G.R. No. L-23859 March 2, 1977
CONSOLIDATED MILLS, INC., plaintiff-appellant, vs. REPARATIONS COMMISSION, defendant and appellee, MABUHAY RUBBER CORPORATION, intervenor.

FACTS

Consolidated Mills, Inc. (CMI) sought reconsideration of the Court’s February 22, 1968 decision, praying for the validation of its November 29, 1961 “Contract to Purchase” with the Reparations Commission and the application of the P2:$1 official exchange rate for computing the peso cost of reparations goods. The intervenor, Mabuhay Rubber Corporation, joined this motion. The Reparations Commission opposed. The Court, noting the complexity of the economic issues, constituted a panel of amici curiae from the financial and development sectors to assist. The amici curiae submitted a joint memorandum and a subsequent clarificatory supplement. Meanwhile, Mabuhay Rubber entered into a Memorandum of Agreement with the Commission modifying its payment schedule but maintaining other contract terms, including a provision for payment based on the free market exchange rate as directed by a 1963 Presidential Directive. The Court allowed Mabuhay to withdraw its intervention after applying the free market rate to its obligations.

ISSUE

The primary issue is whether the “Contract to Purchase” dated November 29, 1961, is a perfected and binding contract that fixes the exchange rate at P2:$1, thereby precluding the Reparations Commission from later imposing the free market rate of exchange for payment.

RULING

The Court denied the motion for reconsideration and affirmed its prior decision. The legal logic rests on the nature of the reparations procurement process and the character of the November 1961 document. The Court held that the “Contract to Purchase” was merely a preliminary agreement, not a perfected contract of sale. A perfected contract requires consent on the definite object and certain price. The 1961 document lacked a specific description of the goods to be procured and omitted a fixed price or an express stipulation on the applicable rate of exchange for converting the dollar cost. The procurement of reparations goods was a complex, multi-stage administrative process under Republic Act No. 1789 , involving application, approval by Philippine and Japanese authorities, allocation, and finally, the execution of a detailed conditional sales contract. The 1961 agreement represented only an initial step, granting CMI a provisional right to apply for goods, not a final sale. Consequently, the Reparations Commission retained its statutory authority to determine payment terms, including the applicable exchange rate, at the time of the final sales contract. The subsequent Presidential Directive mandating the free market rate was a valid exercise of executive authority to reflect the true economic cost of the goods and prevent undue profit from exchange rate differentials. Applying this rate did not impair the obligation of any perfected contract, as none existed at the time the rate was set. The Court found the arguments for the P2:$1 rate unpersuasive, as they would grant a windfall to applicants at the expense of the national economy.