9/11/2015 G.R. Nos.

185729-32

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RepublicofthePhilippines
SUPREMECOURT
Manila

THIRDDIVISION

G.R.Nos.18572932June26,2013

PEOPLEOFTHEPHILIPPINES,PETITIONER,
vs.
THEHONORABLESANDIGANBAYAN(FOURTHDIVISION),ANTONIOP.BELICENA,ULDARICOP.
ANDUTAN,JR.,RAULC.DEVERA,ROSANNAP.DIALAANDJOSEPHA.CABOTAJE,RESPONDENTS.

DECISION

ABAD,J.:

ThiscasearosefromtheissuanceoftwoTaxCreditCertificatesinfavorofJAMLiner,Inc.whichwereinvestigated
andfoundfraudulentbythePresidentialTaskForce156,createdbythenPresidentJosephE.Estrada.

TheFactsandtheCase

The principal respondent in this case, Homero A. Mercado, was the President of JAM Liner, Inc. The other
respondents, Antonio A. Belicena, Uldarico P. Andutan Jr., Raul C. De Vera, and Rosanna P. Diala, were
Department of Finance (DOF) officials formerly assigned at its OneStop Shop InterAgency Tax Credit and
DrawbackCenter(DOFOneStopShop).

Sometimein2000,showingwillingnesstotestifyagainstthecriminalsyndicatethatallegedlyranthetaxcreditscam
attheDOFOneStopShop,MercadoappliedwiththeDepartmentofJustice(DOJ)forimmunityasstatewitness
under its witness protection program. On June 5, 2000 the DOJ favorably acted on the application and granted
immunity to Mercado. Still, since the investigation of the case fell within the authority of the Office of the
Ombudsman(Ombudsman),thelatterchargedhimandtheotherrespondentsbeforetheSandiganbayansFourth
DivisionwithviolationsofSection3(j)ofRepublicAct(R.A.)3019andtwocountsoffalsificationunderArticle171,
paragraph4,oftheRevisedPenalCodeinCriminalCases2751114.

ThefirstinformationallegedthatrespondentDOFofficialsapprovedandissuedin1996TaxCreditCertificate7711
forP7,350,444.00infavorofJAMLiner,Inc.fordomesticcapitalequipmentalthoughitdidnotqualifyforsuchtax
credit. The second Information alleged that they further illegally issued in 1996 Tax Credit Certificate 7708 for
P4,410,265.50infavorofthesamecompanycoveringitspurchaseofsixMitsubishibuses.

Mercado filed a motion for reconsideration or reinvestigation before the Ombudsman, citing the DOJs grant of
immunity to him. Acting favorably on the motion, on September 4, 2003 the Ombudsman executed an Immunity
Agreement1 with Mercado. The agreement provided that, in consideration for granting him immunity from suit,
Mercadowouldproduceallrelevantdocumentsinhispossessionandtestifyagainsttheaccusedinallthecases,
criminalorotherwise,thatmaybefiledagainstthem.Accordingly,onthesamedate,theOmbudsmanfiledamotion
todischargeMercado2fromtheinformationinvolvinghim.

ButonApril30,2008theSandiganbayanissuedaResolution,3denyingtheOmbudsmansmotion.Thatcourtheld
that the pieces of evidence adduced during the hearing of the Ombudsmans motion failed to establish the
conditions required under Section 17, Rule 119 of the Rules of Court for the discharge of an accused as a state
witness.TheOmbudsmanfiledamotionforreconsiderationbutthecourtdenieditonNovember6,2008,4hence,
thispetitionofthePeopleofthePhilippines.

IssuePresented

The central issue that this case presents is whether or not the Sandiganbayan gravely abused its discretion in
refusing to recognize the immunity from criminal prosecution that the Ombudsman granted respondent Mercado
and,asaresult,indecliningtodischargehimfromtheinformationasastatewitness.

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RulingoftheCourt

IndenyingtheOmbudsmansmotiontodropMercadofromtheinformation,theSandiganbayanlargelydweltonthe
questionofwhetherornottheprosecutioncompliedwiththerequirementsofSection17,Rule119oftheRulesof
CriminalProcedure.

RespondentsDeVeraandDiala,Mercadoscoaccusedwhoopposedthegrantofimmunitytohim,contendthat
theimmunitythattheOmbudsmangaveMercadodoesnotbindthecourt,whichinthemeantimealreadyacquired
jurisdiction over the case against him. That immunity merely relieves Mercado from any further proceedings,
includingpreliminaryinvestigation,whichthestatemightstillattempttoinitiateagainsthim.5

This in a way is true. But the filing of the criminal action against an accused in court does not prevent the
OmbudsmanfromexercisingthepowerthattheCongresshasgrantedhim.Section17ofR.A.6770provides:

Section 17. Immunities. x x x Under such terms and conditions as it may determine, taking into account the
pertinent provisions of the Rules of Court, the Ombudsman may grant immunity from criminal prosecution to any
personwhosetestimonyorwhosepossessionandproductionofdocumentsorotherevidencemaybenecessaryto
determinethetruthinanyhearing,inquiryorproceedingbeingconductedbytheOmbudsmanorunderitsauthority,
intheperformanceorinthefurtheranceofitsconstitutionalfunctionsandstatutoryobjectives.Theimmunitygranted
under this and the immediately preceding paragraph shall not exempt the witness from criminal prosecution for
perjuryorfalsetestimonynorshallhebeexemptfromdemotionorremovalfromoffice.

HisaboveauthorityenablestheOmbudsmantocarryouthisconstitutionalmandatetoensureaccountabilityinthe
public service.6 It gives the Ombudsman wide latitude in using an accused discharged from the information to
increasethechancesofconvictionoftheotheraccusedandattainahigherprosecutorialgoal.7Immunitystatutes
seek to provide a balance between the states interests and the individuals right against selfincrimination. To
secure his testimony without exposing him to the risk of prosecution, the law recognizes that the witness can be
givenimmunityfromprosecution.8Insuchacase,bothinterestsandrightsaresatisfied.

Asithappenedinthiscase,theOmbudsmanhadalreadyfiledwiththeSandiganbayanthecriminalactionagainst
Mercado and the other respondents in Criminal Cases 2751114 prior to the Ombudsmans grant of immunity to
Mercado.HavingalreadyacquiredjurisdictionoverMercadoscase,itremainedwithintheSandiganbayanspower
todeterminewhetherornothemaybedischargedasastatewitnessinaccordancewithSection17,Rule119of
theRulesofCriminalProcedure.

TheOmbudsmanpremiseditsgrantofimmunitytoMercadoonhisundertakingtoproduceallthedocumentsinhis
possessionrelativetotheDOFtaxcreditscamandtotestifyinallpendingcriminal,civil,andadministrativecases
against those involved. Indeed, he had consistently cooperated even prior to immunity agreement in the
investigationandprosecutionofthecase.Histestimonygavetheprosecutionaclearerpictureofthetransactions
thatledtotheissuanceofthesubjectcertificates.

Inanyevent,thequestionbeforetheSandiganbayanwaswhetherornotMercadomet,fromitspointofview,the
followingrequirementsofSection17,Rule119forthedischargeofanaccusedtobeastatewitness:(a)thereis
absolute necessity for the testimony of the accused whose discharge is requested (b) there is no other direct
evidenceavailablefortheproperprosecutionoftheoffensecommitted,exceptthetestimonyofsaidaccused(c)
the testimony of said accused can be substantially corroborated in its material points (d) said accused does not
appeartobethemostguiltyand(e)saidaccusedhasnotatanytimebeenconvictedofanyoffenseinvolvingmoral
turpitude.

Theauthoritytograntimmunityisnotaninherentjudicialfunction.9Indeed,Congresshasvestedsuchpowerinthe
OmbudsmanaswellasintheSecretaryofJustice.Besides,thedecisiontoemployanaccusedasastatewitness
mustnecessarilyoriginatefromthepublicprosecutorswhosemissionistoobtainasuccessfulprosecutionofthe
severalaccusedbeforethecourts.Thelatterdonotasarulehaveavisionofthetruestrengthoftheprosecutions
evidenceuntilafterthetrialisover.Consequently,courtsshouldgenerallydefertothejudgmentoftheprosecution
anddenyamotiontodischargeanaccusedsohecanbeusedasawitnessonlyinclearcasesoffailuretomeet
therequirementsofSection17,Rule119.

Here, the Sandiganbayan held that Mercados testimony is not absolutely necessary because the state has other
direct evidence that may prove the offenses charged. It held that Mercardos testimony, in large part, would only
help (1) identify numerous documents and (2) disclose matters that are essentially already contained in such
documents.

Buttherecords,particularlyMercadosconsolidatedaffidavit,showthathistestimonyiftruecouldbeindispensable
in establishing the circumstances that led to the preparation and issuance of fraudulent tax credit certificates.
Indeed, nobody appears to be in a better position to testify on this than he, as president of JAM Liner, Inc., the
companytowhichthosecertificateswereissued.Thisiswhathesaidinthataffidavit:
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Sometime in June 1997, Joseph Cabotaje went to Jam Compound office, approached Jerry Mapalo, the liaison
officerofJamLinerandclaimedthatasaformersalesmanofDiamondMotorCorporation,hecouldfacilitatethe
release of the tax credit. He was brought to my office and impressed upon me that he could do the work as he
personallyknowsthetopbrassintheCenter,likeRaulDeVera,AssistantExecutiveDirectorUldaricoAndutan,Jr.,
DeputyDirectorandUndersecretaryAntonioBelicena.

xxxx

xxxHeaskedforafeeof20%oftheamountofthetaxcreditandexplainedthatthisamounthewouldstillshare
withhis"connections"intheCenter.

AsJamLiner[s]applicationwiththeCenterforthe16Mitsubishibusunitswaspending,andhavingnobodytoturn
to,myliaisonofficerrecommendedthatIaccepttheofferofservicesofCabotaje.Therewasnothingwrittenabout
thearrangementanditwaswiththeunderstandingof"nocurenopay,"meaningCabotajewouldonlybepaidafter
thetaxcreditcertificateswerereleased.

Sometime in July 1997, Cabotaje handed to me tax credit certificates for P4.4millionandP7.3 million in favor of
Jam Liner. I believed that these certificates were approved upon the intercession and through the efforts of
Cabotaje.ThetaxcreditcertificateswereissuedonJune30,1997.

The2TCCswerereceivedandhandedtomebyMr.Cabotaje.WhenhepresentedtheTCCstome,Inoticedthat
theamountwasbiggerthanwhatweweresupposedtoget.Inmyestimate,therewasanoverevaluationofabout
20%equivalenttoP100,000.00perunit,moreorless.10

DuringdirectexaminationbytheSandiganbayan,Mercadoalsotestifiedthat:

AJPonferrada:

Thequestionis,whatisunusalaboutthatdocument?

Answer.

Mr.Mercado:

Itsayshere,datecomplied,whenwehaventgivenanythingtotheDepartmentofFinanceexceptforthosewefiled
originally on April 11, sir. We have not submitted any document related in this application other than those we
originally filed on April 11, sir. But it says here, dated (sic) complied, June 26, so, it means, for us, that we have
compliedwiththeirrequirementswhilewedidnotgiveanyadditionaldocumentstothem,YourHonors(sic).

xxxx

Q:

Whatelsedidyounoticeasidefromthedateofsuspension?

A:

Thedateofsuspension,sir,wasApril13,afewdaysafterwefiledtheapplicationandonthethirdpageofExhibit
"KKK2".IfImayrepeatmytestimonybefore,thisamountismuchbiggerthanthosewefiledwiththeDepartmentof
Finance. But the engine and chassis number are the same except for the amount, which was noted to
P4,094,000.00,sir.11xxx

ThedecisiontomoveforthedischargeofMercadowaspartofprosecutorialdiscretioninthedeterminationofwho
shouldbeusedasastatewitnesstobolsterthesuccessfulprosecutionofcriminaloffenses.Unlessmadeinclear
violationoftheRules,thisdeterminationshouldbegivengreatweightbyourcourts.AsthisCourtheldinPeoplev.
CourtofAppeals:12

The Rules do not require absolute certainty in determining those conditions. Perforce, the Judge has to rely in a
largepartuponthesuggestionsandtheconsiderationspresentedbytheprosecutingofficer.

"Atrialjudgecannotbeexpectedorrequiredtoinformhimselfwithabsolutecertaintyattheveryoutsetofthetrial
astoeverythingwhichmaybedevelopedinthecourseofthetrialinregardtotheguiltyparticipationoftheaccused
inthecommissionofthecrimechargedinthecomplaint.Ifthatwerepracticableorpossible,therewouldbelittle
needfortheformalityofatrial.Incomingtohisconclusionsastothenecessityforthetestimonyoftheaccused
whosedischargeisrequested,astotheavailabilityornonavailabilityofotherdirectorcorroborativeevidenceasto
whichoftheaccusedisthemostguiltyoneandthelike,thejudgemustrelyinalargepartuponthesuggestions
andtheinformationfurnishedbytheprosecutingofficer.xxx."13(Emphasissupplied)

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Whatismore,thecriminalinformationsinthesecaseschargerespondentswithhavingconspiredinapprovingand
issuing the fraudulent tax credit certificates. One rule of wisdom is that where a crime is contrived in secret, the
discharge of one of the conspirators is essential so he can testify against the others.14 Who else outside the
conspiracycantestifyaboutthegoingsonthattookplaceamongtheaccusedinvolvedintheconspiracytodefraud
the government in this case?15 No one can underestimate Mercados testimony since he alone can provide a
detailedpictureofthefraudulentschemethatwentintotheapprovalandissuanceofthetaxcreditcertificates. The 1wphi1

documentscanshowtheirregularitiesbutnotthedetailedeventsthatledtotheirissuance.Ascorrectlypointedout
bytheprosecution,Mercadostestimonycanfillinthegapsintheevidence.

Respondents further contend that Mercado should not be granted immunity because he also benefited from the
unlawfultransactions.ButtheimmunitygrantedtoMercadodoesnotblotoutthefactthathecommittedtheoffense.
Whileheisliable,theStatesawahighersocialvalueinelicitinginformationfromhimratherthaninengaginginhis
prosecution.16

WHEREFORE, the Court GRANTS the petition, SETS ASIDE the Sandiganbayans Resolutions of April 30 and
November6,2008inCriminalCases2751114,andORDERSthedischargeofaccusedHomeroA.Mercadofrom
thecriminalinformationtobeusedasstatewitness.

SOORDERED.

Velasco,Jr.,(Chairperson),Abad,Perez*,Mendoza,andLeonen,JJ.,concur.

July3,2013

NOTICEOFJUDGMENT

Sirs/Mesdames:

Pleasetakenoticethaton___June26,2013___aDecision,copyattachedherewith,wasrenderedby
theSupremeCourtintheaboveentitledcase,theoriginalofwhichwasreceivedbythisOfficeonJuly
3,2013at2:25a.m.

Verytrulyyours,

(SGD)

LUCITAABJELINASORIANO
DivisionClerkofCourt

Footnotes

*Designatedadditionalmember,inlieuofAssociateJusticeDiosdadoM.Peralta,perRaffledatedFebruary
14,2011.
1 Exhibit "UUU," signed by the Office of the Ombudsman, represented by Dennis M. VillaIgnacio, Special
Prosecutor,andHomeroA.Mercado.
2Rollo,pp.5658.

3 Id. at 3741, penned by Associate Justice Jose R. Hernandez and concurred in by Associate Justices
GregoryS.OngandSamuelR.Martires.
4Id.at4245.

5SeeEntryofAppearancewithComment/Opposition,id.at260267.

6Quartov.Marcelo,G.R.No.169042,October5,2011,658SCRA580,600.

7Mapa,Jr.v.Sandiganbayan,G.R.No.100295,April26,1994,231SCRA783.

8Supranote6,at597.

9Sec.Guingona,Jr.v.CourtofAppeals,354Phil.415,430(1998).

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10ConsolidatedAffidavit,p.13.

11TSN,March21,2006,pp.1317.

12209Phil.277(1983).

13Id.at281282.

14Chuav.CourtofAppeals,329Phil.841,847(1996).

15Id.at854.

16Tanchancov.Sandiganbayan(SecondDivision),512Phil.590,616(2005).

TheLawphilProjectArellanoLawFoundation

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