Republic Resources v CA the proposed settlement be submitted to the Court for approval and such
By: Shang Boligor proposed payment be secured by a surety bond but defendant did not act
G.R. No. L-33438 | October 28, 1991
Topic: Sec. 2, Sum Certain in Money
Petitioner: Republic Resources and Development Corporation
Respondents: Court of Appeals and United Geophysical Company, S.A. (Costa Rica)
Summary: United Valenzuela entered into a contract with Republic Resources wherein it
agreed to conduct for Republic Resources geophysical services. In the amount of 3,000USD
per month- 50% to be paid in USD and the other 50% in Php. Republic Resources partly
failed to fulfill its obligation to payable in dollars after several demands. This was brought to
court. Republic Resources proposed a counter offer which the United Venezuela accepted
under certain conditions however, it did not proceed. Both tc and ca ruled that Republic
Resources should pay United Venezuela its remaining balance at the exchange rate
prevailing at the time of payment which lead Republic Resources to question before the sc
whether is should pay the remaining balance at the current exchange rate prevailing at the
time of payment. The SC held that (ratio)
Doctrines: The value in domestic money of a payment made in foreign money is fixed in
reference to the rate of exchange at the time of such payment
Facts:
 The United Geophysical Company S.A. (Costa Rica) is a corporation duly
organized and existing under the laws of Costa Rica. It is the successor-in-
interest of the United Geophysical Company, S. A. (Venezuela)
 The plaintiff-appellee United Venezuela and defendant-appellant Republic
Resources herein, executed with the approval of the Doctor of Mines, a
seismograph conduct wherein the United Venezuela undertook to conduct for
the Republic Resources for a period of 12 months, commencing from January
1960, geophysical surveys in the Philippines
 Republic Resources agreed to pay a contract fee in the amount of 3,000 USD
per month, 50% of which was to be paid in U.S. dollars and the other 50 in
Philippine pesos. It also agreed to reimburse the United Valenzuela at cost,
plus 5% of the cost of returning to the point of origin all the expatriate
personnel, equipment and supplies utilized by Valenzuela
 Republic Resources paid in full the contract fees payable in Philippine Pesos by
but it failed to pay the contract fees payable in dollars amounting to
$34,908.33 and the sum of $3,713.33 representing the cost plus 5% of
returning the equipment
 After several demands upon Republic Resources, it paid as a part payment
$10,000 with the request that the balance of USD28,622.66 be reduced
 Republic Resources, by way of amicable settlement of said balance, offered to
pay another $10,000 requesting condonation of $18,000. This offer was
rejected and thus an action was filed to recover said balance of USD23,622.66
 When this case was filed, Republic Resources renewed its offer to pay its
outstanding balance. United Valenzuela accepted this offer in condition that
upon this counter-proposal; and instead, it filed an answer with counterclaim
to the complain
 This case was set for trial but appellant failed to appear with its counsel several
times after being granted its postponement requests. The trial court ruled in
favor of United Venezuela and ordered Republic Resources to pay
28,622.66USD converted into php at the rate of exchange equivalent at the
time of payment with legal interest therefrom from 8 Nov 1962 and whatever
fees the commercial banks will charge from transmitting the same to the
principal office in U.S.; and other fees
 Republic Resources then filed this appeal. It raised the issue of whether its
28,622.26 obligation should be paid at the rate of exchange prevailing at the
time of the payment
Issue: Whether Republic Resources’ obligation should be paid at the rate of exchange prevailing
at the time of payment - NO
Ratio:
 First, a party is not permitted to raise before this court and issue which he did
not raise either in the lower court or in the CA
 It is clear from Section 21 of R.A. No. 529 [this ra was only mentioned in the sc
part] that what is declared null and void is the "provision contained in, or made
with respect to, any domestic obligation to wit, any obligation contracted in
the Philippines which provision purports to give the obligee the right to require
payment in gold or in a particular kind of coin or currency other than Philippine
currency or in an amount of money of the Philippines measured thereby" and
not the contract or agreement which contains such proscribed provision
 As to the rate of exchange, a distinction has to be made between obligations
incurred prior to the Act and those incurred after its enactment. As to the
former, Section 1 of the Act explicitly provides that:
“. . . if the obligation was incurred prior to the enactment of the Act, 6 and
required payment in a particular kind of coin or currency other than Philippine
currency, it shall be discharged in Philippine currency measured at the
prevailing rates of exchange at the time the obligation was incurred, except in
case of a loan made in a foreign currency stipulated to be payable in the same
currency, in which case the rate of exchange prevailing at the time of the
stipulated date of payment shall prevail."
 As to obligations incurred after enactment such as that of the petitioner's in
favor of private respondent, Kalalo vs. Luz ruled that the rate of exchange
should be that prevailing at the time of payment. Thus:
o The value in domestic money of a payment made in foreign money
is fixed with respect to the rate of exchange at the time of
payment'. (70 CJS, p. 228)
o "According to the weight of authority the amount of recovery
depends upon the current rate of exchange, and not the par value
of the particular money involved." (48 C.J. 605-606)
o "The value in domestic money of a payment made in foreign money
is fixed in reference to the rate of exchange at the time of such
payment. "(48 C.J. 605)