Fortune Tobacco Corporation

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Fortune Tobacco Corporation is the leading cigarette manufacturer in the Philippines and one of the five largest privately-held cigarette manufacturers in the world. The company is a part of the Lucio Tan Group of Companies, founded and owned by the second richest Filipino, Lucio Tan.

In 1966, when Ferdinand Marcos was the president, Tan founded Fortune Tobacco. The very first plant of the company started in a small building with only second hand machines in Marikina. The structure which houses the plant was made of old scrap lumber and GI sheets.

In 2010, Philip Morris Philippines Manufacturing Inc. and Fortune Tobacco entered a 50-50 joint venture and created a new corporation called Philip Morris Fortune Tobacco Corporation (PMFTC). The partnership will translate into a 90% market share for PMFTC since Fortune Tobacco accounts for 60% of the market share while Philip Morris holds the 30%.



Ill gotten wealth

It was widely believed that Fortune Tobacco prospered because of the generous incentives Marcos provided him. It was also believed that the former president own 60 percent of Shareholdings, Inc. which owns several of Lucio Tan’s companies including, Fortune Tobacco, Asia Brewery, Allied Bank, Himmel Industries, Grandspan Development Corporation and Foremost Farms.

Even after Marcos’s death, the government, through the Presidential Commission on Good Governance is running after the 60% ownership claiming that Tan supposedly only held that in trust for the former president Marcos. 1987, the PCGG seized control of the companies until 2006, when the Sandiganbayan nullied the sequestration in favour of Tan.

In 2010, legal counsels of Tan needed only 30 minutes to present evidences that Tan put up the companies from his own pocket.

Tax evasion case

In 1993, the government filed a P25-billion tax evasion case against Tan and Fortune Tobacco Corporation. The Bureau of Internal Revenue claimed that Fortune Tobacco defrauded the government of P25 billion in taxes by not paying the correct amount of the cigarettes it sold from 1990 to 1993. Fortune Tobacco avoided paying value added tax and ad valorem tax when the nine dummy corporations the company put up acted as buyer and the cigarettes were sold to them lower than the actual price.

The nine corporations, which were also charged in the tax evasion case, include Townsman Commercial, Landmark Sales and Marketing, Crimson Croker Distributors, Dagupan Combined Commodities, First Union Trading Corp., Carl & Sons, Omar Distributors, Oriel & Co., and Mt. Matutum Marketing Corp.

In 1999, the Marikina Metropolitan Trial Court dismissed the tax evasion case against Fortune Tobacco but the Supreme Court ordered ordered a retrial. In was dismissed once again in 2006 BY the Marikina MTC citing insufficient evidence.


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