Server v. Car
REITERATIONFacts
The Antecedents: On January 22, 1945, Epifania Car obtained a loan from B. J. Server, executing a promissory note for P2,500.00 in Philippine currency, payable two years after the termination of the Greater East Asia War hostilities. The note stipulated 6% annual interest and a 20% penalty for late payment. As security, Car mortgaged a parcel of land. No payment was made, and Server did not reply to Car's 1953 offer to pay according to the Ballantyne Scale of Values. Procedural History: Server filed a complaint for recovery of the loan, interest, attorney's fees, and foreclosure of the mortgage. The Court of First Instance of Albay ruled that payment should be on a peso-to-peso basis in Philippine currency, ordering Car to pay P2,500.00 with interest from September 8, 1951, plus attorney's fees, and ordered foreclosure in case of non-payment. The Petition: Epifania Car appealed, questioning the mode of payment of the monetary obligation.
Issue(s)
Whether the monetary obligation incurred during the Japanese occupation, payable after the cessation of hostilities, should be settled on a peso-to-peso basis or under the Ballantyne Scale of Values. Whether the Court of First Instance erred in ordering the payment of the obligation in Philippine currency on a peso-to-peso basis.
Ruling
The Supreme Court affirmed the judgment of the Court of First Instance, ordering the payment of the obligation on a peso-to-peso basis in Philippine currency.
Ratio Decidendi
On the mode of payment for monetary obligations incurred during the Japanese occupation: The Court reiterated its settled rulings on this matter. It distinguished between obligations payable within a period that partly covered the occupation and partly after liberation, and those expressly agreed to be paid after the war. For the latter, unless there is a clear agreement to the contrary, repayment must be made in the currency prevailing at the time of payment, on a peso-to-peso basis. The promissory note explicitly stated payment "after the termination of hostilities of the Greater East Asia War in the Philippines," indicating the parties' intent for payment in the currency then legal tender. The Court cited Quiogue v. Bautista and Vda. de Generosa v. Court of Appeals as precedents supporting this principle. The stipulation for interest and attorney's fees further supported the validity of the peso-to-peso payment. On the application of the Ballantyne Scale of Values: The Court rejected the appellant's contention that payment should be under the Ballantyne Scale of Values because she received Japanese currency. The Court held that contracting parties are free to stipulate the currency for settlement. When an obligation incurred during the Japanese occupation is payable after liberation, the parties are deemed to have intended payment in the currency legal at the time of maturity. The Court cited Dizon v. Arrastia to emphasize that parties' stipulations on currency are binding and that the intent for peso-to-peso payment is presumed when maturity falls after liberation.
Main Doctrine
Monetary obligations incurred during the Japanese occupation, if expressly agreed to be paid after the cessation of hostilities, are payable in Philippine currency on a peso-to-peso basis, not under the Ballantyne Scale of Values.