PONCE vs. CA - G.R. No. L-49494

NELIA G. PONCE and VICENTE C. PONCE, vs. CA,

and JESUSA B. AFABLE

G.R. No. L-49494         May 31, 1979

On 3 June 1969, Jesus Afable, together with Feliza Mendoza and Ma. Aurora Dino executed a promissory note in favor of Nelia Ponce in the sum of P814,868.42 payable without interest on or before 31 July 1969, subject to an interest of 12% per annum if not paid at maturity, and an additional sum equivalent to 10% of total amount due as attorney’s fees in case it is necessary to bring suit, and the execution of a first mortgage on their properties or the Carmen Planas Memorial Inc. in the event of failure to pay the indebtedness in accordance with the terms. Upon failure of the debtors to pay, a complaint was filed against them for the recovery of the principal sum, plus interest and damages. The trial court rendered judgment in favor of Ponce. The Court of Appeals affirmed the decision of the trial court. On the second motion for reconsideration, however, the appellate court reversed the judgment and opined that the intent of the parties was that the note was payable in US dollars which is illegal, with neither party entitled to recover under the “in pari delicto” rule.

Issue: Whether or not n agreement to pay in dollars defeat a creditor’s claim for payment.

Held: If there is an agreement to pay an obligation in a currency other than Philippine legal tender, the same is illegal / null and void as contrary to public policy, pursuant to RA 529, and the most that can be demanded is to pay the said obligation in Philippine currency. It cannot defeat a creditor’s claim for payment, for such will allow a person to enrich himself inequitably at another’s expense. What RA 529 prohibits is the payment of an obligation in dollars. A creditor cannot oblige the debtor to pay in dollars, even if the loan was given in said currency. In such case, the indemnity is expressed in Philippine currency on the basis of the current rate of exchange at the time of payment.