G.R. No. L-4347
JOSE ROGERS, plaintiff-appellant, vs. SMITH, BELL, & CO., defendants-appellees.
March 9, 1908

FACTS: On February 17, 1876, Jose Rogers deposited P12,000 in gold coin with Smith, Bell, & Co. in Manila. Smith, Bell, & Co. issued a document acknowledging receipt of P12,000, promising to pay the sum “on the last day of the six months after the presentation of this document” and stating that the sum would bear 8% interest per annum. A contemporaneous letter from Smith, Bell, & Co. referred to the transaction as a “deposit” of “twelve thousand dollars” at 8% interest, payable quarterly, and specified conditions for payment in London.

Smith, Bell, & Co. remitted interest payments to Rogers (who had moved to Barcelona) in silver for over 25 years (first at 8%, then reduced to 6% from 1888), which Rogers accepted without protest. In February 1904, Rogers protested for the first time, arguing that due to the new American law establishing the gold standard in the Philippines (specifically, Act of Congress of March 2, 1903), he was entitled to receive both interest and principal in gold, as he had originally deposited gold. Rogers thus claimed he was owed the value of P12,000 in gold (which amounted to P24,000 in silver at the time of the claim). The Court of First Instance ruled that Rogers was only entitled to recover P12,000 pesos. Rogers appealed.

ISSUE: 1. Whether the contract between Jose Rogers and Smith, Bell, & Co. was an “ordinary loan” or an “irregular deposit.”
2. Whether Jose Rogers is entitled to recover the value of 12,000 pesos in gold coin (P24,000 in silver) or only 12,000 pesos in the legal tender silver currency, particularly in light of the Act of Congress of March 2, 1903.

RULING: The Supreme Court affirmed the lower court’s decision.

1. The Court ruled that the document evidenced an ordinary loan, not an “irregular deposit.” It cited Manresa’s commentary that an irregular deposit is primarily for the benefit of the depositor, allows the depositor to demand the return of the article at any time, and grants preference to the depositor over other creditors. The contract with Smith, Bell, & Co. did not meet these criteria, as it benefited both parties (use of money for the company, interest for Rogers) and required a six-month notice period for repayment. In an ordinary loan of money, the borrower acquires ownership of the thing and is bound to return an equal amount of the same kind and quality (the value represented by the coins), “whatever may have been the increase or depreciation suffered by the specific kind of coin or paper, unless the contrary be stipulated.”

2. Applying Section 3 of the Act of Congress of March 2, 1903, the Court held that the silver Philippine pesos were legal tender for all debts, public and private. The proviso in the Act, which allowed debts contracted before December 31, 1903, to be paid in the currency existing at the time of the contract, gave the debtor (Smith, Bell, & Co.) the option to choose the currency for payment, not the creditor. Since the contract merely stipulated “pesos” and did not expressly provide for payment in gold, Smith, Bell, & Co. had the right to repay the debt in the legal tender silver pesos. Rogers’ acceptance of interest in silver for over 25 years without protest further indicated his initial understanding of the contract. His claim based on the Act of Congress was a misinterpretation of its provisions.