G.R. No. L-20460 - Bombay Department Store vs. Commissioner of Customs

Case Summary (G.R. No. L-20460)

Factual Background

In 1954, petitioner imported a case of merchandise. Customs authorities examined the shipment and found that it contained 239 dozens of nylon socks, 25 dozens of nylon stockings, and 29,715 rayon labels (Exhibit G). Customs appraised the goods at P3,627.80. However, petitioner’s accompanying documents stated that the case contained only 124 dozens of nylon socks and 112 and 1/2 dozens of nylon stockings (Exhibits 1, 2 Bank-D), and that Central Bank Release Certificate No. 840112 (Exhibit E) had been issued for that declared merchandise. Customs determined that the importation exceeded the merchandise covered by the release certificate by 115 dozens of nylon socks and 29,715 rayon labels, which were undeclared, even though there was also a shortage of 87 and 1/2 dozens of nylon stockings.

Because the importation included undeclared and excess goods, Customs held the entire shipment for seizure proceedings. The alleged basis was violation of Central Bank Circulars Nos. 44 and 45, in relation to Sections 1250 and 1363 (f) and (m) 3 and 4 of the Revised Administrative Code. Petitioner later requested release of the merchandise. Customs released the case upon petitioner’s filing of bond No. 1873 issued by First National Surety & Assurance Co., Ltd., in the sum of P3,627.80. The bond’s pertinent condition provided that, in the event it was finally decided that the merchandise should be forfeited and/or that a fine or surcharge should be imposed, the bond amount—or the corresponding amount of the fine or surcharge—would be paid in cash to the Bureau of Customs. It also stipulated that if payment was not made within thirty (30) days from demand and court action became necessary to collect, a penalty of Five Hundred Pesos (P500.00) in addition would be imposed; otherwise, the obligation would be void and of no effect.

Seizure Proceedings and Decisions Below

After seizure proceedings were conducted, the Collector of Customs for the Port of Manila rendered a decision decreasing the forfeiture and ordering petitioner and the surety to pay, jointly and severally, P3,627.80 within thirty days from notice of the decision. Upon appeal, the Commissioner of Customs affirmed the Collector’s decision. Petitioner then appealed to the Court of Tax Appeals, which likewise affirmed the Commissioner’s decision. Consequently, the petitioner instituted the present petition for review.

Issues Raised by Petitioner

Petitioner anchored its petition on five principal arguments: (one) that Central Bank Circulars Nos. 44 and 45, requiring release certificates for importations, were null and void; (two) that those circulars had been impliedly repealed by Central Bank Circular No. 133, issued on January 21, 1962; (three) that the Central Bank Act did not provide for forfeiture of articles imported or sought to be imported without the requisite certificate; (four) that the Commissioner of Customs had no authority to seize and decree forfeiture of the merchandise; and (five) that there had been no misdeclaration or wrongful declaration of the shipment.

Court’s Resolution of the Arguments

On the validity of Central Bank Circulars Nos. 44 and 45, the Court held that it had repeatedly upheld the Central Bank’s authority to issue those circulars and their legality. It cited multiple prior rulings, including Commissioner of Customs vs. Santos (L-11911, March 30, 1962), Commissioner of Customs vs. Eastern Sea Trading (L-14279, October 31, 1961), Acting Commissioner of Customs vs. Leuterio (L-9142, October 17, 1959), Tong Tek vs. Commissioner of Customs (L-11979, June 30, 1959), Pascual vs. Commissioner of Customs (L-10979, June 30, 1959), and several criminal and forfeiture cases involving the same policy on release certificates, including People vs. Lim Ho (L-12091 & L-12092, January 28, 1960), People vs. Jolliffe (L-9553, May 13, 1959), People vs. Henderson (L-10829 & L-10830, May 29, 1959), and People vs. Koh (L-12407, May 29, 1959).

As to the claim of implied repeal by Central Bank Circular No. 133, the Court ruled that the argument failed because Circular No. 133, like Circular No. 44, authorized release of imported goods upon the presentation of a release certificate issued by the Central Bank. The Court further observed that Circular No. 44 and Circular No. 45 were incorporated and made integral parts of Circular No. 133. It pointed to Section 8 of Circular No. 133, which deemed existing circulars, rules, regulations, and conditions governing foreign exchange transactions not inconsistent with the provisions of Circular No. 133 as incorporated by reference. In effect, the later issuance did not displace the earlier requirement but retained its operative policy.

On petitioner’s contention regarding the Commissioner’s jurisdiction, the Court addressed the argument concerning the expiration of Republic Act No. 650. It relied on decisions such as Roxas vs. Sayoc (L-8502, November 29, 1956) and Golay-Buchell & Cia. vs. Commissioner of Customs (L-10994 & L-11012, December 29, 1959), holding that the expiration of Republic Act No. 650 did not deprive the Commissioner of Customs of jurisdiction already acquired prior thereto. The Court described the pending forfeiture proceedings as proceedings in rem. It also invoked supporting authority, including references to U.S. vs. Two Bales of Rugs, Origent vs. United States, and 37 C.J.S. Forfeiture, to sustain that jurisdiction could subsist in rem proceedings.

The Court likewise rejected petitioner’s argument about the lack of statutory basis for forfeiture. It held that because petitioner imported the goods in violation of Central Bank Circulars Nos. 44 and 45, the merchandise acquired the status of “merchandise of prohibited importations” under Section 1363 (f) and (m) 3 and 4 of the Revised Administrative Code. Accordingly, the merchandise became subject to the forfeiture proceedings prescribed in that section. The Court relied on its prior ruling in Tong Tek vs. Commissioner of Customs (L-10979, June 30, 1959) and on People vs. Que Po Lay (50 Off. Gaz. 4850), reinforcing that the legal consequence of the violation was forfeiture within the statutory scheme.

Finally, on petitioner’s claim of no misdeclaration or wrongful declaration, the Court found that petitioner’s wrongful and fraudulent intent was evident from the circumstances. It emphasized that petitioner never attempted to prove that the consignor in the United States had inadvertently shipped more goods than those stated in the invoice covered by the accompanying Central Bank Release Certificate. It also noted that petitioner did not cause the undeclared merchandise to be exported back to the shipper. Instead, petitioner secured the release of

Case Syllabus (G.R. No. L-20460)

Bombay Department Store sought review of a Court of Tax Appeals decision that affirmed the Commissioner of Customs, which in turn affirmed the Collector of Customs for the Port of Manila, ordering petitioner and First National Surety & Assurance Co., Ltd. to pay jointly and severally the sum of P3,627.80 to the Government of the Republic of the Philippines.
The disputed amount represented the appraised value of imported goods that were released upon filing of a bond but later became subject to forfeiture proceedings and consequent payment.
The Court of Tax Appeals ruling became the subject of the petition for review before the Supreme Court.

Parties and Procedural Posture

The petitioner, Bombay Department Store, filed a petition for review challenging the customs and tax tribunal rulings.
The respondent was the Commissioner of Customs.
The customs process began with a Collector of Customs for the Port of Manila decision in seizure proceedings.
The Collector’s decision was affirmed on appeal by the Commissioner of Customs.
The Commissioner’s decision was subsequently affirmed by the Court of Tax Appeals.
The Supreme Court reviewed the same adverse determinations through the petition for review, after the petitioner’s defenses were rejected in the lower tribunals.

Key Factual Allegations

In 1954, the petitioner imported a case of merchandise that customs authorities examined and found to contain 239 dozens of nylon socks, 25 dozens of nylon stockings, and 29,715 rayon labels.
Customs authorities appraised the imported goods at P3,627.80 (Exhibit G).
The accompanying importation documents, however, stated that the case contained only 124 dozens of nylon socks and 112 and 1/2 dozens of nylon stockings.
A Central Bank Release Certificate No. 840112 (Exhibit E) had been issued for the goods described in the documents.
Customs discovered that the importation exceeded the merchandise covered by the certificate by 115 dozens of nylon socks and 29,715 rayon labels, which were undeclared, while there was a shortage of 87 and 1/2 dozens of nylon stockings.
Because the importation exceeded the release certificate coverage and included undeclared items, the entire shipment was held for seizure proceedings for alleged violation of Central Bank Circulars Nos. 44 and 45 in relation to Sections 1250 and 1363 (f) and (m) 3 and 4 of the Revised Administrative Code.
Upon the petitioner’s request, the merchandise was released after the petitioner filed bond No. 1873 with First National Surety & Assurance Co., Ltd. as surety.
The bond stated that if it was finally decided that the merchandise should be forfeited and/or a fine or surcharge imposed, the corresponding bond amount or the fine/surcharge amount would be paid to the Bureau of Customs in cash.
The bond further provided a P500.00 penalty if, within thirty (30) days from demand, the liability was not paid and court action became necessary to collect it.
In due course, the Collector of Customs rendered a decision decreasing the forfeiture and ordering payment of P3,627.80 by the petitioner and the surety jointly and severally within thirty (30) days from notice of the decision.
The Commissioner of Customs affirmed the Collector’s decision, and the Court of Tax Appeals likewise affirmed it on appeal.

Issues Raised on Review

The petitioner argued that Central Bank Circulars Nos. 44 and 45 were null and void.
The petitioner argued that Central Bank Circulars Nos. 44 and 45 were impliedly repealed by Central Bank Circular No. 133 issued on January 21, 1962.
The petitioner contended that the Central Bank Act did not provide for the forfeiture of articles imported or sought to be imported without the requisite certificate.
The petitioner claimed that the Commissioner of Customs had no authority to seize and decree the forfeiture of the merchandise.
The petitioner asserted that there was no misdeclaration or wrongful declaration of the shipment.

Statutory and Regulatory Framework

The seizure proceedings were anchored on alleged violation of Central Bank Circulars Nos. 44 and 45.
The customs violations were linked to Sections 1250 and 1363 (f) and (m) 3 and 4 of the Revised Administrative Code.
The customs authority relied on the requirement that imported goods be released upon presentation of a release