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11 February 2010

Philippine govt orders status quo in Shell tax row

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Philippine Presidential Palace (Malacañang) on Wednesday stepped into the tax dispute between the Bureau of Customs and Pilipinas Shell Petroleum Corp., ordering a status quo and for the parties to wait for the Supreme Court to issue a decision on the case, reported the Philippine Daily Inquirer.

Executive Secretary Eduardo Ermita said that Customs has to await any legal recourse to be taken by Shell following the Court of Tax Appeals ruling, and any final court ruling on the matter.

“I was informed by the secretary of trade and industry that he had spoken with [officials] of Shell and they are quite comfortable that the national government is not going to push through with [Customs’] insisting on asking them to pay P7.3 billion [in taxes],” Ermita said, referring to Secretary Peter Favila.

The Bureau of Customs had given Pilipinas Shell Petroleum Corp. five days starting Wednesday to cough up P7.3 billion or face the seizure of all its future product imports, but the foreign oil firm was able to secure a temporary restraining order from a Batangas court against the government agency.

In a media briefing Wednesday, Customs Commissioner Napoleon Morales said the Court of Tax Appeals had already ruled in favor of Customs, so Shell had no choice but to comply with the order or face the consequences of non-compliance.

“The government was restrained in collecting taxes. They should have paid the proper taxes before they complained. The law may be harsh, but that’s the law and everyone should comply. If they reason to me that there will be a shortage if we seize their products, should I then violate the law?” he said.

“I spoke with [Finance Secretary Margarito] Teves and he said we should give Shell another five days from today to pay their dues. If they pay, then we won’t block their shipments. If they appeal the decision, then it will be status quo, and we won’t block their shipments. But we’re actually open for a compromise. If they can’t pay in cash within five days, we can accept staggered payment, but only until May,” he further said.

But Shell got a reprieve after the Regional Trial Court of Batangas City issued a 72-hour temporary restraining order against Customs to prevent it from holding delivery of all shipments of the oil company.

The order signed by executive judge Ruben Galvez barred Customs personnel 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 stated that all import shipments of Shell would be held.

He 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.”

During the Customs briefing, Morales claimed that they have actually gotten the support of other industry players on this case as Shell’s non-payment of excise taxes had resulted in an uneven playing field.

Shell, he said, was the only oil firm in the country that refused to pay the proper taxes.


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