G.R. No.

L-49494 May 31, 1979

NELIA G. PONCE and VICENTE C. PONCE, petitioners,
vs.
THE HONORABLE COURT OF APPEAL, and !EUA B. AFABLE, respondents.
Romeo L. Mendoza & Gallardo S. Tongohan for petitioners.
Ramon M. Velayo for private respondent.

MELENCIO-HERRERA, J.:
Facts:
On June 3, 1969, private respondent Jesusa B. Afable, together with Felisa L. endo!a
and a. Aurora ". #i$o e%e&uted a pro'issor( note in favor of petitioner )elia *.
+on&e in the su' of +,1-,,6,.-., +hilippine "urren&(, pa(able, without interest, on or
before Jul( 31, 1969. /t was further provided therein that should the indebtedness be not
paid at 'aturit(, it shall draw interest at 1.0 per annu', without de'and1 that should it
be ne&essar( to bring suit to enfor&e pa( 'ent of the note, the debtors shall pa( a su'
e2uivalent to 130 of the total a'ount due for attorne(4s fees1 and, in the event of failure
to pa( the indebtedness plus interest in a&&ordan&e with its ter's, the debtors shall
e%e&ute a first 'ortgage in favor of the &reditor over their properties or of the "ar'en
+lanas e'orial, /n&.
For failure to &o'pl( with the ter's in the +), petitioners 5)elia *. +on&e and her
husband6 filed, on Jul( .7, 1973, a "o'plaint with the "ourt of First /nstan&e of anila
for the re&over( of the prin&ipal su' of +,1-,,6,.-., plus interest and da'ages.
Aurora #ino4s answer8 did not borrow a'ount be&ause signature was obtained b(
plaintiff on their assuran&e that it was 'ere for'alit(.
Jesus Afable Answer8 true agree'ent being that the obligation therein 'entioned would
be assu'ed and paid entirel( b( defendant Felisa L. endo!a1 that she had signed said
do&u'ent onl( as +resident of the "ar'en +lanas e'orial, /n&., and that she was not
to in&ur an( personal obligation as to the pa('ent thereof be&ause the sa'e would be
repaid b( defendant endo!a and9or "ar'en +lanas e'orial, /n&
:;"8 rendered <udg'ent ordering respondent Afable and her &o=debtors, Felisa L.
endo!a and a. Aurora ". #i$o , to pa( petitioners, <ointl( and severall(, the su' of
+,1-,,6,.-., plus 1.0 interest per annu' fro' Jul( 31, 1969 until full pa('ent, and a
su' e2uivalent to 130 of the total a'ount due as attorne(4s fees and &osts.
"A affir'ed ;rial "ourt. "A denied :. "A8 opined that the intent of the parties was
that the pro'issor( note was pa(able in >? dollars, and, therefore, the transa&tion was
illegal with neither part( entitled to re&over under the in pari deli&to rule.
/ssue8@O) the sub<e&t 'atter is illegal, thus do&trine of pari deli&to appliesA
Beld8 )o.
:eprodu&ed hereunder is ?e&tion 1 of :epubli& A&t )o. C.9, whi&h was ena&ted on
June 16, 19C38
?e&tion 1. Dver( provision &ontained in, or 'ade with respe&t to, an( do'esti&
obligation to wit, an( obligation &ontra&ted in the +hilippines whi&h provision purports to
give the obligee the right to re2uire pa('ent in gold or in a parti&ular Eind of &oin or
&urren&( other than +hilippine &urren&( or in an a'ount of 'one( of the +hilippines
'easured thereb(, be as it is hereb( de&lared against publi& poli&(, and null voi&e and
of no effe&t and no su&h provision shall be &ontained in, or 'ade with respe&t to, an(
obligation hereafter in&urred. ;he above prohibition shall not appl( to 5a6 transa&tions
were the funds involved are the pro&eeds of loans or invest'ents 'ade dire&tl( or
indire&tl(, through bona fide inter'ediaries or agents, b( foreign govern'ents, their
agen&ies and instru'entalities, and international finan&ial and banEing institutions so
long as the funds are /dentifiable, as having e'anated fro' the sour&es enu'erated
above1 5b6 transa&tions affe&ting high priorit( e&ono'i& pro<e&ts for agri&ultural industrial
and power develop'ent as 'a( be deter'ined b( the )ational D&ono'i& "oun&il whi&h
are finan&ed b( or through foreign funds1 5&6 forward e%&hange transa&tions entered into
between banEs or between banEs and individuals or <uridi&al persons1 5d6 i'port=e%port
and other international banEing finan&ial invest'ent and industrial transa&tions. @ith the
e%&eption of the &ases enu'erated in ite's 5a6 5b6, 5&6 and 5d6 in the foregoing
provision, in, whi&h &ases the ter's of the parties4 agree'ent shag appl(, ever( other
do'esti& obligation heretofore or hereafter in&urred whether or not an( su&h provision
as to pa('ent is &ontained therein or 'ade with= respe&t thereto, shall be dis&harged
upon pa('ent in an( &oin or &urren&( whi&h at the ti'e of pa('ent is legal tender for
publi& and private debts8 +rovided, ;hat if the obligation was in&urred prior to the
ena&t'ent of this A&t and re2uired pa('ent in a parti&ular Eind of &oin or &urren&( other
than +hilippine &urren&(, it shall be dis&harge in +hilippine &urren&( 'easured at the
prevailing rates of e%&hange at the ti'e the obligation was in&urred, e%&ept in &ase of a
loan 'ade in foreign &urren&( stipulated to be pa(able in the &urren&( in whi&h &ase the
rate of e%&hange prevailing at the ti'e of the stipulated date of pa('ent shall prevail All
&oin and &urren&(, in&luding "entral BanE notes, heretofore and hereafter issued and d
b( the *overn'ent of the +hilippines shall be legal tender for all debts, publi& and
private. 5As a'ended b( :A -133, ?e&tion 1, approved June 19, 196-6 5D'pahsis
supplied6.
/t is to be noted that while an agree'ent to pa( in dollars is de&lared as null and void
and of no effe&t, what the law spe&ifi&all( prohibits is pa('ent in &urren&( other than
legal tender. /t does not defeat a &reditor4s &lai' for pa('ent, as it spe&ifi&all( provides
that Fever( other do'esti& obligation ... whether or not an( su&h provision as to
pa('ent is &ontained therein or 'ade with respe&t thereto, shall be dis&harged upon
pa('ent in an( &oin or &urren&( whi&h at the ti'e of pa('ent is legal tender for publi&
and private debts.F A &ontrar( rule would allow a person to profit or enri&h hi'self
ine2uitabl( at another4s e%pense.