The Bureau of Internal Revenue on Tuesday asked the Justice Department to prosecute tobacco company Mighty Corp. and its executives for tax evasion involving P26.93 billion in unpaid excise taxes arising from its alleged use of counterfeit stamps on cigarette products.
This would be the second complaint for tax evasion filed by the BIR against Might Corp. executives led by its owner Alexander Wongchuking, who are now facing preliminary investigation for a P9.56 billion tax evasion case.
This is the biggest tax evasion case filed by the BIR so far in its Run After Tax Evaders program under the administration of President Duterte.
In its latest complaint, the BIR accused Wongchuking and three other company officials of violating the National Internal Revenue Code for unlawful possession of articles subject to excise tax without payment of the tax and for possessing false, counterfeit, restored or altered stamps.
The tax bureau again named former Armed Forces deputy chief-of-staff and retired Lt. Gen. Edilberto Adan, Might Corp.’s president; retired Judge Oscar Barrientos, company executive vice president; and company treasurer Ernesto Victa as co-respondents of Wongchuking in the second tax evasion case.
The new complaint stemmed from the raid conducted by the BIR and Bureau of Customs last March 24 on the tobacco firm’s warehouses at Barangay Matimbubong, San Ildefonso, Bulacan which resulted in the discovery of 536,000 cigarette packs in 1,072 master cases with fake stamps.
“Internal revenue stamps affixed on the cigarette packs were tested using the Taggant reader, a BIR-registered equipment used to test the authenticity of stamps affixed on cigarette packs. Based on the 24-day validation activity conducted from March 27, 2017 to May 5, 2017, 100 percent of the total stamps tested on 536,000 cigarette packs are fake. The master cases containing the said cigarettes with fake stamps were marked and seized,” the complaint stated.
The 536, 000 cigarette packs were part of the 81,591,500 packs contained in 163,183 master cases found in the said warehouses.
The bureau alleged that the stamps were fake since they did not contain the multi-layered security features of a valid internal revenue stamp and were not affixed at the production plant of Mighty Corp. in Bulacan as required by law, which means the seized master cases came from another manufacturing plant.
The BIR further cited the lack of official delivery receipts for the San Ildefonso warehouses.
“Such failure to present the official delivery receipts showed that the cigarette packs in the subject warehouses did not come from the manufacturing plant in Barangay Tikay where such stamps should have been affixed to confirm that the proper taxes are paid before articles subject to excise tax are removed from the production plant,’ the complaint pointed out.
The first tax evasion case filed by BIR against Mighty Corp. last March involved the master cases of cigarettes worth P2.3 billion bearing fake tax stamps seized from the firm’s warehouse in San Simon Industrial Park in Pampanga.
The DoJ panel of prosecutors led by Senior Assistant State Prosecutor Sebastian Caponong has already started the preliminary investigation on the first case.
In a hearing on May 4, Wongchuking, Barrientos and Victa appeared before the panel and submitted their respective counter-affidavits denying the allegations of the BIR and seeking dismissal of the charges.
The hearing will continue May 11for the submission of counter-affidavit of Adan.
Mighty Corp. has reportedly offered to settle its tax liabilities through a compromise payment agreement, but Justice Secretary Vitaliano Aguirre II said the filing of cases against the tobacco firm would be necessary before the compromise could be arranged.