G.R. No. 161759 , July 2, 2014
COMMISSIONER OF CUSTOMS, Petitioner, vs. OILINK INTERNATIONAL CORPORATION, Respondent.

FACTS

Union Refinery Corporation (URC) imported oil products from 1991 to 1994. On January 11, 1996, Oilink International Corporation (Oilink) was incorporated. URC and Oilink had interlocking directors, and a letter from URC’s Vice-President stated Oilink was 100% owned by URC. From March 1998, the Bureau of Customs (BoC) issued a series of demand letters to URC for deficiency taxes and duties on its 1991-1995 oil imports. URC contested the amounts. On July 2, 1999, the Customs Commissioner made a final demand for payment addressed to both URC and Oilink. On July 8, 1999, Oilink formally protested the assessment, arguing it was not the liable party. On July 12, 1999, the Commissioner denied the protest and reiterated the final demand. Oilink appealed to the Court of Tax Appeals (CTA) on July 30, 1999, seeking nullification of the assessment.

ISSUE

1. Whether the CTA had jurisdiction over the controversy.
2. Whether Oilink had a valid cause of action.
3. Whether the Commissioner of Customs could pierce the veil of corporate fiction to hold Oilink liable for URC’s tax deficiencies.

RULING

1. Yes, the CTA had jurisdiction. The CTA has exclusive appellate jurisdiction over decisions of the Commissioner of Customs involving liability for customs duties and other money charges under Republic Act No. 1125 . The reckoning date for Oilink’s appeal was July 12, 1999 (the date its protest was denied), not an earlier date when demands were sent only to URC. Oilink’s filing on July 30, 1999, was within the reglementary period.
2. Yes, Oilink had a valid cause of action. The principle of exhaustion of administrative remedies is not absolute. Immediate judicial recourse was proper here because the Commissioner of Customs himself had already issued a final denial of Oilink’s protest on July 12, 1999, making further administrative appeal futile.
3. No, there was no ground to pierce the corporate veil. The separate juridical personality of a corporation is respected. To disregard this separate identity, it must be proven that the corporation was set up to avoid a statutory duty, perpetrate fraud, or justify a wrong. The Commissioner of Customs failed to present clear and convincing evidence that Oilink was a mere alter ego of URC or was established to evade tax payments. The fact that the BoC initially pursued only URC and later included Oilink indicated the latter’s pursuit was an afterthought. The elements for applying the “instrumentality” or “alter ego” doctrine were not established.
The Supreme Court AFFIRMED the Court of Appeals’ decision, which upheld the CTA’s ruling declaring the assessment against Oilink null and void.