DEVELOPMENT BANK OF THE PHILIPPINES, PETITIONER, VS. THE COURT OF APPEALS AND THE COMMISSIONER OF CUSTOMS, RESPONDENTS.

Development Bank of the Philippines versus Court of Appeals and Commissioner of Customs

The Case

The Development Bank of the Philippines, a government owned bank, against the Court of Appeals and the Commissioner of Customs. The bank had paid duties, taxes and fees on imported computer equipment, asked for a refund, won before the Court of Tax Appeals, and then lost before the Court of Appeals. The bank now asks the Supreme Court to reverse that loss. The case matters for two reasons: it settles which court hears appeals from the Court of Tax Appeals, and it settles which law governs money disputes between government offices — the ordinary tax court, or the administrative settlement procedure under Presidential Decree Number 242.

Procedural History

The Commissioner of Customs refused the refund, so the bank appealed to the Court of Tax Appeals. On July 31, 1987, the Court of Tax Appeals ruled for the bank and ordered the Commissioner to refund the amount paid, to be applied and credited to the payment of the subscribed capital stock of the Government in the bank.

The Commissioner elevated the matter to the Supreme Court by appeal by certiorari. By Resolution of the Court en banc dated September 15, 1987, the appeal was referred to the Court of Appeals, on the ground that such cases emanating from the Court of Tax Appeals now fall within the exclusive appellate jurisdiction of the Court of Appeals under Section 9 of Batas Pambansa Bilang 129.

The Court of Appeals, through its Ninth Division, rendered judgment on October 3, 1988, annulling and setting aside the decision of the Court of Tax Appeals. It held that the tax court had gravely erred in taking cognizance of the case, because Presidential Decree Number 242 required administrative settlement of disputes between government offices. The bank's motion for reconsideration was denied on January 10, 1989. The bank then filed a petition for review on certiorari with the Supreme Court.

Facts

The Development Bank of the Philippines imported IBM computer equipment from the United States. In connection with that importation, it paid to the Bureau of Customs duties, compensating taxes and import processing fees in the aggregate sum of 5,562,926 pesos.

The bank then asked for a refund of the amount paid, invoking Section 4 (c) of Executive Order Number 1087, which took effect on January 20, 1986. The Customs Commissioner refused, maintaining that the duties, taxes and fees had been correctly imposed and collected.

The bank appealed to the Court of Tax Appeals, which decided in its favor on July 31, 1987. The Commissioner brought the matter up, the Supreme Court referred it to the Court of Appeals, and the Court of Appeals reversed the tax court, holding that the dispute should have been administratively settled under Presidential Decree Number 242 rather than litigated before the Court of Tax Appeals.

Issues

• Whether or not the Court of Appeals has jurisdiction to review decisions of the Court of Tax Appeals, the bank contending that such review belongs exclusively to the Supreme Court.
• Whether or not the Court of Appeals erred in applying Presidential Decree Number 242 to the controversy, in light of Section 7 (2) of Republic Act Number 1125.

Applicable Provisions

Section 1 of Presidential Decree Number 242 provides:

SECTION 1. Provisions of law to the contrary notwithstanding, all disputes, claims and controversies solely between or among the departments, bureaus, offices, agencies and instrumentalities of the National Government, including government-owned or controlled corporations but excluding constitutional offices or agencies, arising from the interpretation and application of statutes, contracts or agreements, shall henceforth be administratively settled or adjudicated as provided hereinafter: Provided, That this shall not apply to cases already pending in court at the time of the effectivity of this decree.

This is the provision that removes the dispute from the courts and channels it to administrative settlement.

Section 2 of the same decree provides:

SEC. 2. In all cases involving only questions of law, the same shall be submitted to and settled or adjudicated by the Secretary of Justice, as Attorney General and ex officio legal adviser of all government-owned or controlled corporations and entities, in consonance with section 83 of the Revised Administrative Code. His ruling or determination of the question in each case shall be conclusive and binding upon all the parties concerned.

This fixes the forum for pure questions of law, which is what the refund claim presented.

Section 3 of the same decree provides:

SEC. 3. Cases involving mixed questions of law and of fact or only factual issues shall be submitted to and settled or adjudicated by: (a) The Solicitor General, with respect to disputes or claims or controversies between or among the departments, bureaus, offices and other agencies of the National Government; (b) The Government Corporate Counsel, with respect to disputes or claims or controversies between or among the government-owned or controlled corporations or entities being served by the Office of the Government Corporate Counsel; and (c) The Secretary of Justice, with respect to all other disputes or claims or controversies which do not fall under the categories mentioned in paragraphs (a) and (b).

This completes the administrative scheme and shows that the decree covers the bank's claim against the Bureau of Customs.

Section 9 of Batas Pambansa Bilang 129, as quoted in the decision, grants the Court of Appeals:

exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of subparagraph (1) of the third paragraphs and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

This is the provision that transferred appellate review of the Court of Tax Appeals to the Court of Appeals.

Ruling

On the first issue, the Court held that the petition is without merit and reaffirmed its earlier resolution that it is the Court of Appeals which is now vested with exclusive appellate jurisdiction over the Court of Tax Appeals and other quasi-judicial agencies. It is true that originally appeals from the Court of Tax Appeals could be taken only to the Supreme Court, under Sections 18 and 19 of Republic Act Number 1125. But those provisions no longer control, in view of the comprehensive provisions of Batas Pambansa Bilang 129. The Court stressed that the text of the law is broad and comprehensive, and the explicitly stated exceptions have no reference whatever to the Court of Tax Appeals. That the Court of Tax Appeals was not among the agencies reorganized by that law is of no moment, because what is essential is that the law broadened the jurisdiction and powers of the Court of Appeals. The Court added that the mode of appeal from the Court of Tax Appeals to the Court of Appeals should be by notice of appeal cum petition for review, consistent with the mode prescribed for other quasi-judicial bodies.

On the second issue, the Court rejected the bank's argument and expressed its entire agreement with the conclusion of the Court of Appeals that there is an irreconcilable repugnancy between Section 7 (2) of Republic Act Number 1125 and Presidential Decree Number 242. Hence the later enactment, Presidential Decree Number 242, being the latest expression of the legislative will, should prevail over the earlier. The dispute between the bank and the Commissioner of Customs therefore belonged to administrative settlement, not to the Court of Tax Appeals.

Doctrine

First, the Court of Appeals exercises exclusive appellate jurisdiction over final judgments and decisions of the Court of Tax Appeals and other quasi-judicial agencies, under Section 9 of Batas Pambansa Bilang 129. Appeals from the Court of Tax Appeals are taken to the Court of Appeals by notice of appeal cum petition for review, not to the Supreme Court.

Second, under Section 1 of Presidential Decree Number 242, all disputes, claims and controversies solely between or among government offices, agencies and instrumentalities, including government-owned or controlled corporations, arising from the interpretation and application of statutes, contracts or agreements, shall be administratively settled. Pure questions of law go to the Secretary of Justice under Section 2; mixed or factual questions go to the officials named in Section 3.

Third, where there is an irreconcilable repugnancy between two statutes on the same subject matter, the later enactment prevails as the latest expression of the legislative will. Presidential Decree Number 242 therefore superseded Section 7 (2) of Republic Act Number 1125 as to disputes between government offices over customs duties.

Disposition

The Supreme Court denied the petition for lack of merit and affirmed the decision of the Court of Appeals, so the Commissioner of Customs prevailed and the refund ordered by the Court of Tax Appeals did not stand.

Remember This

Memorize this line: appeals from the Court of Tax Appeals now go to the Court of Appeals, and disputes between government offices over customs duties are settled administratively under Presidential Decree Number 242, the later law prevailing. Examiners use this case to test the hierarchy of courts over quasi-judicial agencies and the rule that a later statute prevails over an earlier one that irreconcilably conflicts with it.