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 50 years in prison for another set of graft cases in connection with the multibillion-peso tax credit scam in the 1990s.

In a 117-page decision promulgated on Sept. 6, the anti-graft court’s Seventh Division found Andutan guilty of five counts of violation of Section 3 (e) of Republic Act 3019 or the Anti-Graft and Corrupt Practices Act.

Andutan was sentenced to a minimum of six years and one month to a maximum of 10 years of imprisonment for each count of the offense or a total of 30 to 50 years. He was also ordered perpetually disqualified from holding public office.

The country’s penal justice system, however, limits the maximum prison term for a convicted felon to 40 years, as provided under Article 70 of the Revised Penal Code.

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

Also acquitted of both graft and estafa charges were former DOF tax evaluators Asuncion Magdaet and Charmelle Recoter as well as private respondents Grace Chingkoe-Ong and Catalina Bautista, co-owner and representative, respectively, of Filstar Textile Industrial Corp due to insufficient evidence to prove their participation in the commission of the alleged crimes.

The Seventh Division had earlier dismissed the cases against the primary accused, former finance undersecretary Antonio Belicena, following his death in 2021.

Meanwhile, the court ordered the cases against former DOF tax specialist Rowena Malonzo and tax evaluators Gregoria Cuento-Evangelio and Anabelle Dino as well as against Filstar controlling owners Faustino Chingkoe and Gloria Chingkoe to be temporarily archived as they remain at large.

The court said this is without prejudice to the cases’ revival upon their arrest or voluntary surrender.

The cases stemmed from the DOF’s issuance of five tax credit certificates (TCCs) worth P19.76 million to Filstar from 1995 to 1996 even if the company was allegedly not qualified for tax incentives.

The Office of the Ombudsman, which filed the cases in 2009, said that Andutan and his co-accused tax specialists and tax evaluators granted Filstar’s application for TCCs despite its submission of falsified documents.

The ombudsman said that to support its claim that it was a manufacturer and exporter of cotton spurn yarn products, Filstar falsified several sales invoices and delivery receipts to make it appear that it purchased its raw cotton materials from another company, BBS Cotton Fibers Manufacturing Corporation.

The ombudsman said Filstar also submitted several other falsified documents such as export declaration, export sales invoice and bill of lading to make it appear that it was exporting its products.

However, the ombudsman said there was no raw material ever purchased from BBS and that there was no finished product that was produced or exported by Filstar.

In its decision, the Seventh Division said Andutan, as the deputy executive director of the DOF’s One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center, exhibited “gross inexcusable negligence” in ensuring that Filstar was qualified for tax credit incentives.

“The huge amount of the TCCs issued and enjoyed by Filstar, though it is not qualified to receive the same, is clearly considered as an unwarranted benefit,” the Seventh Division said.

“This unwarranted benefit was received by Filstar due to the gross inexcusable negligence of accused Andutan Jr. His failure to identify the presence of anomalous documents despite repeated submission by Filstar led to a significant injury to the government,” it added.

Just last May 23, the Seventh Division also convicted Andutan of six counts of graft over the grant of P17.21 million worth of TCCs to another textile firm in 1997.

The tax credit project was spearheaded by the DOF during the administration of the late former president Fidel Ramos to revitalize 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 a hundred criminal cases were filed before the Sandiganbayan against former DOF officials and several private individuals in connection with the scam.