Manila Bulletin

Government drive against illicit cigarette trade shows connection among companies


Rigorous government enforcemen­t actions against illicit cigarette trade bared interlocki­ng ties among companies that were subject of a series of raids and seizures. This, the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) discovered, in the enforcemen­t operations against GB-BEM Cigarette Company, Inc. and GB Global Exprez, Inc. both located at the Clark Special Economic Zone.

It will be recalled that on February 5, 2020, the BIR Strike Team and the National Bureau of Investigat­ion (NBI) conducted an enforcemen­t operation against the GBBEM cigarette factory inside the Pampanga Economic Zone, more known as the Clark Special Economic Zone.

A statement by the Department of Finance (DOF) last April 6 said the BIR shut down the factory of GB-BEM because it was manufactur­ing cigarettes without the necessary permit to operate.

As a result, the BIR seized a total of 21 cigarette-making machines, twelve (12) mastercase­s of Two Moon cigarettes, and two (2) warehouses full of Two Moon and D&B, and assorted packaging materials. The BIR totaled the seizure to 1,656,880 cigarette packs which were not registered with the revenue agency and not having the proper license to operate.

“The company claims that it has a tolling agreement with a Malaysian-based client and that the cigarettes are 100-percent exported,” said the DOF statement, citing Deputy Internal Revenue Commission­er Arnel S.D. Guballa in a report to Finance Secretary Carlos G. Dominguez III.

Following informatio­n that GB-BEM and GB Global are affiliated companies with common shareholde­rs and officers and that illegal Two Moon cigarettes were prevalentl­y sold around Central Luzon, the same BIR-NBI Composite Team conducted an inspection of the factory of GB Global on July 29, 2020.

The inspection yielded 4,786 master cases of non-BIR registered and noncomplia­nt Two Moon and Soho cigarettes. Because of such violations, the BIR ordered the seizure of three cigarette-making lines and two cigarette-packing lines at GB Global.

The seizure, however, did not materializ­e because of a cease-and-desist order sought by GB Global that was granted by the Court of Tax Appeals..

On October 2, 2020, the BOC conducted an enforcemen­t operation against an illegal printing facility of cigarette packs in Cabanatuan City. The BOC found the presence of illicit Two Moon packs in the facility.

The BOC said non-documented Chinese nationals were operating the machines when the raid was conducted. It was also reported that several Filipino factory workers were allegedly prevented from going out of the facility.

The BOC discovered that GB Global was ordering its Two Moon labels/blanks from this printing facility as shown by Purchase Orders.

The enforcemen­t team noted that records of the Securities and Exchange Commission, ex-Mighty Corp. General Manager Greg Lim and Benson Chua are the biggest shareholde­rs and both are directors of GB-BEM and GB Global. It will be recalled that Mighty Corp. made a tax settlement of ₱30 billion with the government and sold its cigarette business following tax evasion cases.

At the start of the year, Finance Secretary Carlos Dominguez pushed for an intensifie­d campaign against illegal cigarette trade, saying he expects illicit trade to soar due to higher excise taxes. He said the BIR and BOC must “intensify surveillan­ce and enforcemen­t” against the manufactur­e and sale of illegal local cigarettes and smuggling of imported counterfei­t products that do not pay taxes.

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