Plaintiff-Appellant Vs Vs Defendant-Appellee Francisco R. Capistrano, Lao & Feria

EN BANC
[G.R. No. L-3869. January 31, 1952.]
S. DAVIS WINSHIP , plaintiff-appellant, vs . PHILIPPINE TRUST

COMPANY , defendant-appellee.
Francisco R. Capistrano, for appellant.

Lao & Feria, for appellee.
SYLLABUS
1. OBLIGATIONS AND CONTRACTS; BANK DEPOSITS; TRANSFER BY ORDER

OF JAPANESE MILITARY ADMINISTRATION; RELEASE OF BANK. — As the defendant
Philippine Trust Company transferred and paid the credit balances of the current
account deposits of the Eastern Isles Import Corporation and of the Eastern Isles, Inc.
to the Bank of Taiwan by order of the Japanese Military Administration, said defendant
was released from any obligation to the depositors or their transferee.
2. CORPORATIONS; NATIONALITY, HOW DETERMINED. — The nationality of a
private corporation is determined by the character and citizenship of its controlling
stockholders.
DECISION
PARAS , C.J : p
Prior to December, 1941, the Eastern Isles Import Corporation organized under
and existing by virtue of the laws of the Philippines, all of the capital stock of which was
and has been owned by American citizens, except one share with a par value of P100 in
the name of Antonia Sevilla and one share with a par value of P100 in the name of
Edmund A. Schwesinger, had a current account deposit with the Philippine Trust
Company, and as of December 29, 1941, the balance in favor of said depositor was
P51,410.91. Prior to December, 1941, the Eastern Isles, Inc., a corporation organized
under and existing by virtue of the laws of the Philippines, all of the capital stock of
which was and has been owned by American citizens, except one share with a par value
of P100 in the name of F. Capistrano, had a current account deposit with the Philippine
Trust Company, and as of December 29, 1941, the balance in favor of said depositor
was P34,827.74. The Eastern Isles, Incorporated made a withdrawal of P204.37 which
was debited to said account on June 10, 1942.
On October 4, 1943, the Japanese Military Administration in the Philippines
issued an order requiring all deposit accounts of hostile people (including
corporations) to be transferred to the Bank of Taiwan, as the depository of the Bureau
of Enemy Property Custody of the Japanese Military Administration, which order the
Philippine Trust Company was speci cally directed to comply with. On September 29,
1944, in compliance with said order, the Philippine Trust Company transferred and paid
the credit balances of the current account deposits of the Eastern Isles Import
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Corporation and of the Eastern Isles, Inc. to the Bank of Taiwan.
The pre-war current deposit accounts of the Eastern Isles Import Corporation
and of the Eastern Isles, Inc. were subsequently transferred to S. Davis Winship who, on
Aug. 12, 1947, presented to the Philippine Trust Company checks Nos. A-79212 and H-
579401 covering the aforesaid deposits. The Philippine Trust Company, however,
refused to pay said checks, whereupon, on September 6, 1947, S. Davis Winship
instituted the present action against the Philippine Trust Company in the Court of First
Instance of Manila, to recover upon the rst cause of action the sum of P51,410.91 and
under the second cause of action the sum of P34,827.74.
In its answer, the defendant Philippine Trust Company invoked the order of the
Japanese Military Administration by virtue of which it transferred the current deposit
accounts in question to the Bank of Taiwan as the depository of the Bureau of Enemy
Property Custody of the Japanese Military Administration. After trial, the Court of First
Instance of Manila rendered a decision upholding the contention of the defendant and
accordingly dismissing the complaint. From this decision plaintiff appealed. In the case
of Everett Steamship Corporation vs. Bank of the Philippine Islands, 84 Phil., 202; 47 O.
G., No. 1, p. 165, we made the following pronouncement: This Court having ruled in the
Haw Pia case 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 con scation but a mere sequestration of enemy's private
personal property, and therefore the payment by the plaintiff to the Bank of Taiwan was
valid and released his obligation to the defendant bank, it follows that the transfer or
payment by the defendant bank to the Bank of Taiwan of plaintiff's deposit, by order of
the Japanese Military Administration, was valid and released the defendant's obligation
to the plaintiff."
In view of this pronouncement, we have to a rm the appealed judgment. As it
has been stipulated by the parties that the defendant transferred the deposits in
question to the Bank of Taiwan in compliance with the order of the Japanese Military
Administration, the defendant was released from any obligation to the depositors or
their transferee. Appellant's contention that there is no positive showing that the
transfer of the deposits was authorized by the board of directors of the defendant
Philippine Trust Company, is of no moment, since it is admitted that said transfer was
made by the Philippine Trust Company in compliance with the order of the Japanese
Military Administration, and its logical effect is to make such act binding on said
company. At any rate, the defendant corporation has not impugned its validity.
In the case of Filipinas Compañía de Seguros vs. Christern Huenefeld & Co., Inc.,
89 Phil., 54, we held that the nationality of a private corporation is determined by the
character or citizenship of its controlling stockholders; and this pronouncement is of
course decisive as to the hostile character of the Eastern Isles Import Corporation and
the Eastern Isles, Inc., as far as the Japanese Military Administration was concerned, it
being conceded that the controlling stockholders of said corporations were American
citizens.
Wherefore, the appealed judgment is a rmed, with costs against the appellant.
So ordered.
Pablo, Bengzon, Montemayor, Reyes, Jugo and Bautista Angelo, JJ., concur.
Separate Opinions
PADILLA , J., dissenting :
I dissent for the same reasons stated in my opinion in the case of La Orden de
Padres Benedictinos de Filipinas vs. The Philippines Trust Company, G. R. No. L-2020,
47 O. G. 2894, 2897.
Tuason J., concurs.

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EN BANC

[G.R. No. L-3869. January 31, 1952.]

S. DAVIS WINSHIP , plaintiff-appellant, vs . PHILIPPINE TRUST

Francisco R. Capistrano, for appellant.

1. OBLIGATIONS AND CONTRACTS; BANK DEPOSITS; TRANSFER BY ORDER

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