University of the Philippines 75 Gonzalo Sy Trading v Central Bank of the Philippines

College of Law (Evening) (1976)

Administrative Law Permissible Delegation; Licensing Function Martin
Summary
The petitioner in this case, Gonzalo Sy Trading (“GST”), in the year 1968, pursuant to their request with the Central Bank
of the Philippines (“Central Bank”), had been granted a Special Import Permit granting it authority to import products
in their line of business under a “no-dollar” basis; this was eventually granted by the Central Bank. GST, pursuant to
such permit was able to import goods under a no-dollar basis from 1968 to 1970 where its importation was halted
following the orders from the Central Bank. In 1970, the importations of GST came to a halt upon advice from the
Central Bank that its special permit was intended to cover only the Christmas season of 1968. The Supreme Court, in
sustaining the Central Bank held that a license is not a contract but rather, it is a special privilege, as such, it is always
revocable and in this case, there are legitimate grounds for the revocation of the permit.
The Facts
• On September 28, 1968, petitioner GST requested for authority from Central Bank to import fruits from Japan
on a “no-dollar” basis in the total amount of US$715,000.00. In their letter-request, GST stated that they are
making such request because “x x x with the fast approaching Christmas season we are certain we cannot cope
with the demands of our buyers of fresh fruits under this requirement imposed on importers.”
• On October 2, 1968, the Central Bank, through the Executive Assistant to the Deputy Governor, replied to the
request saying that since only the transactions specifically enumerated in Central Bank Circular No. 247, s. 1967
are allowed as “no-dollar” importation and since GST’s goods are not enumerated therein, its request cannot
be granted.
• On October 22, 1968, GST sought the reconsideration of the denial of their request stating that their case is “x
x x a very special one and different from regular importation”. In the same vein, it reminded the Central Bank
that the items they seek to import for the Christmas season are very much in need and that they are confident
that “x x x if [their] request be given consideration, [they] will be able to put good stock of [fresh fruits] in the
market at a cheaper cot for the benefit of the consuming public”. GST coursed another letter to the Deputy
Governor of Central Bank reiterating their request on November 6, 1968; in this letter, they again stressed that
the “x x x main purpose of this importation is to serve the requirements during the Christmas season”.
• On November 19, 1968, the Monetary Board of the Central Bank, through a Resolution approved GST’s request
for Special Import Permit on No-Dollar Basis, subject to the condition that there will be a “x x x special time
deposit of 100%, which shall be held by the bank concerned for a period of 120 days as well as to the normal
customs duties and taxes.” This was communicated to GST on November 21, 1968.
• GST appealed the condition imposing the 100% special time deposit since the particular importation, they state,
is only for the Christmas season. They requested that the Central Bank instead consider allowing them to put
up a 20% special time deposit for 120 days instead. This request was denied in a letter dated December 6, 1968.
• By virtue of the special permit, GST was able to make the following importations on a “no-dollar” basis:
o On February 25, 1969, it made its first importation from Japan;
o On August 7, 1969 thru November 5, 1969, it processed bulks of importation from San Francisco,
California and Australia;
o On January 5, 1970, it made importations from Taipei, Taiwan; and
o On March 16, 1970, it made importations from Israel.
• For all the above-stated importation transactions, Prudential Bank and Trust Company (“Prudential Bank”) acted
as Central Bank’s agent in the issuance of the corresponding release certificates for the entry of the goods. By
June 1970, GST still had an unused balance of US$35,857.49.
• While the importation transactions were happening, GST, on October 30, 1969 requested from the Central Bank
an amendment of the country of origin of their importations to include other countries except communist
countries. Central Bank, through its Deputy Governor, replied to this request on November 19, 1969 informing
GST that the authority granted to it by virtue of the by the Monetary Board per the Resolution issued by said
Board was intended only for the Christmas season of 1968 and does not extend through 1969.
• On November 21, 1969, on the other hand, the Director of the Foreign Exchange Department of the Central
Bank wrote to Prudential Bank in reply to the latter’s letters to the former whereby the Central Bank was
furnished copies of the release certificates issued to GST. The pertinent portion of the letter stated that since
there is a still a balance in GST’s special time deposit, “x x x you may continue to issue release certificates to
cover the No-Dollar Importations of fresh fruits to [GST], subject to the same terms and conditions imposed by
the Monetary Board under the above-named resolution.”
 • On April 17, 1970, Central Bank informed Prudential Bank that the authority granted to GST was intended only
for the Christmas season of 1968 and does not extend through 1969; because of this, Prudential Bank did not
anymore issue release certificates to GST for the latter’s imports.
• On May 27, 1970, GST notified the Assistant that the Prudential Bank refused to issue them any release
certificate for their importations due to his letter of April 17, 1970. On June 3, 1970, GST sent a follow-up letter
to the Assistant reiterating "our request for a reconsideration on the matter and to allow us utilize the balance
of our Permit in the amount of $35,857.49." In the same letter, GST advised that "we have shipments coming
on June 4th and June 6th respectively which is within the balance of our permit."
• On June 10, 1970, the Deputy Governor wrote GST that its request cannot be given due course, inviting
attention to the basic letter of November 19, 1969, informing it that the Special Import Permit was intended
only for the Christmas season of 1968 and does not extend through 1969.
• Finally, in the year 1970, the Collector of Customs issued warrants of seizure and detention against several
importations of GST for being violative of Central Bank Circular 239 in relation to Section 2530 (f) of the Tariff
and Customs Code.
• On Sept. 21, 1970, GST instituted before the CFI of Manila a petition for mandamus with damages. Judge
Alikpala dismissed the complaint for mandamus with damages and ordered the Collector of Customs to proceed
with the seizure proceedings. From this adverse judgment, GST appealed to the CA, but the latter certified the
case to the Supreme Court as involving only pure questions of law.
Issue/s
W/N GST’s Special Import Permit had already expired when it made the importations which were seized by the
Central Bank
Yes. Their permit was only for a limited period Christmas Season of 1968 and it does not extend up to 1969 and
1970.
A license or a permit is not a contract between the sovereignty and the licensee, and it is not property in any
constitutional sense, hence the non-impairment of contracts doctrine cannot apply.

A license is in the nature of a special privilege, of a permission or authority to do what is within its terms. It is not
absolute, and a license granted by the State is always revocable. The absence of an expiry date does not make the
license perpetual.

The Special Import Permit covers only the Christmas Season of 1968. In the application of GST, it made manifest that
the reason for its application was so that it could cope with the demands of its buyers during the Christmas Season
of 1968. In effect, it was GST itself which furnished the period for the permit, and should only subsist within such
period. The omission of an expiry date in the Special Import Permit affords no legal basis for GST to conclude that the
said permit is impressed with continuous validity, i.e., not merely limited to the Christmas season of 1968.

GST mistakenly asserts that the continuous validity of its Special Import Permit has already been passed upon by this
Court in Commissioner of Customs v. Alikpala. What was raised in that case is the question of whether the Collector
of Customs for the Port of Manila has observed the requirements of administrative due process in ordering the
seizure and sale at public auction of GST's imported goods in particular that arrived in June, 1970, as well as the
question of the legality of the Collector's order requiring only cash bond, surety bond not accepted, for the release
of the goods. The Court made no ruling on the continuity of GST's Special Import Permit after the Christmas season
of 1968.

The equitable principle of estoppel forbids GST from taking an inconsistent position now and claim that the permit
extends beyond the period it itself asked for. Where conduct or representation has induced another to change its
position in good faith or the same is such that reasonable man would rely thereon, the consequences of such conduct
or representation cannot later on be disowned.

The doctrine of promissory estoppel was here invoked by GST pointing to the letter issued by the Director of Foreign
Exchange. On the contrary, while the letter advised the agent bank that it may continue issuing release certificates
to cover petitioner-appellant's "no-dollar" importations of fresh fruits, it at the same time subjects the issuance of
release certificates "to the same terms and conditions imposed by the Monetary board" on the Special Import Permit,
one of which is the resolutory term of 1968.

The SC, held, however, that a promise cannot, by itself, be the basis of estoppel without any justifiable reliance or
irreparable detriment to the promisee. The latter element is lacking in this case. The letter referred to specifically
 mentioned that it was subject to the existing terms imposed by the Monetary Board. Moreover, the Director could
not have modified the Special Permit since it was not given the authority to do so, as in fact it was the Monetary
Board who issued it and only the latter has the power to modify it.
Even assuming arguendo, however, that the aforementioned letter really tended to impress that further importations
could be made, still the doctrine of estoppel cannot apply, as it does not operate against the Government. The
Government is never estopped by the errors of its agents (in this case, the Monetary Board).

The authority of the CB to regulate "no-dollar" imports, owing to the influence and effect that the same may exert
upon the stability of our peso and its international value, emanates from its broad powers to maintain our monetary
stability and to preserve the international value of our currency as well as its corollary power to issue such rules and
regulations for the effective discharge of its responsibilities and exercise of powers.
Ruling
ACCORDINGLY, the judgment of the lower court, subject matter of this present review, is hereby affirmed. Costs against
petitioner-appellant.