FRANCISCO S. OLIZON, PLAINTIFF AND APPELLEE, VS. CENTRAL BANK OF THE PHILIPPINES, DEFENDANT AND APPELLANT.

This is an appeal from the decision of the Court of First Instance
of Manila, rendered in Case No. 40215, ordering the appellant Central
Bank to refund to the herein appellee the sum of P9,713.94 plus
interest, cost and attorney’s fees.

The facts giving rise to this suit, as recited in the lower court
decision and borne by the records transmitted to Us, are as follows:

“x x x The defendant on March 21, 1952, December 4,
1952( November 25, 1953, and January 4, 1955, collected from the
plaintiff (herein appellee) the amounts of P3,186.24, P840.65,
P2.488.98, and F2.734.53, under Central Bank Official Receipt Nos.
047895, 052279, 491743, and 663339, respectively, in payment of
Special Excise Tax on Foreign Exchange covering transactions, the
details of which are described in said receipts; that these amounts, as
admitted by the defendant, were collected pursuant to its Monetary
Board Resolution No. 286, dated May 3, 1951 (Answer to Request for
Admission, par. 1); That on March 10, 1958, plaintiff requested the
defendant to refund to him the amounts above-stated, plus the sum of
P463.54, which is supported by a statement from the Philippine National
Bank; subsequently, requests were made by the plaintiff citing various
rulings of the Supreme Court in support thereof but the Central Bank
refused to accede to these requests.”

The Central Bank concedes the illegality of the resolution under
which it made the levy. It expressly adverts to the cases of PNB vs.
Zulueta, 101 Phil., 1071; 53 Off. Gaz., pp. 222-231 and PNB and Central
Bank vs. Union Books, Inc., 101 Phil., 1081; and says that “there was
no longer any necessity for this Honorable Court (the lower court) to
declare Monetary Board Resolution No. 286 dated May 3, 1951, as
illegal. There is no dispute about this.”

Despite the above admission, however, the Bank still refused to
grant the refund on the ground that the claim for the same had already
prescribed. It vigorously argued the theory that “for purposes of
recovering a tax paid illegally or erroneously * * * the action should
be filed within five (5) years, from the date of payment of the tax.”
It arrived at the said period on the reasoning that since the tax code
does not provide for the same, the deficiency should be governed by
Article 1149 of the Civil Code which says:

“All other actions whose periods are not fixed in
this Code or in other laws must be brought within five years from the
time the right of action accrues.” After the dispute was tried in the
lower court, the trial Judge rejected the appellant’s theory and ruled
that the prescriptive period was ten (10) years, holding that the
obligation to refund was one created by law and which therefore, under
Article 1144 of the Civil Code, prescribed in ten years, Hence, this
appeal.

During the pendency of the appeal, however, this Court handed down
its decision in the case of Belman Cia. Inc. vs. Central Bank, 108
Phil., 478, expressly ruling (in the Resolution to a Motion for
Reconsideration filed thereto by the same Central Bank herein) that the
prescriptive period is six (6) years.

“Plaintiff-appellee has filed a motion for
reconsideration arguing that this action was still timely because, it
ia argued, the period of prescription applicable to the case is ten
(10) yean from date of payment. To support this contention, Article
1144, paragraph (2) is cited, which provides:

‘Article 1144.—The following actions must be brought within ten years from the time the right of action accrues:

(1) x x x

(2) Upon an obligation created by law.

Since, it is claimed, the payment here was made by reason of a
mistake in the interpretation of Republic Act 601, the obligation to
return arises by virtue of Article 2155, in relation to Article 2151 of
the New Civil Code and is, therefore, one created by law.

“Movant-appellee is partly correct. However,
Articles 2154 and 2155 relied upon, specifically refer to obligations
of the nature of solutio in-debit which are expressly classified as
quasi-contracts under Section 2, Chapter I of Title XVII of the new
Civil Code. Consequently, the law regarding prescription applicable to
the action herein involved is not Article 1144(2) cited by the movant,
but Article 1145(2) of the new Civil Code providing:

‘Article 1145.—The following actions must be commenced within six years:

(1) * * *

(2) Upon a quasi-contract.'”

In view of the ruling in the above-mentioned case, the Central Bank
filed a memorandum conceding the refundability of all the claims that
“there is no way to determine whether the action for refund of this
amount has already “prescribed or not” as the papers necessary for its
proper processing were no longer available or have been lost.
Furthermore, however, of the claims it concedes to have been filed
within the prescriptive period and of which it. Accepts the obligation
to refund, the Bank asserts that it “should be refunded” only “upon
presentation of satisfactory proof.”

We do not understand just what exactly the appellant Bank means by
the “presentation of satisfactory proof.” It admits it received from
the appellee the sum of P9,713.94.

“On various dates and under Central Bank Official Receipts hereunder
indicated, plaintiff-appellee, paid as 17% special excise tax through
the Philippine National Bank, in settlement of various collection
bills, due to foreign suppliers from plaintiff-appellee, the total turn
of P9, 713.91. itemized as follows:” (Statement of Facts, Appellant’s
Brief, p. 5.) (Italics supplied)

It likewise admits that the Monetary Board Resolution on the authority of which it exacted the said amount is illegal.

“We respectfully contend that there was no longer
any necessity for this Honorable Court (the lower court) to declare
Monetary Board Res. 286 dated May 8, 1951, as illegal. There is no
dispute about this. No allegation can be found in defendant’s pleading.
(Answer to Request for Admission, and Answer to Interrogatories) to the
effect that defendant still upholds the validity of said resolution.
xxx) (pp. 230-240, Record on Appeal).

Lastly, it admits its obligation to refund as well as the timeliness of the claim for the same.

“As shown by the letter of the Philippine National
Bank to the Legal Counsel of the Central Bank dated June 15, 1959, the
remittances of the foreign exchange involved in the collection bills
with respect the seven items were made on various dates between August
23, 1940 and November 28, 1949. the account of Francisco Olison were
all made in 1949, before the effectivity of the special excise tax law
(March 28, 1951), therefore, the assessment and collection of the
exchange rates in question were erroneous and illegal. In accordance
with Arts. 2154 and 2155 of the new Civil Code of the Philippines,
there would be an obligation on the part of defendant Central Bark to
refund the said amounts received by reason of a mistake in the
construction or application of a doubtful question of law.” (p. 6,
Memorandum in lieu of Oral Argument.)

“It has been verified
from, the Foreign Department, Philippine National Bank, that all
foreign exchange (US. dollars) involved in said collection bills were
remitted to the United States on the various dates between August 23,
1949 and November 28, 1949, before March 23, 1951, when the Exchange
Tax law took effect, (pp. 6-7, Statement of Facts, Appellant’s Brief.
(Italics in the above two paragraphs supplied.)

In the face of all those admissions, we do not see what else needs
be proved. This case was submitted on the issue of prescription, the
appellant contending that the period was five (5) years. It now admits
its error and accepts the correct period to be six years. Therefore,
insofar as this suit is concerned, the inquiry need not go beyond
determining whether the claim for refund was filed within the six year
period or not. And, since the Bank explicitly and unequivocably
confirms that the claims were made within that time, it ought not be
too technical, but, on the contrary, it should earnestly endeavor to
remove or overcome the minor technicalities that might stand in the way
of a prompt refund.

It is next urged that inasmuch as the amounts here involved have
already been turned over to the national treasury the present action
may no longer be maintained since it would, in effect, be a suit
against the State without its consent.

We cannot agree to the proposition. This suit is brought against the
Central Bank of the Philippines, an entity authorized by its charter to
sue and be sued. The consent of the State to thus be sued, therefore,
has been given. As said in the case of Central Azucarera San Pedro vs.
Central Bank, 104 Phil., 598, in suits for refund, “being a corporation
that may sue and be sued, the Central Bank is the proper party
defendant pursuant to Section 5 of Republic Act No. 601, which provides
that “the refund of taxes pursuant to sections two and three of this
Act shall be made by the Central Bank of the Philippines.”

In the memorandum submitted in lieu of oral argument, the appellant
Bank represented for the first time that the “plaintiff-appellee has an
outstanding liability of P4.963.62 by way of unpaid 17 % special excise
tax on the remittance of foreign exchange to import cotton goods and
gladiolus bulbs.” It then urged that whatever items this Court should
order to be refunded should be set off against the said “outstanding
liability” of the appellee.

The representation impresses Us as untenable. The matter of
appellee’s outstanding unpaid accounts with the Bank is a fit subject
for a counterclaim and the Rules of Court provide for the manner by
which they may be impleaded or raised in this suit. Those rules were
devised not only to provide a more adequate and elastic procedure for
the prompt dispatch of litigation, but more importantly, to fully
protect the rights of the parties. Verily, therefore, the public policy
involved in the observance of those rules should not be lightly
estimated. Within the perspective of the foregoing discussion,
therefore, it would seem that the appellant has not only withhold
proper deference for the rules; it has been unfair to the appellee as
well. For in raising a counterclaim at so late a stage in the
proceeding as the period for oral argument, it denies to the appellee
full and complete protection of his rights since by then the
proceedings in the court have practically terminated and the appellee
would hardly have time to explain or defend himself from the
countersuit.

IN VIEW OF THE FOREGOING, the judgment appealed from and the awards made thereunder are hereby affirmed.

Costs against the appellant.

Bengzon, C. J.. Padilla, Bautista Angelo, Concepcion, Reyes, J. B. L., Paredes and Makalintal, JJ., concur.