PHILIPPINE TRUST COMPANY, PETITIONER, VS. LUIS MA. ARANETA ET AL., RESPONDENTS.

This is an appeal by certiorari filed by the petitioner
Philippine Trust Co. a banking corporation from the decision of the Court of
Appeals, which affirms the judgment of the Court of First Instance of
Manila.

Before the occupation of Manila by the Japanese military
forces, the respondent and appellee Luis Ma. Araneta was indebted to the
petitioner and appellant in the sum of P4,000, and as a collateral therefor,
said respondent pledged the certificates of stock listed in the decision of the
Court of First Instance. The balance of P3,683.60 was, upon demand of the
appellant, paid by the appellee on May 2, 1944, in Japanese military notes, but
the certificates of stocks pledged could not then be released, because according
to the appellant, at the outbreak of the war, they were turned over to the
American authorities and sent to the United States for safekeeping. After
liberation, appellee demanded from the petitioner the return of the certificates
of stocks, out the petitioner refused to do so, on the ground that the payment
in Japanese war notes was not valid.

A complaint was filed with the Court of First Instance of
Manila by the appellee against the appellant to recover the certificates of
stock in question, and the latter set up as defense that it accepted the payment
of the appellee’s obligation under duress, and therefore the payment was not
valid. The Court of First Instance rendered judgment in favor of the appellee on
the ground that the payment was voluntarily made and accepted, and therefore it
was valid and extinguished the appellee’s obligation to the appellant, and
ordered the latter to return to the former the certificates of stock listed in
the decision. On appeal from the decision of the lower court to the Court of
Appeals the decision was affirmed.

The appellant admits that, as testified to by the then acting
president of the petitioner during the Japanese occupation, “neither the
appellee nor the Japanese military authorities exercised any duress on the
appellee Bank to accept the payment.” But the appellant contends that there was
a collective and general duress exercised by the Japanese military occupant,
because the latter ordered that the war-notes may be used in making payments of
all kinds, and any attempt to interfere with the circulation of said notes, such
as rejection of payment with said notes will be considered as hostile and will
be punished severely (Proclamation dated January 3, 1942), and also ordered the
reopening of such banking institution (not enemy banks) as may be notified in
the City of Manila, one of them the appellant (Proclamation of January 23,
1942).

The question whether or not said orders constituted a
collective and general duress and invalidated the payment made by the appellee
to the appellant is a question of law, and not of fact, and for that, reason the
petitioner asks that the present appeal by certiorari be allowed, under Rule 46
of the Rules of Court which provides that questions of law may be raised in an
appeal by certiorari from a judgment of the Court of Appeals.

But even though such a question be raised the Supreme Court
has, according to said rule, discretion to dismiss the petition if the Court of
Appeals has decided a question in accord, with law or the applicable decision of
this Supreme Court. As the judgment of the Court of Appeals in so far as it
affirms the decision of the Court of First Instance which upholds the validity
of the payment under consideration is in accord with the decisions of this Court
in the cases of Laurel vs. Misa (77 Phil., 856), and Haw Pia vs. China Banking
Corporation, (80 Phil., 604), the appeal by certiorari must be dismissed.

In the case of A. Laurel vs. Misa, this Court held:

“Considering that, although the military occupant is enjoined
to respect or continue in force, unless absolutely prevented by the
circumstances, those laws that enforce public order and regulate the social and
commercial life of the country, he has, nevertheless, all the powers of a de
facto government and may, at his pleasure, either change the existing laws
or make new ones when the exigencies of the military service demand such action,
that is, when it is necessary for the occupier to do so for the control, of the
country and the protection of his army, subject to the restrictions or
limitations imposed by the Hague Regulations, the usages established by
civilized nations, the laws of humanity and the requirements of public
conscience (Peralta vs. Director of Prisons, supra; 1940 U. S. Rules of
Land Warfare, 76, 77); and that, consequently, all acts of the military occupant
dictated within these limitations are obligatory upon the inhabitants of the
territory, who are bound to obey thorn, and the laws of the legitimate
government which have not been adopted, as well and those which, though
continued in force, are in conflict with such laws and orders of the occupier,
shall be considered as suspended or not in force and binding upon said
inhabitants;” (Laurel vs. Misa, G. R. No. L-409,^[1] pp. 3-4, minute
resolution.)

And in the case of Haw Pia vs. China Banking Corporation we held
that, under the rules of Public International Law, the right of the military
occupant, in the exercise of his governmental power, to order the liquidation of
enemy banks and the reopening of others in the occupied enemy territory, as well
as to issue military currency as legal tender, has never been seriously
questioned.

In view of the foregoing, it is evident that the payment made
by the respondent-appellee and accepted by the petitioner and appellant during
the Japanese occupation in compliance with the said orders of the Japanese
military occupant, can not be considered as made under a collective and general
duress, because an act done pursuant to the laws or orders of competent
authorities can never be regarded as executed involuntarily, or under duress or
illegitimate constraint or compulsion that invalidates the act.

Wherefore, the petition for certiorari is denied and the appeal
dismissed.

Moran, C.J., Paras, Pablo, Bengzon, Briones, and
Reyes, JJ., concur.

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CONCURRING

PERFECTO, J.:

We concur in the resolution dismissing the petition.

Upon the facts in this case, we do not believe in the existence
of the collective and general duress upon which the petition is premised. As
stated in the resolution, neither the appellee nor the Japanese military
authorities exercised any duress on petitioner to accept the payment in
controversy.

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DISSENTING

TUASON, J.:

I vote to give this appeal due course. It is extremely unfair
and unjust to the immediate parties and to prospective parties in numerous cases
of this nature, for this Court to dismiss this appeal without the benefit of a
full argument and without full deliberation in the light of all the
evidence.

This case is of very far-reaching importance. This Court’s
action, arrived at on the basis of the findings of the Court of Appeals alone,
might be taken as deciding, if it does not indeed actually decide, hundreds of
cases of payment of pre-war obligations to banks in Japanese war notes. It is a
matter of general knowledge that almost if not quite all such obligations were
liquidated under circumstances which constituted menacing if indirect threats of
severe punishment. It is also a matter of general knowledge that these payments
if approved would spell the complete brankruptcy of the payees. Under all legal
precepts and standards of morality and decency, the said payments are
indefensible. I refuse to be a party to the sanctioning of this mass
depradation. More it is a pity, because still more numerous ‘debts in favor of
private individuals, who can ill afford to lose what to many of then represent
life savings, will be adversely affected.

I maintain that Japanese war notes were not legal tender and
could not be made so by military orders. Accordingly, acceptance of payment in
that money under compulsion did not operate to satisfy the debt except to the
extant the creditor was benefited thereby.

The petitioner pleaded “general and collective duress.” This
plea should not be dismissed with a shrug of the shoulder. The point was not
touched in the appealed decision, and because of its direct bearing on other
payments involving millions, it is the duty of this Court to give it respectful
consideration. Such duress was real and imminent. The very order of the Japanese
High Command for the banks to open was an implied order to accept payments in
Mickey Mouse notes. And working as they did under the noses of Japanese officers
in or out of uniform, the ‘bank officials had no way of turning down the
payments without seriously risking their life or liberty. Had there been no
threat, express or implied, it is inconceivable that the banks would have
allowed outstanding pre-war obligations to be paid off, without at least a
protest on their part, in money which in the latter part of 1944 had very slight
value and in a few months more, as they knew, would be absolutely worthless.