Rosa Cancio v.

CA and Commissioner of Customs

22 October 1987, Melencio-Herrera, J.

SV: Cancio was apprehended with USD 102,900 in cash and USD 600 in travellers checks
while leaving the country for HK. She was not able to present the CB Authority required,
neither did she declare the amounts at customs. The cash and checks were forfeited.

SC ruled that Cancio was a foreign currency depositor and that the CB Circulars requiring a
CB Authority to carry foreign currency out of the country did not apply to her. The law
applicable to her is the Foreign Currency Deposits Act, the purpose of which is to attract
and invite the deposit of foreign currencies which are acceptable as part of the
international reserve in duly authorized banks in order that they may be put into
the stream of the banking system. Undue restrictions to the transferability of foreign
currency deposits should not be made.

FACTS:
- Rosa Cancio, while clearing through the Pre-Boarding Area of MIA (with her husband and
three children) to board a plane for Hongkong was apprehended with USD 102,900.00 in
cash, USD 600 in two travelers checks and PhP 1,500. She was not able to present a Central
Bank Authority allowing her to carry the currency out of the country.
a) The apprehension was effected only through an alarm sounded by a scanner.
b) Mrs. Cancio did not declare her currency and had already passed the Customs
Inspection area.
c) The currencies were placed and concealed inside two carton boxes for local
chocolates, wrapped and taped with tin foil back paper.

- The currencies were confiscated and seizure proceedings were initiated against her.

- At the hearing of the case, Cancio presented certified a certified photocopy of her Bank
Book for foreign currency deposit with the Philippine Commercial and Industrial Bank, dollar
remittances in telegraphic transfers from abroad for deposits in her account, and withdrawal
cards.
a) She was a foreign currency depositor pursuant to RA No. 6426 as implemented by CB
Circular No. 343
b) She claimed that she intended to fly to Hongkong and then proceed to the US for
medical treatment of her heart ailment. The US currency they were carrying was
intended principally for such medical purpose.
c) They were concealed and hidden solely for security reasons.

- The Commissioner of Customs decreed forfeiture of both the foreign and local currencies
due to the failure of Cancio to present a Central Bank Authority to bring said currencies out
of the country.

- Upon appeal, the CTA upheld the forfeiture of the USD 102,900 in cash and USD 600 worth
of travelers checks. However, CTA reversed the forfeiture of the Php 1,500 on the ground
that each traveller is allowed to bring P500 out of the country without a CB permit (par. 4 of
CB Circular No. 383) and Mrs. Cancio was then travelling with four other people.

- Appeal was made to the SC which was initially denied. An MR was subsequently filed (this
case).

ISSUE: Should the USD 102,900 cash and USD 600 in travelers checks be forfeited? NO.

REASONING:
1) The exporting of foreign currency from the country is not allowed except if authorized by
the Central Bank.

CB Circular No. 265, par. 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 Circular No. 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 the mails, or through
international carriers.
The provisions 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.

2) However, Cancio is a foreign currency depositor. What is applicable to her are the
provisions of the Foreign Currency Deposit Act of the Philippines (RA 6426, as amended).

SEC. 5. Withdrawability and transferability of deposits. There shall be no

restriction on the withdrawal by the depositor of his deposit or on the transferability
of the same abroad except those arising from the contract between the depositor and
the bank.

Under the foregoing provision, the transferability abroad of foreign currency deposits is
unrestricted.

Only one exception is provided for therein, which is, any restriction " from the contract
between the depositor and the bank."

A Central Bank Authority is not required for the transferability abroad of foreign currency
deposits.

3) Respondents assert Sec. 11 (b) of the IRR of RA 6426 (CB Circular No. 353), arguing that
the provision withholds from the depositor the right of transferability abroad:

SEC. 11. Withdrawability and Liquidity of Deposits.

b. Subject only to the terms of the contract between the bank and the depositor, the
latter shall have a general license to withdraw his deposit, notwithstanding any
change in policy or regulations.

The SC disagreed and quoted CB Circular Letter dated 3 August 1978, which recognized the
right of transferability abroad:

Effective immediately, the banks authorized to accept foreign currency deposits... are
hereby instructed to advise their foreign currency depositors who are withdrawing
funds for travel purposes to carry with them the certificate of withdrawal that the
banks shall issue. The travellers shall present the certifications to the Customs and
Central Bank personnel at the MIA, if requested.

Cancio did not present a certificate of withdrawal at MIA when she was about to depart.
However, this was because she was unaware of the requirement. As per the Circular-Letter,
it is the depositary bank which should advise its depositors to carry with them the certificate
of withdrawal.
Besides, Cancio has presented in evidence her foreign currency bank book and withdrawal
cards. Such is substantial compliance.

4) The underlying objective of the Foreign Currency Deposit Act is to attract and
invite the deposit of foreign currencies which are acceptable as part of the
international reserve in duly authorized banks in order that they may be put into
the stream of the banking system.

It would defeat the very purpose of the law to place undue restrictions on the transferability
of such funds. CB Circulars Nos. 265 and 534 (see 1) above) should not be made to apply
to foreign currency depositors whose rights are defined and guaranteed in a special law, RA
6426.

This is not to condone petitioners failure to declare the foreign currency she was carrying
out of the country but just to stress 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 the bank.

CTA DECISION SET ASIDE INSOFAR AS IT UPHELD FORFEITURE OF USD 102,900 in

case and USD 600 in travellers checks. AMOUNTS SHOULD BE RETURNED TO
PETITIONERS HEIRS.