Mighty Corporation
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Mighty Corporation () is a Filipino corporation and was the second largest cigarette manufacturer in the Philippines from 2010 to 2017. On September 8, 2017,
Japan Tobacco The (JT) is a Japanese diversified tobacco company and parent company to Japan Tobacco International, one of the three largest international Big Tobacco product manufacturers in the world. It was established in 1985 as a that inherited the ri ...
acquired Mighty Corporation's cigarette business in the amount of ($936 million), paving the way for the full payment of to the Philippine government as part of the agreement for Mighty Corporation to settle its unpaid tax liabilities.


History

In 1945, the company was established as La Campana Fabrica de Tabacos, Inc. by Wong Chu King with a small cigarette factory in
Manila Manila, officially the City of Manila, is the Capital of the Philippines, capital and second-most populous city of the Philippines after Quezon City, with a population of 1,846,513 people in 2020. Located on the eastern shore of Manila Bay on ...
producing a type of native cigarette known as "''matamis''" (sweet blend). In 1948, a second factory was built in Barangay Olympia,
Makati Makati ( ; ), officially the City of Makati (), is a highly urbanized city in the National Capital Region of the Philippines, known for being one of the leading financial centers in the country. As of 2013, the city has the highest concent ...
,
Rizal Rizal most commonly refers to: * Rizal (province), a province of the Philippines * José Rizal, Filipino national hero whom the province is named after Rizal may also refer to: People * Akmal Rizal Ahmad Rakhli, Malaysian footballer * Atep Ri ...
. In 1963, a facility for tobacco threshing and redrying was constructed in
Malolos Malolos , officially the City of Malolos (), is a component city and capital of the province of Bulacan, Philippines. According to the 2020 census, it has a population of 261,189 people. It is the capital city of the province of Bulacan as the ...
,
Bulacan Bulacan, officially the Province of Bulacan (; ; ; ), is a Provinces of the Philippines, province in the Philippines located in the Central Luzon Regions of the Philippines, region. Its capital is the city of Malolos. Bulacan was established on ...
. where the company's processing plant was later established. In 1985, the company changed its name to Mighty Corporation and acquired the trademarks of rival Alhambra Industries, Inc. in 1993. In 2001, the company entered into a cigarette manufacturing agreement with rival Sterling Tobacco Corporation to produce the latter's brands. In 2004, the company entered into a cigarette manufacturing agreement with the Philip Morris Philippines as the latter had acquired the trademarks of Sterling Tobacco Corporation. The company increased its market share from 3 percent in 2012 to nearly 20 percent in 2013 as a result of consumer down-trading from premium (Marlboro, Lucky Strike, Winston) to low-end brands (Mighty, Fortune). The company endured accusations by rival
PMFTC PMFTC, Inc. is the Philippine affiliate of Philip Morris International (PMI). Owned 50-50 by PMI and local conglomerate LT Group, PMFTC is the leading cigarette manufacturer in the Philippines, controlling over 90% of the local market, comme ...
since the implementation of Republic Act 10351, more commonly known as the "Sin Tax Law", in 2012. In 2014, the company was engaged in talks with
British American Tobacco British American Tobacco p.l.c. (BAT) is a British multinational company that manufactures and sells cigarettes, tobacco and other nicotine products including electronic cigarettes. The company, established in 1902, is headquartered in London, E ...
(BAT), the smallest player in the Philippine tobacco market, to explore partnership options. In 2017, Mighty Corporation completed the sale of its cigarette business to
Japan Tobacco The (JT) is a Japanese diversified tobacco company and parent company to Japan Tobacco International, one of the three largest international Big Tobacco product manufacturers in the world. It was established in 1985 as a that inherited the ri ...
in the amount of . The transaction included the company's trademarks, intellectual properties, sales and distribution network, manufacturing equipment and inventories. It also resulted to the domestic manufacturer's tax payment amounting to - the largest amount paid in Philippine history by any corporation. The proceeds were to be used to boost the
Rodrigo Duterte Rodrigo Roa Duterte (, ; born March 28, 1945) is a Filipino lawyer and politician who served as the 16th president of the Philippines from 2016 to 2022. He is the first Philippine president from Mindanao, and is the oldest person to assum ...
administration's infrastructure program.


Tobacco trade war

Since the implementation of Republic Act No. 10351 (Sin Tax Law), Philip Morris International (PMI) and PMFTC Inc. accused Mighty Corporation of various issues, yet no formal charges or complaint have been filed while the
Bureau of Internal Revenue The Bureau of Internal Revenue'' ''(BIR; ) is a revenue service for the Philippine government, which is responsible for collecting more than half of the total tax revenues of the government. It is an agency of the Department of Finance and i ...
(BIR) has clarified to maintain a neutral position in the ongoing tobacco trade war. BIR Commissioner Kim Jacinto-Henares officially stated that "the burden of proof rests on PMI and PMFTC, they should prove that Mighty Corporation has evaded the government. If they cannot prove their allegation, then they may be liable for libel or slander." She said PMI's current hurdles in the Philippine market could have been avoided if PMFTC agreed to the government's original proposal of adopting a unitary tax system, which aimed to remove the tax rate gap between low- and high-priced cigarette brands. The BIR chief explained a unitary rate system on cigarette could have prevented smokers from down-shifting from high-priced brands, such as Marlboro, Winston and Lucky Strike, to low-priced brands, like Mighty.{{dead link In 2014, a
Bureau of Customs The Bureau of Customs (BoC or BOC; ) is a Philippine government agency that is responsible for the collecting of customs, customs duties, excise duties, and other indirect taxes in the Philippines. It is part of the Department of Finance (Philip ...
(BOC) administrative order suspended the firm's customs bonded warehouse operations to assess and audit raw materials originally intended for export but were subsequently used for domestic production. After the assessment, the company paid a total of {{Philippine peso, 978 million. In March 2014, the BIR investigated Mighty Corporation for purported underpayment and unpaid tax levies. The BIR opted for the first time in its history, to field its personnel on a 24/7 basis to closely monitor Mighty Corp's operations. However, the tax agency reported no irregularities. In October 2014, acting Senate Minority Leader
Vicente Sotto III Vicente Castelo Sotto, III (; born August 24, 1948), is a Filipino politician and television personality who is a senator-elect of the Philippines. He is the longest-serving senator in the history of the upper chamber, being the only one ele ...
pointed out during a hearing of the Joint Congressional Oversight Committee on the Comprehensive Tax Reform Program, citing apparent tax leakages, particularly in the tobacco industry. According to Sotto, Mighty Corporation appeared to have questionable figures in the importation of tobacco leaves, and that the company have not declared importation of acetate tow, the material used to make cigarette filters which could not be locally sourced, for domestic consumption until 2013. However, BIR Commissioner Kim Henares, who was in the hearing, opposed the Senate Tax Study Research Office (STSRO) data, which included the discredited information on alleged illicit tobacco trade furnished by multinational research firms AC Nielsen, the International Tax and Investment Center (ITIC) and Oxford Economics, as inaccurate, incomplete and not validated. She also added that the data used as basis for the STSRO report were biased and paid for by Philip Morris International (PMI) and that cannot be a basis against Mighty Corporation. Based on ITIC's website, one of its directors is also a ranking official of Philip Morris. In early 2015, PMFTC declared it had to restructure its manufacturing operations in the country, cutting close to 700 permanent positions and has blamed it on a "market disturbance" said to be generated by Mighty Corporation over the last two years. However, BIR Commissioner Kim Jacinto-Henares had already exposed a flaw in PMFTC's arguments regarding their labor problems the year prior that it would not have happened had the tobacco giant agreed from the start to keep the government's original intent of implementing a unitary tax system for the industry. A unitary tax system means that all brands and price points would have a single rate and thus downshifting by consumers would, in theory, be mitigated. The non-government organization and anti-tobacco advocate group South East Asian Tobacco Control Alliance (SEATCA) has contradicted PMFTC's claims of cooperation with governments worldwide need to be qualified. "For example, Philip Morris' collaboration with the European Union (EU) is the result of a 2004 legally binding out-of-court settlement by Philip Morris International (PMI) after it was sued by the EU for its involvement in tobacco smuggling," SEATCA pointed out. "As part of this settlement, PMI agreed to pay $1.25 billion over 12 years to the EU to fight illicit tobacco trade. It is unlikely that a corporation would resolve a lawsuit for over {{US$, 1 billion, link=yes unless they felt the case against them was strong." SEATCA had also scored a Philip Morris-funded International Tax and Investment Centre and Oxford Economics joint report for using a flawed methodology and coming up with skewed findings that support the tobacco industry. PMFTC had also resorted to the use of "paid advertisements" to attack Mighty Corporation which violates Section 22 of the Republic Act No. 9211 (or the Tobacco Regulation Act of 2003).


Allegations of using fake excise tax stamps

Mighty Corporation allegedly used fake tax stamps on cigarette packs, after Bureau of Customs conducted raids on its warehouses. Using taggant readers, they scanned and confiscated cigarette packs with alleged fake excise tax stamps on in San Simon,
Pampanga Pampanga, officially the Province of Pampanga (; ; ), is a province in Central Luzon in the Philippines. Lying on the northern shore of Manila Bay, Pampanga is bordered by Tarlac to the north, Nueva Ecija to the northeast, Bulacan to the east, ...
, in March 2017 but the company denied the allegations, stating that the confiscated cigarettes used officially issued tax stamps.{{cite news, title=Mighty Corporation: P2-B worth of cigarettes seized not fake, url=http://www.sunstar.com.ph/pampanga/local-news/2017/03/04/mighty-corporation-p2-b-worth-cigarettes-siezed-not-fake-529084, work= Sun.Star Pampanga, date=March 4, 2017, accessdate=March 7, 2017


External links

* {{commonscat-inline


References

{{reflist {{Cigarettes manufacturing companies based in Manila Manufacturing companies established in 1945 Tobacco companies of the Philippines Philippine companies established in 1945 Privately held companies of the Philippines