Ex-DOF exec convicted anew for tax credit scam

MANILA, Philippines — The Sandiganbayan has sentenced former Department of Finance (DOF) executive director Uldarico Andutan Jr. to up to 60 years in prison in connection with the multibillion-peso tax credit scam in the 1990s.

In a 118-page decision promulgated on May 23, the anti-graft court’s Seventh Division found Andutan guilty of six counts of violation of Section 3 (e) of Republic Act 3019 or the Anti-Graft and Corrupt Practices Act.

He was sentenced to a minimum of six years to a maximum of 10 years in prison for each count of the offense or a total of 36 to 60 years for the six counts. He was also perpetually disqualified from holding public office.

On the other hand, Andutan was acquitted of six counts of estafa through falsification of public or commercial documents due to the prosecution’s failure to prove his guilt beyond reasonable doubt.

Meanwhile, acquitted of both graft and estafa through falsification charges were Andutan’s four co-accused: former DOF tax specialists Purita Napeñas, Charmelle Recoter and Merose Tordesillas and private respondent Danny Ty of Circular Knitting Industries Corp., due to insufficient evidence to prove their participation in the crimes.

Napeñas, Recoter and Tordesillas were previously assigned as tax specialists under the DOF’s One-Stop Shop (OSS) Inter-Agency Tax Credit and Duty Drawback Center.

The court had earlier dismissed the cases against the primary accused, former DOF undersecretary Antonio Belicena, as well as against former DOF tax evaluator Emelita Tizon due to their death.

How the case started

The charges stemmed from the OSS Center’s issuance of six tax credit certificates (TCCs) totaling P17.21 million in favor of Circular Knitting in 1997.

The Office of the Ombudsman, which filed the charges in 2012, said the TCCs were granted to Circular Knitting even if the company was not qualified for tax incentives.

The ombudsman cited the Omnibus Investment Code, which states that only Board of Investments-registered companies engaging in domestic production or manufacture of products for export shall be entitled to tax credits.

The ombudsman said Circular Knitting submitted several falsified documents such as schedule of importation, export declaration, export sales invoice and bill of lading, among others, to support its application for tax credit.

The ombudsman said its investigation revealed that after the grant of TCCs, Circular Knitting transferred these documents to Kudos Metal Corp., which used them in paying its tax obligations to the government.

In its decision, the Seventh Division said the ombudsman’s prosecution panel was able to sufficiently establish that Andutan, who was then the deputy executive director of the OSS Center, had been remiss in his duty of reviewing the qualifications of Circular Knitting before he approved the grant of the TCCs.

“Andutan’s ultimate act of approval of the tax credit certificates without relegating them to a verification process enabled the issuance of the TCCs and eventual transfer to another (company) that caused the government undue injury,” the Seventh Division’s decision read.

“The submission of falsified documents made it appear that Circular Knitting was entitled to receive tax credits when it was not qualified for such. Consequently, unwarranted benefit was received by Circular Knitting. This unwarranted benefit is directly attributed from the gross inexcusable negligence of accused Andutan in failing to enact procedures to detect the presence of fictitious supporting documents, which would have led to the rejection of deficient tax credit applications,” it added.

Previous convictions

Last year, the Second Division of the Sandiganbayan had convicted Andutan of four counts of graft in connection with the tax credit scam. He was sentenced to 24 up to 32 years in prison and ordered to pay the government a total of P4.692 million in civil liability.

In 2019, the Sandiganbayan Third Division convicted Andutan of one count of graft in connection with the tax credit scam. He was sentenced to six up to 10 years of imprisonment and perpetually disqualified from holding public office.

Both decisions, however, are still under appeal.

The tax credit project was spearheaded by the DOF during the administration of the late 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.

A Senate investigation in late 1998, however, revealed that a total of P5.3 billion worth of TCCs were issued to several unqualified companies from 1995 to early 1998 despite spurious documents.

More than 100 criminal cases were filed before the Sandiganbayan against former DOF officials and several private individuals in connection with the scam.