Case Digest (G.R. No. L-25071)
Facts:
In G.R. No. L-25071 decided on March 29, 1972, George W. Batchelder, an American citizen permanently residing in the Philippines and conducting business as Batchelder Equipment, sued the Central Bank of the Philippines, a government corporation established under Republic Act No. 265, to compel it to resell U.S.$170,210.60 at the preferred rate of P2.00375 per dollar or pay the peso difference, plus litigation expenses and exemplary damages. Beginning with Central Bank Circular No. 20 (Dec. 9, 1949) and subsequent circulars No. 44 (June 12, 1953), Nos. 105 and 106 (Apr. 25, 1960), Nos. 111 (Sept. 12, 1960), 117 (Nov. 28, 1960), 121 (Mar. 2, 1961) and 133 (Jan. 21, 1962), the Bank imposed exchange controls and then a gradual decontrol program under Republic Act No. 2609. On March 30, 1960, Batchelder entered into U.S. Navy Contract NBy-13374 for construction of a weather station in Bukidnon, Philippines. He surrendered U.S.$199,966 to the Bank and applied to use 90% (U.S.$179,969.Case Digest (G.R. No. L-25071)
Facts:
- Parties and Background
- Plaintiff-Appellant George W. Batchelder: an American citizen, permanent resident engaged in construction in the Philippines under “Batchelder Equipment.”
- Defendant-Appellant Central Bank of the Philippines: a government corporation created by Republic Act No. 265, vested with regulatory and contractual powers.
- Exchange Control and Decontrol Measures
- Central Bank Circular No. 20 (Dec. 9, 1949) imposed exchange controls; Circular No. 44 (June 12, 1953) and others implemented these controls.
- Republic Act No. 2609 (July 16, 1959) mandated gradual decontrol; Central Bank issued Circulars No. 105 and 106 (Apr. 25, 1960), later amended by Circulars No. 111 (Sept. 12, 1960), No. 117 (Nov. 28, 1960), No. 121 (Mar. 2, 1961), and Circular No. 133 (Jan. 21, 1962) for full decontrol.
- Monetary Board Resolutions and Plaintiff’s Contract
- Monetary Board Resolution No. 857 (June 17, 1960) authorized Filipino and resident American contractors on U.S. military bases to use 90% of contract proceeds for imports at a preferred exchange rate; implemented by Memorandum ID-FM No. 11 (June 23, 1960).
- Resolution No. 857 was amended by Resolution No. 695 (Apr. 28, 1961), prescribing procedural requirements for license applications and peso credits.
- Plaintiff’s Dollar Surrender and License Applications
- Plaintiff surrendered U.S.$199,966.00 through authorized agent banks and applied to utilize 90% (U.S.$179,969.40) at the preferred rate.
- Central Bank granted only U.S.$25,874.84 (21.41%); balance was to be sold at the free-market rate.
- Plaintiff filed suit seeking:
- An order compelling Central Bank to resell U.S.$170,210.60 (later quantified as U.S.$154,094.56) at P2.00375 per U.S.$1.00; or
- Payment of the peso difference between the preferred rate and market rate; plus attorney’s fees, actual expenses, and exemplary damages.
- Lower Court Decision and Appeals
- The trial court held that Resolutions Nos. 857 and 695 created an implied contract; ordered Central Bank to resell U.S.$154,094.56 at P2.00375/USD or pay the differential.
- Central Bank appealed, contending no contractual obligation arose from mere policy issuances.
- Plaintiff also appealed the trial court’s denial of damages and fees.
Issues:
- Primary Issue
- Does the issuance of Central Bank monetary-policy resolutions and circulars create a binding contractual obligation to resell surrendered U.S. dollars at a preferred exchange rate?
- Secondary Issue
- If a contractual obligation exists, is plaintiff entitled to actual expenses of litigation, attorney’s fees, and exemplary damages?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)