G.R. No.

133498 April 18, 2002

C.F. SHARP & CO., INC., petitioner,

YNARES-SANTIAGO, J.:

This is a petition for review under Rule 45 of the Rules of Court assailing the February 17, 1997
Decision1 and the April 2, 1998 Resolution2 of the Court of Appeals3 in CA-G.R. SP No.
40996.

The undisputed facts are as follows:

On May 9, 1974, respondent, through its Japan Branch, entered into an International Passenger
Sales Agency Agreement with petitioner, authorizing the latter to sell its air transport tickets.
Petitioner failed to remit the proceeds of the ticket sales, for which reason, respondent filed a
collection suit against petitioner before the Tokyo District Court which rendered judgment on
January 29, 1981, ordering petitioner to pay respondent the amount of "83,158,195 Yen and
damages for the delay at the rate of 6% per annum from August 28, 1980 up to and until payment
is completed."4 Unable to execute the decision in Japan, respondent filed a case to enforce said
foreign judgment with the Regional Trial Court of Manila, Branch 54.5 However, the case was
dismissed on the ground of failure of the Japanese Court to acquire jurisdiction over the person
of the petitioner. Respondent appealed to the Court of Appeals, which affirmed the decision of
the trial court.1âwphi1.nêt

Respondent filed a petition for review with this Court, docketed as G.R. No. 112573. On
February 9, 1995, a decision was rendered, the dispositive portion of which reads:

WHEREFORE, the instant petition is partly GRANTED, and the challenged decision is
AFFIRMED insofar as it denied NORTHWEST’s claims for attorney’s fees, litigation
expenses, and exemplary damages but REVERSED insofar as it sustained the trial court’s
dismissal of NORTHWEST’s complaint in Civil Case No. 83-17637 of Branch 54 of the
Regional Trial Court of Manila, and another in its stead is hereby rendered ORDERING
private respondent C.F. SHARP & COMPANY, INC. to pay to NORTHWEST the
amounts adjudged in the foreign judgment subject of said case, with interest thereon at
the legal rate from the filing of the complaint therein until the said foreign judgment is
fully satisfied.

Costs against the private respondent.

SO ORDERED.6

Accordingly, the Regional Trial Court of Manila, Branch 54, issued a writ of execution of the
foregoing decision.7 On November 22, 1995, the trial court modified its order for the execution
of the decision, viz:
 WHEREFORE, in view of the foregoing, this Court hereby issues another order, as
follows: the writ of execution is issued against defendant C.F. Sharp ordering said
defendant to pay the plaintiff the sum of 83,158,195 Yen at the exchange rate prevailing
on the date of the foreign judgment on January 29, 1981, plus 6% per annum until May
19, 1983; and from said date until full payment, 12% per annum (6% by way of damages
and 6% interest) until the entire obligation is fully satisfied.

SO ORDERED.8

On December 18, 1995, petitioner filed a petition for certiorari under Rule 65, docketed as G.R.
No. 122890, assailing the aforequoted order. On May 29, 1996, the case was referred to the
Court of Appeals. Petitioner contended that it had already made partial payments; hence, it was
liable only for the amount of 61,734,633 Yen. Moreover, it argued that it was not liable to pay
additional interest on top of the 6% interest imposed in the foreign judgment.

The Court of Appeals rendered the assailed decision on February 17, 1997. It sustained the
imposition of additional interest on the liability of petitioner as adjudged in the foreign judgment.
The appellate court likewise corrected the reckoning date of the imposition of the interests in
accordance with the February 9, 1995 decision to be executed, but lowered the additional interest
from 12% to 6% per annum. Further, it ruled that the basis of the conversion of petitioner’s
liability in its peso equivalent should be the prevailing rate at the time of payment and not the
rate on the date of the foreign judgment. The dispositive portion of the said decision reads:

WHEREFORE, the petition is GRANTED. The assailed Orders dated October 13, 1995
and November 22, 1995 are annulled and set aside on the ground that they varied the
final judgment of the First Division of the Supreme Court in G.R. No. 112573, entitled,
"NORTHWEST ORIENT AIRLINES, INC., Petitioner, versus, COURT OF APPEALS
and C. F. SHARP & COMPANY, INC., Respondents".

Respondent court is enjoined to execute the said final judgment with an unpaid principal
balance of Y61,734,633 plus damages for delay at the rate of 6% per annum from August
28, 1980, until fully paid, which may be paid in local currency based on the conversion
rate prevailing at the time of payment; plus 6% legal interest per annum from August 28,
1980, the date of the filing of the complaint in the foreign judgment.

No costs.

SO ORDERED.9

On April 2, 1998, the Court of Appeals denied both the motion for reconsideration and the partial
motion for reconsideration filed by petitioner and respondent, respectively.

In the present recourse, petitioner questions the applicable conversion rate of its liability, and
claims that a ruling thereon by the Court of Appeals effectively deprived it of due process of law
because said rate was not among the issues submitted for resolution.
The petition is without merit.

In ruling that the applicable conversion rate of petitioner’s liability is the rate at the time of
payment, the Court of Appeals cited the case of Zagala v. Jimenez,10 interpreting the provisions
of Republic Act No. 529, as amended by R.A. No. 4100. Under this law, stipulations on the
satisfaction of obligations in foreign currency are void. Payments of monetary obligations,
subject to certain exceptions, shall be discharged in the currency which is the legal tender in the
Philippines. But since R.A. No. 529 does not provide for the rate of exchange for the payment of
foreign currency obligations incurred after its enactment, the Court held in a number of cases11
that the rate of exchange for the conversion in the peso equivalent should be the prevailing rate at
the time of payment.

Petitioner, however, contends that with the repeal of R.A. No. 529 by R.A. No. 8183,12 the
jurisprudence relied upon by the Court of Appeals is no longer applicable.

Republic Act No. 529, as amended by R.A. No. 4100, provides:

SECTION 1. Every 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, be as it is hereby declared against public policy, and null, void, and of
no effect, and no such provision shall be contained in, or made with respect to, any
obligation hereafter incurred. The above prohibition shall not apply to (a) transactions
where the funds involved are the proceeds of loans or investments made directly or
indirectly, through bona fide intermediaries or agents, by foreign governments, their
agencies and instrumentalities, and international financial banking institutions so long as
the funds are identifiable, as having emanated from the sources enumerated above; b)
transactions affecting high-priority economic projects for agricultural, industrial and
power development as may be determined by the National Economic Council which are
financed by or through foreign funds; (c) forward exchange transactions entered into
between banks or between banks and individuals or juridical persons; (d) import-export
and other international banking, financial investment and industrial transactions. With the
exception of the cases enumerated in items (a), (b), (c) and (d) in the foregoing provision,
in which cases the terms of the parties’ agreement shall apply, every other domestic
obligation heretofore or hereafter incurred, whether or not any such provision as to
payment is contained therein or made with respect thereto, shall be discharged upon
payment in any coin or currency which at the time of payment is legal tender for public
and private debts: Provided, That if the obligation was incurred prior to the enactment of
this Act 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. All coin and currency, including Central Bank notes, heretofore or hereafter
 issued and declared by the Government of the Philippines shall be legal tender for all
debts, public and private.

Pertinent portion of Republic Act No. 8183 states:

SECTION 1. All monetary obligations shall be settled in the Philippine currency which is
legal tender in the Philippines. However, the parties may agree that the obligation or
transaction shall be settled in any other currency at the time of payment.

SEC. 2. Republic Act Numbered Five Hundred and Twenty-Nine (R.A. No. 529), as
amended, entitled "An Act to Assure the Uniform Value of Philippine Coin and
Currency" is hereby repealed.

The repeal of R.A. No. 529 by R.A. No. 8183 has the effect of removing the prohibition on the
stipulation of currency other than Philippine currency, such that obligations or transactions may
now be paid in the currency agreed upon by the parties. Just like R.A. No. 529, however, the new
law does not provide for the applicable rate of exchange for the conversion of foreign currency-
incurred obligations in their peso equivalent. It follows, therefore, that the jurisprudence
established in R.A. No. 529 regarding the rate of conversion remains applicable. Thus, in Asia
World Recruitment, Inc. v. National Labor Relations Commission,13 the Court, applying R.A.
No. 8183, sustained the ruling of the NLRC that obligations in foreign currency may be
discharged in Philippine currency based on the prevailing rate at the time of payment. The
wisdom on which the jurisprudence interpreting R.A. No. 529 is based equally holds true with
R.A. No. 8183. Verily, it is just and fair to preserve the real value of the foreign exchange-
incurred obligation to the date of its payment.14

We find no denial of due process in the instant case. Contrary to the argument of petitioner, the
matter of the applicable conversion rate was one of the issues submitted for resolution before the
Court of Appeals. Moreover, opportunity to be heard, which is the very essence of due process,
was afforded petitioner when it filed a motion for reconsideration of the Court of Appeals’
decision.

Petitioner’s contention that it is Article 125015 of the Civil Code that should be applied is
untenable. The rule that the value of the currency at the time of the establishment of the
obligation shall be the basis of payment finds application only when there is an official
pronouncement or declaration of the existence of an extraordinary inflation or deflation.16

For its part, respondent prays for the modification of the Court of Appeals’ award of interest.
While as a general rule, a party who has not appealed is not entitled to affirmative relief other
than what was granted in the decision of the court below, law and jurisprudence authorize a
tribunal to consider errors, although unassigned, if they involve (1) errors affecting the lower
court’s jurisdiction over the subject matter, (2) plain errors not specified, and (3) clerical
errors.17

In the case at bar, the Court of Appeal’s failure to apply the correct legal rate of interest, to
which respondent is lawfully entitled, amounts to a "plain error." In Eastern Shipping Lines, Inc.
v. Court of Appeals,18 it was held that absent any stipulation, the legal rate of interest in
obligations which consists in the payment of a sum of money, as in the present case, is 12% per
annum. As stated in the decision of the Court in G.R. No. 112573, which is final and executory,
petitioner is liable to pay respondent the amount adjudged in the foreign judgment, with "interest
thereon at the legal rate [12% per annum] from the filing of the complaint therein [on August 28,
1980] until the said foreign judgment is fully satisfied." Since petitioner already made partial
payments, his obligation was reduced to 61,734,633 Yen. Thus, petitioner should pay respondent
the amount of 61,734,633 Yen plus "damages for the delay at the rate of 6% per annum from
August 28, 1980 up to and until payment is completed," with interest thereon at the rate of 12%
per annum from the filing of the complaint on August 28, 1980, until fully satisfied.

The Court is clothed with ample authority to review matters, even if they are not assigned as
errors on appeal, if it finds that their consideration is necessary in arriving at a just decision of
the case. Rules of procedure are mere tools designed to facilitate the attainment of justice. Their
strict and rigid application, which would result in technicalities that tend to frustrate rather than
promote substantial justice, must be avoided. Hence, substantive rights, like the applicable legal
rate of interest on petitioner’s long due and demandable obligation, must not be prejudiced by a
rigid and technical application of the rules.19

WHEREFORE, in view of all the foregoing, the instant petition is DENIED. The February 17,
1997 decision and the April 2, 1998 resolution of the Court of Appeals in CA-G.R. SP No.
40996 are AFFIRMED with MODIFICATION. Petitioner is directed to pay respondent
61,734,633 Yen plus damages for the delay at the rate of 6% per annum from August 28, 1980
up to and until payment is completed, with interest at the rate of 12% per annum counted from
the date of filing of the complaint on August 28, 1980, until fully satisfied. Petitioner’s liability
may be paid in Philippine currency, computed at the exchange rate prevailing at the time of
payment.1âwphi1.nêt

SO ORDERED.