CTA Case No. 2394 (Decision)

REPUBi,IC OF ,THE PHILIPPlNEB � CoURT OF TAX APPEALS QUEZON" CITY Lr;: Oli ZB Ll-IAN , C. T.b. . Gtt.SE ~�JC . 2394 .p~ e t�l t l�oner, versus EOL:-~.I�.JDO G. GEOTIIJP. , in His Official Capacity as Acting Con~issioner of Customs , Respondent . X- - - - - - - - - - - - - X DECISIC I�T This is an appeal from a decision of the Comnlis - sioner of Customs .decl~ring forfeited the ~ . S . dollars and u� negctiable instruments , with exception of ~ 1, 000 in cash and :~ 1 , 400 in traveller ' s checl\S which \1/ere declared by Leon Zelman in his currency declaration ,. for violation of Se c tion 3 of Central Bank Circular 265 and Section 1( a) and ( c) of Central Bank Circular to . 266 in relation to Se c tion 2530(f) of the Tariff and Customs Code . It appears that in the afternoon of March 19 , 1969 petitioner Leon .r"elman , a temporary visitor of the Philip- pines 1-Jhc was about to board an outgoing Japan Airlines plane en.route to the '~nited States of America at the .Ianila International Airport , via Japan , vJas found upon inspection to be in possession of United States dollars in cash , traveller ' s and bank checks , amounting to ~20C' , 170 . 54, far exceeding the total amormt of ;:;2,400 declared by him i n his Central Bank Currency Form broken

D~CISIOH - CTli. CASH; NO . 239lt 2 d61.-vn j_nto �P1 , 000 in .cash and .)1 , 400 in traveller 1 s checks . The aforesaid foreign exchange were seized by the Col- lector of Customs for violation of Section 1(a) and (b) of Central Bank Circular No . 266 , and seiiure proceeding ~here� '~:las instituted . In a decision dated l4ugust 19 , 1)69 , the Collector of Customs of the Hanila International Airport decreed the forfeiture in favor of the Republic of the Philip- pines of the aforesaid foreign exchange with the excep- tion of .:� 1 , 000 in cash anc1 ~>1 , ltOO in traveler 1 s chech:s . This decision was appealed by petitioner to the Commis - sioner of Customs vJho affirmed the Collector 1 s decision . Thereafter petitioner filed this appeal . aereunder we quote for ready reference the law in- volved in this easel Central 3ank Circular No . 265 X X X X X X X ( 3 ) No person shall take out or export from the Philippines foreign currency or any other foreign exchange except as otherwise authorized by the Central Bank . X X X X X X (6) Strict observance of the provisions of this Circular is enjoined; and any resident person , firm or corporatioh , ~tJho , being bound to the observance thereof , or of such other rules, regulations or directives as may here - after be issued in implementation of this Circular , shall fail or refuse to comply with , or abide by , or shall violate the same , shall be subject to the penal sanctions provided for under Section 34 of the �Central Danl;: �.. ct � .

DECISION,- 'I CTli Cl\.SE NO . 2394 I 3 Centra 1 Bank C 1srcu l~ r No . 2.(~ In implementation of the provisions of Central Bank Circular No . 265 dated November 20 , 1968 , the following rules and regula - tions are hereby promulgated: SECTION 1 . ( a) Bvery Ph;i.lj...ll:Q,j.ne res;i.dent departing from or returning to the Philippines from abroad and every temporary visitor entering the Phil:l:Q- nines , including members of the crew or complement of vessels and airplanes en- gaged in international transportation, shall accom�olish a Currencv Declaration Qn CB Form No , 303 and shall declare o~ this form all Phili,rr.Jine currency anQ. foreign exchange carried by the Declar - ant . � X X X X X (c) Temporary visi tors (i . e ., all p .rsons ho ar not resid nts of th.f;. Philipbines entering the Philippines , including members of the crew or com- plement of vessels and airplanes engaged in i nternational transportation , ~11 exhibit their accomplished Currency Declaration to the Central Bank repre- sentatives at the pier or airport ~f entr y vJho shall stamp the Currency . � Declaration and retain the stub . The visitor shall keep his Currency Declaration during his stay in the coun- try . ne may carry with him all the foreign exchange declared by him in his Currency Declaration , but to meet his local currency needs during his stay ~ri the Philip?ines , he shall sell foreign exchange for Philip~ine pesos only to authorized agents of the Central Bank. 11e shall not tgl'e out of the Philip;oi..ue..~ foreign exchange �n excess of the amoqnt brought in by him . \t the time of his deuarture fyom the country , the temporary v;i.si tor or member of the cre11 or com- . plAment of a vessel or airplane enr?aP:eQ in inte.rnat,~onal transpo,tation shall surrender h;i.s Curren cy Declaration to the Central Bgnk representatives at the Qier OJ airport of deDartur~ . (Under - s coring suuplied .)

� �' ' , DECISimJ - CTA CASE NO . 2394 4 C~ntral Bank Ct.r.cn.lar No . 220� Pursuant to :1esolution I-;o . 591.1- dated pril 14, 1969 of the Monetary Board , Circular ro . . 266 dated November 26 , 1968 is hereby revoked effective i mmedia tely . :Iencefor th � declaration of currency of any kind shall be required even from outg_oing or incoxning passengers . Tgriff 2: Cl.,l..�tOIU.� Cod~ C:>:CC . 2530 . J'_p~r ty Subj.a.Qt to :B'.Q!.- ffd ture Under 'l'ari ff ~and Customs I..st...W..�. � - lny vessel or�aircraft , carbo , articles and other objects shall , under the follovJing conditions , be subject to forfeiture; X X X X (f :. ny article of nrohibi ted imuorta - tion or exportation , the- impor tation or exportation of which is effected or attempted contrary to 1 1v, and atl other articles vlhich , in the O:'}inion of the ollector , have been used , are or were intended to be used as in- strument in the importation or exportation of the former . . It is not controverted that ryetitioner violated � Se ct ion 1 (a) and (c) of Central Bo.nk Circular No . 266 � requiring residents and temporary visitors entering the Fhilipvines to accomplish a C1.1rrency Declaration on CB Form 1~0 . 303 of foreign exchange carried by the declarant and :prohibiting temporary visitors fror:1 taking out of the Phi-1-ip~)ines foreign exchange j__c PXcess of tLe amount brought in by him . fetitioner hovJever contends that since Circulnr rJo . 266 '.vas repealed by Centra.l Eank Circular �'iio . 270 �on Apri.l 14, 1969 , the repeal abated the forfeiture proceeding . This nretension is untenable .

J.JECI.SI OrJ - CT.tl. CAST' NO . 23 9~- 5 The repeal of Circular No . 266 ab~ted only the penal responsibility of t~e petitioner , not the action for forfe i tvre vJhich is civil in nature. (Capulong v � � ct i_ng Commissioner of Customs , 1'7 SCl:U\ 61; l1anuel Bas - tida v . Acting Com~issioner of Customs and t he Court of Tax i~ppeals , 35 SCR& 4lt-8 . ) Said the Supreme Court in the Bastida case , supra: 3 . Finall.:l: , the petitioner argues that in view of the repeal of Circulars 20 and 42 by Circular 133, the possession and � ex- por tation of dollar s , v.Ji thou t prior license from the Central Banl"" , is no longer prohibited . -~�fnile this may be true in the context of present- day foreign exchange transactions, we nevertheless must recognize the dual char acter of proce ed ings that co~ld be in- stituted for violation of Central Bank cir- culars 20 and 42, during the time that these 1t1ere in force, under the authority of Republic ct 265 (Central Bank Act .) The petitioner loses sigh~ of t he fact that his attempt to export the checks , �money orders and dollar bills in question , in violation of the aforementioned provisions of t he ~evised lldministrative Code and Cen- tral Bank circulars, entailed two penalties : (a , a penalty for violation of Circular 42, prescribed by Section 8 of Circular 20 in relation to Se ction 34 of Renublic Act 265 , directed principally against the person of tne offender and which may be imposed in a cr1rninal :orose cution (an action in personam) , and (b) a penalty of forfeiture imposed by . Section 1363(f) of the Revised Administrative � Code directed primarily against the merchandise rather than the offender (an action in rgm) . . In the case at bar , the repeal of Cir �_ culars 20 and 42 by Circular 133 did not have the effect of abating the forfejture case in- stituted against the petitioner , for the sim- ple reason that the forfeiture proceedings undertal:en here are civil - not criminal -- in nature . In this sense, therefore , the rane.aJ cAnnot h~ gjvaD retr�nact"i\ra effect 1~7

DECISION - CTL CASE NO . 2394 6 and cannot infuse the attribute of legality into the petitioner ' s attempt to export the checks , money orders and dollar bills in .ques oon . At any rate the bills and foreign exchange in question are subject to forfeiture under Section 3 of Central Bank Circular No . 265 in relation to Section 2530 of the Tariff and Customs Code . Said circular , issued by the Central Bank pursuant to the powers vested it by its charter , is subject to enforcement by the Bureau of Custoos and forms a part of our Customs Law . Violations thereof comes \vi thin the purvievJ of Section 2530 of the Tariff and Customs Code although the circulars do not provide for confiscation in� case of violation thPreof . Said the SurJrerne Court in Bienvenj.do Capulong v . The Acting Commissioner of Customs, sLmra: Petitioner claims that the Court of Tax Appeals erred in declaring the forfeiture of the articles iQ question merely be~ause it violates Central ank Circulars Nos . t.:-4 and 45 considering that said circulars do not provide for the penalty of forfeiture in case of violation of their provisions . But this question is novJ a settled matter in vievJ of the several decisions rendered by this Court so.nctioning the forfeiture of merchandise imported in violation of said -Circulars Nos . 4l.J- and 45 . This Court said that these cir - culars should be correlated wi t]l Section 1363 of the Re~ised k~dminis tra tive Code which authorizes the forfeiture of any merchandise of prohibited importation or of any the � importation of which is effected contrary to la1.v , as may be gleaned from the following portion of our decision~ 11As already stated , Circulars Nos . ltl-1- and L:-5 Here issued by the honetary Board within the scope of its powers.

DECISIOr:- - CT.t:. C1~S-r;; NO . 23 94 7 They were published in the Official G[\zette in June;' 1953 . Appellant failed to prEsent to the Commissioner of Customs release certifi cates issued by the Central Banb~ or its duly author - ized agent banks for the importation in question . The Commissioner of Cus - toms may , therefore , seize them and order their forfeiture under the afore - quoted provisions of the Revised 'd- ministrative Code . It is true that neither of the Circulars pr ovide for the penalty or forfeiture . But since the importations in question were made without the necessary import license issued by the Ilone tary Board pursuant t o Circular No . l.t-5 and the release certificates issued by the Central Bank or its authorized agent banl:: in the pres cribed form pursuant to Cir - cular lJo . 4lr , they fall �~:Ji thin the class of ' merchandise of nrohibited importation ' or merchandi~e ' the im- poitation x x x of which is effected x x x contrary to lai�I 1 that the Com- missioner of Customs may seize and or - der forfeited . To sustain the appel- lant 1 s theory of the case v;ould render nugatory the aim and purpose of the la\v �Hhen it authorizes the Central Bank to temporarily suspend or res - trict the sale of foreign exchange to licensing during an exchange crisis in order to orotect the international resPrve and to give the Vonetary Board and the GovPrnment time in \vhich to take constructive measures to combat st:ch crisis �11 (Pascual vs . Commis - sioner of Custorrs, L-1 0979 , June 30, 1959 . See also Venancio 'ronk Tel: vs . CommisE"ioner of Customs , L-1 191+7, June v, 30 , 1959 ; People vs . ~ue Po Lay , 5C 1('\ r~�. . (u' . -l�,,JO . P � 48. 00 ) � The nerchandise in question may not be one of j)rohibi ted importation 'v-Ii thin the mean- ing of the law , but it cannot be denied that it is an imDortation that was effected con- trary to +aw, and in this sense it is subject to forfeiture . x x x Thus, the expo ~�tation of dollars without authority from

. '- " D"SCISION - CT.t~ C. SE NO . 2394 8 the Central Dank , v~1ich is prohibited by 3ection ~ of Circular No . 265 is subject to forfeiture in favor of the gover nm.ent under Section 2530(f) of the Customs Code as expo2:�tation effected contrary to lav-1 . For this it suffices that petitioner is caueht attempting to bring out of the PDilip_cines dollar bills and foreign exchange 1,7ithout authority from the Central Bank . Section 3 of Circular 1Jo . 265 covers all manner of exporting foreign exchange without authority from the Central Banh: , ~..1hether it is br ought out by outgoing passengers, or sent through the ma il, or hidden in cargo sent abroad . 1:1H'SREFORY: , the appealed decision of responc1 ent is hereby affirmed . S 0 Or1DER:::D � ~uezon City , January 15, 1976. iL- 'I-~~ - Ri -10N L . AVJ. l'JCEf:'B. .....ssociate ..Judge WE CONCln: -~~ R0!1J.:J 1>: � 11-11:...LI ~res idi ng Judge �