G.R. No. 111399 - Pecho vs. People

Plaintiff-appellant, George W. Batchelter (doing business under the name and style of Batchelter Equipment), filed a motion for reconsideration through counsel, Delegate Mauro Baradi.
The motion was premised on the contention that the lower court’s decision (of March 29, 1972) had failed to account for an obligation arising from law—even in the absence of a formal contract—imposing on the defendant (Central Bank of the Philippines) the duty to resell US$154,094.56 at an exchange rate of P2.00375 to US$1.00.

The plaintiff contended that, regardless of the absence of a contractual bond, an obligation could nonetheless be derived from law.
It was argued that administrative orders and circulars, though not statutes, have the force and effect of law when issued in conformity with the enabling statute, thereby creating legal obligations similar in nature to those arising from contracts.

The plaintiff supported its argument by citing legal scholars and cases, notably referencing the Outlines on Civil Law by Justice Jose B. L. Reyes (with co-author Judge Ricardo Puno), who noted that “laws,” as used in the Civil Code, include administrative orders and regulations provided they do not conflict with the Constitution or statutory law.
People vs. Que Po Lay was also cited, where the Court recognized that a Central Bank circular, issued pursuant to quasi-legislative power, may have the force and effect of law.

Central Bank’s function as a regulatory agency was emphasized—it is primarily charged with managing the currency rather than entering into contractual relations.
The Court reiterated that the issuance of circulars in the context of administrative regulation does not transmute the Central Bank into a contracting party with an obligation to satisfy a credit.

Plaintiff-appellant further asserted that there was compliance with the rules and regulations of the Central Bank and that a vested right had accrued.
However, these claims were undermined by the clear denial by the Central Bank of having complied, as well as by the prior judicial finding that no contract—and consequently no such obligation—existed between the parties.

Whether the absence of a contract precludes the imposition of an obligation on the part of the defendant Central Bank to resell the specified amount at a fixed exchange rate.
Whether a Central Bank circular, even if possessing the force of law, can create an obligation similar to that which arises from a contract or quasi-contract.
Whether the doctrine that “obligations arising from law are not presumed” can be applied to mandate that an administrative agency assumes a duty solely based on its regulatory circulars.