G.R. No. L-9275. June 30, 1960
[WITH RESOLUTION OF AUGUST 31, 1960]
GUTIERREZ DAVID, J.:
Felino Co were charged in the Court of First Instance of Pampanga with
violation of Circular No. 20 of the Central Bank of the Philippines, in
relation with section 34 of Republic Act No. 265. The specific
provisions of the circular alleged to have been violated are those
found in paragraphs 4 (a) and 4(b) thereof. Paragraph 4(a)
requires any person who receives foreign exchange to sell it to the
Central Bank or its authorized agents within one business day following
the receipt of such foreign exchange, and prohibits the disposition
without a license by the Bank of such foreign exchange except to
designated agents of the said bank. Paragraph 4(b) prohibits
the purchase of foreign exchange, directly or indirectly, except from
or through authorized agents of the Central Bank.
After due trial, the defendants were found guilty and sentenced as
follows: Francisco Tan to suffer imprisonment of from 2 years as
minimum to 4 years as maximum, and to pay a fine of P10,000.00 and
one-half of the costs; Felino Co to suffer imprisonment of from 6
months as minimum to 2 years as maximum and to pay a fine of P2,000.00
plus one-half of the costs. The court also sentenced them to suffer
subsidiary imprisonment in case of insolvency and decreed the
forfeiture, in favor of the Government, of various U. S. postal money
orders and bank drafts, a U. S. treasury check, a traveller’s check
$800 in military payment certificates (commonly known as scrips) and
P500 in Philippine currency. From that sentence, the defendants
appealed to the Court of Appeals but that court certified the case to
this Court on the ground that the constitutionality or validity of a
law and executive order or regulation is in question.
The record shows that sometime in June, 1952, the defendant Felino
Co, an employee of the other defendant, Francisco Tan, persuaded Edward
S. Custer, an American serviceman stationed at Clark Air Force Base in
Angeles, Pampanga, but living outside the base, to buy for him (Co)
money orders at the post office located at the base. Pursuant to their
agreement, Custer received a commission of P30 for every $100 worth of
money orders he bought.
Later in that same month, prior to Custer’s departure for Japan,
defendant Francisco Tan gave him $2,000 in military payment
certificates or scrips for the purchase of a car in Japan. Custer,
however, was not able to buy the car and, following Tan’s instructions,
bought instead 5 U. S. postal money orders of $100 each in his name.
Upon his return to the Philippines on August 5, 1952, Custer delivered
the money orders to Tan together with the $1,500 in scrips, the balance
of the amount given him by Tan. In the presence of Custer, defendant Co
signed Custer’s name on the space for the indorsees signature leaving
out in blank the space intended for the indorsee’s name. As his
commission, Custer received P150 from Tan. Also in the month of August,
1952, Co gave Custer various sums with which to buy bank drafts for Tan
at the branch of the National City Bank of New York in Clark Air Base,
with instructions to put them in his folks’ name. Custer had some of
his airmen friends buy the bank drafts and he himself, bought some for
Tan. Thereafter he delivered them to Tan and received his corresponding
commission therefor.
The defendants and Custer transacted not only in money orders and
bank drafts but also in other kinds of dollar instruments. Thus, on
August 22,1952, Co, at the instance of Tan, gave Custer four sealed
envelopes and requested the latter to post them at the U. S. Post
Office inside the Clark Air Base. The envelopes were addressed to
certain persons in California and Hongkong and contained 28 U.S. postal
money orders, one U. S. treasury check, one traveller’s check and 25
bank drafts.
On August 25, 1952, Co again delivered $4,000 in scrips for the
purpose of buying bank drafts for Tan. Custer turned over the entire
amount to Airman Alberto Gonzales and asked him to buy the bank drafts.
That same morning Gonzales bought two drafts for $1,000 each, which he
placed in Ouster’s writing box.
On that same day, August 25, 1952, Capt. William McMahon of the U.
S. Air Force, then detailed to the Office of Special Investigation
(OSI) at Clark Ay- Base, searched Ouster’s writing desk in the base and
there found the four envelopes containing the U. S. postal money
orders, checks and bank drafts belonging to Tan, as well as the bank
drafts which Airman Gonzales had deposited there earlier in the
morning. Confiscating the dollar instruments, Capt. McMahon placed
Ouster under arrest. Airman Gonzales was apprehended in the afternoon
with two other $1,000 bank drafts in his possession which he bought
with the $2,000 left of the $4,000 given to him by Ouster. On being
questioned later, Custer admitted having received from Tan the scrips
with which said dollar instruments were purchased.
When the defendants came to know of the arrest of Custer and
Gonzales as well as the seizure of the aforesaid money orders, checks
and bank drafts, they lost no time in contacting Capt. McMahon. Acting
under instructions from his superior, Capt. McMahon, as per previous
arrangement, went to the Spic and Span Night Club in Angeles, Pampanga,
and talked with the defendants. At that meeting, Tan admitted ownership
only of the two envelopes addressed to California, but at subsequent
meetings, he also admitted ownership of the other two envelopes
addressed to Hongkong, and offered McMahon $1,000 and P500 for the
return of the four envelopes to him.
Capt. McMahon reported the offer to his superior. He also notified
Antonio Laforteza, chief intelligence operative of the Central Bank,
agents of the National Bureau of Investigation, officers of the
Military Intelligence Service and the Philippine Constabulary, who all
planned the arrest of Tan and Co at the time of the delivery of the
bribe money.
At about midday of November 14, 1952, in a private dining room of
the San Fernando Hotel, Capt. McMahon delivered to Tan the
aforementioned dollar instruments or foreign exchange and asked Tan to
sign a receipt for them. The receipt containing a list of the dollar
instruments was also signed by Co as a witness. After taking delivery
of the said dollar instruments, Tan then gave Capt. McMahon the bribe
money consisting of $800 in scripts and P500 with an apology because he
was not able to bring the full amount agreed upon. It was at this
juncture that Laforteza, the agents of the NBI, the Military
Intelligence Service and Constabulary officers, and the officer of the
OSI barged into the private dining room, placed Tan and Co under
arrest, and seized the dollar instruments. From Capt. McMahon, the
officers of the OSI got the receipt Tan and Co signed, the $800 in
scrips and the P500 in Philippine currency.
Defendants-appellants in their brief do not deny that they had no
license or permit from the Central Bank to deal in foreign exchange.
They claim, however, under their first assignment of error, that
defendant Tan was not the owner of the dollar instruments here in
question; that said defendant Tan merely loaned Custer P6,000 on one
occasion and on another gave him P8,000 to purchase a Buick car; and
that after he, defendant Tan, was made to believe that he could not
collect said amounts from Custer in any other way, he tried to work for
the release of the said dollar instruments * * *.” Regarding this
claim, the trial court said:
“The denial by the accused of Tan’s acquisition and
ownership of the bank drafts, the checks and the money orders seized
from Custer avail them nothing. In the first place, Tan in the letters
Exhibits 10 and 12 admitted ownership of the instruments and demanded
their return to him. The letters were signed by Tan’s lawyer, it is
true, but the latter could not have made the admission and the demands
without instructions from Tan.“In the second place, Tan also
admitted ownership of the money orders, the bank drafts, and the checks
to Captain McMahon. Of course, Tan and Co denied this fact on the
witness stand and stated that when McMahon learned that Custer was
heavily indebted to Tan, for a sum of money McMahon proposed to turn
over the instruments to Tan in payment of Custer’s debt to him; hence
their presence at the San Fernando Hotel on November 14, 1952, to
receive them. But if their testimony on tnis point is true, they gave
no explanation why McMahon should have promptly notified his superiors
of the seizure of the instruments from Custer and Gonzales, depositing
the instruments in his office (see Exhibits N, N-1 and N-2), and kept
his superiors posted on every move Tan made to recover the
instruments—Tan’s first call after he learned of the seizure, their
first meeting at the Spic & Span dub, their frequent meetings
thereafter, and the final meeting on November 13, 1952, when they
agreed to meet at the San Fernando Hotel at noon the next day for the
turnover and the payment of the bribe and why, after that final
meeting, McMahon should have promptly communicated the arrangements to
his superiors and aided them to entrap Tan and Co at the San Fernando
hotel on November 14, 1952.“Furthermore, by merely making a
cursory examination of the contents of the envelope McMahon handed to
him before he signed the receipt Exhibit Q and received the money
orders, that bank drafts and the checks, Tan revealed his familiarity
with the instruments. He could not have gained that familiarity without
having been previously in possession of them. Then too the total value
ot those instruments is more than P14,000, whereas Custer only received
P8,000 from Tan. True, the accused now claim that Custer also borrowed
P6,000 from Tan, but their claim is, of highly doubtful credibility, to
say the least, because of the admitted absence of receipt showing the
indebtedness and because Tan himself stated on the witness stand that
he made no mention of the supposed debt to McMahon when, according to
him and Co, the negotiations which led to the delivery of the
instruments to them on November 14, 1952, precisely concerned Custer’s
alleged indebtedness to Tan.“In the third place, Tan
admitted to Antonio Laforteza, the chief intelligence operative of the
Central Bank, that he delivered the checks, the bank drafts and the
money orders to Custer for mailing and that after they were seized from
Custer he made representations to McMahon for the return of the
instruments to him (Tan). He claims that Exhibit T was prepared in his
absence and without his intervention and that he was afterwards
compelled to sign the document through threats and intimidation, but
the fact that he even had a portion of the document crossed out before
he signed it is not consistent with alleged threats and intimidation.
And the court is satisfied that he understands and speaks sufficient
Tagalog to have answered the questions in Tagalog. Furthermore, Exhibit
T is not a confession. In fact, Tan’s defense partly rests on matters
he stated in the document. If the investigator could compel Tan to sign
Exhibit T, he should have done better to suit his purpose by making him
sign a confession, and the fact that he did not do so belies the
alleged threats and intimidation.”
Examining the record, we find no reason for rejecting the above
findings of the trial court, which are amply supported and it is
well-settled that in the absence of compelling reasons, its
determination is best left to the trial judge who had the advantage of
hearing the parties testify and of observing their demeanor on the
witness stand.
Defendants, in support of their contention that they had committed
no crime, cite the letter of the Acting Deputy Governor of the Central
Bank dated May 20, 1953, which allegedly indicate that the Central Bank
“had no case against Francisco Tan.” The letter, however, does not bear
out the contention. In said letter, the Acting Deputy Governor of the
Central Bank simply gave an opinion that “so far, the Central Bank does
not have sufficient evidence against Tan.” Needless to say, that was
merely an opinion of the Acting Deputy Governor at the time the letter
was written and as such is not controlling; it is not he but the
prosecuting officer of the Government who determines whether or not
there is sufficient evidence to warrant the institution of a criminal
action.
It is also argued that Custer was improperly utilized as a witness
against defendants, because as a co-conspirator, he should have been
made a co-defendant. It appears however, from the facts established by
the evidence that Custer was not a co-conspirator but a mere agent or
tool of the defendants in the purchase and dispositions of the dollar
instruments in question. The alleged irregularity, moreover, is being
raised for the first time on appeal. If counsel believed that Custer
should have been made a co-defendant, they should have taken the
necessary steps when this case was still in the trial court.
Under the second assignment of error, defendants maintain that they
are exempt from the operation of Circular No. 20 by virtue of
Notification No. 13, also a circular issued by the Central Bank.
Paragraph 1(b) of the said Notification relied upon by counsel for the
defense reads:
“1. Individuals who are residents of the Philippines
and who are citizens of foreign countries and not also Philippine
citizens are hereby exempted from the provisions of Central Bank
Circular No. 20, dated Dec. 9, 1949 with respect to:* * * * * * *
“(b)
Property, including bank balances, physically situated elsewhere than
in the Philippines on or prior to December 9, 1949, or the date on
which the foreign citizen became a resident, which ever is later, or
acquired subsequent to that date from a non-resident, and foreign
payments, transfers and other dealings with non-residents involving
such property.” Contrary to defendants’ claim, the dollar instruments
or foreign exchange purchased by Tan thru Custer were not “property
physically situated elsewhere than in the Philippines.” Neither do they
relate to “foreign payments, transfers or other dealings with
non-residents.”
It is established that defendants personally
received from and delivered to Custer, a resident of the Philippines,
foreign exchange (scripts, bank drafts and U.S. postal money orders)
and also received scrips from personnel of the U. S. Army when such
personnel were in Angeles, Pampanga. It should here be stated that
under the Bases Agreement concluded between the Republic of the
Philippines and the United States over American military bases on March
14, 1947, the Philippine Government never abdicated its sovereignty
over the bases as part of the Philippine territory. (See Molina vs. Panaligan, G. R. No. L-10842, May 27, 1957.) At any rate, section 2(b) of said Notification No. 13 provides that:
“2. The exemption granted to resident foreign citizens under this notification does not:
* * * * * * *
“(b)
Authorize any resident foreign citizen to buy foreign exchange or sell,
transfer, or otherwise surrender foreign exchange to anyone in the
Philippines other than as provided in Central Bank Circular No. 20 or
regulations, notifications, rulings, instructions, or licenses issued
thereunder.”
The above provisions does not permit resident aliens, such as the
defendants herein, to buy, sell, transfer or otherwise surrender
foreign exchange in the Philippines except from or to the Central Bank
or its authorized agents as enjoined in Circular No. 20. In the case at
bar, defend ants not only purchased foreign exchange but also attempted
to dispose of them through the mail. Under Circular No. 21, issued
pursuant to Circular No. 20, attempted or frustrated exportation of
gold and foreign exchange are punishable. (See People vs. Jolliffe, 105 Phil., 677; People vs. Lira Ho et al., 106 Phil., 887.)
Under the third assignment of error, it is claimed that inasmuch as
the dollar instruments in question had been in the possession of the
defendants for only about five minutes when they were seized by
government authorities, defendants could not have violated Circular No.
20, which penalizes such possession when it extends for more than 24
hours. The evidence, however, shows that defendants accepted military
payment certificates or scrips in Angeles, Pampanga, and delivered them
to Custer for the purpose of buying from abroad an automobile or U. S.
postal money orders. Custer bought the postal money orders and these
dollar instruments remained in the possession of defendant Tan from
August 2, 1952 to August 22, 1952. It is also on record that Tan, thru
his co-defendant Co, delivered to Custer 4 envelopes containing postal
money orders, U. S. treasury check, traveller’s check and bank drafts.
These various dollar instruments must have also been in the possession
of the defendants, long before they were seized.
In any event, the purchase of foreign exchange, directly or
indirectly, without the necessary license or permit from persons or
entities other than the Central Bank or its authorized agents
constitutes a violation of Circular No. 20, regardless of the length of
possession of said foreign exchange.
Under the fourth assignment of error defendants contend that
Circular No. 20, cannot be considered a valid penal law because (1) it
has not been approved by the President of the Philippines; (2) it
contravenes international agreements to which the Philippines is a
party; (3) its context does not indicate that it was an emergency
measure which temporarily suspends or restricts sales of exchange; (4)
it could only be issued as an emergency measure during a crisis and has
no more force or effect since the emergency it seeks to remedy never
existed or no longer exists; and (5) it constitutes an undue delegation
of legislative power. The issues raised may now be considered settled
by the decisions of this Court in the cases of People vs. Jolliffe, supra; People vs. Koh, et al., 105 Phil., 925; People vs. Henderson, 105 Phil., 859; and s People vs. Lim Ho, et al., supra, wherein the validity of Central Bank Circular No. 20 was assailed on identical grounds.
In all the above cited cases, this Court held that Circular No. 20,
which subjects to licensing by the Central Bank all transactions in
gold and foreign exchange, was in fact approved by the President of the
Philippines. As regards the necessity of approval by the International
Monetary Fund, this Court said in People vs. Koh, supra,
that “it is not incumbent upon the prosecution to prove that the
provisions of Circular No. 20 complied with all pertinent international
agreements binding on our Government, The Central Bank and the
President certify that it accords therewith, and it is presumed that
said officials know whereof they spok,e, and that they performed their
duties properly. It is rather for the defense to show conflict, if any,
between the circular, and our international commitments.”
With respect to the contention that the authority of the Monetary
Board to suspend or restrict the sales of exchange to license is
temporary in nature and may be exercised only during an exchange
crisis, and that the context of the circular in question does not
indicate that it was a temporary emergency measure, this Court again
said in People vs. Jolliffe, supra; “It is not
necessary, however, for the legality of said circular that its
temporary character be stated on its face, so long as the circular has
been issued during an exchange crisis, for the purpose of combating the
same. In the absence of evidence to the contrary, which has not been
offered in the present, it is presumed that the provisions of sec. 74
of Republic Act 265, under the authority of which the aforementioned
circular was issued, has been complied with. Besides, the fact that
there has been an exchange crisis in the Philippines and that such
crisis, not only existed at the time of the issuance of said circular
in 1949 and 1950, but, also, has remained in existence up to the
present, may be taken judicial cognizance of.”
Regarding the allegation that the grant of authority to the Central
Bank to issue the same constitutes an undue delegation of legislative
power, this Court has also held in the case of People vs.
Jolliffe that the standards set forth in the Central Bank Charter (Rep.
Act No. 265) are “sufficiently concrete and definite to vest in the
delegated authority the character of administrative details in the
enforcement of the law and to place the grant of said authority beyond
the category of a delegation of legislative powers * * *.”
Defendants further contend, under the fifth assignment of error,
that even if Circular No. 20 is valid, they are still entitled to an
acquittal because the transaction in dollars was between the servicemen
of the U. S. Armed Forces inside the Clark Air Force Base. In view of
the facts established by the evidence, this contention cannot be
sustained.
Under their last assignment of error, defendants maintain that the
acts committed by them did not adversely affect the dollar reserves of
the Philippines. We fail to see what bearing this contention has in the
instant case, but it may not be amiss to state here that the
restrictions on foreign exchange imposed by Central Bank Circular No.
20, as testified to by Central Bank officials, have a double purpose,
namely, the replacement of the dollars disbursed from the international
reserve and the acquisition of dollars to augment it. As observed by
the trial court, Circular No. 20 is also intended to bring back our
dwindling’ international reserve to a level sufficient to meet our
normal demands for foreign exchange, and every dollar that should be
added, but is not, to said international reserve adversely affects the
country economy.
Finding no error in the judgment appealed from, we hereby affirm it in toto, with costs against appellants.
Paras C. J., Bengzon, Labrador, Concepcion, Reyes, J.B.L., and Barrera, JJ., concur.
Padilla and Montemayor, JJ., took no part.
R E S O L U T I O N
August 31, 1960
GUTIERREZ DAVID, J.:
This is a motion for reconsideration filed by appellants praying
that the decision rendered by this Court on June 30, 1960 affirming the
judgment of conviction by the court below be set aside and a new one
rendered acquitting them of the crime charged.
Citing section 73 of Republic Act No. 265, providing that the
Central Bank may engage in foreign exchange transactions, with the
governments and banking institutions therein enumerated, and section 74
of the same Act, authorizing the Monetary Board to temporarily suspend
or restrict sales of exchange by the Central Bank, counsel for
appellants argues that the Central Bank is not authorized by its
charter to engage in foreign exchange transactions with the public, or
to license such transactions of private individuals. Counsel,
therefore, contends that Circular No. 20, insofar as it requires
private persons who received foreign exchange to sell it to the Central
Bank or to its authorized agents, and prohibits the purchase, sale, or
disposition of such foreign exchange by private persons except from or
to designated agents of the Central Bank, is null and void.
The contention cannot be sustained. the validity of the circular in
question has already been upheld by this court in the case of People vs. Koh et al., 105 phil., 925. in fact, it has been enforced in the cases of the People vs. Jolliffe, 105 phil., 677 and People vs. Henderson, 105 phil., 859).
In answer to counsels arguments, it should here be stated that
section 74 of Republic Act No. 265 expressly provides that
“Notwithstanding the provisions of the third paragraph of the preceding
section, in order to protect the international reserve of the Central
Bank during an exchange crisis and to give the Monetary Board and the
Government time in which to take constructive measures to combat such a
crisis, the Monetary Board * * * may temporarily suspend or restrict
sales of exchange by the Central Bank and may subject all transactions in gold and foreign exchange to license by the Central Bank.
* * *.” The power granted in the above quoted section is so broad in
terms that it evidently covers all sales, purchases or dispositions of
foreign exchange, whether they be by the Central Bank itself or by the
general public or private entities. It will be remembered that the
circular in question was issued in view of our rapidly declining dollar
reserves. Considering the responsibilities, objectives and powers of
the Central Bank—among them “to protect the international reserve of
the Central Bank during an exchange crisis and to give the Monetary
Board and the Government time in which to take constructive measures to
combat such a crisis” (sec. 74), “to take such remedial measures as are
appropriate” to protect the international stability of the peso, when
the international reserve is falling (sec. 70)— it is not difficult to
conclude that Circular No. 20 was a valid exercise of the regulatory
powers delegated by the Central Bank Act (Republic Act No. 265). That
circular is in harmony with the objectives sought to be achieved by the
law.
Section 73 of the Central Bank Act relied upon by counsel to support
appellant’s theory that the Central Bank may engage in foreign exchange
transactions only with the entities (banks) therein enumerated, is
obviously a general rule for observance during normal times,
and is subject to the exception provided in section 74 to the effect
that during an exchange crisis, such as the period when the crime in
question was committed by appellants, the Monetary Board is expressly
authorized to subject all transactions in gold and foreign exchange
to license by the Central Bank. It is significant to note that Circular
No. 20 was reported to Congress, as required by section 34 of Republic
Act No. 265, and Congress has subsequently ratified the same by
enacting laws directly connected with or having direct relation to the
existing foreign exchange control.[1]
Finally, it requires no effort to understand that appellants’
position if upheld, would discourage the public to deal with the
Central Bank or with any other bank authorized by it. This could easily
lead to rampant and unrestrained blackmarketing and thus defeat the
purpose of the law. That effect the law could not have intended.
Counsel also argues that the Central Bank has no jurisdiction to
license foreign exchange transactions in American bases in this
country. This argument is not new and has been found untenable as
extensively discussed in the decision sought to be reconsidered.
In view of the foregoing, the motion for reconsideration is denied.
Paras, C. J., Bengzon, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., and Barrera, JJ., concur.
[1]
Among these laws are Rep. Act. No. 426 (Import Control Law); Rep. Acts
Nos. 601, 814, 871, 1175 and 1197, all legislations imposing an excise
tax of 17% on the value in Philippine peso of foreign exchange sold
and/or authorized to be sold by the Central Bank or its authorized
agents.