Yek Tong Lin Fire and Marine Insurance v. Philippine National Bank
REITERATIONFacts
The Antecedents: Appellant filed a complaint against appellee for P2,000.00 deposited during the Japanese occupation. The deposit originated from a settlement agreement concerning a claim against the estate of Santos Chua Hong. The estate agreed to sell real estate to Judge Arsenio Santos, and P2,000.00 from the proceeds was to be paid to appellant. The intestate court approved this agreement, directing the administratrix to sell the property and deposit P2,000.00 from the proceeds. This order was later amended to have the deposit made in the name of appellant's attorney in trust for appellant. Procedural History: Judge Santos issued a check for P2,000.00 against his pre-war current account with the Philippine National Bank (PNB) to appellant's counsel. Counsel deposited this check into a savings account opened with PNB in his name for appellant. After liberation, appellant attempted to withdraw the P2,000.00 but PNB refused, citing Executive Order No. 49, which declared deposits made during enemy occupation invalid. The Petition: The Municipal Court dismissed the complaint. The Court of First Instance of Manila also dismissed the complaint on appeal. The present appeal questions the validity of the deposit under Executive Order No. 49.
Issue(s)
Whether the deposit of P2,000, made via a check drawn against a pre-war account but credited to a new account during the Japanese occupation, is null and void under Section 2 of Executive Order No. 49.
Ruling
The Supreme Court affirmed the decision of the lower court, dismissing the complaint. The deposit was deemed null and void.
Ratio Decidendi
On Issue 1: The Supreme Court held that the presentation of the P2,000 check to the Philippine National Bank (PNB) and its subsequent credit to the appellant's savings account during the occupation was legally equivalent to a payment of the check followed by a redeposit. Applying the rule from 9 C.J.S. 698, the Court reasoned that when a bank receives a check drawn on itself as a deposit, it is as if the bank paid out currency over the counter and the holder immediately redeposited those funds. Because this 'redeposit' occurred during the Japanese occupation, it falls squarely under Section 2 of Executive Order No. 49, which invalidates deposits made during that period. The Court emphasized that while the source account of Judge Santos was pre-war, the transaction that created the appellant's credit was a distinct act performed during the enemy occupation. It is a matter of public knowledge that the currency in circulation during this time was Japanese military notes; thus, the bank credit created was in said currency. The Court also distinguished the present case from Milan v. Boucher, noting that the latter involved a mere assignment of a joint account, whereas the present case involved the withdrawal from one account to create an entirely new deposit in another name. Therefore, the PNB is not under obligation to pay the amount, as the deposit was legally extinguished by post-war executive mandate.
Main Doctrine
A deposit made during enemy occupation, even if represented by a check drawn against a pre-war account, is considered a deposit during the occupation and is subject to the provisions of Executive Order No. 49, rendering it null and void.