Arcega v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioner Alicia O. Arcega, doing business as Fairmont Ice Cream Company, filed a complaint against the Central Bank of the Philippines (Central Bank) and the Philippine National Bank (PNB) for the refund of P18,030.13, representing allegedly unauthorized payments of the 17% special excise tax on foreign exchange. The refund was sought for foreign exchange purchases used for importing coffee, vanilla, fruit cocktail, peaches, butter, pecan nuts (as flavors), paper containers and covers, ice cream wooden spoons (as accessories), and machineries, equipment, and spare parts for her factory. Procedural History: The PNB moved to dismiss, arguing it was merely an agent of the Central Bank and not liable. The trial court denied this motion. The Central Bank also moved to dismiss on grounds of lack of jurisdiction (suit against the State), failure to state a cause of action, and misjoinder of parties. The trial court dismissed the complaint on these grounds. Petitioner's motion for reconsideration was denied. The Court of Appeals affirmed the dismissal, holding the suit was indirectly against the Republic of the Philippines. The Petition: Petitioner appealed to the Supreme Court, raising two issues: (a) whether the trial court had jurisdiction over the subject matter, i.e., if a suit against the Central Bank for refund of foreign exchange tax is a suit against the State; and (b) whether the dismissal deprived her of due process by preventing her from presenting evidence.
Issue(s)
Issue 1: Whether a suit against the Central Bank of the Philippines for the refund of the 17% foreign exchange tax collected by it under Republic Act No. 601, as amended, is actually a suit against the State, thereby implicating the doctrine of sovereign immunity. Issue 2: Whether the dismissal of the petitioner's complaint upon a motion to dismiss constituted a denial of her constitutional right to due process of law, specifically concerning the first and fourth causes of action, and the propriety of dismissing the second and third causes of action.
Ruling
The Supreme Court set aside the judgment of the Court of Appeals. It dismissed the complaint as to the second and third causes of action and remanded the case to the trial court for further proceedings on the first and fourth causes of action, after impleading the National Treasurer and the Secretary of Finance as parties defendants.
Ratio Decidendi
On Issue 1: The Supreme Court held that a suit against the Central Bank of the Philippines for the refund of taxes collected by it under Republic Act No. 601, as amended, is not a suit against the State. The Central Bank is an entity authorized by its charter to sue and be sued, which signifies the State's consent to be sued. This doctrine was reiterated in Philippines Acetylene Co. vs. Central Bank of the Philippines (L-17097, September 29, 1964, 12 SCRA 38, 42), which explicitly states that Section 5 of Republic Act No. 601 directs that refund of taxes be made by the Central Bank. Therefore, the courts below erred in dismissing the complaint on the ground that the Central Bank was non-suable for the refund of taxes it had collected under the statute, asserting jurisdiction over the matter. On Issue 2: The Supreme Court found it needless to dwell on the alleged denial of constitutional due process in general, but addressed the propriety of the dismissal of each cause of action. For the first cause of action, which alleged that items like coffee and vanilla were used as "flavors," the Central Bank's motion to dismiss contended that these items are not "flavors." This created an issue of fact. The Court ruled that it was improper for the trial court to grant the motion upon the presumption that the averments in the motion were true and those of the complaint were not, citing Palma vs. Graciano, et al. (99 Phil. 72) and Carreon vs. Province of Pampanga, et al. (99 Phil. 808). The court should have either denied the motion or proceeded to receive evidence on the issue of fact. For the second and third causes of action (importation of containers and ice cream wooden spoons), the Court affirmed their dismissal, reasoning that for these articles to be exempt from the foreign exchange tax, they must be used in the manufacture or preparation of a local product that is consigned or exported abroad, an allegation absent from the petitioner's complaint. Lastly, the fourth cause of action concerning "machinery, equipment, accessories and spare parts" suffered from a lack of particularity, as the complaint did not allege specific details like when letters of credit were opened, the exact kind of machinery, arrival dates, or payment dates. The proper course, as guided by Salvador vs. Frio, et al. (L-25352, May 29, 1970, 33 SCRA 315), should have been to treat the motion to dismiss as one for a bill of particulars, requiring the plaintiff to submit more specific details, rather than an outright dismissal.
Main Doctrine
A suit against the Central Bank for the refund of taxes collected by it under its charter is not a suit against the State, as the Central Bank is authorized to sue and be sued. Dismissal of a complaint on a motion to dismiss, without affording the plaintiff an opportunity to present evidence on disputed facts, may constitute a denial of due process.