Weak evidence kept Aquino admin from suing Mighty Corp. – former BIR chief

Former Bureau of Internal Revenue (BIR) Commissioner Kim Jacinto-Henares refuted the claim of Presidential Legal Counsel Salvador S. Panelo that officials of the Aquino administration were coddling cigarette maker Mighty Corporation.

The previous administration was not able to file any complaint against Mighty Corp., as the evidence presented to the government was not admissible in court, Henares said in a text message to reporters on Thursday.

“As to our past actions with regard to Mighty, the complaint we received was based on an extrapolation of a market survey which is not evidence that can be used in court,” she said.

On Wednesday, Panelo alleged it was obvious that BIR officials were protecting Mighty Corp., as there was a case prepared but wasn't filed in court.

But Henares noted even if there were enough evidence to drag the company to court, Mighty Corp. was placed under strict surveillance.

“(W)e put a CCTV surveillance on the factory of Mighty, the only cigarette company we placed a CCTV system on. For a time we also have revenue officers on premises on a 24-hour basis to closely monitor the Mighty factory,” she said.

“We also audited Mighty and assessed them deficiency taxes. Furthermore, at that time, based on the survey of World Bank, the ... stamp in cigarettes went up to as high as 99 percent, which also refute the veracity of the complaint,” she added.

While her office received several complaints, they had to evaluate the validity of every single complaint to ensure there was due process, Henares noted.

“We received a lot of complaints, and we have to evaluate which are valid as we do not also want to be used as tool for competitors of taxpayers to destroy their competitors,” she said.

Henares noted the cigarette tax stamp system was put in place during her term.

“I think everyone should not forget that it was during our time that the tax stamp system was implemented, although this has been mandated since 1998,” she said.

The Internal Revenue Stamps Integrated System (Irsis) was adopted by the Aquino administration in 2014.

“The system’s objective is to monitor and detect and provide evidence of cigarettes introduced into the market without the proper taxes being paid. And this is precisely what it is doing now – telling the government when taxes are not paid and who are not paying,” she said.

In December 2016, the BIR reported lapses in tax stamp production by state-run APO Production Unit Inc., an attached agency of the Presidential Communications Operations Office.

“Any system is always subject to attack, that is why the agreement we entered into with APO requires that the design be changed every three years or sooner if there is evidence of 10 percent fraudulent stamp in the market. And it is precisely because of this that there was an agreement to implement a change of design effective July 1, 2016,” Henares said. — VDS, GMA News