Bank of the Philippine Islands v. Rogers

• Decision Date: 12 June 1958
• Docket Number: Civ. A. No. 2752-56,3521-56.
• Citation: 165 F. Supp. 100
• Parties: BANK OF THE PHILIPPINE ISLANDS, Plaintiff, v. William P. ROGERS, Attorney General, and Ivy Baker Priest, Treasurer of the United States, Defendants. PHILIPPINE NATIONAL BANK, Plaintiff, v. William P. ROGERS, Attorney General, and Ivy Baker Priest, Treasurer of the United States, Defendants.
• Court: U.S. District Court — District of Columbia

165 F. Supp. 100

BANK OF THE PHILIPPINE ISLANDS, Plaintiff, v. William P. ROGERS, Attorney General, and Ivy Baker Priest, Treasurer of the United States, Defendants.

PHILIPPINE NATIONAL BANK, Plaintiff, v. William P. ROGERS, Attorney General, and Ivy Baker Priest, Treasurer of the United States, Defendants.

Civ. A. Nos. 2752-56, 3521-56.

United States District Court District of Columbia.

June 12, 1958.

Joseph B. Friedman and Melville E. Locker, Washington, D. C., for Bank of the Philippine Islands.

Matthew E. McCarthy, New York City, and Elwood H. Seal, Washington, D. C., for Philippine Nat. Bank.

George B. Searls, Victor R. Taylor and Sidney Harris, Dept. of Justice, Washington, D. C., for defendant.

TAMM, District Judge.

I. Nature of the Action.

A. These actions arise under, and are brought pursuant to, the provisions of the "Trading With The Enemy Act" of October 6, 1917, as amended (50 U.S. C.A.Appendix, §§ 1-39, specifically Section 9(a)) and the Fifth Amendment to the Constitution of the United States.

B. There are two actions involved here, each action involving a different plaintiff, but with two defendants common to both cases. In Civil Action 2752-56, the plaintiff is the Bank of the Philippine Islands, a banking corporation duly organized and operating under the laws of the Philippine Islands, with principal office and place of business in Manila, Philippines. In Civil Action 3521-56, the plaintiff is the Philippine National Bank, a banking corporation duly organized, existing and operating under the laws of the Philippine Islands, with its principal place of business in Manila, Philippines. The two defendants involved in each action are William P. Rogers, the Attorney General of the United States of America and, as such, the successor to the Philippine Alien Property Administrator, and Ivy Baker Priest, Treasurer of the United States of America, who holds the property that is the subject matter of these proceedings.

C. The plaintiff in Civil Action 2752-56, the Bank of the Philippine Islands, and the plaintiff in Civil Action 3521-56, the Philippine National Bank, filed conflicting claims with the Philippine Alien Property Administrator of the United States, the predecessor of the defendant Attorney General, for a return of the vested property involved in this case. The vested property amounts to approximately 951,000 of pre-war Philippine currency, of which approximately 662,000 was in Philippine Treasury Certificates, and 289,000 in Philippine Bank Notes. The order by which the funds were vested by the Philippine Alien Property Administrator of the United States is Vesting Order P-285, which reads as follows:

"Vesting Order No. P-285 "Re: Sum of money owned by the Imperial Japanese Government

"Under the authority of the Trading with the Enemy Act, as amended, the Philippine Property Act of 1946 22 U.S. C.A. § 1381 et seq. and Executive Order No. 9818 22 U.S.C.A. § 1382 note, and pursuant to law, the undersigned, after investigation, finding:

"1. That the property described as follows:

"The sum of 662,387.00 in Philippine Treasury Certificates, deposited with the accounts of Lt. Col. G. G. Woehrle, FD., Col. VO. No. 1715, May 1945 to the credit of General Fund Receipt 213897 and 289,000.00 in Philippine National Bank notes, presently in the possession of Major D. Arnhols, Executive Officer of the Fiscal Director, Philrycom, representing the balance of the money deposited by the Southern Regions Development Bank (Nampo Kaihaty Kinko) with the Philippine National Bank, Bacolod Branch, which were captured by the American Forces late in March 1, 1945,

is property within the Philippines owned or controlled by, payable or deliverable to, held on behalf of or on account of, or owing to, or which is evidence of ownership or control by, a designated enemy country (Japan);

"And having made all determinations and taken all action required by law, and deeming it necessary in the national interest,

"Hereby Vests in the Philippine Alien Property Administrator the property described in subparagraph 1 hereof, to be held, used, administered, liquidated, sold or otherwise dealt with in the interest and for the benefit of the United States, in accordance with the provisions of the Trading with the Enemy Act, as amended, and the Philippine Property Act of 1946.

"Any person, except a national of a designated enemy country, asserting any claim arising as a result of this Order may, within two years from the date hereof or within such further time as may be allowed, file with the Philippine Alien Property Administrator on Form PAPA-1 a notice of claim, together with a request for a hearing thereon. Nothing herein contained shall be deemed to constitute an admission of the existence, validity or right to allowance of any such claim.

"Executed at Manila, Philippines, on August 5, 1947.

"/s/ James McI. Henderson /t/ James MCI. Henderson Philippine Alien Property Administrator "Filed with the Official Gazette August 5, 1947 10:20 a. m Date Time

"I hereby certify that the foregoing is a true and correct copy of an instrument on file in this office entitled "Vesting Order Number P-285."

The claim of the Bank of the Philippine Islands is limited to 638,000 of the Philippine Treasury Certificates, while the plaintiff Philippine National Bank claims the entire fund.

Subsequent to the filing of these claims, administrative hearings were held in the Philippines in 1948, 1949 and 1950, before the Philippine Alien Property Administration. Extensive testimony and approximately 40 exhibits comprised these hearings, with the testimony concluding in January, 1950. In January of 1952, a hearing examiner of the office of Alien Property denied both claims. Both plaintiffs appealed these decisions to the Director of the office of Alien Property and Assistant Attorney General of the United States who, on May 18, 1956, denied the claim of the Bank of the Philippine Islands in toto and partially allowed the claim of the Philippine National Bank in the amount of 172,000. The plaintiff Bank of the Philippine Islands applied to the Attorney General for a review of this decision, but the application was denied. Plaintiff Philippine National Bank applied for a rehearing, but this was also denied.

On July 2, 1956, plaintiff Bank of the Philippine Islands instituted Civil Action No. 2752-56, in this court, pursuant to Section 9(a) of the Trading with the Enemy Act of October 6, 1917, as amended (50 U.S.C.Appendix, § 9(a)) and the Fifth Amendment to the Constitution of the United States. On August 23, 1956, plaintiff Philippine National Bank instituted Civil Action No. 3521-56 in this Court upon the same grounds. Subsequently, on November 8, 1957, these cases were consolidated for trial and were pre-tried on that date. This Court presided at the hearing de novo on the merits of these consolidated cases, said hearing having begun on March 25, 1958 and concluded on March 31, 1958.

II. Claim of Bank of the Philippine Islands.

A. Basis. The claim of this plaintiff for a return of 638,000 of the vested property rests on the following allegations:

The Japanese Military Administration instituted a program early in 1943 which was aimed at winning the support of certain Filipino groups in the Visayan Islands. By this program, the Japanese would redeem in valid pre-war Philippine currency the emergency currency which had been issued by the Commonwealth Government of the Philippine Islands in December, 1941 prior to the Japanese invasion and which had been declared null and void by the Japanese. In order to carry out this program, the Japanese would require an adequate supply of pre-war currency. Therefore, the Japanese Military Administration through its agent, Nampo Kaihatsu Kinko (sometimes called the Southern Regions Development Bank, but hereinafter referred to as Nampo), issued an order which directed this plaintiff to turn over all of its pre-war currency to Nampo. This plaintiff complied with this order and turned over pre-war currency to Nampo, the Japanese agent, and in return received an equivalent amount of Japanese Military Notes. It is alleged by Bank of Philippine Islands that this transfer or exchange was effected by force and duress and was an unlawful taking and commingling of its money by the Japanese. This plaintiff further alleges that this currency, taken from them by force or duress, was sent by Nampo through the Philippine National Bank, Manila, along with other pre-war currency, to two branches of Philippine National Bank — one in Iloilo and the other in Bacolod. The Philippine National Bank was to act as an instrument of the Japanese in carrying out this redemption program.

After a partial use of this commingled fund by the Bacolod branch of the Philippine National Bank, the Japanese in March of 1945 ordered the Philippine National Bank to turn over the rest of the fund to the Bank of Taiwan, an agent of the Japanese Military Administration. Subsequently, the United States Armed Forces invaded the Philippine Islands. As the Japanese forces retreated, they buried this money in the mountains where it was found by the United States Army.

The claim of the Bank of the Philippine Islands to the vested funds rests mainly on the theory that since there was an unlawful taking by the Japanese, the latter did not acquire good title to the money taken from it and that the Bank of the Philippine Islands remained the true owner of said money, even to the time of vesting. In support of this, the Bank of the Philippine Islands relies on principles of the law of restitution which are substantially as follows:

"That when a person wrongfully mingles money of another with money of his own, the other is entitled to obtain reimbursement out of the fund." Rest. of Law of Restitution, Sec. 209.

and

"Where a person wrongfully mingles money of another with money of his own and subsequently makes withdrawals from the

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