MANILA, Philippines--The Court of Tax Appeals is split on whether or not to issue the suspension order sought by Pilipinas Shell Petroleum Corp. to stop the Bureau of Customs from seizing the oil company?s oil imports.
According to Shell legal counsel John Balisnomo, the split in the tax court?s decision was expected to result in the ?unlawful confiscation of Shell?s importations.?
?This will have dire consequences not only for Shell but for the national economy,? he stressed.
A source said that tanks of Shell at its Batangas refinery were already being sealed Tuesday by Customs personnel for eventual seizure.
In a four-page resolution issued Tuesday, Justices Erlinda Uy and Esperanza Fabon-Victorino explained that ?the damage in [Shell?s] property rights must, in the meantime, take a back seat to the paramount need of the state for funds to sustain governmental functions. Compared to the damage to the state, which may be caused by reduced financial resources, the damage to [Shell] is negligible.?
However, Presiding Justice Ernesto Acosta, the most senior member of the division hearing the case, rendered a 13-page dissenting opinion stating that ?[Shell] has a right to be protected during the pendency of the case.?
Acosta explained that ?the threatened action of [the BOC] is damaging not only to [Shell?s] interests but also to the whole community considering the undesirable effects of rising prices of basic consumer needs, possible unemployment of a large number of people and extinguishment of opportunities for businesses dependent on [Shell?s] operations.?
Customs had planned to seize part of Shell?s imports to offset the P7.3 billion in alleged unpaid excise taxes, which the oil company refused to pay as it insisted that imported raw materials for its fuel refinery operations should not be subjected to any excise taxes.
Shell is disputing before the special tax court the P7.34-billion tax assessment slapped by Customs on Shell importations of catalytic cracked gasoline (CCG) and light catalytic cracked gasoline (LCCG) from 2004-2009.
In December last year, Shell was able to secure from the tax court a 60-day temporary restraining order (TRO) barring Customs from seizing the imports. The TRO lapsed yesterday.
?It is unfortunate that this split in the CTA clearly results to unlawful double taxation. Apart from the economic disruption that will be caused by the seizures, the long term consequence of the ruling is that manufacturing in the country will be discouraged and the security of our energy supply will be placed at great risk due to the eventual closure of the Batangas refinery,? Balisnomo said.
Shell had said that the seizure of future shipments could lead to the closure of its Batangas refinery, which employs 823 workers, and losses of P11 billion in sales a month.
With no products to sell, Shell?s 959 retail stations would eventually shut down. Shell?s dealers accounted for 34 percent of the market as of June last year. These stations employ nearly 17,000 daily wage earners who also stand to lose their jobs as a result of the seizures.
Apart from Shell?s 27.7-percent market share on average in the retail fuels market, it also supplies 33 percent of the fuel requirements of power plants, including the state-owned National Power Corp.?s facilities, 17.2 percent of the entire aviation fuel market, 24.6 percent of the marine transport market, and 70.2 percent of the demand for bitumen by contractors engaged in roadwork.
Edgar Chua, Shell country chair, said that the oil company had been advised by its head office that ?if we don?t get suspension order and [if Customs] will be mandated to seize imports, we will be forced to stop imports.?
