CTA Case No. 740 (Decision)

. ...... . "~PU'8T,'(C OF THE PHJLTPPT T-:'~ ~ CO URT OF T AX APPE .\J � QUEZON CITY ANDRES E . LAZARO, CTA CASE NO. 740 Petitioner versus THE COMMISSIONER OF CUSTOMS, Respondent. X - - - - - - - - - - -- X DE C I S I 0 N This is an appeal from the decision of the Commissioner of Customs dated December 11, 1959, affirm- ing the decision of the Collector of Customs dated April 26, 1955 and ordering petitioner and his surety to pay, jointly and severally, the amount of ~7 ,663.00. On August 28, 1954, various merchandise, consigned to petitioner and consisting of twenty-nine (29) packages of fruit jams, preserved fruits, preserved I dates, fresh water chestnuts, dried vegetables, melon seeds, biscuits (salted and unsweetened), noodles (ver- micelli), dried fish {cod), dried fish (cuttlefish), and tapioca starch, arrived in Manila on board the s.s. ttHermelinn from Hongkong . These articles declared , under Import Entry No . 69147, series of 1954, were I covered by a bill of lading and a commercial invoice. I Petitioner paid duties and taxes in the amount of iC1 ,308.65. Upon arrival of the merchandise, the Appraisers ' Division seized the same for alleged violation of Cen- tral Bank Circulars Nos . 41+ and lt-5, in -relation to

DECISION - CTA CASE NO . 740 2 Section 1363(f) of the Revised Administrative Code. However, on September 2, 1954, during the pendency of the seizure proceeding , the Collector of Customs ordered the release of the seized merchandise upon peti- tioner's filing of a surety bond of the Century Insur- ance Co., Inc. No. 2883, dated September 2, 1954, in the amount of ~7 ,663.00, representing the local appraised . value of said merchandise. The amount of ~7 ,663.00 was arrived at by adding the landed cost of ~6 ,901.00 and 30% estimated profit of ~2 ,0?0.00 , less the taxes and duties paid in the amount of ~1 ,308.65. The bond provides as follows: "NOW, THEREFORE, the conditions of this obligation are such that in the event that it should be finally decided that the merchandise herein mentioned should be forfeited to the Government, and/or that a fine or surcharge should be imposed, the entire amount of this bond, in case of forfeiture, or the cor- � responding amount of the fine or surcharge, as the case may be, shall be paid in CASH to the Bureau of Customs, PROVIDED, HOW- EVER, that if within thirty (30) days from demand for payment of the liability herein mentioned .the said liability is not paid, and it should be found necessary to file an action in court to effect �the collect- ion thereof, a penalty of FIVE HUNDRED PESOS (~500.00) in addition shall be im- posed, otherwise, this obligation shall be void and of no effecto 11 After the hearing of Seizure Case No . 1874, the Collector o~ Customs, op April 26, 1955, held that in- asmuch as the importation was not covered by a release certificate and an import license in violation of Circulars Nos. 44 and 45 of the Central Bank, it is i

DECISION - CTA CASE NO. 740 3 subject to forfeiture under Section 1363(f) of the Revised Administrative Code. But since it was previous- ly released to petitioner under a surety -bond, the Collector of Customs ordered that the amount of ~7,663.00 be paid in cash to the Bureau of Customs. From the decision of the Collector of Customs, petitioner appealed to the Commissioner of Customs who, in a decision dated December 11, 1959, affirmed 1n ~ the decision of the former. And from the decision of the Commissioner of Customs, petitioner appealed to this Court. The issues raised are: (1) Whether or not the merchandise can be legally forfeited for not being covered by a release certi- ficate and import license, under Circulars Nos. 44 and 45 of the Central Bank, in relation to Section 1363(f) of the Revised Administrative Code; and if in the � affirmative (2) wbether or not the appraised value of the forfeited merchandise should include the 30% expected profit; and (3) Whether or not petitioner is liable for ~500.00 penalty, as provided in the bond. Anent the first issue, we quote from the decision in Andres E. Lazaro vs. The Commissioner of Customs, G. R. Nos. L-21790 & L-21794, Dec. 24, 1965: The issue of whether or not the importations in question are subject to forfeiture for lack of a Central Bank re- lease certificate in violation of Central

DECISION - CTA ,CASE NO. ?40 Bank Circulars 44 and 45 in relation to Section 1363(f) of the Revised Administra- tive Code has already been answered in the affirmative tsin. 1prWeve iosuees cases involving similar fac no cogent reason to alter our previous rulings. Central Bank Circular 133 did not repeal Circulars 44 and 45 with respect to the necessity of a release certificate. As a matter of fact, paragraph 6 of Cir- cular 133 require~ imports to be released only upon presentation of a release cer- tificate issued by the Central Bank. Not only that, Section 14 of Circular 44 which states: "14. No item of import shall be released by the Bureau of Cus- toms without the presentati on of a release certificate issued by the Central Bank or any author - ized Agent Bank in a form pre- - ~ribed by the Monetary Board." was deemed incorporated to Circular 133 by virtue of paragr~ph 8 thereof whic~ we quote hereunder: "8. All existing circulars, rules, regulations, and condi- tions governing transactions in foreign exchange not inconsist- ent with the provisions of this Circular, are deemed incorpora- ted hereto and made i~tegral parts hereof by reference." . With respect to the assertion that the enact ment of Republic Act 1410 abated any liability incurred for violation of Cen- tral Bank Circular 45, suffice it to say that the importations in question do ; not come within the operation of said Act, for Section 3 thereof says: 1serree Investment Company v. Commissioner of Customs, L-2121?, November 29, 1965 and cases cited therein. 2Bombay Department Store v. Commissioner of Customs, L-20489, June o2f2C1 u1s9to6m5;s, Bombay Department St ore v. Commissioner L-2~60, September 30, 1965.

DECISION - CTA CASE NO. 740 5 nsEC. 3� X X X ProyiQ.eQ., however, That goods and com- modities in transit or p;~yious ly 1mported on a no-dollar re- mittance basis at the time of the approvak this Act shall not be affected by the operation of this Act.�� (Underscoring supplied.) Said goods had already been imported and declared forfeited by the Collector of Customs of Manila when Republic Act 1410 was enacted on September 10, 1955. With respect to the second issue, the Supreme Court, in the same decision, held: The contention has no merit. Rule 13(a' of the Philippine Tariff Act of 1909, as amended, relates to the ap- praisal of importations for purpos~s of determining the customs dutie~.j Ii'or appraisal of importations in con- nection with seizure proceedings, the value of the importations in the local market should prevail, follo~dng Sec- tion 1377 of the Revised Administrative Code which provides: 11SEC. 1377. Description a,pd appraisgment of se1zed property. - The collector shall also cause a list and particular description of the property seized to be prepared and an appraisement of the same at its value in the local market to be made by at least the appraising officers, under the revenue laws, if there are such officers at or near the place of seizure, but if there are not, then by tw�o competent and disinterested citizens of the Philippines, to be selected by him for that purpose, residing at or near the place of seizure, which list and appraisement shall be properly attested by such collector and the persons making the appraisal." (Underscoring supplied) 3see Lim Quim v. Collector of Customs, 23 Phil. 509. -

DECISION - CTA CASE NO . 740 6 I Moreover, the inclusion of the 30% estimated profits as part of the value of the importations in question was made with the acquiescence and approval of the appellant. As a matter of fact, the amount of the bonds posted by him upon release of the goods carried the 30% estimated profits. The payment of such estimated profits as part of the value of the importations in the surety bonds therefore constitutes his contract- ual obligation in ease of forfeiture. As regards the third issue, which pertains to respondent's claim for the imposition of the penalty amounting to ~500 . 00 , this Court said in a previous ease: Relative to the claim for damages amounting to ~500.00, we said in a previous ease where respondent was similarly situated: "x x x Upon perusal of the bonds, we observe that liability for the said amount is subject to the condition that the ap- \ praised value of the merchandise involved be not paid within 30 days from demand for its payment and it should be found necessary to file a judicial action for the collection thereof. Obviously, a demand for payment of the amount covered by the bond can- not legally be made until there is a final judgment ordering for- feiture. In the case at bar, there is as yet no final judg- ment of forfeiture. Consequent- ly, there is as yet no liability on the part of petitioner for said damages. (Que Hua Shirt Factory v. Commissioner of Cus- toms, C. T.A. Cases Nos(A. n7g3e9la&s7. 53, Januar y 1962.) 11 11, Lazatin vs. Commissioner of In- ternal Revenue ~ CT& Case No . 782, Jan. 19, 1962.)

DECISION- CTA CASE NO . 740 7 L FORE, the decision appealed from is hereby affirmed, with co?s against petitioner. SO ORDERED .V Qyezon City , July 23, 1966. I ~~ ~ L. AVANCENA Associate Judge WE CONCUR: ROV.iAN M. illvTALI Presiding Judge y~ a:::~ _ 'L~AO CiO-t:u R. ALVABEazy Associate Judge /