Cancio v Court of Tax Appeals (1987

Customs seized Cancio’s undeclared US dollars before she could begin her trip to the US
for heart treatment. The Court of Tax Appeals affirmed the seizure, but the SC reversed it. As a
foreign currency depositor with PCIB, the foreign Currency Deposit Act allows Cancio to
bring foreign currency out of the country even !without declaring it

Facts

• Cancio was clearing through the Manila International Airport’s Pre-Boarding area on a
flight to Hong Kong. She did not declare that she was carrying cash at the airport’s
Customs area

The airport’s Pre-Boarding detector rang an alarm and it was discovered that she was
carrying an undeclared amount of money . $ 102, 900.00 in cash $6,000.00 in travellers
checks and P 1500.00

the money was hidden inside a large chocolate boxes which were securely wrapped in –
foil –back paper

The Commissioner of Customs ordered the seizure of the money because Cancio failed
to present the requisite Central Bank authorization allowing her to bring the money out
of the Philippines'

During the seisure Proceedings Cancio presented a photocopy of her bankbook -or -
foreign currency deposit with "CIB and alleged that
-she was a foreign currency depositor pursuant to the foreign Currency deposit Act (RA
6426

She had withdrawn the cash in preparation for her trip to the US where she would get
medical treatment for her heart

the cash was concealed in the chocolate boxes for security reasons

The CTA affirmed the the forfeiture of Cancio’s Money

Issue: Whether or not CTA erred to uphold the forfeiture if Cancio’s Money?

HELD:

Yes

The General Rule provided by Central Bank Circulars 265 and 534 is that no person may
take foreign currency out of the Philippines without Central Bank Authorization.

 CB Circ 265: “3. No Person shall take out or export from the Philippines
foreign currency or any other foreign exchange except as otherwise
authorized by the Central Bank
 CB Circ 534: Sec. 3, Unless specifically authorized by the Central Bank or
allowed under existing international agreements or Central Bank Regulations,
No person shall take or transmit or attempt to take or transmit foreign
exchange, in any form out of the Philippines only, through other persons,
through mails , or through international carriers.
The provision of this Section shall not apply to tourists and non-resident
temporary visitors who are taking or sending out of the Philippines their own
foreign exchange brought in by them.

However, Cancio fails under the exception because she is a foreign currency depositor.
The Foreign Currency Deposit Act loosens the restriction on transferability if foreign
currency for those who are foreign currency depositors.

In fine, Central Bank Circulars Nos. 265 and 534 requiring prior Central Bank authority
for the taking out of the country of foreign currency should not be made to encompass
foreign currency depositors whose rights are expressly defined and guaranteed in a
special law, the Foreign Currency Deposit Act (RA 6426, as amended). As a foreign
currency depositor, therefore, petitioner cannot be adjudged to have violated the
aforestated Central Bank Circulars. It follows that neither is there room for the
application of Section 2530(f) of the Tariff and Customs Code, as amended, which
provides for the forfeiture of any article and other objects, the exportation of which is
effected or attempted contrary to law.

This is not to condone petitioner's failure to declare the foreign currency she was
carrying out of the country but just to stress that the Foreign Currency Deposit Act
grants petitioner the right of transferability of her funds abroad except that she was not
advised by her bank to secure, and consequently was unable to present, the necessary
certificate of withdrawal from said bank.

Accordingly , the Decision of respondent Court of Tax Appeals is hereby SET ASIDE in so
far as it upheld the forfeiture by respondent Commissioner of Customs of the sums of
US$102,900.00 in cash, and US$600.00 in traveller's checks, which amounts should now
be returned to petitioner's heirs, but AFFIRMED in so far as it reversed the forfeiture by
the same official of the sum of P1,500.00.