G.R. No. 195876, June 19, 2017
Republic of the Philippines, represented by the Bureau of Customs vs. Pilipinas Shell Petroleum Corporation

FACTS

The Bureau of Customs (BOC) assessed Pilipinas Shell Petroleum Corporation for the dutiable value of imported oil products, claiming Shell had impliedly abandoned the shipments by failing to file the required Import Entry and Internal Revenue Declaration (IEIRD) within the non-extendible 30-day period from discharge, as mandated by the Tariff and Customs Code (TCCP). The BOC argued that upon such abandonment, ownership of the goods ipso facto vested in the government. Shell, having later withdrawn and consumed the goods, was thus liable for their value. Shell defended itself by invoking Section 1603 of the TCCP, which prescribes a one-year period for the BOC to make a final liquidation or assessment of duties. Shell contended that the BOC’s action, filed beyond one year from the final payment of duties, was time-barred.
The Court of Tax Appeals (CTA) En Banc originally ruled in favor of the BOC. However, the Supreme Court’s Third Division, in a December 2016 Decision, reversed the CTA, applying the one-year prescriptive period under Section 1603 and ruling the government’s claim had prescribed. The BOC, through the Office of the Solicitor General, filed an Omnibus Motion for Reconsideration, praying for the case to be referred to the Court En Banc, arguing its ruling conflicted with the precedent set in Chevron Philippines, Inc. v. Commissioner of the Bureau of Customs.

ISSUE

Whether the one-year prescriptive period under Section 1603 of the TCCP for the finality of liquidation of duties applies to an action for the recovery of the dutiable value of imported articles deemed abandoned by the importer.

RULING

The Supreme Court, through the dissenting opinion of Justice Peralta, voted to grant the Omnibus Motion. The legal logic clarifies a distinction between the government’s taxing authority and its right of ownership. Section 1603 of the TCCP governs the “finality of liquidation,” which is the final computation and ascertainment of customs duties. Its one-year prescriptive period is a limitation on the government’s power to assess and collect taxes, preventing the re-liquidating of duties after one year from final payment, barring fraud.
The dissenting opinion held this provision inapplicable to the case at bar. The government’s cause of action did not arise from its power to tax but from its right of ownership. Under Sections 1801 and 1802 of the TCCP, an importer’s failure to file the required entry within the 30-day period results in implied abandonment, and the goods automatically become government property. Consequently, when Shell appropriated the abandoned shipments, it appropriated government property. The BOC’s suit to recover the dutiable value was an action to vindicate proprietary rights, not to collect unpaid duties. Therefore, the prescriptive period limiting tax assessment (Section 1603) does not apply to an action for recovery based on ownership of abandoned goods. The dissent emphasized that this interpretation aligns with the Court’s earlier ruling in the Chevron case.