GR L 150; (April, 1949) (Digest)
G.R. No. L-150; April 30, 1949
VICENTE HILADO, plaintiff-appellee, vs. FELIX DE LA COSTA, in his capacity as Acting Bank Commissioner, and THE PHILIPPINE NATIONAL BANK, defendant-appellants.
FACTS
Vicente Hilado, a depositor of the Philippine National Bank (PNB), had a prewar balance of P578.37 as of February 13, 1943. During the Japanese occupation, he made additional deposits totaling P93,250 in Japanese war notes, leaving a total credit balance of P15,023.01 by December 26, 1944. Hilado filed an action for declaratory relief to test the constitutionality of Executive Order No. 49, which declared all deposits made during the enemy occupation null and void, validated withdrawals from prewar balances during that period, and limited bank liability to the “lowest minimum balance” of the prewar deposit. The lower court partially upheld Hilado, declaring EO No. 49 null and void insofar as it validated wartime withdrawals and invalidated wartime deposits, ordering PNB to pay Hilado his prewar balance of P3,678.27. Both parties appealed.
ISSUE
Whether Executive Order No. 49 is constitutional in declaring void all deposits made during the enemy occupation, validating withdrawals from prewar balances during that period, and limiting bank liability to the “lowest minimum balance” of the prewar deposit.
RULING
The Supreme Court reversed the lower court’s decision and dismissed Hilado’s action. The Court upheld the constitutionality of Executive Order No. 49. It ruled that the Japanese war notes, while having some purchasing power during the occupation, were not legal tender of the Philippine government and their use was imposed by force. The state, under its police power, had the authority to enact measures to address the extraordinary economic conditions after liberation, including regulating the validity of financial transactions during the enemy occupation. EO No. 49 was a legitimate exercise of this power to prevent the unjust enrichment of banks and to stabilize the postwar financial system. The Court found the classification between prewar and wartime deposits reasonable, and the “lowest minimum balance” provision was a fair method to account for withdrawals. The deposits made in Japanese war notes were properly declared void, as they did not create obligations payable in genuine Philippine currency.
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