SC rules P1 billion import duty case won by Pilipinas Shell

The Supreme Court (SC) has issued a final ruling on the import duty case between the Bureau of Customs (BOC) and Pilipinas Shell Petroleum Corp. – that the taxman may no longer collect nearly P1 billion against the oil company for crude imports in 1996.

Citing the appeal by the bureau as lacking in merit, the SC Special Third Division dismissed the pleading. It ruled that no further appeal would be entertained and ordered that an entry of judgment on the case be issued.

The division rejected the taxman's plea to elevate the case to the court en banc.

“The arguments raised by respondent [BOC Commissioner] in this pending incident are the very same arguments raised in the petition, which have already been evaluated, passed upon and considered in the December 5, 2016 decision,” the SC said in a June 19 resolution but was made public only recently.

"Ergo, the Court rejects these arguments on the same grounds discussed in the challenged decision and denies, as a matter of course, the pending motion,” it added.

The high court reversed the May 13, 2010 ruling of the Court of Tax Appeals which directed Pilipinas Shell to pay P936,899,855.90. The amount was supposed to represent the total dutiable value of the shipments plus 6 percent interest per year.

The SC ruled that the oil company did not defraud the government, which the BOC contradicted in its motion for reconsideration.

In ruling so, the SC cited the applicability of a previous action in the case of Chevron Philippines Inc. vs. Commissioner of the BOC, even if the facts and circumstance in both cases were totally different.

"In Chevron, evidence on record established that Chevron committed fraud in its dealings. On the other hand, proof that petitioner Pilipinas Shell Petroleum Corporation was just as guilty was clearly wanting,” the high court said.

"Simply, there was no finding of fraud on the part of petitioner in the case at bar. Such circumstance is too significant that it renders Chevron indubitably different from and cannot, therefore, serve as the jurisprudential foundation of the case at bar,” it said.

The allegation of fraud hurled by the taxman against Pilipinas Shell was "mere conjecture and purely speculative," the SC noted.

"Settled is the rule that a court cannot rely on speculations, conjectures or guesswork, but must depend upon competent proof and on the basis of the best evidence obtainable under the circumstances," according to the resolution.

The SC noted Pilipinas Shell filed its Import Entry and Internal Revenue Declaration (IEIRD) and paid P11.23 million in customs duties covering the shipments on May 23, 1996.

But Pilipinas Shell received a demand letter from the BOC to settle the alleged unpaid duties more than four years later on July 27, 2000.

"By this time, the one-year prescriptive period had already elapsed, and the government had already been barred from collecting the deficiency in petitioner's  import duties for the covered shipment of oil," the resolution further said.

The passage on the prescriptive period can be found under Section 1603 of the Tariff and Customs Code.
The SC also cited another section of the Tariff and Customs Code that went against the argument presented by the BOC.

"Consequently, Section 1801(b) failed to operate in favor of the government for failure to demand payment for the discrepancy prior to the finality of the liquidation. The government cannot deem the articles as abandoned without due notice."

The resolution was penned by Associate Justice Presbitero Velasco Jr., and Associate Justice Bienvenido Reyes and Justice Noel Tijam concurred.

Associate Justices Diosdado Peralta and Francis Jardeleza dissented. — VDS, GMA News