GR L 22676; (November, 1966) (Digest)
G.R. No. L-22676, November 23, 1966
B. J. SERVER, plaintiff-appellee, vs. EPIFANIA CAR, defendant-appellant.
FACTS
On January 22, 1945, during the Japanese occupation, Epifania Car obtained a loan from B. J. Server in Japanese currency. She executed a promissory note stipulating payment of P2,500.00 in Philippine currency “two years from and after the cessation of hostilities of the Greater East Asia War in the Philippines.” The note also provided for 6% annual interest from the war’s termination and a 20% penalty as attorney’s fees for non-payment. A parcel of land in Albay was mortgaged as security. The parties stipulated that hostilities terminated on September 8, 1951 (the date of the San Francisco Treaty). Car offered to pay in 1953 according to the Ballantyne Scale of Values, but Server did not reply. Server filed an amended complaint on December 8, 1955, seeking recovery of P2,500.00 with interest from February 5, 1945, attorney’s fees, and foreclosure. The Court of First Instance of Albay ruled on November 8, 1963, that payment should be in Philippine currency on a peso-to-peso basis, with 6% interest from September 8, 1951, plus attorney’s fees and foreclosure in case of non-payment. Car appealed, raising a pure question of law on the mode of payment.
ISSUE
Whether the monetary obligation incurred during the Japanese occupation, which was expressly payable after liberation, should be paid in Philippine currency on a peso-to-peso basis or according to the Ballantyne Scale of Values.
RULING
The Supreme Court affirmed the lower court’s judgment, holding that the obligation must be paid in Philippine currency on a peso-to-peso basis. The Court applied the consolidated rule from Aguilar v. Miranda:
1. If an obligation was contracted during the occupation and payable within a period covering both occupation and liberation, repayment should be in Philippine currency under the Ballantyne Scale.
2. If the indebtedness was expressly agreed to be paid after the war or liberation, repayment should be in the currency prevailing at the time of payment (peso-for-peso), unless a clear agreement states otherwise.
Here, the promissory note expressly stipulated payment after the termination of hostilities, falling under the second rule. Citing Quiogue v. Bautista, the Court emphasized that obligations payable after liberation must be settled peso-for-peso in Philippine currency. The Court rejected Car’s argument based on unjust enrichment, stating that parties are free to stipulate the currency of payment, and such agreements are valid. Thus, the terms of the contract govern, and payment in present Philippine currency is required. Costs were imposed on appellant.