COMMISSIONER OF CUSTOMS, PETITIONER AND APPELLANT, VS. CARIDAD CAPISTRANO, RESPONDENT AND APPELLEE.

Commissioner of Customs versus Capistrano

The Case

This is an appeal by the Commissioner of Customs against Caridad Capistrano, a departing air passenger whose Philippine peso bills were seized at the airport and ordered forfeited for exceeding the amount her Central Bank license permitted her to carry abroad. The action began as a seizure and forfeiture proceeding before the Collector of Customs, was affirmed by the Commissioner of Customs, and was brought by Capistrano to the Court of Tax Appeals, which ordered the peso bills returned to her. The case matters because it fixes the meaning of the word merchandise in the forfeiture provision of the Revised Administrative Code, and holds that Philippine peso bills attempted to be exported out of the country may be treated as merchandise and forfeited.

Procedural History

The Collector of Customs, in a seizure and forfeiture proceeding, rendered a decision ordering the forfeiture of the bills in favor of the Government. The Commissioner of Customs affirmed that decision. Capistrano then brought the matter to the Court of Tax Appeals.

The Court of Tax Appeals ruled that although the Central Bank circulars were promulgated pursuant to Republic Act Number 265, those circulars did not authorize the seizure and forfeiture of the Philippine peso bills carried by Capistrano in excess of what the Central Bank regulations allowed. It further held that Section 1363, paragraph f, of the Revised Administrative Code could not be invoked, because that section referred merely to merchandise of prohibited importation or exportation. Taking judicial notice that the United States dollar had ceased to be legal tender in the Philippines and could be bought and sold in the country, the Tax Court held that the United States dollar falls within the term merchandise, but it did not say the same of the Philippine peso. It therefore reversed the Commissioner of Customs as to the Philippine peso bills and ordered them returned to Capistrano.

From that portion of the decision, the Commissioner of Customs appealed to the Supreme Court.

Facts

On March 31, 1955, Caridad Capistrano was booked as an outgoing passenger on a plane bound for Hongkong. Immediately before the plane took off, she was subjected to the customary search by a woman agent of the Bureau of Customs.

The search found on her person one hundred and fifty six pieces of Philippine 50-peso bills, seventeen pieces of United States 20-dollar bills, and one piece of a United States 10-dollar bill. Her license from the Central Bank allowed her to carry only 200 dollars, broken down into 50 dollars in cash and 150 dollars in traveler's checks.

The bills were consequently seized for alleged violation of Central Bank Circulars Numbers 42 and 55, in relation to Section 1363, paragraph f, of the Revised Administrative Code. In the seizure and forfeiture proceedings instituted, the Collector of Customs ordered the forfeiture of the bills in favor of the Government, and the Commissioner of Customs affirmed.

Issues

• Whether or not the Court of Tax Appeals erred in revoking the order of forfeiture of the Philippine peso bills and in ordering their release to Capistrano.
• Whether or not Philippine peso bills come within the concept of merchandise under Section 1363, paragraph f, of the Revised Administrative Code, so as to be subject to forfeiture when attempted to be exported contrary to Central Bank regulations.

Applicable Provisions

Section 1363, paragraph f, of the Revised Administrative Code, the forfeiture provision relied upon by the Commissioner of Customs, provides:

Any merchandise of prohibited importation or exportation, the importation or exportation of which is effected or attempted contrary to law, and all other merchandise which, in the opinion of the collector, have been used, are or were intended to be used as instrument in the importation or exportation of the former.

The entire question turns on whether Philippine peso bills are merchandise within the meaning of this provision.

Section 1419 of the same Code defines merchandise when used with reference to importations or exportations, and provides:

Merchandise, when used with reference to importations or exportations, includes goods, wares, and in general anything that may be the subject of importation or exportation.

This definition is the textual anchor of the Court's holding that money may be a commodity and therefore merchandise.

Ruling

On the first issue, the Court reversed the Court of Tax Appeals. After careful reflection, it held that the ruling of the Tax Court had to be reversed, because the peso bills were subject to forfeiture under Central Bank Circular Number 37 in relation to Section 1363, paragraph f, of the Revised Administrative Code.

On the second issue, the Court held that Philippine peso bills come within the concept of merchandise. There can scarcely be any doubt that Philippine money may be exported or brought out of the country, and the Tax Court itself recognized this fact. Such exportation ultimately affects the stability of the peso, and it was in the light of compelling economic reasons and necessities that the Central Bank circulars prohibiting the exportation of Philippine bills and coins, subject to certain exceptions, were conceived and promulgated. The Court relied on the statutory definition in Section 1419, and reasoned that it cannot be gainsaid that money may be a commodity, an object of trade. It quoted with approval the following:

Money in the country where it is current, is both a measure of value and a medium of exchange, while in other countries it is a commodity bought and sold in the market, and its value fluctuates in the market like that of other commodities.

The Court drew the parallel with the United States dollar. In the same manner that in the Philippines the United States dollar bills which have ceased to be legal tender are considered merchandise, the Philippine peso bills, when attempted to be exported as in this case, may be deemed to have been taken out of domestic circulation as legal tender and treated as a commodity. Hence they may be forfeited.

Doctrine

Philippine peso bills come within the concept of merchandise under Section 1363, paragraph f, of the Revised Administrative Code, as that term is defined in Section 1419 of the same Code to include goods, wares, and in general anything that may be the subject of importation or exportation. Money may be a commodity, an object of trade; in the country where it is current it is both a measure of value and a medium of exchange, but when attempted to be exported it may be deemed taken out of domestic circulation as legal tender and treated as a commodity. Accordingly, Philippine peso bills attempted to be exported contrary to Central Bank regulations may be forfeited under Central Bank Circular Number 37 in relation to Section 1363, paragraph f, of the Revised Administrative Code. The statutory definition controls: because merchandise includes anything that may be the subject of exportation, and peso bills may be exported, they fall within the forfeiture provision.

Disposition

The Commissioner of Customs won: the Supreme Court reversed the decision of the Court of Tax Appeals and upheld the forfeiture of the Philippine peso bills.

Remember This

The one line to memorize: Philippine peso bills attempted to be exported are merchandise under Section 1363, paragraph f, of the Revised Administrative Code, and may be forfeited. Examiners use this case to test the statutory definition of merchandise in Section 1419 and the rule that money, when taken out of domestic circulation for export, is a commodity and not mere legal tender.