Not a good soldier

The 1987 Constitution states that executive power shall be vested in the President of the Philippines.

The doctrine of qualified political agency, otherwise known as the alter ego doctrine, is basically an application of this constitutional provision.

As explained by the Supreme Court, “the doctrine of qualified political agency essentially postulates that the heads of the various executive departments are the alter egos of the President, and, thus, the actions taken by such heads in the performance of their official duties are deemed the acts of the President unless the President himself should disapprove such acts.”

“This doctrine is in recognition of the fact that in our presidential form of government, all executive organizations are adjuncts of a single Chief Executive; that the heads of the Executive Departments are assistants and agents of the Chief Executive; and that the multiple executive functions of the President as the Chief Executive are performed through the Executive Departments. The doctrine has been adopted here out of practical necessity, considering that the President cannot be expected to personally perform the multifarious functions of the executive office,” the SC said in the case of Demegillo v. TIDCorp.

As early as July last year, President Duterte ordered that Leo Jasareno, head of the Mining and Geosciences Bureau (MGB) which is under the Department of Environment and Natural Resources (DENR) by Mario Luis Jacinto. Obviously, the powers-that-be were not happy with Jasareno’s performance as the DENR’s mining man.

But Environment Secretary Gina Lopez did not seem to get the “message.” Instead, Lopez retained Jasareno as consultant, and even tasked him to head a comprehensive audit of the country’s mining firms.

The President didn’t want Jasareno to have anything to do anymore with the mining industry. So why would Lopez still give Jasareno the power to determine which mining company stays and which should have its operation suspended if not stopped permanently?

Sources say it was the controversial retention of Jasareno that contributed to the delay of the mining audit results, which are due out this week.

Given the dubious credibility of the man initially designated to conduct the audit, the mining industry is expected to challenge the results of the audit and Lopez will have her hands full trying to parry the many legal blows that will come her way, including oppositions to her confirmation by the Commission on Appointments.

But what is more dis-turbing is the fact that Lopez’ act of retaining Jasareno’s services, albeit under a different position, defied the President’s wishes. She is obviously not an alter ego of the President which is a dangerous thing.

Tobacco firm probe

It is not only in the Philippines where tobacco companies are being investigated for alleged illegal practices.

Korea’s Yonhap New Agency reported late last year that South Korean tax authorities are investigating foreign tobacco companies over suspicions that they evaded taxes on huge profits from a tobacco price hike in 2015.

Yonhap said that cigarette makers are said to have raked in tens of millions of dollars in so-called inventory profit by keeping products shipped out before 2015 in stock and selling them after the tax hike for a huge gain.

The report disclosed that according to the sources, the National Tax Service (NTS) has been conducting an extensive tax probe into Philip Morris Korea, which sells the Marlboro brand. NTS investigators are focusing on suspicions that some tobacco companies, aware of the expected price hike beforehand, pocketed “excessive” profits by stocking up on products and selling them after the tax increase.

Yonhap cited industry sources as saying that a tobacco price hike can give cigarette companies large profits by enabling them to sell some products in inventory, which were shipped out before a price hike and that the NIS seems to be investigating their suspected tax evasion or hoarding during the process.

More recently, a report from Bangkok by Agence France Presse as published by Rappler revealed that Philip Morris is facing a $2.2 billion fine if found guilty of dodging tax on cigarette imports to Thailand.

Thai prosecutors say that Philip Morris, which owns the Marlboro and L&M brands, avoided around $551.27 million tax by underdeclaring import prices for cigarettes from the Philippines between 2003-2006 and that Philip Morris as a corporation as well as 7 Thais were indicted Jan. 18, 2017 on custom tax evasion. Four foreign executives have also been charged but are outside Thailand.

But Philip Morris Thailand said their import valuations complied with WTO agreements and had been cleared by local Thai custom officials.

In the Philippines, meanwhile, the Bureau of Internal Revenue has expanded its investigation into alleged use of fake tax stamps by cigarette makers to cover all industry players including market leader Philip Morris.

Earlier, BIR was reportedly planning to investigate another company, Mighty Corp., for allegedly using fake stamps but the practice has been belied by company officials who said that they are not using fake strip stamps and that the BIR has been closely monitoring production and withdrawal at its only factory in Bulacan which is the first one to install CCTV cameras to comply with BIR regulations.

BIR deputy commissioner Jesus Clint Aranas said it is unfair to single out Mighty and the agency should investigate others to get to the bottom of the problem and determine where the counterfeits are coming.

Mighty, in coordination with the BIR, the Bureau of Customs, the National Bureau of Investigation and the police, spearheaded the campaign against fake cigarettes using bogus stamps all over the country as early as two years ago, resulting in the seizure of large quantities of fake Mighty cigarettes and other brands.

Philip Morris Fortune Tobacco Corp. said it welcomes any investigation into the proliferation of fake tax stamps on cigarette packs, saying it hopes the BIR will closely examine the entire manufacturing and distribution supply chain to ensure 100 percent compliance and take swift enforcement action where needed.

Aranas said that BIR is expanding its probe into the widespread use of fake tax stamps on cigarette packs to cover all manufacturers and importers, noting that the government is losing billions of pesos in revenues yearly through this tax avoidance scheme as evidenced by seizure of large cache of various brands affixed with fake strip stamps since the requirement was reintroduced three years ago.

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