BUREAU OF CUSTOMS, PETITIONER, VS. THE HONORABLE AGNES VST DEVANADERA, ACTING SECRETARY, DEPARTMENT OF JUSTICE; HONORABLE JOVENCITO R. ZUÑO, PEDRITO L. RANCES, ARMAN A. DE ANDRE…

Bureau of Customs versus Devanadera

The Case

This is a petition for review on certiorari brought by the Bureau of Customs against the Acting Secretary of Justice, the Chief State Prosecutor, a State Prosecutor, and the private officers and directors of two petroleum companies, UNIOIL Petroleum Philippines and OILINK International, together with a licensed customs broker. The Bureau asks the Supreme Court to reverse the Court of Appeals, which had dismissed outright its special civil action for certiorari on purely procedural grounds, and to reinstate that action so that the merits of its complaint may be reached. The case matters because it settles a question of jurisdiction that every customs and tax practitioner must know: when the Department of Justice dismisses a complaint for lack of probable cause in a case involving tariff and customs offenses, the review of that dismissal belongs not to the Court of Appeals but to the Court of Tax Appeals.

Procedural History

The Bureau of Customs filed a complaint-affidavit with the Office of the Chief State Prosecutor, accusing the private respondents of violations of the Tariff and Customs Code. After preliminary investigation, the State Prosecutor recommended dismissal for lack of probable cause, and that recommendation was approved by the Assistant Chief State Prosecutor and the Chief State Prosecutor, and affirmed on automatic review by the Secretary of Justice. The Bureau's motion for reconsideration was denied by the Acting Secretary of Justice.

The Bureau then went to the Court of Appeals by a petition for certiorari. The Court of Appeals dismissed the petition outright for procedural defects: it contained no explanation why service was not done personally, it had no proper verification and certification against forum shopping, and its docket fees were short. The Bureau moved for reconsideration, but the Court of Appeals denied it, stressing that the petition still suffered from a fatal defect because no proper certification against forum shopping had ever been submitted. The Bureau then elevated the matter to the Supreme Court by a petition for review on certiorari.

Facts

On January 30, 2007, the Commissioner of Customs issued an audit notification letter informing OILINK that the Post Entry Audit Group would conduct a compliance audit of its import transactions for the preceding three years. A pre-audit conference followed, and OILINK submitted some documents, but it repeatedly failed to furnish the other records requested, citing the resignation of its accounting personnel and referring the matter to a special committee of the Bureau.

Because of this refusal, the Legal Service of the Bureau rendered a decision finding OILINK liable for violating the record-keeping requirements of Customs Administrative Order Number 4-2004, and ordered it to pay a fine equivalent to twenty percent ad valorem, in the amount of Two Billion Seven Hundred Sixty-Four Million Eight Hundred Fifty-Nine Thousand Three Hundred Four pesos and eighty centavos. When OILINK did not pay, a final demand was sent, and a hold order was issued against all its shipments.

UNIOIL, which had a terminalling agreement with OILINK for the storage of its petroleum products, asked to withdraw its own products from OILINK's terminal. The Commissioner allowed the withdrawal subject to three conditions: only UNIOIL products would be withdrawn subject to inventory, duties and taxes must be fully paid, and the operation must be monitored by customs personnel. A warrant of seizure and detention was later issued against OILINK's tanks, but the District Collector of Mariveles approved the release of UNIOIL's products. The Bureau then filed a complaint-affidavit accusing the private respondents of unlawful withdrawal of oil products valued at One Hundred Eighty-One Million Nine Hundred Eighty-Eight Thousand Six Hundred Twenty-Seven pesos, with corresponding duties and taxes of Thirty-Five Million Five Hundred Seven Thousand Five Hundred Ninety-Seven pesos.

Issues

• Whether or not the Court of Appeals has jurisdiction over a petition for certiorari assailing the resolution of the Secretary of Justice dismissing a complaint for lack of probable cause involving violations of the Tariff and Customs Code.
• Whether or not the Court of Appeals seriously erred in dismissing the petition on the ground that it lacked a proper verification and certification against forum shopping.
• Whether or not the Court of Appeals erred in not looking into the merits of the case despite the existence of probable cause to prosecute the private respondents.

Applicable Provisions

Section 1 of Republic Act Number 9282, which the Court cites in describing the rank and powers of the Court of Tax Appeals, provides:

The Court of Tax Appeals shall be of the same level as the Court of Appeals and shall possess all the inherent powers of a court of justice.

This provision supports the rule that the tax court, being a court of equal rank with all inherent powers, may issue the writs necessary to exercise its appellate jurisdiction.

Section 6 of Rule 135 of the Rules of Court, quoted by the Court, provides:

When by law, jurisdiction is conferred on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it into effect may be employed by such court or officer.

This is the basis for holding that the grant of appellate jurisdiction to the Court of Tax Appeals carries with it the power to issue a writ of certiorari in aid of that jurisdiction.

Ruling

On the first issue, the Court ruled in the negative: it is the Court of Tax Appeals, not the Court of Appeals, that has jurisdiction to review by certiorari the resolution of the Secretary of Justice in preliminary investigations involving tariff and customs offenses. The Court reasoned that Republic Act Number 9282 expanded the jurisdiction of the tax court and elevated it to the level of a collegiate court, and that the power to issue a writ of certiorari is implied in, and necessary to, the effective exercise of appellate jurisdiction. To rule otherwise would create a split jurisdiction, where one court reviews an incident while another reviews the main case, which is anathema to the orderly administration of justice.

On the second and third issues, the Court held that since the Court of Appeals had no jurisdiction over the petition, it correctly dismissed the same, although on a different ground. The Court explained that the procedural defects cited by the Court of Appeals were not the true obstacle; the real obstacle was the want of jurisdiction, which the Court may notice at any stage even if not raised by the parties.

Doctrine

First, the Court of Tax Appeals has exclusive jurisdiction to review, through a petition for certiorari, the resolution of the Secretary of Justice dismissing a complaint for lack of probable cause in cases involving violations of the Tariff and Customs Code, because the grant of appellate jurisdiction carries with it the power to issue auxiliary writs in aid of that jurisdiction. Second, the question of jurisdiction over the subject matter may be raised at any stage of the proceedings, even for the first time on appeal, and the courts are bound to take notice of it. Third, the dismissal of a petition on the ground of lack of jurisdiction is correct even if the lower court invoked a different reason, because jurisdiction is the first and fundamental question.

Disposition

The petition was partly granted, but the Court of Appeals' dismissal was upheld on the ground that it is the Court of Tax Appeals, not the Court of Appeals, that has jurisdiction over the matter.

Remember This

Memorize this line: a petition for certiorari assailing a Department of Justice resolution in a tariff or customs case belongs to the Court of Tax Appeals, not the Court of Appeals. Examiners use this case to test the expanded jurisdiction of the Court of Tax Appeals and the rule that jurisdiction over the subject matter may be noticed at any stage of the proceedings.