Chevron Philippines Inc.

petitioner
vs.
Commissioner of the Bureau of
Customs, respondent

G.R. No. 178759

August 11, 2008
 FACTS OF THE CASE:
• Petitioner Chevron Philippines Inc. is engaged
in the business of importing, distributing, and
marketing of petroleum products in the
Philippines.
• In 1996, the importations subject of this case
arrived and were covered by eight (8) bills of
lading.
• The shipments were unloaded from the
vessels into the petitioner’s oil tanks over a
period of 3 days from the date of their
arrival.
 FACTS OF THE CASE:
• Subsequently, the Import Entry
Declarations (IED) were filed and 90%
of the total customs duties were paid. The
import entry and Internal Revenue
Declarations (IERDS) of the shipments
were thereafter filed on the following
dates:
 FACTS OF THE CASE:
ENTRY PRODUCT ARRIVAL DATE IED IEIRD

NO.

606-96 66,229,960 liters 3/8/1996 3/12/1996 5/10/1996

Nan Hai Crude Oil

604-96 6,990,712 liters 3/18/1996 3/26/1996 5/10/1996

Reformate

605-96 16,651,177 liters 3/21/1996 3/26/1996 5/10/1996

FCCU Feed Stock

600-96 236,317,862 liters 3/26/1996 3/28/1996 5/10/1996

601-96 Oman/Dubai Crude Oil

602-96

603-96

818-96 51,878,114 liters 4/10/1996 4/10/1996 6/21/1996

Arab Crude Oil
 FACTS OF THE CASE:
• The importations were appraised at a duty
rate of 3% as provided under R.A.
8180. Prior to the effectivity of R.A. 8180
on April 16, 1996, the rate of the duty
on imported crude oil was 10%.
 FACTS OF THE CASE:
• Three years later, then Finance Secretary
Edgardo Espiritu received a letter
denouncing the deliberate concealment,
manipulation and scheme employed by
herein petitioner (Chevron Phil.) and
Pilipinas Shell in the importation of crude
oil, thereby resulting in huge losses of
revenue for the government. This letter
was endorsed to the BOC for investigation
on July 19, 1999.
 FACTS OF THE CASE:
• On August 1, 2000 petitioner received from the
District of Collector of Customs of the Port of Batangas
(District Collector) a demand letter requiring the
immediate settlement of the amount of P73,
535, 830. representing the difference between
the 10% and 3% tariff rates on the shipments.
• Petitioner objected to the demand for payment of
customs duties using the 10% duty rate and reiterated
its position that the 3% tariff rate should instead
be applied. It likewise raised the defense of
prescription against the assessment pursuant to
Section 1603 of the Tariff and Customs Code
(TCC).
 FACTS OF THE CASE:
• SEC. 1603. Finality of Liquidation. When articles
have been entered and passed free of duty or final
adjustments of duties made, with subsequent
delivery, such entry and passage free of duty or
settlements of duties will, after the expiration
of three (3) years from the date of the final
payment of duties, in the absence of ,fraud
or protest or compliance audit pursuant to
the provisions of this Code, be final and
conclusive upon all parties, unless the
liquidation of the import entry was merely
tentative." (R.A. 9135, April 27, 2001)
 FACTS OF THE CASE:
• On February 2, 2001 the Intelligence and
Investigation Service (IPD-CIIS) of the BOC
issued a finding that the import entries
were filed beyond the 30-day non-
extendible period prescribed under
Section 1301 of the TCC. They
concluded that the importations were
already abandoned in favor of the
government. They also found that fraud
was committed by petitioner in collusion with
the Former District Collector.
 FACTS OF THE CASE:
SEC. 1301. Persons Authorized to Make Import Entry. - Imported
articles must be entered in the customhouse at the port of
entry within thirty (30) days, which shall not be extendible,
from the date of discharge of the last package from the vessel or
aircraft either (a) by the importer, being holder of the bill of lading,
(b) by a duly licensed customs broker acting under authority from a
holder of the bill or (c) by a person duly empowered to act as agent
or attorney -in -fact for each holder: Provided, That where the entry
is filed by a party other than the importer, said importer shall
himself be required to declare under oath and under the penalties
of falsification or perjury that the declarations and statements
contained in the entry are true and correct: Provided, further, That
such statements under oath shall constitute prima facie evidence of
knowledge and consent of the importer of violation against
applicable provisions of this Code when the importation is found to
be unlawful ( R.A. 7651, June 04, 1993)
 FACTS OF THE CASE:
• CTA First Division ruled that respondent was correct
when he affirmed the findings of the IPD-CIIS on
the existence of fraud, thus, prescription was
not applicable. It also held that petitioner did not
abandon the shipments. The shipments should be
subject to 10% rate prevailing at the time of
their withdrawal from the custody of the BOC
pursuant to Sections 204, 205, and 1408 of the
TCC. Petitioner was therefore liable for deficiency
customs duties in the amount of P105, 899,
596.05.
• Petitioner and respondent sought reconsideration of
the CTA Division’s ruling but was denied. Both then
filed their petition for review with the CTA en banc.
 FACTS OF THE CASE:
SECTION 204. Effective Date of Rates of Import Duty.
Imported articles shall be subject to the rate or rates of import duty
existing at the time of entry. or withdrawal from warehouse, in the
Philippines, for consumption.
On and after the day when this Code shall go into effect, all articles
previously imported, for which no entry has been made, and all articles
previously entered without payment of duty and under bond for
warehousing, transportation, or any other purpose, for which no permit
of delivery to the importer or his agent has been issued, shall be subject
to the rates of duty imposed by this Code and to no other duty, upon the
entry, or withdrawal thereof from warehouse, for consumption. On
article abandoned or forfeited to, or seized by, the government, and then
sold at public auction, the rates of duty and the tariff in force on the date
of the auction shall apply: Provided, That duty based on the weight,
volume and quantity of articles shall be levied and collected on the
weight, volume and quantity at the time of their entry into the warehouse
or the date of abandonment, forfeiture and/or seizure.
 FACTS OF THE CASE:
• SECTION 205. Entry, or Withdrawal from Warehouse, for Consumption.
• Imported articles shall be deemed "entered " in the Philippines for
consumption when the specified entry form is properly filed and
accepted, together with any related documents required by the
provisions of this Code and/or regulations to be filed with such form at
the time of entry, at the port or station by the customs official designated to
receive such entry papers and any duties, taxes, fees and/or other lawful
charges required to be paid at the time of making such entry have been
paid or secured to be paid with the customs official designated to receive
such monies, provided that the article has previously arrived within the
limits of the port of entry.
• Imported articles shall be deemed 'Withdrawn " from warehouse
in the Philippines for consumption when the specified form is
properly filed and accepted, together with any related documents
required by any provisions of this Code and/or regulations to be filed
with such form at the time of withdrawal, by the customs official designated
to receive the withdrawal entry and any duties, taxes, fees and/or other
lawful charges required to be paid at the time of withdrawal have been
deposited with the customs official designated to receive such payment.
 FACTS OF THE CASE:
SEC. 1408. Assessment of Duty on Less Than Entered
Value. - Duty shall not be assessed case upon an
amount less than the entered value, unless by
direction of the Commissioner in cases which the
importer certifies at the time of entry that the entered
value is higher than the dutiable value and that the
articles are so entered in order to meet increases
made by the appraiser in similar cases then pending
reappraisement; and the lower assessment shall
be allowed only when the importer's contention
is sustained by the final decision, and shall
appear that such action of the importer was
taken in good faith after due diligence and
inquiry on his part.
 FACTS OF THE CASE:
• The CTA en banc held that it was the filing of the IEIRDs
that constituted entry under the TCC. Since these were
filed beyond the 30-day period, they were not
seasonably "entered" in accordance with Section
1301 in relation to Section 205 of the TCC.
Consequently, they were deemed abandoned under
Sections 1801 and 1802 of the TCC.
• It also ruled that the notice required under Customs
Memorandum Order was not necessary in view of
petitioner's actual knowledge of the arrival of the
shipments. It likewise agreed with the CTA Division's finding
that petitioner committed fraud when it failed to file
the IEIRD within the 30-day period with the intent to
"evade the higher rate." Petitioner was ordered to pay
respondent the total dutiable value of the oil shipments
amounting to P893,781,768.21.
 FACTS OF THE CASE:
SEC. 1801. Abandonment, Kinds and Effects of - An imported article
is deemed abandoned under any of the following circumstances:
a. When the owner, importer, consignee of the imported article
expressly signifies in writing to the Collector of Customs his intention
to abandon; or
b. When the owner, importer, consignee or interested
party after due notice, fails to file an entry within thirty (30)
days, which shall not be extendible, from the date of discharge
of the last package from the vessel or aircraft, or having filed such
entry, fails to claim his importation within fifteen (15) days, which
shall not likewise be extendible, from the date of posting of the
notice to claim such importation.
Any person who abandons an article or who fails to claim his
importation as provided for in the preceding paragraph shall be
deemed to have renounced all his interests and property rights
therein (R.A. 7651, June 04, 1993).
 ISSUE/S:
1.) Whether or not “entry” under Section
1301 in relation to Section 1801 of the TCC
refers to the IED or the IEIRD;
2.) Whether fraud was perpetrated by
petitioner;
3.) Whether or not the importations can be
considered abandoned under Section 1801.
 RULING
1.) The position of petitioner, that the import entry to be
filed within the 30-day period refers to the IED and not the
IEIRD, has no legal basis. Under the relevant provisions of
the TCC, both the IED and IEIRD should be filed within 30
days from the date of discharge of the last package from
the vessel or aircraft. The IED serves as basis for the
payment of advance duties on importations whereas the
IEIRD evidences the final payment of duties and taxes. The
operative act that constitutes "entry" of the imported
articles at the port of entry is the filing and acceptance of
the "specified entry form" together with the other
documents required by law and regulations. The
"specified entry form" refers to the IEIRD. The word
"entry" refers to the regular consumption entry (the IEIRD)
and not the provisional entry (the IED).
 RULING
2.) Evidence showed that petitioner bided its time
to file the IEIRD so as to avail of a lower rate of
duty. A clear indication of petitioner's deliberate
intention to defraud the government was its non-
disclosure of discrepancies on the duties
declared in the IEDs (10%) and IEIRDs
(3%) covering the shipments.

Due to the presence of fraud, the prescriptive

period of the finality of liquidation under
Section 1603 was inapplicable.
 RULING
3.) Petitioner's failure to file the required entries within a non-
extendible period of thirty days from date of discharge of the
last package from the carrying vessel constituted implied
abandonment of its oil importations. This means that from
the precise moment that the non-extendible thirty-day
period lapsed, the abandoned shipments were deemed
the property of the government.

Therefore, when petitioner withdrew the oil shipments for

consumption, it appropriated for itself properties which
already belonged to the government. Accordingly, it became
liable for the total dutiable value of the shipments of imported
crude oil amounting to P1,210,280,789.21 reduced by the
total amount of duties paid amounting to P316,499,021.00
thereby leaving a balance of P893,781,768.21.
 RULING:
Due notice was not necessary in this case. The purpose
of posting an "urgent notice to file entry" is only to notify the
importer of the "arrival of its shipment" and the details of said
shipment. Since it already had knowledge of such,
notice was superfluous. Notice to petitioner was
unnecessary because it was fully aware that its shipments
had in fact arrived. The oil shipments were discharged from
the carriers docked in its private pier or wharf, into its shore
tanks. From then on, petitioner had actual physical
possession of its oil importations. It was thus
incumbent upon it to know its obligation to file the
IEIRD within the 30-day period prescribed by law. As a
matter of fact, importers such as petitioner can, under
existing rules and regulations, file in advance an import
entry even before the arrival of the shipment to
expedite the release of the same. However, it deliberately
chose not to comply with its obligation under Section 1301.
 RULING:
• Petition DENIED. Petitioner Chevron
Philippines, Inc. is ORDERED to pay
P893,781,768.21 plus six percent (6%)
legal interest per annum accruing from the
date of promulgation of this decision until
its finality. Upon finality of this decision,
the sum so awarded shall bear interest at
the rate of twelve percent (12%) per
annum until its full satisfaction.
 Bar Question (1995)
When does importation begin and
when does it end?
 Suggested Answer
• “ Importation” begins from the time the carrying vessel or
aircraft enters Philippine territorial jurisdiction with the
intention to unload therein and ends at the time the goods
are released or withdrawn from the custom house upon
payment of the customs duties or with legal permit to
withdraw. (Viduya v. Berdiago, 73 SCRA 553)

• As long as the importation has not been terminated, the

imported goods remain under the jurisdiction of the Bureau
of Customs. Importation is deemed terminated only upon
payment of the duties , taxes and other charges upon the
articles, or secured to be paid , at the port of entry and the
legal permit for withdrawal shall have been granted. The
payment of the duties, taxes, fees, and other charges must
be in full.
 Suggested Answer
• Merchandise, the importation of which is effected
contrary to law, is subject to forfeiture, and that goods
released contrary to law are subject to seizure and
forfeiture.
 G.R. No. 104604 October 6, 1995
NARCISO O. JAO and BERNARDO M. EMPEYNADO,
petitioners,
vs.
COURT OF APPEALS; COMMISSIONER OF CUSTOMS;
COLLECTOR OF CUSTOMS, Port of Manila; Col. SINDULFO
R. SEBASTIAN, Director, Enforcement and Security
Services, Bureau of Customs; and Maj. JAIME MAGLIPON,
Chief, Operations and Intelligence Staff, Enforcement and
Security Services, Bureau of Customs, respondents.
G.R. No. 111223 October 6, 1995
NARCISO O. JAO and BERNARDO M. EMPEYNADO, petitioners,
vs.
THE HONORABLE OMBUDSMAN CONRADO M. VASQUEZ, and
SINDULFO SEBASTIAN, JAIME MAGLIPON; JOSE YUCHONGCO;
RICARDO CORONADO; VICTOR BARROS; DENNIS BANTIGUE; ROY
LARA; BENJAMIN SANTOS; RODOLFO GONDA; ADONIS REJOSO;
DANIEL PENAS; NICANOR BONES; ABUNDIO JUMAMOY; ARTEMIO
CASTILLO; ANDRESITO ABAYON; RUBEN TAGUBA; JAIME JAVIER;
HERBERT DOLLANO, all with the Bureau of Customs; JOVY
GUTIERREZ of the Makati police, and 'JOHN DOES', respondents.
 FACTS OF THE CASE
• The Office of the Director, Enforcement and
Security Services (ESS), Bureau of Customs,
received information regarding the presence of
untaxed vehicles and parts in the premises
owned by Pat Hao located along Quirino
Avenue, Paranaque and Honduras St.,
Makati. After conducting a surveillance of the two
places, respondent Major Jaime Maglipon, Chief of
Operations and Intelligence of the ESS,
recommended the issuance of warrants of seizure
and detention. District Collector of Customs
Titus Villanueva issued the warrants of
seizure and detention.
 FACTS OF THE CASE
• Maglipon coordinated with the local police to assist
in the execution of the respective warrants of
seizure and detention. The team searched the two
premises. They were barred from entering the place,
but some members of the team were able to force
themselves inside and were able to inspect the
premises and noted that some articles were present
which were not included in the list contained in the
warrant. Amended warrants of seizure and detention
were subsequently issued by Villanueva.
• Consequently customs personnel started
hauling the articles pursuant to the amended
warrants.
 FACTS OF THE CASE
• Narciso Jao and Bernardo Empeynado filed a case for
Injunction and Damages with prayer for Restraining Order
and Preliminary Injunction before RTC Makati Branch 56 on
August 27, 1990 against respondents. On the same date,
the trial court issued a Temporary Restraining Order.
• Respondents filed a Motion to Dismiss on the
ground that RTC has no jurisdiction over the subject
matter, claiming that it was the Bureau of Customs
that had exclusive jurisdiction over it. RTC denied
motion to dismiss.
• Respondents filed MFR . MFR was denied.
• CA set aside the questioned orders of the trial court and
enjoined it from further proceeding with the Case. The
appellate court also dismissed the said civil case.
 ISSUE/S:
Whether or not the RTC has jurisdiction
over cases questioning the validity of
seizure and forfeiture proceedings
conducted by the Bureau of Customs?
 RULING:
• The RTC is devoid of any competence to pass
upon the validity or regularity of seizure and
forfeiture proceedings conducted by the
Bureau of Customs and to enjoin or otherwise
interfere with these proceedings .The Collector
of Customs sitting in seizure and forfeiture
proceedings has exclusive jurisdiction to
hear and determine all questions touching
on the seizure and forfeiture of dutiable
goods. The Regional Trial Courts are precluded
from assuming cognizance over such matters even
through petitions of certiorari, prohibition or
mandamus.
 RULING:
• It is likewise well-settled that the provisions of
the Tariff and Customs Code and RA 1125 "An
Act Creating the Court of Tax Appeals," specify
the proper fora and procedure for the ventilation
of any legal objections or issues raised
concerning these proceedings.
• Actions of the Collector of Customs are
appealable to the Commissioner of
Customs, whose decision, in turn, is subject to
the exclusive appellate jurisdiction of the
Court of Tax Appeals and from there to the
Court of Appeals.
 RULING:
• It is likewise well-settled that the provisions of
the Tariff and Customs Code and RA 1125 "An
Act Creating the Court of Tax Appeals," specify
the proper fora and procedure for the ventilation
of any legal objections or issues raised
concerning these proceedings.
• Actions of the Collector of Customs are
appealable to the Commissioner of
Customs, whose decision, in turn, is subject to
the exclusive appellate jurisdiction of the
Court of Tax Appeals and from there to the
Court of Appeals.
 RULING
• The rule that Regional Trial Courts have no review
powers over such proceedings is anchored upon the
policy of placing no unnecessary hindrance on
the government's drive, not only to prevent
smuggling and other frauds upon Customs,
but more importantly, to render effective and
efficient the collection of import and export
duties due the State, which enables the
government to carry out the functions it has been
instituted to perform.

• The illegality of a seizure by the Collector of

Customs does not deprive the Bureau of
Customs of jurisdiction thereon.
 RULING
• The allegations of petitioners regarding
the propriety of the seizure should
properly be ventilated before the Collector
of Customs. We have had occasion to declare:
• The Collector of Customs when sitting in
forfeiture proceedings constitutes a tribunal
expressly vested by law with jurisdiction to hear
and determine the subject matter of such
proceedings without any interference from the
Court of First Instance. (Auyong Hian v. Court of
Tax Appeals, et al., 19 SCRA 10).
 RULING
• SEC. 2308. Protest and Payment Upon Protest in Civil
Matters. - When a ruling or decision of the Collector is
made whereby liability for duties, taxes, fees or other
charges are determined, except the fixing of fines in
seizure cases, the partly adversely affected may
protest such ruling or decision by present
Collector at the time when payment of the
amount claimed to be due the government is
made, or wit, (15) days thereafter, a written
protest setting forth his objection to the ruling
or decision in question with the reason's
therefore. No protest shall be considered unless
payment of the amount due liquidation has first been
made and the corresponding docket fee, as provided
for in Section 3301.
 RULING
• SEC. 2313. Review of Commissioner. - The person
aggrieved by the decision or Collector in any matter
presented upon protest or by his action in any case of
seizure may, within days after notification on writing by
the Collector of his actions or decisions, file a written
notice to the Collector with a copy furnished to the
Commissioner of his intention to appeal the action
or decision of the Collector to the Commissioner.
Thereupon the Collector shall forthwith transmit all the
recc, proceedings to the Commissioner, who shall
approve, modify or reverse the action or decision of t~~
and take such steps and make such orders as may be
necessary to give effect to his decision: Provided, That
when an appeal is filed beyond the period herein
prescribed, the same shag be deemed dismissed.
 RULING
• SEC. 2402. Review by Court of Tax Appeals. - The
party aggrieved by the ruling of the
Commissioner in any matter brought before
him upon protest or by his action or ruling in
any case of seizure may appeal to the Court of
Tax Appeals, in the manner and within the period
prescribed by law and regulations.
• Unless an appeal is made to the Court of Tax
Appeals in the manner and within the period
prescribe by laws and regulations, the action or
ruling of the Commissioner shall be final and
conclusive.
 BAR QUESTION (1996):
• On January 1, 1996, armed with warrants of
seizure and detention issued by the Bureau of
Customs, members of the customs enforcement
and security services coordinated with the
Quezon City police to search the premises
owned by a certain Mr. Ho along Kalayaan
Avenue, Quezon City, which allegedly contained
untaxed vehicles and parts. While inside the
premises, the member of the customs
enforcement and security services noted articles
which were not included in the list contained in
the warrant. Hence, on January 15, 1996, an
amended warrant and seizure was issued.
 BAR QUESTION (1996):

• On January 25, 1996, the customs

personnel started hauling the articles
pursuant to the amended warrant. This
prompted Mr. Ho to file a case for
injunction and damages with a prayer for
a restraining order before the Regional
Trial Court of Quezon City against the
Bureau of Customs on January 27, 1996.
On the same date, the Trial Court issued a
temporary restraining order.
 BAR QUESTION (1996):
• A motion to dismiss was filed by the
Bureau of Customs on the ground that the
Regional Trial Court has no jurisdiction
over the subject matter of the complaint
claiming that it was the Bureau of
Customs that has exclusive jurisdiction
over it. Decide.
 ANSWER:
• The motion to dismiss should be granted. Seizure
and forfeiture proceedings are within the exclusive
jurisdiction of the Collector of Customs to the
exclusion of regular Courts. Regional Trial Courts
are devoid of competence to pass upon the
validity or regularity of seizure and forfeiture
proceedings conducted by the Bureau of Customs
and to enjoin or otherwise interfere with these
proceedings (Republic vs. CFI Manila [Branch
XXII], G.R. No. 43747, September 2, 1992;
Jao vs CA, G.R. No. 104604, October 6,
1995)