Mighty Corp.: Its owners, officers and taxes paid

The Bureau of Internal Revenue today filed a P9.5-billion tax evasion case against cigarette maker Mighty Corp. before the Department of Justice.

The case came at the heels of President Duterte’s order early this month to arrest Mighty owners for “economic sabotage” for allegedly using fake cigarette tax stamps.

A series of raids in various parts of the country led to the confiscation of Mighty cigarette packs with alleged fake tax stamps.

Government agencies estimated the worth of these cigarette packs to be more than a billion pesos.

They alleged that the government was losing billions of pesos in revenues due to unpaid taxes.

GMA News Research looked into the Securities and Exchange Commission (SEC) declarations of the company.

Although SEC records show that Mighty was incorporated in December 1985, the company’s website states that it was founded in 1945 as La Campana Fabrica de Tabacos Inc. by Wong Chu King, a Chinese immigrant.

According to its Articles of Incorporation, Mighty’s primary purpose was to “carry on the business of manufacturing of, dealers in, and sellers of cigarettes, cigar and all kinds of tobacco products”.

P18-billion excise tax paid

From 2008 to 2014, Mighty paid almost P18 billion worth of excise tax, based on its declared financial statements submitted to SEC.

The latest declaration of the company available in the SEC website was for 2014.

Its SEC papers show that the biggest excise taxes Mighty paid were for the years 2013 and 2014, both amounting to at least P8.25 billion.

From 2008 to 2011, Mighty’s excise taxes ranged from P223 million to P266 million. The amount almost doubled in 2012, with P531 million in excise taxes paid.

Mighty’s latest financial statement for 2014 also shows that the total asset of the company is worth P13.17 billion, while its gross profit for the year was P915.24 million.

Family business

Mighty owners kept the business within the family. Until very recently, that is.

The latest roster of Mighty’s officers and directors includes the spouse and children of its founder, as well as a retired judge and a retired AFP official. Mighty is also partly owned by a couple of foreign companies.

According to the company website, Mighty chair Nelia Wongchuking is the widow of Wong Chu King, the founder of the company who died in 1987.

Nelia sits as Mighty’s chair of the board of directors, the company’s 2016 general information sheet (GIS) showed.

Their son Alexander is also a director, vice president for external affairs and assistant corporate secretary. He holds an 18.40-percent ownership of the company.

Alexander appeared before the Department of Justice on March 7 and pledged to Secretary Vitaliano Aguirre that he would pay double the amount of their alleged tax deficit. This happened immediately after Duterte called for his arrest for alleged economic sabotage.

Another son, Caesar, was the director and vice president of Mighty until 2014. The latest GIS of the company shows that although he no longer holds a position, Caesar has 20.8-percent ownership of Mighty.

Belen Wongchuking, whose relationship to the family is unclear, holds 2.40-percent ownership of the company.

Helen W. Chua and Marietta W. Co Chien are also directors, each holding 17.20-percent ownership of Mighty.

A general, a judge and foreign firms

Retired Lt. Gen. Edilberto Adan is the president of the company since 2014.

Adan was appointed executive director, with the rank of undersecretary, of the Presidential Commission on the Visiting Forces Agreement in 2007 by then President Gloria Macapagal Arroyo.

He held that post until 2014.

Before he retired from military service in 2006, he was chief of the Southern Command. He was also deputy chief of staff of the Armed Forces of the Philippines.

Retired judge Oscar Barrientos is the executive vice president since 2013. Barrientos also stands as the company’s spokesperson. He used to be the judge of Branch 82 of the Malolos Regional Trial Court in Bulacan.

Since 2013, Ernesto Andrade is the company's corporate secretary. Ernesto Victa is a director and treasurer since 2015.

BIR filed the tax evasion case against Alexander, Adan, Barrientos, and Victa.

In a statement, Mighty’s lawyer Sigfrid Fortun said that they welcome the case, noting that they see this as a chance to clear the company’s name.

“We will continue to cooperate with government in its continuing effort at tax collection,” he said.

The SEC document also shows that as of 2016, two foreign entities are holding 20-percent ownership of the company.

Hong Kong-based Premier Lotus Limited holds 13.33-percent ownership of Mighty, while Singapore-based Ahlaveht Holdings Pte Ltd owns 6.67 percent. The two foreign companies first appeared in Mighty’s 2016 GIS.

Affiliated companies

Mighty is also related to at least three companies which are all ran by the Wongchuking family.

According to its 2014 financial statement, Mighty leased its warehouse from Wong Chu King Holdings Inc., and its office space from La Campana Fabrica De Tabacos Inc.

The company also leased warehouse and factory spaces from Tobacco Industries of the Philippines Inc.

La Campana’s 2015 financial statement states that the company derived its revenue from leasing out its real properties. In its SEC filing, Tobacco Industries says its primary purpose is “to acquire, maintain and operate flue-curing barn and redrying plants, facilities, warehouses, agencies and depots for the storing, preparation and cure of leaf tobacco and for its sale and distribution”.

Wong Chu King Holdings owns 99.99 percent of both La Campana and Tobacco Industries.

The holding company also owns 99.99 percent of Wong Chu King Properties Inc., which was incorporated only last year.

The family also has a foundation named after their patriarch—the Wong Chu King Foundation.

Based on the respective 2016 GIS of these companies and the foundation, Nelia, Caesar, Alexander, Helen, and Marietta are all connected to these companies as officers, directors, or stockholders. (see table)

While stressing his client's willingness to cooperate and pay the correct taxes, Mighty lawyer Fortun noted that the scanners used by BIR examiners to determine the authenticity of the tax stamps were malfunctioning.

Fortun said the BIR's Taggant reader, which was used to test the authenticity of stamps affixed on cigarette packs, produced varying results when used against Mighty's products that were seized in its warehouses in Pampanga.

He said the devices initially registered a green light, indicating that the confiscated cigarette cartons have genuine stamps, before turning red which meant they were fake. Fortun said the devices also could not read some of the tax stamps. He said the results of the investigation against Mighty are thus unreliable. —With reports from Lia Manalac-Del Castillo/NB, GMA News