G.R. No. L-73882 October 22, 1987
ROSA CANCIO, petitioner, vs. HON. COURT OF TAX APPEALS and HON. COMMISSIONER OF CUSTOMS, respondents.

FACTS

Petitioner Rosa Cancio, a foreign currency depositor, was apprehended at the Manila International Airport on June 12, 1981, while attempting to board a flight to Hong Kong. Authorities discovered US$102,900 in cash and US$600 in traveler’s checks concealed inside chocolate boxes, along with ₱1,500. She failed to declare these currencies and could not present a Central Bank authority for their exportation. Consequently, the customs authorities confiscated all amounts. Cancio appealed the forfeiture, presenting evidence that the foreign currency was withdrawn from her Foreign Currency Deposit Unit (FCDU) account for medical expenses abroad.
The Court of Tax Appeals affirmed the forfeiture of the US dollars, ruling it violated Central Bank Circulars Nos. 265 and 534, which require prior Central Bank authority for exporting foreign currency. However, it reversed the forfeiture of the ₱1,500, as it was within the allowable limit for travelers. Cancio’s motion for reconsideration was initially denied by this Court, prompting this final motion.

ISSUE

Whether the forfeiture of the foreign currencies withdrawn from an FCDU account is valid despite the depositor’s failure to secure prior Central Bank authority for their exportation.

RULING

The Supreme Court granted the motion for reconsideration and set aside the forfeiture of the US dollars. The legal logic centers on the conflict between general foreign exchange regulations and the special provisions of the Foreign Currency Deposit Act ( Republic Act No. 6426 ). While Central Bank Circulars Nos. 265 and 534 generally prohibit the export of foreign currency without prior authority, Section 5 of R.A. 6426 explicitly guarantees foreign currency depositors the right to withdraw and transfer their deposits without restriction.
The Court emphasized that the purpose of the Foreign Currency Deposit Act is to attract foreign currency deposits into the banking system. Applying the general circulars to a depositor like Cancio would undermine this objective by imposing undue restrictions on fund transferability. Although Cancio failed to present a certificate of withdrawal from her bank at the airport, her presentation of her bank book and withdrawal cards constituted substantial compliance. Her concealment of the currency was for security reasons and did not negate her rights under the special law. Therefore, she did not violate the Central Bank circulars, and the forfeiture under the Tariff and Customs Code was inapplicable. The forfeiture of the pesos remained correctly reversed.