Central Bank of the Philippines v. Intermediate Appellate Court
REITERATIONFacts
The Antecedents: Private respondents, domestic corporations operating textile mills, were directed by the Central Bank (CB) in 1954-1955 to integrate their operations. To facilitate this, they were required to submit cost estimates for their projects based on a P2.00 to US $1.00 exchange rate and to import necessary capital machinery on a deferred payment basis. The CB approved these submissions and authorized the importations. Subsequently, the CB issued various circulars (Nos. 105, 117, 121, 133) implementing a gradual decontrol program, which effectively removed the preferred P2.00 to US $1.00 exchange rate for most transactions, including existing contractual obligations previously approved by the Monetary Board. Despite protests, private respondents were compelled to purchase foreign exchange at the higher 'free market' rate to service their obligations. Procedural History: Private respondents filed a complaint for declaratory relief, later amended to pray for a declaration of their right to purchase foreign exchange at P2.00 to US $1.00 and for reimbursement of the increased costs incurred. The Regional Trial Court (RTC) ruled in favor of the private respondents, declaring their right to purchase foreign exchange at the preferred rate and ordering the CB to pay the difference in costs, plus legal interest from December 21, 1970. Both parties appealed to the Intermediate Appellate Court (IAC). The IAC affirmed the RTC's decision in all other respects but modified the commencement of interest payment to January 2, 1964, the date of the filing of the original complaint. The Petition: The Central Bank filed a petition for review, seeking to annul the IAC's decision upholding the private respondents' right to purchase foreign exchange at the preferred rate and to pay interest on the amounts due.
Issue(s)
Whether the Central Bank made an enforceable promise or assurance to sell foreign exchange to private respondents at the preferred rate of P2.00 to US $1.00 to service the deferred payment of their imported machinery and equipment; and whether the subsequent issuance of decontrol circulars could retroactively prejudice the rights acquired by the private respondents. Whether the doctrine of promissory estoppel applies in this case, considering the private respondents' reliance on the Central Bank's assurances and directives.
Ruling
The petition is devoid of merit. The decision of the Court of Appeals is affirmed in toto.
Ratio Decidendi
On the enforceability of the promise and the impact of subsequent circulars: The Court held that the Central Bank is estopped from enforcing its circulars that would deny private respondents their right to purchase foreign exchange at the preferred rate of P2.00 to US $1.00. This is because the private respondents faithfully complied with the petitioner's directives as participants of the textile mills integration program. The CB's policy, established as early as 1954-1955, required private respondents to integrate their mills and import capital machinery on a deferred payment basis, with the CB approving their foreign exchange applications based on the P2.00 to US $1.00 rate. The private respondents submitted cost estimates and payment schedules based on this rate, and the CB approved both. The subsequent issuance of decontrol circulars, which removed the preferred rate, could not retroactively prejudice the rights acquired by the private respondents through their compliance with the CB's directives. The Court distinguished this case from Batchelder v. Central Bank, where Monetary Board Resolutions were deemed general policies and not contracts, by emphasizing that in the present case, private respondents were specifically required to integrate, authorized to import only upon CB approval, and directed to import only on a deferred payment basis. On the application of promissory estoppel: The Court reiterated the doctrine of promissory estoppel, stating that an estoppel may arise from a promise intended to be relied upon, and which was in fact relied upon, to prevent injustice. The private respondents' reliance was evidenced by their compliance with the CB's directives, including incurring contractual obligations payable in foreign currency on deferred payment terms, which they would not have done had they known they would be denied the preferred exchange rate. Their actions constituted reliance on the CB's assurances, making the CB's subsequent withdrawal from its commitment a virtual sanction of injustice.
Main Doctrine
The Central Bank is estopped from enforcing circulars that deny private respondents their right to purchase foreign exchange at the preferred rate of P2.00 to US $1.00, as they faithfully complied with the petitioner's directives as participants of the textile mills integration program.