G.R. No. L-11075; June 30, 1960
COMMISSIONER OF CUSTOMS, petitioner and appellant, vs. CARIDAD CAPISTRANO, respondent and appellee.

FACTS

On March 31, 1955, Caridad Capistrano, an outgoing passenger bound for Hongkong, was subjected to a search by a customs agent. Found in her person were 156 pieces of Philippine 50-peso bills, 17 pieces of U.S. 20-dollar bills, and 1 piece of U.S. 10-dollar bill. Her Central Bank license only permitted her to carry $200 ($50 in cash and $150 in traveler’s check). Consequently, the bills were seized for alleged violation of Central Bank Circulars Nos. 42 and 55, in relation to Section 1363(f) of the Revised Administrative Code. The Collector of Customs ordered the forfeiture of the bills, a decision affirmed by the Commissioner of Customs. Capistrano appealed to the Court of Tax Appeals (CTA Case No. 174).
The Court of Tax Appeals, in its decision of June 4, 1956, ruled that while the Central Bank circulars were validly promulgated, they did not authorize the seizure and forfeiture of the Philippine peso bills carried in excess of the allowed amount. It further held that Section 1363(f) of the Revised Administrative Code could not be invoked as it referred only to “merchandise or prohibited importation or exportation.” The Tax Court took judicial notice that U.S. dollars, having ceased to be legal tender in the Philippines, fell within the term “merchandise,” but did not say the same of Philippine pesos. Thus, it reversed the Commissioner’s decision regarding the 156 Philippine 50-peso bills and ordered their return to Capistrano. The Commissioner of Customs appealed this portion of the decision to the Supreme Court.

ISSUE

Whether the Court of Tax Appeals erred in revoking the order of forfeiture and ordering the release of the Philippine peso bills to Caridad Capistrano.

RULING

The Supreme Court reversed the decision of the Court of Tax Appeals. The Court held that Philippine peso bills come within the concept of “merchandise” as understood in Section 1363(f) of the Revised Administrative Code. Section 1419 of the same Code defines merchandise, with reference to importations or exportations, to include goods, wares, and in general anything that may be the subject of importation or exportation. The Court reasoned that money can be a commodity or object of trade. While money is a measure of value and medium of exchange in its own country, in other countries it is a commodity bought and sold, with its value fluctuating in the market. Therefore, Philippine peso bills, when attempted to be exported as in this case, may be deemed taken out of domestic circulation as legal tender and treated as a commodity. Consequently, they may be forfeited pursuant to Central Bank Circular No. 37 in relation to Section 1363(f) of the Revised Administrative Code. The decision appealed from was reversed.