[ G.R. No. L-1494. August 03, 1949 ] 84 Phil. 230
[ G.R. No. L-1494. August 03, 1949 ]
ALLISON J. GIBBS, AS EXECUTOR OF THE WILL OF A. D. GIBBS, DECEASED, ALLISON J. GIBBS AND FINLEY J. GIBBS, PLAINTIFFS AND APPELLEES, VS. EULOGIO RODRIGUEZ, SR., LUZON SURETY CO., INC., PHILIPPINE NATIONAL BANK AND MARIANO VILLANUEVA, AS REGISTER OF DEEDS, DEFENDANTS AND APPELLANTS. D E C I S I O N
FERIA, J.:
On August 22, 1945, plaintiff filed a complaint alleging, among others, the following:
“(4) That on April 18, 1941, pursuant to a preliminary ‘Agreement of Purchase, Sale and Mortgage,’ dated April 11, 1940, Allison J. Gibbs, acting for himself and as attorney-in-fact for Allison D. Gibbs and Finley J. Gibbs, sold by a document entitled ‘Deed and Mortgage’ said two parcels of land and the improvements thereon to Raymundo F. Navarro and R. F. Navarro & Co., for the sum of One hundred twenty-five thousand dollars ($125,000), United States currency, of which Twelve thousand five hundred dollars ($12,500), United States currency, was paid in cash; that Raymundo F. Navarro and R. F. Navarro & Co., in the said ‘Deed and Mortgage’ mortgaged the said two parcels of land in favor of Allison D. Gibbs and Finley J. Gibbs, to secure the payment of the balance of the sale price which they agreed to pay to the said mortgagees in annual installments, plus 5 per cent interest on the deferred payments. * * *. “(5) That the first installment of $16,875, United States currency, due on April 11, 1941, was paid to the said mortgagees, but none of the other installments totalling $126,562.50, United States currency, have been paid and are now due and owing. “(6) That on August 12, 1941, R. F. Navarro, for himself and in his capacity as president of R. F. Navarro & Co., by document entitled ‘Deed of Sale with Assumption of Mortgage,’ sold said property for the sum of forty-thousand pesos (P40,000), Philippine currency, to Eulogio Rodriguez, Sr., who in said document assumed and agreed to be bound by the obligation of the mortgage existing thereon in favor of the mortgagees, Allison D. Gibbs, Allison J. Gibbs and Finley J. Gibbs, and all the covenants, agreements, stipulations and conditions relating thereto, as recited in said ‘Deed and Mortgage’ Exhibit ‘A’, to which sale and assumption of mortgage the said mortgagees gave their express conformity; * * * “(7) That on December 16, 1941, Eulogio Rodriguez, Sr., with the consent of the said mortgagees and by a document entitled ‘Deed of assignment with Assumption of Mortgage’ assigned his rights, title and interest in and to the said property to the defendant Luzon Surety Co., Inc., for the sum of Forty-two thousand five hundred fifty-six and 21/100 (P42,556.21) pesos, together with his obligations under the ‘Deed of Sale with Assumption of Mortgage,’ Exhibit B, which were duly assumed by the Luzon Surety Co., Inc., with the express stipulation, however, that Eulogio Rodriguez, Sr., was not relieved of the said obligations and that he, together with the Luzon Surety Co., Inc., were jointly and severally liable to the said mortgagees for the obligations under the said mortgage, * * *. “(9) That during the Japanese occupation, to writ, in or about July, 1943, the defendant Eulogio Rodriguez, Sr., and the Luzon Surety Co., Inc., without paying any sum to the said mortgagees, and without the latter’s knowledge or consent, unlawfully secured from the Japanese Military Administration and from the defendant Mariano Villanueva, who was then purporting to act as Register of Deeds of the City of Manila under the Philippine Republic, a purported cancellation of the mortgage Exhibit A, which purported cancellation was on July 30, 1943, unlawfully annotated on the back of said transfer certificate of title No. 63345 as document No. 709-710/63345, but not on the mortgagee’s copy, and without the prior’ cancellation or surrender of said mortgagee’s copy of transfer certificate of title No. 63345.” (Record on appeal of the defendants, pp. 4-7.)
The defendants admitted in their amended answer the facts alleged in the above quoted paragraphs 4, 6, 7 of the complaint, and in connection with paragraphs 5 and 9 the defendants alleged that, during the Japanese occupation, the Department of Enemy Property established by the Japanese Military Administration in. the City of Manila required the defendants to pay to said department the debt due from them to the plaintiffs, who were considered as enemy nationals. In view of the fact that one of the plaintiffs, Allison J. Gibbs, to whom the defendant Luzon Surety Co., communicated the said demand, answered that they could not do anything to avoid its compliance, the defendants had to obtain from the Philippine National Bank a loan of P120,000 they needed to pay, and in fact had paid, to the Department of Enemy, Property the sum of P202,500 which they owed then to the plaintiffs. The Director of the Department of Enemy Property of the Japanese Military Administration had issued a receipt and a deed of cancellation of the mortgage credit of the plaintiffs, and the register of deeds on July 30, 1943, cancelled the mortgage annotated on the back of the transfer certificate title of the property mortgaged. On September 25, the plaintiff filed a motion to strike the defense set up in the defendant’s answer to the effect that they had paid their obligation to the plaintiff to the Department of Enemy Property of the Japanese Military Administration, on the ground that the latter had no authority to demand and accept such payment. Before the date set for the hearing of the motion to strike the defendant’s defense on September 29, 1945, the defendant had filed on September 26, 1945, a motion for summary judgment under section 2, Rule 36, attaching to the motion in support thereof an affidavit of the attorney for the Luzon Surety, Inc., Atty. Arturo Tolentino, to the, effect that on July 21, 1943, when the, department of Enemy Property, Japanese Military Administration, ordered the Luzon Surety Co., to pay to said Department the defendant’s mortgage debt of P202,500 to the plaintiffs, he went to see the plaintiff Allison J. Gibbs at the compound of the Holy Ghost College and asked him his advise “as to what action the company should take on the matter, and Attorney Gibbs told him that he cannot do anything and that he understood the situation of Luzon Surety Inc., and he stated further that in that event the credit will be considered as a war damage.” Attached to the motion for summary judgment was also an affidavit of defendant Eulogio Rodriguez which states that, in view of the demand of payment made by the Department of Enemy Property, Japanese Military Administration, the defendants had to secure a loan of P120,000 from the Philippine National Bank and pay to said department on July 31, 1943, the sum of P202,500 due from them to the plaintiffs. The motion to strike as well as the motion for summary judgment was not acted on by the court until the date set for trial of the case on the merits when both parties, without presenting any evidence, filed their respective memoranda and submitted the case to the lower court for decision. The plaintiffs did not serve any opposing affidavit under section 3, Rule 36, to contradict the affidavit of Eulogio Rodriguez to the effect that payment of the mortgage debt in question was made to the Japanese Military Administration, attached to and in support of the motion for summary judgment for the defendants, and they admit, in paragraph 9 of their complaint, that the defendants secured from the Japanese Military Administration and the defendant register of deeds the purported cancellation of the mortgage Exhibit A and, consequently, the payment of the mortgage debt by necessary implication. These facts belie the assertion of the appellees that there is no basis for the lower court’s assumption that such payment was made, and therefore the lower court was right in stating in its decision the following:
“Sin estar resueltas las citadas petici6n de descarte y de sentencia sumaria, las partes, en inteligencia con el Juzgado y a fin de terminarse definitivamente con el asunto en esta instancia, tuvieron a bien que al mismo fuese sometido, en su fondo, previa practica de sus respectivas pruebas. Se sefialo la causa para su vista en el fondo pero en el dia sefialado los demandantes se limitaron a presentar los Exhibits A, B y C, unidos a la demanda, los cualcs fueron admitidos sin oposicion, y los demandados sometieron el asunto para su fallo sin practicar prueba algima. De modo quc el asunto fue practicamente sometido a una sentencia de acuerdo con los escritos de alegaciones unicamente. (Record on Appeal of the defendants, p. 78.) “El punto principal y decisivo planteado por las alegaciones de las partes es el de si, es o no, legal y valido el pago hecho por los demandados al custodio Japones…. “Tratandose aqui de un credito privado de que se ha incautado el beligerente ocupante japones durante la pasada guerra, este caso tiene similaridad al de ‘Hongkong & Shanghai Banking Corporation contra Luis Perez Samanillo, Inc., et al., causa civil No. 71009’ de este Juzgado. En esta ultima causa se ha discutido extensamente la legalidad o ilegalidad de los actos del invasor al incautarse de un credito privado y disponer de ello. En la decision de dicha causa, este Juzgado hizo las consideraciones y conclusiones que a continuation se acotan y se hacen parte de eflta decision por ser perfectamento aplicables al punto que se discute;”
The lower court declared invalid the payment made by the defendants to the Bureau of Enemy Property, and null and void the cancellation of the mortgage by the register of deeds, and sentenced the defendant to pay to the plaintiff, as soon as the moratorium is lifted, the balance due from the former to the latter, and the defendants appealed from said judgment to this Court. The lower court was correct in holding that the question raised in the present case is similar to that involved in the case of Hongkong & Shanghai Banking Corporation vs. Luis Perez Samanillo, Inc., et al., (82 Phil., p. 851, and in making the reasons and conclusions set forth in support of its decision therein as grounds for its decision in the present case. In Samanillo case, the debt due from the defendant to the plaintiff was paid, by order of the Japanese Military Administration, to the Bank of Taiwan as Liquidator of local enemy banks and Bureau of Enemy Property of the enemy banks’ properties. In the present case the defendants, by order of the Japanese Military Administration, paid to the Bank of Taiwan as Bureau of Enemy Property the debt due from the defendants to the plaintiffs. The question involved in said Samanillo case was whether or not the collection of Samanillo’s debt to the Hongkong and Shanghai Banking Corporation by the Bureau of Enemy Property of the Japanese Military Administration, was a confiscation of the plaintiffs’ credit. And the question involved in the instant case is whether or not the collection by the Department of Enemy Property, Japanese Military Administration, of the mortgage debt due from the defendants to the plaintiffs was a confiscation of the latter’s credit. This Court reversed the decision of the lower court in the case of Hongkong and Shanghai Banking Corporation vs. Luis Perez Samanillo, Inc., et al., on the strength of the ruling of this Court in the case of Haw Pia vs. China Banking Corporation, (80 Phil 604), in which the facts arid law involved were similar to those in Haw Pia. In this last case we held that the collection by the Bank of Taiwan of the China Banking Corporation’s Credit from the latter’s debtor by order of the Japanese Military Administration, was not a confiscation but a sequestration of the enemy private personal property, and therefore the payment by the plaintiff Haw Pia to the Bank of Taiwan was valid and released plaintiff’s obligation to the defendant bank. Therefore, we have to reverse also the decision of the lower court in the present case. The plaintiff’s contention that the debt of the defendants in the present case was payable in dollars or its equivalent in Philippine peso at the option of the plaintiffs is immaterial, because both the Philippine pesos and American dollars at the rate of one dollar for two pesos were then legal tender in the Philippines according to section 1612 of the Revised Administrative Code, and for that reason the lower court sentenced the defendants to pay the plaintiffs in dollars or its equivalent in Philippine pesos. Besides we have held in the case of Haw Pia the following:
“But be that as it may, whatever might have been the intrinsic or extrinsic worth of the Japanese war notes which the Bank of , Taiwan has received as full satisfaction of the obligations of the appellee’s debtors to it, is of no consequence in the present case. As we have already stated, the Japanese war-notes were issued as legal tender at par with the Philippine peso, and guaranteed by Japanese Government ‘which takes full responsibility for their usage having the correct amount to back them up (Proclamation of January .3, 1942). Now that the outcome of the war has turned against Japan, the enemy banks have the right to demand from Japan, through their States or Government, payments or compensation in Philippine pesos or U. S. dollars as the case may be, for the loss or damage inflicted on the property by the emergency war measure taken by the enemy. If Japan had won the war or were the victor, the property or money; of said banks sequestrated or impounded by her might be retained by, Japan and credited to the respective State of which the owners of said banks were nationals, as a payment on account of the sums payable by them as indemnity under the treaties, and the said owners were to look for compensation in Philippine pesos or U. S. dollars to their respective States. (Treaty of Versailles and other peace treaties entered at the close of the first World War; VI Hackworth Digest of International Law, p. 232.) And if they cannot get any or sufficient compensation either from the enemy or from their States, because of their insolvency or impossibility to pay, they have naturally to suffer, as everybody else, the losses incident to all wars.”
In view of the foregoing, the decision appealed from is reversed and the plaintiffs’ action is dismissed. Moran, C.J., Paras, Bengzon, Montemayor, and Reyes, JJ., concur. PERFECTO, J.: Except the pronouncement about legal tender, upon which we wish not to commit ourselves, we concur in the above opinion.