KALALO vs. LUZ - G.R. No. L-27782

OCTAVIO A. KALALO vs. ALFREDO J. LUZ

G.R. No. L-27782         July 31, 1970

On 17 November 1959, Octavio Kalalo entered into an agreement with Alfredo Luz where he was to render engineering design services for a fee. On 11 December 1961, Kalalo sent Luz a statement of account where the balance due for services rendered was P59,505. On 18 May 1962, Luz sent Kalalo a resume of fees due to the latter, and a check for P10,861.08. Kalalo refused to accept the check as full payment of the balance of the fees due him. On 10 August 1962, Kalalo filed a complaint containing 4 causes of action, i.e. $28,000 (representing 20% of the amount paid to Luz in the International Research Institute project) and the balance of P30,881.25 as fees; P17,0000 as consequential and moral damages; P55,000 as moral damages, attorney’s fees and litigation expenses; and P25,000 as actual damages, attorney’s fees and litigation expenses). The trial court ruled in favor of Kalalo. Luz filed an appeal directly with the Supreme Court raising only questions of law.

Issue: Whether or not the rate of exchange of dollar to peso are those at the time of the payment of the judgment or at the time when the research institute project became due and demandable.

Held: Luz’ obligation to pay Kalalo the sum of US$28,000 accrued on 25 August 1961, or after the enactment of RA 529 (16 June 1950). Thus, the provision of the statute which requires payment at the prevailing rate of exchange when the obligation was incurred cannot be applied. RA 529 does not provide for the rate of exchange for the payment of obligation incurred after the enactment of the Act, and thus the rate of exchange should be that prevailing at the time of payment. The view finds support in the ruling of the Court in Engel vs. Velasco & Co. The trial court did not err in holding the rate of exchange is that at the time of payment.