Everett Steamship Corporation v. Bank of the Philippine Islands
REITERATIONFacts
The Antecedents: Plaintiff Everett Steamship Corporation maintained a current deposit account with defendant Bank of the Philippine Islands (BPI) with a balance of P53,175.51 as of December 29, 1941. During the Japanese occupation, the officers of the plaintiff corporation were interned, and the corporation did not access its deposit. On October 4, 1943, the Japanese Military Administration issued ZAI Order No. 257, directing local banks to transfer deposit accounts of 'hostile people' to the Bank of Taiwan as a depositary for the Bureau of Enemy Property Custody. On or around October 8, 1943, BPI, in compliance with this order and against its will, transferred the plaintiff's deposit balance, along with related documents, to the Bank of Taiwan, Manila, via Check No. 3474. Procedural History: On July 18, 1946, plaintiff presented a check to BPI for the same amount, which BPI refused to honor, citing the prior transfer to the Bank of Taiwan under compulsion. The lower court rendered judgment sentencing BPI to pay the plaintiff the deposit balance with legal interest. The Petition: The defendant bank appealed the lower court's decision.
Issue(s)
Whether the transfer of the plaintiff's deposit account to the Bank of Taiwan, pursuant to ZAI Order No. 257 of the Japanese Military Administration, constituted a valid sequestration or an invalid confiscation of enemy property. Whether the defendant bank's compliance with ZAI Order No. 257 released it from its obligation to the plaintiff.
Ruling
The judgment of the lower court is reversed, and the defendant is absolved from the complaint.
Ratio Decidendi
On the issue of whether the transfer constituted valid sequestration or invalid confiscation: The Court held that the transfer of the plaintiff's deposit balance to the Bank of Taiwan, by order of the Japanese Military Administration, was not a confiscation but a mere sequestration of enemy's private personal property. This ruling was based on the Court's prior decision in Haw Pia vs. China Banking Corporation, G.R. No. L-554. In that case, the Court ruled that the collection by the Bank of Taiwan of a credit due to an enemy bank, under the order of the Japanese Military Administration, was a valid sequestration, not a confiscation. The Court found the present case analogous, with the only difference being that the victim of the act was a depositor instead of a bank. Therefore, the principle applied in the Haw Pia case governed the instant case, deeming the act as sequestration. On whether the defendant bank's compliance released it from its obligation: Following the ruling that the transfer was a valid sequestration, the Court concluded that the defendant bank's action in transferring the deposit to the Bank of Taiwan, under compulsion of the Japanese Military Administration's order, was valid. Consequently, this act released the defendant bank from its obligation to the plaintiff depositor. The Court reasoned that if the payment by a debtor to the Bank of Taiwan, under similar circumstances, validly released the debtor's obligation to the original creditor bank (as in the Haw Pia case), then the transfer by the defendant bank to the Bank of Taiwan, under the same compulsion, validly released the defendant bank's obligation to its depositor.
Main Doctrine
The transfer of a deposit account by a local bank to the Bank of Taiwan, pursuant to ZAI Order No. 257 of the Japanese Military Administration during the Japanese occupation, was considered a valid sequestration of enemy property and not a confiscation, thereby releasing the local bank from its obligation to the depositor.