PILIPINAS SHELL
PETROLEUM CORPORATION,
Petitioner, -
versus - COMMISSIONER OF CUSTOMS, Respondent. |
G.R. No. 176380
Present: QUISUMBING, J., Chairperson,
*YNARES-SANTIAGO, **CHICO-NAZARIO,
***LEONARDO-DE
CASTRO, and BRION, JJ.
Promulgated: June
18, 2009 |
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D E C I S I O N
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BRION, J.: |
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Before us is the Petition for Review on Certiorari[1]
filed by petitioner Pilipinas Shell Petroleum Corporation (Shell) questioning the Decision[2] of the Court of
Appeals (CA) in CA-G.R. SP No. 78564.
The CA decision set aside the
resolutions[3]
issued by the Court of Tax Appeals (CTA)
in CTA Case No. 6484, which in turn denied the respondent Commissioner of
Customs’ (respondent) Motion to Dismiss
the petition for review Shell filed with the tax court. The CA decision effectively dismissed Shell’s
tax protest case.
BACKGROUND FACTS
Shell is a domestic corporation engaged, among others, in
the importation of petroleum and its by-products into the country. For these importations, Shell was assessed
and required to pay customs duties and internal revenue taxes.
In 1997 and 1998, Shell settled its liabilities for customs
duties and internal revenue taxes using tax credit certificates (TCCs) that were transferred to it for
value by several Board of Investment (BOI)-registered
companies. The transfers of the TCCs to
Shell were processed by the transferors-BOI-registered companies and were
eventually approved by the One Stop Shop Inter-Agency Tax Credit and
In a letter dated November 3, 1999 (Center’s November 3 letter), the Center, through the Secretary of
the DOF, informed Shell that it was cancelling the TCCs transferred to and used
as payment by the oil company, pursuant to its EXCOM Resolution No. 03-05-99. The Center claimed that after conducting a
post-audit investigation, it discovered that the TCCs had been fraudulently
secured by the original grantees who thereafter transferred them to Shell; no categorical
finding was made regarding Shell’s participation in the fraud. In view of the cancellation, the Center required
Shell to pay the BIR and BOC the amounts corresponding to the TCCs Shell had
used to settle its liabilities.
Shell objected to the cancellation of the TCCs claiming
that it had been denied due process. Apparently, Shell had sent a letter to the
Center on November 3, 1999 (Shell’s November 3 letter) adducing reasons
why the TCCs should not be cancelled; Shell claimed that the Center’s November
3 letter cancelling the TCCs was issued without considering its letter of the
same date.
The Center did not act on Shell’s November 3 letter;
instead, the respondent sent a letter dated
In view of such cancellation, it becomes
apparent that the Customs Official Receipts previously issued to [Shell] with
the applications of the [TCCs] cited in said lists becomes null and void ab initio. In view thereof, your corporation must have
to replace amount of P209,129,141.00 which is equivalent to the amount
of the [TCCs] cancelled. The
corresponding interest, surcharge and penalties thereof shall be relayed to you
in due time after the recomputation.
Your immediate
response to this demand letter shall be appreciated.
Shell submitted its reply letter
dated
Three years later, through letters dated February 15,
February 20, and April 12, 2002 (respondent’s
collection letters), the respondent, through Atty. Gil Valera (Atty. Valera), Deputy Commissioner for Revenue Collections Monitoring Group,
formally demanded from Shell payment of the amounts corresponding to the listed
TCCs that the Center had previously cancelled.
Except for the amount due, the respondent’s collection letters were similarly
worded, as follows:
In
as much as the same [TCCs] were reported as having been utilized to pay your
government obligations earlier, formal
demand is hereby being made upon you to pay back the total amount of x x
x within five (5) days from receipt thereof [sic]. Failure on your part
to settle your obligation would constrain the Bureau of Customs to initiate
legal action in the regular court.
Please consider this as our last and final demand.
As mentioned, all three letters were signed by Atty. Valera.
Shell replied to the respondent’s February 15 and 20,
2002 collection letters via letters
dated February 27 and
On
1.
Whether
or not the TCCs subject of the instant petition for are genuine and authentic;
2.
Whether
or not petitioner’s right to due process of law was violated by the issuance of
the 1999 collection letter and/or the filing of the collection cases, both of
which seek to enforce the Excom Resolution;
3.
Whether
or not attempts to collect unpaid duties and taxes, being based on the bare
allegation that the TCCs were fraudulently issued and transferred, can be given
any effect considering that fraud is never presumed but must be proven;
4.
Assuming
arguendo that fraud was present in
the issuance of the original TCCs, whether or not such fraud can work to the
prejudice of an innocent purchaser for value who is not a party to such fraud;
5.
Whether
or not the respondent and the DOF/Center are stopped from invalidating the TCCs
and the transfers and utilizations thereof;
6.
Whether
or not the TCCs, having been utilized, are already functus officio and can no longer be cancelled.[7]
The respondent filed a motion to dismiss Shell’s petition for review on
the ground of prescription. The respondent claimed that Shell’s petition was
filed beyond the 30-day period provided by law for appeals of decisions of the
Commissioner of Customs to the CTA. The respondent also contended that this
30-day period should be counted from the time Shell received the respondent’s collection
letters.
Shell countered by
invoking the case of Yabes v. Flojo,[8]
where this Court ruled, under the circumstances of that case, that a complaint
for collection filed in court may be considered a final decision or assessment of
the Commissioner[9] that opened the way for an
appeal to the CTA. Applying that
principle, Shell contends the 30-day reglementary period should be counted from
the date it received the summons for one of the collection cases filed by
respondent or, specifically, on
The CTA found the respondent’s
contentions unmeritorious, and thus denied his motion to dismiss in a
Resolution dated
The appellate court
annulled and set aside the CTA rulings in its decision dated
Shell’s attempt to have the CA decision reconsidered
proved unsuccessful; hence, this petition.
THE PETITION
Shell insists, in this
petition for review on certiorari, that its petition for review with the
CTA was filed within the 30-day reglementary period that, it posits, should be
counted from the date it received the summons for the collection cases filed by
respondent against it before the regular court.
Shell cites this Court’s ruling in Yabes
v. Flojo.[13]
On the assumption that the
collection letters amounted to a decision on its protest, Shell submits that
these are not “decision[s] of the Commissioner of Customs” appealable to
the CTA under Section 7, Republic Act (RA)
No. 1125, as amended by RA No. 9282.[14] It
maintains that it is the Commissioner’s
decision on the taxpayer’s liability for customs duties and taxes, not the
decision of his subordinate, which is the proper subject of the appeal to the
CTA, the delegation of authority under CMC No. 27-2001 and CMO No. 40-2001 notwithstanding. It additionally claims that Atty. Valera was
prohibited from carrying out his delegated duties under the injunctive writ
issued the RTC of Manila in its Order dated
THE COURT’S RULING
We resolve to DENY Shell’s petition; the present case does
not involve a tax protest case within the jurisdiction of the CTA to resolve.
The parties argue over which act serves as the decision
of the respondent that, under the law, can be the subject of an appeal before
the CTA, and from which act the 30-day period to appeal shall be reckoned. Shell insists it should be the filing of the
collection suits as this was indicative of the finality of the respondent’s
action. The respondent, on the other
hand, claims, it should be the earlier act of sending the collection letters
where the respondent finally indicated his resolve to collect the duties due
and demandable from Shell.
Section 7 of RA No. 1125, as amended, states:
Sec. 7. Jurisdiction. – The CTA shall exercise:
(a)
Exclusive
appellate jurisdiction to review by appeal xxx;
xxx xxx xxx
4.
Decisions of the Commissioner of Customs in
cases involving liability for customs duties, fees or other money charges, seizure, detention, or release or
property affected, fines, forfeitures or other penalties in relation thereto,
or other matters arising under the Customs Law or other laws administered by
the Bureau of Customs;
These decisions of the respondent involving customs duties specifically
refer to his decisions on administrative tax protest cases, as stated in
Section 2402 of the Tariff and Customs Code of the Philippines (TCCP):
Section 2402. Review by Court
of Tax Appeals. – The party aggrieved by a ruling of the
Commissioner in any matter brought before him upon protest or
by his action or ruling in any case
of seizure may appeal to the
Court of Tax Appeals, in the manner and within the period prescribed by law
and regulations.
Unless
an appeal is made to the Court of Tax Appeals in the manner and within the
period prescribed by laws and regulations, the action or ruling of the Commissioner
shall be final and conclusive. [Emphasis supplied.]
A tax protest case, under the TCCP, involves a protest
of the liquidation of import entries. A
liquidation is the final computation and ascertainment by the collector of the
duties on imported merchandise, based on official reports as to the quantity,
character, and value thereof, and the collector’s own finding as to the
applicable rate of duty; it is akin to an assessment of internal revenue taxes
under the National Internal Revenue Code[15] where the tax liability of the
taxpayer is definitely determined.
In the present case, the facts reveal that Shell
received three sets of letters:
a.
the Center’s November 3 letter, signed by the Secretary of
Finance, informing it of the cancellation of the TCCs;
b.
the respondent’s November 19 letter requiring it to replace
the amount equivalent to the amount of the cancelled TCCs used by Shell; and
c.
the respondent’s collection letters issued through Atty.
Valera, formally demanding the amount covered by the cancelled TCCs.
None of these letters, however, can be considered as a liquidation or an
assessment of Shell’s import tax liabilities that can be the subject of an
administrative tax protest proceeding before the respondent whose decision is
appealable to the CTA. Shell’s import tax liabilities had long been
computed and ascertained in the original assessments,[16] and Shell paid these liabilities using the TCCs
transferred to it as payment. It is even
an error to consider the letters as a “reassessment” because they refer to the
same tax liabilities on the same importations covered by the original
assessments. The letters merely reissued
the original assessments that were previously settled by Shell with the use of the
TCCs. However, on account of the cancellation
of the TCCs, the tax liabilities of Shell under the original assessments were
considered unpaid; hence, the letters and the actions for collection. When
Shell went to the CTA, the issues it raised in its petition were all related to
the fact and efficacy of the payments
made, specifically the genuineness of the TCCs; the absence of due process
in the enforcement of the decision to cancel the TCCs; the facts surrounding
the fraud in originally securing the TCCs; and the application of
estoppel. These are payment and
collection issues, not tax protest issues within the CTA’s jurisdiction to rule
upon.
We note in this regard that Shell never protested the
original assessments of its tax liabilities and in fact settled them using the
TCCs. These original assessments,
therefore, have become final, incontestable, and beyond any subsequent protest
proceeding, administrative or judicial, to rule upon.
To be very precise, Shell’s petition before the CTA
principally questioned the validity of the cancellation of the TCCs – a
decision that was made not by the respondent, but by the Center. As the CTA has no jurisdiction over decisions
of the Center, Shell’s remedy against the cancellation should have been a certiorari
petition before the regular courts, not a tax protest case before the CTA. Records do not show that Shell ever availed
of this remedy. Alternatively, as we
held in Shell v. Republic of the Philippines,[17]
the appropriate forum for Shell under
the circumstances of this case should be at the collection cases before the RTC
where Shell can put up the fact of its payment as a defense.
Parenthetically, our conclusions
are fully in step with what we held in Shell v. Republic[18]
that a case becomes ripe for filing with the RTC as a collection matter after
the finality of the respondent’s assessment. We hereby confirm that this
assessment has long been final, and this recognition of finality removes
all perceived hindrances, based on this case, to the continuation of the
collection suits. In Dayrit v. Cruz,[19] we declared on the
matter of collection that:
[A] suit for the
collection of internal revenue taxes, where the assessment has already become
final and executory, the action to collect is akin to an action to enforce the
judgment. No inquiry can be made therein as to the merits of the original case
or the justness of the judgment relied upon.
In light of our conclusion that the present case does
not involve a decision of the respondent on a matter brought to him as a tax
protest, Atty. Valera’s lack of authority to issue the collection letters and
to institute the collection suits is irrelevant. For this same reason, the injunction against
Atty. Valera cannot be invoked to enjoin the collection of unpaid taxes due
from Shell.
WHEREFORE, we DENY Shell’s petition for
review on certiorari and AFFIRM the
result of the Decision of the Court of Appeals dated
SO
ORDERED.
ARTURO D. BRION
Associate Justice
|
WE
CONCUR: LEONARDO A.
QUISUMBING
Associate Justice Chairperson |
|
|
CONSUELO YNARES-SANTIAGO Associate
Justice |
MINITA V. CHICO-NAZARIO Associate Justice |
TERESITA
J. LEONARDO-DE CASTRO
Associate
Justice
ATTESTATION
I attest that the conclusions in the
above Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CERTIFICATION
REYNATO
S. PUNO
Chief Justice
*
Designated additional Member of the Second Division per Special Order
No. 645 dated
** Designated additional Member of the Second Division effective
*** Designated additional Member of the Second Division effective
[1] Under Rule 45 of the Rules of Court.
[2] Dated
[3] Dated
[4] Shell sent an earlier letter dated
[5] Docketed as Civil Case
No. 02-103300; rollo, pp. 82-86.
[6] The two other collection cases filed with the RTC of Manila were docketed as Civil Case Nos. 02-103191 and
02-103192; summonses in these two cases were received by Shell on April 25 and
30, 2002; id., pp. 88-99.
[7]
[8] G.R. No. L-46954,
[9] Commissioner of
Internal Revenue, as the assessment was under the National Internal Revenue
Code, supra note 8, p. 286.
[10] Rollo, pp. 159-167.
[11] Respondent’s Motion for Reconsideration was denied in the CTA Resolution dated
[12] Supra note 2.
[13] Supra note 8.
[14] The Law Creating
the Court of Tax Appeals, and For Other Purposes; RA No. 1125 was amended by RA No. 9282 on
[15] NIRC, Section 228.
[16] The records did not disclose the exact dates when the liquidation of entries were made, but they most likely refer to importations made by Shell on or before 1997 and 1998, as payments using the TCCs were made in 1997 and 1998.
[17] G.R. No. 161953,
[18]
[19] G.R. No. L-39910,