Commissioner of Customs v. Court of Tax Appeals

FIRST DIVISION [CA-G.R. SP No. 78563. February 15, 2007.] COMMISSIONER OF CUSTOMS , petitioner , vs . COURT OF TAX APPEALS and PILIPINAS SHELL PETROLEUM CORPORATION , respondents . D E C I S I O N ROMILLA-LONTOK , J p : Before this Court is a petition for certiorari and prohibition with Prayer for the Issuance of a Temporary Restraining Order and Writ of Preliminary Injunction filed by the Commissioner of Customs to reverse and set aside the resolution of the Court of Tax Appeals dated January 17, 2003 denying his Motion to Dismiss and the resolution dated June 16, 2003 which denied his Motion for Reconsideration. The facts: On April 16, 1996, Republic Act No. 8180, known as the "Downstream Oil Industry Deregulation Act of 1996" took effect. It provides for the reduction of the tariff duty on imported crude oil from 10% to 3%. Before the effectivity of RA 8180 Pilipinas Shell Petroleum Corporation made importation of 1,979,674.85 US barrels Arab light crude oil. The shipment arrived on April 7, 1996 aboard the vessel EX MT Lanistels. Import Entry No. 683-96 for subject shipment was filed on May 23, 1996. The shipment was subjected to 3% duty. On August 1, 2000, more than four (4) years after the import entries were liquidated, Shell received an assessment from the District Collector of Batangas requiring payment of P120,162,991.00 representing the difference between the amount of duties paid at 3% and the amount that should have been charged at 10%. TAHIED Shell protested the assessment. It asserted that, in accordance with Sections 204 and 205 of the Tariff and Customs Code of the Philippines (TCCP), the rate of duty on an imported article is that existing at the time of entry, not at its arrival and an import entry and the liquidation thereof shall become final upon all parties after one (1) year from the date of final payment of duties. Section 205 of the TCCP states: "SECTION 205. Entry, or Withdrawal from Warehouse, for Consumption. Imported articles shall be deemed "entered" in the Philippines for consumption when the specified entry form is properly filed and accepted, together with any related documents required by the provisions of this Code and/or regulations to be filed with such form at the time of entry, at the port or station by the customs official designated to receive such entry papers and any duties, taxes, fees and/or other lawful charges required to be paid at the time of making such entry have been paid or secured to be paid with the customs official designated to receive such monies, provided that the article has previously arrived within the limits of the port of entry. Imported articles shall be deemed "withdrawn" from warehouse in the Philippines for consumption when the specified form is properly filed and accepted, together with any related documents required by any provisions of this Code and/or regulations to be filed with such form at the time of withdrawal, by the customs official designated to receive the withdrawal entry and any duties, taxes, fees and/or other lawful charges required to be paid at the time of withdrawal have been deposited with the customs official designated to receive such payment." The District Collector stood firm on his demand. Shell appealed the decision of the District Collector to the Commissioner of Customs (COC). On October 29, 2001, Shell received a telefax demand from the COC requiring payment of P936,899,883.90, the whole value of subject importation. The COC asserted that Import Entry 683-96 was irregularly filed and was accepted beyond the thirty (30) day period required. Said irregular filing beyond the 30-day period is considered abandonment in favor of the Government by operation of law. Petitioner protested the letter on the ground that the demand had no factual nor legal basis. The demand to pay had prescribed. On December 28, 2001, Shell received another demand letter. Shell did not settle despite said repeated demands. On April 11, 2002, the Bureau of Customs filed a complaint with the Regional Trial Court, Manila, for collection of a sum of money against Pilipinas Shell Petroleum Corporation (Shell) and Caltex Phils., Inc. (Caltex) docketed as Civil Case No. 02103239. From Shell, it demanded payment of the dutiable value of Import Entry 683-96 in the amount of Nine Hundred Thirty Six Million Eight Hundred Ninety Nine Thousand Eight Hundred Eighty Three and 90/100 (P936,899,883.90) Pesos; attorney's fees and litigation expenses of Twenty Million (P20,000,000.00) Pesos and exemplary damages of Twenty Million (P20,000,000.00) Pesos. On April 25, 2002, summons was received by Shell. While the collection case, CV No. 02103239, was pending before Branch 25, Regional Trial Court of Manila, Shell filed on May 27, 2002 before the Court of the Tax Appeals a petition for review docketed as CTA Case No. 6485 against the COC praying that the demand letters dated July 27, 2000, September 4, 2000, October 29, 2001 and December 28, 2001 be declared devoid of legal basis and respondent COC be enjoined to refrain permanently from any attempt to collect from petitioner Shell. Shell assails the collection case for being erroneous. The TCCP provision on abandonment does not apply to the subject importation. The action of the COC is barred by prescription. The practice is that the crude oil supplier determines the price of crude oil sold during a given month and thereafter sends the corresponding invoice to the buyer. The invoice is received by the buyer a number of days after the arrival of the goods. The Bureau of Customs allows the release of crude oil shipments and unloading at the oil company's receiving tanks before the covering import entry (required to be accompanied by supplier's invoice) is filed. The oil company is merely required to pay an advance duty deposit to the Bureau of Customs before the arrival of the crude oil importation. Upon receipt of supplier's invoice, the oil company files the import entry at times beyond the thirty (30) day reglementary period after unloading of the shipment ( Rollo , pp. 73-74). The buyer then pays the difference between the amount of duty payable and the advance duty deposit. The COC moved to dismiss the petition for review for failure to state a strong and valid cause of action and for the Court's alleged lack of jurisdiction over the subject matter thereof. He asserted that the deliberate filing of the import entry after April 16, 1996, more than thirty (30) days after the arrival and unloading of the imported oil, subjected the importation to only 3% tax depriving the government of 7% of the duties imposable. The intentional delay constituted tax evasion. The failure to file the import entry within the period allowed by TCCP is deemed to be a renunciation of all the importer's interests and property rights over the importation. The imported goods are thus considered abandoned in favor of the government. He likewise asserted that the Court of Tax Appeals has no jurisdiction over the subject matter of the petition. The complaint being one for collection falls within the jurisdiction of ordinary civil courts in accordance with the amount of the claim. He added that the phrase "Decision of the Commissioner of Customs", in par. 2, Sec. 7 of RA 1125, refers to the COC's ruling in protest or seizure cases that are brought before him on appeal or through automatic review pursuant to Section 2313 of TCCP. The demand letter of Customs Deputy Commissioner Valera is not the "ruling" or "decision" being contemplated by either Sec. 2402 of the Tariff Code or Sec. 7(2) of RA 1125. What Section 7 of RA 1125 means by decision of COC which could be appealed to the Court of Tax Appeals are judgments or orders rendered by the COC which are final in nature and not interlocutory. On January 17, 2003, the Motion to Dismiss was denied for lack of merit. The Motion for Reconsideration was likewise denied on June 16, 2003. Hence, this petition on the following grounds: I SINCE RESPONDENT SHELL'S PETITION FOR REVIEW WAS FILED BEYOND THE PERIOD ALLOWED BY LAW, THEREBY MAKING THE DEMAND OF THE BUREAU OF CUSTOMS FOR SAID RESPONDENT TO PAY THE AMOUNT OF P936,899,885.90 REPRESENTING THE TOTAL DUTIABLE VALUE OF THE SUBJECT OIL IMPORTATION. ALREADY FINAL AND EXECUTORY, RESPONDENT COURT OF TAX APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION IN ISSUING THE HEREIN ASSAILED JANUARY 17, 2003 AND JUNE 16, 2003 RESOLUTIONS IN CTA CASE NO. 6485. II SINCE RESPONDENT SHELL'S PETITION FOR REVIEW FAILS TO STATE A VALID CAUSE OF ACTION AGAINST PETITIONER, AND INSTEAD, IT IS THE BUREAU OF CUSTOMS WHICH HAS A WELL-FOUNDED CAUSE OF ACTION AGAINST SAID RESPONDENT OIL COMPANY, RESPONDENT COURT OF TAX APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION IN REFUSING TO DISMISS CTA CASE NO. 6485. I ON THE ISSUE THAT SHELL'S PETITION WAS FILED BEYOND THE PERIOD ALLOWED BY LAW, HENCE, THE CTA ACTED WITH GRAVE ABUSE OF DISCRETION IN DENYING THE MOTION TO DISMISS AND DENYING THE MOTION FOR RECONSIDERATION. The COC contended that inasmuch as SHELL failed to file a timely appeal on the latest letter demanding payment of P936,899,883.90 on or before January 15, 2002, the same is executory. Said respondent company is barred from disputing the correctness of the amount claimed. The right of the government to the amount demanded has been rendered absolute upon expiration of the reglementary period to appeal. AETcSa Said contention does not deserve credence. The Bureau of Customs filed the complaint for collection of the alleged dutiable value of the subject importation on April 25, 2002. It was therefore the final determination the COC made of the disputed assessment. The 30 day period to file the appeal to the CTA is reckoned from said date. May 25, 2002 is a Saturday, and May 26th, a Sunday. The filing of the petition for review on May 27, 2002 was therefore timely. In Yabes vs. Flojo (115 SCRA 278), a tax collection case filed by the Republic of the Philippines (BIR) against Yabes which by analogy can be applied to instant case, the Supreme Court categorically held that: "There is no reason for us to disagree from or reverse the Court of Tax Appeals' conclusion that under the circumstances of this case, what may be considered as final decision or assessment of the Commissioner is the filing of the complaint for collection in the respondent Court of First Instance of Cagayan, the summons of which was served on petitioners on January 20, 1971 and that therefore the appeal with the Court of Tax Appeals in CTA Case No. 2216 was filed on time." II ON THE ISSUE THAT SHELL FAILED TO STATE A VALID CAUSE OF ACTION AND THAT THE CTA HAS NO JURISDICTION OVER THE SUBJECT MATTER OF THE PETITION FOR REVIEW. The COC further contends that the CTA has no jurisdiction over the petition for review Shell filed. He asserts that the demand letter of Deputy Commissioner Valera is not the "ruling" or "decision" being contemplated by Section 2402, Tariff Code or Sec. 7(2) of Republic Act No. 1125. The decision that can be appealed to the CTA are judgments or orders rendered by the COC which are final in nature and not interlocutory. For want of legal precedents more appropriate, this Court has to rely upon the ruling in Yabes vs. Flojo ( supra ) and apply by analogy that the COC's filing of the complaint for collection constituted the final determination made by him of Shell's liability. Sec. 7, par. 2 of Republic Act No. 1125, the Act creating the Court of Tax Appeals (CTA) enumerates the cases where the CTA shall exercise exclusive appellate jurisdiction: 1. . . . 2. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges; seizure, detention or release of property affected; fines, forfeitures or other penalties imposed in relation thereto; or other law or part of law administered by the Bureau of Customs. 3. . . ." In the case at bar, the denial by the Court of Tax Appeals of the Motion to Dismiss and the subsequent Motion for Reconsideration, both filed by the Commissioner of Customs, having been rendered on January 17, 2003 and June 16, 2003, respectively, prior to the enactment on April 23, 2004 of RA 9282, the Act Expanding the Jurisdiction of the Court of Tax Appeals, was appealable to the Court of Appeals by way of a petition for review or by certiorari . WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED. SO ORDERED. Reyes and Del Castillo, JJ., concur.