SC clears former partylist solon to testify in tax credit scam trial

Former 1-Utak Partylist Representative Homer Mercado www.congress.gov.ph

MANILA, Philippines – The Supreme Court has cleared the way for a former partylist representative to become a state witness against former finance department officials charged in the Sandiganbayan antigraft court with involvement in an P11-million tax credit scam more than 10 years ago.

The high court’s Third Division reversed two rulings of the Sandiganbayan in 2008 that denied the Office of the Ombudsman’s bid to make former 1-Utak Partylist Representative Homer Mercado a state witness against Undersecretary Antonio Belicena, deputy director Uldarico Andutan Jr., assistant executive director Raul de Vera and Rosanna Diala, formerly of the DOF’s One-Stop Shop Inter-Agency Tax Credit and Drawback Center.

The case arose from the issuance of two tax credit certificates in favor of JAM Liner Inc., which were investigated and found fraudulent by a task force created by then President Joseph Estrada in 1999.

Mercado, who was then president of JAM Liner, came out in 2000 to testify against the syndicate that allegedly ran the credit scam at the DOF One-Stop Shop. He applied with the Department of Justice for immunity as a state witness under the government’s witness protection program.

The bus operator revealed that he obtained the certificates in 1997 through an intermediary who claimed to have close ties with the One-Stop Shop officials. He said the amount on the certificates was 20 percent more than what the company was supposed to get and that the intermediary told him the excess would be given to his connections in the One-Stop Shop.

The DOF officials were later accused of illegally approving and issuing two certificates in favor of JAM Liner: one was worth P7.35 million for domestic capital equipment and the other worth P4.41 million covering the purchase of six Mitsubishi buses.

The Office of the Ombudsman initially included Mercado in the charges of graft and falsification filed in the Sandiganbayan against the DOF executives. Mercado, in a motion, reminded the Ombudsman of the DOJ’s grant of immunity to him. In September 2003, the Ombudsman executed an immunity agreement with Mercado, who was required “to produce all relevant documents in his possession and testify against the accused in all the cases, criminal or otherwise, that may be filed against them.”

However, in April 2008, the Sandiganbayan denied the Ombudsman’s motion to discharge Mercado from the case. The anti-graft court held that the evidence he offered failed to establish the conditions required under the Rules of Court for the discharge of an accused as a state witness.

The Ombudsman appealed to the Supreme Court, claiming the Sandiganbayan gravely abused its discretion in refusing to recognize the immunity from criminal prosecution that the Ombudsman had granted to Mercado.

In siding with the Ombudsman, the Supreme Court said the Ombudsman premised its grant of immunity to Mercado on his undertaking to produce all the documents in his possession relative to the DOF tax credit scam and to testify against those involved.

Mercado is currently the president and general manager of HM Transport Inc., one of the largest bus companies in the country. He also heads the South Luzon Bus Operators Association.

Mercado became 1-UTAK (United Transport Koalisyon) party-list representative in 2011, replacing Angelo Reyes who committed suicide. However, Mercado resigned in May 2012.