THE COMMISSIONER OF CUSTOMS AND THE COMMISSIONER OF INTERNAL REVENUE, PETITIONERS, VS. MIGUEL FORTICH CELDRAN AND THE COURT OF TAX APPEALS, RESPONDENTS.

Appeal taken by the
Government from a decision of the Court of Tax Appeals.

Sometime in October,
1960, Miguel Fortich Celdran
^_ hereinafter referred to as Celdran ^_
a Filipino physician, returning from the United States, in which he had stayed for about two (2) years arrived at the Port
of Cebu, bringing with him, as part of his personal belongings, a
Chevrolet “Impala” Car, 1959 model. 
The Collector of Customs of Cebu
exempted the car from the payment of customs duty,^[1] but imposed and collected P889.52 as special
import tax of P11,295.12 as compensating tax, in addition to a P35.00 fine for alleged
non-filing of a consular invoice, which sums were paid Celdran
under protest.  The same having been
overruled by said officer, Celdran appealed to the
Commissioner of Customs, with the same result,
except as to the fine of P25.00, which was ordered refunded.  On appeal, taken, once again, by Celdran, Court of Tax Appeals rendered a decision, the dispositive part of which is as follows:

“WHEREFORE, the decision appealed from is modified by eliminating
the 25% margin fee from the tax base of the special import and compensating
taxes and taking the invoice value of $2,150.00 as the tax­able value of
the imported car. After recomputing the taxes in
accordance with our decision, the re­spondent Commissioners shall refund to
petitioner the resulting amounts as overpaid taxes. Without pronoucement as to costs.”

The case is now before us
on petition for review, filed by the Solicitor General, on behalf of the Commissioner
of Customs and the Commissioner of
Internal Revenue, hereinafter referred to as appellants.

The questions for
determination in this appeal are:  1)
whether the margin fee of 25% of the value of the car shall be added thereto as
part of the basis for the computation of the taxes above mentioned; and 2)
whether the value of the car, for purposes of said computation, shall be the
price given in its seller’s invoice, or the value as determined by the Customs
Appraiser, pursuant to Finance Department
Order No. 289-A (November 19, 1957).

With reference to the
first question, Section 1 of Republic Act No. 2609 reads:

“The provisions of any law to the contrary not­withstanding
when and as long as the Central Bank of the Philippines subjects all transactions
in gold and foreign exchange to licensing in accordance with the provisions of section seventy-four of
Republic Act Numbered Two Hundred Sixty-Five, the Central Bank, in respect
of all sales of
foreign exchange by the Cen­tral
and its authorized agent banks, shall have authority to establish a
uniform margin of not more than forty per cent over the banks’ selling
rates stipulated by the Monetary
Board under section seventy-nine of Republic Act Numbered Two Hundred
sixty-five, which margin shall not be changed oftener than once a year except
upon the recommendation of the National Economic Council and the approval of
the President.  The Monetary Board shall
fix the margin at such rate as it may deem necessary to effectively curtail any
excessive demand upon the international reserve.

“In implementing the provisions of this Act, along with other
monetary, credit and fiscal mea­sures to stabilize the economy, the monetary
author­ities shall take steps for the adoption of a four-year program of gradual
decontrol.” (Underscoring sup­plied.)

Pursuant to this section and to Section 7 of the same Act;
authorizing the Monetary Board to “prescribe and promulgate rules and
regulations necessary to carry out the provisions” thereof, the Monetary
Board had issued Central Bank Circular No. 95,2 Section 1
of which provides:

“Authorized agent banks shall collect on every sale of
foreign exchange and the purchaser of foreign exchange shall pay to
the authorized agent banks selling the foreign exchange a margin of
twenty-five per­cent 25%, of the value of the Philippine peso on such sale x x x.” (Underscoring
supplied.)

The issue is whether or
not this provision applies to the “Impala”
car in question, considering that Celdran had bought it
in the United States, with savings from his earnings as a
physician working in a hospital therein, and that no agent bank of Central Bank
of the Philippines had made any sale of foreign exchange in connection therewith.

The Court of Tax Appeals decided said issue in the negative
stating:

“Petitioner (Miguel Fortich Celdran) further disputes the legality of including the 25%
margin fee in the tax base for purposes of assessment and col­lection of
taxes.  He argues that the law, Republic
Act No. 2609, imposes a margin fee on the sale of foreign exchange and since no
such sale is involved in the instant case, the same should not be added to
the tax base in computing his tax liability.

“We agree with petitioner. 
Inasmuch as in the instant case no dollars went out of the country and
the margin levy of 25% did not form part of the total value of the imported
car, we find no cogent reason for adding the margin fee to the tax base.”
(Underscoring supplied.)

Under analogous conditions
we held in Commissioner of Customs
vs. Icamen:3

“Coming to the
claim that the goods in ques­tion are subject to forfeiture because they were
im­ported in violation of Central Bank Circular No. 45, the Court of Tax
Appeals also found as a fact that the same were purchased by respondent with dollars received by him in the form of salary and allowances
in Tokyo, Japan, while he was there as an officer of the Armed Forces of
the Philippines detailed with the Philippine Liaison Group (U. N.) attached to
the Phil­ippine Mission in Tokyo.  The evidence supporting this finding has not
been contradicted.  The case, therefore,
does not involve ‘imported goods’ in the sense of goods purchased abroad and paid
with money (in U. S. dollars or in Philippine Currency) coming from the
Philippines.  In other words, it is
clear that they are goods brought into the Philippines
which did not involve the sale of foreign exchange, this importa­tion
having taken place before the enactment of Re­public Act No. 1410
prohibiting the so-called no dollar importation except under certain
conditions.” (Underscoring supplied.)

Inasmuch, as the margin
fee, provided in Central Bank Circular No. 95, applies only to sales of
foreign exchange by banks duly authorized to sell the same as agents of the
Central Bank of the Philippines, and there has been neither such “sale
of foreign exchange nor the
intervention of any agent bank of the Central Bank, it fol­lows
necessarily, that the Court of Tax Appeals was right in de­ciding the first
issue against appellants herein.

As regards the second
issue, it appears that the invoice value of said car is $2,150.00, whereas its
“red book” value, or the published retail factory price thereof, is
$2,717.00. Appel­lants maintain that the above named taxes should be based upon
the latter price, because Finance Department Order No. 289-A, directs that:

“1.  All cars imported for personal use, ir­respective
of the country of origin shall be evaluated by the appraiser either on
the actual purchase price of the
car when bought directly from the manufacturer or franchised dealer
abroad or if not known or ques­tionable the published retail factory price
for the year of manufacture.  x x x

“2.  The actual purchase price of the car when
bought directly from the manufacturer or franchised dealer abroad or published
retail factory price which­ever is accepted by the appraiser, shall be entitled
to a depreciation allowance for the applicable model year of all makes of cars,
regardless of country where man­ufactured, in accordance with the following
table:  x x x x.” (Underscoring
supplied.)

Appellants further argue
that the determination of which the two (2) prices shall be used in computing the taxes collectible is left
to the judgment of the customs appraiser, whose determination is presumed to be
correct, and that, since Celdran had failed to show
that he had bought the car from a manufacturer or franchised dealer of cars in
the United States, its invoice price cannot serve as the basis of the taxes
adverted to above.

Section 1405 of the
Tariff and Customs Code, upon which Finance Department Order No. 289-A is
predicated, reads:

“x x
x Proceedings and report of appraisers.  Appraisers shall, by all reasonable ways and
means, ascertain, estimate and determine the value or price of the articles as required by law, any invoice, or
af­fidavit thereto or statement of cost, or of cost of production to the contrary notwithstanding, and
after revising and correcting reports of the examiners as they may judge
proper, shall report in writing
on the face of the entry the value so determined ir­respective of
whether such value is equal, higher or lower than the invoice and/or entered
value of the articles.

“Appraisers shall describe all articles on the face of the
entry in tariff and such terms as will enable the Collector to pass upon the
appraisal and classification of the same, which appraisal and classification
shall be subject to his approval or modification, and shall note thereon the
measure­ments and quantities, and any disagreement with the declaration.”

In this connection, it appears that the car involved in this case
is a two-door 8-cylinder Impala car, 1959 model, which came in
“unboxed,” aboard the ‘SS Doña
Aurora,” and was cover­ed by informal entry No. 293753, series of 1960;
that the car had a mileage reading of 216, 029, as described in said informal
entry; that, at the time of its purchase, there were some defects in the
windshield and its tires were so worn out that they had to be replaced;
that the car invoice, issued by the Byrne Bros., Inc., is not an ordinary sales
invoice, but a certified “Bill of Sale,” dated January 15, 1960, signed by the dealer’s
vice-president and rati­fied, on the same date, before a notary public
of New York; that the price of the car had been fully paid; that the car
was encumbered with a chattel mortgage in favor of the First National City Bank
of New York, for a loan in the sum of $1,056.00; and that, on October
24, 1960, a consular invoice was issued by the Consulate Gen­eral of the
Philippines in New York, and ratified by Philippine Con­sul Belen S. Bautista,
as well as verified by the Philippine Customs Attache
in New York, Zosimo de Veyra,
stating that the “selling price to purchaser” and the “current
export value” of the car is $2,150.00.

Upon the other hand, there is absolutely no evidence that this
invoice price of the car is not its actual purchase price, so as to justify a
disregard thereof and a resort to the published retail factory price.  Again, the record does not show that any customs
examiner has made his “report in writing on the face of the entry,”
as required in Section 1405 of the Tariff and Customs Code, that the value of
the car has been determined by him to be higher than its invoice price.

Considering the public character of the Certified Bill of Sale
and the official character of the consular invoice adverted to above, and there
being no reasonable ground to deny to these do­cuments the faith and credence
normally due thereto, we hold that the conclusion reached by the Court of Tax
Appeals in resolving the second issue should not be disturbed.

WHEREFORE, the decision appealed from should be, as it is hereby, affirmed,
without special pronouncement as to costs.

IT IS SO ORDERED.

Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Ruiz Castro, Angeles, and Fernando, JJ., concur.

^[1]
Under Section 105(i) of the Tariff and Customs Code.

2
Dated July 17, 1959.

3
L-112351, June 29, 1965.