G.R. No. 244816 - Gonzaga vs. Commission on Audit

Case Summary (G.R. No. 244816)

Key Dates and Procedural Posture

Arrival of goods: September 19, 1954, at the port of Manila.
Secretary of Finance action: December 15, 1954—declared importation in violation of the Anti‑Dumping Law, ordered payment equal to the price difference, and explicitly reserved other actions under customs or other laws.
Collector of Customs action: December 20, 1954—ordered seizure and declared forfeiture in favor of the Republic for alleged violations of Central Bank Circulars Nos. 44 and 45, provisions of the Revised Administrative Code (cited alternately as sections 1383(m) and 1363(m) 3, 4 and 5 in the record), and Executive Order No. 328.
Litigation: Petitioner sought review in the Court of Tax Appeals (CTA) for annulment of seizure and refund of amounts paid; CTA issued a decision addressing the validity of the Circulars and Executive Order and the applicability of customs forfeiture provisions; petitioner appealed to the Supreme Court, which affirmed the CTA’s disposition on forfeiture.

Facts

One hundred crates of onions were consigned to petitioner and arrived from Kobe, Japan. The import entry and supporting documents submitted to the Bureau of Customs declared the value at $1.20 per crate of 45 kilos, whereas the actual market value at the port of shipment was found to be $3.20 per crate. The Collector seized and declared the merchandise forfeited on grounds of alleged violations of Central Bank Circulars Nos. 44 and 45 (in relation to the Revised Administrative Code and Executive Order No. 328). The Secretary of Finance separately found a violation of the Anti‑Dumping Law and ordered payment of the price difference, expressly reserving other enforcement actions by customs.

Issues Presented

Whether Central Bank Circulars Nos. 44 and 45 were valid and could support seizure and forfeiture.
Whether Executive Order No. 328 (particularly sections referred to by the parties) authorized forfeiture or the licensing powers asserted.
Whether the importation was prohibited by the Barter Trade Agreement with Japan.
Whether the undervaluation and documentary declarations by petitioner rendered the merchandise subject to forfeiture under the customs law provisions cited (section 1363/1383(m) subparagraphs 3, 4 and 5).
Whether alleged violations of internal revenue or anti‑dumping laws could be enforced by the Bureau of Customs and thus justify forfeiture.

Applicable Law Cited in the Record

Central Bank Circulars Nos. 44 and 45 (as alleged bases for seizure).
Executive Order No. 328 (licensing and related provisions).
Anti‑Dumping Law (as invoked by the Secretary of Finance).
Import Control Law (asserted by petitioner to have expired).
Revised Administrative Code provisions on customs forfeiture, cited in the record primarily as section 1363(m) subparagraphs 3, 4 and 5; the CTA and Supreme Court relied on these forfeiture provisions. The decision quotes section 1363(m) subparagraphs 3–5, which describe forfeiture where: (3) wrongful making of any declaration or affidavit touching imported merchandise; (4) wrongful making or delivery of any false invoice, letter or paper touching such merchandise; and (5) causing or procuring merchandise to be entered by fraudulent practice or device by which the government is or might be deprived of its lawful duties.
Section 1419, last paragraph, Revised Administrative Code (definition of “customs law” to include all laws and regulations subject to enforcement by the Bureau of Customs).
National Internal Revenue Code, Section 183(B) (raised in the appeal as a defense and discussed in relation to enforcement).

Court of Tax Appeals Findings

The CTA held that Central Bank Circulars Nos. 44 and 45 were null and void and therefore could not support seizure and confiscation. It also held that forfeiture could not be justified under Executive Order No. 328 because the licensing of imports originally granted to the Import Control Administration had not been conferred on the Central Bank or any other entity. Nevertheless, the CTA found forfeiture to be proper under section 1363(m) subparagraphs 3, 4 and 5 of the Revised Administrative Code, based on a factual finding that the 100 crates of onions were grossly undervalued in the import entry and supporting documents—declared at $1.20 per crate while the market price at shipment was $3.20 per crate. The CTA further found an intent to evade internal revenue tax collectible by customs officers acting as deputies of the Collector of Internal Revenue.

Supreme Court Analysis and Ruling

The Supreme Court addressed respondent’s defenses and petitioner's contentions as presented in the appeal. It rejected the claim that the Commissioner of Customs had not invoked the National Internal Revenue Code provisions in defense, noting that the Commissioner did allege violation of section 1363(m) 3, 4 and 5 and that the National Internal Revenue Code provision was put forward in the proceedings. The Court applied the statutory definition in section 1419 that “customs law” includes other laws and regulations subject to enforcement by the Bureau of Customs, thereby rejecting the argument that enforcement of internal revenue measures by customs fell outside customs law. The Court also noted that the Secretary of Finance had expressly reserved other actions when declaring an Anti‑Dumping Law violation, allowing concurrent o

Case Syllabus (G.R. No. 244816)

Case Citation and Decision

Reported at 101 Phil. 223, G.R. No. L-9810.
Decision promulgated on April 27, 1957.
Opinion authored by Justice Labrador.
Justices Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Conception, Reyes, J. B. L., and Endencia concurred.

Parties and Relief Sought

Petitioner: Estanislao Leuterio (also referred to as E. N. Leuterio in the record).
Respondent: Commissioner of Customs.
Petitioner sought review of the seizure and forfeiture of 100 crates of onions, annulment of the seizure and forfeiture, and refund of P1,175.28 paid by him to redeem the merchandise under section 1388 of the Revised Administrative Code.

Material Facts

On September 19, 1954, 100 crates of onions shipped from Kobe, Japan, and consigned to petitioner arrived at the port of Manila.
On December 20, 1954, the Collector of Customs ordered the consignment seized and declared the same forfeited in favor of the Republic of the Philippines.
The stated reasons for seizure and forfeiture included alleged violations of Central Bank Circulars Nos. 44 and 45 in relation to section 1383 (m) 3, 4 and 5 of the Revised Administrative Code and Executive Order No. 328 (referenced as Annex C).
On December 15, 1954, the Secretary of Finance had decreed that the importation violated the Anti-Dumping Law because the consignee declared the price of onions at $1.20 per crate of 45 kilos instead of $3.20; the consignee was ordered to pay the difference between the declared price and the actual price.
The Secretary of Finance’s decision expressly stated it was without prejudice to other actions which might be taken for violations of customs laws and regulations and other existing laws enforced by the Bureau of Customs (Annex B).
Petitioner submitted import entry and other documents purporting to show a declared value of $1.20 per crate; the record contains a finding that the actual market value at port of shipment was $3.20 per crate.
Petitioner paid P1,175.28 to redeem the merchandise under section 1388 of the Revised Administrative Code.

Procedural History

Petitioner instituted action before the Court of Tax Appeals for review of the Collector’s and Secretary of Finance’s decisions, seeking annulment of the seizure and refund of amounts paid.
The Commissioner of Customs filed an answer raising special defenses and justifications for forfeiture.
The Court of Tax Appeals (CTA) rendered a decision which is the subject of the present appeal to the Supreme Court.

Contentions of Petitioner (as alleged in the petition)

The Import Control Law had already expired and therefore could not justify seizure.
The Central Bank had no power to promulgate Circulars Nos. 44 and 45 and those Circulars were null and void.
The importation of onions from Japan was not prohibited by the Barter Trade Agreement with Japan.
Executive Order No. 328, particularly sections 14 and 15, were null and void as an undue exercise of legislative power by the President.
Petitioner sought annulment of seizure and refund of amounts paid.

Contentions and Special Defenses of the Commissioner of Customs (as pleaded)

Central Bank Circulars Nos. 44 and 45 and Executive Order No. 328 are valid, have the force of law, and importations in violation thereof are subject to forfeiture under Section 1363(f) of the Revised Administrative Code.
The importation involved no-dollar remittance, was paid for on the black market, and represented evasion of payment of the special excise tax and foreign exchange controls under the Monetary Board and the Central Bank.
Upon investigation, it was found that petitioner declared a price of $1.20 per crate when the actual price in Japan was $3.20, constituting violations of section 1363(m) sub-paragraphs 3, 4 and 5 of the Revised Administrative Code, thus subjecting the merchandise to forfeiture under customs laws.
The Commissioner’s answer explicitly alleged violation of Section 1363(m) 3, 4 and 5 as the basis for forfeiture.

Court of Tax Appeals Findings and Rulings

The CTA held that seizure and confiscation could not be made under Central Bank Circulars Nos. 44 and 45 because those Circulars were null and void.
The CTA further held that forfeiture could not be justified under Executive Order No. 328 because licensing of imports originally granted to the Import Control Administration was not granted to the Central Bank nor to any other entity under EO No. 328.
Despite the above, the CTA concluded that forfeiture was nevertheless justified under paragraph (m), sub-paragraphs 3, 4 and 5 of Section 1363 of the Revised Administrative Code.
The CTA based its