Ombudsman finds 8 ex-DOF execs guilty in tax credit scam

The Office of the Ombudsman has found eight former Department of Finance (DOF) officials guilty of grave misconduct in an administrative case where they were charged with illegal issuance of tax credits worth over P115 million.

The Ombudsman said their penalty should be dismissal from service, but since they had already been dismissed from government in connection with another case, they should each be fined the equivalent of six months’ salary.

Found guilty of grave misconduct were supervising tax specialist Asuncion Magdaet; senior tax specialist Sylvialina Daguimol; tax specialist Merose Tordesillas; administrative aide Emelita Tizon; executive assistant Charmelle Recoter; administrative aide Gemma Abara; economist Gregoria Evangelio; and planning officer Rowena Mano.

The administrative case stemmed from the issuance of tax credit certificates to Filstar Textile Industrial Corporation owned by Faustino Chingkoe. His brother Felix Chingkoe, with whom he had a falling out, has been the government’s witness in several tax credit scam cases, including those involving Faustino.

The former DOF officials had denied any wrongdoing and said that they had followed proper procedures. They said they did not know that the documents they processed were fraudulent, adding that they appeared to be regular.

They had contended, among others, that they were not required to confirm the reported sales and signatures on documents by examining the buyer’s purchase books.

Blame the system

They also said it was the system that should be blamed and not the people without discretionary power.

In its resolution, which was approved by then Acting Ombudsman Orlando Casimiro on June 2, the Office of the Ombudsman said it had been established that Filstar was granted tax credit certificates by the DOF’s One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center using fabricated and falsified documents attached to its applications.

It said the center’s personnel should have scrutinized the documents, especially since tax credits affected the government’s earnings.

Tax credit certificates are refund payments that export companies are allowed to claim for duties paid on imported materials used to manufacture their products. Companies can use these certificates to pay for taxes or they could sell these to other companies.

Took part in scheme

“By merely accepting the documents as ‘regular on their face’ without further verification or authentication as required of them as evaluators/reviewers, they took part in allowing the grand scheme of attaching spurious documents to tax credit applications, either due to negligence, malice or bad faith,” the Ombudsman said.

It said Filstar’s request for the tax credits should have been denied since it had not produced any cheap value cotton and polyester or cotton products that it supposedly exported. This was because it had never purchased polyester and cotton fibers necessary to manufacture its supposed products.

It further said that Filstar’s supposed suppliers did not have the capability to produce the kind of materials that the corporation needed.