G.R. No. L-14279. October 31, 1961
THE COMMISSIONER OF CUSTOMS AND THE COLLECTOR OF CUSTOMS, PETITIONERS, VS. EASTERN SEA TRADING, RESPONDENT.
CONCEPCION, J.:
Respondent Eastern Sea Trading was the consignee of several
shipments of onion and garlic which arrived at the Port of Manila from
August 25 to September 7, 1954 Some shipments came from Japan and
others from Hongkong. Inasmuch as none of the shipments had the
certificate required by Central Bank Circulars Nos. 44 and 45 for the
release thereof, the goods thus imported were seized and subjected to
forfeiture proceedings for alleged violations of section 1363 (f)
of the Revised Administrative Code, in relation to the aforementioned
circulars of the Central Bank. In due course, the Collector of Customs
of Manila rendered a decision on September 4, 1956, declaring said
goods forfeited to the Government and—the goods having been, in the
meantime, released to the Commissioner of Customs vs. Eastern Sea
Trading consignee on surely bonds, filed by the same, as principal, and
the Alto Surety & Insurance Co., Inc., as surety, in compliance
with orders of the Court of First Instance of Manila, in Civil Cases
Nos. 23942 and 23852 thereof directing that the amounts of said bonds
be paid, by said principal and surety, jointly and severally, to the
Bureau of Customs, within thirty (30) days ‘from notice.
On appeal taken by the consignee, said decision was affirmed by the
Commissioner of Customs on December 27, 1956. Subsequently, the
consignee sought a review of the decision of said two (2) officers by
the Court of Tax Appeals, which reversed the decision of the
Commissioner of Customs and ordered that the aforementioned bonds be
cancelled and withdrawn. Hence, the present petition of the
Commissioner of Customs for review of the decision of the Court of Tax
Appeals.
The latter is based upon the following premises, namely: that the
Central Bank has no authority to regulate transactions not involving
foreign exchange; that the shipments in question are in the nature of
“no-dollar’ imports; that, as such, the aforementioned shipments do not
involve foreign exchange; that, insofar as a Central Bank license and a
certificate authorizing the importation or release of the goods under
consideration are required by Central Bank Circulars Nos. 44 and 45,
the latter are null and void; and that the seizure and forfeiture of
the goods imported from Japan cannot be justified under Executive Order
No. 328[1] not only because the same seeks to implement an executive agreement [2]—extending the effectivity of our Trade [3] and Financial Agreementsabel [4]
with Japan—which (executive agreement), it believed, is of dubious
validity, but, also because there is no governmental agency authorized
to issue the import license required by the aforementioned executive
order.
The authority of the Central Bank to regulate no-dollar imports and
the validity of the aforementioned Circulars Nos. 44 and 45 have
already been passed upon and repeatedly upheld by this Court (Pascual
vs. Commissioner of Customs, 105 Phil., 1039; 56 Off. Gaz., [47] 7169;
Acting Commissioner of Customs vs. Leuterio, L-9142 [October 17, 1959]; Commissioner of Customs vs. Pascual, 106 Phil., 488; Commissioner of Customs vs. Serree Investment Co., 108 Phil., 1; 58 Off. Gaz., [32] 5413, Commissioner of Customs vs.
Serree Investment Co., 110 Phil, 148; 59 Off. Gaz., [6] 900, for the
reason that the broad powers of the Central Bank, under its charter, to
maintain our monetary stability and to preserve the international value
of our currency, under section 2 of Republic Act No. 265, in relation
to section 14 of said Act—authorizing the bank to issue such rules and
regulations as it may consider necessary for the effective discharge of
the responsibilities and the exercise of the powers assigned to the
Monetary Board and to the Central Bank—connote the authority to
regulate no-dollar imports, owing to the influence and effect that the
same may and do have upon the stability of our peso and its
international value.
The Court of Tax Appeals entertained doubts on the legality of the
executive agreement sought to be implemented by Executive Order No.
328, owing to the fact that our Senate had not concurred in the making
of said executive agreement. The concurrence of said House of Congress
is required by our fundamental law in the making of “treaties”
(Constitution of the Philippines, Article VII, Section 10 [7]), which
are, however, distinct and different from “executive agreements”, which
may be validly entered into without such concurrence.
“Treaties are formal documents which require
ratification with the approval of two-thirds of the Senate. Executive
agreements become binding through executive action without the need of a vote by the Senate or by Congress.
* * * * * * * * * *
” * * *the right of the Executive to enter into binding agreements without the necessity of subsequent Congressional approval has been confirmed by long usage.
From the earliest days of our history we have entered into executive
agreements covering such subjects as commercial and consular relations,
most-favored-nation rights, patent rights, trademark and copyright
protection, postal and navigation arrangements and the settlement of
claims. The validity of these has never been seriously questioned by our courts.
* * * * * * * * * *
“Agreements with respect to the
registration of trade-marks have been concluded by the Executive with
various countries under the Act of Congress of March 3, 1881 (21 Stat.
502). Postal conventions regulating the reciprocal treatment of mail
matters, money orders, parcel post, etc., have been concluded by the
Postmaster General with various countries under authorization by
Congress beginning with the Act of February 20, 1792 (I Stat. 232,
239). Ten executive agreements were concluded by the President pursuant
to the McKinley Tariff Act of 1890 (26 Stat. 667, 612), and nine such
agreements were entered into under the Dingley Tariff Act of 1897 (30
Stat. 151, 203, 214). A very much larger number of agreements, along
the lines of the one with Rumania previously referred to, providing for
most-favored-nation treatment in customs and related matters have been
entered into since the passage of the Tariff Act of 1922, not by direction of the Act but in harmony with it.
* * * * * * * * * *
“International agreements involving political issues
or changes of national policy and those involving international
arrangements of a permanent character usually take the form of
treaties. But international agreements embodying adjustments of detail carrying out well-established national policies and traditions and those involving arrangements of a more or less temporary nature usually take the form of executive agreements.* * * * * * * * * *
“Furthermore,
the United States Supreme Court has expressly recognized the validity
and constitutionality of executive agreements entered into without
Senate approval.” (39 Columbia Law Review, pp. 753-754) (See, also,
U.S. vs. Curtis-Wright Export Corpora- tion, 299 U.S. 304, 81 L. ed.
255; U.S. vs. Belmont, 301 U.S. 324, 81 L. ed. 1134; U.S. vs. Pink, 315
U.S. 203, 86 L. ed. 796; Ozanic vs. U.S. 188 F. 2d. 288; Yale Law
Journal, Vol. 15, pp. 1905-1906; California Law Review, Vol. 25, pp.
670-675; Hyde on International Law [Revised Edition], Vol. 2, pp. 1405,
1416-1418; Willoukhby on the U.S. Constitutional Law, Vol. I [2d. ed.],
pp. 537-540; Moore, International Law Digest, Vol. V, pp. 210-218;
Hackworth, Intenational Law Digest, Vol. V, pp. 390-407). (Italics
supplied.)
In this connection, Francis B. Sayre, former U. S. High Commissioner
to the Philippines, said in his work on “The Constitutionality of Trade
Agreement Acts”:
“Agreements concluded by the President which fall
short of treaties are commonly referred to as executive agreements and
are no less common in our scheme of government than are the more formal
instruments—treaties and conventions. They sometimes take the form of
exchanges of notes and at other times that of more formal documents
denominated ‘agreements’ or ‘protocols’. The point where ordinary
correspondence between this and other governments ends and
agreements—whether denominated executive agreements or exchanges of
notes or otherwise—begin, may sometimes be difficult of ready
ascertainment. It would be useless to undertake to discuss here the
large variety of executive agreements as such, concluded from time to
time. Hundreds of executive agreements, other than those entered into
under the trade-agreements act, have been negotiated with foreign
governments. * * * It would seem to be sufficient, in order to show
that the trade agreements under the act of 1934 are not anomalous in
character, that they are not treaties, and that they have abundant
precedent in our history, to refer to certain classes of agreements
heretofore entered into by the Executive without the approval of the
Senate. They cover such subjects as the inspection of vessels,
navigation dues, income tax on shipping profits, the admission of civil
aircraft, customs matters, and commercial relations generally,
international claims, postal matters, the registration of trade-marks
and copyrights, etc. Some of them were concluded not by specific
congressional authorization but in conformity with policies declared in
acts of €ongress with respect to the general subject matter, such as
tariff acts; while still others, particularly those with respect to the
settlement of claims against foreign governments, were concluded
independently of any legislation.” (39 Columbia Law Review, pp. 751,
755.)
The validity of the executive agreement in question is thus patent.
In fact, the so-called Parity Rights provided for in the Ordinance
Appended to our Constitution were, prior thereto, the subject of an
executive agreement, made without the concurrence of two-thirds (2/3) of the Senate of the United States.
Lastly, the lower court held that it would be unreasonable to
require from respondent-appellee an import license when the Import
Control Commission was no longer in existence and, hence, there was,
said court believed, no agency authorized to issue the aforementioned
license. This conclusion is untenable, for the authority to issue the
aforementioned licenses was not vested exclusively upon the Import
Control Commission or Administration. Executive Order No. 328 provided
for export or import licenses “from the Central Bank of the Philippines
or the Import Control Administration” or Commission. Indeed, the latter
was created only to perform the task of implementing certain objectives
of the Monetary Board and the Central Bank, which otherwise had to be undertaken by these two (2) agencies.
Upon the abolition of said Commission, the duty to provide means and
ways for the accomplishment of said objectives had merely to be
discharged directly by the Monetary Board and the Central Bank, even if
the aforementioned Executive Order had been silent thereon.
Wherefore, the decision appealed from is hereby reversed and another
one shall be entered affirming that of the Commissioner of Customs,
with costs against respondent-appellee, Eastern Sea Trading. It is so
ordered.
Bengzon, C. J., Padilla, Bautista Angelo, Labrador, Reyes, J. B. L., Paredes, Dizon, and De Leon, JJ., concur.
[1] Dated June 22, 1950. It provides, inter alia,
that from and after said date, no commodity may be exported to or
imported from Occupied Japan without an export or import license from
the Central Bank of the Philippines or the Import Control
Administration, and that the annual exports and imports to the
Philippines and from Occupied Japan, as contained in the Trade Plan
shall be allocated and the licenses therefor shall be issued only to bona fide
Philippine exporters and importers, subject to the provisions of
section 9 of said Executive Order and to such rules and regulations as
may be prescribed by the Import Control Administration and the Central
Bank of the Philippines.
[2] According to a
communication dated April 24, 1957 of the then Acting Secretary of
Foreign Affairs (Exhibit F). Japan was subrogated into the rights,
obligations and interests of the SCAP and Japan on March 19, 1952, and
since then the agreements have been extended mutatis mutandis 18 times, the current one to expire at the end of April, 1957.
[3] The Trade Agreement, dated May 18, 1950, provides, inter alia,
for the adoption of a trade plan, on an annual basis, between the
Philippines and Occupied Japan; that, subject to exceptions, all trade
shall be conducted in accordance with the Financial Agreement between
the two countries, and through specified channels; that subject to
exchange, import and export control restrictions, both countries would
permit the importation from and exportation to each other of the
commodities specified in the trade plan, within specified limits; that
consultations would be held for necessary modifications of the trade
plan; that a machinery would be established to ensure accurate and up
to-date information regarding the operation of the agreement and to
ensure the implementation of the trade plan; and that the parties would
do everything feasible to ensure compliance with the export-import
control, exchange control and such other controls pertaining to
international trade as may be in force in their respective territories
from time to time. The agreement, likewise, specifies the method of
revision or cancellation thereof, the procedure for the review of the
trading position between the parties and the time of its effectivity
(upon “exchange of formal ratification”, pending which, “it shall take
effect upon signature by authorized representatives as modus vivendi between the parties).”
[4] The Financial Agreement, dated May 18, 1950, provides, inter alia,
that all transactions covered by the Trade Agreement shall be invoiced
in U.S.A. dollars and shall be entered into the account of each party
to be maintained in the books of the principal financial agent banks
designated by each party; that debits and credits shall be offset
against each other in said accounts and payments shall be made on the
net balance only; that the Agreement may be revised in the manner
therein stated; that the representatives of both parties may negotiate
and conclude all technical details relative to the implementation of
the agreement; and that the same shall be effective upon exchange of
formal retification, pending which it shall take effect upon signature
of the agreement as a modus vivendi between the parties.