Jimenez v. Bucoy
REITERATIONFacts
The Antecedents: Pacifica Jimenez presented four promissory notes, totaling P21,000, signed by Pacita Young during the Japanese occupation, payable six months after the war. The administrator of the intestate estate of Luther and Pacita Young was willing to pay but sought adjustment of the sums according to the Ballantyne schedule. Jimenez objected, insisting on full payment. Procedural History: The trial court ruled that the notes should be paid in post-war currency, entitling the plaintiff to recover P21,000 plus P2,000 in attorney's fees. The Petition: The administrator appealed the decision, questioning the peso-for-peso payment and the award of attorney's fees.
Issue(s)
Whether the promissory notes executed during the Japanese occupation, payable six months after the war, should be paid peso-for-peso or with a reduction based on the Ballantyne schedule. Whether the notes, containing an acknowledgment of receipt and a promise to pay six months after the war, constitute valid promissory notes for a definite amount. Whether the estate is liable for the notes, given that Luther Young did not sign them. Whether attorney's fees were properly awarded.
Ruling
The Supreme Court affirmed the decision of the trial court regarding the peso-for-peso payment of the promissory notes but disapproved the award of attorney's fees. The Court held that notes payable after the war are not subject to the Ballantyne conversion schedule and that the defense regarding Luther Young's signature was not raised in the lower court and thus could not be raised on appeal. The award of attorney's fees was deemed improper as there was no gross and evident bad faith on the part of the administrator.
Ratio Decidendi
On the applicability of the Ballantyne schedule: The Court reiterated its established doctrines that if a loan contracted during the Japanese occupation was expressly agreed to be payable only after the war or liberation, or became payable after those dates, no reduction could be effected, and peso-for-peso payment shall be ordered in Philippine currency. The notes in question explicitly stated they were payable "six months after the war." Therefore, the Ballantyne Conversion Table does not apply, and the amounts should be paid in full, peso for peso, in Philippine currency. This distinguishes the case from those where payment could have been made during the occupation. On the validity of the promissory notes: The Court found no merit in the argument that the notes lacked an express promise to pay a specified amount. Citing Corpus Juris Secundum and Daniel on Negotiable Instruments, the Court explained that an acknowledgment of debt, coupled with words implying a promise to pay, such as "payable" on a given day, constitutes a promissory note. The phrase "payable six months after the war" clearly indicated a promise to pay the stated amount after the war. On the liability of Luther Young's estate: The Court held that the defense that Luther Young did not sign the notes was not interposed in the lower court. The only issue raised below concerned the amount to be paid due to the currency prevailing at the time of payment. The Court emphasized the settled practice that a change of theory on appeal is not permitted, as it would be unfair to the adverse party who did not have the opportunity to address the new issue in the trial court. Had this defense been raised, the appellees could have presented evidence of Pacita's intent to bind the conjugal partnership for the support of her family. On the award of attorney's fees: The Court found no basis for awarding attorney's fees. While the Civil Code provides exceptions to the general rule against awarding attorney's fees, such as when a party acts in gross and evident bad faith or when it is just and equitable, the administrator's actions did not fall under these exceptions. The administrator did not deny the debt but merely pleaded for adjustment based on existing jurisprudence. This defense, though ultimately untenable, did not amount to gross and evident bad faith. The offer to settle for P5,000 was also not a sufficient ground, as the administrator's stance was a consequence of his defense, not bad faith. The Court noted that the issue of whether the notes contained an express promise to pay a definite amount was a point not directly passed upon, further suggesting the defense was not made in bad faith.
Main Doctrine
Promissory notes executed during the Japanese occupation, expressly payable only after the war or liberation, are payable in Philippine currency on a peso-for-peso basis, without reduction under the Ballantyne schedule. A change of theory on appeal is not permitted if it was not raised in the lower court.