NORZAGARAY, Bulacan—Finance Secretary Carlos Dominguez III led the destruction here today (Dec. 12) of some P3.316 billion-worth of Mighty and Marvel cigarettes bearing fake tax stamps that were confiscated last March by teams from the Bureaus of Internal Revenue (BIR) and of Customs (BOC) as part of their heightened joint drive against tax fraud.
A total of 229,428 mastercases or 114,714,000 cigarette packs will be destroyed over a period of several days inside the compound of the Holcim Philippines Geocycle in Norzagaray through a method called “co-processing.”
The “co-processing” method pioneered by Holcim Geocycle ensures the total thermal destruction of waste materials, while reducing toxic gas emissions and land and groundwater pollution.
In disposing the confiscated cigarette stock, Dominguez said, “We have chosen to partner with Holcim Geocycle. Holcim pioneered a co-processing method that ensures total destruction of waste materials with vastly reduced toxic gas emissions and avoids land and groundwater pollution. I want to thank Holcim for helping us out with this task. A few weeks ago, the Holcim facility in Davao disposed cigarette stocks also confiscated in Mindanao.”
According to the BIR, the P3.316 billion worth of cigarettes to be destroyed comprise the 66,245 mastercases valued at P869 million that were confiscated in Pampanga last March 1 and another 163,183 mastercases estimated to cost P2.44 billion that were seized in Bulacan last March 24.
BIR estimates show that excise tax liabilities, including penalties, arising from the use of counterfeit tax stamps on these cigarettes amount to P9.564 billion from the Pampanga raid and another P26.29 billion from the operation in Bulacan.
Dominguez said the co-processing of the seized cigarette packs underscores the Duterte administration’s all-out drive against tax evasion.
“We are destroying this stock of tobacco products to ensure none of them leaks back into the open market,” he said. ”More important, we want to deliver the message that evasion does not pay. Our revenue agencies are alert, adept and empowered to ensure that taxes due, especially sin taxes, are properly collected.”
Joining Dominguez at the event were Holcim Philippines chairman Tomas Alcantara; Finance Assistant Secretary Mark Joven; Assistant Secretary Kelvin Lee of the Office of the Executive Secretary; BIR Assistant Commissioner Teresita Angeles; Marilou Valles, chief of the BIR Excise Large Taxpayers Field Operations Division; and Margarita Detablan, chief of the Tobacco and Tobacco Products Section of the BIR.
Representatives from the Commission on Audit (COA), Department of Environment and Natural Resources (DENR) – Region 3, Framework Convention on Tobacco Control Alliance Philippines (FCAP), Mighty Corporation, and Japan Tobacco International (JTI) Inc. Philippines also attended the event.
“We are totally focused on our mission to raise the revenue government needs to build a vibrant and inclusive economy for our people,” Dominguez said.
The confiscated cigarettes bearing the brands Mighty Menthol 100s, Marvels Menthol and Marvels FK were seized in separate raids on a warehouse in Bulacan and another in Pampanga. In the Pampanga raid, the BIR learned that Mighty Corp. entered into a contract of lease with Hommss Trading Corp and Show Place Landed Corp.
These cigarettes set for destruction in Bulacan represent the second batch of tobacco products manufactured by Mighty Corp. that Dominguez had ordered destroyed.
Two weeks ago, representatives from the BIR and other government agencies witnessed the destruction in Davao City of some five million packs of cigarettes worth an estimated P142.44 million, all bearing the brands sold by Mighty Corp. that were seized earlier this year in Mindanao for having counterfeit tax stamps.
According to the BIR, the estimated deficiency excise tax liability, including penalties, of these cigarettes seized last March 6 in General Santos City would have amounted to P1.39 billion.
The cigarettes destroyed in Davao City and the next batch in Bulacan constituted the evidence in the complaints filed by the BIR last May against Mighty Corp. before the Department of Justice for the use of fake tax stamps.
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The complaints against Mighty had since been withdrawn after the company, with main headquarters in Bulacan, offered last July to settle its tax liabilities with the government for P25 billion and shut down its operations.
Mighty Corp. subsequently sold its assets to Japan Tobacco Inc. to help pay off its tax arrears.
Dominguez said the government stands to gain over P30 billion in additional revenues from Mighty’s tax settlement once the value-added tax from the sale and other fees are paid. He said this makes the tax settlement the largest sum ever paid by a single corporate entity in the country’s history.
“I want to commend the hard work of revenue officials for the confiscation of tobacco products bearing fake stamps. In a series of raids conducted in March last year, revenue officials seized more than P3 billion-worth of merchandise found blatantly evading taxes due,” he said. “That series of raids led to a chain of events that proved beneficial to our revenue efforts.”
Said Dominguez; ”Mighty Corporation was forced to sell its business to pay for a settlement of its obligations, which was around $600 million. This resulted in the biggest tax settlement ever. The favorable settlement significantly improved revenue collections this year. Acquisition of Mighty’s tobacco business by the Japan Tobacco Incorporated substantially improved sin tax collections. Every month, for the first three months since Mighty has been taken over by JTI, our collections from the Mighty operations of JTI have increased by P2.5 billion a month.”