Updated 08:36 AM PHT Thu, March 16, 2017
Metro Manila (CNN Philippines) — Justice Secretary Vitaliano Aguirre said Wednesday local cigarette company Mighty Corporation has agreed to pay ₱3 billion in taxes it owes the government.
Aguirre said the company wrote to President Rodrigo Duterte on Sunday expressing its agreement to pay the amount set by the President.
"Noon pong Linggo, binigay ng Mighty Corp. ang kanilang pagsang-ayon na sila'y magbayad ng ₱3 billion," Aguirre said. "Sumang-ayon na po sila dun sa ating Pangulo, sapagkat gusto na rin nilang makapag-resume ng kanilang operation.
[Translation: Mighty Corp. agreed on Sunday to pay ₱3 billion. They agreed with the President's request since they want to resume their operations.]
Duterte said last week he's willing to let the owners of the local cigarette manufacturer "off the hook" as long as it pays double the ₱1.5 billion reportedly offered by one of the company's owners.
The President said the amount would be used to fund healthcare in Basilan, Jolo, Sulu and Tondo in Manila.
But Aguirre said even if there is a compromise, a case still needs to be filed first against Mighty Corp., in accordance with the Tax Code.
Aguirre also said he has directed the National Bureau of Investigation to build a case against the company.
The Department of Justice (DOJ) likewise issued lookout orders for the company's owners and board of directors, requiring them to get clearance from the DOJ to travel abroad.
Alleged fake tax stamps
A series of raids conducted earlier this month at Mighty Corp. warehouses revealed over ₱2.2 billion worth of Mighty Corporation-manufactured cigarette brands allegedly carrying fake tax stamps.
The government earns ₱30 in excise tax per pack of cigarettes. If the tax remittance for each cigarette pack is pegged at this amount, computations show the seized cigarettes may have deprived the government an estimated ₱1.1 billion pesos in excise taxes.
Excise tax is not chargeable to the consumer and is paid by the product manufacturer instead.
Mighty Corp. said they are willing to cooperate with authorities, but also blamed the anomaly on allegedly faulty stamp-validating devices used during the raid.
Tax liability still being determined
Meanwhile, Finance Secretary Carlos Dominguez said Wednesday that the tax case against Mighty Corp. won't be filed anytime soon since the government is still determining the company's tax liability.
"The objections of Mighty's lawyers are slowing the process down," he said. "We have to determine first the exact liability."
Dominguez said the Bureau of Internal Revenue is having difficulty knowing how much Mighty Corp. owes the government because it has to check if the tax stamps seized from cigarette boxes in its warehouses are fake.
After determining the company's tax liability, Dominguez said the government will see if it has a solid case against the tobacco manufacturer.
"If we have a strong case, then we will file the case and if there is an offer for a reasonable settlement, maybe. But we have to file the case first," he said.
Dominguez said last week if the owners of Mighty Corp. fail to pay their due taxes, the company will face charges.
CNN Philippines Correspondent Xianne Arcangel contributed to this report.