GR L 1494; (August, 1949) (Digest)
G.R. No. L-1494; August 3, 1949
ALLISON J. GIBBS, as executor of the will of A. D. Gibbs, deceased, ALLISON J. GIBBS and FINLEY J. GIBBS, plaintiffs-appellees, vs. EULOGIO RODRIGUEZ, SR., LUZON SURETY CO., INC., PHILIPPINE NATIONAL BANK and MARIANO VILLANUEVA, as Register of Deeds, defendants-appellants.
FACTS
Plaintiffs, the Gibbs brothers, sold two parcels of land to Raymundo F. Navarro and R. F. Navarro and Co. in 1941, with a mortgage securing the unpaid balance. The property was subsequently sold to defendant Eulogio Rodriguez, Sr., who assumed the mortgage obligation. Rodriguez later assigned his rights and obligations to defendant Luzon Surety Co., Inc., with both remaining jointly and severally liable. During the Japanese occupation, the Japanese Military Administration’s Department of Enemy Property demanded payment of the mortgage debt from the defendants, considering the plaintiffs as enemy nationals. After consulting with plaintiff Allison J. Gibbs, who stated he could do nothing, the defendants obtained a loan from the Philippine National Bank and paid the debt to the Department of Enemy Property. The mortgage was then cancelled by the Register of Deeds. After the war, the plaintiffs filed an action to recover the unpaid mortgage debt, arguing the payment to the Japanese authority was invalid.
ISSUE
Whether the payment of the mortgage debt by the defendants to the Japanese Military Administration’s Department of Enemy Property during the occupation extinguished the obligation, thereby barring recovery by the plaintiffs after the war.
RULING
Yes, the payment was valid and extinguished the obligation. The Court, applying its precedent in Haw Pia v. China Banking Corporation, held that payments made to the enemy occupant’s agency authorized to collect debts owed to enemy nationals are valid and discharge the debtor. The Japanese Military Administration had the de facto power to establish such agencies and require payments to them. The debtor who pays under such compulsion is protected, and the creditor’s remedy lies against the collecting agency or government, not against the debtor. The legislative policy, as indicated by Commonwealth Act No. 727 (though vetoed), also supported validating such payments. The motion for reconsideration was denied, and the lower court’s decision was affirmed.
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