BIR Commissioner Romeo Lumagui Jr. inspects different prints of cigarette packets illegally produced at Subic Bay Freeport by two cigarette manufacturers.
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.
BIR Commissioner Romeo Lumagui Jr.
Lumagui, a reporter, told reporters that HIC and OPMC were sister firms with the same owner and complementary in their illicit activities.
Five cigarette-making machine, three cigarette packaging machine and printing machines were confiscated from firms at Subic Bay Gate Park Phase II. These machines are equivalent to 3 cigarette production lines. Each line can produce 100 master cases or 300 cases per day.
Lumagui acknowledged that HIC and OPMC had licenses to operate. However, both firms violated conditions stipulated in their licenses to operate. Lumagui cited that the cigarette making, packaging, and printing machines were not reported to BIR and registered. The cigarette brands that the firms were producing in the country are also not registered, so their operations are 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.
It is clear that they are in violation. They have a permit for a cigarette manufacturer, but everything we see in the area is not registered as per their permit.
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. In the Hongcim facility, raw materials and finished cigarettes were discovered.
BIR also discovered paper, inks, paints and various other materials needed to print cigarette boxes. These finished products are allegedly sold in Vietnam and Cambodia. However, they are actually sold in different areas of the Philippines.
The estimated value of confiscated equipment, machines and materials is still being determined by the authorities.
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 has stated that they are determined to eliminate unscrupulous producers involved in the distribution of illegal and untaxed cigarettes in the country under the pretense that the products are intended for export.
Lumagui cited the example of HIC, which only has the right to produce cigarettes for export. However, he noted that the brands such as RGD, Linqun and others are distributed and sold throughout the country.
Lumagui warned the owner of HIC that he violated Sec. The National Internal Revenue Code 263 prohibits the removal or possession of articles that are subject to excise duty.
“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 stated that the unpaid tax would cost these firms billions.
Lumagui said Subic Freeport Zone had already become “notorious” both in terms of smuggling and producing illegal cigarettes.
The BIR chief stressed the importance of the SBMA business locators paying the correct taxes to ensure smooth operations within the Freeport, as well as getting the necessary documents and registrations to make their operation legal.
Lumagui said that they would be preparing criminal charges for the illegal traders after compiling data, managing the information, and gathering evidence.
BIR filed tax evasion charges against store owners on May 25, exactly four months following the first simultaneous nationwide trade enforcer in January.
“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.
In addition to the raids at Subic Bay Freeport the second wave in the simultaneous nationwide BIR operation swooped on various parts of Luzon and Mindanao, Visayas as well as Mindanao.
Initial reports indicated that large quantities illicit cigarettes, wine, vapes, and other goods had been seized. These were brought to different district offices by the BIR who led the nationwide raids.
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