SIMEON DEL ROSARIO vs.

THE SHELL COMPANY OF THE PHILIPPINES LIMITED

Del Rosario vs. Shell Company of the Phils. Limited
No. L-28776 / Aug. 19, 1988.

FACTS:
1. 1965 - The parties herein entered into a Lease Agreement for a parcel of land in Albay at a monthly rental of (P250.00).
Paragraph 14 of said contract of lease provides: In the event of an official devaluation or appreciation of the Philippine peso,
the rental herein shall be adjusted in accordance with provisions of any law or decree declaring such devaluation or
appreciation as may specifically apply to rentals."

2. November 1965 - President Macapagal promulgated EO No. 195 1 titled "Changing the Par Value of the Peso from
US$0.50 to US$0.2564103.
By reason of this Order, plaintiff Simeon Del Rosario demanded from Shell alleged increase in the monthly rentals from
P250.00 a month to P487.50 a month. Defendant company failed to pay the increased monthly rentals, hence a complaint
was filed by Simeon.

3. Del Rosario filed complaint against Shell, because of failure of Shell to pay, when it was stated in the contract that there
would adjustment if peso is devalued, which is what happended when Pres Macapagal issued the EO. Del Rosario
contended that beneficient Executive Order No. 195 in effect decreased the worth or value of our currency, there has taken
place a "devaluation" or "depreciation" which would justify the proportionate increase of rent.
4. CFI: in dismissed complaint stating EO No. 195, has not officially devalued the Philippine peso but merely modified the
par value of the peso.
5. Del Rosario filed instant petition with SC>

ISSUE: WoN there has been dimunition of purchasing power of peso after the issuance of Executive Order No. 195, thus
entitling the petioner an increase in rentals. --YES

RULING:
CFI averred: It will be noted that devaluation as defined legally is an official act of the government (as when a law is enacted
thereon) and refers to a reduction in metallic content e.g. gold. Depreciation on the other hand, can take place with or without
an official act, and does not depend on metallic content (although depreciation may be caused by devaluation).

(ELAM: CFI is saying that the EO is only adjustment of the value of peso, and it did not cause the devaluation, or decrease of
value of metallic content, which is the subject contemplated in the contract. . . . Par 14 states ---
“14. In the event of an official devaluation or appreciation of the Philippine currency the rental specified herein shall be
adjusted in accordance with the provisions of any law or decree declaring such devaluation or appreciation as may specifically
apply to rentals.”

Since hindi naman daw ito devaluation, wala dapat adjustmet)

Court ruled (with Del Rosario):

Court came with conclusion that the decrease in value of the currency due to EO 195 is precisely the situation or event
contemplated by the parties in their contract; accordingly an upward revision of the rent is called for.

While no express reference has been made to metallic content, there nonetheless is a reduction in par value or in the
purchasing power of Philippine currency.

Even assuming there has been no official devaluation as the term is technically understood, the fact is that there has been a
diminution or lessening in the purchasing power of the peso, thus, there has been a "depreciation" (opposite of "appreciation").

Moreover, when laymen unskilled in the semantics of economics use the terms "devaluation" or "depreciation" they certainly
mean them in their ordinary signification — decrease in value.

Hence as contemplated, the parties herein in their lease agreement, the term "devaluation" may be regarded as synonymous
with "depreciation," for certainly both refer to a decrease in the value of the currency.

The rentals should therefore by their agreement be proportionately increased.

DISPOSITION:
Reversed.