G.R. No. L-1927. May 31, 1949.

CRISTOBAL ROÑO, petitioner, vs. JOSE L. GOMEZ, ET AL., respondents.

FACTS

On October 5, 1944, during the Japanese occupation, Cristobal Roño borrowed P4,000 in Japanese fiat currency from Jose L. Gomez. The promissory note stipulated that Roño would repay the loan one year later in the currency then prevailing. Roño expressly renounced any future right to devaluation of the sum borrowed. After liberation, Gomez sued for payment of P4,000 in Philippine currency. Roño defended that his liability should only be the equivalent value of the Japanese war notes received, arguing the contract was contrary to law, morals, and public order. The trial court and the Court of Appeals ordered Roño to pay P4,000 in Philippine currency.

ISSUE

Whether the promissory note, requiring repayment of P4,000 in the currency prevailing after the war (which became Philippine currency), is valid and enforceable, or is void as contrary to law, morals, or public order.

RULING

The promissory note is valid and enforceable. The Supreme Court affirmed the decision of the Court of Appeals, ordering Roño to pay P4,000 in Philippine currency.

The contract is an aleatory contract recognized under the Civil Code, where the parties assumed the risk of a future change in currency. The eventual gain for the lender is not interest under the Usury Law, as it was a contingent gain dependent on an uncertain event (the change of currency), not a guaranteed additional sum. The Court found no overreaching or unfair advantage, as both parties were on equal footing regarding knowledge of war events, and the outcome was uncertain at the time of contracting. The contract’s terms, freely agreed upon, have the force of law between the parties under the principle of autonomy of contracts. The decision is limited to the specific stipulation to pay in the “currency then prevailing” and does not cover other forms of stipulations regarding repayment of Japanese war notes.

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