Pilipinas Shell gets fresh restraining order vs BOC

Pilipinas Shell Petroleum Corp. has gained more time in its tax dispute with the Bureau of Customs (BOC), after a Batangas court issued a fresh restraining order versus a planned seizure of its fuel imports. In a three-page decision awarding a 20-day temporary restraining order (TRO), Presiding Judge Ruben A. Galvez of Branch 84 of the Batangas City Regional Trial Court said more time was needed to resolve the issues raised in the case. Last Wednesday, Galvez issued a three-day restraining order in Pilipinas Shell’s favor a day after the Court of Tax Appeals rejected the oil firm’s petition for a permanent injunction while the tax dispute was being heard. In his latest order, Galvez noted "a need for this court to thoroughly examine the veracity of the alleged full payment of the taxes and duties of the subject" in ordering that the status quo be maintained. The Customs bureau, following the tax appeals court ruling, earlier notified the oil firm of its intent to seize fuel shipments in its Batangas refinery as payment for P7.3 billion in alleged back taxes. Pilipinas Shell argued before the Batangas court that Customs had no right to confiscate the company’s landed imports, or goods which are already in its possession. Assistant Solicitor General Thomas M. Laragan countered that the Batangas court had no jurisdiction since the tax court was already hearing the case. Galvez, however, said the case did not involve a decision by the Customs commissioner or the CTA "but rather a memorandum issued by a district collector ordering the holding of all import shipments" of Pilipinas Shell. "[The] plaintiff is asking for [an order] to restrain the defendants from holding their import shipments [that] are already in their custody and physical possession," the judge said. "Clearly, the issue is not the validity or legality of the said memorandum but rather the taking of the property of the plaintiff without due process." Customs claims Pilipinas Shell has to make up for alleged tax liabilities from 2004 to 2009 due to the firm’s failure to pay excise taxes on shipments of catalytic cracked gasoline and light catalytic cracked gasoline. The oil firm countered that doing so would mean double taxation since it already pays excise taxes on the finished product. Factoring interests and other penalties, Pilipinas Shell claimed the total amount they are being asked to pay is P43 billion. In a statement, Shell refinery manager Arnel Santos said the workers, contractors and local community in Tabangao were relieved that a restraining order had been issued. "It prevents a possible work stoppage in the refinery," he said. Customs officials were not immediately available for comment. In a text message, Deputy Presidential Spokesman Gary B. Olivar said the government respects the Batangas court’s decision. "We continue to defer to the wisdom of the courts on this matter, even as we’re working on a common compromise position between the executive agencies concerned," Olivar said. Last Wednesday, Customs said it was giving Pilipinas Shell five days to reach a deal with the government. A Palace official, however, said the bureau had been ordered to await a Supreme Court decision. Shell has yet to elevate the matter to the high court, but has said it was looking at doing so as part of its options. — Jose Bimbo F. Santos, BusinessWorld