FORTUNATO HALILI, PLAINTIFF-APPELLANT, VS. MARIA LLORET AND RICARDO GONZALES LLORET AS ADMINISTRATOR OF THE ESTATE OF THE LATE FRANCISCO GONZALES, DEFENDANTS-APPELLANTS.

Halili versus Lloret

The Case

This is a case about the execution of a final judgment, and about the maddening problem of fixing the value of money that the war had destroyed. Fortunato Halili sued to recover a deposit he had paid toward the purchase of several parcels of land belonging to the estate administered by Ricardo Gonzales Lloret. The Supreme Court had already ordered Lloret to return the money, but with a twist: the amount was to be adjusted according to the Ballantyne scale of values. The trouble was that the judgment did not say which month's scale should govern. This case is the sequel that answers that question, and it matters because it shows how a court fills a gap in a final judgment without reopening it, and how equity governs the choice of a conversion date.

Procedural History

The main case was decided by the Supreme Court in May 1954, ordering Ricardo Gonzales Lloret to pay Fortunato Halili the sum of 100,000 pesos, adjusted in accordance with the Ballantyne scale of values. Halili first sought execution in July 1957. Lloret opposed, arguing that the judgment was incomplete because it did not specify the date on which the scale should be applied. The trial court stayed execution and suggested that Halili have the matter clarified. Halili filed a motion for that purpose before the Supreme Court, but it was denied on the ground that the judgment had already become final. Proceedings continued in the trial court, which issued an order in September 1958 sustaining Halili's position that the conversion should follow the scale of values in June 1944. On Lloret's motion for reconsideration, the order was modified in October 1958, adopting the scale as of August 1944. Under the earlier order the judgment was worth 6,666 pesos and 33 centavos; under the amendatory order it was worth 4,000 pesos. Both parties appealed. Halili insisted on June 1944; Lloret said it should be January 1945, when the converted value was only 833 pesos and 33 centavos. The case reached the Supreme Court on those appeals.

Facts

The 100,000 pesos awarded in the main case represented a partial payment or deposit made by Halili to Gonzales Lloret on six parcels of land owned by the intestate estate of which Lloret was administrator. The lands were the subject of negotiations for their sale, and Halili, as prospective vendee, was represented by Attorney Teofilo Sauco. The check for that amount was delivered to Gonzales Lloret in June 1944 and deposited by him to his bank account forthwith.

The negotiations fell through before the contract of sale could be perfected, and suit for recovery was commenced after the war, culminating in the judgment now sought to be implemented. According to the evidence in the main case, when the transaction was called off because of the failure of Sauco to appear on the date set for his last conference with Lloret, the latter attempted to return the amount to Sauco on the second of August 1944. Sauco declined to accept it, on the pretext that he had another buyer willing to purchase the lands for 500,000 pesos, and that if that sale were carried out Lloret could simply deduct the amount from the purchase price.

The Supreme Court had already held in the main case that this offer to return did not relieve Lloret of liability, because his duty was to consign the money in court as required by law. His failure to do so made him answerable to Halili, subject to adjustment under the Ballantyne scale of values. The only remaining question was the date of that adjustment.

Issues

• Whether or not the conversion into Philippine currency of the amount awarded should follow the Ballantyne scale of values as of June 1944, as the plaintiff contends.
• Whether or not the conversion should follow the scale as of August 1944, as the trial court held in its amendatory order.
• Whether or not the conversion should follow the scale as of January 1945, as the defendant contends.

Applicable Provisions

The decision does not quote a statute; it construes its own prior judgment and applies the law on consignation. The governing rule on the defendant's duty is stated in the decision itself, quoting the main case:

His duty was to consign it in court as required by law.

This is the pivot of the whole case: the obligation to consign arose the moment the offer to return was refused, and that moment fixes the date of the liability to be adjusted.

Ruling

On the first issue, the Court rejected the plaintiff's position. In June 1944 no liability had yet attached, because the deposit was still held under a pending negotiation for sale. The conversion rate as of that month therefore cannot be applied.

On the second issue, the Court upheld the trial court. The duty to make the consignation in court arose when the offer to return the money was not accepted, which was in August 1944. It was the defendant's failure to perform that duty that made him answerable to the plaintiff, and it was the liability as of that time, August 1944, that should be adjusted. The Court quoted its own main decision:

That offer to return, in our opinion, cannot have the effect of relieving Lloret from liability.

On the third issue, the Court rejected the defendant's position on equitable grounds. It would have been unjust and inequitable for the defendant to wait until January 1945 before making the consignation, knowing as he did that the Japanese war currency was fast depreciating in value, and considering that the defendant may be presumed to have used and benefited from that money in August 1944, when it was worth considerably more than in January 1945. A debtor cannot choose the date that suits his own depreciation.

Doctrine

First, when a final judgment fixes a liability subject to adjustment under the Ballantyne scale of values but omits the conversion date, the trial court may determine that date in execution proceedings without reopening the merits, because the judgment is clear enough on its face.

Second, the date of adjustment is the date the liability attached. Where the debtor's duty was to consign the money in court and he failed to do so, the liability attaches when the offer to return was refused, and that is the date whose scale of values governs.

Third, a debtor may not delay consignation to profit from the further depreciation of war currency. Equity presumes that he used and benefited from the money, and he is charged with its value at the time his duty arose.

Disposition

The trial court's amendatory order of October 1958 was affirmed, without pronouncement as to costs, so the defendant's liability was fixed at 4,000 pesos under the August 1944 scale.

Remember This

The line to memorize is that the liability as of the time it attached is what gets adjusted, and here that time was August 1944, when the offer to return was refused. Examiners use this case to test the Ballantyne scale, the rule on consignation, and the equitable principle that a debtor cannot profit from his own delay.