Facts:

• Petitioners: Nelia G. Ponce and Vicente C. Ponce
• Respondents: Court of Appeals and Jesusa B. Afable
• Date of Promissory Note: June 3, 1969
• Amount: P814,868.42, due by July 31, 1969, without interest
• Note Stipulations: 12% annual interest if unpaid, 10% attorney’s fee if litigated, first mortgage over properties upon non-payment
• Action: Complaint filed on July 27, 1970, in the Court of First Instance of Manila
• Defenses:
  • Dio: Denied borrowing, claimed signature obtained under false pretenses
  • Afable: Claimed note did not reflect true agreement, was an accommodation party
  • Mendoza: Admitted execution, claimed it resulted from usurious transactions
• Trial Court Ruling: In favor of Ponces, ordered payment of principal, interest, attorney’s fees, and costs
• Appeal: Afable argued transaction was illegal under Republic Act No. 529, invoking in pari delicto rule
• Court of Appeals: Initially affirmed trial court but later reversed, dismissing the complaint based on the illegality of the dollar payment agreement

Issue:

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Ruling:

• The Supreme Court set aside the Resolutions of the Court of Appeals.
• The Decision of the Court of First Instance of Manil...(Unlock)

Ratio:

• Republic Act No. 529: Prohibits payment in currency other than Philippine legal tender but does not invalidate the creditor’s claim for payment.
• Currency Discharge: Obligations can be discharged in Philippine currency.
• Promissory Note: Payable in Philippine currency, and the agreement to convert the dollar loan into pesos at the rate of P4.20 to $1.00 was valid.
• Original Intent: Even if the original intent was payment in dollars, the creditor could still recover the peso equivalent.
• Unjust Enrichment: Disallowing recovery would unjustly enrich the debtor at the creditor’s expense.
• Specific Currency: The promissory note did not contain any provision requiring...continue reading