Ex-finance execs in tax credit scam convicted of graft, estafa

Three former officials of the Department of Finance (DOF) and two private individuals have been convicted of graft and estafa by the Sandiganbayan over a tax credit scam that cost government P18.8 million in damages.

In a decision promulgated by the fifth division of the antigraft court on Monday, the following officials of the DOF’s One Stop Shop-Inter Agency Tax Credit and Duty Drawback Center were convicted: Deputy executive director Uldarico Andutan Jr., supervising tax specialist Raul de Vera, and senior tax specialist Rosanna Diala.

Also convicted for conspiring with the finance officials were Mukesh Uttamchandani and Olivia Demetrio, owner-proprietor and manager of Precision Garments International (PGI), respectively.

The finance officials were convicted for granting P27.8 million in tax credits to PGI in 1998 even though it submitted spurious documents which allowed the company to sell its tax credit to Steel Asia Manufacturing Corp.

Meanwhile, the court suspended its resolution on the case against former Finance Undersecretary Antonio Belicena, whose cases 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

‘Misrepresentation constitutes deceit’

The prosecutors were able to prove that PGI officials committed estafa when Uttamchandani submitted to the center export declarations, sales invoices, bills of lading and foreign currency deposit unit (FCDU) credit memos to make it appear that the company still exported products when in fact there were no deposits and, thus, no transactions.

The company had also been inactive since 1995, or before it was granted tax credit in 1998.

“Such misrepresentation clearly constitutes deceit. The said misrepresentation was committed prior to the commission of the fraud and because of said false representations, its application for tax credit was granted,” the court said.

Damage was also committed against the government because Steel Asia used the said tax credit to pay its custom duties worth P18.8 million.

Demetrio was also convicted because she was the one who represented the company in the center.

The court, meanwhile, said the finance officials complied with the commission of the crime because they did not verify the authenticity of the spurious documents.

They also fast-tracked the request of the transfer of the tax credit to Steel Asia.

Estafa is a criminal offense under the Revised Penal Code of resorting to false pretenses or fraudulent acts resulting in damage to government.

Lapses in performance of duty

Meanwhile, the court also convicted the finance officials of graft for committing lapses in the performance of their duties and thereby causing undue injury to government when they failed to check if the claims of PGI to tax credit were valid.

They were also held liable for giving undue benefit to PGI when it skirted certain procedures for the approval of the tax credit and its transfer to Steel Asia.

Undue injury was also committed against the government because Steel Asia paid P18.8 million of its custom duties through the tax credit.

Graft is a criminal offense under Section (3e) of the Anti-Graft and Corrupt Practice Act of acting with manifest partiality, evident bad faith and gross inexcusable negligence by giving injury to a private party while giving undue benefit to another.

The court, however, acquitted the officials of charges of falsification of public documents because the prosecution failed to present original documents or certified true copies of the export declarations, export sales invoices and bills of lading.

“Thus, there is no factual basis by which the court can conclude that said export declarations, export sales invoices and bills of lading were falsified,” the court said.

The court sentenced the respondents to six to 10 years imprisonment with perpetual disqualification from public office for the graft conviction, and four to 20 years of imprisonment for estafa.

They were also ordered to indemnify the government of the P18.8 million in damages.

The tax credit scam spanned five years (1993 to 1998) when Belicena headed the DOF’s One Stop Shop-Inter Agency Tax Credit and Duty Drawback Center under the Ramos administration.

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.

The antigraft court first division recently approved the quashal of graft and estafa charges against Andutan over the Ombudsman’s inordinate delay in filing the cases in the Sandiganbayan. CDG/RC

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