Subic Freeport, May 12, 2003 -- More than P700 million in taxes on only two 
brands of smuggled cigarets are lost every year in the Subic Bay 
Metropolitan Authority alone.

A source in the Bureau of Customs said that Customs Commissioner Antonio 
Bernardo knows the identities of the smugglers but "cannot seem to curb 
their illegal activities."

The source said Bernardo is under pressure from "very powerful" people in 
high places.

Under the law, companies operating in special economic zones are entitled 
to tax-free imports of "nearly anything." However, if the goods go out of 
Subic, the importer has to pay all the taxes that ordinary importers pay.

A customs official who requested anonymity said that "it is impossible for 
the workers and residents of Subic to consume 10,000 cases of 50 reams each 
of Champion and Marlboro cigarets in just one month."

The official estimated that the value of smuggled Champion cigarets is 
worth more than P90 million a month at retail prices. Including the 
Marlboro brand, the total annual value of smuggled cigarets is estimated by 
the official to be at least P1.5 billion.

If taxes had been paid, the official said, the government would have 
collected more than P700 million a year, or nearly half of the value.

The official identified the importers as Sonny Lee, R. Repalda, M. Cordova 
and A. Del Rosario, all Chinese-Filipinos. Cordova, the customs official 
said, is a concessionaire in Duty Free Philippines in Manila.

"He has an official outlet," the source said, "but none of us ask him why 
the goods have to land in Subic when his concession is in Manila."

The customs official explained how the alleged smuggling is facilitated. 
"Importers make it appear that the cigarets brought from China and Hong 
Kong are for re-export to such countries as Indonesia, Thailand and other 
Southeast Asian countries. Bernardo should know better than to believe that 
the cigarets are for re-export," he said.

"The stated destinations or foreign buyers buy direct from the source and 
do not smuggle," the official explained.

Apart from cigarets, the same people and a brother of a military officer 
are said to be heavily involved in the smuggling of "Fundador" brand of brandy.

The brother of the military officer, on the other hand, is allegedly 
involved in the importation of brand new and second hand vehicles.

In fact, he said, the company he works for has set up a facility that 
converts right-hand drive Japanese vehicles to left hand.

He said the vehicles are sold dirt cheap. A second-hand Pajero, for 
example, can be bought for P350,000.

The local automotive industry has been complaining to Bernardo about the 
rampant smuggling, but its pleas have fallen on deaf ears, the official said.

There are at least two Chinese-Filipino businessmen who also bring in 
through Subic luxury cars, notably BMW and Mercedes Benz. They are, on 
paper, also intended for re-export, the official said.

Covered by documents showing they are for re-export, the vehicles are 
brought out of Subic to dealers particularly Metro Manila.

The source said that Andy Salvacion, newly designated acting collector in 
the Subic port, "simply looks the other way."

According to the official, Subic is now the "smuggling" capital of the 

"Subic is an excellent facility for smugglers," he said. "It has a good 
port and the place is not as conspicuous as the piers in Manila."

"Unchecked smuggling is killing Philippine industry and the farmers," the 
official said.

He said that even vegetables are smuggled from China and find their way to 
the supermarkets of Metro Manila.

Asked what happened to the rice smugglers threatened with death by 
President Arroyo, the customs official replied that none of them have even 
been questioned.

He said, however, that rice smuggling has slowed down a bit presumably 
because Philippine harvests have improved. (By AMADO P. MACASAET, Malaya)

Reported by: Sol Jose Vanzi

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