Title
Arcega vs. Court of Appeals
Case
G.R. No. L-20869
Decision Date
Aug 28, 1975
Petitioner seeks refund of 17% foreign exchange tax on imports for ice cream production; Supreme Court remands case for further proceedings on some claims, affirms dismissal of others.
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Case Digest (G.R. No. L-20869)

Facts:

  1. Parties Involved:

    • Petitioner: Alicia O. Arcega, assisted by her husband Raf. L. Arcega, doing business under the firm name "Fairmont Ice Cream Co."
    • Respondents: The Court of Appeals, the Central Bank of the Philippines, and the Philippine National Bank (PNB).
  2. Nature of the Case:

    • The petitioner filed a complaint for the refund of P18,030.13, representing allegedly unauthorized payments made under the 17% special excise tax on foreign exchange levied under Section 1 of Republic Act 601, as amended by Republic Acts 1175 and 1197.
  3. Causes of Action:

    • First Cause of Action: Refund for foreign exchange used to import coffee roasted, vanilla, fruit cocktail, peaches, butter, and pecan nuts, which were used as "flavors" for the petitioner's ice cream product.
    • Second Cause of Action: Refund for foreign exchange used to import paper containers and covers, specially manufactured by Sealright Pacific, Ltd., used in the manufacture and distribution of ice cream.
    • Third Cause of Action: Refund for foreign exchange used to import ice cream wooden spoons, individually wrapped, used as accessories in the sale and distribution of ice cream.
    • Fourth Cause of Action: Refund for foreign exchange used to import machinery, equipment, and spare parts used in the petitioner's ice cream factory.
  4. Procedural History:

    • The PNB moved to dismiss the complaint, arguing it did not state a sufficient cause of action. The trial court denied the motion.
    • The Central Bank also moved to dismiss, citing lack of jurisdiction, no cause of action, and misjoinder of party defendants. The trial court dismissed the complaint on these grounds.
    • The petitioner appealed to the Court of Appeals, which affirmed the dismissal. The petitioner then appealed to the Supreme Court.

Issue:

  1. Jurisdiction:

    • Whether the trial court has jurisdiction over the subject matter of the action, or whether the suit against the Central Bank for the refund of the 17% foreign exchange tax is a suit against the State, which cannot be sued without its consent.
  2. Due Process:

    • Whether the dismissal of the petitioner's complaint upon a motion to dismiss constitutes a denial of her constitutional right to due process, as it deprived her of the opportunity to present evidence to prove the allegations in her complaint.

Ruling:

  1. Jurisdiction:

    • The Supreme Court held that the Central Bank is suable for the refund of taxes collected under Republic Act 601, as amended. The Court cited previous rulings (Central Azucarera Don Pedro vs. Central Bank, Olizon vs. Central Bank, and Philippine Acetylene Co. vs. Central Bank) to affirm that the Central Bank, being authorized by its charter to sue and be sued, can be held liable for the refund of taxes.
  2. Due Process:

    • The Court found it unnecessary to rule on the due process issue. However, it addressed the merits of the causes of action:
      • First Cause of Action: The Court held that the trial court erred in dismissing the complaint based on the Central Bank's motion to dismiss. The issue of whether the imported items were "flavors" should have been resolved through evidence, not presumed in favor of the motion to dismiss.
      • Second and Third Causes of Action: The Court dismissed these claims because the petitioner failed to allege that the ice cream wooden spoons and paper containers were used in products consigned or exported abroad, a requirement for exemption under the law.
      • Fourth Cause of Action: The Court found the complaint lacked particularity regarding the importation of machinery, equipment, and spare parts. The trial court should have treated the motion to dismiss as a motion for a bill of particulars and required the petitioner to provide more details.
  3. Final Decision:

    • The Supreme Court set aside the judgment of the Court of Appeals. It dismissed the second and third causes of action but remanded the case to the trial court for further proceedings on the first and fourth causes of action. The National Treasurer and the Secretary of Finance were ordered to be impleaded as parties defendants.

Ratio:

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