G.R. No. 209324 , December 09, 2015
Republic of the Philippines, represented by the Bureau of Customs, Petitioner, vs. Pilipinas Shell Petroleum Corporation, Respondent.

FACTS

Pilipinas Shell Petroleum Corporation (PSPC) is a domestic corporation engaged in importing, refining, and selling petroleum products. It utilized four Tax Credit Certificates (TCCs) with a total value of P10,088,912.00, which it acquired via a Deed of Assignment from Filipino Way Industries (FWI), to pay customs duties and taxes on its importations. The Bureau of Customs (BOC) initially accepted these TCCs. However, the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (the Center) later cancelled the TCCs, having found them to have been fraudulently issued and transferred. The Center informed the BIR and BOC of the cancellation and directed the collection of the utilized amounts. Consequently, the Republic, represented by the BOC, filed a collection suit against PSPC in the RTC for P10,088,912.00. PSPC filed a separate petition for review with the Court of Tax Appeals (CTA) questioning the cancellation. The Supreme Court, in a prior related case ( G.R. No. 161953 ), ruled that the RTC, not the CTA, had jurisdiction over the collection case and ordered the RTC to proceed. After pre-trial, PSPC filed a motion for summary judgment, which the RTC initially denied but later granted upon reconsideration. The RTC’s grant of summary judgment in favor of PSPC was affirmed by the Court of Appeals. The Republic, through the BOC, elevated the case to the Supreme Court via this petition for review.

ISSUE

Whether the Court of Appeals erred in affirming the RTC’s grant of summary judgment in favor of PSPC, thereby dismissing the Republic’s collection suit.

RULING

The Supreme Court DENIED the petition and AFFIRMED the assailed Court of Appeals Decision and Resolution. The RTC correctly granted PSPC’s motion for summary judgment as there was no genuine issue of material fact requiring a full trial. The pivotal issue—whether PSPC was a transferee in good faith and for value of the TCCs—had already been conclusively resolved by the Supreme Court in a previous case, Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue ( G.R. No. 172598 , March 25, 2009). In that case, the Court held that PSPC was an innocent purchaser for value of the TCCs, having acquired them from FWI in good faith and without knowledge of any fraud in their issuance. The Court further ruled that the TCCs could not be cancelled based on a post-audit, as a post-audit is not a suspensive condition for their validity. Since this ruling constitutes the “law of the case” and is binding, it established that PSPC’s payment using the TCCs was valid, thereby negating any basis for the Republic’s collection claim. No other factual issues remained for trial. The Supreme Court also noted that the Republic’s cause of action had prescribed, as the collection suit was filed beyond the one-year prescriptive period from the date of payment. Therefore, summary judgment was proper, and the dismissal of the collection suit was upheld.