When reports broke out in Malacañang on March 6 that a businessman allegedly tried to bribe President Duterte to settle a legal dispute, reporters immediately went on the trail to find out who he was.
They first asked Presidential Spokesman Ernesto C. Abella, who gave vague hints, rather than dropping a specific name. Then they asked Chief Presidential Legal Counsel Salvador S. Panelo, who provided the details, and even bravely disclosed the identity of the supposed bribe giver: It was Alexander Wongchuking, owner of local cigarette manufacturer Mighty Corp.
“He was ordered arrested by the President because of economic sabotage. Marami siyang ginagawang [ilegal] saka ipinangangalandakan niyang nabibili niya ang lahat ng opisyales dito [He did many illegal activities. He even bragged he could buy any official in our country],” Panelo said in a news statement.
The supposed arrest order from Duterte developed as Finance Secretary Carlos G. Dominguez III told the bureaus of Internal Revenue (BIR) and Customs (BOC) to gather evidence against “certain parties” to be submitted to the Department of Justice (DOJ).
Dominguez made a strong statement afterward, echoing the President’s rhetoric to criminals: “The government needs to first establish strong evidence to pin down this cigarette manufacturer on such charges. We must make sure the charges stick, not only to haul the guilty parties [to jail], including their possible cohorts in the government, but to send a clear message to big-time tax dodgers that the Duterte administration is dead set on putting an end to these nefarious activities and sending all of them behind bars.”
Clear message
This internal investigation of the government, which went alongside its scrutiny on the abuses of its police forces, looks like the beginning of the Duterte administration’s crusade against corruption. As what the finance chief said, it is now sending a message to tax cheaters to start packing up their bags or else, the government would not hesitate to bring them behind bars.
So what’s the real score in Mighty Corp.’s recent tax-evasion case?
It was in January that the BIR told a local newspaper it has been receiving reports of widespread use of fake tax stamps affixed on cigarette packs. The news report said industry sources point to Mighty Corp., since the counterfeits proliferated mostly in provinces where the Wongchuking-owned brand is leading market sales.
The BIR, implementing the Internal Revenue Stamps Integrated System on tobacco products since 2014, is concerned with these fake tax stamps, because they cheat on the government’s collection of excise tax. “Our collection is affected, because they are supposed to pay,” BIR Commissioner Caesar E. Dulay was quoted as saying.
Mighty’s defense
In the local manufacturer’s defense, Mighty Corp. Executive Vice President Oscar P. Barrientos said the situation being portrayed by the local newspaper is strange, as it sounds like an orchestrated deception. “This situation is unusual and highly suspicious for Mighty Corp. to be at the receiving end, because our operation is transparent and closely monitored by revenue authorities, from sourcing of raw materials to manufacturing and withdrawals of cigarettes,” Barrientos argued.
He added the company’s operation is closely monitored by cameras required by the BIR itself. And why would anyone even doubt Mighty Corp’s compliance to the law when it spearheaded the campaign against the proliferation of fake tax stamps, Barrientos said.
The local manufacturer’s vice president pointed out it is necessary, however, that should the BIR conduct its investigation, it should include multinational companies and their local partners, particularly those who are known for importing large quantities of raw materials without paying the correct taxes to the prejudice of local farmers. “We are prepared for [any investigation] as our records are always open for scrutiny by the BIR.”
Raids
But Barrientos’s polite defense was not able to fend off government scrutiny. A month later, Mighty Corp. was put on the receiving end of litigation, after a series of raids by the BOC and the BIR led to the confiscation of stockpiles of Mighty cigarette packs with fake tax stamps affixed to them.
The first week of March saw the series of raids by the two bureaus seizure of 11,044 master cases of cigarettes carrying the Mighty and Marvel brands worth P215 million in General Santos City and 62,000 master cases of the same product valued at P1.98 billion in San Simon, Pampanga. This was followed by the BOC capturing three more containers carrying Mighty cigarettes in the Port of Cebu and in Tacloban.
A week after, Panelo told Malacañang reporters Duterte has given him instructions to bring Wongchuking to court. This announcement came as the BOC issued a preventive suspension against Mighty Corp., effectively barring the cigarette firm from importing raw materials needed for tobacco production.
“I’ve been instructed [by the President] to study and prepare the case against Wongchuking,” Panelo said. The head lawyer of Duterte also clarified the President’s pronouncement that the Mighty Corp. owner can just pay P3 billion and the case will be over. “Under the law, civil liability can be in [the form of] settlement.”
Settlement
Wongchuking expressed his intent to just pay up the P3-billion settlement, but the game was over for the local cigarette firm as the BIR already filed a case against Mighty Corp. on March 22. The complaint presses President Edilberto P. Adan, Barrientos, Wongchuking and Treasurer Ernesto A. Victa of tax evasion amounting to an estimated aggregate excise-tax liability P9.564 billion.
According to the BOC and the BIR, revenue losses due to the nonpayment of excise taxes summed up to P1.1 billion. Aside from those confiscated in General Santos City and Pampanga, another raid in Zamboanga City yielded 400 counterfeit cigarettes, with an estimated street value of P13.5 million.
“As a consequence of its acts and omissions, Mighty Corp., together with its responsible corporate officers, is liable to pay an estimated aggregate excise-tax liability in the total amount of P9.564 billion,” the BIR said in a statement.
There was no bribery to begin with, reporters found out, but bigger than trying to buy Duterte was the evasion of tax liabilities. “Mighty Corp. is supposed to pay some taxes and they have avoided that [obligation], so we have to prosecute them for that,” Panelo said.
Alongside the war against drugs, it seems the administration is now keen on going after tax cheaters and their cohorts in the government.
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