Ex-finance official, 5 others guilty of graft for tax credit scam

The Sandiganbayan on Thursday found guilty beyond reasonable doubt former finance deputy executive director Uldarico Andutan Jr. and five others of graft over a tax-credit scam that cost government some P9.7 million in damages.

In an 83-page decision, the anti-graft court Special First Division convicted Andutan and five others of graft for causing injury to government when they authorized P9,699,639 million in tax credit to the companies J.K. Apparel and United Apparel Manufacturing Inc. without valid basis.

The five were Miriam Tasarra (officer-in-charge/reviewer of the wearables division); Irene Magbojos, Gladys Olano and Lucila Cueto, evaluators at the One Stop Shop Center under the Department of Finance; and Kuldip Singh, president and owner of J.K. Apparel and United Apparel.

The court proceeded with the promulgation on Thursday despite the absence of Andutan, whose lawyer said he was sick.

According to its decision, the court said the prosecution was able to prove that the supporting documents attached to the applications for tax credit were mere photocopies and the bank credit memos were spurious.

The documents needed to support the application for tax claim were: bill of landing, bank credit memo, export sales invoice, export declarations, purchase invoice, among others.

The court said Andutan as the deputy executive director of the One Shop Stop Center approved the tax-credit claim despite the spurious documents submitted from 1997 to 1998.

Among the offenses committed in the application are the submission of fake or spurious documents, the submission of mere photocopies without the original documents, and the failure of the officials to verify the authenticity of the documents.

The court ruled the grant of tax credit certificates to J.K. Apparel and United Apparel had no valid basis.

The court said Andutan as the deputy executive director should have denied outright the tax credit claims because of the red flags in the submission of documents.

“From the facts obtaining in these cases, accused Andutan Jr. should have denied the tax credit claims of J.K. Apparel and United Apparel for non-compliance with the documentary requirements. The documents were mere photocopies and their authenticity not verified. These should have raised a red flag against giving a favorable recommendation on tax credit applications,” the court said.

The court said the evaluators kept a blind eye on the irregularities and failed to verify the authenticity of the documents supporting the tax credit applications.

“In total disregard of their functions, duties and responsibilities, accused Olano, Magbojos and Cueto closed their eyes and intentionally passed upon the validity of the documents supporting the subject applications for tax credit despite being mere photocopies,” the court said.

The court also convicted private respondent Singh because he was aware of the spurious documents as owner, president and director of J.K. Apparel and United Apparel.

“The bank credit memos represent payment of the goods exported. It is highly improbable that accused Singh as owner, president and director of the two companies would not concern himself of the export remittances. It is hard to believe that he did not know about the falsity of the credit memos,” the court said.

The court said they were convicted of multiple counts of graft for causing undue injury to government in violation of Section 3(e) of the Anti-Graft and Corrupt Practices Act.

Andutan was convicted of seven counts of graft, Tasarra of seven counts, Olano of two counts, Magbojos of two counts, Cueto of two counts, and Singh of seven counts.

Each count of graft cost each of them six-to-10 years imprisonment and a perpetual disqualification from public office.

“By granting J.K. Apparel and United Apparel tax credits when none should have been given, the conspirators unjustifiably reduced the government coffer. Thus, undue injury was caused to the government,” the court said.

Because of their conviction, the convicted officials were ordered to indemnify government P5,231,505 or the amount of tax credit granted to J.K. Apparel Manufacturing, and P4,468,134 or the amount of tax credit granted to United Apparel Manufacturing, for a total damage worth P9,699,639 million.

The court acquitted Cesar Estolano Jr. and Mark Binsol, who were Andutan’s executive assistants, after the prosecutors failed to prove guilt beyond reasonable doubt.

The court said the role of the two “was limited only to proofreading of the evaluation reports and did not involve an exercise of judgement or discretion.”

Accused Cherry Melissa Manalili (corporate secretary of J.K. Apparel) and Lea Dychingco (tax specialist II) remained at large. Accused Marina Abran (secretary of United Apparel) has jumped bail.

The tax credit scam spanned five years (1993 to 1998) when Finance Undersecretary Antonio Belicena headed the DOF’s One Stop Shop-Inter Agency Tax Credit and Duty Drawback Center as its executive director under the Fidel V. Ramos administration.

READ: What Went Before: Timeline of 22-year-old tax credit certificates scam cases 

Tax credit certificates or TCCs are government refunds of duties and taxes given to manufacturing companies that produce local goods for export.

Under the scam, the DOF center processed fake commercial documents without verification. The tax credits were then sold or illegally transferred to other business entities by making the companies appear as suppliers of raw materials.

Belicena’s cases over the tax credit scam were archived as he was incompetent to stand trial due to dementia, a disease associated with old age.

READ: Tax credit cases take too long–dementia hits accused

The tax credit scam cases have also been docketed in other Sandiganbayan divisions.

READ: Ex-finance execs in tax credit scam convicted of graft, estafa 
In a decision promulgated on Feb. 29, anti-graft court Fifth Division convicted Andutan and four others of graft and estafa for granting P27.8 million in tax credits to Precision Garments International in 1998 even though it submitted spurious documents which allowed the company to sell its tax credit to Steel Asia Manufacturing Corp.

The anti-graft court First Division has also approved the dismissal of graft and estafa charges against Andutan over the Ombudsman’s inordinate delay in filing the cases before the Sandiganbayan. TVJ/rga

READ: Gov’t loses tax credit cases; prosecutors blamed for ‘inordinate’ delay