[ G.R. No. L-1927. May 31, 1949 ] 83 Phil. 890
[ G.R. No. L-1927. May 31, 1949 ]
CRISTOBAL ROÑO, PETITIONER, VS. JOSE L. GOMEZ ET AL., RESPONDENTS. D E C I S I O N
BENGZON, J.:
This petition to review a decision of the Court of Appeals was admitted mainly because it involves one phase of the vital contemporary question: the repayment of loans given in Japanese fiat currency during the last war of the Pacific. On October 5, 1944, Cristobal Roño received as a loan four thousand pesos in Japanese fiat money from Jose L. Gomez. He informed the latter that he would use the money to purchase a jitney; and he agreed to pay that debt one year after date in the currency then prevailing. He signed a promissory note of the following tenor:
“For value received, I promise to pay one year after date the sum of four thousand pesos (P4,000) to Jose L. Gomez. It is agreed that this will not earn any interest and the payment will be made in currency that will be prevailing by the end of the stipulated period of one year.” “In consideration of this generous loan, I renounce any right that may come to me by reason of any postwar arrangement, of privilege that may come to me by legislation wherein this sum may be devalued. I renounce flatly and absolutely any condition, term, right or privilege which in any way will prejudice the right engendered by this agreement wherein Atty. Jose L. Gomez will receive by-right his money in the amount of P4,000. I affirm that the legal tender, currency or any medium of exchange, or money in this sum of P4,000 will be paid by me to Jose L. Gomez one year after this date, October 5, 1944.”
On October 15, 1945, i. e, after the liberation, Roño was sued for payment in the Laguna Court of First Instance. His main defense was that his liability should not exceed the equivalent of 4,000 pesos “mickey mouse” money—and could not be 4,000 pesos Philippine currency, because the contract would be void as contrary to law, public order and good morals. After the corresponding hearing, the Honorable Felix Bautista Angelo, Judge, ordered the defendant Roño to pay four thousand pesos in Philippine currency with legal interest from the presentation of the complaint plus costs. On appeal the Court of Appeals in a decision written by Mr. Justice Jugo, affirmed the judgment with costs. It declared that Roño being a mechanic who knew English was not deceived into signing the promissory note, and that the contents of the same had not been misrepresented to him. It pronounced the contract valid and enforceable according to its terms and conditions. One basic principle of the law on contracts of the Civil Code is that “the contracting parties may establish any pacts, clauses and conditions they may deem advisable, provided they are not contrary to law, morals or public order.” (Article 1255.) Another principle is that “obligations arising from contract shall have the force of law between the contracting parties and must be performed in accordance with their stipulations” (Article 1091). Invoking the above proviso, Roño asserts this contract is contrary to the Usury Law, because on the basis of calculations by Government experts he only received the equivalent of one hundred Philippine pesos and now he is required to disgorge four thousand pesos or interest greatly in excess of the lawful rates. But he is not paying interest. Precisely the contract says that the money received “will not earn any interest.” Furthermore, he received four thousand pesos; and he is required to pay four thousand pesos exactly. The increased intrinsic value and purchasing power of the current money is consequence of an event (change of currency) which at the time of the contract neither party knew would certainly happen within the period of one year. They both elected to subject their rights and obligations to that contingency. If within one year another kind of currency became legal tender, Gomez would probably get more for his money. If the same Japanese currency continued, he would get less, the value of Japanese money being then on the downgrade. Our legislation has a word for these contracts: aleatory. The Civil Code recognizes their validity (see art. 1790 and Manresa’s comment thereon) on a par with insurance policies and life annuities. The eventual gain of Gomez in this transaction is not interest within the meaning of Usury Laws. Interest is some additional money to be paid in any event, which is not the case here, because Gomez might have gotten less if the Japanese occupation had extended to the end of 1945 or if the liberation forces had chosen to permit the circulation of the Japanese notes. Moreover, Roño argues, the deal was immoral because taking advantage of his superior knowledge of war developments Gomez imposed on him this onerous obligation. In the first place, the Court of Appeals found that he voluntarily agreed to sign and signed the document without having been misled as to its contents and “in so far as knowledge of war events was concerned” both parties were on “equal footing.” In the second place although on October 5, 1944 it was possible to surmise the impending American invasion, the date of victory or liberation was anybody’s guess. In the third place there was the possibility that upon re-occupation the Philippine Government would not invalidate the Japanese currency, which after all had been forced upon the people in exchange for valuable goods and property. The odds were about even when Roño and Gomez played their bargaining game. There was no overreaching, nor unfair advantage. Again Roño alleges it is immoral and against public order for a man to obtain four thousand pesos in return for an investment of forty pesos (his estimate of the value of the Japanese money he borrowed). According to his line of reasoning it would be immoral for the homeowner to recover ten thousand pesos (P10,000), when his house is burned, because he invested only about one hundred pesos for the insurance policy. And when the holder of a sweepstakes ticket who paid only four pesos luckily obtains the first prize of one hundred thousand pesos or over, the whole business is immoral or against public order. In this connection we should explain that this decision does not cover situations where borrowers of Japanese fiat currency promised to repay “the same amount” or promised to return the same number of pesos “in Philippines currency” or “in the currency prevailing after the war.” There may be room for argument when those litigations come up for adjudication. All we say here and now is that the contract in question is legal and obligatory. A minor point concerns the personality of the plaintiff, the wife of Jose L. Gomez. We opine with the Court of Appeals that the matter may involve a defect in procedure which does not amount to prejudicial error. Wherefore the appealed judgment will be affirmed with costs. So ordered. Moran, C. J., Ozaeta, Tuason, Montemayor, and Reyes, JJ., concur.