CONSOLIDATED MILLS, INC., PLAINTIFF AND APPELLANT, VS. REPARATIONS COMMISSION, DEFENDANT AND APPELLEE, MABUHAY RUBBER CORPORATION, INTERVENOR.

The Consolidated Textile Mills, Inc. (now Consolidated Mills,
Inc.), hereinafter referred to as the CMI, in its “Motion for
Reconsideration and/or Clarification” filed on 18 May 1968, requests a reexamination by this
Court of the main conclusions arrived at in the decision promulgated on 22 February 1968.  In the main, the CMI prays this Court to set
aside the aforesaid decision and to enter another upholding (1) the validity
and efficacy of the questioned Contract to Purchase dated 29 November, 1961;
and (2) the applicability of the rate of exchange of P2 for every $1 in
computing the pro­curement cost in Philippine currency of the reparations goods
it applied for.  Intervenor
Mabuhay Rubber Corporation, in a separate motion for
reconsideration it submitted on 24 May
1968, joins the CMI in assailing the decision of this Court, dated 22 February 1968.

Under date of 9 August
1968, the Reparations Commission, hereinafter referred to as the
Commission, filed its opposition to the aforestated
motion of the CMI.

The joint hearing on the motions for reconsideration interposed
by the CMI and on L-22768 (Lirag Textile Mills, Inc.
vs. Reparations Commission), a companion case posing similar issues, followed
on 12 August 1969.

Subsequently, this Court impaneled an impartial group composed of
Emilio Abello (Chairman, Council for Economic
Development), Amado R. Briñas
(Deputy Governor, Central Bank of the Philippines), Manuel J. Marquez (Chairman
of the Board, Commercial Bank and Trust Company), Sixto
K. Roxas (President, Economic Development
Foundation), Cesar Virata (Secretary, Department of
Finance), and Leonides S. Virata (Chairman,
Development Bank of the Philippines) to act in the capacity of amici curiae, with the request to
assist in the further exposition and consideration of the issues raised by the
cases.  On 1 September 1969 the amici
curiae submitted their joint memorandum.

This Court then, in a resolution dated 11 September 1969, required the parties in both cases to comment on the aforestated joint memorandum of the amici curiae.  In compliance therewith, the CMI filed
its comments on 6 October 1969;
Lirag Textile Mills, Inc. on the following day.

Thereafter, the amici curiae submitted a clarificatory supplement under date of 29 October 1970 to further explain certain
material points in their joint memorandum. 
Whereupon, this Court, in a resolution dated 23 November 1970, directed the parties in the
case at bar and in L-22768 to comment on the supplementary clarificatory
memorandum of the amici curiae.  This Court thereafter
received the respective comments of the parties:  that of the intervenor
Mabuhay Rubber Corporation dated 21 January 1971, of the CMI dated 26 January 1971, and of the Lirag Textile Mills, Inc. dated 3 February 1971.

On 15 October 1971,
the intervenor Mabuhay
Rubber Corporation^[1]
asked this Court for leave to withdraw its intervention in the case at bar.  In its petition, the intervenor
claimed that it entered into a “Memorandum of Agreement” dated 28 July 1971 with the Commission.

The above “Memorandum of Agreement” relates mainly to a
modification in the schedule of payments to be made by the intervenor
on the “P5,346,884.79 total value” of the reparations goods delivered to it, covered by three separate contracts of
conditional purchase and sale dated 25 May 1964, 4 December 1964 and 17 January
1965 entered into with the Commission.  A
stipulation in the “Memorandum of Agreement” provides that except for
the revision in the schedule of payments, all the other terms and conditions
set forth in the three contracts of condi­tional purchase and sale “shall
remain unchanged and in full force and effect.”

On the other hand, both the aforesaid contracts dated 4 December
1964 and 17 January 1965 include a provision stating that the payments to be
made by the intervenor on the reparations goods it
acquired “shall be on the basis of the free market rate of exchange
pursuant to the Presidential directive of March 28, 1963, without prejudice to
re-adjustment should the courts finally declare invalid the imposition of the
free market rate.” The contract dated 25 May 1964, however, merely states
that “the f.o.b. US dollar currency value of the reparations goods shall
be payable in its equivalent in Philippine peso currency computed at such rate
of exchange as shall be finally determined in [the aforesaid] Civil Case No.
54375, it being expressly understood and agreed upon, however, that the peso
equivalent of the dollar value of the goods to be reflected in the Schedule of
Payments shall be expressed in Philippine currency at a rate finally determined
by the Court in said Civil Case
No. 54375.”

Subsequently, this Court, using the free market rate of exchange
decreed by the Presidential Directive dated 30 October 1962, as further
clarified on 28 March 1963, as the basis
in the conversion of the
US-dollar-stated cost of the reparations goods acquired by the intervenor into Philippine pesos, granted the intervenor’s petition for the withdrawal of its
intervention in a resolution dated 21 October 1971.

At the outset, the main conclusions articu­lated in this Court’s
decision of 22 February 1968 now questioned by the CMI relate to the
following:  (1) that the Contract to
Purchase dated 29 November 1961 — which contract excludes a specific
description of both the objects to be procured and the price to be paid therefor and omits an express stipulation as to the rate of
exchange to be used in the conver­sion into Philippine pesos of the US dollar
procure­ment cost of the reparations goods applied for — ­merely constitutes a
preliminary agreement; (2) that the said Contract to Purchase, even on the
assumption that it partakes of the nature of a perfected contract between the
parties, “can only be so with respect to the rights and obligations
therein stipulated and agreed upon by the parties”; and (3) that the
application by the Commission of the free market rate of exchange in the
determination of the Philippine peso cost of the reparations goods “would
not spell impairment of any obligation” under the said contract.

Observably, the CMI, in its more than eighty-page “Motion
for Reconsideration and/or Clarification,” advances numerous impressive
arguments, all intended to persuade this Court to reconsider its decision of 22
February 1968, set it aside, and enter a new one in its favor.  It certainly requires but the minimum of
effort to understand the whys for the laborious pains taken by the CMI to
convince this Court now to take a completely different view of the case under
consideration.  And aptly, a discussion
of these numerous arguments proffered by the CMI appears, at this stage of the
proceedings, profitless and unnecessary. 
After all, most, if not all, of the arguments of the CMI, reduced to
their bare and simple terms, constitute
reiterations and reproductions, if not mere rehashes, of the same arguments it
previously submitted for consideration by the court a quo as well as by this Court.

This Court indeed, in the consideration
of this case, not only carefully conducted a study in depth of all the issues
raised but also objectively examined and deliberated upon all the arguments,
extending to their legal and factual bases and implications, submitted by the
CMI and the Commission in support of their respective stands in relation to the
said issues.  In its decision of 22 February 1968, this Court
extensively discussed the legal aspects of the controversy, delving into the
juridi­cal relations between the CMI and the Commission.  This Court thus deems it an exercise in
superfluity as well as in redundancy to disclose and further expound on — in
this resolution — the minutiae of the legal considerations which
constituted the main emphasis of the aforestated
decision.  For these considerations, in
the main, adequately and squarely answer the legal postulates tendered by the
CMI in its action against the Commission in the first instance and in the
subsequent appeal to this Court.

However, the nature of the case at bar and the importance and
significance of the issues posed render imperative a disquisition on certain
consi­derations in support of the main conclusions arrived at by this Court
clearly spelled out and fully explained in the decision of 22 February
1968.  In this connection, there arises
the need, by way of preface to a further exposition of these additional considerations,
to restate briefly the reasons for the holding that the Contract to Purchase
constitutes and “reveals all the earmarks of a mere preliminary
agreement.” This Court so opined for the said Contract to Purchase
significantly carried neither any specific description of both the objects to
be procured and the price to be paid therefor nor any
express stipulation as to the rate of exchange to be used in the determination
of the Philippine peso equivalent of the US dollar value of the repa­rations goods
applied for and procured.  This Court
stated that the agreement, as is obvious from its face, “does not contain,
and was not intended to contain, all of the important terms and conditions of
the future contract,” thereby leaving them for future determination.  The Contract to Purchase is thereby rendered
incomplete and necessitated a stipulation therein for the execution, before the
delivery of the reparations goods to
the CMI of a contract of conditional purchase and sale “wherein
the dollar price of the goods may be reduced into its peso equivalent” to supersede the
former agreement.

I.

The procurement of reparations
goods involves a series of
tedious, although not complicated, steps, all directly affecting and qualifying
any agreement entered into between an applicant end-user and the Commission in
relation thereto.  This, a close reading
of the provisions of Republic Act 1789,^[2]
as amended,^[3]
of the Reparations Agreement,
and of the Exchange Notes on Reparations makes manifest.  Briefly, these steps or phases,^[4]
per the pertinent provisions of the aforementioned statute and docu­ments
attached to the procurement program, consist of the following:

1. Filing by the applicant end-user with the Commission of his or
its application accompanied by the required supporting papers;^[5]

2. Action by the Commission on the appli­cation;^[6]

3. Preparation by the Commission of the tentative schedule of
reparations goods to be procured from Japan every year, the said schedule based
on approved reparations program and approved applications;^[7]

4. Action by the President of the Philippines
on the tentative annual schedule
of reparations goods.  The said schedule,
after approval by the President upon recommendation of the National Economic
Council, forms the basis of consultation between the Philippine and Japanese
governments towards the formulation of the fixed or agreed annual schedule;^[8]

5. Transmission by the Commission to the Philippine Reparations
Mission in Japan
of the ten­tative annual schedule and the approved applications, with the
required supporting papers, included in the said schedule;^[9]

6. Negotiation by the Mission
in Japan with
the Japanese government on the tentative annual schedule of reparations goods
prepared by the Com­mission;^[10]

7. After conclusion of the agreed annual schedule between the Mission
in Japan and
the Japanese government, the publication of the said schedule in the Philippines
and Japan in
the manner and form statutorily prescribed;^[11]

8. Issuance, subject to the fulfillment of certain prior conditions,
of the procurement order for the acquisition of the reparations goods on the basis of the agreed annual schedule;^[12]

9. Publication of the procurement order in the Philippines
and Japan in
the manner and form statutorily prescribed;^[13]

10. Negotiation between the Mission
and Japanese nationals or firms on the manufacture, production or supply of the
reparations goods on the basis of the agreed annual schedule and the
procurement order received from the Commission. 
This entails, among others, calling for bids, evaluating bids received
from prospective Japanese manufacturers, producers or suppliers, and verifying
bids against approved plans and specifications;^[14]

11. Action by the Commission on bids submitted to the Mission
by Japanese manufacturers, producers or suppliers before the said Mission
accepts any bid.  The evaluation of the
submitted bids transmitted by the Mission
to the Commission purports, among others, to give the applicant end-user the
opportunity to examine all bids and make observations thereon;^[15]

12. Preparation by the Mission
of the proposed contract with the Japanese manufacturer, producer or supplier
whose bid the said Mission
accepted;^[16]

13. Action by the Commission on the proposed contract prepared by
the Mission.  This enables (a) the Commission to ascertain
the compliance by the said contract with the terms of the Reparations Agreement
and the statutory provisions, and (b) the applicant end-user to verify the
contract specifications and terms thereof;^[17]

14. Verification by the Japanese government of the proposed
contract prepared by the Mission as
to the conformity of the said contract with (a) the terms of the Reparations
Agreement; (b) “the provisions of such arrangements [as may be] made by the two Governments
for the implementation” of the Reparations Agreement; and (c) the
applicable schedule;^[18]

15. Conclusion by the Mission
of the contract, termed as the “Reparations Contract”, with the
Japanese manufacturer, producer or supplier;^[19]

16. Inspection by the Mission
of the repa­rations goods to insure their compliance with the plans and
specifications;^[20]

17. Shipment, supervised by the Mission,
of the reparations goods from Japan
to the Philippines;^[21]

18. Filing by the applicant end-user in favor of the Commission of
a performance bond in the amount statutorily prescribed and subject to the
conditions laid down by the rules and regulations of the said Commission;^[22]
and

19. Delivery by the Commission to the applicant end-user of the
reparations goods.^[23]

An analysis of the aforementioned steps or phases attached to the
procurement program of repa­rations goods in implementation of the Reparations Agreement easily results in the observation
that the conclusion between the Commission and the applicant end-user of any agreement — wherein the Commission gives “due
course” to the application of the applicant end-user; wherein the said
applicant end-user “engages itself to perform” certain obligations
derived from the pertinent provisions of Republic Act 1789, as amended; and,
notably, wherein the parties agree to enter into a subsequent contract to
supersede the earlier agreement — evidences nothing more than the parties’
participation in a simple preliminary tran­saction, devoid of any obligatory
effect whatsoever.  The qualification of
such a transaction into a com­plete one attaches only upon the conclusion of
certain salient phases of the procurement program.

In the case at bar, the record reveals the inclusion of the
reparations goods applied for by the CMI in Resolution 485 of the Commission, dated
20 November 1961, which
resolution treats of the Fifth Reparations Year Tentative Schedule.  This tentative schedule later became the
agreed schedule for the Sixth Reparations Year “because when it was
finally concluded with the Japanese Government, the Fifth Reparations Year had
already expired and it was then already the 6th Reparations Year.”^[24]
The CMI and the Commission entered into the Contract to Purchase on 29 November 1961.  Verily, it appears evident that at the time
of the execution of the Contract to Purchase, the CMI fully knew the status of
the said agreement, particularly in relation to the reparations goods it
applied for.  Then, the very schedule
which included the said goods in its commodity list was still pending for
consultation between the Philippine and Japanese governments.

Such a schedule, a tentative one, takes the form of a mere
proposed catalogue of items of specific goods which the Philippines
seeks to requisition from Japan
as reparations for the particular reparations year subject of negotiation.^[25] And remarkably, in the preparation of the agreed annual schedule based on
the tentative one, the Japanese
government enjoys a certain latitude of discretion to ask for the deferment of any specific request for any given
reparations item.^[26] Consi­dering this, the Commission could thus
reasonably ascertain the reparations goods subject to its disposition for
allocation only after the conclusion of the agreed annual schedule between the Mission in Japan and the Japanese government.^[27]

In addition, the inclusion of the reparations goods applied for
by an applicant end-user in the tentative schedule constitutes no guaranty of a
definite allocation of the said reparations goods in favor of the said
applicant end-user.  As observed by this Court
in Terminal Shipping Corpo­ration
vs. Hon. Juan L. Bocar and the Reparations Commission,^[28] the annual tentative schedule formu­lated by
the Commission has “to have some measure of flexibility,” a quality
“designed to meet the exigencies of bilateral negotiation and to keep pace
with the ever-changing needs of a developing nation like ours.” This Court
therein also observed that —

“Section 6, 2nd paragraph, sub-paragraph (a) of the
Reparations Act, as amended, categorically allows subsequent change in the
tentative schedule involving any item
or project, whether by addition, substitution or deletion, whether in kind,
quantity, or value, whether partial or total, provided that such change has
been duly endorsed by the National Economic Council and approved by
the President.”

And subject to the same extent and
limitations as provided, the same provision of Republic Act 1789, as amended,
also allows change even in the
agreed schedule.  That the law itself
concedes the sub­sequent revision of the schedule — either the tentative schedule prepared by the Commission
or the agreed one concluded by the Mission in Japan with the Japanese
government — constitutes another indisputable indicium
of the uncertainty of a definite allocation of reparations goods in favor of a
parti­cular applicant end-user.

All these considerations, relating to a mate­rial matter in the
Contract to Purchase the reparations goods applied for, the CMI apparently
overlooked.  It failed to reckon with the
relative importance of these phases of the procurement program to the
qualification of the agreement it entered into with the Commission as a complete one.

Section 7 (b) of Republic
Act 1789, as amended, and Article 5 of the
Reparations Agreement spell out other details of comparative significant effect on the Contract to Purchase between the CMI and the
Commission.  Both section 7 (b) and Article 5 provide that the
authority to conclude, on behalf of the
Philippine government, any proposed repara­tions contract with any Japanese
national or firm for the manufacture, production or supply of
reparations goods resides with the Mission in Japan.  Article 5, however, subjects the proposed
reparations contract, before its conclusion by the Mission with the Japanese national or firm, to
verification by the Japanese government as to its compliance with (a) the terms
of the Reparations Agreement; (b) the provisions of arrangements between the
two governments for the implementation of the said Agreement; and (c) the
applicable schedule.  Indeed, the said
Article requires the Japanese government to examine all aspects of the proposed
reparations contract and to determine their acceptability or non-acceptability.

Upon the favorable action taken, under such requirements by the
Japanese government on the proposed reparations contract — which contract
provides for either the manufacture or production or supply by the particular Japanese national or firm of the
specific reparations items verified as to their approved specifications —
finally rests the availability of the reparations goods subject of the
preliminary agreement between the applicant end-user and the Commission.  With the availability of the reparations
goods applied for definitely ascertained, the procurement of the said goods for
and in behalf of the applicant end-user becomes actually and absolutely
certain.  This then qualifies the
transaction, evidenced by the Contract to Purchase, between the applicant
end-user and the Commission into a complete one.  More importantly, such completion of the transaction
makes operative the essential commitment of the parties expressly stipulated in
the Contract to Purchase, which is, the execution of the contract of
conditional purchase and sale for the reparations goods “accordingly
procured.”

In the instant case, the
records clearly indicate the verification by the Japanese government of the
reparations contract for the procurement of the reparations goods applied for
by the CMI on 1 April 1963.^[29]
Thus, on 1 April 1963, the definite availability of the said goods became
finally certain.  The element of
completeness then accrued to the Contract to Purchase entered into between the
CMI and the Commission on 29 November 1961 and the completion of the said transaction, in turn,
rendered in force the obligation of the parties to execute the contract of
conditional purchase and sale — a contract to supersede the antecedent
agreement.

II

The other point being challenged vehemently by the CMI relates to
the conclusion reached by this Court in its decision dated 22 February 1968 on
the appropriate use of the free market rate of exchange of the Philippine peso to the United States dollar in fixing the peso
cost of the reparations goods requisitioned by the Commission from Japan for
allo­cation to the CMI.  On this matter,
the CMI claims that the reparations goods it requested are payable in “a
sum in Philippine currency equivalent to the procurement cost at the exchange
rate of P2 for $1.” This, insists the CMI, constitutes the express under­standing
and agreement of the parties at the time of the execution of the Contract to
Purchase.

The arguments the CMI proffers on this parti­cular point also
hardly warrant an extended discussion and this Court sees no valid reason to
adopt a different or modified stand in favor of the said CMI on the question
raised.  Apparently, the CMI chooses a
rather inflexible stand on the problem instead of taking an approach fairly
consistent with the economic realities of the situation.  Nonetheless, inasmuch as the question on the applica­bility of
either the free market rate of exchange obtaining in the Philippines as of the
time of the procurement of the reparations items from Japan or the rate of
exchange of P2 for every $1 in ascertaining the peso cost of the goods
constitutes a matter of vital interest and importance not only to the CMI but
also to others similarly situated, this Court deems it peremptory to expound
on, although not at length, several additional considerations which underscore
the rejection of the said CMI’s reiterated contentions.

To start with, Article 1 of the Reparations Agreement fixes and
expresses Japan’s reparations obligation as a definite amount in United States
dollars payable in such amount of Japanese yen equivalent to such amount of
dollars within the period and in the manner prescribed in the said
Agreement.  The Memorandum dated 30 April
1956 re the Analysis of the
Draft Agreements Negotiated by the Philippine and Japanese Technical Panels provides an insight into the
particular reason for measuring Japan’s obliga­tion in terms of a currency
foreign to both the Philippines and Japan. 
The Memorandum, in no uncertain terms, states:

“Inasmuch as the yen is not a stable currency and one that may
be devalued any time, it is not safe to fix Japan’s reparations obliga­tion in
yen because in the event of its devaluation, the Philippines would get less
reparations in Japanese services and products. 
x x x.  As the
United States dollar is more stable in value than the Japanese yen, Japan’s
obligation expressed in dollars is a more stable and reliable measure of such
obligation.  Should the yen be devalued
some time in the future, such as
devaluation will have no effect on the quantity of the services and products
that the Philippines would get as reparations because under Article 1 … Japan
is obliged to set aside whatever amount of yen is necessary to discharge its
obligation thus expressed in United States dollars.”

The said Memorandum also relates that the
original Japanese draft proposal for Article 1 specified the reparations
obligation of Japan in terms of the yen. 
The Philippine Technical Panel did not find this proposal acceptable so
as to recommend its adoption by the Philippine Plenipotentiary Panel for the
main reason that this proposed version of Article 1 subjected the value of the
reparations obligation of Japan to the fluctuation of the then unstable yen.

The expression thus of the monetary value of Japan’s obligation
in US dollars — then the foreign exchange considered established in its
convertibility as well as in its stability in value in relation to other
foreign currencies — stems from the intention of the Philippine government to
obtain Japanese services and goods equivalent as nearly as possible in worth to
the true value of the said Japanese obligation as expressed and fixed in US
dollars.  Considered in the light that
the Philippines originally claimed from Japan the amount of $8,000,000,000^[30]
(although scaled down later to an “irreducible minimum” of
$1,000,000,000)^[31]
as reparations settle­ment, the observation that the Philippine govern­ment
assuredly aimed and intended — by way of insisting on stipulating Japan’s
obligation in US dollars in the Reparations Agreement — to obtain for the
Philippines and the Filipino people Japanese services and goods worth not only
the total but also the true value of
the considerably reduced amount of $550,000,000 becomes one of utmost importance and significance.

Consequently, any transaction by the Commis­sion relating to the distribution of the reparations
goods, particularly the sale thereof to an applicant end-user — in line with
the foregoing and to realize the discovered design of the Philippine government
to obtain the maximum benefit derived from either the utilization or the
disposition of the reparations goods — necessarily calls for a recompense
equiva­lent to the true worth of the said goods as expressed in US dollars,
that is, a quid pro quo
arrangement.  Translated into terms
apposite to the particular question raised
by the case at bar, this requires the applicant end-user, the CMI, to deliver to the Com­mission the amount (referred to as the procurement cost) in
Philippine pesos corresponding as
nearly as possible to the true and exact value of the re­parations goods
procured — machineries and equip­ment for an integrated cotton and rayon
textile plant — as stated in US dollars.

The concomitant dilemma as to the translation of the value of the
reparations goods expressed in US dollars
into Philippine pesos poses no real difficulty. 
The actual and exact procurement cost of the reparations goods — and this the CMI admits^[32] — becomes known to the applicant end-user
and the Commission only upon the
submission and transmission by
the Mission to the said Commission of the Summary Statement of Costs covering
the reparations goods procured and already shipped to the Philippines.  This statement quotes the procurement cost —
fixed and specified in US dollars — of the reparations goods as reflected in the reparations
contract entered into between the Mission and the Japanese manufacturer,
producer or supplier concerned.  Plainly,
under the circumstances, the prevailing rate of exchange (of the Philippine peso
to the US dollar) at the time of that particular phase of the procurement
program when the procurement cost becomes fixed and certain as well as
definitely ascertained — more specifically, upon the conclusion by the Mission
of the reparations contracts with the Japanese manufacturer, producer or
supplier concerned — constitutes the appropriate measure for converting the
US-dollar-stated procurement cost of the reparations goods into the domestic
currency.  Thus, if the Commission
secures for an applicant end-user an animal feed plant with the procurement
cost of $1,500,000 per the Summary Statement of Costs as well as the
reparations contract, and the free money market at that time when the Mission
concluded the reparations contract with the Japanese supplier of the said plant
dictates a rate of exchange (of the Philippine peso to the US dollar) of P3 for
every $1, the peso cost of the said plant, after the proper translation, would
amount to P4,500,000.

This of course necessarily implies no determinate rate of exchange (of the Philippine peso to the US dollar) for use by the
Commission in fixing the procurement cost in Philippine pesos of all the items
it requisitions from Japan as reparations for applicant end-users.  Any change — rise or fall -? in the purchasing power of the Philippine peso
in the foreign money exchange, particularly in relation to the US dollar, would
consequently affect the translation of the US-dollar-stated procurement cost of
the reparations goods into Philippine pesos. 
In such wise, the conversion of the procurement cost — ­stated in US
dollars — into Philippine pesos definitely rests on whatever rate of exchange (of the Philippine peso to the US dollar) obtains — to
repeat — at the time of that particular phase of the procurement program when
the said cost becomes not only fixed and certain but also definitely
ascertained.  For indeed, if Republic Act
1789, as amended, required the applicant end-user to pay the procurement cost
of the reparations goods it applied for in US dollars, the said applicant
end-user would have to purchase, with the necessary amount of Philippine pesos,
US dollars at no matter what rate of exchange (of the Philippine peso to the US
dollar) prevails at the time it would make payment to the Commission in order
to satisfy the said cost.

Apropos to all of these, the circumstance
that an applicant end-user chooses to acquire reparations goods on a credit
basis, preferring to pay on installments^[33] the cost of the said goods according to a
schedule of payments, creates no effect on the said cost expressed in US
dollars.  No justification exists for
demanding of the applicant end-user to shoulder an unwarranted burden:  that of requiring it, after splitting the
US-dollar-stated procure­ment cost into equal amounts, to make payment of every
installment in a sum in Philippine pesos cor­responding to the installment
amount stated in US dollars converted at the rate of exchange (of the
Philippine peso to the US dollar) obtaining at the time the said installment
payment falls due.  It suffices that the
translation exclusively involves the total US-dollar-stated procurement cost
and makes use of a single measure of conversion — that rate of exchange (of
the Philippine peso to the US dollar) prevailing at the time of that particular
phase of the procurement program when the said cost becomes fixed and certain
as well as definitely ascertained.

In the controversy at bar, the Mission concluded reparations
contracts for the procurement of the reparations goods applied for by the CMI
with the corresponding Japanese suppliers sometime in April 1963.^[34]
Consistency with all the foregoing demands the adoption of that money market
rate of exchange of the Philippine peso vis-a-vis the
US dollar prevailing at that time in the determination of the peso equivalent
of the procurement cost of the reparations goods expressed in US dollars.^[35]

All told, this Court finds no compelling reason to disturb the
conclusions set forth in the decision promulgated on 22 February 1968 assailed
by the CMI.  This Court’s extended dis­cussion of the considerations herein included more
than suffices to further dispose of and settle the issues raised and already
resolved in the aforesaid decision as well as submitted anew by the CMI in its
“Motion for Reconsideration and/or Clarification.”

ACCORDINGLY, the “Motion for Reconsideration and/or Clarification” filed by the
Consolidated Mills, Inc. on 18 May 1968 is
hereby denied, and this denial is final and immediately executory.  No costs.

Teehankee, Barredo,
Makasiar, Antonio, Muñoz
Palma, Concepcion, Jr., and
Martin, JJ., concur.

Fernando, J., did not take part
having been the previous counsel of plaintiff-appellant.

Aquino, JJ., no part.

^[1]
Now Mabuhay Vinyl Corporation.

^[2]
AN ACT PRESCRIBING THE NATIONAL POLICY IN THE PROCUREMENT AND UTILIZATION OF
REPARATIONS AND DEVELOPMENT LOANS FROM JAPAN,
CREATING A REPARATIONS COMMISSION TO IMPLEMENT THE POLICY, PROVIDING FUNDS
THEREFOR, AND FOR OTHER PURPOSES.

^[3]
As amended by Republic Act 2611
approved on 20 July 1959 and by Republic Act 3079 approved on 17 June
1961.

^[4]
Limited, for the purposes of this
Resolution, to those steps or phases in relation to the procure­ment of
reparations goods at the instance of a private applicant end-user.

^[5]
Section 2 (a) of RA 1789, as amended by
RA 3079.

^[6]
Section 6 (a) of RA 1789, as amended by RA 3079.

^[7]
Ibid.

^[8]
Ibid.; Article 4 of the Reparations Agreement.

^[9]
Ibid.

^[10]
Section 7 (a) of RA 1789, as amended by RA 3079.

^[11]
Section 6 (a) of RA 1789, as amended by RA
3079.

^[12]
Section (a-1) inserted by RA 2611 in RA
1789 and as amended by RA 3079.

^[13]
Ibid.

^[14]
Section 7 (a) and (d) of RA 1789, as
amended by RA 3079.

^[15]
Section 6 (b) of RA 1789, as amended by
RA 2611.

^[16]
Section 7 (b) of RA 1789, as amended by
RA 3079.

^[17]
Section 6 (b) of RA 1789, as amended by
RA 2611.

^[18]
Article 5 (2) of the Reparations
Agreement.

^[19]
Section 7 (b) of RA 1789, as amended by
RA 3079.

^[20]
Section 7 (c) and Section 8 of RA 1789.

^[21]
Section 7 (c) of RA 1789.

^[22]
Section 12-A inserted by RA 3079 in RA
1789.

^[23]
Section 6 (d) of RA 1789, as amended by
RA 3079.

^[24]
Partial Stipulation of Facts under date of 11 October 1963, Record on Appeal, p. 68.

^[25]
Terminal Shipping Corporation vs. Hon. Juan L. Bocar
and the Reparations Commission, L-26369, 29 February 1972, 43 SCRA 351.

^[26]
Memorandum dated 30 April 1956
re the Analysis of the Draft
Agreements Negotiated by the Philippine and Japanese Technical Panels.

^[27]
Terminal Shipping Corporation vs. Hon. Juan L. Bocar
and the Reparations Commission, supra.

^[28]
Ibid.

^[29]
Partial Stipulation of Facts under date of 11 October 1963, Record on Appeal, p. 72.

^[30]
Senate Congressional Record, Third Congress of the Republic, Third Special
Session, Vol. III, No. 8, 2 July 1956, p. 169.

^[31]
Senate Congressional Record, Third Congress of the Republic, Third Special
Session, Vol. III, No. 12, 9 July 1956, p. 302.

^[32]
Motion for Reconsideration and/or Clarification, p. 63.

^[33]
In sales of reparations goods on credit basis,
section 12 of Republic Act 1789, as amended, requires the first
installment to be paid at a prescribed period after complete delivery of the
goods, and the balance to be paid in equal annual installments with interest at
three per cent per annum within a period fixed by the Commission after
considering the economic life expectancy of the goods but in no case exceeding
10 years from the date the first installment becomes due in case of ordinary
capital goods and 20 years in case of ocean-going vessels.

^[34]
Partial Stipulation of Facts under date of 11 October 1963, Record on Appeal, p. 72.

^[35]
Parenthetically, during this period, the Presidential Directive dated 30 October 1962, as further
clarified on 28 March 1963,
specifically directed the application of the free market rate of exchange of
the Philippine peso to the US dollar in the matter of payments by applicant
end-users for the reparations goods they applied for and subse­quently
acquired.