CLARA TAMBUNTING DE LEGARDA AND VICENTE L. LEGARDA, PLAINTIFFS AND APPELLEES, VS. ANTONIO CARRASCOSO, JR. (SUBSTITUTING WILLIAM J. B. BURKE), DEFENDANT AND APPELLANT.

Before the Japanese occupation, Clara Tambunting de Legarda hereafter called
the plaintiff, because her husband, the other plaintiff, is a nominal party,
owed the original defendant William J. B. Burke about seventy thousand pesos
P70,000.00. In May, 1944, she offered money to pay that debt plus interest. Upon
refusal of William J. B. Burke to accept payment, she sued him immediately, and
made a deposit of P75,920.83 in the court of first instance of Manila, where
both resided. In June, 1944, he answered in substance that he and plaintiff had
agreed that the credit would earn no interest during the existence of the war
between Japan and the United States, and that such credit would be paid after
the termination of such war.

In December, 1944, the court rendered judgment requiring said defendant to
take the sum of 175,920.83 consigned by plaintiff with the clerk of.court as
full payment of the indebtedness. He moved for new trial. Then liberation came
to Manila, and the records of the case were destroyed. When proceedings for the
reconstitution thereof were instituted, the defendant lost no time in submitting
what he entitled “Supplemental Answer” wherein he averred that plaintiff’s
tender of payment was made with Japanese Military Notes and was null and void,
and that he (defendant) could not plead this defense in his original answer
because had he done so, he and his attorney would have been tortured and
probably killed by the Japanese military police. The “supplemental answer”
included a counterclaim wherein defendant asked for payment of his original
credit of seventy thousand pesos plus interest. It was accompanied by a motion
for its admission, which plaintiff vigorously opposed. The court refused to
admit the supplemental answer. It also denied the motion for new trial
interposed by defendant. Hence this appeal, in the course of which appellant
Burke died and was substituted by Atty. Antonio Carrascoso, Jr., his
executor.

Several errors are assigned. The most important and decisive is the
appellant’s contention that it was prejudicial mistake for the court to reject
the supplemental (answer and in preventing defendant from presenting proofs in
support thereof.

It will be observed that the proposed supplemental answer directly challenged
the right of the plaintiff Tambunting-Legarda to pay her debt in Japanese
Military paper notes. Obviously this issue could not be raised in June, 19441
during the Japanese regime. Had he done so, defendant Burke would have been in
grave bodily peril. let this seems to be a valid plea, if as defense alleges –
and the documents substantiate this allegation (Annexes G (and H) – that
plaintiff’s contract was to repay her obligation, at defendant’s option
either in Philippine currency, lor in British currency. Supposing that in 1944,
Japanese Military notes were Philippine currency for the purpose of discharging
pre-war debts payable in that medium of exchange, and that ordinary creditors
could be legally compelled to accept them in payment (a point on which this
writer and other members have not yet made up their minds) — still it is a
serious question whether the defendant Burke who was a special creditor having
the right to insist upon his option to receive payment in British urrency or the
equivalent of British currency at that time, could be enjoined to
receive Japanese money especially at par. And although he did not say so in
plain words, his refusal to take the Japanese notes could have no other
significance than his election to be paid in British currency, or, at least,
Philippine currency at the right valuation – considering the well-known
depreciated of the Japanese notes at that time. We are all of opinion that
defendant should have been permitted to Establish such defenses. And although it
is true that the option of defendant was a fact known to him and existing fat
the time he submitted his answer, still it is clear that he could not then
invoke it; and the subsequent liberation of Manila being the fact that enabled
him to hold forth and assert his right, we believe that, under a liberal
interpretation of the rule concerning supplemental pleadings (Sec. 5, Rule 17,
Rules of Court) the herein Supplemental answer should be allowed. Consequently a
new trial is in order. For that purpose, the record will be remanded to the
court below for further proceedings not inconsistent with this opinion. So
ordered.

Paras, Actg., C.J., Feria, Pablo, Perfecto, Briones, Padilla, and
Tuason, JJ., concur.