MANILA, Philippines — The Sandiganbayan has acquitted three former Department of Finance (DOF) officials of graft in connection with their alleged involvement in a multibillion-peso tax credit scam in the 1990s.
In a 68-page decision promulgated on Jan. 17, the court’s Second Division said the prosecution team of the Office of the Ombudsman “miserably failed” to prove the guilt of the four respondents – former finance executive director Uldarico Andutan Jr., former officer-in-charge Raul de Vera, former senior tax specialist Brandy Marzan and private respondent Rizalina Lamzon of R. Transport Corp. – who were charged with violating Section 3 (e) of Republic Act 3019 or the Anti-Graft and Corrupt Practices Act.
“Without definitive proof that all accused had a common design to unduly favor R. Transport and to defraud the government, the Court finds discomfort in concluding that accused conspired altogether to commit the offense charged against them. Moreover, the conduct of the accused are not demonstrative of evident bad faith and manifest partiality,” the ruling read in part.
Filed by the ombudsman in 2002, the case stemmed from the grant of a Tax Credit Certificate (TCC) for P12.769 million to R. Transport Corp. on Dec. 5, 1996. The amount was to be used for the purchase of 30 units of locally manufactured buses.
The anti-graft office said that the National Bureau Investigation (NBI) probe showed that R. Transport was not legally qualified to avail itself of tax credit incentives as it was not yet registered with the Board of Investments (BOI) at the time the buses were bought sometime in November to December 1994.
It also said the buses were purchased from auto dealer PhilHino Sales Corp. (PHSC) and not from the domestic manufacturer Pilipinas Hino Inc. (PHI) in violation of the requirement under Section 39 (d) of Executive Order 226, otherwise known as the Omnibus Investment Code.
In its ruling, however, the Second Division said that while the certificate of registration of R. Transport was issued by the BOI only on Aug. 16, 1995, a letter dated Oct. 26, 1994 issued by then BOI executive director Ofelia Bulaong stated that R. Transport may already start its commercial operation “not later than” July 1995 and “shall be entitled to tax credit on the purchase of locally built” bus units.
Furthermore, the court said records show that PHSC is the marketing arm of domestic manufacturer PHI. Thus, it is considered that the PHI “indirectly sold the Hino bus units to R. Transport.”
“What is evident from the testimonial and documentary evidence presented before the Court is the fact that R. Transport purchased the Hino bus units from PHSC, which in turn acquired the same from PHI. In relation to the subject Hino units, PHI issued sales invoices and delivery receipts in favor of PHSC. In turn PHSC issued the corresponding sales invoices and delivery receipts to R. Transport,” the court’s decision read.
The decision was penned by Associate Justice Lorifel Pahinma with concurrence of Associate Justices Oscar Herrera Jr. and Michael Frederick Musngi. The Second Division earlier ordered the cases against the primary accused, former finance undersecretary Antonio Belicena, to be indefinitely archived after his camp was able to prove that he is suffering from dementia.
The Tax Credit project was spearheaded by the DOF during the administration of former president Fidel Ramos with the aim of revitalizing the local manufacturing industry.
Under the project, TCCs were issued to companies involved in the manufacture, sale and transportation of local products, including those for export, as a form of tax refund by the government. However, in a Senate investigation in late 1998, it was discovered that a total of P5.3 billion worth of TCCs were issued to several companies from 1995 to early 1998 despite spurious documents.
More than a hundred criminal cases were filed against Belicena, former DOF officials and several other private individuals in connection with the scam. The cases are pending at the Sandiganbayan.