The Bureau of Internal Revenue (BIR) today filed a criminal complaint with the Department of Justice (DOJ) against MIGHTY CORPORATION, together with its President LT. GEN. EDILBERTO P. ADAN, AFP (RET.), Executive Vice-President JUDGE OSCAR P. BARRIENTOS (RET.), Vice-President for External Affairs and Assistant Corporate Secretary ALEXANDER D. WONGCHUKING, and Treasurer ERNESTO A. VICTA, for Unlawful Possession of Articles Subject to Excise Tax without Payment of the Tax, and for Possessing False, Counterfeit, Restored or Altered Stamps, in violation of Sections 263 and 265(c) of the National Internal Revenue Code of 1997, as amended (Tax Code).
Mighty Corporation is a domestic corporation organized and existing under the laws of the Republic of the Philippines. It manufactures the following brands of cigarettes, among others: Mighty Menthol 100’s (Hard Pack); Mighty Menthol 100’s; Mighty Full Flavor King Size (Red); Marvel’s Menthol 100’s; Marvel’s Menthol (Hard Pack); and Marvel’s Menthol 100’s (Green). Its only BIR-registered production plant is located at 55 McArthur Highway, Barrio (now Barangay) Tikay, Malolos, Bulacan.
The respondent corporation was the subject of an on-the-spot surveillance operation of untaxed cigarette products conducted by regional investigation division officers in San Simon Industrial Park, San Isidro, Pampanga (SSIP) pursuant to Mission Orders issued by the Regional Director of BIR Pampanga.
The investigating officers entered four (4) warehouses and conducted random tests of ten (10) master cases of cigarettes stores in the said warehouses which were being leased by Mighty Corporation as per certification and contracts of lease provided by the SSIP Administrative Office.
In the presence of Bureau of Customs personnel, Philippine National Police officers, Mighty Corporation representatives, and barangay officials, 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. The tests conducted showed that the stamps are fake or not authentic. The master cases containing the said cigarettes with fake stamps were marked “Tested Fake” and confiscated.
Upon transfer of custody of the seized master cases and the subject warehouses to his office, the Commissioner of Internal Revenue (CIR) issued Mission Orders to revenue officers of the Excise Large Taxpayers Service to check the authenticity of the internal revenue stamps affixed on packs of cigarettes found in the warehouses of Mighty Corporation in SSIP.
Pursuant to the said orders issued by the CIR, the revenue officers conducted an inventory of all the cigarette packs found in the subject warehouses and checked the authenticity of the internal revenue stamps affixed on the packs using the Taggant reader.
The inventory showed that Mighty Corporation stored 66,281 master cases containing 33,140,500 packs of cigarettes. The investigation further showed that 87.5% of the said packs bore fake internal revenue stamps.
The stamps are fake since they did not contain one of the multi-layered security features of a valid internal revenue stamp.
Likewise, they were not affixed at the production plant of Mighty Corporation in Barangay Tikay, Malolos, Bulacan as required by law since no official delivery receipts for the SSIP warehouses were presented by the respondent company as per certification of revenue officers on premises of the BIR. Such failure to present the official delivery receipts showed that the cigarette packs in the SSIP warehouses did not come from the manufacturing plant in Barangay Tikay where such stamps should have been affixed.
It should be noted that the warehouses in SSIP are not registered with the BIR as certified by the Excise Large Taxpayer Regulatory Division. Thus, Mighty Corporation cannot legally remove these packs of cigarettes from their only plant in Tikay, Bulacan for delivery to the said unregistered warehouses.
The mere possession of the said packs of cigarettes with fake internal revenue stamps is ILLEGAL and a violation of the Tax Code.
As a consequence of its acts and omissions, MIGHTY CORPORATION, together with its responsible corporate officers, is liable to pay an estimated aggregate deficiency excise tax liability in the total amount of P9.564 BILLION.