DOF officials in tax credit scam cleared

The Sandiganbayan has reversed the conviction of five former Department of Finance (DOF) officials in one of the graft cases involving a multibillion-peso tax credit scam in the 1990s.

In a 23-page resolution dated Jan. 11, the court’s Special First Division granted the motions for reconsideration by the DOF officials and a garments exporter appealing their June 30 conviction.

Acquitted were former executive director Uldarico Andutan Jr., garment division officer in charge Miriam Tasarra, and tax credit evaluators Lucila Cueto, Irene Magbojos and Gladys Olaño.

Also acquitted was Kuldip Singh, the president of J.K. Apparel Manufacturing Inc., and United Apparel Manufacturing Inc.

Although some of the officials face conviction in other cases, they no longer have to pay the government P9.7 million in damages because of their acquittal in this specific case.

A tax credit certificate (TCC) entitles an exporter to tax refund as part of an incentives package for local companies.

The scam saw companies submit fake documents to increase their tax claims.

In this specific case, the court originally said the prosecution was able to prove that the DOF officials granted P9.7 million in tax credits to Singh’s  businesses without valid basis.

It said the supporting documents attached to the tax credit applications were mere photocopies, and the bank credit memos (stating the export sales) were spurious.

But now, the court said a 1993 order by Assistant Secretary and One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (OSS) administrator Antonio Belicena rocked the initial ruling.

Office Order No. 93-13 stated that the original copies of the supporting documents may be returned to the claimants after the TCCs were issued.

This meant there were two possibilities: the original copies were actually returned to the claimants, or the OSS center really accepted mere photocopies as they were the only copies available.

Because of this, the court had to return to the presumption of the defendants’ innocence, and the prosecution failed to overthrow it by proving the irregularity.

As for the allegedly spurious bank credit memos, the court earlier gave credence to the denial of Prudential Bank officer Renato de Villa Jr. that the signatures there were his.

At the time, it refused to admit a photocopy of a September 1998 certification that would have cast doubt on De Villa’s disavowal.

But upon reevaluation, the court said the photocopy of De Villa’s certification should be accepted “in the exercise of logic, fairness and prudence,” especially as Tasarra made reference to it.

The decision said the certification put De Villa’s denial—along with the prosecution’s assertion that there was no evidence of export sales—into question, because it confirmed that J.K. Apparel was really an exporter-client of Prudential Bank.