GEORGE W. BATCHELDER vs.

THE CENTRAL BANK OF THE PHILIPPINES

G.R. No. L-25071 March 29, 1972

Facts:

Monetary Board Resolution No. 857 requires Filipino and American resident contractors
for constructions in U.S. military bases in the Philippines to surrender to the Central Bank their
dollar earnings under their respective contracts but were entitled to utilize 90% of their
surrendered dollars for importation at the preferred rate of commodities for use within or
outside said U.S. military bases. Resolution 695 moreover, denies their right to reacquire at the
preferred rate ninety per cent (90%) of the foreign exchange the sold or surrendered earnings
to Central Bank for the purpose of determining whether the imports against proceeds of
contracts entered into prior to April 25, 1960 are classified as dollar-to-dollar transactions or
not.

George Batchelder, an American Citizen permanently residing in the Philippines who is

engaged in the Construction Business, surrendered to the Central Bank his dollar earnings
amounting to U.S. $199,966.00. He compels Central Bank of the Philippines to resell to him
$170,210.60 at the preferred rate of exchange of two Philippine pesos for one American dollar,
more specifically P2.00375 which was denied by the court.

He then contended that said decision failed to consider that if there was no contract
obligating the bank to resell to him at the preferred rate, the judgment of the lower court can
and should nevertheless be sustained on the basis of there being such an obligation arising from
law.

Issue:

Whether or not Central Bank has the obligation arising from law to resell the
US$154,094.56 to Batchelder at the preferred rate.

Held:

Central Bank was intended to attain basic objectives in the field of currency and finance.
“It shall be the responsibility of the Central Bank of the Philippines to administer the monetary
and banking system of the Republic. It shall be the duty of the Central Bank to use the powers
granted to it under this Act to achieve the following objectives: (a) to maintain monetary
stability in the Philippines; (b) to preserve the international value of the peso and the
convertibility of the peso into other freely convertible currencies; and (c) to promote a rising
level of production, employment and real income in the Philippines."

It is, of course, true that obligations arise from 1) law; 2) contracts; 3) quasi-contracts;
4) acts or omissions punished by law and 5) quasi-delicts. One of the sources an obligation then
is a law. A legal norm could so require that a particular party be chargeable with a prestation or
undertaking to give or to deliver or to do or to render some service. It is an indispensable
requisite though that such a provision, thus in fact exists. There must be a showing to that effect.
As early as 1909 in Pelayo v. Lauron, Court through Justice Torres, categorically declared:
"Obligation arising from law are not presumed." For in the language of Justice Street in Leung
Ben v. O'Brien, a 1918 decision, such an obligation is "a creation of the positive law." They are
ordinarily traceable to code or statute. It is true though, as noted in the motion for
reconsideration following People v. Que Po Lay, that a Central Bank circular may have the force
and effect of law, especially when issued in pursuance of its quasi-legislative power. That of
itself, however, is no justification to conclude that it has thereby assumed an obligation.