Chamber of Agriculture and Natural Resources v. Central Bank of the Philippines
REITERATIONFacts
The Antecedents: Petitioners, a group of exporters, sought a writ of prohibition to stop the Central Bank of the Philippines (CBP) from enforcing Circulars Nos. 133 and 171. These circulars required exporters to surrender 20% of their export receipts to the CBP at par value (P2.00 to $1.00) and allowed the sale of the remaining 80% at the prevailing free market rate. This policy originated from CBP Circular No. 20 (1949), issued due to a foreign exchange crisis, which initially required 100% surrender. Republic Act No. 2609 (1959) authorized the CBP to establish a margin of not more than 40% over banks' selling rates of foreign exchange up to December 31, 1964, and mandated steps for a four-year program of gradual decontrol. Procedural History: Petitioners filed an original petition for a writ of prohibition before the Supreme Court. The Petition: Petitioners argued that the maintenance of the partial retention of export receipts under Circulars 133 and 171 was illegal, contravened R.A. 2609, constituted an unlawful delegation of powers, was confiscatory and an invalid exercise of police power and eminent domain, deprived exporters of property without due process, and imposed an unlawful export tax.
Issue(s)
Whether the Central Bank is authorized by law to compel the surrender of 20% of exporters' foreign exchange receipts at par value. Whether Circular No. 171, continuing the 20% retention beyond December 31, 1964, contravenes Republic Act No. 2609. Whether the said Circulars constitute an unlawful delegation of powers. Whether the said Circulars are confiscatory and an invalid exercise of police power and eminent domain. Whether the said Circulars deprive exporters of property rights without due process. Whether the said Circulars impose an invalid export tax.
Ruling
The petition for a writ of prohibition is denied. The Central Bank Circulars Nos. 133 and 171 are declared valid.
Ratio Decidendi
On the Central Bank's authority to compel surrender of export receipts: The Court clarified that the pronouncements in Bacolod-Murcia Milling Co. vs. Central Bank regarding the Central Bank's lack of power to "commandeer" foreign exchange were merely the personal views of the writer and not the ratio decidendi of the majority. The majority in Bacolod-Murcia had ruled on estoppel. The Court affirmed that prior decisions had sustained the validity of CBP Circular No. 20, requiring 100% surrender, as an exercise of the Monetary Board's power under Section 74 of R.A. 265 to license and restrict foreign exchange transactions during an exchange crisis to protect the international reserve. This power necessarily implies the authority to impose conditions, including surrender of receipts. The Court noted that the gradual relaxation from 100% to 20% indicated the crisis was waning but did not invalidate the temporary measure. On contravention of Republic Act No. 2609: The Court found that paragraph 2 of Section 1 of R.A. 2609 did not decree total decontrol after four years but mandated steps to adopt a "four-year program of gradual decontrol." The Central Bank did formulate such a program. The failure of complementary fiscal measures, such as an export tax, meant that total decontrol could not be achieved without risking economic dislocation. The Court also pointed out that R.A. 2609 did not totally supersede Section 74 of R.A. 265; the power to restrict and license foreign exchange transactions continued to exist, albeit limited by R.A. 2609, particularly concerning the balance of imports not decontrolled. On unlawful delegation of powers: The Court reiterated its previous rulings in cases like People vs. Jolliffe and People vs. Tan, holding that the standards set forth in the Central Bank Charter (R.A. 265) are sufficiently concrete and definite to vest in the delegated authority the character of administrative details, thus placing the grant of authority beyond the category of an undue delegation of legislative powers. On confiscatory nature and exercise of police power: The Court found the claim of confiscation to be an exaggeration, as the 20% retained by the CBP was paid for at the legal parity value of the peso. While the CBP might resell these dollars at a higher price, the profits were credited to the "Revaluation of International Reserve" account, not disposable as ordinary profits, but earmarked for currency stabilization. The Court also noted that the argument regarding the invalid exercise of police power had been adversely resolved in prior cases involving similar Central Bank circulars. On deprivation of property without due process: This argument was implicitly addressed by the Court's affirmation of the validity of the CBP's actions under its emergency powers. The Court found that the measures taken were justified by the continuing exchange crisis, evidenced by the low level of international reserves, and were temporary in nature, consistent with Section 74 of the Charter. On imposition of an export tax: The Court distinguished the 20% retention from an export tax. A tax is for government revenue, whereas the proceeds from the 20% retention were applied to strengthen the Central Bank's international reserve, a measure aimed at currency stabilization rather than general government funding.
Main Doctrine
The Central Bank's authority under Section 74 of Republic Act No. 265 to impose exchange restrictions, including requiring exporters to surrender a portion of their foreign exchange receipts at parity value, is a valid exercise of its emergency powers to protect the international reserve, and this power continues to exist even after the expiration of Republic Act No. 2609, provided an exchange crisis persists.