Aguilar v. Miranda
REITERATIONFacts
The Antecedents: On September 22, 1944, Valeriano Miranda borrowed P15,000.00 in Japanese military notes from Filemon Aguilar. To secure the loan, Miranda mortgaged a parcel of land in Las Piñas, Rizal, with a redemption period stipulated as 'APAT (4) NA TAON at APAT (4) NA ANI SA PANAHON' from the effectivity of the agreement. The mortgage was registered in October 1944. Procedural History: After the redemption period expired without the loan being paid despite demands, Aguilar filed an action to recover the loan and foreclose the mortgage. The Court of First Instance of Rizal ordered Miranda to pay P15,000.00 within 90 days, with legal interest and costs, and in case of default, to have the property sold. The Petition: Defendant Valeriano Miranda appealed directly to the Supreme Court, raising questions of law, specifically whether the loan in Japanese military notes should be repaid in the same currency or its equivalent based on the Ballantyne schedule, or peso for peso in present currency.
Issue(s)
Whether the loan of P15,000.00 obtained in Japanese military notes should be repaid in the same currency or its equivalent based on the Ballantyne schedule, or peso for peso in the present currency. Whether the period stipulated in the contract, which does not bear interest, should be deemed intended for the exclusive benefit of the debtor.
Ruling
The decision of the lower court ordering the defendant to pay the loan peso for peso in the present currency is affirmed.
Ratio Decidendi
On the currency of repayment: The Supreme Court reiterated its settled rule that if a monetary obligation was contracted during the Japanese occupation and its repayment period extends beyond liberation, the repayment must be made in Philippine currency, peso for peso, based on the currency prevailing at the time of repayment, unless there is a clear agreement to the contrary. This rule applies even if the agreement is silent as to the currency of payment, as it is understood that payment is to be made in legal tender. The Court clarified that the argument that the absence of interest implies the period is for the debtor's exclusive benefit is untenable, as the period is presumed to benefit both parties, and the creditor may have considered currency fluctuation risks. On the period for the debtor's benefit: The Court held that the claim that the period stipulated in the contract should be deemed intended for the exclusive benefit of the debtor, due to the absence of interest, is untenable. Article 1127 of the old Civil Code presumes that the period is constituted for the benefit of both the creditor and the debtor. Furthermore, the Court noted that even without interest, a creditor might have considered the risk of currency depreciation when setting the repayment period.
Main Doctrine
An obligation incurred during the Japanese occupation, payable within a specified period that extends beyond liberation, unless there is a clear agreement to the contrary, must be repaid in Philippine currency, peso for peso, based on the currency prevailing at the time of repayment, not under the Ballantyne schedule.