THE Regional Trial Court of Batangas has granted Pilipinas Shell Petroleum Corp. (PSPC) another 18 days extension to prevent the Bureau of Customs (BOC) from confiscating the shipments of their raw materials being used to process fuel until the legal issues surrounding the controversial tax disputes is resolved.

In a three-page order, Batangas executive judge Ruben Galvez noted that there is a need to thresh out first the issue on unpaid taxes before the court approves the injunction being asked by the major oil firm.

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"There is a need for this court to thoroughly examine the veracity of the alleged full payment of the taxes and duties of the subject import shipments and as such, a status quo should be maintained before resolution can be had or the injunction, this court hereby extends the 72 hour TRO for 20 days as provided in the rules," the order said.

During the hearing last Friday, Shell asserted that BOC in particular its district collector cannot seize their shipments covering January 4 to February 4 since there is no final ruling yet on the tax disputes they filed with the Court of Tax Appeal involving P7.3 billion unpaid back taxes.

Despite the order from Malacanang to maintain the status quo, BOC Collector Juan Tan attempted to confiscate landed imports at the Shell refinery in Tabangao, Batangas on February 10.

A 72-hour temporary restraining order (TRO) was later issued by Judge Galvez to stop the seizure.

Shell refinery general manager Arnel Santos said "the workers, contractors and local community in Tabangao are relieved that a TRO was issued. It prevents a possible work stoppage in the refinery."

In his order, Galvez brushed the argument of Assistant Solicitor General Thomas Laragan, who represented the BOC in the case, that the court had no jurisdiction over the case since the CTA was hearing the case over whether the BOC’s claim of P7.3 billion in excise taxes from Shell is valid.

"After a careful examination on the allegations on the complaint and a careful reading of Section 7 of Republic Act No. 9282 which provides for the Jurisdiction of Court of Tax Appeals, the Court is convinced that it has jurisdiction over the instant case," said Galvez.

He noted that the case pending before the Batangas court does not involve a decision of the Customs Commissioner or the CTA "but rather a Memorandum issued by a District Collector ordering the holding of all import shipments of (Shell)." He also stated the case before him does it involve a violation of the customs code.

Court records show that the issue in the Batangas RTC case is whether Collector Tan can seize the landed imports of Shell that arrived between January 4 and February 4 after the taxes and duties had already been paid.

"(Shell) is asking for TRO to restrain the defendants from holding their import shipments which are in their custody and physical possession and all the taxes due to the defendants had been paid," said Galvez.

He said that "clearly, the issue is not the validity or legality of the said memorandum but rather the taking of the property of (Shell) without due process which this court is constitutionally bound to protect."

Galvez noted in a previous order 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."

With no more products to sell, Galvez said Shell’s 959 retail dealer stations will eventually close down to the prejudice of the public in general.

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.

He also noted that closure of Shell’s refinery will result 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.

The BOC is bent on seizing Shell imports to pay for P7.3 billion in excise taxes for imported catalytic-cracked gasoline (CCG) and light catalytic-cracked gasoline (LCCG) from 2004 to 2009 that are currently being disputed by Shell before the CTA since these are raw materials and not subject to excise taxes.

Further, Shell maintains that it has already paid all excise taxes on finished products withdrawn from its refinery and is not liable for any back taxes.

Earlier, the joint foreign chambers of commerce together with the Employers Confederation of the Philippines (Ecop) and the Philippine Chambars of Comerce and Industry (PCCI) expressed concern on the ongoing tax row with Shell, the BOC and the Bureau of Internal Revenue (BIR). (MSN/Sunnex)