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    Ponce vs. CA

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    Celine Garcia
    Nelia Ponce filed a case against Jesusa Afable and others to recover payment on a promissory note. Afable argued on appeal that the contract was illegal because it involved payment in US dollars. The Court of Appeals agreed, finding the transaction illegal and applying the in pari delicto rule to prevent recovery. However, the Supreme Court found that while payment in foreign currency was prohibited, the law still allowed recovery of the obligation in Philippine pesos. The intent of the law was to prevent unjust enrichment, not defeat valid claims. Therefore, the in pari delicto rule did not apply in this case.

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    Ponce vs. CA

    Uploaded by

    Celine Garcia
    205 views1 page
    Nelia Ponce filed a case against Jesusa Afable and others to recover payment on a promissory note. Afable argued on appeal that the contract was illegal because it involved payment in US dollars. The Court of Appeals agreed, finding the transaction illegal and applying the in pari delicto rule to prevent recovery. However, the Supreme Court found that while payment in foreign currency was prohibited, the law still allowed recovery of the obligation in Philippine pesos. The intent of the law was to prevent unjust enrichment, not defeat valid claims. Therefore, the in pari delicto rule did not apply in this case.

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    Ponce-vs.-CA

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    Nelia Ponce filed a case against Jesusa Afable and others to recover payment on a promissory note. Afable argued on appeal that the contract was illegal because it involved payment in US dollars. The Court of Appeals agreed, finding the transaction illegal and applying the in pari delicto rule to prevent recovery. However, the Supreme Court found that while payment in foreign currency was prohibited, the law still allowed recovery of the obligation in Philippine pesos. The intent of the law was to prevent unjust enrichment, not defeat valid claims. Therefore, the in pari delicto rule did not apply in this case.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    205 views1 page

    Ponce vs. CA

    Uploaded by

    Celine Garcia
    Nelia Ponce filed a case against Jesusa Afable and others to recover payment on a promissory note. Afable argued on appeal that the contract was illegal because it involved payment in US dollars. The Court of Appeals agreed, finding the transaction illegal and applying the in pari delicto rule to prevent recovery. However, the Supreme Court found that while payment in foreign currency was prohibited, the law still allowed recovery of the obligation in Philippine pesos. The intent of the law was to prevent unjust enrichment, not defeat valid claims. Therefore, the in pari delicto rule did not apply in this case.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

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

    THE HONORABLE
    COURT OF APPEALS, and JESUSA B. AFABLE, respondents.
    G.R. No. L-49494
    May 31, 1979

    MELENCIO-HERRERA, J.:

    FACTS:

    Private respondent Jesusa B. Afable, together with Felisa L. Mendoza and Ma. Aurora C. Di ño
    executed a promissory note in favor of petitioner Nelia G. Ponce in the sum of P814,868.42,
    Philippine Currency. It was further provided therein that should the indebtedness be not paid at
    maturity, it shall draw interest at 12% per annum, without demand; that should it be necessary to
    bring suit to enforce payment of the note, the debtors shall pay an amount due for attorney's fees;
    and, in the event of failure to pay the indebtedness plus interest in accordance with its terms, the
    debtors shall execute a first mortgage in favor of the creditor over their properties or of the Carmen
    Planas Memorial, Inc.

    Upon the failure of the debtors to comply with the terms of the promissory note, petitioners Ponce
    filed a Complaint for the recovery of the principal sum plus interest and damages.

    Defendant Dino’s Answer contained a general denial and averred that the aforementioned
    promissory note was obtained by plaintiffs on their assurance that it was only for formality.
    Defendant Afable likewise contended that the promissory note failed to express the true intent of
    the agreement of the parties that the entire obligation was to be paid by defendant Mendoza and
    that she only signed the promissory note as the President of Carmen Planas Memorial, Inc.

    The trial court rendered judgment in favor of petitioner.

    Respondent Afable appealed to the Court of Appeals. She argued that the contract under
    consideration involved the payment of US dollars and was, therefore, illegal; and that under the in
    pari delicto rule, since both parties are guilty of violating the law, neither one can recover.

    The Court of Appeals reversed the judgment of the trial court and opined that the intent of the
    parties was that the promissory note was payable in US dollars, and, therefore, the transaction was
    illegal with neither party entitled to recover under the in pari delicto rule.

    ISSUE:

    Whether or not the subject matter is illegal and against public policy, thereby warranting the
    application of the doctrine of in pari delicto

    HELD:

    No.

    It is to be noted that while an agreement to pay in dollars is declared as null and void and of no
    effect, what the law specifically prohibits is payment in currency other than legal tender. It does not
    defeat a creditor's claim for payment, as it specifically provides that "every other domestic
    obligation ... whether or not any such provision as to payment is contained therein or made with
    respect thereto, shall be discharged upon payment in any coin or currency which at the time of
    payment is legal tender for public and private debts." A contrary rule would allow a person to
    profit or enrich himself inequitably at another's expense.

    What is prohibited by RA No. 529 is the payment of an obligation in dollars, meaning that a
    creditor cannot oblige the debtor to pay him in dollars, even if the loan were given in said currency.
    In such a case, the indemnity to be allowed should be expressed in Philippine currency on the basis
    of the current rate of exchange at the time of payment.

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