Seldom heard in the cacophony surrounding government allegations of tax evasion by local tobacco firm Mighty Corp. is the side of the folks who will bear the brunt of the burden should the company close its doors.
Internal Revenue Commissioner Caesar Dulay suggested last week that as early as May the tobacco firm might have to cease operations as a penalty for using “fake” tax stamps and thereby evading proper tax payments. This came on the heels of a series of revelations and accusations that Mighty, a homegrown firm that was founded soon after World War II, had been evading taxes mainly by producing bogus tax stamps, totaling P9.6 billion in back charges. By law, the Bureau of Internal Revenue is authorized to cancel the license to operate of companies found guilty of tax evasion.
But if Mighty’s factory in Bulacan is shuttered, the biggest number of people to be adversely affected by it would not be the Wongchuking family or its factory workers, sales force and other allied workers. The most deeply affected would be local tobacco farmers, most of them in the Ilocos. As well, farm workers hired on a seasonal basis following the tobacco farming cycle and numbering much more than the farmers themselves would lose their livelihood.
Mario Cabasal, national president of Naftac or the National Federation of Tobacco Farmers and Cooperatives, which counts a total membership of 55,000, says his fellow farmers are dreading the day Mighty would have to cease operations.
This is because, he says, Mighty is the only cigarette manufacturer that buys the “low-grade and reject” parts of tobacco plants from them. The other tobacco concern also buys along with Mighty the premium or “high-grade” tobacco leaves, he says, but only Mighty pays attention to the less desirable parts of the plant, which is mixed in to formulate its cigarettes. It’s the money they earn from selling the low-grade tobacco that gives farmers a comfortable edge and continued assurance of their livelihood.
The toll that a closure of Mighty, the second-largest tobacco concern in the country, would take is considerable.
Around 6,000 direct and indirect employees or workers of Mighty would lose their jobs; that means about 30,000 citizens adversely affected, including the workers’ families. The farmers themselves number about 55,000, and, counting their families, the total would come to a staggering 300,000.
Cabasal says he alone hires 10 agricultural workers to do field work, so if they and other workers hired by tobacco farms lose their livelihood, the toll could reach nearly a million.
But the issue has ramifications beyond those directly engaged in the tobacco industry. All those living in tobacco-producing provinces would likewise be affected, for if the affected farmers stop producing tobacco, then the provincial governments would no longer be entitled to a share of the “sin tax” imposed by Republic Act No. 7171.
“This is why we are appealing to President Duterte to address the issues being raised against Mighty,” says Cabasal. The firm’s owners have sought a compromise regarding their alleged tax liabilities, and there has been an apparent turnaround since the President said he was open to talks with Mighty to settle its case.
Instead there have been threats of closure and cancellation of Mighty’s license to operate, and even an order to arrest Alexander Wongchuking, the corporation’s president.
Perhaps those itching for a confrontation with—if not the closure of—Mighty, should consider that by shutting the door to any form of compromise, they will be hurting more people than a single family, firm, or community. Tobacco farming and the manufacture of tobacco products date back to the Spanish colonial times. And whatever one’s opinion may be of smoking and its toll on health and survival, the fact remains that cigarettes, cigars and other tobacco products are still legal. In fact, by passing the Sin Tax Law, the state even sought to profit more from the industry, with a large chunk of the proceeds going to health programs.
In their visit to the south, Mighty aided in the renovation of historic churches that were heavily damaged during the 2013 earthquake.
These churches include the Diocesan Shrine of Immaculate Conception Church in Naic, Cavite and the Basilica Minore of Our Lady of Piat Church in Tuguegarao City, Cagayan.
The company’s foundation will take care of the churches’ roofs and ceilings.
“Churches are also symbols of strength and hope for Filipinos. To see a church survive earthquakes and other calamities can easily uplift the spirits of our people,” said the foundation’s General Manager.
“The devastation brought about by the recent Visayas earthquake has firmed up our advocacy to build more churches and strengthen the Filipino faith.”
“However, we also understand that this is not enough. We have to make sure that the design and structure of these buildings, particularly the old and existing ones, are safe and resistant to calamities such as earthquakes,”He added.
Mighty looks to help more people through is CSR projects. Hoping to raise the tobacco industry while also helping the economy grow, the company is finding various ways to help the country grow.
In their recent expansion, Mighty Corp. implements various Corporate Social Responsibility projects designed to uplift the lives of local farmers up north.
Due to the implementation of the Sin Tax Law back in 2012, Mighty expanded and decided to help uplift the livelihood of millions of local tobacco farmers while also helping the local tobacco industry grow.
The company implemented various CSR Projects to aid the local farmers, their children, the environment, and the tobacco industry.
To help the tobacco industry, Mighty Corp. executed these actions as part of the CSR.
- Increased tobacco purchase – Mighty Corp. substantially increased their tobacco purchase in order to raise the income of local farmers significantly. This will also help Mighty compete in the tobacco industry on an equal playing field.
- Supports the use of organic Pesticides – Mighty claimed that this move will help reduce the reliance of millions of local farmers on the use of chemical-based pesticides. Mighty said that this will not only help the environment, but will also help the farmers increase their income.
- Scholarship Grants for the farmers’ children – Honoring their patriarch’s memory, Mighty’s foundation granted scholarships and educational assistance to children of local tobacco farmers.
- Provided tobacco dust to Fish Pond owners – Mighty also helped local fish pond owners fight predators that infest their ponds. The company provided them with tobacco dust, a fish pond conditioner, to help decrease the number of predators in their ponds.
- Absorbed Low-grade leaves – Mighty also purchased low-grade leaves from local farmers at very good prices. This helped the local farmers increase their income while also assuring them that their crops have a place on the local market.
Mighty Corp. celebrates this year’s National Management Congress with an Outstanding Corporation Award.
Philcoman Research Institute (PCMRI) will be hosting this year’s National Management Congress in simple ceremonies, allocating the funds that will be saved to further research on more important issues.
“We opted to hold a simple rite so that funds and other resources we can save can be channeled to research and further studies of important issues in politics, economics, sociology and national security,” spokesperson of PCMRI said.
The PCMRI will honor the recepients of Outstanding Corporation of the year Award and the Outstanding Management Leadership Award of the year. They will also witness the oath-taking of its newest members.
The Philippine tobacco industry is not a place for companies who lack strategy and a competitive drive. Many have tried, many have failed. Mostly due to family or financial problems.
Today, the Philippine tobacco industry amass up to P150 Billion per year. It serves as the top source of national government taxes for Philhealth, education and other social services. However, only a few companies are part of the industry’s success and only a few enjoys its perks and privileges.
One of these firm companies is Mighty Corp, the country’s oldest Filipino-owned cigarette manufacturer. The company has been rising in the local market, increasing its market share from 3 percent in 2012 to nearly 20 percent in 2013.
So what made Mighty Corp. the cigarette-manufacturer monster it is today? The company finally shares the secrets behind their overflowing success.
- Anticipate future trends and adjust. Wongchuking said that when he was an assistant sales manager of their company from 1983 to 1985, he noticed the changing fashion in local smoking, as well as how the new tax system was killing the local cigarette segment. So the company decided to adjust to these factors. They developed Virginia-tobacco type cigarettes in 1985,and changed the company and brand name to “Mighty.”
- Preservation is basically harmony. Wongchuking stated that a little harmony between the families in a family business wouldn’t hurt. “If you have family harmony and you can work well together with family members and other people.”
- Succession should be based on meritocracy. Selecting the successor should be based on who is the most qualified. Same with the selection of executives and managers.
- Perseverance. Wongchuking stated that perseverance and a high-degree of patience is needed to attain success. “There should be a high degree of patience and perseverance. It is like courting a girl, a lot of patience is required.”
- Faith. As a devotee of Our Lady of Piat, the Virgin Mary shrine in Cagayan province, Wongchuking said that faith is needed in order to run a company with a proper mindset. “Faith is important to business or the profession, because faith gives you spiritual development and direction. Meaning, faith keeps you cool all the time, whatever happens to our business, profession or life.”
- People. Wongchuking praises the people behind Mighty Corp.’s success, which he describes as “very prudent and very dedicated.” He touched on the importance of taking care of your people in order to strengthen teamwork.
- Filial piety. The Wongchuking family believes in total obedience to parents and family elders. Alex Wongchuking said that one factor behind the company’s success is their firm belief in their 87-year-old mother, Nelia Dy Wongchuking.
- Hard work. Alex said that there is no substitute for hard work. According to him, he and his siblings go beyond the normal eight-hour shift per day. Even spending their weekends on work.
- Innovation. The company always seek to innovate. They modernized their manufacturing equipment for improved quality and increased yield production. Their father also bought a bigger factory in Malolos, Bulacan.
- Philanthropy. The company has always given something to the people as a way of remembering their hardworking, simple-living father, Wong Chu King. Their patriarch had no chance to finish high school or college. As a way of honoring him, the company’s foundation supports educational scholarships for three sets of beneficiaries: the kids of company employees, the kids of non-employees who are deserving students and need help, and also for children of rural tobacco farmers who want to study agriculture in college.
- Humility. Alex believes that humility is one factor to achieve success. “There should be an element of self-denial,” he said.
- Focus. He also believes on the importance of “concentrating on your core business.”
- Have only one family. Alex believes that being loyal and faithful to your spouse is also a factor to achieving success. “Having only one family is crucial for genuine success, because if one has too many families, that is a sure recipe for chaos and for nonstop family quarrels, “he said.
- Destiny. Alex explains his take on “destiny.” He responded, “Destiny is key to success, just like in the Bible. When God called Jeremiah to become a prophet, he said ‘No, I’m a shy person.’ But God said to him, ‘Before you were born, you were already destined to become a prophet.’ It became true, Jeremiah became a good prophet, naging madaldal (he became eloquent). Read the Bible, Jeremiah Chapter 1:4.”
Local cigarette manufacturer Mighty Corp. vows to increase their tobacco purchase and help increase the production of local farmers from up north.
According to the president of Mighty Corp., the company’s domestic market share has significantly increased throughout the years.
Now, the company wants to return the favor, aiming to help increase the production and income of local farmers.
“We have earned our fair share of the market by making affordable cigarettes sold to the mass market. We’re proud of our modest success coming from a home-grown and Filipino-owned cigarette company,” the president said
“With a bigger share of Mighty Corp. in the market today, we are giving the tobacco farmers a fair share of our success by offering competitive prices to their crops.”, he added.
“Last year, we have bought even the low-priced tobacco leaves. Had Mighty Corp. not done that, it would have created a problem for tobacco farmers,” he claimed.
“We are happy to offer better prices to tobacco farmers and are willing to tie-up with the Department of Agriculture and the National Tobacco Administration to cement our partnership with the farmers.”
He claims that aside from helping millions of farmers all over the country, the company also helps the country grow through its taxes.
“Our contribution is in the form of taxes, which helps in the development of the country. We also employed more factory workers. Now, we have more than 2,000,” he said.
“As far as CSR is concerned, we will have irrigation pumps in their area and provide mini tractors. This will come in the form of grant. We will have scholarship grants,” he said.