Court of Tax Appeals
0Donata San Miguel and Benito Chua Petitioners, et al. vs. = Case No. 1013 the Commissioner of Customs and the Collector of Customs of Manila
REPUBLI C OJ? 'rHE PHILI PPIN~S
COU.,T OF' 'rAX APPE.t LS
quszm: CI'1'Y
DONATA SAI{ 1.UGU7L
and K~'NITO CHUA ,
Petit ioners ,
- versus -
THE CQ1'.1NI SSIONER OF
CUSTOH:S and THE COLLECTOR
OF CUSTOMS OF Iv NI LA,
Respondents .
x- - - - - - - - - - - - -x
D E C I S I 0 N
C. T.A.
C SE NO . 1013
This is an appeal from the decisioh of. respon-
dent Commissioner of Customs affirming that of the
Collector of Customs of !"!anila decreeing the seizure
and f orfeiture of "310 Bales Cereal Food (Sautang-
hon)" for violation of Central Bank Circular No. 44,
in relation to section 2530 (f) of the Tariff and
Customs Code .
The parti es have agreed and stipul.a ted on the
fa ctual issues , the pertinent port:lons of vlhich are
quoted hereinbelovr, as follmvs :
X
X
X
X
X
112.
That petitioner Donata San
Niguel is an importer of a shipment of
310 bales of sotanghon, weighing approxi-
mately 37 , 200 kilos , gross 1:Jeight , ,,Jhich she
i mported from Hongkong under her firm
name
1 DONAT AS THADING 1 and 1vhich shipment
arrived at the port of Nanila on ugust
25, 1960 on board the vessel S/S SHOHO
HAH.U.
"3.
That prior to the actual ship-
ment and impor tation of t he subj,ect shi p-
ment of sotanghon, petitioner applied
I•Ti t h the Central Bank of the Philippines
through its authorized agent bank , the
Pacific Banking Corporation, 1'-Canila ,
DECISION -
C. T. A. CASE NO. 1013 / 2 - for the opening of commercial ~etter of credit in the amount of US $2, 498. 00 to cover a shipment of - 11APPROXH.!.ATELY 310 BALES CEREAL FOOD (SAUTANGHON) .t. x
X
X
X
x.
11lt.
That the corresponding letter of credit vias opened by the Pacific Bank- ing Corporation on July 13 , 1960 in favor of the National Handleshan...lt, N. Yo., 15 Queen ' s Road Central , Hongkong , :Ln the amount of US ~~2 , 498 . 00 , to cover :tAl?out
310 Bales Cereal Food (Sautangnon)
~NEC -
048- 01. 03) from Honglj:ong to Nanila. ·1 x
X
X
X
X.
"5. That the subject shipment of 310 bales of sotanghon arrived in the Port of Hanila and was declared for Cus- toms purposes under Entry 1/-066039. The shipment \vas duly examined and appraised and the amount of r22 , 529. 00 was deposited by the petitioner under Official I eceipt No. 60781 to cover payrnent of the taxes and duties on the shipment.
x x
X
X
X.
"6 .
That shortly prior to the arrival of the subject shipment in Hanila, the petitioners applied for and vrere issued by the Central Bank of the Philip- pines , through its authorized agent Bail1t, the Pacific Banking Corporation, JI.Ianila , Central Bank - elease Certificate No. 11450 covering the shipment in question. x x
X
X
X.
"7.
I'hat the petitioners thereupon submitted the said Central Ballit Release Certificate , Exhibit 'D~, to the Central Bank representatives in the Bureau of Customs and said official approved and validated t he said CB ·Release Certificate.
X
X
x.
x.
X
X
X
X
"9.
That the subject shipment of 310 bales of Sotanghon vras seized and in his Decision, dated January 18, 1961 (Annex 'G' of the Petition), the Collector of Customs of l·~anila decreed the forfei- ture of said shipment.
On appeal , the r espondent Commissioner of Customs , in his Order (Annex 'H' of the Petition)
DECISION -
......
C. T. A. CASE NO . ~013 - 3 - affir med the Decision of respondent Col- lector of Customs .
"10.
That release certificate of t he CP, EY..hibi t ' D' was -vd thdra\m. by the r-.m on September 9 , 1960. x x x .
1111.
That under CB Statistical Clas- sification of Commodities , revised as of July 1, 1957, implementing Circular No. 44, the classification of 1sautanghon ' was under Commodity Code No. VI- 048- 03 , not No. VI- 048- 01. 03.
1112.
That the subject shipment of sotanghon has been seized and ordered f orfeited by the r espondents , allegedly f or violation of Centnal Bank Cir cular No. l.J-4 in relation to Sec. 2350 of the Tariff and gustoms Code .
1113 .
That the petitioners have sea- sonably appealed from t he decisions of
the Collector of Customs and the Commis-
sioner of Customs , to the Court of Tax Appeals ."
( Stipulat i~n of Fa c ts ~ Oct. 10, 1964, pp . 90- 94 , ~ . T • • rec .J. ~
I
Pending final determinat i on of t he case , an order \vas issued for the release of t he 310 bales of sotanghon t o the petitioners upon their filing of a surety bond i n the amount of P5o,ooo.oo to guarantee payment of the balance of the redemption price of said goods in the event that f orfeiture t hereof is f inally upheld (pp . 66- 67 , C. T.A. rec.). The case ·was submitted for decision without
I
memorandum of both parties . Petitioners assail the legality of t he for - feiture of said goods on the following grow1ds , to /
DECISION -
C. T. A. CASE NO. 1013 .
- 4 - 1 .
That Central Bank Qircular No. 44 is beyond t he po',<Jer of the Central Bank to is sue and promulgate under Republic Act No . 265; 2.
1'hat Central Bank Circular No. 44 -vras not
I
approved by the President of the Philippines; 3 .
That Central Bank Statistical Classifica-
tion of CoJTI.modi ties vlhich i mplements Central Bank tir cular No. 44 is arbitrary, capr icious and vn1im- sical ; and 4.
1
Footnotes
- 1
hat t he pm·mr to regulate andccnntrol importations are vested on other agencies of the government and not 1.d t h the Central Bank. (See p . 6-8, "Petition for _eview. " ). The issue as to the legality of Central Bank Circular No. 44 is not nell/ and decisions on cases si~ilarly situated are more or less uniform. It appears that a commercial letter o!S credit ( 1.·ras opened to cover a shipment of "31 Bales Cereal :B'ood (Sautanghon) 11 classified under- Corrmwdi ty Code No . :N~C - Qlf-8 - 01 . 03 l.vhich means "Cereal Foods , ready t o eat. " Thereupon , Central Banlc Release Certifi- cate No . 1145 0 vra s is sued and later val ida ted to cover said shipment . Due hovJever to a protest lodged by Baguio Food 1'-:anufacturing Co . against said ship- ment , a re- exam.ination conducted shO\·ls that Central Bank ~1elease Certif icate No . 11450 did not correctly cover the questioned shipment . Under Central Bank DECISION - C. T. A. CASE NO. 1013 - 5 - Statistical Classification of Commodities , revised as of .. Tuly 1 , 1957 , "Sautanghon" falls under Commo- dity Code No. U;t-Ott-8- 03 . 00 which covers ttcereal paste (macaroni , spaghetti , noodles , sautanghon, vermicelli and similar preparations )". There being a discrepan- cy between the commodity code classification found in 2elease Certif icate No. 11450 and the shipment ' involved , the Central Bank , t hru the Honetar ~r Board , vii thdrevr the release certificate . Hespondent Collect; or of Customs ordered the seizure and forfeiture of said commodity for failure of t he petitioners to pre- sent the proper release certificate , amendatory or otherwise , to correct the discrepancy in the commo- dity classification of t he subject shipment . To our mind , 1·rhen t he Central Bank issued a release certificate for 111\fEC- 048. 01 . 03 , Cereal Foods , ready to eat ," it '\vas not intended t o cover "sautanghon" '\vhich comes 1..mder a different commodity classification as UI- 048- 03 . 00. (See Phil . Planters & Investment Co. V o CornEl. of Customs , CTA Case No. 549 , Dec . 29 , 1959.) Petitioners , therefore , are without release certi- ficate for the said shipment of 11sautanghon 11 and its forfeiture for violation of C. B. Circular Noo 44 , in relation to section 2530 (f) of the Tariff and Customs Code is in order , petitioners having attempted to effect the i mportation of the same contrary to lavlo 'I'he validity of Central Bank Circular No. 44 promulgated under authority of section 74 , Republic Act No . 265 , has been passed upon and repeatedly up- /I DECISI ON - C. T . A. C1 SE NO. 1013 - 6 - held by the Hi ghest Tribunal. (Pascual v. Comm . of Cus- toms , L- 10979, June 30, 1959 ; Actg . Comm. of Customs v. Leuterio , L- 91~2 , Oct . 17, 1959; Comm. of Customs v. Serree Investment Co., 1-12007 , Nay 16 , 1960; Comm. of Customs v. Nepomuceno , L-11126 , 1•1arch 31 , 1962 ; Serree Investment Co . v. Comm. of Customs , L- 1956~ , Nov. 28 , 19 6~ ~. As to the claim t hat Central Bank Cir cular No. ' 4~ is invalid for laclr o.f presidential signature , the Supreme Court in a similar vein held : "Appellant ' s claim that Circulars Nos . lt·Lt· and 4·5 were promulgated by the Monetary Board without concur rence of at least five of its members and without the approval of the President , is not supported by evidence . They have been published in the Official Gazette and the pre- sumption that an official duty has been regularly performed , the ordinary course of business follm:Jed, and the law complied \·lith, is on the appellee ' s side . 11 (F . Pascual v. Comrn . of Customs , supra) . Similarly, petitioners are now estopped from impugning the - r easonableness of the classification of comrnodi ties made in pursuance of Central Bank Circular No. ~~ , it appear j.ng t hat they had acted thereon, or invoked the ' benefits thereof , ·when they applied for release cer- tif icate under it . (See Comn1. of Customs v . Santos , et . al., L-11911 , Narch 30 , 1962.) Petitioners argue further that the Centra1 Bank lmder its charter (Rep . · ct 265) has no po\ver to regu- DECISION - C. T. A. CASE 'NO . 1013 - 7 - late and control imports . On the contrary , \ole are of the opinion that the Central Balli~ possesses such power and this is cor ollary to its main functions of main- taining our monetary stability (Sec . 2(a), ~ ep . ct 265) and protecting the countr;y ' s international reserve . (Sec . 74, id.) The last issue pertains to petitioners ' allega- t,ion that the subject importation vlas made in good faith . The factS of record , ho-vrever , negate petitioners ' contention. In the first place , when petitionemapplied for ~he opening of a commercial letter of credit i:rith ~ the Pacific Banking Corporation, they f urnlshed the i tern sought to be imported as 11310 Bales Cereal Food (Sautanghon) 11 classifying the same under Commodity Code No . "NEC- 048. 01. 03 . 11 The bank mistakenly approved the application and opened a l etter of credit in favor of the petitioners not realizing th<ft under Central Bank Statistical Cl assification of Commodi- ties , Commodity Code No . NEC-0~-8 . 01 . 03 applies only to ttCereal Foods , ready to eatu and not to "sautang- hon" which properly falls 1.mder Commodity Code No. UI-048. 03 . 00 covering "Cereal paste (macaroni , spag- hetti , noodles , sautanghon, vermicelli and simil ar preparations ). " Petitioners , therefore , misdeclared or misrepresented to the bank the true classification of their importation to facilitate its entry into I DECISION C. T. A. CASE NO. 1013 - 8 - I the Philippines . Petitioners ' a ctuation i s understand- able . "Sautanghon" , although not totally banned , is allowed to be imported only in limited quantities due to the policy of our government to protect local manufacturers . In the second place , petitioners can- not claim that they \•rere mistaken in their class;Lfi- dation of t he commodity I.·Jhen they applied for a letter of credit. 'l'he fact that they requested and vrere allovJed to vii thdraw the shipment under bond conclu- si vely shovJS that petitioners intended f rom the out- set to import t he commodity they applied for (which is sautanghon) and nothing else . In t he t hird place , petitioners , through their cou..'Ylsel , in t ne seizure proceedings before the Collector of Customs , admit t ho.t the subject importation is ban..ned and indicated ti1eir disavo\val , of an intention to further contest the move of the government to forfeit t he s~Je . This only shows that peti tj_oners all along kne "~:J that the item is banned or its importation restricted , thus , their I.·Jillingness to \vaive any inter est they had over it . At any r ate , good f aith can not legalize an otherwise illegal importation. IN VIm• Qli' ALL THE FOREGOI NG, the decision appealed from is affirmed. Inasmuch as t he commodity in ques- t j_on \•las released under bond , petit ioners and I ndus- trial Insurance Co., Inc ., are hereby ordered to pay, jointly and severally , to the Bureau of Customs t he surL DECISION - C.I.A. CASE NO. 1013 aD wi of P50,000.00 representing the balance of the redemp- tion price of said commodity, with costs against petitioners. SO OXDERED. Quezon City, February 2, 1965. ROMAN M. UMALI Associate Judge I CONCUR?