Cagayan de Oro Rep. Rufus Rodriguez (File photo from his Facebook page)
MANILA, Philippines — A House of Representatives panel has recommended the filing criminal complaints against vape companies Denkat Philippines, a local firm subject to House Resolution (HR) No. 1437, and Top King.
During the hearing of the House committee on ways and means on Tuesday, Cagayan de Oro City 2nd District Rep. Rufus Rodriguez moved to suggest that the Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR) file the appropriate cases against Denkat for allegedly conspiring with Flava Corporation, a brand from China being investigated for “possibly massive” tax evasion totaling billions of pesos.
Citing the committee report, Rodriguez revealed that Dennis Rostrata, the president of Denkat, later admitted that Flava had solicited his assistance in transacting the supposed exporter on their behalf.
“In our draft on page 16, clearly Mr. Rostrata of Denkat admitted later that Flava Corp. solicited his assistance in transacting the supposed exporter,” said the lawmaker, who filed HR No. 1437 seeking to probe the discovery of P1.43 billion worth of Flava e-cigarettes during Bureau of Customs (BOC) raid in Valenzuela on October 27 last year.
“Earlier, [Lilac] Tayaban said they have photocopies of the following documents and receipts from Denkat and a proforma invoice for the purchase of Romeo products,” he added.
Moreover, Rodriguez also disclosed that their documents showed that Denkat legal counsel, Lorman Arugay, verified “that there is an unofficial partnership between Denkat and Flava,” although it is not formalized in any of their corporate documents. Before this, however, he said that Arugay claimed that his client, Rostrata, is not the consignee of Flava products.
The lawmaker said these circumstantial pieces of evidence gathered during the previous hearings — which he claimed showed that the companies indeed brought the Flava products currently under the custody of BOC into the country — should be enough for them to be prosecuted.
Albay Rep. Joey Salceda, who chairs the House committee, suggested that Top King, another vape product company, should also be included in Rodriguez’s recommendations. Agreeing with this, the latter said records also showed that Flava had submitted copies of billing statements from Top King.
Salceda approved the resolution with the amendments made by Rodriguez.
If the government agencies do not comply, Rodriguez said they will file a case against them.
READ: House panel subpoenas execs of 2 vape firms for tax evasion
Earlier, Salceda revealed that Flava is suspected of mislabelling its products as “conventional freebase e-cigarettes” when there are indicators that suggest such items are of the nicotine salt variety.
Under Republic Act No. 11900 or the Vaporized Nicotine and Non-Nicotine Products Regulation Act, freebase nicotine has a lower tariff compared to nicotine salts because the latter has a higher concentration rate and, therefore, would be more potent.
He said that freebase nicotine products are taxed at P60 per 10 milliliter (mL), while nicotine salt has a tariff of P50 per one ml. The lawmaker further explained that companies can save illegally by misdeclaring nicotine salts as freebase nicotine.
If proven that the products are indeed nicotine salts and not freebase nicotine, Salceda said the tax evaded can go up to P7.3 billion.