G.R. No. 69078 - Central Bank of the Philippines vs. Intermediate Appellate Court

Private respondents are domestic textile mill corporations engaged in the integration of their operations.
The Central Bank, as early as December 9, 1949, issued Circular No. 20, which restricted foreign exchange sales and mandated licensing for such transactions.
Between 1954 and 1955, the Monetary Board of the Central Bank established a policy aimed at maximizing benefits for the textile industry through intensified investment, full employment, enhanced local resource development, and foreign exchange savings.
Subsequent technical and financial considerations led to the liberalization of the initial policy, allowing textile mills to begin with finishing operations along with limited weaving and spinning.

In 1958, following the availability of U.S. surplus raw cotton under U.S. Public Law 480, the status of the local textile industry was re-examined.
Local textile mills were requested to submit integration schedules covering a two-and-a-half-year period (from the second semester of 1958 to the second semester of 1960), which later served as the basis for the overall integration program.
Private respondents incurred contractual obligations payable in foreign currency on deferred payment terms to import capital machinery essential for the integration of their mills.
Their applications for foreign exchange allocations were approved by the Central Bank under several Monetary Board resolutions issued before April 23, 1960.

On July 16, 1959, Republic Act No. 2609 was enacted, directing the monetary authorities to implement a gradual decontrol program.
On April 22, 1960, the Monetary Board approved Resolution No. 632, which adopted a “program of Gradual Decontrol,” and CB Circular No. 105 was issued on April 25, 1960, establishing a decontrol exchange rate of P3.20 to US $1.00 while specifically excluding previously approved contractual obligations.
CB Circular No. 117 (November 28, 1960) maintained the servicing of “special financing items” at the preferred rate, though later, CB Circular No. 121 (March 2, 1961) eliminated these approved contractual obligations from enjoying the P2.00 to US $1.00 rate.
Despite prior compliance and payment of amortizations at the preferred rate, private respondents were subsequently denied the right to purchase foreign exchange at P2.00 to US $1.00 for servicing their deferred payment obligations.

Private respondents filed a complaint for declaratory relief on January 2, 1964, which initially sought to establish the right to purchase foreign exchange at the preferred rate and a corresponding duty on the Central Bank to sell such exchange.
An amended complaint also prayed for an order directing the Central Bank to compensate for the increased costs arising from being forced to transact at the higher “free market” rate.
The trial court rendered judgment on December 3, 1973, declaring that:

Private respondents had the right to purchase the required foreign exchange at the preferred rate of P2.00 to US $1.00.
The Central Bank was obligated to sell the necessary foreign exchange and to pay the private respondents specified amounts plus legal interest from December 21, 1970, until payment was effected.

The Central Bank (petitioner) filed a Notice of Appeal on January 5, 1979.
Private respondents sought reconsideration regarding the interest period, which was denied.
The Court of Appeals, on October 19, 1984, affirmed the trial court’s decision in all respects, save for modifying the commencement of the interest payment period to January 2, 1964.

Private respondents contended that they had been induced to act and incur contractual obligations in reliance on the Central Bank’s express representations and approved circulars guaranteeing the preferred rate.
The case highlights the application of the doctrine of promissory estoppel where the Central Bank’s prior commitments, directives, and representations to the textile mills integration program were central to the dispute.
Witness testimonies, such as that of Benigno Zialcita of Artex Development Co., Inc., underscored the financial risks and injustice faced by the respondents had they not been promised the preferred rate.

Whether the Central Bank made an enforceable promise or assurance to private respondents to provide foreign exchange at the preferred rate of P2.00 to US $1.00 for servicing their deferred payment obligations.
Whether the Central Bank’s prior representations and actions created a contractual obligation, particularly through the administrative approvals and directives under the textile mills integration program.

Whether the principles of promissory estoppel, as adopted in cases such as Emerito Ramos v. Central Bank, applied given the private respondents’ reliance on the Central Bank’s representations.
Whether it would be inequitable or unjust to allow the Central Bank to deny its earlier commitments, thereby prejudicing private respondents who had complied with its directives.

How the present case differs from the Batchelder v. Central Bank case, where not all prior contractual obligations were deemed to merit the preferred rate.
Whether the integration program’s unique requirements (integration directives, deferred payment terms, and subsequent compliance) warrant private respondents’ acquisition of the right to the preferred rate.