G.R. No. L-23039 November 26, 1986
RAMCAR, INC., vs. CENTRAL BANK OF THE PHILIPPINES.

FACTS

Ramcar, Inc., an importer, opened sixteen free market letters of credit with the Philippine National Bank (PNB) between October 1961 and January 1962 to cover importations. The PNB, as an authorized agent, applied with the Central Bank for the necessary foreign exchange. Consequently, the PNB and the Central Bank executed “forward exchange contracts” on various dates from October 31, 1961, to January 3, 1962. The foreign suppliers subsequently drew drafts against these letters of credit, which Ramcar accepted from January 24 to April 10, 1962. During this latter period, PNB assessed and collected from Ramcar a 15% margin levy under Central Bank Circular No. 122, which Ramcar paid under protest.
The legal conflict arose because the Central Bank suspended the collection of the margin levy on January 21, 1962. Thus, while the letters of credit and forward contracts were established during the levy’s effectivity, the drafts were accepted and paid after its suspension. Ramcar sued for a refund, and the trial court, applying the precedent in Belman Compañia Inc. vs. Central Bank, partially granted the refund, ruling the levy attachable only upon the foreign currency payment by the correspondent bank, which for some transactions occurred after January 21, 1962.

ISSUE

The decisive issue is when the margin levy on the sale of foreign exchange becomes collectible: upon the execution of the forward exchange contract, upon the drawee’s acceptance of the drafts, or upon the actual payment in foreign currency by the correspondent bank.

RULING

The Supreme Court reversed the trial court, ruling the margin fee was collectible upon the execution of the forward exchange contracts. The Court explicitly overruled the Belman doctrine, which had pegged the levy to the actual payment in foreign currency. Following its subsequent rulings in Pacific Oxygen and Acetylene Co. vs. Central Bank and Vargas Plow Factory, Inc. vs. Central Bank, the Court held that Republic Act No. 2609 and the implementing circulars made no distinction between perfected and consummated sales. Applying civil law principles, a sale is perfected by mere consent upon the execution of the contract, regardless of the delivery of the subject matter. Therefore, the “sale of foreign exchange” was perfected when the forward exchange contracts were executed in late 1961 and early January 1962, prior to the levy’s suspension.
The Court emphasized the nature and purpose of a forward exchange contract, which is to fix the exchange rate for a future date, thereby hedging the buyer against currency fluctuation risks. Since Ramcar availed itself of this contractual benefit and liquidated its obligations at the contracted rates, it must also bear the corresponding obligation (the margin fee) imposed by law at the time of contract perfection. To rule otherwise would grant Ramcar an unfair advantage, allowing it to secure a fixed rate while avoiding the attendant tax burden legally in force when the binding contracts were made. Consequently, the collection was valid, and the complaint for refund was dismissed.