Dizon v. Arrastia
REITERATIONFacts
The Antecedents: In October 1943, appellant borrowed P10,000.00 from appellee. To secure the loan, appellant executed a deed of mortgage (Exhibit C) on July 1, 1944, stipulating that the loan would become due and demandable after October 23, 1947, and waiving the right to repay before that date. On October 9, 1944, appellant consigned P12,436.00 in the Court of First Instance of Manila (Civil Case No. 2917) due to appellee's alleged refusal to accept payment. Appellee previously filed an action to foreclose Exhibit C, but it was dismissed because the deed was unregistered. The court ordered appellant to execute a new mortgage deed with formalities for registration. Appellant complied by executing Exhibit D, which was duly registered and is the subject of the present foreclosure action. Procedural History: Appellant did not deny the mortgage debt or the execution of the deeds. He claimed the debt was paid by the consignation in Civil Case No. 2917. He also argued that the condition waiving his right to repay before October 23, 1947, was oppressive and illegal, and that it would be unjust to collect the full P10,000.00 considering the loan was made in Japanese military notes. The lower court rendered judgment sentencing appellant to pay P10,000.00 plus P1,000.00 as attorney's fees and costs, with a 90-day period for payment, failing which the mortgaged property would be sold at public auction. The Petition: Appellant contended that the lower court erred in holding the loan due and demandable on October 23, 1947, and in ordering payment of the full P10,000.00 in Philippine currency instead of applying the Ballantyne schedule.
Issue(s)
Whether the loan became due and demandable on October 23, 1947. Whether the payment should be made in Philippine currency based on the Ballantyne schedule or peso for peso.
Ruling
The decision appealed from is affirmed, with costs.
Ratio Decidendi
On whether the loan became due and demandable on October 23, 1947: The Court held that the stipulation in Exhibits C and D, stating the mortgage debt would become due and demandable after October 23, 1947, and that the mortgagor expressly waived the right to pay before that date, was clear and binding. This meant the loan was payable only after October 23, 1947, with appellee having the right to demand payment thereafter, while appellant could not discharge the obligation before that date without appellee's consent. The Court found no merit in the contention that this condition was oppressive or illegal, as parties are free to stipulate the terms of their contract. On whether payment should be made in Philippine currency based on the Ballantyne schedule or peso for peso: The Court reiterated its rulings in Roño vs. Gomez, et al. and Nicolas vs. Matias. It stated that parties are free to stipulate the currency for settlement. When an obligation incurred during the Japanese occupation is not payable until after liberation, the parties are deemed to have intended payment in the legal tender at the time the obligation becomes due. In this case, the deed provided for payment after October 23, 1947, which was after liberation. Therefore, the obligation must be satisfied peso for peso in Philippine currency. The Court explicitly stated that the doctrine laid down in previous cases leaves no choice but to declare that the obligation must be satisfied, peso for peso, in Philippine currency, implicitly rejecting the application of the Ballantyne schedule in such circumstances.
Main Doctrine
The stipulation in a mortgage deed that the debt becomes due and demandable on a specific date, and the mortgagor waives the right to repay before said date, is binding. Obligations incurred during the Japanese occupation are payable peso for peso in Philippine currency if the contract does not specify otherwise or if the payment date is after liberation.