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Manila Standard Today (Philippines): Shell case goes back to tax court

By Rey E. Requejo

The Court of Appeals has authorized the Court of Tax Appeals to proceed with the litigation of the case filed by Pilipinas Shell Petroleum Corp. seeking to stop the Bureau of Customs from collecting P1 billion in custom duties from the importation of crude oil in 1996.

In an eight-page decision written by Associate Justice Arcangelita Romilla-Lontok, the CA’s First Division dismissed the petition filed by the Customs seeking to nullify the Jan. 17, 2003 resolution of the court denying the motion to dismiss the case filed by Pilipinas Shell.

The CA disagreed with the Customs’ argument that the petition of Shell should be dismissed since it was filed before the court beyond the 30-day period allowed by law.

The appellate court stressed that Customs filed the complaint for collection of the amount on April 25, 2002 before the Manila City Regional Trial Court, thus the 30-day period to file the appeal to the CTA is reckoned on that date.

Since May 25 and May 26, 2002, was a Saturday and Sunday, respectively, then the filing of the petition for review by Shell on May 27, 2002, was timely.

The CA also junked the argument of BoC that the CTA has no jurisdiction over the petition of Shell, since the complaint for collection of money falls within the jurisdiction of the civil courts.

Prior to the effectivity of Republic Act 8180, known as the “Downstream Oil Industry Deregulation Act of 1996” on April 16 1996, Pilipinas Shell made importation of 1,979,674.85 US barrels Arab light crude oil.

RA 8180 provides for the reduction of the tariff duty on imported crude oil from 10 percent to 3 percent.

Shell’s shipment arrived on April 7, 1996 aboard the vessel EX MT Lanistels. The import entry for the subject shipment was filed on May 23, 1996, thus, it was subjected to 3 percent duty.

Four years after the entries were liquidated, Shell received an assessment from the Batangas District Collector requiring the payment of P120.1 million, representing the difference between the amount duties paid at 3 percent and the amount that should have been charged at 10 percent.

Shell assailed the assessment, asserting that under Sections 204 and 205 of the Tariff and Customs, the rate duty on an imported article existed at the time of entry, not on its arrival.

The oil company stressed that an import entry and the liquidation should become final to all parties only after one year from the date of final payment of duties.

Despite its protest, BoC stood firm on its demand and sent another demand letter to Shell requiring payment of P936,899,833, representing the whole value of the subject importation.

Customs asserted that the import entry was irregularly filed and was accepted beyond the 30-day period required. It said that such irregular filing is considered tax evasion and abandonment in favor of the government.

Due to the failure of Shell to settle its alleged obligations, the BoC filed a complaint for collection of sum of money against the oil company demanding payment of the said amount, aside from P20-million litigation expenses and P20 million in exemplary damages.

On May 27, 2002, Shell filed before the CTA a petition against the BoC praying that the demands made by the bureau be declared null and void for lack of legal basis.

The BoC moved to dismiss the petition citing the CTA’s lack of jurisdiction. It noted that only final judgments rendered by the bureau could be appealed to the CTA. It said the demand letter sent to Shell could not be considered a ruling.

But the CA declared that the BoC’s filing of the complaint for collection of sum of money before the Manila RTC “constituted final determination” of Shell’s liability, which can now be a subject of appeal before the CTA.

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