GR L 8706; (December, 1956) (Digest)
G.R. No. L-8706 and L-8813, December 14, 1956
THE PHILIPPINE NATIONAL BANK, plaintiff-appellee/appellant, vs. JULIAN L. TEVES, defendant-appellant/appellee.
FACTS
On February 13, 1952, the Philippine National Bank (PNB) filed a case to recover two promissory notes from Julian L. Teves totaling P3,130.00, plus attorney’s fees and costs. PNB simultaneously filed a verified ex parte motion for a writ of preliminary attachment, which was granted. Teves, in his answer, alleged that the loan proceeds were delivered in valueless “emergency notes” that were not legal tender and filed a counterclaim for P20,000.00 in moral damages, claiming the allegations in PNB’s motion for attachment were defamatory and false. The trial court rendered a decision ordering Teves to pay PNB P1,489.00 (as the computed present value of the P3,130.00 emergency notes), P20.00 for filing fees, and P148.90 as attorney’s fees; it dismissed Teves’s counterclaim for moral damages and his claim for attorney’s fees. Both parties appealed.
ISSUE
1. Whether the sums of money received by Teves from PNB were legal tender.
2. If yes, what amount is due from Teves under the promissory notes.
3. Whether Teves should recover moral damages from PNB.
RULING
1. Yes, the emergency notes were legal tender. The promissory notes were dated April 23, 1942, and May 26, 1942. The consideration was paid in “emergency notes” authorized by President Quezon for issuance in unoccupied areas before his departure in 1942. These notes were valid and legal tender at the time, as evidenced by Executive Order No. 25 (1944) prohibiting their further circulation and their subsequent redemption under Republic Acts Nos. 22 and 369. The alleged refusal of some people to accept them and their partial destruction by fire did not affect the validity of Teves’s obligation.
2. The amount due is the full face value of P3,130.00 in present currency. The trial court erroneously applied paragraph (b) of Section 1 of Republic Act No. 369 , which pertains to “guerilla notes.” Since the notes were received prior to the Japanese occupation of Negros Oriental and were specifically “emergency notes,” paragraph (a) of Section 1 applies, mandating payment to holders at one hundred percent (100%) of face value. Therefore, PNB is entitled to recover P3,130.00.
3. No, Teves is not entitled to moral damages. The trial court correctly dismissed the counterclaim. While the allegation in PNB’s motion for attachment (that Teves was disposing of property to defraud creditors) was false, Teves’s testimony focused on the embarrassment caused by a deputy sheriff’s alleged attempt to attach his car, not directly on the defamatory allegations. The writ was never executed, and no overt act of seizure was proven. Teves suffered no actual damages, and given the circumstances—including that the debt was interest-free and outstanding for about 13 years—the trial court did not err or abuse its discretion in denying moral damages.
DISPOSITIVE MODIFICATION:
The decision is modified: Teves shall pay PNB P3,130.00 in present currency, plus P313.00 as attorney’s fees. The decision is affirmed in all other respects. Costs against Teves.