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Prescription Period for Questioning Propriety of Entry, Settlement of Duties

Can the Philippine Bureau of Customs question propriety of entry and settlement of duties beyond one year from date of payment of final duties?


No. And this is the story.


Bell Petroleum, Inc. [BPI] imported 1,979,674 US barrels of Arab light crude oil sometime in 1996. The shipment was unloaded from the carrying vessel to the oil tanks of BPI on 10 April 1996.


BPI subsequently filed its import entry and internal revenue declaration [IEIRD] and paid the import duty in the amount of PHP11,231,081.00 on 23 May 1996.


More than four years later or on 1 August 2000, the BOC [through its District Collector] sent a demand letter to BPI assessing BPI for deficiency in customs duties in the amount of PHP120,162,191.00, representing the difference between old and new rates as an offshoot of the “Downstream Oil Industry Deregulation Act of 1996” [R.A. No. 8180].


And one year later, BPI received another letter from the BOC demanding the payment of the dutiable value of its 1996 crude oil importation which had been allegedly abandoned in favor of the government by operation of law.


But on 11 April 2002, the BOC filed a civil case for the collection of a sum of money for the dutiable value of BPIs importation with the Regional Trial Court of Manila.


With no other recourse, BPI filed a Petition for Review with the Court of Tax Appeals [CTA] upon considering that the civil complaint filed by the BOC in the RTC of Manila was the BOC’s final decision of its protest.


But the CTA ruled to dismiss the Petition for Review of BPI and ordered BPI to pay PHP936,899,883.90 on the ground of implied abandonment pursuant to Sections 1801 & 1802 of the Tariff and Customs Code of the Philippines.


BPI elevated the case to the Supreme Court, which ruled in the following tenor:


“Basic is the rule that provisions of law should be read in relation to other provisions therein. A statute must be  interpreted to give it efficient operation and effect as a whole avoiding the nullification of cognate provisions. Statutes are read in a manner that makes it wholly operative and effective, consistent with the legal maxim, ut res magis valeat quam pereat.


This maxim applied, we read Sections 1301, 1801, and 1802, together with Section 1603 of the TCCP. Thus, should there be a failure on the part of the owner, importer, consignee or interested party, after due notice of the arrival of its shipment (except in cases of knowledgeable owners or importers), to file an entry within the non-extendible period of 30-days from the date of discharge of the last package (shipment) from the vessel, such owner, importer, consignee or interested party is deemed to have abandoned said shipment in favor of the government. As imperative, however, is the strict compliance with Section 1603 of the TCCP, which should be read as we have ruled. Any action or claim questioning the propriety of the entry and settlement of duties pertaining to such shipment made beyond the 1-year prescriptive period from the date of payment of final duties, is barred by prescription. x x x”.


One final note. Had the BOC clearly proven that BPI committed fraudulent act/s, the one-year prescriptive period from the date of payment of the final duties would not have been applied to the above case.


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