EVERETT STEAMSHIP CORPORATION, PLAINTIFF AND APPELLEE, VS. BANK OF THE PHILIPPINE ISLANDS, DEFENDANT AND APPELLANT.

This case was submitted to the Court of First Instance of
Manila on an agreed statements of facts the pertinent parts of which read as
follows:

“That plaintiff is a corporation duly organized and existing
under find by virtue of the laws of the Philippines, with principal offices at
223 Dasmariñas, City of Manila, Philippines; and that the majority of
stockholders of the plaintiff corporation are American and British citizens;

“That defendant is a banking corporation duly organized and
existing under and by virtue of the laws of the Philippines, with principal
offices at Plaza Cervantes, City of Manila, Philippines;

“That sometime before December, 1941, the plaintiff opened and,
since then maintained a deposit in current account with the defendant, which
account, at the close of banking hours on December 29, 1941, had a valid balance
of P53,175.51, Philippine currency;

“That during the period of Japanese occupation of Manila, the
officers of the plaintiff corporation were interned by the Japanese Army in the
University of Santo Tomas Internment Camp, Manila;

“That between December 29, 1941, and February 3, 1945, the
plaintiff corporation has not availed nor attempted to avail itself of said
deposit in current account with the defendant;

“That on October 4, 1943, the Director of the Department of
General Affairs of the then Japanese Military Administration in the Philippines,
promulgated ZAI No. 257, ordering the local banks to transfer to the Bank of
Taiwan, Ltd., as the depository of the Bureau of Enemy Property Custody, all
deposit account of hostile people (including those of corporation);

“That on or around October 8, 1943, the defendant bank in
compliance with ZAI Order 257, turned-over to the Bank of Taiwan, Ltd., Manila,
the aforesaid balance of plaintiff’s account with it, including the registry and
identification cards, as well as all other papers related to said account, as
non-combatant enemy property;

“That plaintiff’s account with the defendant was transferred or
paid by the defendant to the Bank of Taiwan on October 9, 1943 by defendant’s
Check No. 3474 drawn by defendant in favor of the Bank of Taiwan in the sum of
P53,175.51;

“That on July 18, 1946, plaintiff presented to the defendant
bank for honor its check No. 3976 for the sum of P53,175.51 and the defendant
bank refused to honor plaintiff’s check for the reason that on or about October
8, 1943, the defendant bank was ordered against its will, to tarn over to the
Bank of Taiwan, Ltd., Manila, as the depositary of the Bureau of Enemy Property
Custody, the aforesaid balance of plaintiff’s account with it, including the
registry and identification cards, as well as other papers related to said
account, in accordance with order ZAI No. 257 of the aforesaid Japanese Military
Administration.”

The lower court rendered a judgment sentencing the defendant to
pay the plaintiff the sum of P53,175.51, which was the balance of the
plaintiff’s deposit in current account with the defendant bank at the close of
banking hours on December 29, 1941, with legal interest up from July 6, 1946,
until fully paid, and the costs.

The case of Haw Pia vs. China Banking Corporation No. 71164 of
the Court of First Instance of Manila, decided by the said Court of First
Instance on March 13, 1943, in favor of the defendant, was then pending on
appeal in this Supreme Court, L-554, (45 Off. Gaz. [Supp. to No. 9], 229), and
the attorneys for the plaintiff-appellee in their brief filed with this Court in
the instant case submitted the following:

“Contrary to the assertions of defendant-appellant, this case
is analogous to Haw Pia vs. China Banking Corporation, G. R. No. L-554, now
pending before this Honorable Court. The slight difference in the factual
situation between this case and the Haw Pia case is insignificant for, in the
final analysis, the ultimate issue of facts and the general applicable
principles in both cases are basically the same. If we understand correctly the
argument in. the Haw Pia case, it is there contended by the China Banking
Corporation that the collection by the Bank of Taiwan, Ltd., as liquidator of
the China Banking Corporation, of the mortgage credit which it had against Haw
Pia, amounted to a confiscation of said credit by the Japanese Military
authorities. It is further urged by the China Banking Corporation that the
payment by Haw Pia to the Bank of Taiwan, Ltd. was null aid void, and did not
discharge Haw Pia’s mortgage obligation.

“In the instant case, the issue involved is whether the
Japanese Military Administration could validly require defendant-appellant to
transfer to the Bank of Taiwan, Ltd., as official depository of the Bureau of
Enemy Property Custody, the balance of plaintiff-appellee’s current account with
defendant-appellant. It is the contention of plaintiff-appellee that the
transfer by defendant-appellant to the Bank of Taiwan, Ltd. of the balance of
its pre-war account amounted to a confiscation of plaintiff-appellee’s credit
against defendant-appellant. It may, therefore, be seen that the only difference
between the two cases is that in the Haw Pia case, the victim of the
confiscatory act is a bank, while in the instant case, the victim is a
depositor. We, therefore, take the view that both the Haw Pia case and the
instant case should be governed by the same decisive principles of law.”
(Plaintiff’s brief, pages 4 and 5.)

Attorneys for the appellee are correct in stating that the case
at bar is analogous to that of Haw Pia, vs. China Banking Corporation, and that
the “slight difference in the factual situation between this case and the Haw
Pia case is insignificant for, in the final an the ultimate issue of facts and
the general applicable principles in both cases are basically the same,” and
therefore, “the Haw Pia case and the instant case should be governed by the same
decisive principles of law.”

In the Haw Pia case the Japanese Military Administration
ordered the liquidation of the local enemy banks, among them the China Banking
Corporations, and authorized the Bank of Taiwan, which was the depository or
custodian of the enemy property, to liquidate the business of said corporation
and to collect and keep the debts due to the Bank from its debtors, because a
bank had to be liquidated before its asset or properties could be seized or
impounded. In the present case, by order of the Japanese Military
Administration, the plaintiff’s deposit balance with the defendant Bank was
transferred or paid by the defendant to the Bank of Taiwan designated by ZAI
Order No. 257 of the Japanese Military Administration as depository of Enemy
Property Custody of all deposit accounts of hostile people including those of
corporations. The question involved in the Haw Pia case was whether or not the
collection of Haw Pia’s debt to the China Banking Corporation by the Bank of
Taiwan by order of the Japanese Military Administration was a confiscation of
the defendant bank’s credit; and the question involved in the present case is
whether or not the transfer or payment by the defendant bank to the Bank of
Taiwan of the plaintiff’s credit or deposit accounts, by order of the Japanese
Military Administration was a confiscation of said credit.

This Court having ruled in the Haw Pia case that the collection
by the Bank of Taiwan of the China Banking Corporation’s credit from the latter
debtor by order of the Japanese Military Administration was not a confiscation
but a mere sequestration of enemy’s private personal property, and therefore the
payment by the plaintiff to the Bank of Taiwan was valid and released his
obligation to the defendant Bank, it follows that the transfer or payment by the
defendant bank, to the Bank of Taiwan of plaintiff’s deposit, by order of the
Japanese Military Administration was valid and released the defendant’s
obligation to the plaintiff.

In view of the foregoing, the judgment appealed from is
reversed and the defendant is absolved from the complaint.

Moran, C.J., Paras, Bengzon, Montemayor, and Reyes,
JJ., concur.

PERFECTO, J.:

We concur upon the same grounds in our opinion in the Haw Pia
case.

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DISSENTING

TUASON, J.:

I dissent on the same general principles and reasons stated in
Mr. Justice Hilado’s dissenting opinion in Haw Pia vs. China Banking
Corporation, G. R. No. L-554, and in my dissenting opinion in Philippine Trust
Company vs. Araneta, G. R. No. L-2734.