BIR padlocks illegal cigarette manufacturer and printing companies in Subic Bay Freeport
MANILA, Philippines — The Bureau of Internal Revenue (BIR) raided and padlocked an illegal cigarette manufacturing factory and a cigarette printing facility both in Subic Bay Freeport Zone for numerous tax revenue code violations.
BIR Commissioner Romeo Lumagui Jr. inspected the facilities of Hongcim International Corp. (HIC) and Onesubic Premier Manufacturing Corp. (OPMC), and assessed for himself the extent of the illegal operations and the negative economic impact in terms of potential losses in government revenues.
It turned out, Lumagui told repoters that HIC and OPMC, which are both registered as cigarette manufacturing firms, were sister companies with the same owners and complementing each other in their illicit operations.
Confiscated from the firms located at the Subic Bay Gateway Park Phase II were five cigarette-making machines, three cigarette packaging machines and printing machines that are equivalent to three cigarette production lines with each line could produce 100 master cases of cigarettes per day or a total of 300 cases per day.
Lumagui admitted that while HIC and OPMC have license to operate, both firms, however, violated the conditions stipulated under their own license to operate, citing that the cigarette- making, packaging and printing machines have not been reported and registered with BIR. Also, the cigarette brands the companies were producing are not registered brands in the country, thus, their operations are both deemed illegal.
“Basta ang malinaw, may violations sila. Kahit na may permit to operate sila as manufacturing ng sigarilyo, lahat ng makikita natin dito sa area, lalo na ang mga makina nila ay hindi rehistrado sa BIR na stipulated sa kanilang permit to operate,” Lumagui explained.
(The clear thing is, they have violations. Even though they have a permit to operate as a cigarette manufacturing company, everything we see here in the area, especially their machines, are not registered with the BIR as stipulated in their permit to operate.)
He added: “They have license to operate pero hanggang doon lang. ang lisensya nila. Tulad sa mga ibinebenta, imported man o ineexport, dapat irehistro nila sa amin. Pati mga makina dapat ay humingi sila ng permit bago sila magmanufacture ng sigarilyo.”
The Subic Bay raid was part of the second wave of the BIR’s simultaneous nationwide trade enforcement against illicit cigarette trading that started on Thursday.
During the inspection at the OPMC facility, the BIR team found cigarette printing machines, printed cigarettes packs and voluminous rolls of paper boards to be used for cigarette packs. At the Hongcim factory, raw materials used for cigarette production and finished cigarette products were found.
Furthermore, the BIR team found paper materials, inks paints and other items necessary in printing cigarette boxes, the finished products of which were reportedly sold to Vietnam and Cambodia but said brands are actually being sold in various areas in the Philippines.
Authorities are still determining the estimated value of the confiscated machines, equipment and other materials.
During the interview with the OPMC personnel, they admitted that their permit to operate is for cigarette manufacturing but that they print boxes for six brands of cigarettes namely RGD, Baisha, Liqun, Saat, Furongwang and Nanjing, which are not legal and registered brands in the country and yet are seen and sold in many retail stores in various parts of Mindanao and Luzon.
Lumagui said they are hell bent on eliminating unscrupulous manufacturers involved in the circulation of untaxed and illegal cigarette products in the country in the guise that these items are meant to be distributed abroad.
Citing the case of HIC which has a permit to manufacture cigarettes for export only, Lumagui noted, the brands they are producing such as RGD and Linqun, are being distributed and sold in many parts of the country.
Lumagui warned that the owner of HIC violated Sec. 263 of the National Internal Revenue Code which prohibits the possession or removal of articles subject to excise tax.
“Ang inaalam natin ngayon kung may kinalaman din sila (HIC and OPMC) sa distribution ng mga illegal cigarettes. Pwedeng-pwede talagang tanggalin ang kanilang registration,” Lumagui declared.
The revenue chief himself inspected the warehouses and other facilities of the firm “padlocked and sealed” by BIR while various tax revenue cases and liabilities, are being prepared against the firms. Lumagui said this would cost them billions in pesos of unpaid taxes.
Lumagui said Subic Freeport Zone had already become “notorious” both in terms of smuggling and producing illegal cigarettes.
The BIR chief underscored the importance for the business locators at the SBMA to settle the proper taxes if they want to ensure smooth operations in the Freeport as well as securing necessary documents and registration to make their operations legal.
Lumagui stressed that after compiling information, data management, gathering of evidence and testimonies, they will already prepare the filing of criminal charges against the people behind the illicit trade for them to face the consequences of their illegal activities.
On May 25, or exactly four months after the first-ever simultaneous nationwide trade enforcement in January, BIR filed 69 tax evasion cases with the Department of Justice (DOJ) against owners of the stores they raided.
“We hope to build up strong cases against the culprits. It will take sometimes before the actual filing of the charges because we want to ensure that we have tight cases against these tax evaders,” Lumagui said.
Apart from the raids in Subic Bay Freeport, the second wave of the simultaneous nationwide BIR operations swooped down on several parts of Luzon, Visayas and Mindanao.
Initial reports mentioned that large volumes of illicit cigarettes, wines, vapes and other goods were seized and brought to various district offices of the BIR which spearheaded the nationwide raids.