G.R. No. 2206. November 02, 1905

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5 Phil. 197

[ G.R. No. 2206. November 02, 1905 ]




No question of fact is presented in the brief of the appellant. He presents, however, several questions of law.

It is claimed that the judgment is void because it is written in the
English language. The official language of the courts is Spanish, and
the judgment should have been written in that language. The court
committed an error in writing and signing it in English. For this
error, however, we can not reverse the judgment. Section 503 of the
Code of Civil Procedure is as follows:

Judgment not to be reversed on technical grounds.—
No judgment shall be reversed on formal or technical grounds, or for
such error as has not prejudiced the real rights of the excepting

It is apparent in this case that the error referred to has not prejudiced the real rights of the appellant.

The evidence contained in the bill of exceptions returned to this
court is also in English, and the appellant claims that this fact
entitles him to a new trial. It does not appear in the record how the
evidence was taken in the court below. It does not appear whether the
witnesses testified in Spanish or in English, If they testified in
Spanish and the defeated party desired to present any question to the
Supreme Court based upon such evidence, it was his duty, and not the
duty of the judge, to prepare a bill of exceptions which contained the
evidence so given in the official language. The record does not show
that any error was committed in this respect.

This action was brought to recover 4,121.42 pesos-the value of hats
sold by the plaintiff to the defendant in July, 1903. It does not appear
from the evidence that there was any agreement between the parties as
to the kind of money in which payment for the hats should be made. The
court in its judgment found that the plaintiff was entitled to recover
of the defendant 3,596.06 pesos, Mexican currency. The action was
brought in February, 1904, and the judgment was rendered on the 17th of
September, 1904. The court in its judgment, following the provisions of
section 3 of Act No. 1045, which act took effect on January 27,1904,
reduced the said sum of 3,596.06 pesos, Mexican currency, to Philippine
currency, at the rate of 1.10 pesos, Mexican currency, for each peso of
Philippine currency, and ordered judgment against the defendant for
3,269.14 pesos, Philippine currency.

It is said by the appellant that the court made this reduction
without hearing any proof concerning the relative value of Mexican and
Philippine currency, and it is true that it does not appear from the
bill of exceptions that such evidence was received. The act above
mentioned (No. 1045, sec. 3) allows the parties to introduce evidence
upon this question. The appellant had an opportunity to produce such
evidence bearing upon this point as he saw fit. He did not avail
himself of this opportunity, and now claims that there was no evidence
upon which this finding of the court as to the relative value of
Mexican and Philippine currency can be sustained. It is made the duty
of the court to render judgment in Philippine currency. If the parties
refuse to produce any evidence of the relative value of Mexican and
Philippine currency, we think and hold that the court is entitled to
take into consideration the executive orders issued from time to time
fixing such value. In the absence of other proof contradicting these
orders, we hold that they are sufficient evidence, prima facie,
to show that the relative value of the two currencies is as stated
therein. Executive Order No. 24, dated May 20,1904, fixed the rate at 1
peso and 10 centimos, for both Spanish-Filipino currency and Mexican
currency; Executive Order No. 29, dated the 21st of June, 1904, fixed
the rate for Spanish-Filipino currency at 1.13; Executive Order No. 34,
dated the 29th of July, 1904, fixed the rate at 1.10. It thus appears
that the court had before it at the time it rendered judgment on the
17th day of September, 1904, evidence that the rate was 1.10.

The appellant claims that Act No. 1045 is void because it impairs
the obligation of his contract, which was made prior to its passage and
which did not specifically provide for payment in any kind of money.
The appellant made no tender of any kind of money in discharge of his

The act of Congress of March 2, 1903, provides, in section 3, as follows:

“That the silver Philippine peso authorized by this
act shall be legal tender in the Philippine Islands for all debts,
public and private, unless otherwise specifically provided by contract:
Provided, That debts contracted prior to the thirty-first day
of December, nineteen hundred and three, may be paid in the
legal-tender currency of said Islands existing at the time of the
making of said contracts, unless otherwise expressly provided by

Sections 3, 4, and 5 of Act No. 1045 are as follows:

“SEC. 3. Whenever any contract, debt, or
obligation, payable by the terms thereof in local currency, is sought
to be enforced in any court and the right of the plaintiff is
established, it shall be the duty of the court to render judgment for
the plaintiff to recover as damages the law-ful sum due to him, in
Philippine pesos, instead of in the currency mentioned in the contract,
debt, or obligation. For the purpose of determining the amount of such
judgment the court shall receive evidence as to the real and just value
in Philippine currency of the currency named in the contract, debt, or
obligation, including evidence of the local market value of such
currency, its value in neighboring countries as currency, its value in
the great markets of the world, its bullion value, and any other facts
necessary to determine its true value. The local market value, whether
affected by the prohibition of the importation of such currency or by
other causes, shall not be conclusive evidence of the amount of the
judgment to be rendered in such cases. Payment of a judgment thus
rendered shall extinguish all liability on the contract, debt, or

“SEC. 4. Whenever any contract, debt, or
obligation is made payable in local currency, the debtor or person
under obligation to make payment may tender to the creditor in lieu of
such currency the just amount due thereon in Philippine pesos, computed
in the manner stated in the preceding section, and the effect of such
tender shall be the same as though the tender had been made in the kind
of currency named in such contract, debt, or obligation.

5. The two last preceding sections shall apply to all contracts, debts,
or obligations made before the passage of this act, as well as to those
made subsequent thereto.”

Two questions are presented: First, does Act No. 1045 impair the
obligation of the contract or deprive the defendant of his property
without due process of law? Second, are these sections, so far as
contracts made prior to the passage of this law are concerned,
inconsistent with the above-quoted act of Congress because they require
the payment in Philippine pesos instead of permitting the payment in
Mexican pesos?

If Act No. 1045 had required the defendant to discharge his debt by
the delivery of an equal number of Philippine pesos, it would have been
objectionable as being inconsistent with the provisions of the
above-quoted section 3 of the act of Congress.

In view of the acts of Congress providing for the new Philippine
currency, and in view of the decisions of the Supreme Court at
Washington in the Legal Tender Cases (12 Wallace, 457 and 110 U.S.,
421) whether such a law would also have been objectionable because it
impaired the obligation of the contract may perhaps be open to
question. It is not necessary, however, to pass upon this point, for we
do not think Act No. 1045 impairs the obligation of the contract.

The Philippine Commission possesses general powers of legislation
for the Islands, and its laws are valid unless they are prohibited by
some act of Congress, some provision of the Constitution, or some
provision of a treaty. At the time Act No. 1045 was enacted the
Government of the Islands was undertaking to introduce here a new
currency, and to place that currency upon a gold basis. It was
attempting to drive out of circulation the old currency. In this same
act (No.1045) it adopted radical, and as the event showed, successful
measures to accomplish that end. As a means for making the substitution
of the new currency for the old more complete, and to lessen the number
of cases in which the old currency would be needed, it provided that
all judgments entered in the courts of the , Islands should be stated
in terms of the new currency. In so providing it did not undertake to
nor did it in any way increase or diminish the rights and obligations
of parties to contracts entered into prior to its passage. It did not
require the debtor to pay more nor the creditor to receive less than
they were required to pay or receive under the former law. By the terms
of the contract in question the debtor was required to pay, say, 3,600
Mexican pesos. In a judicial proceeding to which he was a party and in
which he had a right to introduce evidence upon the subject, it was
determined that 3,600 Mexican pesos were of the same value as, say,
3,300 Philippine pesos. This judicial determination having been made,
it must be taken as a fact that 3,300 Philippine pesos were the exact
equivalent of 3,600 Mexican pesos. The, judgment orders him to pay not
3,600 Mexican pesos but 3,300 Philippine pesos. By this order his
rights are not in any way impaired. It can make no difference to him
whether .he delivers to the sheriff in satisfaction of the judgment
3,600 Mexican pesos, or whether with these 3,600 Mexican pesos he buys
3,300 Philippine pesos and delivers them.

If Congress should desire to withdraw from circulation the
legal-tender notes, for example, and should pass an act saying that all
contracts theretofore executed and payable expressly by their terms in
legal-tender notes should be discharged by the payment in other lawful
money of the value of the legal-tender notes so contracted to be
delivered, could it be said that such a law in any way prejudiced
either of the parties to the contract, or that it in any way increased
the obligation of the debtor?

The law relating to the obligation of contracts does not prohibit
every change in existing laws. To fall within the prohibition the
change must impair the obligation of the existing contract, and the
impairment must be substantial. In the case of Ochiltree vs.
The Railway Company (21 Wallace, 249) the phrase “materially impairs”
is used at page 252. In the case of the City and Lake Railroad Company vs. New Orleans (157 XJ. U.S.,219) the phrase “any substantial right” is used at page 224. In the case of Barnitz vs. Beverly (163 U. S., 118) the phrase “seriously interfere” is used at page 122. In the case of Van Hoffman vs. City of Quincy (4 Wallace, 535) it is said at page 553:

“It is competent for the States to change the form
of the remedy or to modify it otherwise, as they may see fit, provided
no substantial right secured by the contract is there by impaired.”

We see nothing in this Act No. 1045 which impairs the obligation of
any contract or deprives the defendant of his property without due
process of law.

Are sections 3, 4, and 5, so far as they relate to contracts
existing at the time of the passage of the act, inconsistent with the
proviso in section 3 of the act of Congress above quoted, and therefore
void? The purpose of the proviso, we think, is plain. It perhaps being
doubtful whether the Commission, under its general power of legislation
and its control over the currency, had not the right to impair the
obligation of contracts in the introduction of the new currency,
Congress declared in this proviso its purpose to deprive the Commission
of this right, if it did exist. It prohibited the Commission from
passing a law that required the debtor to pay more than he was required
to pay under the old law. Having protected the debtor in that respect,
Congress did not, we think, intend to hamper the Commission in its
plans for making effective the change in the currency. As to the
details of those plans, everything was left to the Commission after.
Congress had provided that the debtor’s rights should not be infringed.
We think that the Commission had a right to pass any law on the
subject, provided that the debtor was not thereby bound to pay more nor
the creditor to receive less in value than he was required to pay or
receive under the old law. If this right was preserved, the particular
kind of money which the debtor should deliver in representation of that
value was not, in the opinion of Congress, important. We think that
sections 3, 4, and 5 of Act No. 1045 are not inconsistent with the
proviso of section 3 of the act of Congress of March 2, 1903, and are
therefore valid.

The only cases cited by the appellant in support of his contention are the cases of Hepburn vs. Griswold (8 Wallace, 603) and Broderick’s Executor vs. Magraw (8 Wallace, 639), which were overruled by the Legal Tender cases (12 Wallace,457).

The judgment of the court below is affirmed, with costs of this
instance against the appellant, and after the expiration of twenty days
judgment should be entered in accordance herewith, and the cause
remanded to the court below for execution of said judgment. So ordered.

Arellano, C.J., Torres, Mapa, and Johnson, JJ., concur.

Carson, J., reserves his opinion.

Date created: April 28, 2014


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