Hong Kong and Shanghai Banking Corporation v Luis Perez-Samanillo Inc.

• Jurisdiction: Filipinas
• Docket Number: 157
• Court: Court of First Instance (Philippines)
• Date: 14 October 1946

Philippines, Court of First Instance of Manila.

Case No. 157

Hongkong & Shanghai Banking Corporation

and

Luis Perez-Samanillo, Inc. & Register of Deeds of Manila.

Belligerent Occupation — Respect for Private Property — Debts due to Inhabitants of Occupied Territory — Article 53 of the Hague Convention — Right of Lawful Sovereign to Annul Acts of Occupant.

The Facts.—In 1937 the defendant, a Philippine corporation, obtained a credit from the plaintiff bank which was incorporated in Hongkong. As security for payment the defendant mortgaged land to the bank. In 1942 the Japanese forces of occupation appointed the Bank of Taiwan as liquidator of all foreign banking institutions which were considered to be enemy banks. In 1944 the defendant company paid to the Bank of Taiwan, as liquidator, the debts due to the Bank of Hongkong. The Bank of Taiwan executed a deed of cancellation of the deed of mortgage. The Register of Deeds of Manila thereupon noted the discharge of mortgage. The plaintiff bank now instituted an action for foreclosure of mortgage. It was contended on its behalf that the Japanese sequestration was contrary to the Hague Convention of 1907 and therefore void. The defendant, on the other hand, argued that the Japanese military authorities were entitled to take possession of enemy property wherever found.

Held: that the debt was still outstanding and the cancellation of the mortgage null and void. It was not within the power of the Japanese authorities to sequestrate the credit in question. The Court said:

“The rules governing belligerent occupation were codified in Section III of the Hague Regulations concerning the laws and customs of land warfare and are embodied in Articles 42–56 of said Regulations. They are the result of progress achieved across several centuries and incorporate the theory that an occupant, in contrast with a ‘sovereign’, acquires only a temporary and precarious power and that private property is exempt from confiscation. Said body of laws has survived all historical changes. It has been interpreted, developed and supplemented by the practice of governments, by the decisions of Courts and by the opinions of eminent authorities on international law.

“Article 46, Section III, of the Hague Convention of 1907, states:

‘Family honor and rights, the lives of persons, and private property as well as religious convictions and practice, must be respected.

‘Private property cannot be confiscated.’

Article 53 of the same section states:

‘An army of occupation can only take possession of cash, funds and realizable securities which are strictly the property of the State’.

“The 1907 Convention, in so far as the cited provisions are concerned, is a reproduction of the Hague Convention of July 29, 1899, of which the United States and Japan were signatories. The 1907 Convention was ratified by the United States on November 27, 1909...