THE YEK TONG LIN FIRE & MARINE INSURANCE CO., LTD., PLAINTIFF AND APPELLANT, VS. PHILIPPINE NATIONAL BANK, DEFENDANT AND APPELLEE.

On November 15, 1948, appellant filed with the Municipal Court of
Manila a complaint against appellee seeking to recover the amount of
P2,000.00 deposited by appellant with appellee during the Japanese
occupation. The motion to dismiss interposed by appellee having been
denied, appellee filed its answer on August 1, 1949. On March 15, 1950,
after trial, the court rendered its decision dismissing the complaint
without special pronouncement, as to costs.

In due course, appellant perfected an appeal to the Court of First
Instance of Manila. On April 14, 1950, appellee filed its answer. After
the parties have submitted their evidence and their respective
memoranda, the lower court rendered decision on May 16, 1958 also
dismissing the complaint. Hence this appeal.

Sometime prior to the outbreak of the last war, special proceedings
were instituted before the Court of First Instance of Manila for the
administration and settlement of the estate of one Santos Chua Hong who
died intestate. In the course of the administration of said estate,
appellant filed a claim against the estate for the payment of the sum
of P3,000.00, plus interest and attorney’s fees, representing the
amount which appellant paid under a surety bond solicited by the
deceased during his lifetime in favor of the Mitsui Bussan Kaisha,
Ltd., a Japanese firm then engaged in business in the City of Manila. A
few months after the outbreak of the last war, or sometime in May,
1942, appellant and the administratrix of the estate agreed to settle
the claim extrajudically, said settlement consisting in the payment to
appellant of the sum of P2,000.00 in cash in full satisfaction of its
claim.

To carry out the settlement as above stated after a series of
negotiations had between the administratrix and Judge Arsenio Santos,
it was finally agreed that the estate would sell to Judge Santos a
piece of real estate belonging to the estate and that, out of the
proceeds of the sale, the sum of P2,000.00 would be paid to appellant.
Whereupon, the parties submitted to the intestate court the
corresponding motion embodying said agreement, Which was in due course
approved, the court authorizing the administratrix to sell the needed
property and directing that the amount of P2,000.00 to be taken from
the proceeds of the sale be deposited with the clerk of court of first
instance. This order was later amended upon petition of appellee by
directing that the amount of P2,000.00 which was to be paid to
appellant be deposited in the name of appellant’s attorney in trust for
said appellant.

Pursuant to the authority granted by the court, the administratrix
executed the necessary deed of sale in favor of Judge Arsenio Santos,
said deed of sale having been approved by the court. In conformity with
the agreement, Judge Santos, as buyer, issued a check for P2,000.00
against his pre-war credit balance on his current account with the
Philippine National Bank and said check was delivered to appellant’s
counsel. Then, counsel for appellant opened a savings account with
appellee and delivered to it for deposit to the credit of said savings
account the aforesaid check of P2,000.00 received from Judge Santos.
After liberation, or sometime prior to the filing of this complaint on
November 15, 1948, appellant attempted to withdraw from appellee the
aforesaid amount of P2,000.00, but appellee refused reasoning that
since said account was opened during the enemy occupation the deposit
was declared invalid by virtue .of Executive Order No. 49 dated June 6,
1945.

The issue to be determined is whether the Philippine National Bank,
in the light of the facts obtaining in this case, is under obligation
to pay appellant the sum of P2,000.00 which was deposited with it
durihg the enemy occupation in the name of counsel of appellant, or
whether said deposit shall be deemed null and void as coming within the
purview of Section 2 of Executive Order No. 49, as held by the trial
court.

Appellant contends that the sum of P2,000.00 which was supposedly
withdrawn from the current account of Judge Arsenio Santos and
deposited in the savings account of its counsel did not represent fresh
cash which came from outside sources and paid over the counter to
appellee bank, but rather it was good Philippine currency already in
the coffers of the bank at the time the deposit was made. Appellant
further contends that what was deposited by its counsel with the bank
was not Japanese currency but pure Philippine currency because the
check delivered to the bank was a check against the pre-war account of
Judge Santos. And because of these facts, appellant concludes that said
deposit cannot come within the purview of Section 2 of Executive Order
No. 49.

The contention has no merit. It has been shown that the check for
P2,000.00 issued by Judge Santos was presented to the bank and received
as a deposit and credit to the savings account of appellant’s counsel
during the Japanese occupation and as such such presentation is
tantamount to payment of the check just as if currency had been paid
over the counter and immediately redeposited. As a consequence thereof,
the amount of P2,000.00 was credited to the account of appellant’s
counsel under Pass Book No. 18990 during the Japanese occupation. Being
a deposit during the occupation, the same necessarily comes under
Section 2 of Executive Order No. 49.

“Where a check is presented by the payee or holder
to the bank on which it is drawn, and received as a deposit and
credited to his account, this amounts, in the absence of fraud, to a
payment of the check, just as if currency had been paid over the
counter and immediately redeposited.” (9 C.J.S., 698.)

The contention that what was deposited by appellant’s counsel was
not Japanese currency but pure and simple Philippine currency because
the check delivered for deposit was one drawn against the pre-war
account of Judge Santos cannot be entertained, for it is a matter of
public knowledge that the money in circulation during the occupation
was Japanese currency although at the time there was still little
Philippine money in circulation.

The case of Milan vs. Boucher, 189 N.E., 576-578, cited by
appellant, is not in point. In that case, it was held that under the
terms of the agreement whereby a husband and wife opened a joint
account giving to each the right to withdraw, the transfer from their
joint account to a trust account in the same bank made at the order of
the wife was held to be not a withdrawal but a mere assignment of the
deposit. In the present case, only a portion of the Santos’ account was
withdrawn and the amount so withdrawn was deposited in the name of
another depositor. As already held above, such withdrawal and deposit is tantamount to a payment over the counter and a redeposit in the name of the new depositor.

Wherefore, the decision appealed from is affirmed, with costs against appellant.

Paras, C. J., Bengzon, Labrador, Concepcion, Endencia, Barrera, and Gutierrez David, JJ., concur.
Montemayor, J., reserves his vote.