DOJ approves indictment of Land Bank, BIR officers

MANILA, Philippines - The Department of Justice (DOJ) yesterday approved the indictment of some officers and employees of Land Bank of the Philippines (LBP), Bureau of Internal Revenue (BIR) and nine private firms and several other persons over the controversial multi-million-peso tax diversion scam in 2002.

Justice Secretary Agnes Devanadera said investigating prosecutors have found probable cause to file charges of estafa and money laundering against LBP Binangonan, Rizal branch manager Artemio San Juan and 25 others after the scam was exposed by whistleblower Acsa Ramirez.

“This is the biggest tax diversion scam so far. We have very strong documentation,” Devanadera told reporters, adding that the supposed scheme had allegedly defrauded government of over P400 million in taxes.

Apart from San Juan, also charged were LBP officers Catalina Villegas, Allan Diaz and Rival Lazanas; BIR officers Zenaida Marciales, Gina Villasoto, Eleanor Litao, Bernadette Ongsoto, David Agpalo, Zenaida Almirez, Pablito Berena and Esther Mendoza.

Named private respondents were Ronilo Yu, Teodorico Rivera and Resty Rivera of Lorenzo Shipping Corp.; Henry Marquez and Gemma Mariano of GMA Marketing Corp.; Orlando Fetil of Sumisetsu Phils. Inc.; and Flordel Foronda of Prumerica Life Insurance Co.

It was found that some officers of Nissan Motors Inc., Honda Phils., Pilipinas Makro, and Dow Chemicals Phils. were also involved in the scam.

Also named were Loreto Castillo, Marcelino Saludo, Susana Villegas, Jeffrey Torres, Rodrigo Bautista Jr., Melchor Leus and an alias Joven Aquino.

Devanadera said charges of plunder against LBP and BIR officers and falsification of public documents against officers of private firms would also be filed by the DOJ before the trial court.

All respondents were also put in the watch list of the Bureau of Immigration to prevent them from fleeing the country, she added.

In a 62-page resolution, the DOJ said it has found that the scheme involving switching of checks in the bank and diversion of tax payments to the BIR to private – including fictitious – accounts lasted from April 2001 up to February 2002.

Conspiracy

The modus operandi starts when accounts under fictitious names are opened in the bank. Once the checks of large taxpayers intended for tax payments fall into the hands of the group through messengers, the group copies the amounts thereon on dummy checks, which it deposits in the fictitious accounts with the account holder as payee.

“To avoid discovery, the syndicate manufactures fake LBP official receipts for the messenger to bring back to the taxpayer along with the latter tax returns, which has been stamped with fake validation marks, to make it appear that the checks were paid to LBP and the tax returns were filed with the BIR,” explained the DOJ prosecutors who conducted preliminary investigation on 15 consolidated complaints filed by the NBI.

Records show that the scheme covered a total of 74 checks from private firms.

The BIR, working closely with the LBP, had confirmed the tax diversion scam through earlier investigation of corporations that seemed to have stopped filing taxes and LBP’s ongoing review of large deposits and withdrawals in compliance with RA 9160 (Anti-Money Laundering Act of 2001).

The corporations that the BIR investigated issued checks for payments to the bureau. As proof of tax payment, they presented receipts issued to them by the LBP. However, upon scrutiny by the BIR, the receipts were found to be falsified.

Under RA 9160, bank transactions exceeding P4 million have to be reported to the Anti-Money Laundering Council. But in 17 instances, over P4 million in deposits were made in the LBP Binangonan branch, none of which were reported by San Juan.

Ramirez, then a cashier with the Landbank, revealed in August 2002 that San Juan, her boss at the time, had supposedly diverted P204 million worth of tax payments into his own account.