Casco Philippine Chemical Co. Inc., v. Hon.

Pedro Gimenez
Case No. 48
G.R. No. L-17931 (February 28, 1963)
Chapter I, Page 9, Footnote No.31

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:
W/N “urea” and “formaldehyde” are exempt by law from the payment of the margin fee.

HELD:
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.