PHILIPPINE PORTS AUTHORITY, PORT MANAGER AND PORT DISTRICT OFFICE OF DAVAO CITY, PETITIONERS, VS. HON. RENATO A. FUENTES AND TERMINAL FACILITIES AND SERVICES CORPORATION, RESPON…

Philippine Ports Authority versus Fuentes

The Case

This is a petition for review, with a prayer for a writ of preliminary injunction and restraining order, brought by the Philippine Ports Authority, its Port Manager, and the Port District Manager of Davao City against Judge Renato Fuentes and the Terminal Facilities and Services Corporation, known as TEFASCO. The petitioners challenge the jurisdiction of the Regional Trial Court of Davao City, Branch 17, over a suit testing the legality of port charges the Authority imposed on TEFASCO, namely one hundred percent wharfage dues and berthing fees, and the ten percent government share in arrastre and stevedoring revenues, also called a privilege fee. The case matters because it draws the boundary between the regular courts and the Court of Tax Appeals, and settles that port charges collected by the Philippine Ports Authority are no longer customs charges appealable to the tax court.

Procedural History

On August 30, 1988, TEFASCO filed in the Regional Trial Court of Davao City, Branch 17, a complaint for declaration of nullity, prohibition, mandamus, and damages with a writ of preliminary injunction, asking the court to restrain the Authority from imposing the government share or privilege fee, from collecting the ten percent share of cargo handling revenue, and from collecting one hundred percent wharfage, harbor, and berthing dues on cargoes and vessels using its terminal. The Authority answered, TEFASCO replied, and the Authority opposed the application for injunction. On December 14, 1988, the trial court, through Judge Fuentes, granted the injunction, and upon TEFASCO's posting of a one million peso bond, the writ issued on January 10, 1989. The Authority moved for reconsideration and for dissolution of the writ with an offer of counterbond, but Judge Fuentes denied the motion on June 21, 1989. On September 11, 1989, the Authority filed an urgent motion to dismiss on the ground that the trial court had no jurisdiction, because the action was essentially one to restrain the collection of dues, fees, and other assessments in the nature of taxes or charges under the Customs law. Judge Fuentes denied the motion on October 5, 1989. The Authority then came to the Supreme Court by petition for certiorari and prohibition, and the Court issued a temporary restraining order on December 21, 1989, enjoining enforcement of the trial court's orders and writ.

Facts

On July 11, 1974, Presidential Decree Number 505 created the Philippine Ports Authority, and Presidential Decree Number 857, the Revised Charter, amended it. Under that charter the Authority carries out an integrated program for the planning, development, financing, and operation of ports and port districts throughout the country, and the powers, duties, and jurisdiction of the Bureau of Customs concerning arrastre operations were transferred to and vested in it. The charter authorized the Authority to regulate port rates and charges and to levy dues, rates, or charges for the use of premises, works, appliances, and facilities, and to impose a ten percent charge on the monthly gross earnings of arrastre and stevedoring operators, known as the government share.

In its Board Resolution Number 7 dated April 21, 1976, embodying a memorandum agreement, the Authority laid down the terms under which TEFASCO was allowed to construct specialized port and terminal facilities and to render arrastre and stevedoring services on incoming and outgoing cargoes.

On August 30, 1988, TEFASCO sued, and the trial court enjoined the Authority from collecting the government share or privilege fee, from collecting wharfage dues in excess of fifty percent of the gross cargo levy, and from collecting berthing fees in excess of seventy percent of charges, among other acts. The Authority resisted on jurisdictional grounds, and the dispute reached the Supreme Court.

Issues

• Whether or not the Regional Trial Court has jurisdiction over an action to restrain the Philippine Ports Authority from collecting wharfage dues, berthing fees, and the government share or privilege fee.
• Whether or not these port charges are customs charges, so that the rulings of the Philippine Ports Authority on them fall within the exclusive appellate jurisdiction of the Court of Tax Appeals.

Applicable Provisions

Section 39 of Presidential Decree Number 857 provides:

Section 39. Bureau of Customs. — The Tariff and Customs Code is hereby modified or amended to the extent that all the powers, duties and jurisdiction of the Bureau of Customs concerning the following matters shall be transferred to and be vested in the Authority: a) All dues, fees and rates collectible on vessels and cargoes under Title VII but excluding Part VII of the Code, as amended by P.D. 34, regardless of the port or place of call of the vessel, whether on government or private port; b) The general supervision, control and regulation of all matters and affairs that pertain to the operation of and the issuance of permits or license to construct ports, port facilities, warehouses, and other facilities within port districts; c) All such other powers, duties and jurisdictions vested in the Bureau of Customs, pertaining to every matter concerning port facilities, port operations or port works.

This provision is the hinge of the case, because it shows that the collection of port charges passed from the Bureau of Customs to the Authority.

Section 7 of Republic Act Number 1125, creating the Court of Tax Appeals, provides:

Section 7. Jurisdiction. - The Court of Tax Appeals shall exercise appellate jurisdiction to review by appeal, as herein provided: (2) Decisions of the Commissioner of Customs in cases involving the liability for customs duties, fees or other money charges, seizure, detention or release of property affected; fines, forfeiture or other penalties imposed in relation thereto; or other matters arising under the Customs Law or other law or part of law administered by the Bureau of Customs.

This defines the tax court's appellate jurisdiction, which the Authority invoked but which the Court found inapplicable.

Section 11 of the same law provides:

Section 11. Who may appeal; effect of Appeal — Any person, association or corporation adversely affected by a decision or ruling of the Collector of Internal Revenue (now Commissioner), the Collector of Customs (now Commissioner) or any provincial or City Board of Assessment Appeals may file an Appeal in the Court of Tax Appeals within thirty (30) days after the receipt of such decision or ruling.

This identifies whose decisions may be appealed to the tax court, and the Authority is not among them.

Section 18 of the same law provides:

Section 18. Appeal to the Supreme Court — No judicial proceeding against the Government involving matters arising under the National Internal Revenue Code, the Customs Law, or the Assessments Law shall be maintained except as herein provided, until and unless an appeal has been previously filed with the Court of Tax Appeals and disposed of in accordance with the provisions of this Act.

This limits the tax court's reach to matters arising under the named laws, which the Court held these port charges are not.

Ruling

On the first issue, the Court held that the trial court has jurisdiction. Jurisdiction is conferred by law, and under Presidential Decree Number 857 the collection of port charges ceased to be an administrative function of the Bureau of Customs and was transferred to the Authority. Neither that decree nor Republic Act Number 1125 provides for an appeal to the Court of Tax Appeals from decisions of the Authority.

On the second issue, the Court held that the tax court is a specialized court of limited jurisdiction, and no appellate jurisdiction over the Authority's decisions may be vested in it by mere implication. The Court rested this on its earlier ruling in Victorias Milling Company versus the Philippine Ports Authority:

There is no law or statute which expressly vests jurisdiction upon the Court of Tax Appeals to review appeals from decisions or rulings of the Philippine Ports Authority. The jurisdiction of a court to take cognizance of a case, we believe, should be clearly conferred and should not be deemed to exist on mere implication, specially with respect to the Court of Tax Appeals which is a specialized court of limited jurisdiction.

Having so ruled, the Court found it unnecessary to discuss the other issues raised in the petition.

Doctrine

First, jurisdiction is conferred by law and must be clearly conferred; it is never presumed from implication, especially for a specialized court of limited jurisdiction such as the Court of Tax Appeals. Second, under Section 39 of Presidential Decree Number 857, the powers, duties, and jurisdiction of the Bureau of Customs over dues, fees, and rates collectible on vessels and cargoes were transferred to the Philippine Ports Authority, so that port charges it collects are no longer customs charges. Third, because no law expressly vests appellate jurisdiction in the Court of Tax Appeals over decisions or rulings of the Philippine Ports Authority, the regular courts retain jurisdiction over actions testing the legality of those charges.

Disposition

The petition for certiorari and prohibition was denied for lack of merit, with costs against the petitioners, and the temporary restraining order was lifted and set aside, leaving the trial court's orders and writ of preliminary injunction in force.

Remember This

The one line to memorize is that the jurisdiction of a court, especially a specialized court of limited jurisdiction, must be clearly conferred by law and is never deemed to exist on mere implication. Examiners use this case to test the boundaries of the Court of Tax Appeals and to ask whether port charges collected by the Philippine Ports Authority are customs charges appealable to that court.