MANILA, Philippines - The Joint Foreign Chambers of the Philippines (JFC) expressed alarm over the tax row between oil giant Pilipinas Shell Petroleum Corp. and the Bureau of Customs (BOC), saying that this may discourage future investments in the Philippines.

In a letter to Finance Secretary Margarito Teves, JFC called on the government to review the case as it watches the developments surrounding the tax dispute.

"The JFC members are concerned about the heavy hand of government in this case, threatening to confiscate future shipments, endangering the supply of vital products to the economy on the basis of retroactive changes in government regulations," JFC said.

If not addressed immediately, the group said the issue may further discourage investments in the manufacturing sector since both raw materials and finished products are taxed by the government.

"Double taxation favors trading over manufacturing, which cannot be in the interest of Philippine economic policymakers. We suggest that this policy be urgently addressed as it is detrimental to the vision of growth in manufacturing," JFC said.

The BOC has threatened to seize future imports of Shell and sell these in an auction to collect P7.3 billion in excise taxes from the oil firm's importation of catalytic cracked gasoline (CCG) and light CCG from 2004 to 2009.

Shell, citing the Bureau of Internal Revenue's (BIR) past ruling, argued that CCG and LCCG are raw materials and not products subject to such taxes.

The BIR then reversed its earlier ruling, which raised concerns among business groups. The agency has reiterated that what they did was "allowed by law and done in the discharge of its mandate."