CTA Case No. 861 (Decision)

l'\EPU:BLIC OJ' THE PH-ILIP' P1NFJ:! COURT O,F TAX APPEALS QUEZON CITY ~IDR1~S E . IAZlL1=lO , C. T. � CASE NO . 861 Petitioner versus THE COI"llHSSIONER OF CUSTONS , Respondent . X- - - - - - - - - - - - X DE CI S I 0 N This is an appeal from the decision of the Acting Commissioner of Customs dated May 31 , 1960, affirm- ing that of the Collector of Customs for the Port of Manila decreeing the forfeiture of the merchandise covered by Seizure Identification No . 1878 , and or- dering petitioner and his surety to pay in cash, jointly and severally , the amount of ~4 , 680 . oo , representing the appraised value of the seized mer- chandise , for violation of Central Bank Circulars Nos . 44 and 45 , in relation to Section 1363(f) of the Re- vided Administrative Code . It appears that in 1954 , petitioner imported various merchandise from Hongkong consisting of the following: Eighty- one (81) packages of various merchandise , namely: 1 package bean stick , 2 packages rice stick , 22 packages preserved vegetable , 11 packages preserved beans , 9 packages canned mushroom , 1 package canned fruit , 1 package canned water chestnut, 4 packages bean curd, 4 packages preserved fruit , 1 package preserved fruit , 1 package preser ved fruit , 6 packages sea blubber , 1 package squid ,

DEC I SION . CTA CASE NO. 861 ~ I 2 1 package canned fish , 5 packages salted fish , 5 packages 1-1ater chestnuts , 6 pack- ages lily and taro roots , and 1 package joss stick. Upon arrival in Ha.nila on August 31 , 1954, the above- stated merchandise were seized for alleged violation of Circular Nos . 44 and 45 of the Central Bank of the Philippines , in relation to Section 1363(f) of the Revised .dministrative Code . During the pendency of the seizure proceedings , the mer chandise involved were released to petitioner upon the filing of a surety bond of the Century Insur- ance Company do . 2884 in the amount of l4 , 680 . 00 to cover the appraised value of the said merchandise. The amount of r4 , 680 . 00 vtas arrived at by adding the landed cost of ;4, 391. 92 to the 307; estimated profit minus the taxes and duties paid . fhe bond provided that in the event of the forfeiture of the merchandise covered by said bond , the entire amount thereof shall be paid in cash to the Bureau of Customs ; and that a pe�1alty of :r 500 . 00 was sti_pulated in the bond 'tlhj. ch reads as follows: "NO':J 'l' iER~~H'O ~ , the condj_ tions of this obligation are such that in the event that it should hbeerfeiinn8 lly decided that the raercha ndise r.1entioned should be forfeited to the Government , �and/or that a fine or surcharge shou.ld be imposed , the entire amount of this bond , in case of forfeiture , or the corresponding am � unt of the fine or sur- IcNhaCr.gt~eSHasto the case may be shall bPeROpVaIidD~D the Bureau of t ustoms ; , Hu.;.;;v...J:a , that if 1vi thin thirty (30) days from demand for payment of the liability herein mentioned the said liability is not paid, and it should be found neces-

DECISION - C'.�A CASE NO. 861 3 sary to file an action in court to effect the collection thereof, a penalty of Ii'IVE HUNDRED (�500. 00) in addition shall be imposed , otherwise, this obligation shall be void and of no effect ." After hearing the seizure proceedings , the Acting Collector of Customs for the Port of l1Ianila held on P...pril 20, 1955, that as the merchandise in question had been imported without import license and \'/ere not covered by the corresponding rel ease certificate, in violation of Central Bank Circular Nos . 44 and 45, the same were subject to forfeiture under Section 1363(f) of the Revised Administrative Code . However , inasmuch as the merchandise involved were previously released to petitioner under bond , he ordered the latter and his surety to pay in cash , jointl,v and severally , the sum of ~4 , 68 0 . 00 to the Bureau of Cus- toms . From the decision of the Acting Collector of Cus- toms , petitioner appealed to the Acting Commissioner of Customs , who affirmed the decision of the former on I�-:ay 31 , 1960. Hence , the appeal to this Court . On October 13, 1962, petitioner filed \�Ii th this Court a motion to set aside the decision of respond- ent and to dismiss the forfeiture proceedings contend- ing that Central Bank Circular No. 133 has repealed Central Bank Circular Nos . 41;- and 45 and consequent- ly the liability of the aforesaid merchandise has been abated . In a resolution dated December 3 , 1962, the Court held in abeyance the resolution of the motion, the same to be considered in the decision

- -- -- ---- -...--- - -------- . ~ DECISION C'T:A CASE NO . 861 of the case on the ~erits . Later , petitioner moved to postpone the hearing of this case until the Supreme Court shall have de- cided the case of Lazaro vs.� Commissioner o.f Customs , G. R. Nos . L- 21790 and L- 21794 , which involve the same issues as those raised in the case at bar . On December 24, 1964, the Supreme Court rendered its decision in the above-mentioned Lazaro cases . There- after , the parties submitted the case on the basis of the record thereof without submission of further evidence . Let it be said at this point that respondent ' s counterclaim prays for legal interest on the total amount of the bond and ~500 . 00 as additional damages stipulated therein. The issues to be resolved in this case are as follows: (1) :mether the merchandise involved in this case are subject to forfeiture for not being covered by a release certificate and import li cense under Circular Nos . 44 and 45 of the Central Bank, in relation to Section 1363(f) of the Revised. A-dministra- tive Code; (2) Whether the appraised value of the forfeited merchandise should include the 30~& expected profit ; (3) vfuether petitioner is liable for interest on the total amount of the surety bond and for �500 . 00 as additional damages . The main issue involving the legality of the seizure and forfeiture of the aforesaid merchandise is no longer of first ~pression . In the case of Andres E. Lazaro vs . The Commissioner of Customs, G. a. No .

DECISION - CTA CASE NO . 861 5 L-21790 & L-21794 , Dec . 24, 1965, suor~ , the Supreme Court , resolving a similar issue, held: The issue of whether or not the importations in question are subject to forfeiture for lack of a Central Banlc release certificate in violation of Central Bank Circulars 44 and 45 in relation to Section 1363(f) of the Revised Administrative Code has already been answered in the affirmative in previous cases involving similar facts . 1 ~ve see 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 required imports to be released only upon presentation of a release cer- tificate issued by the Central Bank. Not only that, Section 14 of Circular 4ll. which states: 11 14. No item of import shall be released by the Bureau of Cus- toms without the presentation of a release certificate issued by the Central Bank or any author- ized Agent Bank in a form pre- scribed by the Nonetary Board . 11 vi a s . deemed � incorpora ted to Circular 133 by virtue of paragr~ph 8 thereof which we quote hereunder: 118 . 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 integral parts hereof by reference . " 1 Serree Investment Company v . Commissioner of Customs, L-21217, November 29 , 1965 and cases cited therein . 2 Bombay Department Store v . Cormnissioner of Customs , 1- 20489 , June 22 , 1965; Bombay Department Store v . Commissioner of Customs , L- 20460, September 30, 1965. - (

DECISION - C'I:.l\. CASE NO . 861 'iii th respect to the assertion that the enactment of Republic ~ct 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: "SEC. 3. x x x Provided , hovrever, That goods and com- modities in transit or ur~vious lY import~ on a no- dollar re- mittance basis at the time of the approval ~~ Agt shall not be affected by the operation of this Act . u (Underscoring Sl:lPPlied . ) Said goods had already been imported and declared forfeited by the Collector of Customs of ~1anila when Republic Act 14-10 vras enacted on September 10, 1955o (See also t!,le case of CaP,ulonjS v . A~eron , G. R. No . L- 22989 , hay 14-, 1966; and Andres E. Lazaro v. Comm . of Customs , G. R. Nos . L-22511 & 22513 , May 16, 1966 . ) Anent the second issue , the Supreme Court , also in the aforesaid decision, held: The contention has no merit . Rule 13(a) of the Philip pine Tariff Act of 1909, as amended , relates to the ap- praisal of importations for purpos~s of determiuing the gustoms dutie~.j For appraisal of importations in con- nection with seizure proceedings, the value of the importations in the local market should prevail, following Sec- tion 1377 of the Revised Administrative Code waich provides: 11SEC. 1377. Desgr;iption and appraisement of seized property. - The collector shall also cause a list and particular description of the property seized to be prepared and an appraisement of 3 See Lim Quim v. Collector of Customs, 23 Phil . 509o

DECISIOl�J - C'r.&~o CASE NO . 861 7 the same at its valye jn 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 two 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 sup- plied) 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 pa~~ent of such estimated profits as part of the value of the importations in the surety bonds therefore constitutes his contract- ual obligation in case of forfeiture . lment the third issue, vlhich partly pertains to respondent's claim for the imposition of the penalty of f500 . oo , this Court said in a previous case: Relative to the claim for damages amounting to �500 . 00 , we said in a previous case where respondent was similarly situated: 11x x x Upon perusal of the bonds, we observe that liability for the said amount is st1bject 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 /

DECISION C 1J.1.1~ CASE NO . 861 8 is a final judgment ordering for- feiture . In the case at bar, t~ere is as yet no final judg- ment 6f forfeiture . Consequent- ly, there is as yet no liability on the part of petitioner for said damages. (Que Hua Shirt Fac- tory v . Commissioner of Customs , C. T. A. Cases Nos . 739 & 753 , J"an- uary 11 , 1962 o) 11 (Angela s . Laz- atin vs . Corr~issioner of Internal Revenue , CTA Case ~�Jo . 782 , Jan . 19 , 1962. ) As for the interest on the total amount of the surety bond claimed by respondent , same cannot be sustained. There is no basis, legal or contractual, to justify the imposition . The surety bond does not so ~de for payment of interest . ~lliEREFORE , findi ng no error in the decision appealed from , tt.e same is hereby affirmed in toto with costs against p~itioner . SO ORDERED . / Quezon City , November 14, 1966. bL~V~ Associate Judge ':IE CONCUR: R0!11l!.N H. T.Jl~LI Presiding Judge ./LYJ 'WlfJl~ ~~~"' SLA.O R . ALVARfit Associate Judge ~