The Department of Justice will consolidate the two multibillion-peso tax evasion cases filed by the Bureau of Internal Revenue against tobacco firm Mighty Corp. and its executives which now totals to P36.5 billion arising from its use of counterfeit internal revenue excise stamps on its products.
Justice Secretary Vitaliano Aguirre II said the new complaint filed by BIR last Tuesday involving P26.93 billion in allegedly unpaid excise tax will be handled by the same panel of prosecutors conducting preliminary investigation on the bureau’s earlier P9.56-billion tax evasion complaint against Mighty Corp.
“I’m inclined to assign the new complaint to the same panel since the two cases involve similar facts and issues. We will consolidate them,” he told reporters during a weekly forum in Manila on Wednesday.
Aguirre also revealed that the issue on compromise settlement with Mighty Corp. was again discussed in last Monday’s Cabinet meeting. He said that while President Rodrigo Duterte is open to a settlement, Finance Secretary Carlos Dominguez stressed that a settlement must be a reasonable amount considering that the tax liabilities of Mighty Corp. from its use of fake tax stamps has now reached P36 bilion. As it is, Aguirre said the DoJ investigation through the prosecution panel will proceed as scheduled.
In its latest complaint, the BIR accused Mighty Corp. executives led by owner Alexander Wongchuking of violations of 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, Mighty Corp.’s president; retired Judge Oscar Barrientos, company executive vice pesident; 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 to 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 BIR said. 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 alreadystarted the preliminary investigation on the first case. In a hearing last 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 today (May 11) for the submission of counter-affidavit of Adan.
Mighty Corp. has reportedly offered to settle its tax liabilities through a compromise payment agreement, but Aguirre explained that the filing of cases against the tobacco firm would be necessary before the compromise could be arranged.