Title
Batchelder vs. Central Bank of the Philippines
Case
G.R. No. L-25071
Decision Date
Mar 29, 1972
An American contractor in the Philippines disputed the Central Bank's exchange control policies, claiming entitlement to a preferred exchange rate; the Supreme Court ruled no contractual obligation existed, denying damages.
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Case Digest (G.R. No. L-25071)

Facts:

  1. Parties Involved:

    • Plaintiff-Appellant: George W. Batchelder, an American citizen residing in the Philippines, doing business under the name Batchelder Equipment.
    • Defendant-Appellant: The Central Bank of the Philippines, a government corporation established under Republic Act No. 265.
  2. Background of the Case:

    • The Central Bank issued Central Bank Circular No. 20 on December 9, 1949, imposing exchange controls. Subsequent circulars, including Circular No. 44 (June 12, 1953), Circular No. 105 (April 25, 1960), and Circular No. 106 (April 25, 1960), were issued to implement exchange control policies.
    • On July 16, 1959, Republic Act No. 2609 was enacted, mandating a four-year program of gradual decontrol of foreign exchange.
  3. Plaintiff’s Contract with the U.S. Navy:

    • On March 30, 1960, Batchelder entered into a contract with the U.S. Navy for the construction of a weather station in Bukidnon, Mindanao, for $188,000.
  4. Monetary Board Resolutions:

    • On June 17, 1960, the Central Bank issued Monetary Board Resolution No. 857, allowing contractors with U.S. military base contracts predating April 25, 1960, to utilize 90% of their surrendered dollar earnings at a preferred exchange rate of P2.00375 per $1.
    • On April 28, 1961, Monetary Board Resolution No. 695 amended Resolution No. 857, requiring contractors to comply with specific terms to utilize their dollar earnings.
  5. Plaintiff’s Surrender of Dollar Earnings:

    • Batchelder surrendered $199,966 to the Central Bank but was only allowed to utilize $25,874.84 (21.41%) of his earnings. He demanded the balance of 90% of his surrendered earnings at the preferred exchange rate.
  6. Lower Court Decision:

    • The lower court ruled in favor of Batchelder, holding that the Central Bank’s resolutions created a contractual obligation to resell $154,094.56 at the preferred exchange rate or pay the difference in peso cost.

Issue:

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Ruling:

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Ratio:

  1. No Contractual Obligation Created:

    • A contract requires a meeting of minds between parties, with mutual consent to the terms. The Central Bank’s issuance of resolutions and circulars was an exercise of its regulatory powers, not an offer to enter into a contract.
    • The resolutions were part of the Central Bank’s implementation of statutory objectives under Republic Act No. 265, aimed at maintaining monetary stability and promoting economic growth.
  2. Regulatory vs. Contractual Actions:

    • The Central Bank’s actions were quasi-legislative, aimed at implementing exchange control policies. These actions did not create enforceable contractual rights for individuals.
    • The lower court erred in interpreting the resolutions as creating a binding contract.
  3. No Grounds for Damages:

    • Since no contractual obligation existed, Batchelder’s claims for compensatory damages, attorney’s fees, and exemplary damages were without legal basis.
  4. Proper Remedy:

    • Batchelder may pursue other legal remedies under the Central Bank’s valid rules and regulations, but he cannot enforce a contractual claim based on the resolutions.


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