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Philippines
Wednesday, April 24, 2024

Weakening Mighty

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The full force of the law will bear down on Mighty Cigarette Corp. 

This was made clear by Finance Secretary Carlos Dominguez III who said the big-selling cigarette company must pay no less than P12 billion for allegedly using fake tax stamps on its products. The Bureau of Internal Revenue and Customs discovered the spurious stamps during lightning raids on Mighty’s two warehouses in San Simon, Pampanga and General Santos in Mindanao.

The raiding BIR teams were able to secure documents that the two warehouses were leased by the Mighty Corp. owners.

President Rodrigo Duterte earlier  said he wanted Mighty to pay P30 billion to settle its tax evasion case. But Secretary Dominguez said the cigarette firm must first pay the penalty of P12 billion to avoid prosecution. In other words, pay the penalty first, then talk settlement later. The settlement for the confiscated goods and the use of fake tax stamps, however, does not expunge Mighty owners of criminal liability, according to Dominguez.  The guilty parties may still end up in jail if found guilty by the proper court. Mighty is represented by high-profile lawyer Sigfrid Fortun.

The 10 times rule of tax liability is provided for under the tax code or the National Internal Revenue Code of the Philippines.

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The tax evasion case is a reversal of fortune for the Wong Chuking family owners of Mighty which had gained a sizable share of the domestic market.

The BIR raid in Pampanga and Mindanao yielded 36.2 million packs of Mighty and Marvel cigarettes with fake tax stamps with an estimated value of nearly P2 billion. At an excise tax of P30 per pack, this will translate to P1.2 billion in potential taxes lost to the government.

Section 263 of the Internal Revenue Code is clear on the unlawful possession or removal of articles subject to excise tax without payment of the corresponding tax:

“Any person who is found in possession of locally manufactured articles subject to excise tax, the tax  on which have not been paid in accordance with law, or any person who is found in possession of such articles  which are exempt from excise tax other than those to whom the same is lawfully issued shall be punished with a fine of not less than 10 times the amount of excise tax due on the articles found but not less than P500 and suffer imprisonment of not less than two years but not more than four years.”

Ouch, that hurts.

It’s now up to Mighty to settle the excise tax that should have been paid to government. Or for Mighty lawyer Fortun to fight the case in court. The Wong Chuking family will have to weigh the cost of paying a fortune to Fortun in a long-drawn hearing or settle now. If they do, perhaps they can recover the huge tax liability they have to pay and then just recoup their  losses by continuing business as usual. But by paying and using the right genuine excise tax stamps, of course.

Trillanes is the next target

Going by the words of presidential legal counsel Salvador Panelo, administration critic Senator Antonio Trillanes IV could be the next target of Malacañang.

“Constantly criticizing and attacking the President  without presenting evidence will make the people hate Duterte. This is tantamount to sedition and is punishable by imprisonment,” said Presidential Legal Counsel Salavador Panelo.

Trillanes, however, is unfazed by the threat of Panelo as he dares him to just do it and bring it on.

Panelo is also studying filing a case against Trillanes for harboring a criminal like Arturo Lascañas who testified at a Senate hearing that Duterte is involved in the extrajudicial killings of hundred of suspects in Davao when he was the city mayor.

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