Feliciano A. Cruz v.

Auditor General
L-12233, May 30, 1959

FACTS: During the Japanese occupation, Cruz wanted to purchase a lot made available to the public by
the government (Rural Prog. Adm.). The lot was the Sta. Clara Estate in Sampaloc, Manila. Pursuant to
government requisites, Cruz has to pay P1,160 in Japanese money as “deposit.” After liberation, he
sought the delivery to him of the lot. In the meantime, he was required to pay the WHOLE purchase
price. He now sues for the value paid during the Japanese occupation. The Aud. Gen. refused on two
grounds: Firstly, under Ex. Order No. 49, “deposits” were considered void. Secondly, the loss of the
“deposits” by a fortuitous event must be borne by the depositor.

ISSUE: WON a contract of deposit was constituted?

HELD: Cruz can recover for what he gave was not really a deposit (a real contract), but an advance
payment. Moreover, Ex. Order 49, which speaks of “bank deposits” applies merely to banks, who were
then under a sort of compulsion to accept “deposits.” Here, the Rural Progress Adm. was under no
compulsion. If at all, it was Cruz who was compelled to pay the deposit required. Cruz, however, should
be credited only with the value in the Ballantyne Scale, as the deposit could have been returned during the
war.

Source: CIVIL CODE of the PHILIPPINES ANNOTATED Vol. IV Obligations and Contracts by. PARAS
2008 Edition, pp. 386-387.

Q: What is the nature of advance payment in a contract of sale?

A: A so called deposit of an advance payment in the case of sale is not the deposit contemplated in under
Art. 1962. It is that advance payment upon which ownership is transferred to the seller once it is given
subject to the completion of payment by the buyer under an agreement. (Cruz vs. Auditor General, No. L-
12233, May 30, 1959)

Source: UST Golden Notes - Credit Transactions.pdf, p. 388

xxx if a monetary obligation was contracted during the Japanese occupation and is payable within a
specified period which covers partly said occupation and partly after liberation such that its repayment
may be made any time before the termination of the war, the repayment should be made in Philippine
currency convertible under the Ballantyne scale of values and not entirely in accordance with the legal
tender at the time of repayment. xxx

Source: Cited in Aguilar v.s Miranda, GR No. L-16510, Nov 29, 1961