GR 23950; (December, 1980) (Digest)
G.R. No. L-23950 and L-23970. December 29, 1980.
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. PILAR TANJUATCO and COURT OF TAX APPEALS, respondents. PILAR TANJUATCO, petitioner, vs. COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE, respondents.
FACTS
Pilar Tanjuatco imported a Chevrolet car with accessories on June 26, 1960, and paid a compensating tax of P12,699.81 under protest. She later demanded a refund of P5,118.28, claiming overpayment. The Court of Tax Appeals (CTA) ordered a refund of only P579.90, calculating the tax based on the actual discounted invoice value of the car and accessories converted at the free market exchange rate of P3.20 to $1. Both parties appealed. The Commissioner argued the tax base should be the higher published “blue book” retail value. Tanjuatco contended the conversion should use the par value of P2.00 to $1 and that the tax rate should be 75%, not 100%, of the landed cost.
ISSUE
The main issues were: (1) whether the taxable base for the compensating tax is the actual invoice value or the published retail factory price; and (2) whether the applicable dollar-to-peso conversion rate is the par value (P2:$1) or the free market rate (P3.20:$1).
RULING
The Supreme Court affirmed the CTA decision. On the first issue, the legal basis for the compensating tax under Section 190 of the Tax Code is the “total value” of the imported article at receipt. Finance Department Order No. 289-A provided that the appraiser should use the actual purchase price when bought directly from a manufacturer or franchised dealer, resorting to the published retail price only if the actual price is unknown or questionable. The Court upheld the CTA’s use of the actual discounted invoice value presented by Tanjuatco, as it was a direct purchase, making the “blue book” value inapplicable. On the second issue, the Court ruled the free market exchange rate of P3.20:$1 was correct. Central Bank Circular No. 105 limited the use of the official P2:$1 rate to specific transactions like controlled imports and government expenditures. General importations, like this one, fell under the free market rate. Since compensating taxes are revenue measures akin to customs duties, the conversion must align with the exchange rate governing the import transaction itself. Finally, as the computed landed cost exceeded P10,000, the 100% tax rate under Section 184(A) was correctly applied. The refund was thus limited to P579.90.