Commissioner of Customs v. Serree Investment Company
REITERATIONFacts
The Antecedents: On October 8, 1954, five cases of ham arrived in the port of Manila from Hongkong, imported by and consigned to Serree Investment Company. The importer paid the advance sales tax and customs duties. The merchandise was seized by the Collector of Customs for violation of Central Bank Circulars Nos. 44 and 45 in relation to Sections 1363(f) and 1250 of the Revised Administrative Code, as they were not covered by a consular invoice and did not have a release certificate from the Central Bank or its authorized agent bank. Procedural History: The respondent filed a surety bond for P3,478.00 to secure the release of the merchandise, which was subsequently released. After a hearing, the Collector of Customs ordered the forfeiture of the merchandise or the confiscation of the bond. The Commissioner of Customs affirmed this decision, adding that the importations also violated Sections 17 and 18 of the Philippine Tariff Act of 1908 and Customs Administrative Order No. 50. The Court of Tax Appeals reversed the decision, holding that the seizure was illegal because the importation did not involve the sale of foreign exchange, thus not falling under Section 1363(f) of the Revised Administrative Code for violation of Central Bank Circulars Nos. 44 and 45. The Commissioner of Customs appealed this decision. The Petition: The Commissioner of Customs appealed the decision of the Court of Tax Appeals, arguing that the importations were effected contrary to law and thus subject to forfeiture.
Issue(s)
Whether the importation of merchandise not covered by a consular invoice and release certificate, and not involving the sale of foreign exchange, is subject to seizure and forfeiture under Section 1363(f) of the Revised Administrative Code for violation of Central Bank Circulars Nos. 44 and 45. Whether Central Bank Circulars Nos. 44 and 45 are valid regulations governing importations, even those not involving the sale of foreign exchange.
Ruling
The judgment of the Court of Tax Appeals is reversed. The decision of the Commissioner of Customs, affirming that of the Collector of Customs, is revived. The surety bond filed by the importer is ordered confiscated.
Ratio Decidendi
On the validity and applicability of Central Bank Circulars Nos. 44 and 45: The Court held that Central Bank Circulars Nos. 44 and 45 were issued by the Monetary Board within the scope of its powers granted by Republic Act No. 265, specifically Section 74, which authorizes the Monetary Board, with the President's approval, to suspend or restrict sales of exchange and subject transactions to licensing during an exchange crisis to protect the international reserve. These circulars were published in the Official Gazette and are considered part of "Customs Law" pursuant to the second paragraph of Section 1419 of the Revised Administrative Code. The Court rejected the argument that Congress did not authorize the Central Bank to issue regulations for imports not requiring the sale of foreign exchange, as such importations ultimately require foreign exchange. The Court also clarified that even if the importations do not require an immediate sale of foreign exchange, their importation will ultimately require it, as currency is not legal tender in another country and traders must avail themselves of foreign exchange to pay for imports. On the applicability of Section 1363(f) of the Revised Administrative Code: The Court found that the importations in question were made without the necessary import license from the Monetary Board pursuant to Circular No. 45 and without the release certificates from the Central Bank or its authorized agent bank pursuant to Circular No. 44. Therefore, these importations fall within the class of "merchandise of prohibited importation" or merchandise "the importation... of which is effected... contrary to law" as contemplated by Section 1363(f) of the Revised Administrative Code, making them subject to seizure and forfeiture. The Court emphasized that to hold otherwise would render nugatory the aim and purpose of the law in authorizing the Central Bank to regulate foreign exchange during a crisis. The fact that the merchandise was part of a shipment from a foreign business concern and that proceeds might be invested locally does not alter the conclusion that the importation would involve a future demand for the sale of foreign exchange.
Main Doctrine
Importations effected contrary to law, specifically those violating Central Bank Circulars requiring consular invoices, release certificates, or import licenses, are subject to seizure and forfeiture under Section 1363(f) of the Revised Administrative Code, even if the specific circular does not explicitly provide for forfeiture as a penalty, as such violations fall under merchandise of prohibited importation or importation effected contrary to law.