CTA Case No. 782 (Decision)

"'1'1'1\J!!LIC OP Tfm PHlLL~U COURT OF TAX AP.f&L~ ~rw ANGELA S � I.AZATIN, . Petitioner, - versus - C. T.A. CASE NO. 782 COl~ISSIONER OF CUSTOMS , Respondent . X- - - - - - - - � - - - ~X DEC I S I 0 N This is an appeal from the decision of the Commis- sioner of Customs dated Y~rch 24, 1960 affirming the de - cision of the Collector of Customs of Manila in decreeing the forfeiture of the articles imported by petitioner, and as the articles were previously released under bond, in ordering the petitioner and the Empire Insurance Com- pany to pay , jointly and severally , the amount of P8,578.00 representing the total appraised value of the released articles. The petitioner imported from abroad articles that arrived in Manila on board the S/S "Sunnyville" on Decem- ber 18, 1955, which articles are described in the bill of lading, the commercial invoice, pro-forma invoice and the marine insurance policy as 7 boxes automatic musical ins- truments and valued at $2 , 499. 00. These articles are co- vered by a Central Bank Release Certificate dated Decem- ber 9, 1955, classifying them in the non-essential consumer category (NEC), with code No . 890110, and describing them as 7 boxes Musical Instruments-Devices. Upon examination by Examiner Faustino Mendoza , of the Bureau of Customs , it was found that they consisted of juke boxes and were classi-

DECISION - C.T.A. CASE NO. 782 �- 2 - fied under Code No. 890101 - UI (Phonographs and gramo- phones) of the Central Bank Statistical Classification of Commodities (Revised July 1, 1955). For this reason, they were seized as having been imported in violation of Central Bank Circulars Nos. 44 and 45, in relation to Sections 1363(f) and 1250 of the Revised Administrative Code. In the meantime, the articles were released to the petitioner under Empire Insurance Co. Bond No. 5096for the amount of P8,578.00, the conditions of which read: "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 corres- ponding amount of the fine or surcharge, as the case may be, shall be paid in CASH to the Bureau of Customs; PROVIDED, HOWEVER, 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 collection ther eof, a penalty of EIVE HUNDRED PESOS (P500.00) in addition shall be imposed otherwise, this obligation shall be void and of no effect. 0 ~fter due hearing, the Collector of Customs for the Port of Manila rendered a decision, decreeing the for- feiture of the seven (7) cases of juke boxes in question, and as the same have been released under bond, ordering the petitioner and the Empire Insurance Co. to pay jointly and severally the sum of 8,578.00 within thirty (30) days from receipt of the decision. Being dissatisfied with the decision of the Collector of Customs, the petitioner appealed to the respondent Com-

DECISION - C.I.A. CASE NO. 782 - 3- missioner of Customs who affirmed the same. Hence, the present petition for review to which respondent answered, seeking the dismissal of the petition, and the payment by petitioner and Empire Insurance Co. of P8,578.00 re- presenting the appraised value of the articles in ques- tion, plus interest at the legal rate, and P500.00 as pen- alty. The main issue in this case is: ~fllether or not the Commissioner of Customs erred in affirming the decision of the Collector of Customs declaring the forfeiture of the juke boxes in question for alleged violation of Central Bank Circulars Nos. 44 and 45, in relation to Sections 1363(f) and 1250 of the Revised Administrative Code. Petitioner does not question the validity of Central Bank Circulars Nos. 44 and 45. However, she contends that the Statistical Classification of Commodities, as revised on July 1, 1955, particularly that portion referring to un- classified (UI) or banned items, is invalid for lack of publication in the Official Gazette. The importations at bar which, as aforestated, con- sist of juke boxes were made under the Code No. 890110 - NEC and description "Musical Instruments". Their forfei- ture and payment of the amount of the release bond are now being justified on the ground that they fall under the com- modity classification of phonograph and gramophone (Code No. 89010 - UI), which are banned items in the Statistical Classification of Commodities as revised on July 1, 1955. However, this particular statistical classification has not

DECISION - C.I.A. CASE NO. 782 -4- been published in the Official Gazette. It is the prin- ciple and the law that before a regulation can have a legal force and binding effect upon any person, that re- gulation must first be published in the Official Gazette (People vs . Que Po Lay, G. R. No. L-6791, March 29, 1954) . Therefore, the classification of commodities (revised on July 1, 1955), particularly with regards ,to the banned items listed therein, cannot be applied adversely to the petitioner as it was not published before the importation of the juke boxes was completed in 1955. However, the Cen- tral Bank Statistical Classification of Commodities, which was published in the June, 1953 issue of the Official Ga- zette, can legally bind the petitioner. And as nowhere in this latter commodity classification are the jmke boxes in question listed , it follows that the same are banned items and cannot be released without the presentation of a release certificate issued by the Central Bank or any Authorized Agent Bank. That articles not listed in the commodity clas- sification published in 1953 are banned items and only goods mentioned therein are allowed to be imported can be gleaned from the provisions of Section 3, Article II of Regulation No. 1, implementing Circular No . 44 which reads: use-c. 3. No application for foreign ex- change covering any commodity item not included in the commodity classification mentioned in the preceding section, shall be granted by any Autho- rized Agent Bank or the Bankers' Committee, with- out prior approval of the Monetary Board." {49 Off. Gaz. No. 6, pp. 2192 & 2194 . ) and paragraph 14 of Central Bank Circular No. 44, which pro- vides as follows:

DECISION - C.I.A. CASE NO. 782 5- 8 ul4. No item of import shall be released by the Bureau of Customs without the presenta- tion of a release certificate issued by the Central Bank or any Authorized Agent Bank in a form prescribed by the Monetary Board." 1 (49 Off. Gaz. No.6, pp. 2189 & 2191.) l The alternative claim of the petitioner that the ~ juke boxes were correctly classified under Code Mo. 890110 (NEC) as musical instruments is without merit. The meaning given by lexicographers to the term "musical instrument," is as follows: "(musical) 'instrument' -is a contri- vance by which musical sounds are produced. (Webster's New Int' ll. Dk tionary, p . 1288) Musical instruments may be classified, ac- cording to the nature of the vibrating body that initiates the sound, as stringed, wind, and percussion. In stringed instruments it is a group of tense strings, either bowed as in the violin and its class; plucked, as in the harp, guitar, and mandolin; struck as in the piano; or blown upon, as in the aeolian harp. In wind instrument it is a column of air set vibrating either by a single or double reed, as in the clarinet or oboe; by the lips acting as reeds, x x x." From the definition, it is plain that juke boxes cannot be classified as musical instruments because juke boxes are devices designed to reproduce music. Musical instruments are those which produce music. It would be a strained interpretation to classify juke boxes as mu- sical instruments. ' Not falling under the commodities des- cribed in the release certificate as musical instruments (Code No. 890110 - NEC), the juke boxes at bar are not, in effect,� covered by a release certificate and therefore, are subject to forfeiture pursuant to Section 1363(f) of the Revised Administrative Code for violation of Circu-

DECISION - C.T.A. CASE NO. 782 -6- lars Nos. 44 and 45 {Philippine Planters & Investment Co. v. Commissioner of Customs, C.I.A. Case No. 549, Decembe r 29, 1959). As afore-stated, the respondent seeks the payment, jointly and severally, by the petitioner and the Empire Insunance Co. of the respective sums of P8,578.00, ap- praised value of the articles in question, and PSOO.OO, as additional dama ges. Suffice it to say that the in- surance company is not a pa r ty in the ins t ant case. f'on- sequently, this Court has no jurisdiction over it, and we cannot order it to pay. Relative to the claim for damages amounting to ~500.00, we said in a previous case 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 cannot legally be made until the r e is a final judgment order- ing forfeiture. In the case at bar, there is as yet no final judgment of forfeiture. Con- sequently, there is as yet no liability on the part of petitioner for said damages. {Que Hua Shirt Factory v. Co~~issioner of Customs, C.I.A. Cases Nos. 739 & 753, January 11, 1962.) WHEREFORE, finding no error in the decision of the res pondent ~ommissioner of ~ustoms appealed from, the same is hereby affirmed. The petitioner is ordered to pay to the r espondent CGmmissioner of Customs or his

DECISION - C. T. A. CASE NO. 782 97- authorized representa tive the amount of P8 , 578 . 00, re - presenting the appraised value of the juke boxes in question. Costs against the petitioner. SO ORDERED. Mani la , J anuary 19, 1962. I concur: ROMAN M. UMALI Associate Judge AUGUSTO M. LUCIANO inhibited himself . (