Case Summary (G.R. No. L-17931)
Key Dates
- July 1, 1959: Central Bank issues Circular No. 95 imposing a 25% uniform margin fee on foreign exchange transactions
- November–December 1959 and May 1960: Petitioner’s purchases of foreign exchange and payment of margin fees (P33,765.42 and P6,345.72)
- February 28, 1963: Decision rendered by the Supreme Court
Applicable Law
- 1935 Philippine Constitution (governing law at time of decision)
- Republic Act No. 2609 (Foreign Exchange Margin Fee Law)
- Section 2, paragraph XVIII of Republic Act No. 2069 (exemption provision)
Factual Background
Pursuant to RA 2609, the Central Bank fixed a 25% margin fee on purchases of foreign exchange by Circular No. 95. It later issued a memorandum detailing procedures for seeking fee exemptions. Between November 1959 and May 1960, petitioner bought foreign exchange to import urea and formaldehyde, paying aggregate margin fees of P40,111.14. Petitioner relied on Monetary Board Resolution No. 1529 (November 3, 1959), which declared “separate importation of urea and formaldehyde” to be exempt.
Procedural History
Petitioner applied to the Central Bank for refund of the margin fees paid. Although the Bank prepared refund vouchers, its Auditor refused audit approval, holding that the Monetary Board’s exemption did not align with Section 2(XVIII) of RA 2069. On appeal, the Auditor-General affirmed the refusal. Petitioner then filed this petition for review.
Legal Issue
Whether the separate importation of urea and formaldehyde by an end-user is exempt from the 25% margin fee under Section 2(XVIII) of RA 2069.
Statutory Provision
Section 2, paragraph XVIII, RA 2069: “The margin … shall not be imposed upon the sale of foreign exchange for the importation of the following: … XVIII. Urea, formaldehyde for the manufacture of plywood and hardboard when imported by and for the exclusive use of end-users.”
Petitioner’s Argument
Petitioner contends that the phrase “urea formaldehyde” in the enrolled act should be read as the copulative “urea and formaldehyde,” thereby exempting the separate raw materials. It relies on pre-enrollment congressional drafts and floor statements suggesting legislative intent to grant an exemption for each ingredient.
Court’s Analysis
- Chemical Distinction: The National Institute of Science and Technology clarified that “urea formaldehyde” is a finished synthetic resin produced by condensing urea and formaldehyde under specific conditions. It is distinct from its separate raw materials.
- Enrolled Bill Doctrine: The Supreme Court held that the text of the enrolled act—using “urea formaldehyde” rather than “ur
Case Syllabus (G.R. No. L-17931)
Facts of the Case
- Republic Act No. 2609 (Foreign Exchange Margin Fee Law) authorized the Monetary Board of the Central Bank to impose a uniform margin fee on foreign exchange transactions.
- On July 1, 1959, the Central Bank issued Circular No. 95, fixing a 25% margin fee, and later issued a memorandum prescribing procedures for exemption applications under R.A. No. 2609.
- In November and December 1959, petitioner Casco Philippine Chemical Co., Inc. imported urea and formaldehyde—key raw materials for synthetic resin glues—and paid margin fees totalling ₱33,765.42.
- In May 1960, petitioner made a further importation of the same materials and paid an additional ₱6,345.72 in margin fees.
- Petitioner sought refunds of both payments, relying on Monetary Board Resolution No. 1529 (November 3, 1959), which declared that separate importations of urea and formaldehyde were exempt from the margin fee.
Procedural History
- The Central Bank issued margin fee vouchers for the requested refunds.
- The Auditor of the Central Bank refused to pass and approve the vouchers, holding that the exemption did not comport with Section 2, paragraph XVIII of Republic Act No. 2069.
- On appeal, the Auditor General affirmed the Auditor’s disallowance.
- Petitioner filed this petition for review before the Supreme Court.
Issue
- Whether the terms “urea” and “formaldehyde,” when imported separately for the manufacture of synthetic resin glues, are exempt from the 25% foreign exchange margin fee under Section 2, paragraph XVIII of R.A. No. 2069.