Winship v. Philippine Trust
REITERATIONFacts
The Antecedents: Prior to December 1941, Eastern Isles Import Corporation and Eastern Isles, Inc., both Philippine corporations with capital stock owned by American citizens except for one share each, maintained current account deposits with Philippine Trust Company. As of December 29, 1941, the balances were P51,410.91 and P34,827.74, respectively. Eastern Isles, Inc. made a withdrawal of P204.37 on June 10, 1942. On October 4, 1943, the Japanese Military Administration ordered the transfer of all deposit accounts of hostile peoples (including corporations) to the Bank of Taiwan, and Philippine Trust Company was specifically directed to comply. On September 29, 1944, Philippine Trust Company transferred and paid the credit balances of the subject accounts to the Bank of Taiwan in compliance with this order. Procedural History: The pre-war current deposit accounts were subsequently transferred to S. Davis Winship. On August 12, 1947, Winship presented checks to Philippine Trust Company for the aforesaid deposits, but the company refused payment. Consequently, on September 6, 1947, Winship filed an action against Philippine Trust Company to recover the deposited sums. The defendant bank invoked the order of the Japanese Military Administration as its defense. The Court of First Instance of Manila upheld the bank's contention and dismissed the complaint, and the plaintiff appealed. The Petition: The plaintiff appealed the decision of the Court of First Instance, arguing that the defendant bank should still be liable for the deposited amounts.
Issue(s)
Whether the Philippine Trust Company was released from its obligation to the depositors (or their transferee) by transferring the deposit accounts to the Bank of Taiwan pursuant to an order from the Japanese Military Administration. Whether the Eastern Isles, Inc. and Eastern Isles Import Corporation were considered hostile entities by the Japanese Military Administration.
Ruling
The Supreme Court affirmed the appealed judgment, dismissing the complaint. The Court held that the Philippine Trust Company was released from its obligation to the depositors or their transferee because it had transferred the deposit accounts to the Bank of Taiwan in compliance with the order of the Japanese Military Administration. The Court also affirmed that the Eastern Isles, Inc. and Eastern Isles Import Corporation were considered hostile entities due to their controlling stockholders being American citizens.
Ratio Decidendi
On the issue of the release of obligation: The Court reiterated its pronouncement in Everett Steamship Corporation vs. Bank of the Philippine Islands, which cited the ruling in the Haw Pia case. In Haw Pia, the collection by the Bank of Taiwan of a credit from a debtor, by order of the Japanese Military Administration, was deemed not a confiscation but a mere sequestration of enemy's private personal property. Therefore, payment to the Bank of Taiwan was valid and released the obligation to the original creditor. Applying this principle, the Court found that the transfer of the plaintiff's deposit to the Bank of Taiwan, made by order of the Japanese Military Administration, was valid and consequently released the defendant's obligation to the plaintiff. The stipulation by the parties that the defendant transferred the deposits in compliance with the order of the Japanese Military Administration was given significant weight, making such act binding on the company. The defendant corporation had not impugned the validity of this transfer. On the issue of hostile character: The Court applied its ruling in Filipinas Compañia de Seguros vs. Christern Henefeld and Co., Inc., which established that the nationality of a private corporation is determined by the character or citizenship of its controlling stockholders. In this case, it was conceded that the controlling stockholders of Eastern Isles, Inc. and Eastern Isles Import Corporation were American citizens. Therefore, these corporations were correctly considered hostile entities by the Japanese Military Administration.
Main Doctrine
A banking institution that transfers deposit accounts to the Bank of Taiwan in compliance with an order from the Japanese Military Administration is released from its obligation to the original depositors or their transferees, provided the order was validly issued and the bank acted in compliance therewith. The nationality of a corporation, for the purpose of determining its status as an enemy or hostile entity, is determined by the citizenship of its controlling stockholders.