THE House Committee on Ways and Means has called for the prosecution of a company found storing 1.4 million unregistered electronic cigarettes in a Valenzuela warehouse.
The committee, chaired by Rep. Joey Sarte Salceda, recommended charges against Flava Corporation and urged a halt in its operations after authorities discovered a Valenzuela City warehouse stocked with unregistered disposable vapes marked “Flava” with an estimated value of P700 million and an excise tax requirement of P728 million in October 2023.
An inquiry was launched after the discovery of the warehouse allegedly “used to store illegally imported electronic cigarettes and vape products without paying the correct duties and taxes” by the Intellectual Property Rights Division of the Customs Intelligence and Investigation Services (IPRD-CIIS).
The IPRD-CIIS, along with the Formal Entry Division of the Port of Manila and the Philippine Coast Guard Task Force Aduana, inspected the warehouse with a Bureau of Customs (BOC) letter of authority.
The House panel report said Flava Corporation’s initial documents “did not include import documents and proof of payment of duties and taxes.”
The report also found that Flava Corporation’s registered office address was a small commercial-residential building, and the declared manufacturer address was a residential house “showing no capacity to manufacture and accommodate machinery.”
Citing Section 115(a) of the National Internal Revenue Code (NIRC), the committee asked the BIR to immediately suspend Flava Corporation’s business operations. The BIR has the authority to suspend businesses for offenses such as failing to issue receipts, file value-added tax returns, or accurately report sales, according to the committee report.
The committee report said Flava Corporation has no registered brands for import and lacks a facility for domestic manufacturing.
The inquiry stemmed from a request by Rep. Rufus Rodriguez to investigate reports of smuggled electronic cigarettes and the resulting losses in government tax revenues.
After two hearings, the committee directed the BOC and BIR to pursue legal action against Flava Corporation.
The committee recommended the filing of charges against Flava Corporation under Section 263 of the NIRC for unlawful possession or removal of articles subject to excise tax without proper payment.
The NIRC prescribes a fine of P10 million to P20 million and imprisonment of 10 to 12 years for those convicted of the offense, which applies to goods with an appraised value exceeding P1 million.
To curb further illicit trade, the committee said authorities should also prevent the public sale of all Flava Corporation e-cigarette products that cannot demonstrate proper tax payment and registration with the BIR.
This aligns with Section 23 of Republic Act No. 11900, or the Vape Law, which mandates the recall, ban, or seizure of unregistered vapor products.
A Flava Corporation representative testified during a hearing that “they procure their products through third-party importers,” even though Flava Corporation’s brands are licensed as domestically manufactured. The committee said this is considered evidence of importing electronic cigarettes without a licensed brand.
The BIR also found that “Flava Corporation has no brands registered for importation.”
The committee report highlights the need for stronger enforcement measures and legislative reforms to address illegal activities within the e-cigarette industry.
