Title
Chevron Philippines, Inc. vs. Commissioner of the Bureau of Customs
Case
G.R. No. 178759
Decision Date
Aug 11, 2008
Chevron's delayed filing of customs documents led to fraud findings and implied abandonment, forfeiting shipments to the government and imposing P893M liability.
customs duties
import entry declarations
implied abandonment

Case Summary (G.R. No. 178759)

Factual Background

In 1996 Chevron imported six shipments of crude oil and petroleum feedstocks under eight bills of lading, which arrived between March 8 and April 10, 1996, and were unloaded into petitioner’s oil tanks at its private pier over several days from arrival. Import entry declarations (IEDs) were filed and petitioner paid advance duties totaling ninety percent of assessed duties; final import entry and internal revenue declarations (IEIRDs) were filed on dates varying by shipment, generally in May and June 1996. The shipments were appraised and duties were paid at the three percent rate under RA 8180, although before the effectivity of that law on April 16, 1996 the applicable rate on imported crude oil had been ten percent. The total duties paid by petitioner amounted to P316,499,021.

Initiation of Investigation and Government Findings

In June 1999 the Finance Secretary received a letter alleging deliberate concealment and manipulation in the crude oil importations involving petitioner and another oil company; that communication was endorsed to the Bureau of Customs (BOC) for investigation. The BOC’s Investigation and Prosecution Division, Customs Intelligence and Investigation Service (IPD‑CIIS), issued subpoenas and conducted inquiries in 2000 and 2001. The IPD‑CIIS issued a finding dated February 2, 2001 that the import entries were filed beyond the non‑extendible thirty‑day period under Sec. 1301 of the TCC, that the importations were therefore deemed abandoned, and that fraud had been committed in collusion with a former District Collector. The District Collector earlier had sent a demand for payment of P73,535,830 on August 1, 2000; the Commissioner thereafter notified petitioner on October 29, 2001 of irregularities and demanded payment of P1,180,170,769.21 representing the total dutiable value of the importations.

Proceedings in the Court of Tax Appeals, First Division

Petitioner filed a petition for review with the CTA First Division on November 28, 2001 seeking reversal of the Commissioner’s demand. The CTA First Division, in a decision promulgated April 5, 2005, agreed with the Commissioner and IPD‑CIIS that fraud had been established, thereby rendering prescription inapplicable, but concluded that the shipments were not abandoned. The CTA First Division held that the shipments should be subject to the ten percent rate prevailing at the time of withdrawal from BOC custody, pursuant to provisions of the TCC, and assessed petitioner for deficiency customs duties in the amount of P105,899,569.05. Motions for reconsideration by both parties were denied on September 9, 2005.

Proceedings in the Court of Tax Appeals, En Banc

Petitioner and the Commissioner filed appeals to the CTA en banc, which consolidated the matters as CTA EB Nos. 121 and 122. In a decision dated March 1, 2007 the CTA en banc reversed the First Division on the issue of abandonment. The en banc court held that the act of "entry" under the TCC referred to filing of the IEIRD, that the IEIRDs had been filed beyond the non‑extendible thirty‑day period of Sec. 1301, and that the shipments were therefore deemed abandoned under Secs. 1801 and 1802. The en banc also found that petitioner had actual knowledge of arrival of the shipments and that notice under CMO 15‑94 was unnecessary; it agreed that petitioner committed fraud to evade the higher duty rate. The CTA en banc ordered petitioner to pay the total dutiable value of the importations amounting to P893,781,768.21 after deducting the duties already paid.

Issues Presented to the Supreme Court

The Supreme Court accepted the petition for review on certiorari and framed three principal issues: whether "entry" under Sec. 1301 in relation to Sec. 1801 of the TCC refers to the IED or the IEIRD; whether petitioner perpetrated fraud; and whether the importations were impliedly abandoned under Sec. 1801.

The Court’s Holding on the Meaning of "Entry"

The Court held that "entry" under Secs. 1301 and 1801 of the TCC encompasses both the IED and the IEIRD and that the operative act constituting "entry" for consumption is the filing and acceptance of the specified entry form together with related documents and payment or security of duties, as defined in Sec. 205. The Court observed that the IEIRD is the specified entry form that accompanies final payment and that prior jurisprudence, notably Go Ho Lim v. The Insular Collector of Customs, treated "entry" as the regular consumption entry (the IEIRD) rather than a provisional declaration (the IED). The Court reviewed the legislative history of RA 7651, which established a non‑extendible thirty‑day period to expedite collection and port clearance, and concluded that permitting only the IED to satisfy the thirty‑day rule would leave submission of the IEIRD without a fixed deadline and would frustrate the public interest in prompt collection of tariffs. Consequently, both the IED and the IEIRD must be filed within thirty days from the date of discharge of the last package.

The Court’s Finding on Fraud

The Court affirmed the factual findings of the IPD‑CIIS and both CTA bodies that petitioner's conduct established fraud. The Court reiterated the legal definition of fraud and the rule that such factual determinations by specialized tribunals are final unless clearly erroneous. The evidence showed a calculated course to delay filing the IEIRDs until the lower three percent duty rate took effect, collusion with the former District Collector who accepted late IEIRDs and allowed collection at the reduced rate, and non‑disclosure of discrepancies between duties declared in the IEDs and the IEIRDs. The Court rejected petitioner’s explanation that original bills of lading and invoices arrived late as implausible and noted that a cited memorandum dated October 30, 2002 post‑dated the events. Because fraud was established, the one‑year finality of liquidation under Sec. 1603 did not bar the asserted claims.

The Court’s Conclusion on Abandonment and Notice

Applying the amended language of Sec. 1801 enacted by RA 7651, the Court concluded that an imported article is deemed abandoned when the owner or importer fails to file an entry within the non‑extendible thirty‑day period and that no additional act or omission need be shown to infer an intention to abandon. The Court held that petitioner’s failure to file the IEIRDs within thirty days therefore constituted implied abandonment, and that ownership of the abandoned articles passed to the government ipso facto under Sec. 1802. The Court further held that the posting and procedural requirements of CMO 15‑94 were not necessary in the circumstances because the fraudulent scheme concealed the true facts from the Commissioner and because petitioner, a sophisticated multinational importer, had actual knowledge and physical possession of the shipments; legislative history indicated that the "after due n

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