Case Digest (G.R. No. L-25732)
Facts:
- Vargas Plow Factory Inc. applied for free market letters of credit from the Philippine National Bank to cover the cost of importing steel blades, bolts, and rivets from Germany.
- The Philippine National Bank, on behalf of Vargas Plow Factory Inc., applied with the Central Bank to purchase forward exchange to cover the letters of credit.
- The Central Bank charged and collected a 15% margin levy on the foreign exchange covered by the drafts drawn against the letters of credit.
- Vargas Plow Factory Inc. demanded a refund of the margin levy, claiming that its collection was not in accordance with the law.
- When the refund was denied, Vargas Plow Factory Inc. filed a complaint before the Court of First Instance of Manila.
Issue:
- (Unlock)
Ruling:
- The Supreme Court ruled in favor of the Central Bank and dismissed the complaint.
- The Court held that the margin fee was properly collected.
- The Court overruled the previous ruling in Belman Cia, Inc. vs. Central Bank and held that the true sale of foreign exchange took place when the forward exchange contracts were executed before the margin levy was suspended.
- The Court emphasized that the sales of foreign exchange by the Central Bank were made to Vargas Plow Factory Inc....(Unlock)
Ratio:
- The Court based its decision on the re-examination of the doctrine in Belman Cia, Inc. vs. Central Bank and other related cases.
- The Court concluded that the imposable margin fee becomes collectible upon the execu...continue reading
Case Digest (G.R. No. L-25732)
Facts:
The case involves Vargas Plow Factory, Inc. as the plaintiff-appellee and the Central Bank of the Philippines as the defendant-appellant. The events leading to the case began when Vargas Plow Factory, Inc. sought to import steel blades, bolts, and rivets from Germany. To finance this importation, the company applied for free market letters of credit through the Philippine National Bank, which were granted on September 22, 1961, December 22, 1961, and January 15, 1962, with face values of $10,820.00, $3,580.00, and $10,820.00, respectively. The Philippine National Bank subsequently applied to the Central Bank to purchase the necessary "forward exchange" to cover these letters of credit. The Central Bank approved these applications, leading to the execution of Forward Exchange Contracts on December 15, 1961, December 26, 1961, and January 19, 1962.
The foreign beneficiary, Stahlkontor Hahn Aktiengesellschaft of Dusseldorf, Germany, drew drafts against these letters of credit on December 30, 1961, March 22, 1962, and other dates, which were accepted by Vargas Plow Factory on various dates in 1962. The Central Bank then charged Vargas Plow Factory a sum of P11,642.65 as a 15% margin levy on the foreign exchange covered by these drafts. Vargas Plow Factory paid this amount but later demanded a refund, arguing that the collection was unlawful. When the Central Bank denied the request, Vargas Plow Factory filed a case in the Court of First Instance of Manila (Civil Case No. 57582). On November 11, 1965, the court ruled in favor of Vargas Plow Factory, ordering the Central Bank to refund th...