G.R. No. 195876. December 05, 2016
PILIPINAS SHELL PETROLEUM CORPORATION, PETITIONER, V. COMMISSIONER OF CUSTOMS, RESPONDENT.

FACTS

Pilipinas Shell Petroleum Corporation imported crude oil, filing its import entry and paying duties on May 23, 1996. The Bureau of Customs (BOC) subsequently deemed the shipment abandoned and, years later, sought to collect its entire dutiable value. The Commissioner of Customs issued demand letters on August 1, 2000, and October 29, 2001, asserting a claim for unpaid duties. Shell contested this, arguing the government’s right to collect had prescribed. The Court of Tax Appeals ruled in favor of the Commissioner, prompting Shell to elevate the case to the Supreme Court. The central dispute revolved around whether the BOC’s action was barred by prescription and whether the precedent set in Chevron Philippines v. Commissioner of the Bureau of Customs was controlling.

ISSUE

Whether the Bureau of Customs’ claim for the collection of customs duties on the imported crude oil had prescribed.

RULING

Yes, the claim had prescribed. The Court ruled that the doctrine of stare decisis, which would compel following the Chevron case, was not applicable due to a critical factual distinction: the absence of proven fraud in the present case. Section 1603 of the Tariff and Customs Code provides that the liquidation of duties becomes final and conclusive after one year from final payment, “in the absence of fraud.” Fraud removes the case from this one-year prescriptive period, making the government’s right to collect virtually imprescriptible. Here, the Commissioner failed to present clear and convincing evidence of fraud by Shell. The February 2, 2001 Memorandum, which lower courts relied upon to imply fraudulent intent, was never formally offered in evidence during the trial de novo before the CTA. Per established jurisprudence, documents not formally offered have no evidentiary value. Consequently, with no fraud established, the one-year prescriptive period under Section 1603 applied. Since the BOC’s demand letters were issued more than four years after Shell’s final payment of duties, the right to collect had clearly prescribed. The ruling in Chevron, which involved established fraud, was thus factually inapposite.