MARSMAN AND COMPANY, INC., PLAINTIFF AND APPELLANT, VS. CENTRAL BANK OF THE PHILIPPINES, SECRETARY OF FINANCE, AND NATIONAL TREASURER OF THE PHILIPPINES, DEFENDANTS AND APPELLEES.

On various occasions during the latter part of 1955, Marsman &
Company, Inc. imported from the United States goods and merchandise
amounting to P1,409,231.05, upon which the Central Bank of the
Philippines collected, and said importer paid under protest, the total
sum of P239,635.62 as special excise tax under Republic Act 601, as
amended, on the foreign exchange utilized for said importations. The
corresponding drafts drawn on the letters of credit opened by the
importer in favor of its creditors in the United States in connection
with said importations were paid for and liquidated by the former on
various dates between January 16 and April 6, 1956. As Republic Act 601
under which the excise tax was assessed and paid, was repealed
effective December 31, 1955, refund of the amount paid after that date
when the law was no longer in force was demanded, and when the demand
was not heeded, the present action was filed in the Court of First
Instance of Manila against the Central Bank of the Philippines, the
Secretary of Finance and the National Treasurer.

Sustaining
defendants’ contention that plaintiff’s amended complaint stated no
cause of action, the lower court dismissed the same, concluding that
under plaintiff’s averments, it was under obligation to pay the 17%
excise tax. Hence, this appeal.

The facts appearing in the amended complaint and its annexes are as follows:

For the importations involved in this case, appellant Marsman &
Company, Inc., opened, from February 24 to November 15, 1955, with the
Philippine National Bank and the Bank of America, letters of credit in
favor of its creditors and business associates in the United States.
Upon said letters of credit, drafts were drawn and accepted during the
period of from June 1, 1955 to December 28, 1955, except with respect
to Letters of Credit No. 23689 and No. 6998-55 upon which the
corresponding drafts were accepted on January 4 and 19, 1956,
respectively. The different amounts in dollars covered by all these
drafts, were paid and liquidated in equivalent amounts of pesos to the
corresponding banks between January 16 and April 6, 1956, or after the
repeal of Republic Act 601. The question now raised in the instant case
is whether the Central Bank of the Philippines may still impose and
collect the 17% excise tax as required under Republic Act 601, on the
amounts covered by the drafts in question.

The 17% excise
tax collectible under Republic Act 601, as amended, is imposed on the
foreign exchange sold or authorized to be sold by the Central Bank of
the Philippines or any of its agents^[1] during the effectivity of said law. As already held by this Court,^[2]
the sale of foreign exchange is effected or consummated upon payment or
delivery to the creditor (in whose favor the letter of credit was
drawn) by the agent or corresponding bank, of the amount in foreign
currency authorized by the transmitting bank to be paid or drawn under
the letter of credit. The determinative factor for purposes of imposing
the aforementioned 17% excise tax, therefore, is not the date of
maturity of the obligation to pay for the foreign currency involved,
which is extendible, but the date the foreign currency allowed under
the draft is delivered to the drawee or becomes obligated or committed
upon acceptance of the draft. As, admittedly, with the exception of
those covered by Letters of Credit Nos. 23689 and 6990-55 (as to which
refund of the excise tax collected is proper), the drafts involved
herein were all accepted during the effectivity of Republic Act 601, it
is clear that they are subject to the imposition of the excise tax on
foreign exchange.

Wherefore, with the modification as above
indicated, the order appealed from is hereby affirmed, with costs
against the plaintiff-appellant. So ordered.

Paras, C. J., Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, and Gutierrez David, JJ., concur.

Padilla, J., took no part.
Reyes, J.B.L., and Endencia, JJ., on leave, took no part.

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^[1] Section 1, Republic Act 601.

^[2] Belman Cia. Inc. vs. Central Bank 104 Phil., 877; 55 Off. Gaz. (33) 6665; Belman Cia. Inc. vs. Central Bank, supra, p. 478. See also PNB vs. F. ARROZAL & Co., 103 Phil., 213 Off. Gaz. (21) 5698; Central Bank vs. Union Books, Inc., 101 Phil., 1984; PNB vs. Zulueta, 101 Phil., 1071; 55 Off. Gaz. (2) 222.