Case Digest (G.R. No. 208465)
Facts:
Bureau of Customs v. Bush Boake Allen (Phils.), Inc., G.R. No. 208465, April 28, 2021, Supreme Court Third Division, Leonen, J., writing for the Court. The petition for review challenges the Court of Appeals’ Decision dated November 29, 2012 and its subsequent Resolution denying reconsideration (August 5, 2013), which had reversed the Regional Trial Court (RTC), Branch 20, Manila, in Civil Case No. 02-102693.Bureau of Customs (petitioner) assessed Bush Boake Allen (Phils.), Inc. (respondent), a BOI-registered manufacturer and trader of chemical fragrances, for unpaid customs duties and taxes totaling P2,462,650.00 arising from respondent’s importations. On March 19, 1996, the One-Stop Shop Tax Credit and Duty Drawback Center (the Duty Drawback Center) issued Tax Credit Certificate (TCC) No. 004334 in favor of Filipino Way Industries, Inc. The TCC was assigned to Bush Boake on April 11, 1996 as payment for chemicals supplied by Filipino Way, and Bush Boake used the TCC to settle its customs liabilities with the Bureau of Customs.
A post-audit by the Duty Drawback Center later disclosed that the documents underlying TCC No. 004334 (export declarations and bank credit memos) were forgeries and that Filipino Way no longer existed; the Center cancelled the TCC on September 26, 2001. After the cancellation, the Bureau of Customs demanded payment from Bush Boake; upon its refusal, the Bureau filed a civil complaint for collection of sum of money against Bush Boake in 2002 before the RTC of Manila. Bush Boake filed a third-party complaint against Filipino Way, which later defaulted.
On March 5, 2007, the RTC ruled for the Bureau of Customs, holding Bush Boake liable for the unpaid duties (P2,462,650.00 plus 6% interest) and dismissing Bush Boake’s counterclaim. Bush Boake appealed to the Court of Appeals. The Court of Appeals Special Twelfth Division reversed the RTC on the ground that Bush Boake was a transferee in good faith and for value of the TCC — the appellate court relied heavily on this Court’s earlier decision in Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue — and held that Bush Boake could not be required to pay again the tax covered by the TCC. The Bureau of Customs brought this petition for review to the Supreme Court.
In the Supreme Court proceedings, the Bureau of Customs argued that the acceptance of the TCC did not effect payment because no money changed hands and that Bush Boake therefore remained liable under Article 1231 of the Civil Code; it further argued that Bush Boake was not a transferee in good faith and for value because the TCC was fraudulently issued and later cancelled. Bush Boake countered that the case was essentially a tax case, that it relied on the Duty Drawback Center’s verification and approval of the TCC transfer when...(Subscriber-Only)
Issues:
- Did the Regional Trial Court have jurisdiction over this collection suit and did the Court of Appeals have jurisdiction to entertain the appeal from the RTC decision?
- Did the Bureau of Customs’ acceptance of the cancelled TCC produce the effect of a valid payment that extinguished Bush Boake’s obligations?
- Was Bush Boake a transferee in good faith and for value such that it may not be required to pay again the customs duties covered by TCC No. 004334?
- Is Bush Boake liable to pay again the custom...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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