Republic of the Philippines


G.R. No. L-2734             March 17, 1949

LUIS MA. ARANETA, ET AL., respondent.

La O & Feria for petitioner.
No appearance for respondent.


This is an appeal by certiorari filed by the petitioner Philippine Trust Co. a banking corporation from the decision of the Court of Appeals, which affirms the judgment of the Court of First Instance of Manila.

Before the occupation of Manila by the Japanese military forces, the respondent and appellee Luis Ma. Araneta was indebted to the petitioner and appellant in the sum of P4,000, and as a collateral therefor said respondent pledged the certificates of stock listed in the decision of the Court of First Instance. The balance of P3,683,60 was, upon demand of the appellant, paid by the appellee on May 2, 1944, in Japanese military notes, by the certificates of stock, but the petitioner the return of the certificates of stock, but the petitioner refused to do so, on the ground that the payment in Japanese war notes was not valid.

A complaint was filed with the Court of First Instance of Manila by the appellee against the appellant to recover the certificates of stock in question, and the latter set up as defense that it accepted the payment of the appellee's obligation under duress, and therefore the payment was not valid. The Court of First Instance rendered judgment in favor of the appellee on the ground that the payment was voluntarily made and accepted, and therefore it was valid and extinguished the appellee's obligation to the appellant, and ordered the latter to return to the former the certificates of stock listed in the decision. On appeal from the decision of the lower court to the Court of Appeals the decision was affirmed.

The appellant admits that, as testified to by the then acting president of the petitioner during the Japanese occupation, "neither the appellee nor the Japanese Bank to accept the payment." But the appellant contends that there was a collective and general duress exercised by the Japanese military occupant, because the latter ordered that the war-notes may be used in making payments of all kinds, and any attempt to interfere with the circulation of said notes, such as rejection of payment with said notes will be considered as hostile and will be punished severally (Proclamation dated January 3, 1942), and also ordered the reopening of such banking institution (not enemy banks) as may be noticed in the City of Manila, one of them the appellant (Proclamation of January 23, 1942).

The question whether or not said orders constituted a collective and general duress and invalidated the payment made by the appellee to the appellant is a question of law, and not of fact, and for that reason the petitioner asks that the present appeals by certiorari be allowed, under Rule 46 of the Rules of the Court which provides that questions of the law may be raised in an appeal by certiorari from a judgment of the Court of Appeals.

But even though such a question be raised the Supreme Court has, according to said rule, discretion to dismiss the petition if the Court of Appeals has decided a question in accord with law or the applicable decision of the Supreme Court. As the judgment of the Court of Appeals is so far as it affirms the decision of the Court of First Instance which uphold the validity of the payment under consideration is in accord with the decision of this Court in the cases of Laurel vs. Misa (77 Phil., 856), and Haw Pia vs. China Banking Corporation, (80 Phil., 604), the appeal by certiorarimust be dismissed.

In the case of Laurel vs. Misa, this Court held:

Considering that, although the military occupant is enjoined to respect orcontinue in force, unless absolutely prevented by the circumstances, thoselaws that enforce public order and regulate the social and commercial life ofthe country, he has, nevertheless, all the powers of a de facto governmentand may, at his pleasure, either change the existing laws or make new ones when the exigencies of the military service demand such action, that is, when it is necessary for the occupier to do so for the control of the country andthe protection of his army, subject to the restriction or limitations imposed by the Hague regulations, the usages established by civilized nations, the laws of humanity and the requirement s of public conscience (Peralta vs. Director of Prisons, supra; 1940 U.S. Rules of Land Welfare, 76, 77): and that, consequently, all acts of the military occupant dictated within these limitations are obligatory upon the inhabitants of the territory, who arebound to obey them, and the laws of the legitimate government which havenot been adopted, as well and those which, though continued in force, are inconflict with such laws and orders of the occupier, shall be considered assuspended or not in force and binding upon said inhabitant; (Laurel vs. Misa, G.R. No. L-409,1 pp. 3-4, minute resolution.)

And in the case of Haw vs. China Banking Corporation we held that, under the rules of Public International Law, the right of the military occupant, in the exercise of his governmental power, to order the liquidation of enemybanks and the reopening of the others in the occupied enemy territory, aswell as to issue military currency as legal tender, has never been seriously questioned.

In view of the foregoing, it is evident that the payment made by the respondent-appellee and accepted by the petitioner and appellant during the Japanese occupation in compliance with the said orders of the Japanese military occupant, can not be considered as made under a collective and general duress, because an act done pursuant to the laws or orders of competent authorities can never be regarded as executed involuntary, orunder duress or illegitimate constrain or compulsion that invalidates the act.

Wherefore, the petition for certiorari is denied and the appeals dismissed.

Moran, C.J., Paras, Pablo, Bengzon, Briones and Reyes, JJ., concur.

Separate Opinions

PERFECTO, J., concurring:

We concur in the resolution dismissing the petitioner.

Upon the facts in this case, we do not believe in the existence of the collective and general duress upon which the petition is premised. As stated in the resolution, neither the appellee not the Japanese military authoritiesexercised an duress on petitioner to accept the payment in controversy.

TUASON, J., dissenting:

I vote to give this appeal due course. It is extremely unfair and unjust to the immediate parties and to prospective parties in numerous cases of this nature, for this Court to dismiss this appeal without the benefit of a full argument and without full deliberation in the light of all the evidence.

This case is of very far-reaching importance. This Court's action, arrived at on the basis of the finding of the Court of Appeals alone, might be taken as deciding, if it does not indeed actually decide, hundreds of cases of payment of pre-war obligation to banks in Japanese war notes. It is a matter of general knowledge that almost, if not quite, all such obligations were liquidated under circumstances which constituted menacing, if indirect, threats of severe punishment. It is also a matter of general knowledge thatthese payments if approved would spell the complete bankruptcy of the payees. Under all legal precepts and standards of morality and decency, the saidpayments of are indefensible. I refuse to be a party to the sanctioning this mass depredation. More it is a pity, because still more numerous debt in favor of private individuals, who call ill afford to lose what to many of them represent life savings, will be adversely affected.

I maintain that Japanese war notes were not legal tender and could not be madeso by military orders. Accordingly, acceptance of payment in that money undercompulsion did not operate to satisfy the debt except to the extent the creditor was benefit thereby.

The petitioner pleaded "general and collective duress." This plea should notbe dismissed with a shrug of the shoulder. The point was not touched in the appealed decision, and because of its direct bearing on the other paymentsinvolving millions, it is the duty of this Court to give it respectful consideration. Such duress was real and imminent. The very order of the Japanese High Command for the banks to open to accept payments in MickeyMouse notes. And working as they did under the noses of Japanese officersin or out of uniform, the bank officials had no way of turning down the payments without seriously risking their life or liberty. Had there been no threat, express or implied, it is inconceivable that the banks would have allowed outstanding pre-war obligation s to be paid off, without at least aprotest on their part, in money which in the latter part of 1944 had veryslight value and in a few months more, as they knew, would be absolutely worthless.


1 77 Phil., 856.

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