Flip-flop on tax credit case

The five former Department of Finance officials accused of illegal issuance of tax credit certificates (TCCs) during the 1990s got a much needed reprieve from their legal problems when the Sandiganbayan recently acquitted them, together with an executive of a garment company, in one of their graft cases.

TCCs entitle their holders to tax refunds from the government for the tariff duties and internal revenue taxes they paid for the raw materials and supplies they used to make export products.

The scheme, which is in effect up to the present, aims to encourage the development of local export-oriented companies.

Initially, the anti-graft court convicted the accused of multiple counts of graft for issuing TCCs to the garment firm based on photocopies of the supporting documents it submitted.

The court said this was contrary to DOF rules and that the subject officials failed to check the authenticity of those documents.

Thus, the accused were sentenced to lengthy prison terms and ordered to indemnify the government some P9.7 million representing the financial loss it suffered on account of the unlawful TCC issuance.

Six months later, acting on one of the motions for reconsideration filed, the court overturned its guilty verdict and absolved them from the crime.

The accused were saved by a “newly discovered” evidence—DOF Office Order No. 93-13—which states that the original documents filed in connection with TCC applications shall be returned to the applicants after the duplicate copies have been received.

With this order, the accused cannot therefore be faulted for using the garment firm’s photocopied documents when they processed and approved its TCC application.

With this case out of the way, the accused officials can now focus their attention on the other cases filed against them by the Ombudsman in connection with other TCCs they issued while they were in office.

It’s lamentable that it took almost two decades to investigate, try and convict the accused, only for them to be acquitted based on an internal memorandum that was produced at the eleventh hour.

The slow pace of justice in our country is already a given, unless any of the litigants happen to be politically influential in which case the pace picks up.

But what is grossly unacceptable is the failure of the DOF, prosecutors and the lawyers of the accused to get hold of the said office order that would have cut short the investigation or aborted the court proceedings, and saved the government, the court and the accused a lot of time, money and effort.

The belated discovery of the order does not speak well of the quality of DOF’s record- keeping process.

For the prosecutors and the court, the entire incident may be looked at as just another day in the office or nothing to lose sleep over.

Not so for the accused who, aside from incurring legal expenses and suffering the inconveniences of court hearings, suffered emotional or psychological stress from the whole experience.

The involvement of a private company, or any of its executives, in a company-related litigation, especially if it may result in adverse financial consequences, invariably affects the performance and morale of its staff.

And depending on the gravity or significance of the case, or the instructions of its auditor, the pendency of the case may require setting aside some money (that can otherwise be used for productive purposes) as reserve to answer for any financial contingency.

To aggravate matters, the publicity that normally accompanies the filing of criminal charges against a company unduly sullies its reputation in the business community.

With the court’s acceptance of the authenticity of the belatedly-produced office order, the question now is whether that document will also make or break the other graft charges filed against the accused and businessmen who supposedly connived with them in the issuance of illegal TCCs.

The prosecutors may have to take another look at their evidence on those cases to avoid another embarrassing flip-flop.