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1 - Pilipinas Shell Petroleum Corp. v. Commissioner of Customs (2016) - 22 Pages PDF
1 - Pilipinas Shell Petroleum Corp. v. Commissioner of Customs (2016) - 22 Pages PDF
DECISION
PEREZ , J : p
Before the Court is a Petition for Review on Certiorari seeking to reverse and set
aside the 13 May 2010 Decision 1 and the 22 February 2011 Resolution 2 rendered by
the Court of Tax Appeals (CTA) Former En Banc in C.T.A. EB No. 472 which dismissed
petitioner's petition, and accordingly a rmed with modi cation as to the additional
imposition of legal interest the 19 June 2008 Decision 3 of the CTA Former First
Division (CTA in Division) ordering petitioner to pay the amount of P936,899,883.90,
representing the total dutiable value of its 1996 crude oil importation, which was
considered as abandoned in favor of the government by operation of law.
The Facts
The factual antecedents of the case are as follows:
On 16 April 1996, Republic Act (R.A.) No. 8180, 4 otherwise known as the
"Downstream Oil Industry Deregulation Act of 1996" took effect. It provides, among
others, for the reduction of the tariff duty on imported crude oil from ten percent (10%)
to three percent (3%). The particular provision of which is hereunder quoted as follows:
Section 5. Liberalization of Downstream Oil Industry
and Tariff Treatment. — . . .
b) Any law to the contrary notwithstanding and starting
with the effectivity of this Act, tariff shall be imposed and
collected on imported crude oil at the rate of three percent (3%)
and imported re ned petroleum products at the rate of seven
percent (7%), except fuel oil and LPG, the rate for which shall be
the same as that for imported crude oil Provided, That beginning
on January 1, 2004 the tariff rate on imported crude oil and
re ned petroleum products shall be the same: Provided, further,
That this provision may be amended only by an Act of Congress.
Prior to its effectivity, petitioner's importation of 1,979,674.85 U.S. barrels of
Arab Light Crude Oil, thru the Ex MT Lanistels, arrived on 7 April 1996 nine (9) days
earlier than the effectivity of the liberalization provision. Within a period of three days
thereafter, or speci cally on 10 April 1996, said shipment was unloaded from the
carrying vessels docked at a wharf owned and operated by petitioner, to its oil tanks
located at Batangas City.
Subsequently, petitioner led the Import Entry and Internal Revenue Declaration
and paid the import duty of said shipment in the amount of P11,231,081.00 on 23 May
1996.
More than four (4) years later or on 1 August 2000, petitioner received a demand
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letter 5 dated 27 July 2000 from the Bureau of Customs (BOC), through the District
Collector of Batangas, assessing it to pay the de ciency customs duties in the amount
of P120,162,991.00 due from the aforementioned crude oil importation, representing
the difference between the amount allegedly due (at the old rate of ten percent (10%) or
before the effectivity of R.A. No. 8180) and the actual amount of duties paid by
petitioner (on the rate of 3%). CAIHTE
In reply thereto, petitioner sent a letter dated 4 January 2002 1 4 to the BOC
Deputy Commissioner and expressed that it had already responded to the aforesaid
demand letter through the letters dated 7 November 2001 and 3 December 2001 sent
to respondent and to the Director of Legal Service of the BOC, respectively.
On 11 April 2002, the BOC led a civil case for collection of sum of money
against petitioner, together with Caltex Philippines, Inc. as co-party therein, docketed as
Civil Case No. 02103239, before Branch XXV, Regional Trial Court (RTC), of the City of
Manila. 1 5
Consequently, on 27 May 2002, petitioner led with the Court of Tax Appeals
(CTA) a Petition for Review, ra ed to the Former First Division (CTA in Division), and
docketed as C.T.A. Case No. 6485, upon consideration that the civil complaint led in
the RTC of Manila was the final decision of the BOC on its protest. 1 6
Respondent led on 2 August 2002 a motion to dismiss the said petition raising
lack of jurisdiction and failure to state a cause of action as its grounds, which the CTA
in Division denied in the Resolution dated 17 January 2003. Likewise, respondent's
motion for reconsideration led on 14 February 2003 was denied on its 16 June 2003
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Resolution. 1 7
Subsequently, respondent, through the O ce of the Solicitor General, led on 13
August 2003 before the Court of Appeals (CA) a Petition for Certiorari and Prohibition
with Prayer for the Issuance of a Temporary Restraining Order and Writ of Preliminary
Injunction, docketed as CA-G.R. SP No. 78563, praying for the reversal and setting aside
of the CTA in Division's Resolutions dated 17 January 2003 and 16 June 2003. 1 8
In the interim, respondent led his Answer to the petition in C.T.A. Case No. 6485
on 20 October 2003 which reiterated the lack of jurisdiction and failure to state a cause
of action. Thereafter, trial on the merits ensued.
On 15 February 2007, the Former First Division of the CA dismissed respondent's
petition in CA-G.R. SP No. 78563. Similarly, respondent's motion for reconsideration of
the 15 February 2007 Decision was denied in its 24 July 2007 Resolution. 1 9
The Ruling of the CTA in Division
In a Decision dated 19 June 2008, 2 0 the CTA in Division ruled to dismiss the
Petition for Review on C.T.A. Case No. 6485 for lack of merit and accordingly ordered
petitioner to pay the entire amount of P936,899,883.90 2 1 representing the total
dutiable value of the subject shipment of Arab Light Crude Oil on the ground of implied
abandonment pursuant to Sections 1801 and 1802 of the TCCP.
Relevant thereto, the CTA in Division made the following factual and legal
ndings: (a) that petitioner led the speci ed entry form (Import Entry and Internal
Revenue Declaration) beyond the 30-day period prescribed under Section 1301 of the
TCCP; 2 2 (b) that for failure to le within the aforesaid 30-day period, the subject
importation was deemed abandoned in favor of the government in accordance with
Sections 1801 and 1802 of the TCCP; 2 3 (c) that petitioner's excuses in the delay of
ling its Import Entry and Internal Revenue Declaration were implausible; 2 4 (d) that
since the government became the owner of the subject shipment by operation of law,
petitioner has no right to withdraw the same and should be held liable to pay for the
total dutiable value of said shipment computed at the time the importation was
withdrawn from the carrying vessel pursuant to Section 204 of the TCCP; 2 5 (e) that
there was fraud in the present case considering that "the District Collector, in
conspiracy with the officials of Caltex and Shell acted without authority or [with] abused
(sic) [of] authority by giving undue bene ts to the importers by allowing the processing,
payment and subsequent release of the shipments to the damage and prejudice of the
government who, under the law is already the owner of the shipments . . .;" thus,
prescription under Section 1603 of the TCCP does not apply herein; 2 6 and (f) that the
ndings of facts of administrative bodies charged with their speci c eld of expertise,
are afforded great weight by the courts; and in the absence of substantial showing that
such ndings are made from an erroneous estimation of the evidence presented, they
are conclusive, and in the interest of stability of the government structure, should not be
disturbed. 2 7
On 24 February 2009, the CTA in Division denied petitioner's Motion for
Reconsideration for lack of merit citing Section 5 (b), 2 8 Rule 6 of the 2005 Revised
Rules of the CTA, as sole legal basis in considering the Memorandum dated 2 February
2001 issued by the Customs Intelligence & Investigation Service, Investigation &
Prosecution Division (CIIS-IPD) of the BOC as evidence to establish fraud, and the case
o f Chevron Phils., Inc. v. Commissioner of the Bureau of Customs , 2 9 as the
jurisprudential foundation therein. 3 0
Petitioner explains that, in issuing Customs Administrative Order (CAO) No. 5-93
dated 1 September 1993 and Customs Memorandum Order (CMO) No. 15-94 dated 29
April 1994, respondent even recognized the signi cance of the due notice requirement
before any goods may be deemed impliedly abandoned articles. Such notice
purportedly refers to notice to le entry, and not notice of arrival as mistakenly
interpreted by the CTA Former En Banc. Thus, in the absence of such notice in the
present case, there could have been no implied abandonment in favor of the
government of the said imported crude oil by petitioner pursuant to Section 1801 of
the TCCP.
Lastly, petitioner believes that a rmance of the ruling a quo, would be
tantamount to a clear violation of international laws, i.e. the Revised Kyoto Convention,
which generally prohibit the imposition of substantial penalties for errors when there is
no fraud or gross negligence on the part of an importer. Consequently, such current and
reasonable trend in the international and uniform application of customs rules and laws
shows how unreasonable, unjust, con scatory, iniquitous and incongruent the
disposition made against petitioner in the instant case; hence, the very need to set
aside the assailed Decision and Resolution of the CTA Former En Banc in C.T.A. EB No.
472, in order to prevent the creation of a legal precedent which contravenes State
commitments.
Respondent, on the other hand, counters that petitioner's failure to le its Import
Entry and Internal Revenue Declaration within the non-extendible period of 30 days was
fatal to its cause of action. Resultantly, the subject imported crude oil is deemed
abandoned in favor of the government by reason of such non- ling of the imported
entries within said prescriptive period. 3 8
Our Ruling
The submissions of the parties to this case bring to fore two timelines and the
consequences of the lapse of the prescribed periods. Petitioner appears to be covered
by Section 1801, in relation to Section 1301, which respectively states:
Sec. 1801. Abandonment, Kinds and Effects of . — An
imported article is deemed abandoned under any of the following
circumstances:
(a) When the owner, importer or consignee of the imported article expressly
signi es in writing to the Collector of Customs his intentions to abandon;
or
(b) When the owner, importer, consignee or interested party after due notice, fails
to le an entry within thirty (30) days, which shall not be extendible,
from the date of discharge of the last package from the vessel or aircraft,
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or having led such entry, fails to claim his importation within fteen (15)
days which shall not likewise be extendible, from the date of posting of the
notice to claim such importation. (Emphasis supplied)
Any person who abandons an article or who fails to claim
his importation as provided for in the preceding paragraph shall
be deemed to have renounced all his interests and property rights
therein.
xxx xxx xxx
Sec. 1301. Persons Authorized to Make Import Entry . —
Imported articles must be entered in the customhouse at the port
of entry within thirty (30) days, which shall not be extendible, from
the date of discharge of the last package from the vessel or
aircraft either (a) by the importer, being holder of the bill of lading,
(b) by a duly licensed customs broker acting under authority from
a holder of the bill or (c) by a person duly empowered to act as
agent or attorney-in-fact for each holder: Provided, That where the
entry is led by a party other than the importer, said importer shall
himself be required to declare under oath and under the penalties
of falsi cation or perjury that the declarations and statements
contained in the entry are true and correct: Provided, further, That
such statements under oath shall constitute prima facie evidence
of knowledge and consent of the importer of violations against
applicable provisions of this Code when the importation is found
to be unlawful.
Tersely put, when an importer after due notice fails to le an Import Entry and Internal
Revenue Declaration within an unextendible period of thirty (30) days from the
discharge of the last package, the imported article is deemed abandoned in favor of the
government.
Upon the other hand, respondent is covered in a manner likewise mandatory, by
the provisions of Section 1603 which states that:
Sec. 1603. Finality of Liquidation. — When articles have
been entered and passed free of duty or nal adjustment of duties
made, with subsequent delivery, such entry and passage free of
duty or settlement of duties will, after the expiration of one
year, from the date of the nal payment of duties, in the absence
of fraud or protest, be nal and conclusive upon all parties, unless
the liquidation of the import entry was merely tentative. (Emphasis
supplied) SDAaTC
We rule that in this case, Section 1603 is squarely applicable. The nality of
liquidation which arises one (1) year after the date of the nal payment of duties, which
is in this case 23 May 1996, renders inoperable the provisions of Section 1801.
Discussion
At the outset, it bears emphasis that the determination of the issues presented in
this case requires a comprehensive assessment of the pronouncements made in the
case of Chevron Philippines, Inc. v. Commissioner of the Bureau of Customs ; 3 9 thus,
we nd it imperative to reproduce hereunder the points there considered which are
germane to the controversy under review.
THE IMPORTATION WERE ABANDONED
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IN FAVOR OF THE GOVERNMENT
The law is clear and explicit. It gives a non-
extendible period of 30 days for the importer to le the
entry which we have already ruled pertains to both the IED
and IEIRD. Thus under Section 1801 in relation to Section
1301, when the importer fails to le the entry within the
said period, he "shall be deemed to have renounced all his
interests and property rights" to the importations and
these shall be considered impliedly abandoned in favor of
the government :
Section 1801. Abandonment, Kinds and Effect of. —
xxx xxx xxx
Any person who abandons an article or who fails to
claim his importation as provided for in the preceding paragraph
shall be deemed to have renounced all his interests and
property rights therein.
According to petitioner, the shipments should not be
considered impliedly abandoned because none of its overt acts
( ling of the IEDs and paying advance duties) revealed any
intention to abandon the importations.
Unfortunately for petitioner, it was the law itself
which considered the importation abandoned when it
failed to le the IEIRDs within the allotted time. Before it
was amended, Section 1801 was worded as follows:
Sec. 1801. Abandonment, Kinds and Effect of. — Abandonment
is express when it is made direct to the Collector by the interested
party in writing and it is implied when, from the action or
omission of the interested party, an intention to abandon
can be clearly inferred. The failure of any interested party to
le the import entry within fteen days or any extension thereof
from the discharge of the vessel or aircraft, shall be implied
abandonment. An implied abandonment shall not be effective
until the article is declared by the Collector to have been
abandoned after notice thereof is given to the interested
party as in seizure cases.
Any person who abandons an imported article renounces
all his interests and property rights therein.
After it was amended by RA 7651, there was an indubitable shift in
language as to what could be considered implied abandonment :
Section 1801. Abandonment, Kinds and Effect of. — An imported
article is deemed abandoned under any of the following
circumstances:
a. When the owner, importer, consignee of the imported article expressly
signi es in writing to the Collector of Customs his intention to
abandon;
b . When the owner, importer, consignee or interested party after
due notice, fails to le an entry within thirty (30) days,
which shall not be extendible, from the date of discharge of
the last package from the vessel or aircraft . . . .
From the wording of the amendment, RA 7651 no
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longer requires that there be other acts or omissions
where an intent to abandon can be inferred. It is enough
that the importer fails to le the required import entries
within the reglementary period. The lawmakers could have
easily retained the words used in the old law (with respect to the
intention to abandon) but opted to omit them. It would be error on
our part to continue applying the old law despite the clear changes
introduced by the amendment. 4 0 (Emphasis and underlining
supplied) acEHCD
Based on the foregoing, it appears that in the Chevron case, the Court simply
applied the clear provision of Section 1801 (b), in relation to Section 1301, of the TCCP,
as amended, which categorically provides that mere failure on the part of the owner,
importer, consignee or interested party, after due notice, to le an entry within a non-
extendible period of 30 days from the date of discharge of the last package (shipment)
from the vessel, would mean that such owner, importer, consignee or interested party is
deemed to have abandoned said shipment. Consequently, abandonment of such
shipment (imported article) constitutes renouncement of all his interests and property
rights therein.
The rationale of strict compliance with the non-extendible period of 30 days
within which import entries (IEIRDs) must be led for imported articles are as follows:
(a) to prevent considerable delay in the payment of duties and taxes; (b) to compel
importers to le import entries and claim their importation as early as possible under
the threat of having their importation declared as abandoned and forfeited in favor of
the government; (c) to minimize the opportunity of graft; (d) to compel both the BOC
and the importers to work for the early release of cargo, thus decongesting all ports of
entry; (e) to facilitate the release of goods and thereby promoting trade and commerce;
and (f) to minimize the pilferage of imported cargo at the ports of entry. 4 1 The
aforesaid policy considerations were signi cant to justify a rm observance of the
aforesaid prescriptive period.
It was observed that it is the law itself that considers an imported article
abandoned for failure to le the corresponding Import Entry and Internal Revenue
Declaration within the allotted time. No acts or omissions to establish intent to
abandon is necessary to effectuate the clear provision of the law. Since Section 1801
(b) does not provide any quali cation as to what may have caused such failure in ling
said import entry within the prescriptive period in order to render the imported article
abandoned, this Court shall likewise make no distinction and plainly apply the law as
clearly stated. Hence, upon the lapse of the aforesaid non-extendible period of 30 days,
without the required import entry led by the importer within said period, its imported
article is therefore deemed abandoned.
Moreover, Section 1802 of the same Code states to whom said abandoned
imported articles belong as a consequence of such renouncement by the owner,
importer, consignee or interested party. It provides:
Sec. 1802. Abandonment of Imported Articles. An
abandoned article shall ipso facto be deemed the property of
the Government and shall be disposed of in accordance with the
provisions of this Code.
xxx xxx xxx (Emphasis supplied)
In the Chevron case, we explained that the term "ipso facto" is de ned as "by the
very act itself" or "by mere act." Hence, there is no need for any a rmative act on the
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part of the government with respect to abandoned imported articles given that the law
itself categorically provides that said articles shall ipso facto be deemed the property
of the government. By using the term "ipso facto" in Section 1802 of the TCCP, as
amended by R.A. No. 7651, 4 2 the legislature removed the need for abandonment
proceedings and for any declaration that imported articles have been abandoned
before ownership thereof can be effectively transferred to the government. In other
words, ownership over the abandoned imported articles is transferred to the
government by operation of law.
The rulings in Chevron was generously applied by CTA Former En Banc in the
present case. Thus:
Petitioner Shell's failure to le the required entries,
within the prescribed non-extendible period of thirty (30)
days from the date of discharge of the last package from
the carrying vessel, constitutes implied abandonment of
its oil importation. This means, that from the precise
moment that the non-extendible thirty-day period had
lapsed, the abandoned shipment was deemed the property
of the government. Therefore, when petitioner withdrew the oil
shipment for consumption, it appropriated for itself properties
which already belonged to the government. . . .
Petitioner Shell's contention that the belated ling of its
import entries is justi ed due to the late arrival of its
import documents, which are necessary for the proper
computation of the import duties, cannot be sustained. SDHTEC
Petitioner insists that, in the absence of fraud, the right of respondent to claim
against it has already prescribed considering that an action involving the entry and
payment of customs duties involving imported articles demanded after a period of one
(1) year from the date of nal payment of duties, shall not succeed, pursuant to the
clear provision of Section 1603. It therefore contends that even if the subject imported
crude oil of petitioner is by law deemed abandoned by operation of law under Sections
1801 (b), in relation to Section 1301, of the Code, respondent's right to claim
abandonment had already lapsed since fraud is wanting in this case. On the other hand,
respondent counters that since there was a factual nding of fraud committed by
petitioner in the ling of its Import Entry and Internal Revenue Declaration beyond the
30-day period prescribed under Section 1301 of the TCCP, the 1-year prescriptive
period under Section 1603 therefore does not apply.
At this point, it bears emphasis that in a petition for review on certiorari under
Rule 45 of the Rules of Court, only questions of law may be raised. 4 6 The Court is not a
trier of facts and does not normally undertake the re-examination of the evidence
presented by the contending parties during the trial of the case considering that the
ndings of facts of the CA are conclusive and binding on the Court 4 7 — and they carry
even more weight when the CA a rms the factual ndings of the trial court. 4 8
However, it is already a settled matter that, the Court had recognized several
exceptions to this rule, to wit: (1) when the ndings are grounded entirely on
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speculation, surmises or conjectures; (2) when the inference made is manifestly
mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when
the judgment is based on a misapprehension of facts; (5) when the findings of facts are
con icting; (6) when in making its ndings the Court of Appeals went beyond the
issues of the case, or its ndings are contrary to the admissions of both the appellant
and the appellee; (7) when the ndings are contrary to the trial court; (8) when the
ndings are conclusions without citation of speci c evidence on which they are based;
(9) when the facts set forth in the petition as well as in the petitioner's main and reply
briefs are not disputed by the respondent; (10) when the ndings of fact are
premised on the supposed absence of evidence and contradicted by the
evidence on record; and (11) when the Court of Appeals manifestly overlooked
certain relevant facts not disputed by the parties, which, if properly considered,
would justify a different conclusion. 4 9
Records of this case reveal that the CTA in Division in its 19 June 2008 Decision
5 0 made a pronouncement that there was indeed fraud committed by petitioner based
on the factual nding contained in the Memorandum dated 2 February 2001 issued by
Special Investigator II Domingo B. Almeda and Special Investigator III Nemesio C.
Magno, Jr. of the CIIS-IPD of the BOC. Consequently, since such memorandum made
such factual nding of fraud against petitioner, the court a quo ruled that prescription
does not set in even if respondent's claim was made beyond the 1-year reglementary
period.
Upon an assiduous review of the factual nding of fraud, we nd petitioner's
contention meritorious. Hence, the instant case falls among the exceptions to the
general rule previously mentioned which would require this Court's judicial prerogative
to review the court a quo's findings of fact.
Generally, fraud has been de ned as "the deliberate intention to cause damage or
prejudice. It is voluntary execution of a wrongful act, or a willful omission, knowing and
intending the effects which naturally and necessarily arise from such act or omission.
5 1 For fraud to exist, it must be intentional, consisting of deception willfully and
deliberately done or resorted to in order to induce another to give up some right. 5 2 It is
never presumed and the burden of proof to establish lies in the person making such
allegation since every person is presumed to be in good faith. 5 3 To discharge this
burden, fraud must be proven by clear and convincing evidence. 5 4 Also, fraud must be
alleged and proven as a fact where the following requisites must concur: (a) the fraud
must be established by evidence; and (b) the evidence of fraud must be clear and
convincing, and not merely preponderant. Upon failure to establish these two (2)
requisites, the presumption of good faith must prevail.
Section 3611 (c) of the TCCP, as amended, de nes the term fraud as the
occurrence of a "material false statement or act in connection with the transaction
which was committed or omitted knowingly, voluntarily and intentionally, as established
by clear and convincing evidence." Again, such factual nding of fraud should be
established based on clear, convincing, and uncontroverted evidence.
Relevant thereto, in the landmark case of Aznar v. Court of Tax Appeals , 5 5 we
explained the general concept of fraud as applied to tax cases in the following fashion:
TAIaHE
Indubitably, the matters which become nal and conclusive against all parties
include the timeliness of ling the import entry within the period prescribed by law, the
declarations and statements contained therein, and the payment or non-payment of
customs duties covering the imported articles by the owner, importer, consignee or
interested party. Since the primordial issue presented before us focuses on petitioner's
non-compliance in ling its Import Entry and Internal Revenue Declaration within a non-
extendible period of 30 days from the date of discharge of the last package from the
vessel, respondent may only look into it within a limited period of one (1) year in
accordance with the above-quoted provision.
In the case at bench, it is undisputed that petitioner led its IEIRD and paid the
remaining customs duties due on the subject shipment only on 23 May 1996. Yet, it
was only on l August 2000, or more than four (4) years later, that petitioner received a
demand letter from the District Collector of Batangas for the alleged unpaid duties
covering the said shipment. Thereafter, on 29 October 2001, or after more than ve (5)
years, petitioner received another demand letter from respondent seeking to collect for
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the entire dutiable value of the same shipment amounting to P936,899,855.90.
Consequently, applying the foregoing provision and considering that we have
determined already that there is no factual nding of fraud established herein, the
liquidation of petitioner's imported crude oil shipment became nal and conclusive on
24 May 1997, or exactly upon the lapse of the 1-year prescriptive period from the date
of payment of nal duties. As such, any action questioning the propriety of the entry
and settlement of duties pertaining to such shipment initiated beyond said date is
therefore barred by prescription.
Since time immemorial, this Court has consistently recognized and applied the
statute of limitations to preclude the Government from exercising its power to assess
and collect taxes beyond the prescribed period, and we intend to abide by our rulings
on prescription and to strictly apply the same in the case of petitioner; otherwise, both
the procedural and substantive rights of petitioner would be violated. After all,
prescription is a substantive defense that may be invoked to prevent stale claims from
being resurrected causing inconvenience and uncertainty to a person who has long
enjoyed the exercise. Thus, symptomatic of the magnitude of the concept of
prescription, this Court has elucidated that:
The law prescribing a limitation of actions for the collection
of the income tax is bene cial both to the Government and to its
citizens; to the Government because tax o cers would be obliged
to act promptly in the making of assessment, and to citizens
because after the lapse of the period of prescription
citizens would have a feeling of security against
unscrupulous tax agents who will always nd an excuse
to inspect the books of taxpayers, not to determine the
latter's real liability, but to take advantage of every
opportunity to molest peaceful, law-abiding citizens.
Without such legal defense taxpayers would furthermore
be under obligation to always keep their books and keep
them open for inspection subject to harassment by
unscrupulous tax agents. The law on prescription being a
remedial measure should be interpreted in a way conducive to
bringing about the bene cient purpose of affording protection to
the taxpayer within the contemplation of the Commission which
recommend (sic) the approval of the law. 7 3 (Emphasis supplied)
Basic is the rule that provisions of the law should be read in relation to other
provisions therein. A statute must be interpreted to give it e cient operation and effect
as a whole avoiding the nulli cation of cognate provisions. Statutes are read in a
manner that makes it wholly operative and effective, consistent with the legal maxim ut
res magis valeat quam pereat. EATCcI
This maxim applied, we read Sections 1301, 1801, and 1802, together with
Section 1603 of the TCCP. Thus, should there be failure on the part of the owner,
importer, consignee or interested party, after due notice of the arrival of its shipment
(except in cases of knowledgeable owners or importers), to le an entry within the non-
extendible period of 30 days from the date of discharge of the last package (shipment)
from the vessel, such owner, importer, consignee or interested party is deemed to have
abandoned said shipment in favor of the government. As imperative, however, is the
strict compliance with Section 1603 of the TCCP, which should be read as we have
ruled. Any action or claim questioning the propriety of the entry and settlement of
duties pertaining to such shipment made beyond the 1-year prescriptive period from
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the date of payment of nal duties, is barred by prescription. In the present case, the
failure on the part of respondent to timely question the propriety of the entry and
settlement of duties by petitioner involving the subject shipment, renders such entry
and settlement of duties nal and conclusive against both parties. Hence, respondent
cannot any longer have any claim from petitioner. Sections 1301, 1801, and 1802 of the
TCCP have been rendered inoperable by reason of the lapse of the period stated in
Section 1603 of the same Code.
Indeed, if the prescriptive period of one year speci ed in Section 1603 of the
TCCP is not applied against the respondent, the reality that the shipment has been
unloaded from the carrying vessels to petitioner's oil tanks and that import duty in the
amount of P11,231,081.00 has been paid would be obliterated by the application of the
principle of deemed abandonment four years after the occurrence of the facts of
possession and payment, as a consequence of which application, the petitioner would
be made to pay the government the entire value of the shipment it had as vendee of the
shipper already paid.
WHEREFORE, the petition is GRANTED . Accordingly, the Decision dated 13 May
2010 and Resolution dated 22 February 2011 of the Court of Tax Appeals Former En
Banc in C.T.A. EB No. 472 are hereby REVERSED and SET ASIDE on the ground of
prescription.
No costs.
SO ORDERED.
Reyes, J., concurs.
Velasco, Jr., J., see concurring opinion.
Peralta, J., pls. see dissenting opinion.
Jardeleza, J., I join the dissent of J. Peralta
Separate Opinions
VELASCO, JR. , J., concurring :
I register my concurrence with the ponencia.
The Latin maxim stare decisis et non quieta movere means stand by the thing
and do not disturb the calm — a bar from any attempt at relitigating the same issues. It
requires that high courts must follow, as a matter of sound policy, their own
precedents, or respect settled jurisprudence absent compelling reason to do
otherwise. 1 As a recognized exception, the salutary doctrine cannot be invoked when
the facts and circumstances in the succeeding case have so changed as to have
robbed the old rule of significant application or justification.
There is truth to the claim that the instant case bears striking resemblance to
that of Chevron Philippines v. Commissioner of the Bureau of Customs (Chevron) . 2 As
observed by Associate Justice Diosdado M. Peralta (Justice Peralta) in his dissent: 3
. . . As in Chevron, the imported crude oil subject of the
present case arrived in the Philippines and was discharged from
the carrying vessels prior to the effectivity of RA 8180. The import
entries in both cases were led beyond the 30-day period required
under Section 1301 of the [Tariff and Customs Code of the
Philippines]. In fact, it is on the bases of the facts obtaining in
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these importations of petitioner and Chevron (then known as
Caltex Phils., Inc.) that only one civil suit for collection of the
dutiable value of the imported articles was led by the [Bureau of
Customs] against these two corporations as defendants. It is from
this factual backdrop and the ensuing demand by the [Bureau of
Customs] to collect the dutiable value of the importations that the
case of Chevron reached this Court and was ultimately decided in
favor of the [Bureau of Customs]. . . .
Notwithstanding these glaring similarities, it cannot hastily be concluded that
Chevron is on all fours with the case at bar; the two cases are diametrically
opposed insofar as the issue of fraud on the part of the importer is
concerned . While the Court's ruling in Chevron was that the existence of fraud therein
was su ciently established, no clear and convincing evidence was presented herein to
justify arriving at the same conclusion.
Whether or not petitioner Pilipinas Shell Petroleum Corporation (Pilipinas Shell)
defrauded the Bureau of Customs (BOC) becomes pivotal in this case because of Sec.
1603 of the Tariff and Customs Code (TCC), to wit:
Section 1603. Finality of Liquidation. — When articles have
been entered and passed free of duty or nal adjustments of
duties made, with subsequent delivery, such entry and passage
free of duty or settlements of duties will, after the expiration
of one (1) year, from the date of the nal payment of
duties, in the absence of fraud or protest or compliance audit
pursuant to the provisions of this Code, be nal and conclusive
upon all parties , unless the liquidation of the import entry was
merely tentative. (emphasis added)
Pursuant to the above-quoted provision, the attendance of fraud would remove
the case from the ambit of the statute of limitations, and would consequently allow the
government to exercise its power to assess and collect duties even beyond the one-
year prescriptive period, rendering it virtually imprescriptible.
Exhaustively discussed by the ponencia was that no scintilla of proof was ever
offered in evidence by respondent Commissioner of Customs to reinforce the claim
that Pilipinas Shell acted in bad faith, then a fortiori, in a fraudulent manner, in its
settlement of duties on its imported crude oil. The February 2, 2001 Memorandum on
which the Court of Tax Appeals (CTA), both in division and en banc, chie y anchored the
nding of fraudulent intent was never formally offered, but was instead merely
included in the records of the proceedings before the Bureau of Customs. CAacTH
Petitioner protested the assessment but was denied by the District Collector.
Petitioner appealed the District Collector's decision to herein respondent
Commissioner of Customs.
Thereafter, on October 29, 2001, petitioner received from respondent a demand
letter for the payment of the amount of P936,899,885.90, representing the dutiable
value of the subject crude oil importation which was held to be abandoned for
petitioner's failure to file the required import entry on time.
On November 7, 2001, petitioner led a protest contending that the demand
letter has no factual and legal basis, and that such demand has already prescribed.
Subsequently, on April 11, 2002 the BOC filed a civil action for collection of a sum
of money against petitioner and Caltex Philippines, Inc., which also made crude oil
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importations like petitioner, for their refusal to pay the dutiable value of their
importations which they have consumed. 3
On May 27, 2002, petitioner led a petition for review with the Court of Tax
Appeals (CTA) questioning the BOC's demand letters which required petitioner to pay
de ciency customs duties as well as the dutiable value of its 1996 crude oil
importation. The case was raffled to the CTA First Division.
On June 19, 2008, the CTA First Division promulgated its Decision 4 dismissing
petitioner's petition for review for lack of merit. Petitioner's motion for reconsideration
was denied in a Resolution 5 issued by the CTA First Division on February 24, 2009.
Petitioner then filed a petition for review with the CTA Former En Banc.
On May 13, 2010, the CTA Former En Banc promulgated its Decision 6 dismissing
petitioner's petition for review and a rming with modi cation the CTA First Division's
assailed Decision and Resolution by imposing 6% interest on the sum awarded from the
date of promulgation until nality of the decision and 12% interest from nality of the
decision until full satisfaction.
Aggrieved, petitioner led a motion for reconsideration which was, however,
denied for lack of merit by the CTA Former En Banc in its Resolution 7 dated February
22, 2011.
Hence, the present petition for review on certiorari.
The basic issue that needs to be resolved in the instant petition is whether or not
respondent may still recover from petitioner the dutiable value of the latter's crude oil
importation which it has consumed despite its having been deemed abandoned by
operation of law.
T h e ponencia rules that "there being no evidence to prove that petitioner
committed fraud in belatedly ling its [Import Entry and Internal Revenue Declaration]
(IEIRD) within the 30-day period prescribed under Section 1301 of the [Tariff and
Customs Code of the Philippines] (TCCP), as amended, respondent's right to question
the propriety thereof and to collect the amount of the alleged de ciency customs
d ut ies, more so the entire value of the subject shipment, have already
prescribed." 8
I take exception to the above pronouncement as it is my considered view that it
runs counter to the pertinent provisions of the TCCP and of this Court's ruling in the
leading case of Chevron Philippines, Inc. v. Commissioner of the Bureau of Customs
(Chevron). 9
It bears stressing that the basic facts of the present case and those of Chevron,
which the Court follows as precedent, are practically the same. As in Chevron, the
imported crude oil subject of the present case arrived in the Philippines 1 0 and was
discharged from the carrying vessels prior to the effectivity of RA 8180. 1 1 The import
entries in both cases were led beyond the 30-day period required under Section 1301
of the TCCP. In fact, it is on the basis of the facts obtaining in these importations of
petitioner and Chevron (then known as Caltex Phils., Inc.) that only one civil suit for
collection of the dutiable value of the imported articles was led by the BOC against
these two corporations as defendants. It is from this factual backdrop and the ensuing
demand by the BOC to collect the dutiable value of the importations that the case of
Chevron reached this Court and was ultimately decided in favor of the BOC. Thus, since
the present case and the case of Chevron basically arise from the same factual
circumstances, it is the Court's duty to apply the ruling in Chevron to the present case.
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I n Chinese Young Men's Christian Association of the Philippine Islands v. Remington
Steel Corporation, 1 2 this Court ruled as follows: SaCIDT
It was also held in the same case that "[p]etitioner's failure to le the required
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entries within a non-extendible period of thirty days from date of discharge of the last
package from the carrying vessel constituted implied abandonment of its oil
importations. This means that from the precise moment that the non-extendible thirty-
day period lapsed, the abandoned shipments were deemed, ipso facto, (that is, they
became) the property of the government." 1 9
The term ipso facto is de ned as by the very act itself or by mere act. Probably a
closer translation of the Latin term would be by the fact itself. Thus, there was no
need for any affirmative act on the part of the government with respect to the
abandoned imported articles since the law itself provides that the abandoned
articles shall ipso facto be deemed the property of the government.
Ownership over the abandoned importation was transferred to the government by
operation of law under Section 1802 of the TCC[P], as amended by RA 7651.
Therefore, when petitioner withdrew the oil shipments for consumption, it
appropriated for itself properties which already belonged to the government.
Accordingly, it became liable for the total dutiable value of the shipments of
[its] imported crude oil. 2 0
It becomes apparent from the above discussions, that the issue of whether or
not an importer is guilty of fraud in the ling of its import entry is immaterial insofar as
its liability for the payment of the dutiable value of its abandoned importation is
concerned. As applied to the present case, petitioner becomes liable to pay the
dutiable value of its importation, regardless of whether or not it is guilty of fraud,
especially since it consumed or used its imported crude oil despite losing ownership
thereof. Thus, the CTA Former En Banc correctly held that:
As regards the issue on the existence of fraud, it should be
emphasized that fraud is not controlling in this case. Even in the
absence of fraud, petitioner Shell is still liable for the payment of
the dutiable value by operation of law. The liability of petitioner
Shell for the payment of the dutiable value of its imported crude
oil arose from the moment it appropriated for itself the said
importation, which were already a property of the government by
operation of law. Absence of fraud in this case would not exclude
petitioner Shell from the coverage of Sections 1810 and 1802 of
the TCCP. 2 1
The ponencia sustains petitioner's contention and rules that the provisions of
Sections 1301, 1801 and 1802 of the TCCP should be read in relation to Section 1603
to make the whole statute wholly operative and effective. I agree that a statute must be
read or construed as a whole or in its entirety and that all parts, provisions, or sections,
must be read, considered or construed together, and each must be considered with
respect to all others, and in harmony with the whole. 2 2 However, it would be error to
rely on petitioner's fallacious premise that, under Section 1603 of the TCCP, the
government's right to claim abandonment and recover the dutiable value of the
abandoned importation is dependent on whether or not it (petitioner) is guilty of fraud,
and its subsequent position that, if it is not guilty of fraud, the government's right to
claim abandonment will lapse after a period of one (1) year. How can the government's
right to claim abandonment lapse if the government's ownership over the abandoned
articles is already transferred to it by operation of law from the moment that petitioner
failed to le its import entry within the non-extendible 30-day period? In other words,
after the expiration of the 30-day period, the government, ipso facto, becomes the
owner of the abandoned articles and, being the owner, the government's exercise
of its rights of ownership over the abandoned imported article, which
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includes the right to recover the value of such abandoned article, which was
already consumed by the importer, is not conditioned upon any prior act or
proceeding nor is it subject to the prescriptive period provided under Section
1603.
Contrary to what has been stated in the ponencia, the government, in the present
case, is not exercising its power to assess and collect taxes. What it exercises is its
right of ownership over abandoned imported articles. AHDacC
Footnotes
1. Rollo, pp. 131-156; Penned by Associate Justice Olga Palanca-Enriquez with Presiding
Justice Ernesto D. Acosta, Associate Justices Juanito C. Castañeda, Jr., Lovell R.
Bautista and Erlinda P. Uy concurring.
2. Id. at 157-186; Penned by Associate Justice Juanito C. Castañeda, Jr. with Associate
Justices Erlinda P. Uy and Caesar A. Casanova concurring with a Dissenting Opinion
penned by Associate Justice Olga Palanca-Enriquez with Presiding Justice Ernesto D.
Acosta and Associate Justice Lovell R. Bautista concurring.
3. Id. at 341-353; Penned by Associate Justice Caesar A. Casanova with Presiding Justice
Ernesto D. Acosta and Associate Justice Lovell R. Bautista.
4. R.A. No. 8180 was declared unconstitutional in the consolidated cases of Tatad v. The Sec.
of the Dept. of Energy, 346 Phil. 321 (1997). However, the events and transactions
(importations) involved in the present case occurred when R.A. No. 8180 was still in
effect.
5. Rollo, p. 452.
6. Id. at 453-457.
7. Id. at 458-459.
8. Id. at 460-465.
9. Id. at 466.
10. Id. at 467-471.
16. Id.
17. Id. at 136-137.
18. Id. at 137.
19. Id.
20. Id. at 341-353.
21. Note that, as contained in the demand letters dated 29 October 2001 and 28 December
2001 sent by respondent to petitioner, the amount being collected was
P936,899,885.90.
22. Rollo, pp. 346-347.
26. Id. at 351-352; Citing pertinent portion of the Memorandum dated 2 February 2001 issued
by the Investigation and Prosecution Division (IPD) of the BOC.
27. Id. at 352.
28. SEC. 5. Answer. —
xxx xxx xxx
44. Chevron Phils., Inc. v. Commissioner of the Bureau of Customs, supra note 29 at 731-733.
45. Rollo, pp. 148-149.
46. Salcedo v. People, 400 Phil. 1302, 1304 (2000).
47. The Insular Life Assurance Co., Ltd. v. Court of Appeals, 472 Phil. 11, 22 (2004).
48. Borromeo v. Sun, 375 Phil. 595, 602 (1999).
49. The Insular Life Assurance Co., Ltd. v. Court of Appeals, supra note 47 at 22-23.
50. Rollo, pp. 341-353.
51. International Corporate Bank v. Guenco, 404 Phil. 353, 364 (2001).
52. Transglobe International, Inc. v. Court of Appeals, 361 Phil. 727, 739 (1999).
53. Astroland Developers, Inc. v. GSIS , 481 Phil. 724, 748 (2004).
57. Dizon v. CTA, 576 Phil. 111, 128 (2008); and Atlas Consolidated Mining and Dev't. Corp. v.
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Commissioner of Internal Revenue, 547 Phil. 332, 339 (2007); and Commissioner of
Internal Revenue v. Manila Mining Corp., 505 Phil. 650, 664 (2005).
58. An Act Creating the Court of Tax Appeals.
59. An Act Expanding the Jurisdiction of the Court of Tax Appeals (CTA), Elevating Its Rank to
the Level of a Collegiate Court with Special Jurisdiction and Enlarging Its
Membership, Amending for the Purpose Certain Sections or Republic Act No. 1125, as
Amended, Otherwise Known as the Law Creating the Court of Tax Appeals, and for
Other Purposes.
60. 264 Phil. 753, 759 (1990).
61. Mato v. CA, 320 Phil. 344, 349 (1995).
62. Section 5(b), Rule 6 of the Revised Rules of the Court of Tax Appeals requires, among
others, the Commissioner of Customs, within ten days after his answer, to certify and
forward to the court all the records of the case in their possession. Failure to transmit
the records within the time prescribed herein or within the time allowed by law by the
court may constitute indirect contempt of court.
63. Supra note 57 at 131-132 citing Heirs of Pasag v. Parocha, 550 Phil. 571, 578-579 (2007).
64. People v. Tundag, 396 Phil. 873, 887 (2000).
65. Rep. of the Phils. v. CA, 194 Phil. 476, 495 (1981).
73. Rep. of the Philippines v. Ablaza, 108 Phil. 1105, 1108 (1960).
5. Decision, p. 30.
11. Chevron's and petitioner's importations were unloaded from the carrying vessels three (3)
days after their arrival.
12. Supra note 2.
13. Id. at 337.
14. An Act to Revitalize and Strengthen the Bureau of Customs, Amending for the Purpose
Certain Sections of the Tariff and Customs Code of the Philippines, As Amended.
15. Emphasis ours.
16. Supra note 9, at 727.
17. Emphasis ours.