First batch of P142-M seized cigarettes destroyed in Davao

November 26, 2017 - 3:16 PM
File photo from the DOF shows boxes of cigarettes stored in one of Mighty Corp.’s warehouses in the Philippines. Fake Mighty cigarettes, unearthed in recent NBI raids, are eating into the government's revenues and the bottomline of the real Mighty cigarette makers, Japan Tobacco Inc. Philippines. FILE PHOTO FROM D.O.F.

MANILA – National government officials led over the weekend the destruction of the first batch of close to 5 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.

Holcim Philippines Geocycle’s “co-processing” method was used to destroy these cigarettes, which were seized on March 6 this year in a joint operation done by a composite team from the Bureaus of Internal Revenue (BIR) and of Customs (BOC) on a warehouse leased to Mighty Corp. in General Santos City.

According to Holcim Philippines, this method, which ensures the total thermal destruction of waste materials, reduces toxic gas emissions and land and groundwater pollution.

The BIR and BOC have stepped up their joint search and seizure operations of illicit cigarettes and other products in line with President Duterte’s all-out drive against smuggling and tax evasion.

“The decision to destroy these confiscated cigarettes came easily. We imposed sin taxes on these products in part to protect the health of our people. It would be wrong to release these products to the market,” said Finance Secretary Carlos Dominguez III in remarks read for him at the event by Assistant Secretary Kelvin Lee of the Office of the Executive Secretary.

The destruction of the seized cigarettes “is intended to deliver this message: tax evasion does not pay. We will confiscate the offending products and destroy them. No one will profit from the commission of a crime,” said Dominguez.

Some 9,496 mastercases or 4,748,000 packs of cigarettes of Mighty Menthol 100s, Marvels Menthol, Marvels FK and King Full Flavor brands—all manufactured by Mighty Corp.–were destroyed beginning Sunday (November 26) at the Holcim Philippines Incorporated Geocycle compound in Bunawan, Davao City.

According to the BIR, the estimated deficiency excise tax liability of the seized cigarettes, including penalties, would have amounted to P1.39 billion.

The BIR said the warehouse where the seized cigarettes belonged to Sunshine Cornmill Corp. managed by Rosie and Alicia Liang.

Aside from Lee, present at the event were BIR Assistant Commissioner Teresita Angeles who heads the bureau’s Large Taxpayers’ Service (LTS); BIR Davao Regional Director Nuzar Balatero; BIR Revenue Region No. 18 – Koronadal City Regional Director Esmeralda Tabule; and Jeper Ylagan senior environmental management specialist of the Department of Environment and Natural Resources (DENR).

Also witnessing the destruction process were Alejandro Cenon Paje, the senior technical officer of the Framework Convention on Tobacco Control Alliance Philippines; Cyril Lubaton of Japan Tobacco International (JTI) and representatives of the soon-to-be defunct Mighty Corp.

The destruction of all the 4,748,000 million packs will take place in batches because of their enormous quantity, further underscoring the scale of tax fraud attempted by the erring firm. About eight tons of cigarettes per day will be destroyed.

The confiscated tobacco products constituted the evidence in one of the three complaints filed by the BIR last May against Mighty Corp. before the Department of Justice for the use of fake tax stamps.

Besides this batch, the government is also set to destroy 66,245 cases of Mighty cigarettes confiscated in San Simon, Pampanga, another 163,183 cases in San Ildefonso, Bulacan and other smaller stockpiles confiscated in Tacloban and Cebu. These seized cigarettes were also used as evidence in the complaints filed before the DOJ.

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 JTI to help pay off its tax arrears.

Dominguez has 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.