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Manila Standard Today: Shell’s case stays with tax court

By Rey E. Requejo
Monday 30 July 2007

The Court of Appeals has affirmed its decision allowing the Court of Tax Appeals to resolve the petition filed by Pilipinas Shell Petroleum Corp. contesting the Bureau of Customs’ demand for payment of P936.8 million in custom duties for the importation of crude oil in 1996.

In a four-page resolution, the CA’s former First Division through Associate Justice Arcangelita Romilla-Lontok denied with finality the appeal for reconsideration filed by Customs seeking to reverse its Feb. 15, 2007 decision upholding the Jan. 17, 2003 resolution of the Court of Tax Appeals. In that resolution, the tax appeals court rejected a motion to dismiss the petition filed by Pilipinas Shell to declare the assessment null and void.

Concurring in the ruling were Presiding Justice Ruben Reyes and Associate Justice Mariano del Castillo.

The appelate rejected Customs’ argument that the petition of Shell should be dismissed since it was filed beyond the 30-day period allowed by law.

The court ruled that the appeal period should begin to run from the receipt of summons in a civil action filed by the BoC with the regional trial court of Manila.

It noted that the Customs filed the complaint for collection of the amount on April 25, 2002 before the Manila RTC, thus the 30-day period to file the appeal is reckoned from that date.

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

The appellate court also rejected the Customs’ argument 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.

“Having gained expertise in the field of taxation, the tax court’s decision on the matter is worthy of respect,” the CA said.

Court records showed that the oil firm, prior to the effectivity of Republic Act 8180, otherwise known as the “Downstream Oil Industry Deregulation Act of 1996,” Pilipinas Shell made importation of US$1,979,674.85 barrels Arab light crude oil on April 16, 1996.

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, court records showed. 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 BoC, 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 contested the assessment insisting that under Sections 204 and 205 of the Tariff and Customs, the rate duty on an imported article is that existing at the time of entry, not at its arrival.

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

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 apart from P20 million litigation expenses and P20 million in exemplary damages.

While the case was pending, Shell filed on May 27, 2002 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.

Customs moved to dismiss the petition, which the CTA junked, prompting the bureau to appeal to the appellate court. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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