Mercado v. Mercado
REITERATIONFacts
The Antecedents: On August 29, 1944, plaintiff Bonifacio Mercado executed a Deed of Sale with Right to Repurchase with defendant Paulo M. Mercado, ceding a parcel of land in consideration of P5,000.00 in Japanese war notes. The contract stipulated a redemption period of ten years from the date of execution for the same amount. Procedural History: Sometime before July 10, 1954, the plaintiff offered to redeem the property by tendering P300.00 in Philippine currency, which he believed to be the equivalent of P5,000.00 in Japanese war notes under the Ballantyne scale of values. The defendant rejected the offer, demanding P5,000.00 in Philippine currency. Consequently, the plaintiff deposited P300.00 with the Court of First Instance of Zambales and filed a complaint seeking to redeem the property based on the Ballantyne scale of values. The Petition: The parties submitted a stipulation of facts, presenting the sole issue of whether redemption should be made peso-for-peso in Philippine currency or based on the equivalent value of P5,000.00 in Japanese war notes under the Ballantyne scale. The Court of First Instance ruled for a peso-to-peso redemption in Philippine currency, prompting the plaintiff's appeal.
Issue(s)
Whether the redemption of the property should be made on a peso-to-peso basis in Philippine currency or based on the equivalent value of P5,000.00 in Japanese war notes under the Ballantyne scale of values. Whether the plaintiff's tender of P300.00 in Philippine currency was sufficient for redemption.
Ruling
The Supreme Court modified the decision of the Court of First Instance. It ruled that the redemption should be based on the equivalent value of P5,000.00 in Japanese war notes, applying the Ballantyne scale of values. The Court ordered the defendant to execute a deed of reconveyance upon payment of the equivalent amount, which was determined to be P200.00 in Philippine currency, after deducting costs.
Ratio Decidendi
On the issue of redemption basis: The Court distinguished the present case from Gomez vs. Tabia. In Gomez, the redemption period was set to occur when Japanese war notes were no longer legal tender, thus implying a peso-to-peso redemption in Philippine currency. However, in the present case, the redemption period was "at any time within the period of ten years" from August 29, 1944, meaning redemption could have been made during the occupation when Japanese war notes were legal tender. Therefore, the redemption should be based on the equivalent value of P5,000.00 in Japanese war notes at the time of the contract, as per the Ballantyne scale of values, citing De Asis vs. Agdamag, Hilado vs. De la Costa, and Soriano vs. Abalos. On the sufficiency of the tender: The Court found that P5,000.00 in Japanese war notes was equivalent to P200.00 in Philippine currency according to the Ballantyne scale, where one genuine Philippine peso was worth P25.00 in Japanese war notes. The plaintiff had deposited P300.00, which was more than the required P200.00. Therefore, the tender of P300.00 was sufficient to cover the redemption price and costs.
Main Doctrine
A contract of sale with right to repurchase, executed during the Japanese occupation using Japanese war notes as currency, where the redemption period extends beyond the occupation, should be redeemed based on the equivalent value in Philippine currency at the time of the execution of the contract, applying the Ballantyne scale of values, not on a peso-to-peso basis.