PILIPINAS Shell Petroleum Corp. secured a 72-hour temporary restraining order preventing the Bureau of Customs (BOC) from confiscating the shipments of their imported raw materials-cracked catalytic gasoline (CCG) and light cracked catalytic gasoline (LCCG) to process fuel.
In a five-page ruling, Batangas executive judge Ruben Galvez said Customs personnel are barred from entering Shell’s refinery (in Batangas) to hold, seize, confiscate, and forcibly take possession of the import shipments of Shell.
“The court finds valid grounds to grant the prayer for the issuance of ex-parte Temporary Restraining Order for 72 hours,” said Galvez, noting that the Customs order clearly states that all import shipments of Shell will be held.
Galvez said that allowing the seizure of Shell’s imports "will cause irreparable injury and grave injustice to (Shell) as a business entity engaged in the manufacture and sale of petroleum products."
He also pointed that with no more products to sell, Shell’s 959 retail dealer stations will eventually close down to the prejudice of the public in general.
Earlier, Shell said it will be forced to shut down its refinery if its imports are seized since it will no longer have raw materials needed to produce fuel products.
Galvez noted the possible impact of Shell's closure in a supply shortage since Shell has a market share of 27.7 percent. It will also result in P11 billion in losses for Shell while its 823 refinery workers will lose the jobs.
Last Tuesday, Customs officers serving notice of the BOC’s intent to seize Shell’s imports were met by picketing workers and stakeholders at the Batangas refinery of Pilipinas Shell.
The BOC is planning to seize Shell imports to pay for P7.3 billion in excise taxes for imported CCG and LCCG that are currently being disputed by Shell before the Court of Tax Appeals since these are raw materials and not subject to excise taxes.
Shell officials met the customs officers but they refused to receive the notice.
According to Shell Tabangao Refinery general manager Arnel Santos, receiving the notice would be a premature act since the case has yet to be decided by the courts and the petroleum products in the refinery are not properly the subject of any seizures.
Picketing Shell workers urged the BOC to reconsider, pointing out that their jobs are at stake.
Shell said it will be forced to shut down its refinery if its imports are seized since it will not have raw materials to process into fuel products.
Shell rotating equipment engineer Glenn Pamplona said they hope the Court of Tax Appeals will reconsider its decision and bar Customs from seizing the imports while hoping that customs will wait until the case has been resolved.
Pamplona stressed that the refinery is dependent on imports and cannot operate without imported raw materials.
He meanwhile added that on the line is not just the jobs of Shell workers, but the hundreds of contractors and business partners who depend on the refinery for their jobs.
For his part, Jojo Mandocdoc, Shell team leader of inspectors, said the issue of whether CCG and LCCG are raw materials or finished products is a very simple issue to resolve.
“All we have to do is see if we pump it into the vehicles of customs to see if their cars will run properly on CCG and LCCG,” he said.
Raul Concepcion, chairman of the Consumer and Oil Price Watch (COPW), said: “The court decision established the fact that Shell has been faithfully paying the P4.35 per liter excise tax on the same kind of importation for many years. However, Shell used the opinion by BIR Deputy Commissioner for Legal Jose Mario Buñag, which was illegal, for not paying excise taxes from April 2004 to August 2009."
Concepcion said that while Shell decided not to pay the excise tax on CCG, all the other oil companies paid. “This is why the Bureau of Customs is running only after Shell and not after Petron or other oil firms for non-payment of excise taxes.”
“If this was going on since 2004 to 2009, then Shell would have a P4.35 per liter price advantage over the other oil companies but how come it priced its Unleaded Gasoline similar to them? This also proved that consumers never benefited from Shell’s ‘savings’,” he emphasized.
“To put to rest this issue, Shell should no longer arouse the emotions of the people and just ask that penalties be waived and accept payment on a staggered basis within a 5 to 7 year period and borrow at reasonable rates of interest," Concepcion further opined.
The Court of Tax Appeals on Tuesday issued a split decision on the tax disputes filed by Shell against the BOC.
In a 4-page Resolution, Justices Erlinda Uy and Esperanza Fabon-Victorino said 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 [PSPC] is negligible."
Presiding Justice Ernesto Acosta, the most senior member of the division hearing the case, rendered a 13-page dissenting opinion stating that "[PSPC] has a right to be protected during the pendency of the case."
He added that the threatened action of BOC is damaging not only to Shell’s interests but 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 the firm’s operations.
Shell was disputing before the special tax court a P7.34 billion tax assessment slapped by the BOC on Shell importations of CCG and LCCG from 2004-2009. (MSN/Sunnex)