G.R. No. L-867. December 29, 1949
ANTONIO DEL ROSARIO ET AL., PLAINTIFFS AND APPELLEES, VS. CARLOS SANDICO ET AL., DEFENDANTS. CARLOS SANDICO, DEFENDANT-APPELLANT.
FERIA, J.:
this case on appeal from the judgment of Court of First Instance rendered before
the war, the dispositive part of which reads as follows:
“But for the purpose of avoiding multiplicity of litigations,
the decision should be amplified by requiring plaintiffs to pay the amount of
P3,944.20 to appellee Sandico within a period of ninety days from the date this
decision becomes final; and upon such payment, the latter shall surrender to
them the possession of the land. Should they fail to do so, the land will be
auctioned off to satisfy such credit.” (Record on Appeal, p.
11.)
In view of the refusal of the defendant Sandico to accept the
payment of the judgment offered to his attorney in the case, the plaintiffs, on
October 19, 1944, that is within the period of ninety days after the decision
had become final, deposited or paid into the court the sum of P3,944.20 which
they were sentenced to pay to recover the possession and enjoyment of the
property delivered to the defendants in antichresis, and filed a motion praying
the court to order the defendant Carlos Sandico to deliver the possession of
said property to the plaintiffs, because the defendant Carlos Sandico presented
an opposition to the motion on the ground that the money deposited did not
belong to all the plaintiffs but to one Ponciano Ong, who purchased the right
and interests of Antonio and Victoriano del Rosario, two of the six plaintiffs,
and prayed that the motion be denied and the property be ordered sold to satisfy
the judgment.
On October 11, 1945, the defendant Sandico was notified of the
resolution of the court dated October 5, 1945, accepting the payment deposited
and ordering the said defendant to surrender to the plaintiffs the possession of
the land in dispute.
The defendant Carlos Sandico appealed from the court’s
resolution or order and the principal questions raised in the present appeal
are: (1) that the sum of P3,944.20 deposited being in Japanese war notes is not
acceptable to satisfy the judgment of the lower court as affirmed by the Court
of Appeals on July 8, 1944, during the Japanese occupation; and (2) that the
deposit or consignation of said amount in payment of the judgment by Ponciano
Ong in behalf of the plaintiffs was not valid, because it was not made in
conformity with the requirements of the provisions of articles 1176 and 1177 of
the Civil Code.
I. As to the first assignment of error, since the final
judgment of the Court of Appeals was rendered during the Japanese occupation in
which the Japanese war notes were legal tender, and the judgment does not
specify that the plaintiff should pay a different specie of money,( the delivery
or deposit of P3,944.20 in Japanese war notes was a valid payment of the
judgment in accordance with the ruling of this Court in the case of Soriano vs.
Abalos, G. R. No. L-1525.[1]
The invectives hurled by the dissenter against the decision of
the majority should have properly no place even in a dissenting opinion, so much
so because they do not contain any argument in support of the contention of its
writer that the dissenting opinion is correct and the decision of the majority
is wrong.
The contention of the dissenter is (a) that “the Court
of Appeals did not hold that the antichretic right or equitable mortgage that
Carlos Sandico had in the parcel of land in litigation could be discharged or
cancelled by paying it off with paper money that was then circulated in the
country by the, Japanese army of occupation. * * * It merely declared that the
plaintiffs are the owners of the parcel of land involved in the litigation,
subject to an antichretic right of Carlos Sandico, and that upon payment of the
sum of P3,944.20 by the former to the latter within 90 days from the judgment
the possession of the parcel of land was to be delivered to the plaintiffs.” And
(b) as the parties entered into the contract of antichresis before the
Japanese occupation, “the currency contemplated or agreed upon “by them and
between the parties could not have been the Japanese military or war notes, * *
* it was the currency of the Government of the Philippines which was used or in
circulation at the time the contract was entered into,” citing in support of
this conclusion article 1170 of the Civil Code. And the Court of Appeals did not
and could not have ordered “the payment of the antichretic debt or equitable
mortgage in or by means of Japanese military notes, * * * because the contract
stipulated that payment of the debt was to be in Philippine money, the currency
at the time the contract was entered into; because the Japanese army of
occupation was not authorized to change or alter the contractual rights and
obligations, but on the contrary it was enjoined to respect private property as
well as contractual rights and obligations.”
(a) It is not true, as stated in the dissenting
opinion that the decision of the Court of Appeals “merely declared that the
plaintiffs are the owners of the parcel of land involved in the litigation,
subject to an antichretic right of Carlos Sandico, and that upon payment of the
sum of P3,944.20 by the former to the latter within 90 days from the judgment
the possession of the parcel of land was to be delivered to the plaintiffs.” No.
The Court of Appeals in the dispositive part of its decision declared, as
already quoted at the beginning, that “the decision should be amplified by
requiring plaintiffs to pay the amount of P3,944.20 to appellee Sandico within a
period of ninety days from the date this decision becomes final; and upon such
payment, the latter shall surrender to them the possession of the land. Should
they fail to do so, the land will be auctioned off to satisfy such credit.”
The plaintiffs or debtors did not, therefore, take “advantage
of the abnormal situation when the Japanese military or war notes could be
acquired for nothing or gotten for the asking because they were worthless and
valueless, paid off a valid, legitimate and lawful debt,” as asserted
gratuitously in the dissenting opinion. The plaintiff had to pay by order of the
court within the period of ninety days from the promulgation of the judgment
because no appeal was taken, that is, from July 24, to October 22 of 1944, in
order to prevent the sale of their property at public auction to satisfy such
credit.
(b) Article 1170 of the Givil Code quoted in the
dissenting opinion does not support the dissenter’s contention that, although
the Court of Appeals did not say that the amount of P3,944.20 must be paid in
Philippine currency, the payment should be made in that currency, because it is
to be presumed that it was the currency contemplated and agreed upon the parties
at the time the contract was entered into.
In the case of Haw Pia vs. China Banking Corporation (45 Off.
Gaz. [Supp. to No. 9, p. 229]),[1] we
have already held that “the fact that the money with which the debts have been
paid were Japanese war notes does not affect the validity of the payments.” The
provision of article 1170 of our Civil Code to the effect that “payment of debts
of money shall be made in the specie stipulated and, should it not be possible
to deliver such, specie, in silver or gold coins legally current in the
Philippines,” is not applicable to the present case, because the contract
between the parties was to pay Philippine pesos and not some other specifically
denned specie of money. It is obvious that the phrase specie stipulated used in
article 1170 of the Civil Code refers to money different from that which is the
legal tender or legally current in the Philippines, because to construe it
otherwise would be to make said article read as follows: “Payment of debts of
money shall be made in silver or gold coins that are legal tender in the
Philippines (the specie stipulated) and, should it not be possible to deliver
such specie in silver or gold coin legally current in the Philippines.” Which is
evidently absurd.
As there was no stipulation that the payment of the plaintiffs’
debt shall be made in another specie of money and the agreement was only to pay
P3,944.20, “it was not a duty to pay gold or silver, or the kind of money
recognized by law when the contract was made, nor was it a duty to pay money of
equal intrinsic value in the market, (we speak now of contracts to pay money
generally, not contracts to pay some specifically denned species of money). * *
* But the obligation of a contract to pay money is to pay that which the law
shall recognize as money when the payment is to be made. If there is anything
settled by decision it is this and we do not understand it to be controverted.
Davis Reps,, 28; Barrington vs. Potter, Dyer 81 6. (Fol., 67); Faw vs.
Marsteller, 2 Cranch, 29 (Know vs. Lee and Parks vs. Davis [Legal Tender cases],
12 Wall. 457, 20 Law. ed., 287, 311.)
But even if we assume arguendo that the Philippine
genuine currency in circulation at the time the contract was entered into were
the specie expressly stipulated by the parties and the provision of article 1170
were applicable, it is evident that, since it was not possible at the time the
decision of the Court of Appeals become final and executory to satisfy the
judgment in such currency, because we have already taken judicial notice that it
was no longer in circulation as far back as the last part of 1943 (Hilado vs. De
la Costa, 46 Off. Gaz., 5472),[2] it had
to be paid in Japanese war notes that was legal tender at the time the judgment
was to be satisfied by the plaintiffs.
In the case of Rogers vs. Smith, Bell & Co. (10 Phil.,
319), this Court held the following applicable to the present case:
“It having been determined that the control between the parties
created the common relation of debtor and creditor, the case is easily resolved.
Section 3 of the act of Congress of March 2, 1903, entitled ‘An act to establish
a standard of value and to provide for a coinage system in the Philippine
Islands,’ is 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
contract.’“That this case falls within the terms of this section is very
clear. The debt dn question is a private debt, calling for the payment of 12,000
pesos. This section authorizes the payment of that debt in the Philipppine pesos
authorized by the act. That the act applies as well to debts created prior to
its passage as to those created after, appears from the proviso. The effect of
that proviso is to give the debtor and not the creditor the option as to the
kind of money with which the debt shall be paid.“The only possible way to avoid the application of this section
to the case at bar is by saying that Congress had no power to pass the act and
that as to debts created prior to its passage it is therefore null and void.
That the act can not be declared void on this ground is well’ settled by the
decisions of the Supreme Court of the United States. (Legal Tender Cases, 12
Wall., 457; Dooley vs. Smith, 13 Wall., 604; Railroad Company vs. Johnson, 15
Wall., 195; Maryland vs. Railroad Company, 22 Wall., 105; and Juilliard vs.
Greenman, 110 U. S. 421.) In the first four of those cases it was held that
debts created when the only legal-tender money was gold and silver could be paid
in paper money issued by the Government and which had no intrinsic value.”[3]
That is evidently the reason why the Court of Appeals, in
promulgating its decision sentencing or requiring the plaintiffs to pay the
amount of P3,944.20 to appellee Sandico within a period of ninety days; did not
specify the kind or specie of money in which it shall be paid, nor had the
defendant Sandico appealed from such judgment of the Court of Appeals, for
judgments rendered during the Japanese occupation sentencing one of the parties
to pay money to another shall be satisfied in that which the law shall recognize
as money when the payment is to be made, unless otherwise is provided in the
judgment.
We have already shown in our decision in the Haw Pia case that
the power of a military occupant to issue military currency is based, not only
on the military occupant’s general power to maintain law and order recognized in
article 43 of the Hague Regulations, but also on military necessity; and said
power was exercised during the last World War not only by Germany who used in
most occupied areas the Reichskroditkassa mark, a paper currency printed in
Germany and denominated in German monetary units, but also by the Allies in the
occupied enemy territory of Sicilly, Germany and Austria. The Combined
Directives of the Combined Chiefs of Staff of the Supreme Allied Commander
issued on June 24, 1943, April 28, 1944, and June 27, 1947, declared
respectively as legal tender the yellow seal dollars currency and the British
military notes (BMN) in Sicilly, the Allied military mark and the yellow seal
dollars in Germany, and the Allied military shillings in Austria. When the
Japanese military occupant issued the Proclamation of January 3, 1942, which
declared the Japanese military notes of small denominations up to ten pesos as
legal tender at par with the Philippine peso, the purchasing power of said notes
was then the same as that of the Philippine peso. If the Japanese war notes
became depressed and valueless, it was because the war was prolonged and lost by
the Japanese contrary to their expectation of winning the war in a short time,
and not because they issued purposely a depressed and valueless currency as
legal tender. If their expectation had been realized no question as to the
validity of the Japanese military notes as legal tender would have come up.
Tribunals have invariably held that action of a belligerent
occupant validly initiated does not become retroactively invalid by reason of
the fact that such action subsequently takes on a confiscatory form or effect.
In other words, it is a principle of international law that if the action
originated in a lawful manner, even if it thereafter impaired private property
rights, that circumstance would not prevent the original validity from
continuing so far as third parties and courts are concerned.
Besides, the Court of Appeals could not have rendered a
judgment sentencing the plaintiffs to pay this obligation to pay money or the
sum of P3,944.20 to Sandico in a currency other than the Japanese war notes;
because such judgment would have been contrary to the Proclamation of January 3
of 1942 and notification of February 23, 1942, issued by the Japanese Military
Administration, enjoining the use of Japanese war notes on their face value in
making payment of all kinds because the “Imperial Japanese Government takes full
responsibility for their usage;” and “any person or individual refusing to
receive or to accept the aforesaid note or notes will be severely punished.” And
because, although the circulation of the Commonwealth currency was not then
prohibited legally because of the Proclamation of January 10, 1942, they had
already disappeared from circulation at that time, as above stated; and for the
Court of Appeals to have ordered in the judgment that the sum of P3,944,20 shall
be paid within 90 days or before October 22, 1944, in Commonwealth legal
currency, would have been tantamount to order the execution of a thing which was
impossible to do and which might be impossible forever to perform in the future,
inasmuch as there was then no assurance that the Commonwealth of the Philippines
shall be restored, and such kind of currency recognized as legal tender by the
government then established by the Japanese or to be established in the
future.
II. With respect to the second assignment of error, it is
obvious that tender of payment of judgment into court is not the same as tender
of payment of a contractual debt and consignation of the money due from a debtor
to a creditor, and therefore the requirements of articles 1176 and 1177 of the
Civil Code are not applicable. “In case of a refusal of a tender of the amount
due on a judgment, the court may direct the money to be paid into court, and
when this is done, order satisfaction of the judgment to be entered” (31
American Jurisprudence, p. 362). The fact that the money deposited belonged to
Ponciano Ong, who succeeded by purchase into the rights and obligations of two
of the six judgment debtors, did not make the payment inacceptable or
insufficient to satisfy the judgment, for “a voluntary payment into court of
money due under a judgment by one of several obligors is a bar to an action
against the others for the same debt or obligation.” (Ditto, ditto.)
In view of all the foregoing, the appealed order is affirmed
with costs against the appellees.
Moran, C.J., Ozaeta, Paras, Bengzon, Tuason, Montemayor,
Reyes, and Torres, JJ., concur.
[1] 47 Off. Gaz. (1) 168.
[1] 80 Phil., 602.
[2] 83 Phil., 406.
[3] In Thorington vs. Smith (8
Wall., 1), it was held by the U. S. Supreme Court that the Confederate currency
notes must be considered in courts of law in the same light as if it has been
issued by a foreign government temporarily occupying a part of the territory of
the United States.
DISSENTING
PADILLA, J.:
On 30 June 1941, a judgment was rendered by the Court of First
Instance of Pampanga holding that the plaintiffs are the owners of a parcel of
land described in the complaint, subject to an antichretic right in favor of the
defendant Carlos Sandico who was in possession of the parcel of land since 1925.
That right derived from his predecessors in interest was in existence since 8
April 1918. The complaint as to the other defendants, the spouses Lazatin and
Singian, was dismissed. From that judgment the plaintiffs appealed. On 8 July
1944, the Court of Appeals of Central Luzon affirmed the judgment of the lower
court and further directed the appellee Carlos Sandico to return the possession
of the parcel of land to the appellants upon payment of the sum of P3,944 by the
latter to the former within 90 days after judgment shall have become final. On
19 October 1944, a motion entitled, “Motion de Posesion y Desglose” was filed by
the plaintiffs and two days before the filing thereof, Ponciano Ong Lacson
deposited the sum of P3,944 in the office of the clerk of the Court of First
Instance of Pampanga and authorized the latter to pay it to defendant Carlos
Sandico or his attorney. The motion was never heard or acted upon by the Court;
so on 13 September 1945 a notice setting the motion for hearing was served upon
the attorney for the defendant Carlos Sandico. On 5 October 1945, the court
granted the motion holding that the sum deposited was a compliance with the
judgment of the Court of Appeals and ordering the defendant Carlos Sandico to
deliver the possession of the parcel of land to the plaintiffs. A motion for
reconsideration was denied. From these two orders this appeal has been
taken.
The majority holds that the sum deposited on 17 October 1944 by
Ponciano Ong Lacson in behalf of the plaintiffs with the clerk of the Court of
First Instance of Pampanga was not a consignation but a compliance with the
judgment of the Court of Appeals and, therefore, the orders appealed from are in
accordance with law. But the Court of Appeals did not hold that the antichretic
right or equitable mortgage that Carlos Sandico had in the parcel of land in
litigation, by virtue of which he held possession thereof since 1925, could be
discharged or cancelled by paying it off with paper money that was then
circulated in the country by the Japanese Army of occupation. It affirmed a
judgment of the Court of First Instance rendered in 1941, when there was not the
slightest thought that as a result of the outbreaks of war the Philippines would
be invaded and occupied by the Japanese Army. It merely declared that the
plaintiffs are the owners of the parcel of land involved in the litigation,
subject to an antichretic right of Carlos Sandico, and that upon payment of the
sum of P3,944 by the former to the latter within 90 days from the judgment the
possession of the parcel of land was to be delivered to the plaintiffs. The
antichretic right by virtue of which Carlos Sandico held possession of the
parcel of land was a pre-war contractual obligation. In the absence, therefore,
of specific law on the matter, or of a clear or express judgment by a court of
competent jurisdiction, that the antichretic debt or equitable mortgage could be
paid off with Japanese military or war notes, the law on the matter was the
contract between the parties. What was the contract between the parties? It was
to pay P3,944 to the creditor Carlos Sandico by the debtors, the predecessors in
interest of the plaintiffs. What was the money or currency then contemplated or
agreed upon by and between the parties? It could not have been the Japanese
military or war notes; it was the currency of the Government of the Philippines
which was used or in circulation at the time the contract was entered into.
“Payment of debts of money shall be made in the specie stipulated, and should it
not be possible to deliver such specie, in silver or gold coin legally current
in Spain (Philippines).” (Article 1170, Civil Code.)[1]
As already stated, the Court of Appeals did not order the
payment of the antichretic debt or equitable mortgage of Carlos Sandico in or by
means of Japanese military or war notes. It could not have done so, because the
contract stipulated that payment of the debt was to be in Philippine money, the
currency at the time the contract was entered into; because the Japanese army of
occupation was not authorized to change or alter contractual rights and
obligations but on the contrary it was enjoined to respect private property as
well as contractual rights and obligations;[2] and because there was no prohibition by
the Japanese Army of occupation of the use of the Philippine currency.[3] Only that as bad money drives away the
good one, Philippine money because of its value was hoarded and for that reason
withdrawn from circulation.
As to the insinuation that the creditor or mortgagee, Carlos
Sandico, should have appealed from the judgment of the Court of Appeals rendered
on 8 July 1944 if he was not satisfied with it, I say that as there was in the
judgment no specific direction that the debt could be paid off in Japanese
military or war notes, the creditor or mortgagee, Carlos Sandico, had the right
to rely on the terms of the contract with his debtors, to wit: that it was to be
paid in the lawful money agreed upon by them. Hence there was no need to appeal
from the judgment rendered by the Court of Appeals. Morever, the conditions of
the country at the time said judgment was rendered prevented the creditor from
taking an appeal.
The decision of the majority cannot be good law because the net
result would be that, contrary to what the parties had agreed, the debtors would
be released from their obligation and would recover possession of the parcel of
land, whereas the creditor would get nothing and would be deprived of his right
in the property in exchange for nothing. At the time of the deposit (17 October
1944) by Ponciano Ong Lacson of the sum of P3,944 in Japanese military or war
notes, these were already worthless and valueless, bombings and strafings in the
province of Pampanga by the United States Armed Forces having begun on the 21st
day of September 1944. It is a clear case of deprivation of a person’s property’
or right in violation of the contract and the law. It is difficult to conceive a
worse iniquity and travesty of justice than the one sanctioned by the majority
of the Court. And the irony of it is that it is an injustice committed in the
name of Justice. I cannot give my assent to a judgment that deprives a creditor
of his credit or right for the benefit of debtors who, taking advantage of the
abnormal situation when Japanese military or war notes could be acquired for
nothing or gotten for the asking because they were worthless and valueless, paid
off a valid, legitimate and lawful debt, the payment of which it was agreed
would be by means of or in the currency used or in circulation at the time the
contract was entered into. The decision of the majority sanctions the payment
made with valueless and worthless Japanese military or war notes—an unlawful
paper money from the standpoint of the Commonwealth Government and of the
Republic of the Philippines. This Court should not in any manner, even in an
indirect way, sanction or give validity and legal effect to the acts of an
invader that has shown contempt to and trampled upon the rules and principles of
International Law. This Highest Court of the Republic is indirectly sanctioning
the immoral and unlawful act of a ruthless enemy that flooded the country with
military or war notes by giving validity and legal effect to a payment made with
such notes without the consent of the creditor. And the worst part of it is that
it does an injustice to one of its citizens by giving validity and legal effect
to a payment made with Japanese military or war notes which at the time of
payment were worthless and valueless. If Japan had finally triumphed and
conquered the Philippines, that payment would certainly have been validated by
the courts created and organized under its authority; but a court of the
Commonwealth or of the Republic should be the last to sanction such payment. By
requiring the debtors to pay now in lawful money no injustice would be done to
them, because they parted, with nothing of value when they paid the debt with
worthless and valueless Japanese military or war notes. Law, equity and justice
demand that they should be required to pay now in lawful money.
For these reasons I dissent.
The orders appealed from should be reversed and the lower court
directed to order the plaintiffs to pay to the defendant Carlos Sandico the sum
of P3,944, without interest.
[1] Castan, Derecho Civil Español Comun y Foral, Vol.
2, p. 518
[2] Article 46, Hague Convention IV
of 1907; Oppenheim’s International Law, Vol. 2, pp. 313, 341-342; Wheaton’s
International Law (7th Ed.), Vol. 2, pp. 247-248; Digest of International Law by
Hackworth, Vol. VI, p. 401.
[3] Proclamation of the Commander in
Chief of the Imperial Japanese Forces dated 10 January 1942, 1 Off. Gaz. (1942),
No. 1, pp. 9-10.