ANDRES E. LAZARO, PETITIONER, VS. THE COMMISSIONER OF CUSTOMS, RESPONDENT. ANDRES E. LAZARO, PETITIONER, VS. THE COMMISSIONER OF CUSTOMS, RESPONDENT.

Lazaro versus Commissioner of Customs

The Case

This is Andres E. Lazaro versus the Commissioner of Customs, a petition for review of a decision of the Court of Tax Appeals in a customs seizure proceeding. Lazaro imported candies, dried shrimps, and celluloid combs without the Central Bank release certificate required by Central Bank Circulars Numbered 44 and 45, and the Collector of Customs decreed forfeiture of the goods, which had already been released to him on a surety bond. The case matters because it settles, against the importer, four questions that recur in customs and exchange-control litigation: whether goods imported without a release certificate are articles of prohibited importation under Section 1363(f) of the Revised Administrative Code; whether the later Central Bank Circular Numbered 133 and Republic Act Numbered 1410 abated the liability; whether the appraised value for seizure purposes is the value at the place of origin or the local market value; and whether the thirty percent estimated profit may be included in that value.

Procedural History

The Collector of Customs rendered a decision decreeing forfeiture of the goods and, since they had already been released to Lazaro, ordering him to pay in cash the sum of 4,820 pesos as the value thereof. Lazaro appealed to the Commissioner of Customs, who affirmed the decision, directed the confiscation of the bond, and ordered Lazaro and his surety to pay jointly and severally the sum of 4,822 pesos within thirty days from notice. A motion for reconsideration was denied, and a second motion for reconsideration met the same result. Lazaro then appealed to the Court of Tax Appeals, which affirmed the decision of the Commissioner of Customs. After that court refused to reconsider its decision, two petitions for review were filed in the Supreme Court for Lazaro, one by Attorneys De Leon and De Leon with Nicolas V. Benedicto, Junior, and another by Attorney Juan T. David. The two cases raised substantially the same issues and were resolved together.

Facts

On the thirty-first of August, 1954, the steamship Templar arrived at the port of Manila carrying, among other goods, a shipment of candies, dried shrimps, and celluloid combs consigned to Lazaro under customs entry number 69463. Because the shipment lacked the Central Bank release certificate required by Central Bank Circulars Numbered 44 and 45, in relation to Section 1363(f) of the Revised Administrative Code, the goods were subjected to seizure proceedings.

On the fourth of September, 1954, the goods were released to Lazaro upon a surety bond of the Pioneer Insurance and Surety Corporation, filed by him, in the sum of 4,822 pesos, based on the value of the goods as appraised by the Bureau of Customs, including an estimated profit of thirty percent of the landed cost.

After appropriate proceedings, the Collector of Customs decreed forfeiture and ordered Lazaro to pay the value of the goods in cash. The Commissioner of Customs affirmed, and the Court of Tax Appeals likewise affirmed. Before the Supreme Court, Lazaro argued that Section 1363(f) refers only to articles of prohibited importation, that the circulars do not authorize forfeiture, that Circular Numbered 133 and Republic Act Numbered 1410 repealed the earlier circulars and abated the liability, and that in any event the value should be limited to the value at the place of origin under the Philippine Tariff Act of 1909, without estimated profits.

Issues

• Whether or not Section 1363(f) of the Revised Administrative Code, in relation to Central Bank Circulars Numbered 44 and 45, applies to the goods in question so as to sustain the forfeiture.
• Whether or not Central Bank Circular Numbered 133 and Republic Act Numbered 1410 repealed the earlier circulars and abated the liability incurred for their violation.
• Whether or not the appraised value for purposes of seizure proceedings is the value at the place of origin under the Philippine Tariff Act of 1909 rather than the local market value.
• Whether or not the thirty percent estimated profit may be included in the appraised value of the goods.

Applicable Provisions

Section 14 of Central Bank Circular Numbered 44 provides:

No item of import shall be released by the Bureau of Customs without the presentation of a release certificate issued by the Central Bank or any authorized Agent Bank in a form prescribed by the Monetary Board.

This is the requirement whose breach, in relation to Section 1363(f), subjected the shipment to seizure.

Paragraph 8 of Central Bank Circular Numbered 133 provides:

All existing circulars, rules and regulations and conditions governing transactions in foreign exchange not inconsistent with the provisions of this Circular, are deemed incorporated hereto and made integral parts hereof by reference.

This is the clause by which the Court held that Circular Numbered 133 did not repeal the release-certificate requirement.

Section 3 of Republic Act Numbered 1410 provides:

That goods and commodities in transit or previously imported on a no-dollar remittance basis at the time of the approval of this Act shall not be affected by the operation of this Act.

This saving clause preserved the liability for goods already imported when the law took effect.

Section 1377 of the Revised Administrative Code provides:

Sec. 1377. Description and appraisement of seized property. - The collector shall also cause a list and particular description of the property seized to be prepared and appraisement of the same at its value in the local market to be made by at least two appraising officers under the revenue laws, if there are such officers at or near the place of seizure, but if there are not, then by two competent and disinterested citizens of the Philippines, to be selected by him for the purpose residing at or near the place of seizure which list and appraisement shall be properly attested by such collector and the persons making the appraisal.

This is the provision that fixes local market value as the measure for seizure proceedings.

Ruling

The Court affirmed the Court of Tax Appeals on all points, holding that the questions had already been decided adversely to Lazaro in the earlier case involving the same petitioner.

On the first issue, the Court held that importations made without the corresponding release certificate violated Circulars Numbered 44 and 45 in relation to Section 1363(f) of the Revised Administrative Code. The Court noted that Circular Numbered 133 did not repeal the earlier circulars with respect to the necessity of a release certificate, since paragraph 6 of Circular Numbered 133 still required imports to be released only upon presentation of a release certificate, and Section 14 of Circular Numbered 44 was deemed incorporated into Circular Numbered 133 by paragraph 8 thereof.

On the second issue, the Court held that the passage of Republic Act Numbered 1410 did not abate any liability incurred for violation of Central Bank Circular Numbered 45, because Section 3 of that Act expressly saved goods in transit or previously imported on a no-dollar remittance basis at the time of its approval.

On the third issue, the Court held that the appraised value for seizure proceedings is not the market value in the country of origin under the Philippine Tariff Act of 1909, because that rule relates to the appraisal of importations for determining customs duties. For seizure proceedings, the value of the importation in the local market prevails, following Section 1377 of the Revised Administrative Code.

On the fourth issue, the Court held that the inclusion of the thirty percent estimated profit was made with the acquiescence and approval of the petitioner, since the amount of the bonds he posted upon release of the goods carried the thirty percent estimated profits, so that payment of such profits formed part of his contractual obligation in case of forfeiture.

Doctrine

First, an importation made without the Central Bank release certificate required by Circulars Numbered 44 and 45 violates those circulars in relation to Section 1363(f) of the Revised Administrative Code, and the goods are subject to seizure and forfeiture. Second, Circular Numbered 133 did not repeal the release-certificate requirement, because Section 14 of Circular Numbered 44 was incorporated into it by paragraph 8, and Republic Act Numbered 1410 did not abate liabilities already incurred, because its Section 3 saved goods previously imported on a no-dollar remittance basis. Third, for purposes of seizure proceedings the appraised value is the local market value under Section 1377 of the Revised Administrative Code, not the value at the place of origin under the Philippine Tariff Act of 1909, which governs only the appraisal for customs duties. Fourth, the thirty percent estimated profit may be included in the appraised value where the importer acquiesced in it and posted a bond carrying that amount, making it a contractual obligation in case of forfeiture.

Disposition

The Supreme Court affirmed the decision of the Court of Tax Appeals, with costs against the petitioner Lazaro.

Remember This

The single line worth memorizing is that the release-certificate requirement survived Circular Numbered 133 by express incorporation, and that seizure proceedings are measured by local market value under Section 1377, not by the value at the place of origin. Examiners use this case to test the interplay of exchange-control circulars with Section 1363(f) of the Revised Administrative Code, the effect of a saving clause in a repealing law, and the distinction between appraisal for customs duties and appraisal for seizure proceedings.