Cancio v. Court of Tax Appeals
REVERSALFacts
The Antecedents: Petitioner Rosa Cancio was apprehended at the Pre-Boarding (AVSECOM) Area of the Manila International Airport (MIA) while attempting to depart for Hong Kong with US$102,900.00 in cash, US$600.00 in traveler's checks, and P1,500.00 in cash. The currencies were concealed in two carton boxes of chocolates. Petitioner did not declare the foreign currency and failed to present a Central Bank authority for its exportation. Procedural History: The Commissioner of Customs ordered the forfeiture of the foreign and local currencies. Petitioner appealed to the Court of Tax Appeals (CTA), which affirmed the forfeiture of the US$102,900.00 and US$600.00 for violation of Central Bank Circulars Nos. 265 and 534, in relation to Section 2530(f) of the Tariff and Customs Code. The CTA reversed the forfeiture of P1,500.00, finding it within the allowed limit for personal travel. The Petition: Petitioner sought review of the CTA's decision, arguing that as a foreign currency depositor, she was exempt from the requirement of Central Bank authority for exporting her withdrawn funds, citing Republic Act No. 6426 (Foreign Currency Deposit Act).
Issue(s)
Whether respondent Court of Tax Appeals committed reversible error in upholding the forfeiture of the foreign currencies. Whether Central Bank Circulars Nos. 265 and 534, requiring prior Central Bank authority for taking out foreign currency, apply to foreign currency depositors under Republic Act No. 6426. Whether petitioner's failure to present a certificate of withdrawal constitutes a violation warranting forfeiture.
Ruling
The Supreme Court set aside the decision of the Court of Tax Appeals insofar as it upheld the forfeiture of US$102,900.00 in cash and US$600.00 in traveler's checks, ordering their return to the petitioner's heirs. The decision was affirmed in so far as it reversed the forfeiture of P1,500.00.
Ratio Decidendi
On the issue of whether respondent Court committed reversible error in upholding the forfeiture of the foreign currencies: The Court ruled in the affirmative. It found that while Central Bank Circulars Nos. 265 and 534 generally require prior Central Bank authority for exporting foreign currency, these circulars should not be made to encompass foreign currency depositors whose rights are expressly defined and guaranteed by Republic Act No. 6426, the Foreign Currency Deposit Act. As a foreign currency depositor, petitioner could not be adjudged to have violated these circulars, thus negating the basis for forfeiture under Section 2530(f) of the Tariff and Customs Code. On the applicability of Central Bank Circulars Nos. 265 and 534 to foreign currency depositors: The Court held that these circulars do not apply to foreign currency depositors under RA 6426. Section 5 of RA 6426 explicitly states that there shall be no restriction on the withdrawal or transferability abroad of deposits, except those arising from the contract between the depositor and the bank. This provision grants a general license to withdraw and transfer funds abroad, and a Central Bank authority is not required for such transferability. The Court emphasized that applying these circulars to depositors would defeat the purpose of the law, which is to attract foreign currency deposits. On whether petitioner's failure to present a certificate of withdrawal constitutes a violation warranting forfeiture: The Court acknowledged that petitioner failed to present a certificate of withdrawal. However, it noted her explanation that she was unaware of this requirement and that the bank was supposed to advise depositors. The Court considered her bank book and withdrawal cards as substantial compliance for the purposes of the case. It reiterated that the Foreign Currency Deposit Act grants the right of transferability, and the failure to present the certificate was due to lack of advice from the bank, not a willful violation of law.
Main Doctrine
Foreign currency depositors under Republic Act No. 6426 are granted unrestricted transferability of their deposits abroad, and Central Bank Circulars requiring prior authorization for taking out foreign currency do not apply to them, provided they can show substantial compliance with withdrawal procedures.