Jabalde v. Philippine National Bank
REITERATIONFacts
The Antecedents: Plaintiff-appellant Perfecto Jabalde sought to recover P10,000.00 allegedly deposited with the defendant-appellee Philippine National Bank. He claimed P5,000.00 was deposited on July 21, 1941, and another P5,000.00 on August 30, 1943, in mixed genuine Philippine currency and Japanese military notes. The complaint reproduced the entries from his passbook. Procedural History: The defendant's answer admitted the deposits but denied the dates, alleging the true dates were July 21, 1944, and August 30, 1944, and that the entries were altered by the plaintiff. The deposits, according to the bank, were all in Japanese military notes. After trial, the Court of First Instance of Cebu dismissed the case. The Petition: The plaintiff appealed, insisting on the earlier deposit dates and the nature of the currency. The case was elevated to the Supreme Court due to a constitutional question.
Issue(s)
Whether the Philippine National Bank's failure to deny under oath the entries in the passbook, as copied in the complaint, constitutes an admission of the document's genuineness and due execution. Whether the deposits were made on the dates alleged by the plaintiff (July 21, 1941, and August 30, 1943) in genuine or mixed Philippine currency, or on the dates alleged by the defendant (July 21, 1944, and August 30, 1944) in Japanese military notes. Whether Executive Order No. 49, Series of 1945, is valid and constitutional, considering arguments of impairment of contract, deprivation of property without due process, and its applicability outside an emergency period. Whether a subsequent promise by the bank to pay the depositor could be considered a novation of the contract of deposit.
Ruling
The Supreme Court affirmed the decision of the Court of First Instance, dismissing the plaintiff's complaint. The Court held that the wartime deposits were null and void under Executive Order No. 49 and that the plaintiff's claim was not supported by evidence, as the passbook entries were found to be tampered with.
Ratio Decidendi
On Issue 1: The Supreme Court held that while ordinarily, a failure to deny under oath the genuineness and due execution of a document constitutes an admission, this rule cannot apply in the present case. The plaintiff-appellant himself introduced evidence purporting to support his allegations of deposit on his preferred dates and, critically, offered no objection during the trial to the testimonies of defendant's witnesses and documentary evidence showing different dates of deposit. By these affirmative acts of presenting contradictory evidence and failing to object to the defendant's counter-evidence, the plaintiff-appellant waived the defendant's technical admission arising from its failure to deny under oath. The Court cited precedents such as Legarda Koh vs. Ongsiako and Yu Chuck vs. Kong Li Po, which establish that a party cannot later claim a procedural admission when they actively participated in litigating the very fact presumed to be admitted. On Issue 2: The Supreme Court found that the evidence preponderantly militated against the appellant's contention regarding the dates and currency of the deposits. The passbook, Exhibit "A", clearly showed tampering with the year entries, with photographic enlargements (Exhibits 3-A and 3-B) discernibly revealing "1944" for the first entry and inferring the same for the badly obliterated second entry. Expert witness testimony logically supported that both last digits were "4". The Court also agreed with the trial court's observation that it would be "puerile" for the bank to tamper with dates against its own interest. Furthermore, defendant's witnesses and business sheets (Exhibits 5, 6, and 7) established that appellant Perfecto Jabalde had a wartime "Free Account" and not a pre-war "controlled" account, and all deposits were made in Japanese military notes on the dates alleged by the bank, specifically July 21, 1944, and August 30, 1944. On Issue 3: The Supreme Court unequivocally upheld the validity and constitutionality of Executive Order No. 49, Series of 1945. Citing Hilado vs. De la Costa, 83 Phil. 471, the Court declared this "no longer an open issue," reaffirming that the Executive Order does not deprive the plaintiff of property without due process of law or impair the obligation of contract. The rationale is that EO 49 is a logical application of Executive Order No. 25, which declared Japanese military notes not legal tender in liberated territories, the validity of which is unquestioned. The Court further ruled that the promulgation of EO 49 was a valid exercise of the extraordinary powers granted to the President by the legislature under Commonwealth Act No. 671, specifically under Section 2(i) thereof. The argument that the rule should not apply because the complaint was filed when there was no more emergency was dismissed as "impertinent," as EO 49 was clearly intended for permanent application. On Issue 4: The Supreme Court held that assuming, arguendo, that the bank had promised to pay the plaintiff-depositor if it were indemnified by the United States or Japanese government, such a promise could not be considered a novation of the contract of deposit. This is because there was no contract to novate in the first place. The Court explained that one of the essential elements of a contract, the "object," was missing or had been rendered non-existent. The deposited military notes, being declared null and void by Executive Order No. 49, could not form the valid object of a contract, thereby precluding any subsequent agreement from constituting a novation of a non-existent primary obligation.
Main Doctrine
Wartime deposits made in Japanese military notes are declared null and void under Executive Order No. 49, Series of 1945, which is a valid exercise of extraordinary powers and does not violate the due process clause or the prohibition against impairment of contracts. Tampering with passbook entries to reflect earlier deposit dates is evident and militates against the depositor's claim.