CASCO PHIL. CHEMICAL CO. V.

GIMENEZ

FACTS:
Casco Philippine Chemical Co., Inc. (Casco) was engaged in the production of
synthetic resin glues used primarily in the production of plywood. The main
components of the said glue are urea and formaldehyde, which are both being
imported abroad. Pursuant to a Central Bank circular, Casco paid the required
margin fee for its imported urea and formaldehyde. Casco however paid in
protest as it maintained that urea and formaldehyde are tax-exempt transactions.
They paid P33,765.42 in November and December 1949 and P6345.72 in May
1960. Prior thereto, the petitioner sought the refund of the first and second sum
relying upon Resolution No. 1529 of the Monetary Board of said bank, dated
November 3, 1959, declaring that the separate importation of urea and
formaldehyde is exempt from said fee.
The Central Bank agreed and it issued vouchers for refund. The said vouchers
were submitted to Pedro Gimenez, the then Auditor General, who denied the tax
refund. Gimenez maintained that urea and formaldehyde, as two separate and
distinct components are not tax exempt; that what is tax exempt is urea
formaldehyde. Gimenez cited the provision of Sec. 2, par 18 of Republic Act No.
2609
ISSUE:
Whether or Not Urea and formaldehyde are exempt by law from the payment of
the margin fee.
HELD:
No. Urea formaldehyde is not a chemical solution. It is the synthetic resin formed
as a condensation product from definite proportions of urea and formaldehyde
under certain conditions relating to temperature, acidity, and time of
reaction. Urea formaldehyde is clearly a finished product, which is patently
distinct and different from urea and formaldehyde, as separate articles used in
the manufacture of the synthetic resin known as urea formaldehyde.
The petitioners contends that the bill approved in Congress contained the
conjunction and between the terms urea and formaldehyde separately as
essential elements in the manufacture of urea formaldehyde and not the
latter. If there has been any mistake in the printing of the bill before it was
certified by the officers of Congress and approved by the Executive on which
the SC cannot speculate, without jeopardizing the principle of separation of
powers and undermining one of the cornerstones of our democratic system
the remedy is by amendment or curative legislation, not by judicial decree.