GR L-15645, 31 January 1964
On 19 May 1952, Paz and Vitaliado Arrieta participated in the public bidding called by NARIC for the supply of 20,000 metric tons of Burmese rice. Ad her bid of $203 per metric ton was the lowest, she was awarded the contract for the same. As a result of the delay in the opening of the letter of credit by NARIC, the allocation of Arrieta’s supplier in Rangoon was cancelled and the 5% deposit amounting to an equivalent of P200,000 was forfeited. Arrieta endeavored but failed to restore the cancelled Burmese rice allocation, and thus offered Thailand rice instead. Such offer was rejected by NARIC. Subsequently, Arrieta sent a letter to NARIC, demanding compensation for the damages caused her in the sum of US$286,000 representing unrealized profit. The demand having been rejected, she instituted the case.
Whether the rate of exchange to be applied in the conversion is that prevailing at the time of breach, or at the time the obligation was incurred, or on the promulgation of the decision.
As pronounced in Eastboard Navigation vs. Ismael, if there is any agreement to pay an obligation in the currency other than Philippine legal tender, the same is null and void as contrary to public policy (RA 529), and the most that could be demanded is to pay said obligation in Philippine currency to be measured in the prevailing rate of exchange at the time the obligation was incurred. Herein, the rate of exchange to be applied is that of 1 July 1952, when the contract was executed.