G.R. No. 161953 ; March 6, 2008
PILIPINAS SHELL PETROLEUM CORPORATION, Petitioner, vs. REPUBLIC OF THE PHILIPPINES, represented by the BUREAU OF CUSTOMS, Respondent.

FACTS

Pilipinas Shell Petroleum Corporation (Shell) utilized assigned Tax Credit Certificates (TCCs) to pay customs duties and taxes on its importations in 1997 and 1998. These TCCs, acquired from various entities with approval from the relevant government center, were later cancelled by the Department of Finance as fraudulently issued, prompting the Bureau of Customs (BoC) to demand payment from Shell for the corresponding duties. Shell filed a formal protest with the BoC, which went unacted upon, leading Shell to file a petition for review with the Court of Tax Appeals (CTA) to question the cancellation’s legality.
Subsequently, the Republic, through the BoC, filed a civil complaint for collection of the unpaid duties in the Regional Trial Court (RTC). Shell moved to dismiss, arguing the RTC lacked jurisdiction because its petition on the validity of the TCC cancellation was still pending with the CTA. The RTC denied the motion, a decision affirmed by the Court of Appeals, which held that the BoC’s assessment had become final, placing the collection suit within the RTC’s jurisdiction. Shell elevated the case to the Supreme Court.

ISSUE

Whether the Regional Trial Court has jurisdiction over the collection case filed by the Bureau of Customs despite a pending petition for review before the Court of Tax Appeals challenging the cancellation of the Tax Credit Certificates used for payment.

RULING

The Supreme Court denied Shell’s petition, upholding the RTC’s jurisdiction. The legal logic hinges on the finality of the customs liquidation. Under the Tariff and Customs Code, a liquidation or assessment becomes final and conclusive one year from the final payment of duties, absent fraud, a pending protest, or a tentative liquidation. Here, Shell paid the duties using the TCCs without protest, and the liquidation was not tentative. The subsequent discovery that the TCCs were spurious did not constitute fraud attributable to Shell, who was a presumed assignee in good faith. Consequently, the BoC’s assessment attained finality.
Since the assessment was final, the BoC’s written demand for payment was not a protestable assessment but a consequence of the invalidated payment. The proper remedy for the government was an ordinary action for collection of a sum of money, which falls under the general jurisdiction of the RTC. The pending petition in the CTA, which questioned the administrative act of cancellation, did not divest the RTC of jurisdiction over the separate civil action to collect the debt that was conclusively established by the final liquidation. The two proceedings address different issues and can proceed independently.