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The House Committee on Ways and Means has asked the Department of Trade and Industry (DTI) and the Bureau of Internal Revenue (BIR) to immediately cancel the business permit and manufacturing license of vape company Flava Corporation. 

This, after the Albay 2nd district Rep. Joey Salceda-chaired panel approved its committeee report Tuesday, Feb. 20 following a probe that delved into the company's string of violations. 

These include tax evasion and marketing flavored vapes to minors, which is in violation of Republic Act (RA) No. 11900, or the Vaporized Nicotine and Non-Nicotine Products Regulation Act. 

"The DTI should revoke the business license and permit of Flava Corporation for violations of RA 11900. The DTI should conduct surveillance and initiate the confiscation and removal of all Flava vapor products and electronic cigarettes from the market," read the committee report. 

This means the DTI must also seize and pull out Flava's existing stocks that are still available in vape shops nationwide. 

Salceda also urged the Securities and Exchange Commission (SEC) to investigate Flava for fraudulent conduct of business, a violation of the Revised Corporation Code (RPC). 

"The SEC may also invoke its powers under Section 138 of the Revised Corporation Code to dissolve motu proprio the incorporation of Flava Corporation upon final judgement that said corporation was created for the purpose of committing smuggling and tax evasion, among others," the Bicolano said. 

The Salceda panel also learned that despite Flava's separate registration with the BIR as a manufacturer, the company had instead been importing from China the vaping products it sells here in the Philippines. 

During the committee hearing held in December 2023, Flava's executives claimed that they only imported vapes through Denkat Trading Corporation, which is said to be the biggest vape distributor in the country. However, Denkat had denied importing on behalf of Flava. 

"It appears clear that Flava Corporation has no existing capacity to manufacture the products marketed under its brands. If Flava... imported the products, it shall have violated its brand registration with the BIR," the report read. 

"As Flava Corporation was unable to prove that it licitly imports (there are no brands registered for import) or manufactures (no facility was found capable of manufacturing), then all of its products in the market are suspect," it further read. 

As such, the House panel urged the BIR to immediately suspend Flava's business operations, as well as issue a mission order against the company for failure to pay correct taxes. 

Cagayan de Oro City Second District Rep. Rufus Rodriguez had estimated up to P728 million in foregone tax revenues for the government from the alleged technical smuggling of P1.43-billion worth of illicit Flava electronic cigarettes last year. 

After laboratory testing, it was learned that Flava had underdeclared its vape imports by mislabeling its ingredient as freebase nicotine, which has a lower excise tax rate, instead of nicotine salt.