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G.R. No. L-49494 May 31, 1979NELIA 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!aand 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 orbefore Jul( 31, 1969. /t was further provided therein that should the indebtedness be notpaid at 'aturit(, it shall draw interest at 10 per annu', without de'and 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 10 of the total a'ount due for attorne(4s fees and, in the event of failureto pa( the indebtedness plus interest in a&&ordan&e with its ter's, the debtors shalle%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 herhusband filed, on Jul( 7, 197, a "o'plaint with the "ourt of First /nstan&e of anilafor 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!a that she had signed saiddo&u'ent onl( as +resident of the "ar'en +lanas e'orial, /n&., and that she was notto in&ur an( personal obligation as to the pa('ent thereof be&ause the sa'e would berepaid b( defendant endo!a andor "ar'en +lanas e'orial, /n&

:;"8 rendered

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?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 togive 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 5a transa&tionswere the funds involved are the pro&eeds of loans or invest'ents 'ade dire&tl( orindire&tl(, through bona fide inter'ediaries or agents, b( foreign govern'ents, theiragen&ies and instru'entalities, and international finan&ial and banEing institutions solong as the funds are /dentifiable, as having e'anated fro' the sour&es enu'eratedabove 5b transa&tions affe&ting high priorit( e&ono'i& pro