Romasanta v. Sanchez
REITERATIONFacts
The Antecedents: Plaintiff Francisca Romasanta filed an action against defendant Felix Sanchez before the Court of First Instance of Rizal to recover P35,000.00, plus P3,500.00 as attorney's fees, representing a loan obtained by the defendant. The defendant admitted incurring the obligation but claimed entitlement to pay only P1,500.00 based on the Ballantyne schedule, considering the exchange rate of Japanese currency to Philippine peso in December 1944 when the loan was obtained. Procedural History: The trial court rendered judgment ordering the defendant to pay P35,000.00, Philippine currency, without interest, plus P1,000.00 as attorney's fees, with a warning of foreclosure in case of default. The defendant appealed to the Court of Appeals, which certified the case to the Supreme Court due to the sole legal issue raised. The Petition: The core issue is whether the appellant may be allowed to pay the obligation in conformity with the Ballantyne schedule, considering the time and circumstances under which the loan was contracted.
Issue(s)
Whether the defendant-appellant may pay his obligation in accordance with the Ballantyne schedule. Whether the stipulation in the Deed of Mortgage regarding the payment of the loan should be given force and effect.
Ruling
The decision of the Court of First Instance is affirmed. The defendant-appellant is ordered to pay the plaintiff-appellee the sum of P35,000.00, Philippine currency, without interest, plus P1,000.00 as attorney's fees. In default of payment within 90 days from notice, the mortgaged property shall be sold at public auction.
Ratio Decidendi
On whether the defendant-appellant may pay his obligation in accordance with the Ballantyne schedule: The Court held that the defendant-appellant is not entitled to pay his obligation based on the Ballantyne schedule. The Deed of Mortgage explicitly stipulated that the loan of P35,000.00 would not earn interest and that the mortgagor bound himself not to redeem the property during the war. Payment was to be made within one year from the termination of the war, when peace was restored and a new civil government was functioning, and the loan was to be paid in the currency of the new government. This clear stipulation reflects the real intention of the parties and must be respected. On whether the stipulation in the Deed of Mortgage regarding the payment of the loan should be given force and effect: The Court affirmed that the stipulation in the Deed of Mortgage should be given full force and effect. The defendant's contention that equity demands payment according to the Ballantyne schedule is untenable as it contradicts the express terms of the agreement. The parties entered into a speculative transaction, gambling on the date of the war's termination and liberation. Such agreements, when not contrary to law, morals, or public order, are permitted and must be honored. The Court reiterated its pronouncements in previous cases, such as Berg vs. Theus, Roño vs. Gomez, and Gomez vs. Tabia, emphasizing that stipulations regarding payment terms and currency, when clearly expressed, should be upheld.
Main Doctrine
The stipulation of the parties regarding the currency for payment of a loan, especially when it involves a speculative transaction based on the termination of war, must be given force and effect as it reflects the real intention of the parties, unless contrary to law, morals, or public order.