Title
Caltex Inc. vs. Acting Commissioner of Customs
Case
G.R. No. L-24619
Decision Date
Feb 26, 1968
Caltex challenged the 25% margin fee on import currency conversion for customs duties; Supreme Court upheld its inclusion as part of exchange rate.
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Case Digest (G.R. No. L-24619)

Facts:

Context of the Case:
The case involves Caltex (Philippines) Inc. (Caltex) and the Acting Commissioner of Customs. The dispute arose from the Bureau of Customs’ practice of adding a 25% margin fee, imposed under Republic Act 2609, to the peso value of importations when converting foreign currency to determine customs duties and special import tax.

First Cause of Action:
Caltex imported crude oil through the port of Batangas from November 14, 1960, to April 12, 1961. Caltex paid P1,231,081.00 in customs duties and P2,235,788.00 in special import tax. Caltex claimed that without the margin fee, the customs duty and special import tax would have been P995,897.00 and P1,809,911.00, respectively.

Second Cause of Action:
Caltex received 14 shipments of various articles through the port of Davao from August 27, 1960, to April 22, 1961. Caltex paid P18,897.33 in customs duties and P24,556.82 in special import tax. Caltex argued that without the margin fee, the customs duty and special import tax would have been P15,193.13 and P19,784.77, respectively.

Procedural History:
Caltex filed formal protests with the Collectors of Customs of Davao and Batangas, which were denied. Appeals to the Commissioner of Customs were also unsuccessful. Caltex then appealed to the Court of Tax Appeals, which dismissed the petition. Caltex subsequently appealed to the Supreme Court.

Issue:

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Ruling:

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Ratio:

  1. Margin Fee as Part of Exchange Rate:
    The Court held that the margin fee is part of the current rate of exchange, as provided under Section 204 of the Tariff and Customs Code. The margin fee, imposed under Republic Act 2609, is a form of exchange control designed to stabilize the currency and discourage excessive demand for foreign exchange. It does not alter the par value of the peso but adjusts the exchange rate to address economic imbalances.

  2. Legal Basis for Inclusion:
    The margin fee is not a tax on the purchase of foreign exchange but a measure to strengthen the country’s international reserves. The Court rejected Caltex’s argument that the margin fee should not be included in the tax base, emphasizing that it is integral to the exchange rate fixed by the government.

  3. Special Import Tax and Customs Duty:
    The Court ruled that the margin fee should similarly be included in the computation of the special import tax under Republic Act 1394, as its tax base is analogous to that of customs duties under Section 201 of the Tariff and Customs Code.

  4. Policy and Economic Objectives:
    The imposition of the margin fee aligns with the International Monetary Fund’s objectives of stabilizing currencies and addressing balance of payment issues. The Court noted that exchange restrictions, including the margin fee, are temporary measures aimed at correcting fundamental economic disequilibria.

Conclusion:
The Supreme Court upheld the inclusion of the 25% margin fee in the valuation of importations for customs duty and special import tax purposes, affirming the decision of the Court of Tax Appeals.
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