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July 31, 1970 | Reyes, JBL, J. | Extinguishment of Obligations - Payment
PETITIONER: Octavio Kalalo
RESPONDENTS: Alfredo Luz
SUMMARY: Kalalo (civil engineer) entered into a commission-based agreement with Luz (architect) in 1959 for engineer design
services, with stipulated commission from the architects fees. After refusing Luz partial payment in 1962, Kalalo filed a complaint
for payment, and the Commissioners report stated that the amount due was USD 28,000 (20% of the USD 140,000 project with the
International Research Institute), among other fees.
DOCTRINE: Under RA 529, if the obligation was incurred prior to the enactment in a particular kind of coin or currency other
than the Philippine currency the same shall be discharged in Philippine currency measured at the prevailing rate of exchange at the
time the obligation was incurred. RA 529 does not provide for the rate of exchange for the payment of obligation incurred after the
enactment of said Act. The logical conclusion is that the rate of exchange should be that prevailing at the time of payment for such
contracts.
FACTS:
1. In 1959, Kalalo (civil engineer) entered into an agreement
with Luz (architect) where the former was to render
engineering design services to the latter for fees, as
stipulated in the agreement.
2. In 1961, Kalalo sent a statement account asking for PhP
116,565.00 in engineering fees.
3. Luz already paid Php 57,000 prior, so the actual balance
was Php 59,565.00.
4. In 1962, Luz said they only owe PhP 10,861.08, and sent
a check with the said amount.
5. Kalalo refused to accept the check as full payment.
6. Kalalo then filed a complaint against Luz for 4 causes of
action:
(1) USD 28,000 and PhP 30,881.25 for his
services;
(2) PhP 17,000 as consequential and moral
damages;
(3) PhP 55,000 as moral damages, attorney's fees
and expenses of litigation;
(4) PhP 25,000 as actual damages, and also for
attorney's fees and expenses of litigation.
7. The USD 28,000 fee is in US dollars because it was for
the International Research Institute (IRRI) project.
8. Luz contended that the Kalalos services were not
complete or were performed in violation of the agreement
and otherwise unsatisfactory.
9. In order to settle the dispute, the trial court authorized the
case to be heard before a Commissioner since the only
question is on the assessment of the proper fees and the
balance due to Kalalo after deducting the admitted
payments made by Luz.
10. The Commissioner rendered a report which stated that the
amount due to appellee was USD 28,000.00 as his fee in
the International Research Institute Project which was
20% of the USD 140,000.00 that was paid to Luz, and
PhP 51,539.91 for the other projects (less the sum of PhP
69,475.46 already paid by Luz), plus PhP 8,000 Attorney's
fees.
11. The USD 28,000 was to be converted into peso on the
basis of the rate of exchange of the US dollar to the
Philippine peso at the time of payment of judgment as
Certified by the Central Bank of the Philippines.
ISSUE/S:
1. WON the recommendation in the Report that the payment