CTA Case No. 5918 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEA LS QUEZON CITY OILINK INTERNATIONAL CORPOI{ATION, l'l'l iIiotwr. \ '1' I .':t 1:: ( '01\1 1\IISSIONI <I< 01 �' ( 'II.')TO I\1 ,\, JUL 0s (UOl -t-1J;n, c/J / )L 't1 I " ' l td{!- I X - - - - - - - - - - - - - - - - - -�- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -/ !.('- - - - - X DECISION The case at bar seeks the nullifi cation and rev iew of the assessment iss ued by the Respondent demanding from the Petitioner the payment of the amount of P 138,060 ,200.49 all egedly representing the latter's defi ciency duti es and taxes h om its oil imports for the years 199 1 to 1995. As represented , Petitioner is a corporati on dul y existing by virtue of the laws of the Philippines with principal office address at M ariveles, Prov ince of Bataan . On September 15 , 1966, Union Refin ery Corporation (URC) was established pursuant to the Corporation Code of the Philippines. In the co urse of its business undertakings, particularly within the peri od of 199 1 to 1994, it imported spec ies of oil products to suppl y the fuel requirements of vario us compani es in the Philippines. 8 2 () -v 1.._~ l

( DEC IS ION - CTA C ASE NO . 59 18 PAGE 2 On January 11 , 1996, Petitioner Oilink Intern ati onal Corporation (Oilink or OI C, for brevity) was incorporated primaril y for the purpo�;e of manufacturing, importin g, ex porting, buying, selling or otherwise dealing in, at wholesa le and retail of petrol eum , oil , gas and of any and all re fin ements and by-prod ucts thereof. URC and O ilink had interlocking directors at the time when the latter started its undertakin g as a business e ntit y. In applying for and in ex pediting the transfer of the operator 's name for the Customs Bonded Warehouse (CBW) operated by URC, a letter dated January 15, 199� was sent by M s. Esther Magleo, then Vi ce President and General Manager of URC, manifesting that URC and Oilink have the same boara of directors and that Oilink is 100% owned by URC. On March 4 , 1998, Di strict Collector of the Po rt of Manil a Oscar Brillo sent a demand letter to URC requiring it to pay a tax assess ment of (PhP) 295,583,329. 10 representing URC's taxes and duti es for its oil imports whi ch arri ved at the Port of Lucanin, Mariveles, Bataan, sometime between January 6, 1991 and N ovember 7, 1995 (Annex " C" of the Petition for Rev iew). On April 16, 1998, Di strict Co llector Oscar Brill o sent another demand letter to URC obli ging it now to pay the reduced amount of (PhP) 289,2 87,486.60 fo r all eged non- payment of the value added tax, special duti es and taxes and excise taxes fo r the years 1991-1995 (Annex " D" of the Petition for Review).

( DECISION- CTA CASE NO. 5918 PAGE 3 On April 23, 1998, Atty. Gustilo, then counsel for URC, in response to the letter of demand, sought for the landed compatations of the tax assessments and challenged the inconsistencies therein (Annex "E" of the Petition for Review). On November 25, 1998, then Customs Commissioner Pedro C. Mendoza sent a demand letter to URC, directing the latter to pay the amount of P 119,223,541.71 representing URC's Special duty, VAT and Excise Tax which it failed to pay at the time of the re lease of its 17 oil shipments which arrived in the Sub-port of Mariveles from January l, 1991 to September 7, 1995 (Annex "G" of the Petition for Review) . On December 21, 1998, then Customs Commissioner Mendoza sent another . demand letter to URC requiring it to pay deficiency taxes in the reduced amount anew of (P hP) 99,216,580.10 (Annex "H" of the Petition for Review). On December 23, 1998, immediately upon hi s assumption of office, Customs Commissioner Nelson Tan sent another demand letter to URC affirming the assessment of Commissioner Mendoza in the amount of (PhP) 99,216,580.1 0. On January 18, 1999, Ms. Esther Magleo, then still a member of URC, sent a letter to Commissioner Tan denying the liability and insisted that only (PhP) 28,933,079.20 be paid as a compromise payment. On March 26, 1999, Commissioner Tan wrote URC a letter denying the proposal of Ms. Magleo and directed URC to pay (PhP) 99,216,580.00. On May 24, 1999, URC President Manuel Co wrote another letter to the Respondent agreeing to pay the total sum of (PhP) 94,216,580.00 with the initial amount of (PhP) 28,264,974.00 to be taken from the collectibles of Oilink from NPC, the B'~).. 4.

( DECISION- CTJ\ CASE NO. 5918 PAGE4 remaining balance to be paid in monthly installments for a period of three (3) years with corresponding post-dated checks as security and other available tax credits in the future (Annex "I" of the Petition for Review). On July 2, 1999, Commissioner Tan sent a FINAL LETTER OF DEMAND addressed to URC and Petitioner OILINK stating that the total liability amounted to (PhP) 138,060,200.49 (Annex "A" of the Petition for Review). The letter received by the Petitioner on July 4, 1999 is quoted hereunder: "02 July 1999 Manuel Co President Union Refinery Corp./ Oilink Int'l. Corp. 2445 Pedro Gil St. , Sta. Ana, Metro Manila Dear Mr. Co, A review of the documents covering the importation of Union Refinery Corporation (URC) from 1991 to 1995 conducted by the CIIS with the assistance of the Customs Appraisers has established that the amount of (PhP) 99,216,580.00 which you were directed to pay in our demand letter dated 26 March 1999 should be (PhP) 93,41 I,862. 10 after the necessary correction of the amounts collectible against the payment is made. It was also established that your shipments arc subject to additional VAT and Special Duty in the amount of (PhP) 12,872,468.32 and (PhP) 537,747.00 respectively or a total of(PhP) 13,410,218.32. Likewise, the shipment of 4,693,937 MT base oil ex M/V "Jian She" No. 8, which was inadvertently included in the tax liability of Union Global Trading (UGT) is actually your shipment. Based on the recomputation, said shipment has additional tax deficiency of PhP 2,839,829.00 for additional VAT; PhP 5,163,320.00 for additional Special Duty and PhP 23,234,968 .00 for additional Excise Tax or a total of PhP 31,238, 123.00. 825

,/ I DECISION- CTA CASE NO. 59I8 PAGES Based on the above findings, your tax liability increased to PhP 138,060,200.49 as shown in the attached tabulation. This adjusted amount does not include the tax deficiency of your company which maybe uncovered by the BIR as collectible after its ongoing review of the documents covering the shipments is completed . You arc therefore directed to pay the preliminary assessment of P 138,060,200.49 within ten (I 0) days from receipt hereof, otherwise we will take appropriate legal action against your company and the officials involved. Please consider this letter as our final demand. Very truly yours, NELSON TAN Acting Commissioner" On July 12, 1999, URC sent a letter protesting the preliminary assessment, asking the Respondent to give the bases of its computation and the source/s thereof (Annex "K" of the Petition for Review). On July 15, 1999, Petitioner Oilink similarly sent a letter protesting the assessment not being the proper party liable for the assessed deficiency taxes. Additionally, Petitioner sought the immediate issuance of a tax clearance from the public Respondent since its collectibles from the NPC were unnecessarily being held as NPC rode on the representations of the Respondent that Oil ink is liable for URC's alleged tax liability, the two companies being one and the same (Annex "L" of the Petition for Review). On July 12, 1999, in response to the protests by URC and Oilink, Respondent sent another letter dictating its impositions styled as follows:

I DECISION- "July 12,1999 CTA CASE NO. 591 S PAGE 6 Mr. Manuel Co President Union Refinery Corporation- OILINK 2445 Pedro Gil St., Sta. Ana Metro Manila Dear Mr. Co: We refer to your letter dated 08 July 1999 in response to our July 2, 1999 demand letter for your company to settle the amount of PI-IP 138,060,200.49 representing deficiency in duties and taxes in your oil imports as has been adjusted. In reply to your request for particulars, attached please find the detailed computation as to how the above figure was arrived at. Meanwhile, we are furnishing you a cop: of our self-explanatory letter to NPC President Federico Puno indicating our position on NPC's proposed disposition of OILINK's claim against NPC in relation to BOC's demand against URC/OlLINK. May we stress that BOC will not issue any clearance to OILINK unless the demanded the (sic) amount of P 138,060,200.49 is first paid and that a performance bond be posted by URC/OILINK to secure payment of any adjustments resulting from the BIR review on VAT, excise Tax , Special duties, etc., has been made. Finally, please be advised that the 10-day period given to your Office to comply with BOC's demand is set to expire tomorrow. Please give the matter your preferential attention. Thank you. Very truly yours, NELSON TAN Acting Commissioner"

i DEC ISION- CTA C ASE NO . 591 8 PAG E 7 Marking his Jul y 2, 1999 and Jul y 12, 1999 le tter to be FIN AL, Petiti oner on Jul y 30, 1999 instituted thi s appeal to nullify th e shifting of the tax impos iti on fo r hav ing bee n issued without authority and with grave abuse o f discreti on tantamount to lack of jurisdiction. lt is the principa l submi ssion o f Petitioner that Respondent Commi ss ioner of C ustoms gravely erred and co mmitted a grave abuse of discretion when he shifted th e tax liabilities of URC to here in Petiti oner kn owin g for a fact that its personality is separate and distinct from URC . It cl aimed th at the Respond ent cannot ex pedi entl y pierce the ve il of corporate ficti on by capita li zing heav il y on th e represe ntation o f Ms. Es ther Mag leo th at Petitioner is I 00% owned by URC w ith comm on directors. Petiti oner li kew ise stated . th at in the absence of an y a llegation of fraud committed by URC showing that Petitioner was used as a device to evade the payment o f the tax nor to shi eld URC from performing an a lleged obligation to pay, the Commi ssioner cannot lawfull y pi erce the ve il of corporate fiction . It asseverated that URC is not in th e process of di sso lution as its business affairs are still in ex istence and is in fact co ntestin g the assessment before thi s Court in the case entitl ed Uni on Refin e ry Corporati on vs. Commi ssioner of Customs, CTA Case No. 5917. Furthermore, Petitioner argued th at th e assess ment by Respondent Commi ss ioner of Customs involving interna l revenue taxes, i.e. VAT a nd excise taxes, is vo id fo r want of authority to do so takin g into account th at the imported arti cles have a lready been re leased and parted from th e custody o f th e Bureau o f C ustoms. It said th at o nl y the 828

f DEC ISION- CTA CA SE NO. 591 8 PAGE 8 Commi ssioner of Internal Revenue has the so le authorit: to assess taxes co llectibl e under the Tax Code once the goods subject o f the tax have le ft the C ustoms' custod y. Moreover, Petiti oner said that ass uming fo r th e sake of argum ent th at the Res pondent could pi erce the corporate perso na lity o f Petiti oner OILI NK, still , the enforcement of the assessment could not be ava il ed of having bee n done beyo nd th e prescriptive period prov ided for in Secti on 1603 of th e Ta ri ff and C ustoms Code of th e Philippines (TCCP). Finally, Petitioner argued that the assessment is vo id for having fa iled to provide the necessary bases upon which the computati on was r~ached . Thus, it prayed tha t th e assailed assessme nt iss ued by the Respondent aga inst herein Petiti oner be struck down and declared null and vo id and that Petiti oner be declared not liable to pay the said fina l assessment rend ered by the Respond e nt. On the other hand , Res pondent co ntended th at th ere ex ists a legal bas is for him to pierce the ve il of corporate fi cti on o f URC and here in Petiti oner OlLINK, and that the Bureau of Customs validl y acted in demanding pay ment from Petitioner OILINK w ith respect to the deficiency taxes incurred by URC. He arti cul ated that the conditions unde r which the juridica l entity may be di sregard ed vary acco rdin g to th e pec ulia r fac ts and circumstances of each case. Res pondent asserts tha t there is no hard and fa st rul e th at can be accuratel y laid down, but th ere a rc certa inl y so me probati ve fac tors of identity th at will justify th e applicati on of th e doctrine o f pi ercing the ve il of corporate entity in the case at bar, namely: 828

I DECISION- CTA CASE NO. 59I8 PAGE9 I. Stock ownership by one or common owncrsllir. ol' both corporations; 2. Identity of directors and officers; 3. The manner of keeping corporate books and records; and 4. Method of conducting business. (cf Lopez the Corporation Code of the Philippines, Vol. 1, 1994 p. 19, citing 4 MINNL. Rev. pp . 219-227) Respondent stated that in the case under consideration, it is admitted that OILINK is 100% owned by URC, that OILINK and URC have interlocking directors and that the ' stockholders and board of directors of the two cutPorations are the same (par. III, Nos. 3.02 and 3.03, p. 5 and Annex B, Petition). Furthern1ore, Respondent asseverated the following circumstances to show that URC manifested its identity and union with herein Petitioner OILINK: I. Thus, in a letter dated 12 May 1998 addressed to the Commissioner of Customs, one of the documents submitted by URC as proof of payment of deficiency tax is BOC-OR No. 59865531 in the amount of PHP 16,612,439.00 in the name of OILINK issued on 12 March 1997 for duty, VAT and excise tax for the importation of 16,993.7 BPLS dual purpose kerosene ex S/S "Ocean Progress," covered by Import Entry No. 065-96. 2. Likewise on 04 May 1998, in a meeting attended by Mr. Paul Co and Esther Magleo of URC and their counsel, A+.ty. Francis Gustilo, at the Bureau of Customs (BOC), the latter presented a photocopy of an acknowledgment receipt which contains the list of the original copies of consumption entries, together with official receipts of shipments of both URC and OILINK from 1991 to 1995. For these importations (1991 to 1995), URC was found liable for tax deficiency in the amount of PI-IP 119,223,541.71. 3. In August 1998, URC asked the BOC that certain amount be deducted from the above-mentioned tax deficiency, one of which is the amount of PHP 4,177,063.00 representing the excess payment of duties and ... t . 8 ~3 0

DECISION- CTA CASE NO. 5918 PAGE10 taxes on OILINK's five (5) importations which were assessed based on higher rate of exchange. 4. Another amount which URC sought to be deducted from its tax deficiency is the sum of PIIP I6,612,439.00 covered by 130C-OR No. 59865531 which OILINK paid lor Philippine Airlines (PAL) importation of .J FT A-1 fuel. or 5. Subscquellt1y, Oil 24 May I<)l)l), Mr. Manuel ( 'o. President l Jl{(' wrote the Responde11t Colllllli ss ioJll'l" Ta11 proposin g lo settle its t;1:-: obligation, ;1s I(JIIows: X X X "a) URC to advance from OILINK International Corporation (OIC) receivable from NAPo:.::oR, the amount of P28,264,974.00 to pay the Bureau of Customs (BOC) 30% of its total obligations. b) The balance to be paid in monthly installments for a period of three (3) years with corresponding company post dated checks as security and other available tax credits in the future." (Annex "L", Petition) Respondent argued that the foregoing are clear indications that the Petitioner and URC are one and the same corporate entity, the former being completely controlled and used as a business conduit of the latter. Moreover, he said that, it was not the Respondent Commissioner who pierced the veil of corporate fiction of the two corporations and it was URC itself which brought OILINK into the instant controversy. It was URC itself which lifted the corporate mask of OILINK. Finall y, it was URC itself which treated OILINK as its mere alter ego. Besides, Respondent said that the corporate veil of URC and OILINK may be pierced in the controversy at bar since badges of fraud exist. The notion of corporate 831

r DEC ISION- CTA CASE NO. 59 18 PAGE II fi cti on must be di srega rded s1nce it IS be ing used to defeat publi c co nve mence and inte rest, i.e. collectio n o f the appropri ate exc ise taxes, VAT and spec ial duti es . A nd , it wo uld be extrem e ly anomalous to a ll ow the Petiti oner to invoke th e doctrine of corporate entity in ord er to free itself from any o bli gation regard ing the payment of tax de fi c iency of URC w hile in the same ve in all owing itse lf to be used by URC in ord e r to abso lve the latter from the paym ent of its tax defi c iency w ith the gove rnm ent. Certa inl y, under this prevailing situati on, the Respondent Co mmi ss ioner of Custo ms has every rig ht and legal bas is to " pi erce the veil of co rporate fi cti on of both c0rporati ons." Consequentl y, th e assessment and/or tax defi ciency of URC beco mes also the assess ment or tax defi c iency of th e Petiti oner OILINK . Likewise, Respondent said that the Commi ssioner o f Customs has the authority to make assess ments of intern al re venue taxes imposabl e by reason of the importati on o r goods and merchandi se . The mere fac t that the articl es are no longer in the c ustody of the BOC is inco nsequentia l because, techni ca ll y speakin g, the importati on of sa id a rticl es is not yet deemed terminated by reason of the non-pay ment of th e appropriate duties, taxes and oth er cha rges du e therefrom. Appropri ate ly, Secti or; 1202 of th e TCCP reads: "Section 1202. Wheu lmporlatiou Begius aud Deemed Termiuated. - Importation begins when the carrying vesse l or a ircraft enters th e j urisdi cti on o f th e Philippines w ith th e intentio n to unl ade there in. Importa ti on is deemed terminated upon payment o r th e duti es, taxes and o th er charges du e upon the articl es or secured to be paid at the port of entry and th e legal pe rmit for w ithdrawal sha ll have been granted or in case sa id arti c les arc free of dut ies, taxes and other charges, until th ey have legall y le lt th e j uri sd icti on o f c usto m s." 'I .

r DECISION- CTA CASE NO. 5918 PAGE 12 Respondent also argued that the assessment made by the Bureau of Customs is valid and legal even if the supporting documents were not appended to the assessment and that the one-year prescriptive period under Section 1603 of the TCCP had not yet set in on the assessment of the Bureau of Customs (pp. 25 tc 27, Answer). Finally, Respondent contends that this Court has no jurisdiction over the subject matter of the instant petition on the ground that the final demand letter dated July 2, 1999 of Commissioner Tan (Exhibit R) is not the " ruling" or "deci sion" being contemplated by either Section 2402 of the TCCP, or Section 7(2) of RA 1125 (The Law Creating the Court of Tax Appeals). He said that the phrase "decision of the Commissioner of Customs" in paragraph (2) Section 7 of RA 1125 refers to the Commissioner's ruling in the protest cases or seizure cases that are brought before him on appeal or through automatic review pursuant to Section 2313 of the TCCI< Thus, he concluded that since the demand of the Commissioner for the payment of the tax deficiency or liability of URC/OILINK did not arise from or is related to any protest or se izure, the same does not fall within the jurisdiction of the Court of Tax Appeals. As jointly stipulated by the parties, the following issues arc to be resolved by this Court. I . Whether or not there exists legal basis for the Respondent to "p ierce the veil of corporate fiction" of Petitioner and URC; �as a consequence thereof, the assessment against URC became an assessment also against Petitioner.

DEC ISION- CT!\ CASE NO. 59 I 8 PAGE I 3 2. Wheth er or not thi s Honorabl e Co urt has jurisd icti on over th e subj ect matter of th e petiti on. 3. Whether or not Petiti oner has a cause of ac ti on aga inst Respo nd ent. The Co urt rul es the first issue in the negati ve. A corporati on is an entity separate and distinct fi�om its stockholde rs and from other co rpo rati ons to whi ch it may be related . While not in fac t and in real ity a perso n, the law treats the corporati on as though it we re a perso n by process of fi ctio n o r by rega rdin g it as an artificial pe rso n di stinct a nd separate from its indi vidua l stockho lders and oth er legal. entiti es to w hich it may be conn ected . However, when va lid ground s ex ist, suc h as when th e co rporate ficti on is show n to be used to de feat publi c co nve ni ence, justify wrong, protect fraud or defend crime or w here a corporati on is the mere a lter ego or business co nduit o f a perso n o r anoth er corporati on, th e lega l fi cti on th at a co rpo rati o n is an entity w ith a juridica l perso nality separate from its stockh olders and from o ther corporations may be di sregard ed. In the absence o f such ground s, th e corporati ons are to be ri ghtl y treated as di stinct and separate from each oth er. In ord er to di sregard the separate j uridi cal perso na lity of a corpo ration, th e wrongdoi ng must be clearl y and co nvincing ly establi shed . In the cas e at bar, th e said wrongd o in g was not cl earl y and co nvinc ing ly establi shed by Respondent. He did not submit any evidence to sup po rt hi s a ll egati ons but mere ly s ubmitted the case for dec ision based on th e pl ead ings and ev idence presented by Pe titi o ner. Stated otherw ise, should the Res pondent s uffi c iently prove that OILINK w as

DEC IS ION- CTI\ CASE NO. 59 18 PAGE I4 merely set up in order to avo id the payment of taxes or fo r some other purpose whi ch will defeat publi c conveni ence, justify wrong, protect fi�aud or defend crime, thi s Co urt shall not hes itate to pierce the veil of corporate fic ti on of URC and OJLI NK. Moreover, thi s Court is in total acquiescence with >etitioner's rati oc inati on, that the Respondent Co mmi ss ioner cannot lawfull y pierce the ve il of corporate fi cti on in the absence of any all egati on of fraud committed by URC showing that Oil in k was used as a device to evade the pay ment of the tax nor to shi eld URC fro m perfo rmin g an alleged obli gati on to pay . Pertinentl y, the fraud contempl ated by law must be actual and not constructive of an intenti onal nature consisting of decepti on willfull y and deliberatel y done (Farolan vs. Court of Tax Appeals, 217 SCRA 298). Differentl y stated, the intenti on to minimize taxes, when used in the contex t of fraud, must be proved to ex ist by clear and convincing ev idence amounting to more than mere prepo nderance and cannot be justified by mere speculati on for fraud is not presumed (Yutivo Sons Hanlwar�e Co. vs. Court of Tax Appeals, 1 SCRA 160). Further, there must be showing of how the conduit co rporation was used to perpetrate a fraud . In th is regard , the lead ing case of Yutivo Sons Hardware Co. vs. Court of Tax Appeals pos iti vely demonstrates why even with co mmon directors and commonality of ownershi p, the ve il of corporate fi ction cannot just be summaril y invoked. Neither co uld it be stated that the creation of Petiti oner Oilink was devised to evade the payment of a tax, when there is no showing that URC has absconded in its obli gati on as in fact it is still contesting the assess ment. Parentheticall y, URC is not in the process of di sso lution as its business affa irs are still in exi stence. There is no rhyme or reason for the Respondent to visuali ze that Oilink was 83 5

DEC ISION - CTA CASE NO . 59 18 PAGE 15 created for U RC to escape payment of an obli ga ti on w hen th e business interest and purposes of the co rporatio ns a re mil es apa rt from each othe r. As held in Yuti vo: "A fte r go ing over the vo luminous record of the present case, we are inclined to rul e that the Court of Tax A ppeals was not justified in finding that SM was organi zed for no other purpose th an to de fraud th e Gove rnm ent of its lawful revenues. In the first place, thi s co rporati on was orga ni zed in June, 1946 when it could not have caused Yuti vo any tax savings. From th at date up to June 30, 1947, or a period of more than one year. G M was the importe r of the cars and trucks so ld to Yuti vo, w hi ch, in turn reso ld them to SM . During th at period , it is not di sputed that GM , as importer, was the one so lely li abl e for sales taxes. Neither Yuti vo or SM was subj ect to th e sales taxes on their sales of cars and trucks. The sales tax li ability of Yuti vo d id not arise until Jul y 1, 1947 when it became the importer and simpl y continued its practi ce of selling to SM . The decision, therefore, of the Tax Court that SM was organi zed purpose ly as a tax evas ion dev ice runs co unter to the fac t th at there was no tax to evade." The doctrin e in Yuti vo was reiterated in contemporary jurisp rudence. Hence, in Tradct�s Royal Bank vs. Court of Appeals (269 SCRA 15), th e Supre me A rbiter dec lared w ith equal vi gor the unav ail abili ty of piercin g th e ve il of corpo ra te fi cti on w ithout th e required proof that it was mi sused to such extent th at injusti ce, fra ud, or crim e was committed upon another. Witnesseth : " Petiti oner cannot put up th e exc use of p iercing th e ve il of corporate entity as thi s is mere ly an equitabl e remedy and may be awa rded onl y in cases when the corporate fi cti on is used to defeat public conveni ence, justify wrong, protect fraud or de fend crim e, or where a corporatio n is a mere alter ego o r business conduit o f a person. Piercing the veil of corporate entity requires the court to sec throu gh th e protecti ve shroud w hi ch exempts its stockh o lders from liabiliti es that ordin arily, th ey could be subj eG t to, or di stin gui shes one corporati on from a seemingly separate one, we re it not for th e ex isting corporate fi cti on. But to do thi s, th e Court must be sure that th e corporate ftcti on was mi sused, to such 83G

D EC ISION- CTA CASE NO. 59 18 PAGE 16 an extent th at injustice, fraud or crime was committed upon anoth er, di sregardin g, thus his, her or its ri ghts. It is the protecti on of the interests of innocent third persons dealing w ith the co rporate en tity whi ch th e law a im s to protect by thi s doc tri ne." Ne ither is the fac t of commona lity of sha reho ld ings a bas is to pierce the ve il of corporate fi cti on j ust to acco mmodate the thirst of the :"..espo nde nt to co ll ect taxes fro m anothe r entity, ergo: "Tho ugh it is true that when vali d reasons ex ist, the legal fi cti on that a corporati on is an entity w ith a juridical perso nal ity separate from its stockho lders and from other co rpora ti ons may be dis regarded, in the abse nce of such grounds, th e genera l rul e must be uphe ld. T he fac t th at Phi!Ji nance owns maj ority shares in Filriters is not by itself a ground to di sregard the independent corporate status of Filriters. ln Lidde l & Co., Inc. vs . Co ll ector of Interna l Revenue, the mere own ership by a single stock holde r or by anothe r co rporati on of a ll or nearl y a ll of the capital stock of a co rporati on is not of itse lf a suffic ient reaso n fo r di sregardi ng the fi ctio n of separate co rporate perso naliti es." (Traders Royal Bank vs. Co urt of Appeals, supra) Taxes are persona l to the tax payer. A co rpora ti on 's tax de linquency cannot just be passed to any pe rso n even unto its stockho lde rs because taxes arc perso na l in nature not to mention th at a corporatio n is vested by law w ith a perso nality tha t is separate and di stin ct from those perso ns compri sing it, as we ll as from that of any oth er lega l entity to whi ch it may be re lated . The di ctum in Suniu vs. NLRC (127 SC RA 390) is defi nite ly co nsistent w ith the above admo nitions of th e High Court: " It is bas ic that a corporatio n is invested by law with a personality separate and di stin ct from those of th e persons cu n posi ng it as we ll as from th at of any other legal entity to w hi ch it may be related. Mere owne rshi p by a sing le stockho lde r o r by a nother corporati on of all or near ly all of th e cap ita l R ~1 '7

DEC ISION- CTA CASE NO. 59 18 I'i\CI E 17 stock o r ;1 corporati on is not o r it se Jr suni cient gro und !"or di sreg;mJin g th e se p;11�;1lc corpora te personalit y." With regard to the seco nd and third iss ues the Co urt rules the sa me in the a nirmati ve. Thi s court has j uri sdiction over the subject matter of the in stant petiti on and that Petitioner has a cause of action in filin g the instant petiti on. Republic Act No. 11 25 which created the Court of Tax Appea ls prov ides in Section 7 thereof: "Section 7. Jurisdiction. - The Court of Tax Appea ls shall exercise ex clusive appell ate jurisdiction to rev iew by appeal, as herein prov ided: I. X X X 2. Decisions of the Commiss ioner of Customs in cases invo lving li ability fo r Customs duties, fees or o~he r money charges; seizure, detention or release of property affec ted; fi nes forfe itures or other penalties imposed in relati on thereto; or other matters arising under the Customs Law or other law or part of law admini stered by the Bureau of Customs; The reco rds show that there was a final dec ision rende red by JZespondent Commi ssioner dated Jul y 2, 1999 (A nnex "A" of the Peti tion fo r Rev iew) in vo lving the di sputed assess ment. hence, the instant petitio n fa ll s with in the j uri sd icti on o f thi s Co urt and as such gives the Petitioner the right to fil e the instant petiti on wi th thi s Court pursuant to the aforequoted Section 7(2) of R.A . 11 25 .

DEC ISION - CTA CASE NO. 59 18 PAGE 18 IN THE LIGHT OF ALL THE FOREGOING, the petition ts hereby GRANTED. The assailed assessment iss ued by Respo ndent against herein Petiti oner OILI NK INT ERN ATION A L CORPORATIO N is hereby declared NULL and VOID. SO ORDERED. ~~~~ / " L" ...Assoc iate Jtldge l CONCUR: G[�.o~ ERNESTO D. ACOSTA Presiding Judge CERTIFICATION I hereby certify that the above decision was reached after due consultati on w ith the members of the Court of Tax Appeals in accordance wi th Secti on 13, Article VIll of the C on stituti o n . L ~-~ ERNESTO D. ACOSTA Pres iding Judge