CF Sharp vs Northwest Airlines, 381SCRA314 Facts: On May 9, 1974, CF Sharp was authorized to sell tickets of Northwest Airlines-Japan by entering an International Passenger Sales Agency Agreement, however, CF Sharp failed to remit the proceeds of the ticket sales. This prompted Northwest Airlines to file a collection suit against the CF Sharp before the Toko Distirct Court. Judgment was rendered in its favor, ordering CF Sharp to pay Northwest Airlines including damages for the delay. Unable to execute the decision in Japan, the respondent filed a case to enforce said judgment with the RTC. Thereafter, the RTC issued a writ of execution for foreign court’s decision. The petitioner filed for certiorari, asserting it has already made partial payments. The CA lowered the amount to be paid and included in its decision that the amount may be paid in local currency at rate prevailing at time of payment. partly affirmed by the Supreme Court. CF Sharp was then ordered to pay Northwest so that the RTC issued a writ of execution of decision ruling that Sharp is to pay Northwest the sum of 83,158,195 yen at the exchange rate prevailing on the date of the foreign judgment plus 6% per annum until fully paid, 6% damages and 6% interest. An appeal, the Court of Appeals reduced the interest and 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. Issue: Whether or not the basis for the payment of the amount due is the value of the currency at the time of the establishment of the obligation. Ruling: NO, the rule that the value of currency at the time of the establishment of the obligation shall be the basis of payment finds application only when there is an official

CF Sharp vs Northwest Airlines

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CF Sharp vs Northwest Airlines, 381SCRA314

Facts: On May 9, 1974, CF Sharp was authorized to sell tickets of Northwest Airlines-Japan by entering an International Passenger Sales Agency Agreement, however, CF Sharp failed to remit the proceeds of the ticket sales. This prompted Northwest Airlines to file a collection suit against the CF Sharp before the Toko Distirct Court. Judgment was rendered in its favor, ordering CF Sharp to pay Northwest Airlines including damages for the delay. Unable to execute the decision in Japan, the respondent filed a case to enforce said judgment with the RTC. Thereafter, the RTC issued a writ of execution for foreign court’s decision. The petitioner filed for certiorari, asserting it has already made partial payments. The CA lowered the amount to be paid and included in its decision that the amount may be paid in local currency at rate prevailing at time of payment.

partly affirmed by the Supreme Court. CF Sharp was then ordered to pay Northwest so that the RTC issued a writ of execution of decision ruling that Sharp is to pay Northwest the sum of 83,158,195 yen at the exchange rate prevailing on the date of the foreign judgment plus 6% per annum until fully paid, 6% damages and 6% interest. An appeal, the Court of Appeals reduced the interest and 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.

Issue: Whether or not the basis for the payment of the amount due is the value of the currency at the time of the establishment of the obligation.

Ruling: NO, the rule that the value of 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. Hence, petitioners contention that Article 1250 of the Civil Code which provides that “in case of an extra ordinary inflation or deflation of the currency stipulated should supervene, the value of the currency at the time of establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary” shall apply in this case is untenable.

Under RA 529, 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 of the Philippines. But since the law doesn't provide for the rate of exchange for the payment of foreign currency obligations incurred after its enactment, jurisprudence held that the exchange rate should be the prevailing rate at time of payment. This law has been amended, in payments for obligations to be made in currency other than Philippine currency but then again, it failed to state what the exchange rate that should be used. This being the case the jurisprudence regarding the use of the exchange rate at time of payment shall be used.