G.R. No. L-5054; August 31, 1953
ENRIQUE A. GARCIA, plaintiff-appellee, vs. NATIVIDAD DE LOS SANTOS, assisted by her husband MAXIMINO VASQUEZ, SEVERINO DE LOS SANTOS, PEDRO DE LOS SANTOS, RAMON DE LOS SANTOS, and JOSEFINA DE LOS SANTOS, represented by NATIVIDAD DE LOS SANTOS, as Guardian Ad-Litem, defendants-appellants.

FACTS

On September 9, 1944, the defendants executed a promissory note in favor of the plaintiff for P10,000, Philippine currency, payable “four years after date,” with 10% annual interest. To secure the note, they mortgaged a piece of land in Manila. The mortgage stipulated that payment of interest and the principal obligation “shall be made in full whatever legal tender and currency is prevailing and in use at the time such interests or the obligation becomes due and payable.” The note matured on September 9, 1948. Except for a P500 payment made by defendants in 1946, the debt remained unpaid. The plaintiff filed an action for foreclosure. The trial court rendered judgment in favor of the plaintiff for the sum due, plus P600 attorney’s fees and costs. The defendants appealed. The moratorium issues raised became moot after the Court’s decision in Rutter v. Esteban invalidating moratorium laws. The sole remaining issue for determination is the proper currency for payment of the debt.

ISSUE

Whether the defendants’ debt should be paid in present-day Philippine currency peso for peso, or only its equivalent according to the Ballantyne scale of values (which would account for the difference in value between Japanese military currency and post-liberation Philippine currency).

RULING

The Supreme Court AFFIRMED the trial court’s judgment, holding that the debt must be paid in present-day Philippine currency peso for peso. The Court found the case to be on all fours with Cristobal Roño v. Jose L. Gomez, et al. (83 Phil. 890). In that case, involving a note payable in “currency that will be prevailing” at maturity, the Court held the promissor must pay the face value in Philippine currency and could not discharge the debt by paying only the equivalent of the Japanese currency received. The ratio decidendi from Roño was adopted. The Court rejected the appellants’ argument that the note could be construed as permitting payment at any time within the four-year period (which, if allowed during the Japanese occupation, might permit use of the Ballantyne scale under a concurring opinion in Gomez v. Tabia). The Court held this interpretation contrary to the clear language of the instrument, which required payment “four years after date”—a period presumed for the benefit of both parties and not subject to unilateral shortening by the debtor. The provision in the mortgage that its duration “shall not exceed four years” did not alter the fixed maturity date of the note. The cases cited by appellants (De Asis v. Agdamag and Colmenar v. Cosca) were distinguished as involving different contractual terms. Costs were awarded against the appellants.
SEPARATE OPINION:
Chief Justice Paras filed a dissenting opinion, stating his dissent for the reasons expressed in his opinion in Roño v. Gomez.