GR L 10221; (February, 1958) (Digest)
G.R. No. L-10221; February 28, 1958
Intestate of Luther Young and Pacita Young, spouses. PACIFICA JIMENEZ, petitioner-appellee, vs. DR. JOSE BUCOY, administrator-appellant.
FACTS
In the intestate proceedings of spouses Luther Young and Pacita Young, Pacifica Jimenez presented for payment four promissory notes signed by Pacita Young for different amounts totaling twenty-one thousand pesos (P21,000). The notes were executed in August 1944 during the Japanese occupation, acknowledging receipt of sums in the currency then prevailing, and were payable “six months after the war, without interest.” The administrator, Dr. Jose Bucoy, acknowledged the debt but was willing to pay only after adjusting the sums according to the Ballantyne schedule. The claimant objected, insisting on full payment per the notes. The lower court, applying Supreme Court doctrines, held the notes should be paid in the currency prevailing after the war and ordered payment of P21,000 plus P2,000 in attorney’s fees. The administrator appealed.
ISSUE
The primary issue is whether the amounts in the promissory notes, payable “six months after the war,” should be paid peso for peso in Philippine currency or reduced according to the Ballantyne schedule.
RULING
The Supreme Court affirmed the lower court’s decision, except for the award of attorney’s fees. The Court ruled that peso-for-peso payment in Philippine currency is required. The established doctrine is that if a loan contracted during the Japanese occupation was expressly agreed to be payable only after the war or liberation, or became payable after those dates, no reduction under the Ballantyne schedule applies. Since the notes were payable only “six months after the war,” the Ballantyne schedule is inapplicable. The Court rejected the appellant’s arguments: (1) the notes contained an implied promise to pay a specified amount despite lacking express promissory words; (2) the defense that Luther Young’s estate was not liable because he did not sign the notes was raised for the first time on appeal and is therefore not permitted; and (3) the award of attorney’s fees was improper as the administrator’s defense, though erroneous, did not constitute gross and evident bad faith. The decision was modified by deleting the award for attorney’s fees.