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 bills of lading. The shipments were unloaded from the carrying vessels onto petitioner’s
oil tanks over a period of three days from the date of their arrival. Subsequently, the import entry
declarations (IEDs) were filed and 90% of the total customs duties were paid.

Three years later, then Finance Secretary Espiritu received a letter dated June 10, 1999 from a certain
Alfonso A. Orioste denouncing the deliberate concealment, manipulation and scheme employed by
petitioner and Pilipinas Shell in the importation of crude oil, thereby resulting in huge losses of revenue for
the government. In the same year, petitioner received from the District Collector of Customs of the Port of
Batangas a demand letter requiring the immediate settlement of the amount representing the difference
between the 10% and 3% tariff rates on the shipments. Furthermore, 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).

The IPD-CIIS, through their Special Investigator II and Special Investigator III issued a finding in the year
2001 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 considered abandoned in favor of
the government. They also found that fraud was committed by petitioner in collusion with the former
District Collector. Petitioner was ordered to pay the amount of P1,180,170,769.21 representing the total
dutiable value of the importations. This prompted petitioner to file a petition for review in the CTA First
Division

Whether the importations can be considered abandoned under Section 1801.

Whether "entry" under Section 1301 in relation to Section 1801 of the TCC refers to the IEIRD or the
Import Entry and Internal Revenue Declaration.

The term "entry" in customs law has a triple meaning. It means (1) the documents filed at the customs
house; (2) the submission and acceptance of the documents and (3) the procedure of passing goods
through the customs house. 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 question is: was the filing of the
IED sufficient to constitute "entry" under the TCC? Clearly, 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. There is no dispute that the "specified entry form"
refers to the IEIRD. Section 205 defines the precise moment when the imported articles are deemed
"entered. The pertinent provision provides that 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 regained 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.

The filing of the IEIRDs has several important purposes: to ascertain the value of the imported articles,
collect the correct and final amount of customs duties and avoid smuggling of goods into the country. It is
the IEIRD which accompanies the final payment of duties and taxes. These duties and taxes must be paid
in full before the BOC can allow the release of the imported articles from its custody. It is clear therefore
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. As a result, 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.
Yes. The law is clear and explicit. It gives a non-extendible period of 30 days for the importer to file the
entry which we have already ruled pertains to both the IED and IEIRD. Thus under Section 1801 in
relation to Section 1301, when the importer fails to file the entry within the said period, he "shall be
deemed to have renounced all his interests and property rights" to the importations and these shall be
considered impliedly abandoned in favor of the government. Before it was amended, Section 1801
provides the kinds and effects of abandonment. Abandonment is express when it is made direct to the
Collector by the interested party in writing and it is implied when, from the action or omission of the
interested party, an intention to abandon can be clearly inferred. The failure of any interested party to file
the import entry within fifteen days or any extension thereof from the discharge of the vessel or aircraft,
shall be implied abandonment. An implied abandonment shall not be effective until the article is declared
by the Collector to have been abandoned after notice thereof is given to the interested party as in seizure
cases.

After it was amended by RA 7651, there was an clear change in language as to what could be considered
implied abandonment. For it to constitute as such, the owner, importer, consignee of the imported article
expressly signifies in writing to the Collector of Customs his intention to abandon or 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. From
the wording of the amendment, RA 7651 no longer requires that there be other acts or omissions where
an intent to abandon can be inferred. It is enough that the importer fails to file the required import entries
within the reglementary period. The lawmakers could have easily retained the words used in the old law
(with respect to the intention to abandon) but opted to omit them. It would be error on our part to continue
applying the old law despite the clear changes introduced by the amendment.

In accordance with the Local Government Code of 1991, a municipal ordinance imposing fees on
goods that pass through the issuing municipality’s territory is null and void.

Petitioner Palma Development Corporation is engaged in milling and selling rice and corn to
wholesalers in Zamboanga City. It uses the municipal port of Malangas, Zamboanga del Sur as
transshipment point for its goods. The port, as well as the surrounding roads leading to it, belong to
and are maintained by the Municipality of Malangas, Zamboanga del Sur. On January 16, 1994, the
municipality passed Municipal Revenue Code No. 09, Series of 1993, which was subsequently
approved by the Sangguniang Panlalawigan of Zamboanga del Sur in Resolution No. 1330 dated
August 4, 1994. The pertinent provision of the Resolution provides that there shall be collected
service fee for its use of the municipal road[s] or streets leading to the wharf and to any point along
the shorelines within the jurisdiction of the municipality and for police surveillance on all goods and
all equipment harbored or sheltered in the premises of the wharf and other within the jurisdiction of
this municipality. Accordingly, the service fees imposed by Section 5G.01 of the ordinance was paid
by petitioner under protest.

Whether or not the municipal ordinance is contrary to the provisions of R.A. No. 7160 or the Local
Government Code of the Philippines.

Yes. By express language of Sections 153 and 155 of RA No. 7160, local government units,
through their Sanggunian, may prescribe the terms and conditions for the imposition of toll fees or
charges for the use of any public road, pier or wharf funded and constructed by them. A service fee
imposed on vehicles using municipal roads leading to the wharf is thus valid. However, Section
133(e) of RA No. 7160 prohibits the imposition, in the guise of wharfage, of fees -- as well as all
other taxes or charges in any form whatsoever -- on goods or merchandise. It is therefore irrelevant
if the fees imposed are actually for police surveillance on the goods, because any other form of
imposition on goods passing through the territorial jurisdiction of the municipality is clearly prohibited
by Section 133(e). Under Section 131(y) of RA No. 7160, wharfage is defined as "a fee assessed
against the cargo of a vessel engaged in foreign or domestic trade based on quantity, weight, or
measure received and/or discharged by vessel." It is apparent that a wharfage does not lose its
basic character by being labeled as a service fee "for police surveillance on all goods."
Unpersuasive is the contention of respondent that petitioner would unjustly be enriched at the
former’s expense. Though the rules thereon apply equally well to the government, for unjust
enrichment to be deemed present, two conditions must generally concur: (a) a person is unjustly
benefited, and (b) such benefit is derived at another’s expense or damage.

In the instant case, the benefits from the use of the municipal roads and the wharf were not unjustly
derived by petitioner. Those benefits resulted from the infrastructure that the municipality was
mandated by law to provide. There is no unjust enrichment where the one receiving the benefit has a
legal right or entitlement thereto, or when there is no causal relation between one’s enrichment and
the other’s impoverishment.

Value-Added Tax
Whether or not the CTA Division is correct in granting only the claim of SPI for tax credit/refund of
input Value- Added Tax (VAT) on its purchases of capital goods, but not the input VAT attributable to
its zero-rated sales.

SILICON PHILIPPINES, INC. (formerly INTEL PHILIPPINES MANUFACTURING, INC.), Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE

Facts

1. It must be noted that when Kepco filed its protest to the FLD on November 26,
2009, the CIR had 180 days or until May 25, 2010 to act on the protest. Thereafter,
Kepco may elevate its protest to the CTA within 30 days from the lapse of the 180-
day period, or until June 24, 2010. Section 7(a)(2) of RA No. 9282 provides that the
"inaction" of the CIR or his failure to decide a disputed assessment within the 180-
day period is "deemed a denial" of the protest. Section 3(a)(2), Rule 4 of the
Revised Rules of the CTA further clarifies that "that in case of disputed
assessments, the inaction of the CIR within the 180-period under Section 228 of the
1997 NIRC shall be deemed a denial for purposes of allowing the taxpayer to appeal
his case to the CTA." Clearly, the inaction is deemed an adverse decision of the CIR
on the administrative protest. Thus, for purposes of determining whether taxpayers
may already appeal to the CTA, the inaction of the CIR within 180 days shall
be  deemed denial or an adverse decision of the CIR. Since Kepco failed to appeal
the inaction or deemed denial or adverse decision of the CIR on June 24, 2010, the
assessment for deficiency VAT and FWT for TY 2006 became final, executory and
demandable.

2. As to whether the CIR properly accepted Kepco's offer for a compromise because
"the assessment is lacking in legal and/or factual basis," the general rule is that the
authority of the CIR to compromise is purely discretionary and the courts cannot
interfere with his exercise of discretionary functions, absent grave abuse of
discretion. Here, no grave abuse of discretion exists. Kepco complied with the
procedures prescribed under the BIR rules on the application and approval of
compromise settlement on the ground of doubtful validity.

SPI, formerly known as Intel Philippines Manufacturing, Inc., is a corporation duly organized and
existing under Philippine laws, and engaged in the business of designing, developing,
manufacturing, and exporting advance and large-scale integrated circuit components, commonly
referred to in the industry as Integrated Circuits or "ICs." It is registered with the Bureau of Internal
Revenue (BIR) as a VAT taxpayer and with the Board of Investments as a preferred pioneer
enterprise enjoying a six-year income holiday, in accordance with the provisions of the Omnibus
Investments Code. SPI filed on 1999 with the One-Stop Shop Inter-Agency Tax Credit and Duty
Drawback Center of the Department of Finance an Application for Tax Credit/Refund of Value-Added
Tax Paid covering the Third Quarter of 1998.

CTA Division rendered a Decision on 2003 only partially granting the claim of SPI for tax
credit/refund. The CTA Division disallowed the claim of SPI for tax credit/refund of input VAT for
failure of SPI to properly substantiate the zero-rated sales to which it attributed said taxes. The CTA
Division particularly pointed out the failure of SPI to comply with invoicing requirements under
Sections 113, 237, and 238 of the National Internal Revenue Code of 1997 (1997 Tax Code) and
Section 4.108-1 of Revenue Regulations No. 7-95 which is the registration of receipts or sales or
commercial invoices with the BIR, securing an authority to print receipts or sales or commercial
invoices from the BIR and imprinting the words "zero-rated" on the invoices covering zero-rated
sales.

Amount
Tax paid on Imported/Locally Purchased Capital
Equipment P 2,425,764.00
Total VAT Paid on Purchases per Invoices Received
During the Period for which this Application
is Filed 23,105,548.83
Amount of Tax Credit/Refund Applied For P 25,531,312.83

When respondent Commissioner of Internal Revenue (CIR) failed to act upon its aforesaid
Application for Tax Credit/Refund, SPI filed on September 29, 2000 a Petition for Review before the
CTA Division, which was docketed as CTA Case No. 6170.

The CTA Division rendered a Decision on November 24, 2003 only partially granting the claim of SPI
for tax credit/refund. The CTA Division disallowed the claim of SPI for tax credit/refund of input VAT
in the amount of P23,105,548.83 for failure of SPI to properly substantiate the zero-rated sales to
which it attributed said taxes. The CTA Division particularly pointed out the failure of SPI to comply
with invoicing requirements under Sections 113, 237, and 238 of the National Internal Revenue
Code of 1997 (1997 Tax Code) and Section 4.108-1 of Revenue Regulations No. 7-95, i.e.,
registration of receipts or sales or commercial invoices with the BIR; securing an authority to print
receipts or sales or commercial invoices from the BIR; and imprinting the words "zero-rated" on the
invoices covering zero-rated sales. As for the claim of SPI for tax credit/refund of input VAT on its
purchases of capital goods in the amount of P2,425,764.00, the CTA Division held that Section
112(B) of the 1997 Tax Code did not require that such a claim be attributable to zero-rated sales;
and that SPI was able to comply with all the requirements under said provision. 
Issue

THE HONORABLE COURT OF TAX APPEALS EN BANC ERRED IN NOT GRANTING THE
WHOLE CLAIM OF [SPI] FOR REFUND OF ITS EXCESS AND UNUTILIZED INPUT VAT FOR THE
PERIOD JULY 1, 1998 TO SEPTEMBER 30, 1998 IN THE TOTAL AMOUNT OF PhP25,531,312.83
BY DENYING ITS CLAIM ATTRIBUTABLE TO ZERO-RATED EXPORT SALES IN THE AMOUNT
OF PHP23,105,548.83

Held

During the pendency of the present Petition, this Court en banc promulgated on February 12, 2013
its Decision in the consolidated cases of Commissioner of Internal Revenue v. San Roque Power
Corporation, Taganito Mining Corporation v. Commissioner of Internal Revenue, and Philex Mining
Corporation v. Commissioner of Internal Revenue  (hereinafter collectively referred to as San
10

Roque). In San Roque, the Court settled the rules on the prescriptive periods for claiming
credit/refund of input VAT under Section 112 of the 1997 Tax Code.

The pertinent provisions of the 1997 Tax Code  provided:

11

SEC. 110. Tax Credits. –

xxxx

(B) Excess Output or Input Tax. – If at the end of any taxable quarter the output tax exceeds
the input tax, the excess shall be paid by the VAT-registered person. If the input tax exceeds
the output tax, the excess shall be carried over to the succeeding quarter or quarters. Any
input tax attributable to the purchase of capital goods or to zero-rated sales by a VAT-
registered person may at his option be refunded or credited against other internal revenue
taxes, subject to the provisions of Section 112.

SEC. 112. Refunds or Tax Credits of Input Tax. –

(A) Zero-Rated or Effectively Zero-Rated Sales. – Any VAT- registered person, whose sales
are zero-rated or effectively zero-rated may, within two (2) years after the close of the
taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or
refund of creditable input tax due or paid attributable to such sales, except transitional input
tax, to the extent that such input tax has not been applied against output tax: Provided,
however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (B) and
Section 108(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had
been duly accounted for in accordance with the rules and regulations of the Bangko Sentral
ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or
effectively zero-rated sale and also in taxable or exempt sale of goods or properties or
services, and the amount of creditable input tax due or paid cannot be directly and entirely
attributed to any one of the transactions, it shall be allocated proportionately on the basis of
the volume of sales.

(B) Capital Goods. – A VAT-registered person may apply for the issuance of a tax credit
certificate or refund of input taxes paid on capital goods imported or locally purchased, to the
extent that such input taxes have not been applied against output taxes. The application may
 be made only within two (2) years after the close of the taxable quarter when the importation
or purchase was made.

xxxx

(D) Period Within Which Refund or Tax Credit of Input Taxes Shall be Made. – In proper
cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable
input taxes within one hundred twenty (120) days from the date of submission of complete
documents in support of the application filed in accordance with Subsections (A) and (B)
hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the
Commissioner to act on the application within the period prescribed above, the taxpayer affected
may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration
of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax
Appeals. (Emphases supplied.)

The Court interpreted the aforequoted provisions, as well as the seemingly conflicting jurisprudence
and administrative rulings on the same provisions, in San Roque, thus:

At the time San Roque filed its petition for review with the CTA, the 120+30 day mandatory periods
were already in the law. Section 112(C) expressly grants the Commissioner 120 days within which to
decide the taxpayer’s claim. The law is clear, plain, and unequivocal: "x x x the Commissioner shall
grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty
(120) days from the date of submission of complete documents." Following the verba legis doctrine,
this law must be applied exactly as worded since it is clear, plain, and unequivocal. The taxpayer
cannot simply file a petition with the CTA without waiting for the Commissioner’s decision within the
120-day mandatory and jurisdictional period. The CTA will have no jurisdiction because there will be
no "decision" or "deemed a denial" decision of the Commissioner for the CTA to review. In San
Roque’s case, it filed its petition with the CTA a mere 13 days after it filed its administrative claim
with the Commissioner. Indisputably, San Roque knowingly violated the mandatory 120-day period,
and it cannot blame anyone but itself.

Section 112(C) also expressly grants the taxpayer a 30-day period to appeal to the CTA the decision
or inaction of the Commissioner, thus:

x x x the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the
claim or after the expiration of the one hundred twenty day- period, appeal the decision or the
unacted claim with the Court of Tax Appeals.

This law is clear, plain, and unequivocal. Following the well-settled verba legis doctrine, this law
should be applied exactly as worded since it is clear, plain, and unequivocal. As this law states, the
taxpayer may, if he wishes, appeal the decision of the Commissioner to the CTA within 30 days from
receipt of the Commissioner’s decision, or if the Commissioner does not act on the taxpayer’s claim
within the 120-day period, the taxpayer may appeal to the CTA within 30 days from the expiration of
the 120-day period.

xxxx

Section 112(A) and (C) must be interpreted according to its clear, plain, and unequivocal language.
The taxpayer can file his administrative claim for refund or credit at anytime within the two-year
prescriptive period. If he files his claim on the last day of the two-year prescriptive period, his claim is
still filed on time. The Commissioner will have 120 days from such filing to decide the claim. If the
Commissioner decides the claim on the 120th day, or does not decide it on that day, the taxpayer
still has 30 days to file his judicial claim with the CTA. This is not only the plain meaning but also the
only logical interpretation of Section 112(A) and (C).

xxxx

The Atlas doctrine, which held that claims for refund or credit of input VAT must comply with the two-
year prescriptive period under Section 229, should be effective only from its promulgation on 8 June
2007 until its abandonment on 12 September 2008 in Mirant. The Atlas doctrine was limited to the
reckoning of the two-year prescriptive period from the date of payment of the output VAT. Prior to
the Atlas doctrine, the two-year prescriptive period for claiming refund or credit of input VAT should
be governed by Section 112(A) following the verba legis rule. The Mirant ruling, which abandoned
the Atlas doctrine, adopted the verba legis rule, thus applying Section 112(A) in computing the two-
year prescriptive period in claiming refund or credit of input VAT.

xxxx

When Section 112(C) states that "the taxpayer affected may, within thirty (30) days from receipt of
the decision denying the claim or after the expiration of the one hundred twenty-day period, appeal
the decision or the unacted claim with the Court of Tax Appeals," the law does not make the 120+30
day periods optional just because the law uses the word "may." The word "may" simply means that
the taxpayer may or may not appeal the decision of the Commissioner within 30 days from receipt of
the decision, or within 30 days from the expiration of the 120- day period. x x x.

xxxx

To repeat, a claim for tax refund or credit, like a claim for tax exemption, is construed strictly against
the taxpayer. One of the conditions for a judicial claim of refund or credit under the VAT System is
compliance with the 120+30 day mandatory and jurisdictional periods. Thus, strict compliance with
the 120+30 day periods is necessary for such a claim to prosper, whether before, during, or after the
effectivity of the Atlas doctrine, except for the period from the issuance of BIR Ruling No. DA-489-03
on 10 December 2003 to 6 October 2010 when the Aichi doctrine was adopted, which again
reinstated the 120+30 day periods as mandatory and jurisdictional.

xxxx

BIR Ruling No. DA-489-03 does provide a valid claim for equitable estoppel under Section 246 of the
Tax Code. BIR Ruling No. DA-489-03 expressly states that the "taxpayer-claimant need not wait for
the lapse of the 120-day period before it could seek judicial relief with the CTA by way of Petition for
Review." Prior to this ruling, the BIR held, as shown by its position in the Court of Appeals, that the
expiration of the 120-day period is mandatory and jurisdictional before a judicial claim can be filed.

xxxx

Clearly, BIR Ruling No. DA-489-03 is a general interpretative rule. Thus, all taxpayers can rely on
BIR Ruling No. DA-489-03 from the time of its issuance on 10 December 2003 up to its reversal by
this Court in Aichi on 6 October 2010, where this Court held that the 120+30 day periods are
mandatory and jurisdictional.12 (Emphasis supplied, citations omitted.)
NIRC Remedies
KEPCO PHILIPPINES CORPORATION, PETITIONER, COMMISSIONER OF INTERNAL
REVENUE, RESPONDENT.
Facts
On 2009, Kepco received Preliminary Assessment Notice for alleged deficiency income tax,
value-added tax (VAT), expanded withholding tax, and final withholding tax (FWT) for taxable
year 2006. In the same year, Kepco received Final Letter of Demand (FLD) for deficiency VAT
and for deficiency FWT.  On 2010, Kepco filed its petition before the CTA Division.
In 2013, the CTA Division partly granted Kepco's petition and cancelled the deficiency FWT
assessment and the compromise penalties. Kepco was ordered to pay deficiency VAT plus
interest and surcharges. Kepco and the CIR filed motions for reconsideration but were denied
for lack of merit.

Meantime, on 2017, Kepco filed a Manifestation that it entered into a compromise

agreement with the CIR on its tax assessments for the years 2006, 2007 and 2009.
For TY 2006, which is the subject of the instant petition, Kepco paid a total of
P134,193,534.12. As proof, Kepco attached the Certificate of Availment issued by
the CIR in the same year certifying that the National Evaluation Board (NEB)
approved Kepco's application for compromise settlement for deficiency taxes for TYs
2006, 2007 and 2009. Thus, Kepco moved that the case be declared closed and
terminated. However, the OSG filed its Comment on July 20, 2018 opposing the
Compromise agreement as not valid.

In compliance with this Court's Resolution dated February 14, 2018, the OSG filed
its Comment25 on July 20, 2018 opposing Kepco's manifestation and motion.

The OSG avers that the compromise agreement is not valid because first,

1. Whether or not it failed to allege and prove any of the grounds for a valid
compromise under Section 3 of Revenue Regulations (RR) No. 30-2002
2. Whether the CTA considering that that it did not issue yet any adverse
Decision against Kepco, hence, there is no "doubtful validity" to speak of as a
ground for a valid compromise pursuant to Section 2 of RR No. 8-2004;
3. Whether Kepco did not pay in full the compromise amount upon filing of the
application in violation of Section 2 of RR No. 9-2013.
Issue
Whether or not the compromise agreement is valid.
Held
There is no dispute that Kepco entered into a compromise agreement with the CIR
on its deficiency taxes for TY 2006, and the CIR issued Certificate of Availment on
December 11, 2017. On this basis, the deficiency tax assessment subject of the
Petition can now be considered closed and terminated. The power of the CIR to enter
into compromise agreements for deficiency taxes is explicit in Section 204(A) of the 1997
National Internal Revenue Code, as amended (1997 NIRC). The CIR may compromise an
assessment when a reasonable doubt as to the validity of the claim against the taxpayer exists,
or the financial position of the taxpayer demonstrates a clear inability to pay the tax.

In this regard, the BIR issued RR No. 30-2002, as amended by RR No. 08-2004, in which Sec.
3 (1) (e) is the basis for the acceptance of the compromise settlement in the instant case on the
ground of doubtful validity the assessment became final because Kepco failed to appeal the
inaction or "deemed denial" of the CIR to the CTA within 30 days after the expiration of the 180-
day period and there is reason to believe that the assessment is lacking in legal and/or factual
basis.

SEC. 3. Basis For Acceptance of Compromise Settlement. –  x x x

1. Doubtful validity of the assessment. — The offer to compromise a delinquent account or

disputed assessment under these Regulations on the ground of reasonable doubt as to the
validity of the assessment may be accepted when it is shown that:

(a) The delinquent account or disputed assessment is one resulting from a jeopardy
assessment x x x; or

(b) The assessment seems to be arbitrary in nature, appearing to be based on presumptions

and there is reason to believe that it is looking in legal and/or factual basis; or

(c) The taxpayer failed to file an administrative protest on account of the alleged failure to
receive notice of assessment and there is reason to believe that the assessment is lacking in
legal and/or factual basis; or

(d) The taxpayer failed to file a request for reinvestigation/ reconsideration within 30 days from
receipt of final assessment notice and there is reason to believe that the assessment is lacking
in legal and/or factual basis; or

(e) The taxpayer failed to elevate to the Court of Tax Appeals (CTA) an adverse decision of the
Commissioner, or his authorized representative, in some cases, within 30 days from receipt
thereof and there is reason to believe that the assessment is lacking in legal and/or factual
basis; or
Kepco's case falls under paragraph e – the assessment became final because Kepco failed to
appeal the inaction or "deemed denial" of the CIR to the CTA within 30 days after the expiration
of the 180-day period and there is reason to believe that the assessment is lacking in legal
and/or factual basis.
It must be noted that when Kepco filed its protest to the FLD on November 26, 2009, the CIR
had 180 days or until May 25, 2010 to act on the protest.39 Thereafter, Kepco may elevate its
protest to the CTA within 30 days from the lapse of the 180-day period,40 or until June 24, 2010.
Section 7(a)(2)41 of RA No. 928242 provides that the "inaction" of the CIR or his failure to decide
a disputed assessment within the 180-day period is "deemed a denial" of the protest.43 Section
3(a)(2),44 Rule 4 of the Revised Rules of the CTA further clarifies that "that in case of disputed
assessments, the inaction of the [CIR] within the [180]-period under [Section] 228 of the [1997
NIRC] shall be deemed a denial for purposes of allowing the taxpayer to appeal his case to the
[CTA]." Clearly, the inaction is deemed an adverse decision of the CIR on the administrative
protest. Thus, for purposes of determining whether taxpayers may already appeal to the CTA,
the inaction of the CIR within 180 days shall be deemed denial or an adverse decision of the
CIR. Since Kepco failed to appeal the inaction or deemed denial or adverse decision of the CIR
on June 24, 2010, the assessment for deficiency VAT and FWT for TY 2006 became final,
executory and demandable.

As to whether the CIR properly accepted Kepco's offer for a compromise because "the
assessment is lacking in legal and/or factual basis," the general rule is that the authority of the
CIR to compromise is purely discretionary and the courts cannot interfere with his exercise of
discretionary functions, absent grave abuse of discretion.45 Here, no grave abuse of discretion
exists. Kepco complied with the procedures prescribed under the BIR rules on the application
and approval of compromise settlement on the ground of doubtful validity.

Contrary to the OSG's claim that Kepco did not pay the full amount offered for compromise
upon filing of its application, records show that Kepco paid P143,891,831.9046 representing 40%
of the basic tax assessed for TYs 2006, 2007 and 2009 when it applied for compromise on
January 19, 2017.47 For TY 2006, which is the subject of the instant case, Kepco paid
P40,963,870.6348 (40% of basic deficiency VAT of P102,409,676.58) and
P31,783,857.5449 (40% of basic deficiency FWT of P79,459,643.84) on January 19, 2017.
Notably, the minimum compromise amount under Section 204(A)50 of the 1997 NIRC and
Section 451 of RR No. 30-2002 is 40% of the basic tax assessed. Kepco complied with the
requirement of payment of the compromise offer as a pre-condition for the processing of the
application.

Further, the TWG evaluated Kepco's application and on October 19, 2017, recommended to the
NEB its approval on the basis of doubtful validity. The application was approved by a majority of
all the members of the NEB composed of Deputy Commissioners Jesus Clint O. Aranas (Legal
Group), Lanee Cui-David (Information Systems Group), and Celia C. King (Resource
Management Group), and Commissioner Ceasar R. Dulay in compliance with Section 2 of RR
No. 9-2013. Thereafter, the CIR issued Certificate of Availment in favor of Kepco on December
11, 2017.

A compromise agreement has the effect of res judicata on the parties.56 Compromises are
generally to be favored and those entered into in good faith cannot be set aside,57 except when
there is mistake, fraud, violence, intimidation, undue influence, or falsity of documents.58 None
of these exceptions obtain in the present case.

To be sure, Kepco already paid 100% of the basic deficiency VAT and 40% of the basic
deficiency FWT for TY 2006 in the aggregate amount of P134,193,534.12, as evidenced by B1R
payment forms.59 The CIR approved the compromise settlement as early as December 11,
2017. Kepco now only seeks to have the instant case closed and terminated. Thus, to allow the
OSG to question the validity of the compromise settlement alleging anomalies in its approval is
not only unfair to Kepco and taxpayers alike that entered into compromise agreements in good
faith but there will also be no final and definitive settlement of tax compromises. The dissenting
opinion of Justice Carpio in PNOC v. Court of Appeals60 is enlightening:

A compromise agreement constitutes a final and definite settlement of the controversy between
the parties. A compromise agreement, even if not judicially approved, has the effect of res
judicata on the parties. Article 2037 of the Civil Code provides: 
ChanRoblesVirtualawlibrary

A compromise has upon the parties the effect and authority of resjudicata; but there shall he no
execution except in compliance with a judicial compromise. (Emphasis supplied.)

The compromise agreement has the force of law between the parties and no party may discard
unilaterally the compromise agreement. Under Section 8.1 of RMO No. 39-86, upon payment of
the compromise amount, the tax "case is already closed." The Solicitor General, who withdrew
as counsel for the BIR, maintains that the compromise agreement is valid.

Where a party has received the consideration for the compromise agreement, such party is
estopped from questioning its terms and asking for the reopening of the case on the ground of
mistake. As explained in McCarthy v. Barber Steamship Lines:61

Hence it is general rule in this country, that compromises are to be favored, without regard to
the nature of the controversy compromised, and that they cannot be set aside because the
event shows all the gain to have been on one side, and all the sacrifice on the other, if the
parties have acted in good faith, and with a belief of the actual existence of the rights which they
have respectively waived or abandoned; and if a settlement be made in regard to such subject,
free from fraud or mistake, whereby there is a surrender or satisfaction, in whole or in part, of a
claim upon one side in exchange for or in consideration of a surrender or satisfaction of a claim
in whole or in part, or of something of value, upon the other, however baseless may be the claim
upon either side or harsh the terms as to either of the parties, the other cannot successfully
impeach the agreement in a court of justice ... Where the compromise is instituted and carried
through in good faith, the fact that there was a mistake as to the law or as to the facts, except in
certain cases where the mistake was mutual and correctable as such in equity, cannot afford a
basis for setting a compromise aside or defending against a suit brought thereon x x x

xxxx

And whether one or the other party understood the law of the case more correctly than the
other, cannot be material to the validity of the bargain. For if it were, then it would follow that
contracts by the parties settling their own disputes, would at last be made to stand or fall,
according to the opinion of the appellate court how the law would have determined it.
(Emphasis supplied)
In People v. Magdaluyo,62 the BIR Commissioner approved the agreement which compromised
the taxpayer's violation of the Tax Code. The taxpayer paid the compromise amount before the
filing of the criminal information in court. The Court ruled that the government could no longer
prosecute the taxpayer for violation of the Tax Code.

The same principle holds true in the present case. The parties to the compromise agreement
have voluntarily settled the tax liability arising from PNB's failure to withhold the final tax on
PNOC's interest income. The parties have fully implemented in good faith the compromise
agreement. The new BIR Commissioner cannot just annul the legitimate compromise
agreements made by his predecessors in the performance of their regular duties where the
parties entered into the compromise agreements in good faith and had already fully
implemented the compromise agreements.

To rule otherwise would subject the validity and finality of a tax compromise agreement to
depend on the different interpretations of succeeding BIR Commissioners. Such lack of finality
of tax compromises would discourage taxpayers from entering into tax compromises with the
BIR, considering that compromises entail admissions by taxpayers of violations of tax laws. A
tax compromise cannot be invalidated except in case of mistake, fraud, violence, undue
influence, or falsity of documents. Article 2038 of the Civil Code provides:

Art. 2038. A compromise in which there is mistake, fraud, violence, intimidation, undue
influence, or falsity of documents, is subject to the provisions of Article 1330 of this Code.

xxxx
(Emphasis supplied)

Article 1330 of the Civil Code makes compromises tainted with such circumstances voidable. In
the present case, there is no mistake because PNOC's delinquent account clearly falls within
the coverage of EO No. 44. Also, PNOC clearly filed its application for tax compromise before
the deadline. Thus, none of the circumstances that make a compromise voidable is present in
this case. 63 (Emphasis and underscoring supplied.)

Indeed, while taxes are the lifeblood of the government, the power of taxation should be
"exercised with caution to minimize the proprietary rights of a taxpayer. It must be exercised
fairly, equally and uniformly, lest the tax collector kill the "hen that lays the golden egg." x x x
[T]o maintain the general public's trust and confidence in the Government this power must be
used justly and not treacherously."64 After all, "in balancing the scales between the power of the
State to tax and its inherent right to prosecute perceived transgressors of the law on one side,
and the constitutional rights of a citizen to due process of law and the equal protection of the
laws on the other, the scales must tilt in favor of the individual, for a citizen's right is amply
protected by the Bill of Rights under the Constitution."65

Accordingly, we rule that the compromise settlement between Kepco and the CIR is valid. As
such, there is nothing left for us to do but to declare the case closed and terminated
Local Government Taxation
PALMA DEVELOPMENT CORPORATION, petitioner,
vs.
MUNICIPALITY OF MALANGAS, ZAMBOANGA DEL SUR, 

Facts

Petitioner Palma Development Corporation is engaged in milling and selling rice and corn to
wholesalers in Zamboanga City. It uses the municipal port of Malangas, Zamboanga del Sur as
transshipment point for its goods. The port, as well as the surrounding roads leading to it, belong to
and are maintained by the Municipality of Malangas, Zamboanga del Sur.

On January 16, 1994, the municipality passed Municipal Revenue Code No. 09, Series of 1993,
which was subsequently approved by the Sangguniang Panlalawigan of Zamboanga del Sur in
Resolution No. 1330 dated August 4, 1994. Section 5G.01 of the ordinance reads:

"Section 5G.01. Imposition of fees. There shall be collected service fee for its use of the municipal
road[s] or streets leading to the wharf and to any point along the shorelines within the jurisdiction of
the municipality and for police surveillance on all goods and all equipment harbored or sheltered in
the premises of the wharf and other within the jurisdiction of this municipality in the following
schedule:

a) Vehicles and Equipment: rate of fee

1. Automatic per unit ₱10.00

2. Ford Fiera ₱10.00

3. Trucks ₱10.00

xxxxxxxxx

b) Other Goods, Construction Material products:

1. Bamboo craft ₱20.00

2. Bangus/Kilo 0.30

xxxxxxxxx

41. Rice and corn grits/sack 0.50" 5

Accordingly, the service fees imposed by Section 5G.01 of the ordinance was paid by petitioner
under protest. It contended that under Republic Act No. 7160, otherwise known as the Local
Government Code of 1991, municipal governments did not have the authority to tax goods and
vehicles that passed through their jurisdictions. Thereafter, before the Regional Trial Court (RTC) of
Pagadian City, petitioner filed against the Municipality of Malangas on November 20, 1995, an action
for declaratory relief assailing the validity of Section 5G.01 of the municipal ordinance.
On the premise that the case involved the validity of a municipal ordinance, the RTC directed
respondent to secure the opinion of the Office of the Solicitor General. The trial court likewise
ordered that the opinions of the Departments of Finance and of Justice be sought. As these opinions
were still unavailable as of October 17, 1996, petitioner’s counsel filed, without objection from
respondent, a Manifestation seeking the submission of the case for the RTC’s decision on a pure
question of law.

In due time, the trial court rendered its November 13, 1996 Decision declaring the entire Municipal
Revenue Code No. 09 as ultra vires and, hence, null and void.

Issue
whether Section 5G.01 of Municipal Revenue Code No. 09 is valid

Whether or not the Court of Appeals erred when it did not rule that the questioned municipal
ordinance is contrary to the provisions of R.A. No. 7160 or the Local Government Code of the
Philippines

Whether a remand of the case is necessary

Held

No. Petitioner argues that while respondent has the power to tax or impose fees on vehicles using its
roads, it cannot tax the goods that are transported by the vehicles. The provision of the ordinance
imposing a service fee for police surveillance on goods is allegedly contrary to Section 133(e) of RA
No. 7160, which reads:

"Section 133. Common Limitations on the Taxing Powers of Local Government Units. – Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and
barangays shall not extend to the levy of the following:

xxxxxxxxx

e) Taxes, fees and charges and other impositions upon goods carried into and out of, or passing
through, the territorial jurisdictions of local government units in the guise of charges for wharfage,
tolls for bridges or otherwise, or other taxes, fees or charges in any form whatsoever upon such
goods or merchandise;"

On the other hand, respondent maintains that the subject fees are intended for services rendered,
the use of municipal roads and police surveillance. The fees are supposedly not covered by the
prohibited impositions under Section 133(e) of RA No. 7160. It further contends that it was
8 

empowered by the express mandate of Sections 153 and 155 of RA No. 7160 to enact Section
5G.01 of the ordinance. The pertinent provisions of this statute read as follows:

"Section 153. Service Fees and Charges. -- Local government units may impose and collect such
reasonable fees and charges for services rendered.

xxxxxxxxx
"Section 155. Toll Fees or Charges. -- The sanggunian concerned may prescribe the terms and
conditions and fix the rates for the imposition of toll fees or charges for the use of any public road,
pier or wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the
local government unit concerned: Provided, That no such toll fees or charges shall be collected from
officers and enlisted men of the Armed Forces of the Philippines and members of the Philippine
National Police on mission, post office personnel delivering mail, physically-handicapped, and
disabled citizens who are sixty-five (65) years or older.1a\^/phi1.net

"When public safety and welfare so requires, the sanggunian concerned may discontinue the
collection of the tolls, and thereafter the said facility shall be free and open for public use."

Respondent claims that there is no proof that the ₱0.50 fee for every sack of rice or corn is a
fraudulent legislation enacted to subvert the limitation imposed by Section 133(e) of RA No. 7160.
Moreover, it argues that allowing petitioner to use its roads without paying the ₱0.50 fee for every
sack of rice or corn would contravene the principle of unjust enrichment.

By express language of Sections 153 and 155 of RA No. 7160, local government units, through their
Sanggunian, may prescribe the terms and conditions for the imposition of toll fees or charges for the
use of any public road, pier or wharf funded and constructed by them. A service fee imposed on
vehicles using municipal roads leading to the wharf is thus valid. However, Section 133(e) of RA No.
7160 prohibits the imposition, in the guise of wharfage, of fees -- as well as all other taxes or
charges in any form whatsoever -- on goods or merchandise. It is therefore irrelevant if the fees
imposed are actually for police surveillance on the goods, because any other form of imposition on
goods passing through the territorial jurisdiction of the municipality is clearly prohibited by Section
133(e).

Under Section 131(y) of RA No. 7160, wharfage is defined as "a fee assessed against the cargo of a
vessel engaged in foreign or domestic trade based on quantity, weight, or measure received and/or
discharged by vessel." It is apparent that a wharfage does not lose its basic character by being
labeled as a service fee "for police surveillance on all goods."

Unpersuasive is the contention of respondent that petitioner would unjustly be enriched at the
former’s expense. Though the rules thereon apply equally well to the government, for unjust
9 

enrichment to be deemed present, two conditions must generally concur: (a) a person is unjustly
benefited, and (b) such benefit is derived at another’s expense or damage. 10

In the instant case, the benefits from the use of the municipal roads and the wharf were not unjustly
derived by petitioner. Those benefits resulted from the infrastructure that the municipality was
mandated by law to provide. There is no unjust enrichment where the one receiving the benefit has
11 

a legal right or entitlement thereto, or when there is no causal relation between one’s enrichment
and the other’s impoverishment

No. ‘Section 153. Service Fees and Charges. -- Local government units may impose and collect
such reasonable fees and charges for services rendered.

xxxxxxxxx

‘Section 155. Toll Fees or Charges. -- The Sanggunian concerned may prescribe the terms and
conditions and fix the rates for the imposition of toll fees or charges for the use of any public road,
pier or wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the
local government unit concerned: Provided, That no such toll fees or charges shall be collected from
officers and enlisted men of the Armed Forces of the Philippines and members of the Philippine
National Police on mission, post office personnel delivering mail, physically-handicapped, and
disabled citizens who are sixty-five (65) years or older.

‘When public safety and welfare so requires, the Sanggunian concerned may discontinue the
collection of the tolls, and thereafter the said facility shall be free and open for public use. x x x’

"As we see it, the disputed municipal ordinance, which provides for a service fee for the use of the
municipal road or streets leading to the wharf and to any point along the shorelines within the
jurisdiction of the municipality and for police surveillance on all goods and all equipment harbored or
sheltered in the premises of the wharf and other within the jurisdiction of this municipality, seems to
fall within the compass of the above cited provisions of R.A. No. 7160. As elsewhere indicated, the
parties in this case, nonetheless, chose to submit the issue to the Trial Court on a ‘pure question of
law,’ without a full-blown trial on the merits: consequently, we are not prepared to say, at this
juncture, that the facts of the case inevitably call for the application, and/or that these make out a
clear-cut case within the ambit and purview, of the aforecited section. The plaintiff, thus, has to
adduce evidence to substantiate its thesis that the assailed municipal ordinance, in fact, imposes
fees on the movement of goods within the jurisdiction of the defendant, and that this imposition is
merely in the guise of a toll fee for the use of municipal roads and service fee for police surveillance.
Competent evidence upon this score must, thus, be presented." 14

We note that Section 5G.01 imposes two types of service fees: 1) one for the use of the municipal
roads and 2) another for police surveillance on all goods and equipment sheltered in the premises of
the wharf. The amount of service fees, however, is based on the type of vehicle that passes through
the road and the type of goods being transported. 1a\^/phi1.net

While both parties admit that the service fees imposed are for the use of the municipal roads,
petitioner maintains that the service fee for police surveillance on goods harbored on the wharf is in
the guise of a wharfage, a prohibited imposition under Section 133(e) of RA No. 7160.
15 

Thus, the CA held that the case should be remanded to the trial court in order to resolve this factual
dispute. The appellate court noted that under Section 155 of RA No. 7160, municipalities apparently
now have the power to impose fees for the use of municipal roads.

Nevertheless, a remand is still unnecessary even if the service fee charged against the goods are for
police surveillance, because Section 133(e) of RA No. 7160 expressly prohibits the imposition of all
other taxes, fees or charges in any form whatsoever upon the merchandise or goods that pass
through the territorial jurisdiction of local government units. It is therefore immaterial to the instant
case whether the service fee on the goods is for police surveillance or not, since the subject
provision of the revenue ordinance is invalid. Reception of further evidence to establish this fact
would not legalize the imposition of such fee in any way

Tariff and Customs Code

CHEVRON PHILIPPINES, INC., petitioner,
vs.
COMMISSIONER OF THE BUREAU OF CUSTOMS, 

Facts
This is a petition for review on certiorari1 of the decision2 and resolution3 of the Court of Tax Appeals
(CTA) en banc dated March 1, 2007 and July 5, 2007, respectively, in CTA EB Nos. 121 and 122 which
reversed the decision of the CTA First Division dated April 5, 2005 in CTA Case No. 6358.

Petitioner Chevron Philippines, Inc.4 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 bills of lading, summarized as follows:

PRODUCT ARRIVAL VESSEL

DATE
66,229,960 liters Ex MT
Nan Hai Crude Oil 3/8/1996 Bona Spray
6,990,712 liters Ex MT
Reformate 3/18/1996 Orient Tiger
16,651,177 liters Ex MT
FCCU Feed Stock 3/21/1996 Probo Boaning
236,317,862 liters Ex MT
Oman/Dubai Crude Oil 3/26/1996 Violet

51,878,114 liters Ex MT
Arab Crude Oil 4/10/1996 Crown Jewel5

The shipments were unloaded from the carrying vessels onto petitioner’s oil tanks over a period of three
days from the date of their arrival. Subsequently, the import entry declarations (IEDs) were filed and 90%
of the total customs duties were paid. The import entry and internal revenue declarations (IEIRDs) of the
shipments were thereafter filed on the following dates:

ENTRY PRODUCT ARRIVAL IED IEIRD

DATE
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

The importations were appraised at a duty rate of 3% as provided under RA 8180 6 and petitioner paid the
import duties amounting to P316,499,021.7 Prior to the effectivity of RA 8180 on April 16, 1996, the rate of
duty on imported crude oil was 10%.

Three years later, then Finance Secretary Edgardo Espiritu received a letter (with annexes) dated June
10, 1999 from a certain Alfonso A. Orioste denouncing the deliberate concealment, manipulation and
scheme employed by petitioner 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 Bureau of Customs (BOC) for
investigation on July 19, 1999.8

On January 28, 2000, petitioner received a subpoena duces tecum/ad testificandum from Conrado M.
Unlayao, Chief of the Investigation and Prosecution Division, Customs Intelligence and Investigation
Service (IPD-CIIS) of the BOC, to submit pertinent documents in connection with the subject shipments
pursuant to the investigation he was conducting thereon. It appeared, however, that the Legal Division of
the BOC was also carrying out a separate investigation. Atty. Roberto Madrid (of the latter office) had
gone to petitioner’s Batangas Refinery and requested the submission of information and documents on
the same shipments. This prompted petitioner to seek the creation of a unified team to exclusively handle
the investigation.9

On August 1, 2000, petitioner received from the District 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. In response, petitioner
wrote the District Collector to inform him of the pending request for the creation of a unified team with the
exclusive authority to investigate the matter. Furthermore, 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). Thus, it prayed that the assessment for deficiency customs duties
be cancelled and the notice of demand be withdrawn. 10

In a letter petitioner received on October 12, 2000, respondent Commissioner of the BOC 11 stated that it
was the IPD-CIIS which was authorized to handle the investigation, to the exclusion of the Legal Division
and the District Collector.12

The IPD-CIIS, through Special Investigator II Domingo B. Almeda and Special Investigator III Nemesio C.
Magno, Jr., issued a finding dated February 2, 2001 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 considered abandoned in favor of the government. They also found that fraud was
committed by petitioner in collusion with the former District Collector. 13

Thereafter, respondent14 wrote petitioner on October 29, 2001 informing it of the findings of irregularity in
the filing and acceptance of the import entries beyond the period required by customs law and in the
release of the shipments after the same had already been deemed abandoned in favor of the
government. Petitioner was ordered to pay the amount of P1,180,170,769.21 representing the total
dutiable value of the importations.15

This prompted petitioner to file a petition for review in the CTA First Division on November 28, 2001,
asking for the reversal of the decision of respondent.

Issue

There are three issues for our resolution:

 1. whether "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 and

3. whether the importations can be considered abandoned under Section 1801.

Held

ENTRY" IN SECTIONS 1301 AND 1801 OF THE

TCC REFERS TO BOTH THE IED AND IEIRD

Under Section 1301 of the TCC, imported articles must be entered within a non-extendible period of 30
days from the date of discharge of the last package from a vessel. Otherwise, the BOC will deem the
imported goods impliedly abandoned under Section 1801. Thus:

Section 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
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. (Emphasis supplied)

Section 1801. Abandonment, Kinds and Effect of. - An imported article is deemed
abandoned under any of the following circumstances:

xxx xxx xxx

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. (Emphasis supplied)

Petitioner argues that the IED is an entry contemplated by these sections. According to it, the
congressional deliberations on RA 7651 which amended the TCC to provide a non-extendible 30-day
period show the legislative intent to expedite the procedure for declaring importations as abandoned.
Filing an entry serves as notice to the BOC of the importer’s willingness to complete the importation and
to pay the proper taxes, duties and fees. Conversely, the non-filing of the entry within the period connotes
the importer’s disinterest and enables the BOC to consider the goods as abandoned. Since the IED is a
BOC form that serves as basis for payment of advance duties on importation as required under PD
1853,20 it suffices as an entry under Sections 1301 and 1801 of the TCC. 21

We disagree.
The term "entry" in customs law has a triple meaning. It means (1) the documents filed at the customs
house; (2) the submission and acceptance of the documents and (3) the procedure of passing goods
through the customs house.22

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 question is: was the filing of the IED sufficient to constitute
"entry" under the TCC?

The law itself, in Section 205, defines the meaning of the technical term "entered" as used in the TCC:

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 regained 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.

xxx xxx xxx

(Emphasis supplied)

Clearly, 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. There is no dispute that the "specified entry form" refers to the IEIRD. Section 205 defines
the precise moment when the imported articles are deemed "entered."

Moreover, in the old case of Go Ho Lim v. The Insular Collector of Customs,23 we ruled that the word
"entry" refers to the regular consumption entry (which, in our current terminology, is the IEIRD) and not
the provisional entry (the IED):

It is disputed by the parties whether the application for the special permit. Exhibit A, containing
the misdeclared weight of the 800 cases of eggs, comes within the meaning of the word "entry"
used in section 1290 of the Revised Administrative Code, or said word "entry" means only the
"original entry and importer's declaration." The court below reversed the decision of the Insular
Collector of Customs on the ground that the provisions of section 1290 of the Revised
Administrative Code refer to the regular consumption entry and not to a provisional
declaration made in an application for a special permit, as the one filed by the appellee, to
remove the cases of eggs from the customhouse.

This court is of the opinion that certainly the application, Exhibit A, cannot be considered as a
final regular entry of the weight of the 800 cases of eggs imported by the appellee, taking into
account the fact that said application sought the delivery of said 800 cases of eggs "from the pier
after examination," and the special permit granted, Exhibit E, provided for "delivery to be made
after examination by the appraiser." All the foregoing, together with the circumstance that the
appellee had to file the regular consumption entry which he bound himself to do, as shown by the
application, Exhibit A, logically lead to the conclusion that the declaration of the weight of the 800
cases of eggs made in said application, is merely a provisional entry, and as it is subject to
verification by the customhouse examiner, it cannot be considered fraudulent for the purpose of
imposing a surcharge of customs duties upon the importer. 24 (Emphasis supplied

The filing of the IEIRDs has several important purposes: to ascertain the value of the imported articles,
collect the correct and final amount of customs duties and avoid smuggling of goods into the
country.28 Petitioner’s interpretation would have an absurd implication: the 30-day period applies only to
the IED while no deadline is specified for the submission of the IEIRD. Strong issues of public policy
militate against petitioner’s interpretation. It is the IEIRD which accompanies the final payment of duties
and taxes. These duties and taxes must be paid in full before the BOC can allow the release of the
imported articles from its custody.

Taxes are the lifeblood of the nation. Tariff and customs duties are taxes constituting a significant portion
of the public revenue which enables the government to carry out the functions it has been ordained to
perform for the welfare of its constituents.29 Hence, their prompt and certain availability is an imperative
need30 and they must be collected without unnecessary hindrance. 31 Clearly, and perhaps for that reason
alone, the submission of the IEIRD cannot be left to the exclusive discretion or whim of the importer.

We hold, therefore, that under the relevant provisions of the TCC, 32 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. As a result,
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.

THE IMPORTATIONS WERE ABANDONED

IN FAVOR OF THE GOVERNMENT

The law is clear and explicit. It gives a non-extendible period of 30 days for the importer to file the entry
which we have already ruled pertains to both the IED and IEIRD. Thus under Section 1801 in relation to
Section 1301, when the importer fails to file the entry within the said period, he "shall be deemed to have
renounced all his interests and property rights" to the importations and these shall be considered
impliedly abandoned in favor of the government:

Section 1801. Abandonment, Kinds and Effect of. -

xxx xxx xxx

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.

According to petitioner, the shipments should not be considered impliedly abandoned because none of its
overt acts (filing of the IEDs and paying advance duties) revealed any intention to abandon the
importations.41

Unfortunately for petitioner, it was the law itself which considered the importation abandoned when it
failed to file the IEIRDs within the allotted time. Before it was amended, Section 1801 was worded as
follows:

Sec. 1801. Abandonment, Kinds and Effect of. — Abandonment is express when it is made direct
to the Collector by the interested party in writing and it is implied when, from the action or
omission of the interested party, an intention to abandon can be clearly inferred. The failure of
any interested party to file the import entry within fifteen days or any extension thereof from the
discharge of the vessel or aircraft, shall be implied abandonment. An implied abandonment shall
not be effective until the article is declared by the Collector to have been abandoned after notice
thereof is given to the interested party as in seizure cases.

Any person who abandons an imported article renounces all his interests and property rights
therein.42
After it was amended by RA 7651, there was an indubitable shift in language as to what could be
considered implied abandonment:

Section 1801. Abandonment, Kinds and Effect 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 xxxx

From the wording of the amendment, RA 7651 no longer requires that there be other acts or omissions
where an intent to abandon can be inferred. It is enough that the importer fails to file the required import
entries within the reglementary period. The lawmakers could have easily retained the words used in the
old law (with respect to the intention to abandon) but opted to omit them. 43 It would be error on our part to
continue applying the old law despite the clear changes introduced by the amendment.