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G.R.No.73882

TodayisThursday,June23,2016

RepublicofthePhilippines
SUPREMECOURT
Manila
SPECIALFORMERFIRSTDIVISION
G.R.No.73882October22,1987
ROSACANCIO,petitioner,
vs.
HON.COURTOFTAXAPPEALSandHON.COMMISSIONEROFCUSTOMS,respondents.

MELENCIOHERRERA,J.:
Beforeusispetitioner'sMotionforReconsiderationofthisCourt'sResolutionofAugust11,1986,whichdeniedfor
lack of merit her Petition for Review on certiorari of respondent Court of Tax Appeals' (CTA) Decision in C.T.A.
CaseNo.3398.
During the pendency of this case, or on April 23, 1986, petitioner had passed away and her legal heirs were
orderedsubstitutedinhersteadandJoseCancio,Jr.,wasappointedguardianadlitemfortheminorsMa.Irene
andRoberto,bothsurnamedCancio,inthisCourt'sResolutionofAugust11,1986.
There is no substantial dispute on the background facts and the evidentiary aspects Vol the controversy,
summarizedinsaid
Decisionasfollows:
The records show that claimant Mrs. Rosa Cancio bearing Philippine Passport No. 11797799 while
clearingthroughthePreBoarding(AVSECOM)AreaofMIAwithherhusbandandthree(3)children
to board PR 306 for Hongkong in the morning of June 12, 1981, was apprehended with One
Hundred Two Thousand Nine Hundred Dollars (US$102,900.00) in cash, six hundred dollars
(US$600.00) in two travelers checks, and one thousand five hundred (Pl,500.00) Pesos that such
apprehension was effected only thru an alarm sounded by the scanner (metal detecting device) of
the AVSECOM men, when Mrs. Cancio who did not declare her currency had already passed the
Customs inspection area that subject currencies were placed and concealed inside the two fairly
sized carton boxes for local chocolates, securely wrapped and taped with tin foilback paper and,
thatinviewofclaimant'sfailure,uponbeingrequired,topresenttheCentralBankAuthority,thesaid
currencies were accordingly confiscated and a seizure Receipt No. 013 was issued to her hence,
thisseizureproceedings.
Atthehearingofthiscase,claimant,thrucounsel,presentedcertifiedxeroxcopyofherBankBook
(Exhibit "I") for foreign currency deposit with the Philippine Commercial and Industrial Bank under
AccountFCDUNo.0265,dollarremittancesintelegraphictransfersfromabroadfordepositsinher
accountfromMay13,1981toMay21,1981,andwithdrawalcards(Exhibit"lA"to"1E",inclusive),
attesting to the fact that claimant Rosa Cancio had withdrawn from her FCDU Account a certain
amountofUnitedStatescurrencywhichtendedtoshowthatclaimanthereinwasaforeigncurrency
depositor pursuant to the provisions of Republic Act No. 6426, as implemented by Central Bank
CircularNo.343.Andhereinclaimanttestifiedthatbecauseherforeigncurrencydepositcouldnotbe
withdrawnatonetime,shemadeherwithdrawalonseveraloccasionsstartingfromMay14,1981up
toMay27,1981whensheclosedheraccountpreparatorytoherdeparturewhichwasscheduledin
the morning of June 12, 1981 for Hongkong that from Hongkong, she and her family intended to
proceed to the United States for medical treatment of her heart ailment as advised by her two
attending physicians from the UST Hospital that the US currency that they were carrying and
confiscatedfromthemonJune12,1981wasintendedprincipallyforsuchmedicalpurposeandfor
othermiscellaneousandnecessaryexpenses,and,thatthesubjectcurrencieswereconcealedand
hiddenbytheminsidethetwochocolateboxessolelyforsecurityreasons.1
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By reason of the forfeiture decreed by respondent Commissioner of Customs of both the foreign and local
currenciesduetopetitioner'sfailuretopresentaCentralBank(CB)authoritytobringsaidcurrenciesoutofthe
country, petitioner appealed to respondent Court of Tax Appeals. The latter Court affirmed the forfeiture of the
US$102,900.00incash,andUS$600.00intravellers'checksforhavingbeeninviolationofCentralBankCirculars
Nos. 265 and 534, in relation to Section 2530(f) of the Tariff and Customs Code, as amended. It reversed,
however,theforfeitureofP1,500.00onthegroundthatsincepetitionerwastravellingwithherhusbandandthree
(3) children, the said amount did not exceed the P500.00 at that each traveller is allowed to bring out of the
countrywithoutaCBpermitpursuanttoparagraph4ofCBCircularNo.383.
Petitioner'sunimpugnedevidenceshowsthatshewasaforeigncurrencydepositoratthePhilippineCommercial
andIndustrialBankatMakati,MetroManila,andthatthesubjectforeigncurrencywaspartofthetotalamountof
US$116,000.00shehadwithdrawnfromsaidbankfromMay14to27,1981forhertravelandmedicalexpenses
in the United States via Hongkong. 2 Admitted, too, is the fact that petitioner failed to present to the apprehending
customsauthoritiesaCentralBankauthoritytobringoutofthecountrythesaidcurrencieswhileatthepreboardingareaof
theManilaInternationalAirportonJune12,1981onherscheduledflighttoHongkongtogetherwithherhusbandandthree
children.

The primordial issue for resolution is whether or not respondent Court had committed reversible error in
upholdingtheforfeitureoftheforeigncurrenciesinquestion.
Asecondlookatthefactsandtheequityofthecase,thepertinentlaws,andtheCBCircularsinvolvedconstrains
us to rule in the affirmative and, accordingly, to grant reconsideration of our Resolution of August 11, 1986
denyingreview.
Itistruethatinsofarastheexportationortakingoutofforeigncurrencyfromthecountryisconcerned,Central
BankCircularNo.265,issuedonNovember20,1968,particularlyparagraph3thereof,mandates:
3. No person shall take out or export from the Philippines foreign currency or any other foreign
exchangeexceptasotherwiseauthorizedbytheCentralBank.
Similarly, Central bank Circular No. 534, issued on July 19, 1976, reiterates and provides in Sec. 3 thereof as
follows:
Sec. 3. Unless specifically authorized by the Central Bank or allowed under existing international
agreements or Central Bank regulations, no person shall take or transmit or attempt to take or
transmitforeignexchange,inanyformoutofthePhilippinesonly,throughotherpersons,throughthe
mails,orthroughinternationalcarriers.
TheprovisionsofthisSectionshallnotapplytotouristsandnonresidenttemporaryvisitorswhoare
takingorsendingoutofthePhilippinestheirownforeignexchangebroughtinbythem.
However,peculiartothepresentcontroversyisthefactthat,asstatedpreviously,petitionerisaforeigncurrency
depositor. Relevant and applicable to her is the following provision of the "Foreign Currency Deposit Act of the
Philippines"(RepublicActNo.6426,asamended),whichtookeffectuponitsapprovalonApril4,1972:
SEC. 5. Withdrawability and transferability of deposits. There shall be no restriction on the
withdrawalbythedepositorofhisdepositoronthetransferabilityofthesameabroadexceptthose
arisingfromthecontractbetweenthedepositorandthebank.11(EmphasisOurs).
Under the foregoing provision, the transferability abroad of foreign currency deposits is unrestricted. Only one
exceptionisprovidedfortherein,whichis,anyrestriction"fromthecontractbetweenthedepositorandthebank."
NeitherisaCentralBankauthorityrequiredforthetransferabilityabroadofforeigncurrencydeposits.
Attentioniscalled,however,totheimplementingrulesandregulationstosaidRepublicAct6426,asembodiedin
CBCircularNo.343issuedonApril24,1972,whichprovides:
SEC.11.WithdrawabilityandLiquidityofDeposits.
a.xxxxxxxxx
b.Subjectonlytothetermsofthecontractbetweenthebankandthedepositor,thelattershallhave
agenerallicensetowithdrawhisdeposit,notwithstandinganychangeinpolicyorregulations.
xxxxxxxxx
(Emphaisissupplied)

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Respondent Court has taken the position that the foregoing provision its the right of the depositor to that of
withdrawalandwithholdsfromhimtherightoftransferabilityabroad.Thatisnotso.CircularLetter,datedAugust
3,1978,issuedbytheCentralBankreadsinexplicitterms:
TO:ALLBANKSAUTHORIZEDTOACCEPTFOREIGNCURRENCY DEPOSITS UNDER THE PROVISIONS OF
RA6426,ASAMENDEDANDPRESIDENTIALDECREENO.1035.
Effectiveimmediately,thebanksauthorizedtoacceptforeigncurrencydepositsundertheprovisions
ofRA6426,asamended,andPD1035andasimplementedbyCentralBankCircular343and547,
areherebyinstructedtoadvisetheirforeigncurrencydepositorswhoarewithdrawingfundsfortravel
purposes to carry with them the certificate of withdrawal that the banks shall issue. The travellers
shallpresentthecertificationstotheCustomsandCentralBankpersonnelattheMIA,ifrequested.
Thebanksshallissueauniformcertification,asfollows:
___________________
Date
TOWHOMITMAYCONCERN:
This certifies that ________________________whose signature appears below has withdrawn
today, the amount of ____________in cash (US$ _______________) and Travellers Check
(US$___________________________)againsthis/herforeigncurrencyaccountmaintainedwithus.
The funds herein withdrawn are represented to be used in connection with the depositor's foreign
travelscheduledonorabout____________________197_________.
___________________________
(SignatureofAuthorized
OfficialOverPrintedName)
_______________________
(SignatureofDepositor)
Pleasebeguidedaccordingly.
(SGD.)R.D.RUIZ
Director
ItisafactthatpetitionercouldnotpresentacertificateofwithdrawalattheManilaInternationalAirportwhenshe
was about to depart. As she had explained, however, she was unaware of this requirement. And if she had
wrapped her dollar currency inside a chocolate box it was for "security reasons." Besides, as instructed in the
CircularLetterabovequoted,itistheauthorizeddepositorybankwhichshouldadviseitsdepositorstocarrywith
them the certificate of withdrawal. At any rate, respondent Court has found that petitioner has presented in
evidence her foreign currency bank book 3 and her withdrawal cards. 4 These may be considered as substantial
complianceforpurposesofthiscase.

Indeed,giventheunderlyingobjectiveoftheForeignCurrencyDepositAct,asamended,whichistoattractand
invitethedepositofforeigncurrencieswhichareacceptableaspartoftheinternationalreserveindulyauthorized
banksinorderthattheymaybeputintothestreamofthebankingsystem,itwouldbetodefeattheverypurpose
of the law to place undue restrictions on the transferability of such funds. The countervailing effect would be to
discourageprospectiveforeigncurrencydepositorstothedetrimentofthebankingsystem.
In fine, Central Bank Circulars Nos. 265 and 534 requiring prior Central Bank authority for the taking out of the
country of foreign currency should not be made to encompass foreign currency depositors whose rights are
expresslydefinedandguaranteedinaspeciallaw,theForeignCurrencyDepositAct(RA6426,asamended).As
a foreign currency depositor, therefore, petitioner cannot be adjudged to have violated the aforestated Central
BankCirculars.ItfollowsthatneitheristhereroomfortheapplicationofSection2530(f)oftheTariffandCustoms
Code,asamended,whichprovidesfortheforfeitureofanyarticleandotherobjects,theexportationofwhichis
effectedorattemptedcontrarytolaw.
Thisisnottocondonepetitioner'sfailuretodeclaretheforeigncurrencyshewascarryingoutofthecountrybut
justtostressthattheForeignCurrencyDepositActgrantspetitionertherightoftransferabilityofherfundsabroad
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exceptthatshewasnotadvisedbyherbanktosecure,andconsequentlywasunabletopresent,thenecessary
certificateofwithdrawalfromsaidbank.
ACCORDINGLY,theDecisionofrespondentCourtofTaxAppealsisherebySETASIDEinsofarasitupheldthe
forfeiture by respondent Commissioner of Customs of the sums of US$102,900.00 in cash, and US$600.00 in
traveller's checks, which amounts should now be returned to petitioner's heirs, but AFFIRMED in so far as it
reversedtheforfeiturebythesameofficialofthesumofP1,500.00.Nocosts.
SOORDERED.
Yap,Actg.C.J.,Narvasa,Cruz,Feliciano,GancaycoandSarmiento,JJ.,concur.

Footnotes
1CTADecision,pp.23Rollo,pp.3334.
2Ibid.,pp.78.
3Exhibit"I".
4Exhibits"IA"to"IE".
TheLawphilProjectArellanoLawFoundation

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