G.R. No. L-4788
JUANA URBANO, ET AL., plaintiffs-appellants, vs. PEDRO RAMIREZ, judicial administrator of the estate of Victorino Buhay, deceased, defendant-appellee.
March 3, 1910

FACTS:
The appellants, Juana Urbano, et al., filed a claim against the estate of Victorino Buhay for a debt of 2,890.59 pesos (Mexican currency) plus interest, contracted on February 9, 1898. The lower court ordered the judicial administrator, Pedro Ramirez, to pay the claimed sums. The order specified that the debt, having been contracted in Mexican currency, should be converted into Philippine currency at the “official ratio established by the Government of the Philippine Islands of this date” (March 6, 1908).

Appellants excepted to this specific part of the order, arguing that the conversion should be at par (one Mexican peso for one Philippine peso). They claimed that the administrator had admitted the debt in Philippine currency during the appraisal proceedings, citing a record of appearance before the commissioners and Exhibit A (an account statement), which they alleged used the proper sign for Philippine currency (“P”).

The Supreme Court rejected the appellants’ claim regarding the administrator’s alleged agreement to pay at par, finding that the cited record of appearance was not properly submitted and, even if considered, the sign “P” indicated pesos in general, not specifically Philippine pesos (“P”). Similarly, Exhibit A showed inconsistent use of “$” and “P,” suggesting no specific intent regarding Philippine currency at par.

ISSUE:
Was the lower court correct in ordering the conversion of the Mexican currency debt into Philippine currency based on the “official ratio established by the Government” effective on March 6, 1908?

RULING:
No. The Supreme Court ruled that the lower court’s order directing the conversion of Mexican currency to Philippine currency at the “official rate established by the Government and in force on the date of said order (March 6, 1908)” was erroneous and should be revoked.

The Court explained that the official rates for exchanging Mexican silver dollars and other local currencies for Philippine currency, as provided by Section 7 of the Act of Congress of March 2, 1903, and Executive Order No. 1 of January 1, 1904, were intended to serve as a basis for exchange at government treasuries only during the period when local currencies were receivable for public dues. However, Executive Order No. 1 specifically prohibited the redemption of local currencies by the Insular Treasurer and provincial treasurers “from the 1st day of July, 1907.”

Consequently, by March 6, 1908, when the lower court’s order was rendered, the reason for the official ratio between local currency and Philippine currency had ceased to exist, and no such official rate of exchange was in force. Since no official ratio existed, it could not serve as a basis for the conversion.

The Court set aside the appealed order concerning the currency conversion method. A new trial was ordered for the sole purpose of allowing the parties to present evidence regarding the actual value of Mexican money compared to Philippine currency, as mandated by Section 3 of Act No. 1045 of the Philippine Commission, to determine the proper reduction of the debt into Philippine currency.