JACINTO NOTOR, PETITIONER, VS. RAMON MARTINEZ, AS GUARDIAN OF THE INCOMPETENT, PEDRO MARTINEZ, AND THE COURT OF APPEALS, RESPONDENTS.

On February 28, 1943, Pio Martinez, as guardian of Pedro
Martinez, executed a promissory note for P2,000 in favor of Jacinto Notor, with
interest at 10 per cent annually, and payable within two years from said date.
In a mortgage executed on March 28, 1943, covering said note, it was furhter
provided that the contract was “renewable at the discretion of the mortgage,”
and that the mortgagor promised to pay the sum specified in the note “according
to the terms thereof”. Due to additional sums subsequently obtained from Jacinto
Notor, plus interest, the total indebtedness amounted as of January 29, 1945, to
P10,111.

Some time prior to this date, the guardian of pedro Martinez
offered to pay the debt, but hte creditor Jacinto Notor refused to accept the
payment, as a result of which the present action was instituted by the guardian
of Pedro Martinez in the Court of First Instance of Batangas, wherein, the
necessary amount was deposited. In the complaint (filed before the liberation of
the Philippines), it was prayed that the debtor be declared as having fully paid
his indebtedness to Jacinto Notor. After trial, the lower court, on August 18,
1945, (already after liberation) rendered judgment declaring that the plaintiff,
Ramon Martinez, as guardian of Pedro Martinez, had paid in full his indebtedness
to the defendant, Jacinto Notor, from the time he consigned the amount thereof
by depositing it with the clerk of court of First Instance of Batangas. From
this judgment, Jacinto Notor appealed to the Court of Appeals which, on November
25, 1947, rendered a decision affirming the judgemnt of the court of origin.
From the later decision, Jacinto Notor (the petitioner) has come to this court
in an appeal by way of certiorari. He alleges that the Court of Appeals erred in
holding (1) that there was a valid consignation; (2) that the respondent debtor
can pay off the mortgage within two years although the parties agreed “that this
contract is renewable at the discretion of the mortgagee”; and (3) that the
courts of the Commonwealth and their successors, the courts of the Philippine
Republic, have jurisdiction over the case.

It appearing from the stipulation of the parties that the
defendant Jacinto Notor “admits the allegations contained in the complaint in
sub-paragraphs 1, 3, 4, 5, and 6 and that “the only question to be raised in the
complaint is whether, according to the contract Exhibit A, the
defendant-mortagee has the right to renew or not the mortgage contract at his
discretion, as embodied in paragraph 2 of Exhibit A,” the herein petitioner
cannot now allege that there was no valid consignation. It is true that there is
no allegation in paragraph 5 and 6 of the complaint to the effect that there was
notice of consignation, as required by article 1177 of the Civil Code, but the
absence of such allegation is cured by the positive stipulation that the only
question to be raised is whether the creditor has the right to renew the
mortgage contract at his discretion. The first assignment of error is therefore
without merit.

It is the view of the herein petitioner that he has the
absolute right to renew the term of the promissory note and accordingly refuse
to accept payment form the debtor. It is noteworthy that hte note is payable
wihtin two years from February 28, 1943, and that the clause providing that the
contract is renewable at the discretion of the creditor, contains the condition
that the debtor promises to pay according to the terms of the promissory note.
Since at the time (prior to January 29, 1945) the promissory note in question
was undeniably in force, the debtor had the right thereunder to pay within two
years from February 28, 1943. The pact allowing payment within two years will be
meaningless, if the theory of the herein petitioner were correct. At any rate,
it is futile to speak of any renewal before the note had even matured and unless
the debtor was unable to pay within the original term of two years. The second
assignment of error is also untenable.

There can be no doubt as to the jurisdiction of the courts of
the Commonwealth and of the Republic. In the case of Co Kim Cham vs. Valdez Tan
Keh, 75 Phil., 113, 371; 41 Off. Gaz., 779, we have held that the judicial acts
and proceedings of the courts of justice during the Japanese military occupation
which are not of a political complexion, were good and valid and, by virtue of
the principle of postliminy in international law, remained good and valid after
the liberation of the Philippines. The litigation between the parties herein is
certainly not of a political complexion, since it involves merely their civil
rights, and it is immaterial whether the currency in dispute was Japanese
military notes. At any rate, the tender of payment was made during the Japanese
military occupation when said military notes were legal tender. Under the rules
of Public International Law, the right of the military occupant, in the exercise
of his governmental power, to issue military currency as legal tender has never
been seriously questioned. (Haw Pia vs. China Banking Corporation, 80 Phil.,
604; 45 Off Gaz. (Supp. to No. 9), 229; Philippine Trust Company vs. Araneta, G.R. No. L-2734, March 17, 1949^[1]). In the
case of Haw Pia vs. China Banking Corporation, supra, we have already recognized
the validity of a payment of a mortgage indebtedness in Japanese military notes.
This has to be so, because “the law made by the occupant within his admitted
power, whether morally justifiable or not will bind any member of the occupied
population as against any other member of it, * * * as far as it produces an
effect during the occupation.” (Hilado vs. De la Costa and Philippine National
Bank, G.R. No. L-150, April 30, 1949^[2]). In the case at bar we are not
authorizing the circulation of Japanese military notes, as legal tender at
present, but we are merely giving effect to a payment that was valid and binding
at the time it was made. The third assignemtn of error is likewise without
merit.

Wherefore, the appealed decision of the Court of Appeals is
affirmed with costs against the herein petitioner. So ordered.

Moran, C.J., Ozaeta, Feria, Bengzon, Tuason,
Montemayor, and Reyes, JJ., concur.

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[1] 83 Phil., 132.

[2] 83 Phil., 471.