ARRIETA VS.

NATIONAL RICE AND CORN

CORPORATION
GR L-15645 January 31, 1964
FACTS:
On May 19, 1952, plaintiff-appellee Mrs. Paz
Arrieta participated in a public bidding called by NARIC
for the supply of 20,000 metric tons of Burmese rice. As
her bid of $203, 000 per metric ton was the lowest, she
was awarded he contract for the same. On July 1, 1952,
Arrieta and NARIC entered into Contract of Sale of Rice
under the term of which the former obligated herself to
deliver to the latter 20, 000 metric tons of Burmese rice at
$203, 000 per metric ton. In turn, NARIC committed itself
to pay for the imported rice by means of an irrevocable,
confirmed and assignable letter of credit in US currency in
favor of Arrieta and/or supplier in Burma, immediately.
However, it was only on July 30, 1952 that NARIC
took the first step to open a letter of credit by forwarding to
the PNB its application for Commercial Letter of Credit.
On the same day, Arrieta, thru counsel, advised NARIC of
the extreme necessity for the opening of the letter of credit
since she had by then made a tender to her supplier in
Rangoon, Burma equivalent to 5% of the F.O.B. price of
20, 000 tons at $180.70 and in compliance with the
regulations in Rangoon, this 5% will be confiscated if the
required letter of credit is not received by them before
August 4, 1952.
On August 4, PNB informed NARIC that its
application for a letter of credit has been approved by the
Board of Directors with the condition that 50% marginal
cash deposit be paid and that drafts a5e to be paid upon
presentment. It turned out that NARIC was not in financial
position to meet the condition. As a result of the delay, the
allocation of Arrietas supplier in Rangoon was cancelled
and the 5% deposit amounting to 524 kyats or
approximately P200, 000 was forfeited.
ISSUE:
Was NARIC liable for damages?
RULING:
Yes. One who assumes a contractual obligation
and fails to perform the same on account of his inability to
meet certain bank which inability he knew and was aware
of when he entered into contract, should be held liable in
damages for breach of contract.
Under Article 1170 of the Civil Code, not only
debtors guilty of fraud, negligence or default but also
debtor of every, in general, who fails in the performance of
his obligations is bound to indemnify for the losses and
damages caused thereby.

34 SCRA 337 Mercantile Law Negotiable Instruments Law Negotiable Instruments in General
Sum Certain in Money Currency To Be Used
Octavio Kalalo is an engineer whose services were contracted by Alfredo Luz, an architect in 1961. Luz
contracted Kalalo to work on ten projects across the country, one of which was an in the International Rice
Research Institute (IRRI) Research Center in Los Baos, Laguna. Luz was to be paid $140,000.00 for the
entire project. For Kalalos work, Luz agreed to pay him 20% of what IRRI is going to pay or equivalent to
$28,000.00.
ISSUE: Whether or not Kalalo should be paid in US currency.
HELD: No. The agreement was forged in 1961, years before the passage of Republic Act 529 in 1950.
The said law requires that payment in a particular kind of coin or currency other than the Philippine
currency shall be discharged in Philippine currencymeasured at the prevailing rate of exchange at the
time the obligation was incurred. Nothing in the law however provides which rate of exchange shall be
used hence it is but logical to use the rate of exchange at the time of payment.

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NOTE: RA 529 has already been repealed by Republic Act 8183 which provides that every monetary
obligation must be paid inPhilippine 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. (The Philippine Negotiable Instruments Law, De Leon and De Leon Jr., p. 29)

Papa v. Valencia Digest

Papa v. Valencia
G.R. No. 105188 January 23, 1998
Banking; Checks
Facts:
1. The case arose from a sale of a parcel of land allegedly made to private respondent Penarroyo by petitioner acting
as attorney-in-fact of Anne Butte. The purchaser, through Valencia, made a check payment in the amount of
P40,000 and in cash, P5,000. Both were accepted by petitioner as evidenced by various receipts. It appeared that
the said property has already been mortgaged to the bank previously together with other properties of Butte.
2. When Butte passed away, the private respondent Penarroyo now demanded that the title to the property be
conveyed to him, however the bank refused. Hence, the filing of a suit for specific performance by private
respondents against the petitioner. The lower court ruled in favor of the private respondents and ordered herein

petitioner the conveyance or the property or if not, its payment. The petitioner appealed the lower court's decision
alleging that the sale was not consummated as he never encashed the check given as part of the purchase price.
3. The Court of Appeals affirmed with modifications the lower court's decision. It held that there was a
consummated sale of the subject property despite.
Issue: Whether or not the check is a valid tender of payment/Whether or not there was a valid sale
of the subject property
RULING: Yes. While it is true that the delivery of check produces payment only when encashed (pursuant to Art.
1249, Civil Code), the rule is otherwise if the debtor is prejudiced by the delay in presentment. (Here in this case, the
petitioner now alleges that he did not present the check, ten years after the same was paid to him as part of the
purchase price of the property.)
Check acceptance implied an undertaking of due diligence in presenting it for payment. If the person who receives it
sustains loss by want of this diligence, this will operated as actual payment of the debt or obligation for which the
check was given. The debtor cannot now be held liable if non-presentment of the check was through the fault of the
creditor.