FIRST DIVISION

[G.R. No. L-20869. August 28, 1975.]

ALICIA O. ARCEGA, assisted by her husband RAF. L. ARCEGA, doing

business under the rm name of "FAIRMONT ICE CREAM CO.," ,
petitioner, vs. THE COURT OF APPEALS, THE CENTRAL BANK OF THE
PHILIPPINES, and THE PHILIPPINE NATIONAL BANK , respondents.

Raf L. Arcega for petitioner.

Nat. M. Balboa, F .E. Evangelista & Santiago V . Reyes for respondent Central
Bank of the Philippines.
Tomas Besa for respondent Philippine National Bank.

SYNOPSIS

Petitioner led suit against the respondent banks for a refund of the sum of
P18,030.13 paid by her in the concept of the 17% special excise tax on foreign
exchange levied under Section 14 of Republic Act No. 601, as amended. The involved
purchases of foreign exchange made from the Philippine National Bank to cover the
cost of transportation and other charges incident to the importation into the
Philippines of ingredients used as avors, paper containers and wooden spoons,
machineries, equipment, and spare parts used in the manufacture and distribution of
ice cream.
The Philippine National Bank led a motion to dismiss the complaint on the
ground that the complaint does not state a su cient cause of action. This was denied
by the trial court. The Central Bank of the Philippines, likewise, moved to dismiss the
complaint for lack of jurisdiction over the subject matter of the action because the
judgment sought would constitute a nancial charge against the government which
cannot be done without its consent; lack of cause of action, and failure to implead the
National Treasurer and the Secretary of Finance as party defendants who are
indispensable parties. Upon these grounds, the trial court dismissed the complaint.
Petitioner's motion for reconsideration having been denied, she appealed to the Court
of Appeals, which a rmed the order of dismissal ruling that the suit is indirectly
against the Republic of the Philippines which cannot prosper without its consent.
In assailing the decision of the Court of Appeals , the petitioner raised two
issues: (1) whether a suit against the Central Bank for refund of the 17% foreign
exchange tax collected by it under R.A. No. 601 as amended is actually a suit against
the State, and (2) whether the dismissal of the complaint deprived petitioner due
process of law.
The Supreme Court held that the Central Bank can be sued because the consent
of the State had already been granted under its Character authorizing it to sue and be
sued. It thus set aside the judgment under review, dismissed the complaint as to the
second and third causes of the action, and remanded the case for further proceedings
as to the rst and fourth causes of action after impleading the Treasurer of the
Philippines and the Secretary of Finance, as parties; without costs.

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 SYLLABUS

1. CENTRAL BANK; SUABILITY; CENTRAL BANK CAN BE SUED. — The Central

Bank of the Philippines, as an entity authorized by its Charter to sue and be sued, can be
sued for refund of the taxes collected by it under Republic Act 601, as amended,
because the consent of the State to thus be sued has already been given and Section of
R.A. No. 601 as amended directs that refund of taxes be made by Central Bank.
2. COMPLAINTS; MOTION TO DISMISS; ERROR TO DISMISS COMPLAINT WHERE
MOTION TO DISMISS ASSAILS THE CORRECTNESS OF THE ALLEGATIONS THEREOF.
— Where the complaint alleges that the imported items were used for " avors" for ice
cream products hence exempt from the payment of the 17% foreign exchange tax
under Section 2 of Republic Act 601, while the motion to dismiss assails the
correctness of the allegation that the abovenamed commodities were used as " avors,"
it was improper for the court a quo to grant the motion upon the assumption that the
averments therein are true and those of the complaint are not. The court should have
either denied the motion without prejudice to the defendant Bank's right to plead, as a
special defense in it answer, the issue upon which the motion was predicated, or
proceeded to the reception of evidence on the issue thus raised before resolving the
same.
3. ID.; LACK OF PARTICULARITY; BILL OF PARTICULAR REQUIRED OF PLAINTIFF.
— Where the complaint suffers from lack of particularity the proper course of action the
trial court should have taken was to treat the motion to dismiss as one for a bill of
particulars and consequently require the plaintiff to submit a bill of particulars rather
than dismiss the complaint.

DECISION

CASTRO , J : p

On August 17, 1956 the petitioner Alicia O. Arcega, doing business under the rm
name "Fairmont Ice Cream Company," led a complaint with the Court of First Instance
of Manila, Branch I, docketed as civil case 30443, against the respondents Central Bank
of the Philippines and Philippine National Bank, for the refund, under four causes of
action, of the total sum of P18,030.13 representing allegedly unauthorized payments
made by her in the concept of the 17% special excise tax on foreign exchange levied
under Section 1 of Republic Act 601, as amended by Republic Acts 1175 and 1197. cdasia

The refund prayed for involves purchases of foreign exchange from the Philippine
National Bank to cover the costs and transportation and other charges incident to the
importation into the Philippines (1) under the rst cause of action, of coffee roasted,
vanilla, fruit cocktail, peaches, butter and pecan nuts which were used as " avors" for
the petitioner's ice cream product; (2) under the second cause of action, of paper
containers and corresponding covers, specially manufactured by her supplier Sealright
Pacific, Ltd., which were utilized as containers in the manufacture and distribution of ice
cream; (3) under the third cause of action, of ice cream wooden spoons individually
wrapped used as accessories to or inseparable articles in the manufacture, sale and
distribution in retail of ice cream; and (4) under the fourth cause of action, of
machineries, equipment and spare parts which were used by the petitioner in her
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 factory.
The Philippine National Bank moved to dismiss the complaint on the ground that
it does not state a su cient cause of action because, although the PNB is being sued
as an agent of the Central Bank, there is no allegation in the complaint that it had
contracted in its own name or exceeded its authority as such agent, hence, even
assuming that the averments of the complaint could be established, it cannot be held
liable for the amount of the special excise tax it had collected from the petitioner. The
trial court denied the motion.
The Central Bank also moved to dismiss the complaint on the grounds that (1)
the trial court has no jurisdiction over the subject-matter of the action, because the
judgment sought will constitute a nancial charge against the Government, and
therefore the suit is one against the Government, which cannot prosper without its
consent, and in this case no such consent has been given; (2) the complaint states no
cause of action; and (3) there is a misjoinder of party defendant, for neither the
Treasurer of the Philippines nor the Secretary of Finance was impleaded as party
defendant, notwithstanding that either of them, representing the Government of the
Philippines, is an indispensable party, not only because the foreign exchange tax
collected accrued to the National Treasury, but also because, after December 31, 1955,
the expiry date of the foreign exchange tax law, the authority to order the refund of
special excise taxes or to approve exemptions under the foreign exchange tax law
devolved upon the Secretary of Finance.
After the ling by the petitioner of an opposition to the Central Bank's motion to
dismiss, by the Central Bank of a reply thereto, and by the petitioner of a rejoinder to the
Central Bank's reply, the trial court, on November 23, 1956, dismissed the complaint on
the three grounds set forth in the Central Bank's motion to dismiss.
On December 12, 1956 the petitioner Arcega led a motion for reconsideration
of the resolution of November 23, 1956, to which an opposition was led by the Central
Bank. A certi cate dated December 18, 1956 and signed by Jose Carmona, Chief
Accountant of the Central Bank, was attached as an annex to the Central Bank's
opposition, certifying "that the balance of P7,137,747.71 as of December 29, 1955 of
the total amount collected as special excise tax on sales of foreign exchange was
turned over to the Treasurer of the Philippines on June 20, 1956." In an order dated
December 12, 1955 the court denied the petitioner's motion for reconsideration. She
appealed to the Court of Appeals. cdtai

Holding that the suit is indirectly against the Republic of the Philippines which
cannot he sued without its consent, the Court of Appeals a rmed the dismissal of the
complaint.
The petitioner interposed the present appeal by certiorari, presenting for
resolution two issues: rst, whether the trial court has jurisdiction over the subject-
matter of the action, or, stated differently, whether a suit against the Central Bank for
refund of the 17% foreign exchange tax collected by it under Republic Act 601, as
amended, is actually a suit against the State; and, second, assuming arguendo that the
trial court has jurisdiction, whether the dismissal of the petitioner's complaint upon a
motion to dismiss constitutes a denial of her constitutional right to due process of law
in the sense that such dismissal deprived her of the right to present evidence to prove
the truth of the essential allegations of her complaint.
1. The suability of the Central Bank for the refund of taxes collected by it under
Republic Act 601, as amended, was upheld in Central Azucarera Don Pedro vs. Central
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 Bank of the Philippines, 1 which ruling merited elaboration in Olizon vs. Central Bank 2
as follows:
"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."

This doctrine was reiterated in Philippine Acetylene Co. vs. Central Bank of the
Philippines 3 where it was pointedly stated that "sec. 5 of Republic Act No. 601 (as
amended) directs that refund of taxes be made by the Central Bank."
The courts below, therefore, 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.
2. In resolving the second issue we nd it needless to dwell on the alleged denial
of constitutional due process.
Upon the- rst cause of action, the petitioner alleges that she used the coffee
roasted, vanilla, fruit cocktail, peaches, butter and pecan nuts as " avors" for her ice
cream product. The respondent Central Bank, in its motion to dismiss, contended that
these items are not " avors," and that what is exempt from the 17% foreign exchange
tax under Section 2 of Republic Act 601 is the importation of " avors." The motion to
dismiss, therefore, assails the correctness of the allegation that the abovenamed
commodities were used as " avors." It was thus improper for the court a quo to grant
the motion upon the presumption that the averments in the motion are true and those
of the complaint are not. The court should have either denied the motion, without
prejudice to the defendant bank's right to plead, as a special defense in its answer, the
very issue upon which said motion was predicated, or proceeded to the reception of
evidence on the issue of fact thus raised before resolving the same. 4
The second and third causes of action must however fall. For the importation of
containers and ice cream wooden spoons to be exempt from the foreign exchange tax,
these articles must be used by the importer in the manufacture or preparation of a local
product and the product so manufactured or prepared must be consigned or exported
abroad; here there is no allegation in the complaint that the ice cream wooden spoons
and paper containers used by the petitioner in her ice cream industry and her ice cream
product were consigned or exported abroad.
The fourth cause of action suffers from lack of particularity. Under Republic Act
601, as amended, the cost of importations of "machinery, equipment, accessories and
spare parts for the use of industries, miners, mining enterprises, planters and farmers"
was exempt from the 17% foreign exchange tax, but the complaint does not allege (a)
when the corresponding letters of credit were opened, (b) the kind of "machinery,
equipment, accessories and spare parts" imported by the petitioner to be used in her
ice cream industry, (c) when the goods arrived, and (d) when the foreign exchange tax
was paid. The proper course of action the trial court should have taken was to treat the
motion to dismiss as one for a bill of particulars and consequently require the plaintiff
to submit a bill of particulars. 5
ACCORDINGLY, the judgment appealed from is set aside. Another one is hereby
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 entered (a) dismissing the complaint as to the second and third causes of action, and
(b) remanding the case to the trial court for further proceedings on the rst and fourth
causes of action, conformably with this decision and with law, after impleading the
National Treasurer and the Secretary of Finance as parties defendants. No
pronouncement as to costs. aisa dc

Makalintal, C . J ., Teehankee, Makasiar and Martin, JJ ., concur.

Footnotes

1. 104 Phil. 598, 603 (1958).

2. L-16524, June 30, 1964, 11 SCRA 357, 362.

3. L-17097, September 29, 1964, 12 SCRA 38, 42.

4. Palma vs. Graciano, et al., 99 Phil. 72; Carreon vs. Province of Pampanga, et al., 99 Phil. 808.
5. Salvador vs. Frio, et al., L-25352, May 29, 1970, 33 SCRA 315.

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