Arrieta vs.

National Rice & Corn Corporation (NARIC)

Facts:
On 19 May 1952, Paz and VitaliadoArrieta 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 wasawarded the contract for the same. As a result of the delay in the opening of
the letter of credit by NARIC, theallocation of Arrietas supplier in Rangoon was cancelled and the
5% deposit amounting to an equivalent ofP200,000 was forfeited. Arrietaendeavored but failed to
restore the cancelled Burmese rice allocation, andthus offered Thailand rice instead. Such offer
was rejected by NARIC. Subsequently, Arrieta sent a letter toNARIC, demanding compensation for
the damages caused her in the sum of US$286,000 representingunrealized profit. The demand
having been rejected, she instituted the case.
Issue:
Whether the rate of exchange to be applied in the conversion is that prevailing at the time
of breach, orat the time the obligation was incurred, or on the promulgation of the decision.
Held:
As pronounced in Eastboard Navigation vs. Ismael, if there is any agreement to pay an
obligation in thecurrency 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 theprevailing rate of exchange at the time the obligation
was incurred. Herein, the rate of exchange to be appliedis that of 1 July 1952, when the contract
was executed.