The Sandiganbayan has dismissed the graft charges filed against four former executives of Petron Corp. who were accused of defrauding the government of P700.74 million in revenues in connection with the tax credit scam in the 1990s.
The antigraft court cited the Supreme Court’s 2010 ruling that held the oil giant in good faith when it bought tax credit certificates (TCC) from garments firms that allegedly obtained the perk from the Department of Finance using fraudulent documents.
In two separate resolutions dated March 2, the court’s Special Fourth Division granted the motions to dismiss filed by former Petron president Monico Jacob, vice president and general manager Celso Legarda, vice president for refinery Apolinario Reyes, and senior marketing executive Rafael Diaz Jr.
A total of 48 graft cases against Legarda were dismissed.
The other three officials were his coaccused in 18 of these cases.
Charges were also dropped against a fifth Petron executive, Reynaldo Campos, because of his death.
Executives of Petron and Pilipinas Shell Petroleum Corp. were implicated in the scam since they bought TCCs to apply against their own tax liabilities.
But the antigraft court dismissed the criminal cases against the Petron executives on the ground of res judicata, the principle barring courts from litigating a settled issue again.
It cited the Supreme Court’s rulings clearing the oil firm of tax liabilities arising from the cancelation of the spurious TCCs.
The court noted that the tax case and the criminal charges also involved the same party: the government.
Thus, it applied the conclusiveness of the Supreme Court judgments on issue of unpaid taxes.
“Petron, represented by accused-movant, was found not to be a party to the fraudulent issuance and assignment of the TCCs, and was therefore considered as a transferee in good faith and for value,” the resolutions read.
The 48 graft cases covered Petron’s use of 276 TCCs worth a total of P700,741,929. These were purchased from 18 garments exporters: Filsyn Corp.; Dragon Textile Mills, Inc.; Southern Textile Mills, Inc.; Fiber Technology Corp.; Diamond Knitting Corp.; Filstar Textile Industrial Corp.; R.S. Textile Mills; Monti Textile Mfg. Corp.; Master Colour System Corp.; First Unity Textile Mills; Jantex Phils Inc.; Unisol Industries & Mfg. Corp.; Southern Dae Yeong Corp.; Solid Development Corp.; Asia Textile Mills, Inc.; Phelps Dodge Phils., Inc.; Alliance Thread Co., Inc.; and Kewalram Phils., Inc.
The tax credits were granted to Board of Investments-registered entities representing tariff duties and internal revenue taxes paid on raw materials and supplies used for export products.
In lieu of a cash refund, TCCs could be used to offset internal revenue liabilities.
Entitled firms with no liabilities to apply the tax credit against were previously allowed to transfer their TCCs to another buyer until the BIR prohibited the practice in 2011.
The Department of Finance first discovered in July 1998 the anomalies in the issuance of TCCs.
To facilitate the illicit issuance of TCCs, fraudulent or spurious documents were allegedly submitted to the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center, established in 1992 to help expedite tax credit claims.
This ended up defrauding the government of up to P2.5 billion in revenues.