G.R. No. L-19564. November 28, 1964
SERREE INVESTMENT COMPANY, petitioner, vs. COMMISSIONER OF CUSTOMS, respondent.

FACTS

Petitioner Serree Investment Company was the consignee of two shipments: 120 packages of garlic arriving on October 30, 1954, and 500 packages of fresh potatoes arriving on January 1, 1955, both from Hongkong and entering the Port of Manila. The shipments were seized by the Bureau of Customs’ Appraisers’ Division for alleged violation of Central Bank Circulars Nos. 44 and 45, in relation to Sections 1363(f) and 1250 of the Revised Administrative Code, due to the absence of the required Central Bank Release Certificate. The Collector of Customs ordered the forfeiture of the shipments. Petitioner was allowed to redeem the goods under protest, paying the redemption values of P25,520.46 and P7,859.91, respectively. Petitioner then filed a protest challenging the validity of the forfeiture proceedings. The Collector denied the protest, a decision sustained by the respondent Commissioner of Customs on March 22, 1960. Petitioner appealed to the Court of Tax Appeals, which upheld the forfeiture. Petitioner then elevated the case to the Supreme Court, arguing that the Central Bank lacked the power to regulate the importation of such merchandise and that Circulars Nos. 44 and 45 were void.

ISSUE

Whether the forfeiture of the imported merchandise for failure to present the required Central Bank release certificate or import license, pursuant to Central Bank Circulars Nos. 44 and 45, was valid.

RULING

Yes, the forfeiture was valid. The Supreme Court affirmed the decision of the Court of Tax Appeals, holding that the importations were properly forfeited.
The Ratio Decidendi is as follows: The Court rejected petitioner’s contention that the Central Bank had no authority to regulate imports that do not require the sale of foreign exchange. Citing its prior ruling in Commissioner of Customs vs. Serree Investment Company (G.R. No. L-12007, May 16, 1960), the Court held that every importation, even if it does not require an immediate sale of foreign exchange, ultimately creates a demand for it, as the currency of one country is not legal tender in another. To pay for imports, foreign exchange is eventually required. The Court found that Central Bank Circulars Nos. 44 and 45 were valid exercises of the Monetary Board’s authority under Section 74 of Republic Act No. 265 (The Central Bank Act). This provision authorizes the Board, with presidential approval, to temporarily restrict sales of foreign exchange and subject transactions to licensing during an exchange crisis to protect the country’s international reserves. The Circulars, which required an import license and a release certificate, were precisely such measures to control the unregulated outflow of foreign exchange.
Furthermore, the Court held that the absence of a specific forfeiture penalty in the Circulars did not preclude the application of the general forfeiture provision under Section 1363(f) of the Revised Administrative Code. Since the importations were made without the required license and release certificate, they constituted “merchandise of prohibited importation” or merchandise whose “importation… is effected… contrary to law,” making them subject to seizure and forfeiture by the Commissioner of Customs. The Court cited a line of precedents (Pascual vs. Commissioner of Customs, Commissioner vs. Eastern Sea Trading, etc.) consistently upholding this doctrine.

DOCTRINES

1. Central Bank’s Regulatory Power Over Imports: The Central Bank, through the Monetary Board, has the authority under Section 74 of Republic Act No. 265 to issue regulations (such as Circulars Nos. 44 and 45) requiring licenses and release certificates for all imports, even those not immediately involving a sale of foreign exchange. This is because all importations ultimately generate a demand for foreign exchange, and such measures are within the Bank’s power to protect the international reserve during an exchange crisis.
2. Forfeiture under the Revised Administrative Code: Merchandise imported without the required Central Bank release certificate or license pursuant to valid circulars constitutes “merchandise of prohibited importation” or merchandise imported “contrary to law” under Section 1363(f) of the Revised Administrative Code. Consequently, they are subject to seizure and forfeiture by customs authorities, even if the circulars themselves do not explicitly prescribe forfeiture as a penalty.
3. Finality of Established Doctrine: The Supreme Court will adhere to and apply its settled jurisprudence on the validity of Central Bank Circulars Nos. 44 and 45 and the consequent forfeiture of goods imported in violation thereof, as established in a line of prior cases.