[ G.R. No. L-28776. August 19, 1988 ] 247 Phil. 520
SECOND DIVISION
[ G.R. No. L-28776. August 19, 1988 ]
SIMEON DEL ROSARIO, PLAINTIFF-APPELLANT, VS. THE SHELL COMPANY OF THE PHILIPPINES LIMITED, DEFENDANT-APPELLEE. D E C I S I O N
PARAS, J.:
The antecedent relative facts of this case are as follows:
On September 20, 1960 the parties entered into a Lease Agreement whereby the plaintiff-appellant leased a parcel of land known as Lot No. 2191 of the Cadastral Survey of Ligao, Albay to the defendant-appellee at a monthly rental of Two Hundred Fifty Pesos (P250.00).
Paragraph 14 of said contract of lease provides:
“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.”
On November 6, 1965, President Diosdado Macapagal promulgated Executive Order No. 195[1] titled “Changing the Par Value of the Peso from US$0.50 to US$0.2564103 (U.S. Dollar of the Weight and Fineness in Effect on July 1, 1944). This took effect at noon of November 8, 1965.
By reason of this Executive Order No. 195, plaintiff-appellant demanded from the defendant-appellee an increase in the monthly rentals from P250.00 a month to P487.50 a month.
Defendant-appellee refused to pay the increased monthly rentals.
On January 16, 1967, plaintiff-appellant filed a complaint (Civil Case No. 68154) with the CFI of Manila, Branch XVII praying that defendant-appellee be ordered to pay the monthly rentals as increased by reason of Executive Order 195 and further prayed that plaintiff-appellant be paid the following amounts: The difference between P487.50 and P250.00 from noon of November 8, 1965 until such time as the defendant-appellee begins to pay the adjusted amount of P487.50 a month; the sum of P20,000.00 as moral damages; the sum of P10,000.00 as exemplary damages; and the sum of P10,000.00 as attorney’s fees and the costs.
On January 8, 1968 the trial court in dismissing the complaint stated:
“x x x in the opinion of the Court, said Executive Order No. 195, contrary to the contention of the plaintiff, has not officially devalued the Philippine peso but merely modified the par value of the peso from US$.50 to US$0.2564103 (U.S. Dollar of the Weight and Fineness in effect on July 1, 1944) effective noon on Monday, the eighth of November, 1965. Said Executive Order certainly does not pretend to change the gold value of the Philippine peso as set forth in Sec. 48 of the Central Bank Act (R.A. 265), which is 7-13/21 grains of gold, 0.900 fine. Indeed, it does not make any reference at all to the gold value of the Philippine peso.” (pp. 25-26, Record on Appeal; p. 13, Rollo)
In view of the trial court’s refusal to increase the rental, petitioner brought the instant petition on the theory that because 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.
Hence this appeal, with the following two-pronged assignment of errors:
I. The trial court erred in holding that Executive Order No. 195 has not officially devalued the Philippine peso.
II. The trial court erred in dismissing the complaint.
After a study of the case, We have come to the conclusion that the resultant decrease in the par value of the currency (affected by Executive Order No. 195) is precisely the situation or event contemplated by the parties in their contract; accordingly an upward revision of the rent is called for.
Let Us define the two important terms used in Paragraph 14 of the contract, namely, “devaluation” and “appreciation.”
(a) Sloan and Zurcher’s classic treaties, “A Dictionary of Economics,” 1951 ed. pp. 80-81, defines devaluation (as applied to a monetary unit) as.
“a reduction in its metallic content as determined by law[2] resulting in “the lowering of the value of one nation’s currency in terms of the currencies of other nations” (Italics supplied)
Samuelson and Nordhaus, writing in their book, “Economics” (Singapore, Mc-Graw Hill Book Co., 1985, p. 875) say:
“when a country’s official exchange rate[3] relative to gold or another currency is lowered, as from $35 an ounce of gold to $38, we say the currency has been devalued.”[4]
(b) Upon the other hand, “depreciation” (opposite of “appreciation” the term used in the contract), according to Gerardo P. Sicat in his “Economics” (Manila: National Book Store, 1983, p. 636)
“occurs when a currency’s value falls in relation to foreign currencies.”
(c) It will be noted that devaluation is an official act of the government (as when a law is enacted thereon) and refers to a reduction in metallic content; depreciation can take place with or without an official act, and does not depend on metallic content (although depreciation may be caused by devaluation).
In the case at bar, while no express reference has been made to metallic content, there nonetheless is a reduction is par value or is 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 by 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.
WHEREFORE, the judgment appealed from is REVERSED and SET ASIDE, and the rental prayed for by the plaintiff-appellant is hereby GRANTED, effective on the date the complaint was filed. No award of damages and no costs.
SO ORDERED.
Melencio-Herrera (Chairperson), Padilla and Sarmiento, JJ., concur.