Casco Philippine Chemical Co., Inc. v.

Gimenez
G.R. No. L-17931. February 28, 1963.
CONCEPCION, J p:||

FACTS:
Petitioner was engaged in the manufacture of synthetic resin glues. It sought the refund of
the margin fees relying on RA 2609 (Foreign Exchange Margin Fee Law) stating that the Central
Bank of the Philippines fixed a uniform margin fee of 25% on foreign exchange transactions.
However, the Auditor of the Bank refused to pass in audit and approved the said refunds
upon the ground that Petitioner’s separate importations of urea and formaldehyde is not in accord
with the provisions of Sec. 2, par. 18 of RA 2609. The pertinent portion of this statute reads:
“The margin established by the Monetary Board … shall be imposed upon the sale of foreign
exchange for the importation of the following: “XVIII. Urea formaldehyde for the manufacture
of plywood and hardwood when imported by and for the exclusive use of end-users.”

ISSUE:
Whether or not “urea” and “formaldehyde” are exempt by law from the payment of the
margin fee.

RULING:
No, it is not exempt.
The term “urea formaldehyde” used in Sec. 2 of RA 2609 refers to the finished product as
expressed by the National Institute of Science and Technology and is distinct and separate from
“urea and formaldehyde” which are separate chemicals used in the manufacture of synthetic
resin.
The one mentioned in the law is a finished product, while the ones imported by the
Petitioner are raw materials. Hence, the importation of “urea” and “formaldehyde” is not exempt
from the imposition of the margin fee.