G.R. No. L-23244 June 30, 1965
CHAMBER OF AGRICULTURE AND NATURAL RESOURCES OF THE PHILIPPINES, ET AL., petitioners, vs. CENTRAL BANK OF THE PHILIPPINES, respondent.

FACTS

Petitioners, a group of exporters, filed an original petition for a writ of prohibition to restrain the Central Bank from enforcing Circulars Nos. 133 and 171. These circulars required exporters to surrender 20% of their foreign exchange receipts to the Central Bank at the official par value (P2.00 to $1.00), while authorizing the sale of the remaining 80% at the prevailing free market rate. This regulatory scheme originated from Circular No. 20 issued in 1949 during a foreign exchange crisis, which required full surrender of foreign exchange. Republic Act No. 2609 , enacted in 1959, authorized the Central Bank to establish a margin of not more than 40% over banks’ selling rates and called for a four-year program of gradual decontrol. Implementing this, the Central Bank issued a series of circulars (Nos. 105, 111, 117, 121, 133) progressively reducing the percentage of export receipts to be surrendered at the official rate. Circular No. 171, issued in 1964, continued the effect of Circular No. 133. Petitioners argued that these circulars were illegal, contravened the decontrol program deadline of December 31, 1964 under R.A. 2609, involved unlawful delegation of powers, were confiscatory, deprived exporters of property without due process, and constituted an unauthorized tax on exports.

ISSUE

Whether the Central Bank is authorized by law to compel the sale to it of 20% of exporters’ foreign exchange receipts at the official par value after the expiration of the period set in Republic Act No. 2609 .

RULING

The Supreme Court upheld the validity of Central Bank Circulars Nos. 133 and 171. The Court ruled that the Central Bank’s power to require the surrender of a portion of export receipts at par value is derived from Section 74 of its Charter (Republic Act 265), which authorizes it, during an exchange crisis and with Presidential approval, to temporarily restrict sales of exchange and subject all foreign exchange transactions to licensing to protect its international reserve. This power necessarily includes the authority to impose conditions on licensees, such as surrender of receipts. The Court clarified that the personal views expressed by Justice Labrador in the Bacolod-Murcia Milling Co. case, which questioned this power as confiscatory and beyond the Bank’s charter, did not represent the majority opinion and were not binding precedent. Previous decisions had sustained the validity of Circular No. 20 (requiring 100% surrender). The Court further found that the requirement was not an unlawful delegation of legislative power, nor was it a tax, but a valid monetary measure. The expiration of R.A. 2609 did not terminate the Central Bank’s inherent powers under its Charter to impose such exchange restrictions in a continuing crisis. The dissenting opinion argued that the 20% surrender at par value was confiscatory, as it deprived exporters of the substantial difference between the par value and the free market rate.