Case Digest: Haw Pia vs China Banking Corporation, 80 Phil 604, G.R. No. L-554

Haw Pia vs China Banking Corporation, 80 Phil 604, GR No. L-554, April 9, 1948

Subject: Obligations and Contracts

FACTS

Haw Pia instituted an action in the CFI Manila against China Banking Corporation to compel the latter to execute a deed of cancellation of the mortgage on property described in the complaint. Haw Pia was indebted to CBC in the sum of Php5,103.35 by way of overdraft in current account payable on demand with interest and this was completely paid by Haw Pia through the Bank of Taiwan Ltd which was appointed by the Japanese Military authorities as liquidator of the CBC. Having not recognized such payment, CBC made a demand against Haw Pia to pay the balance.

The lower court held that there was no evidence that CBC authorized the Bank of Taiwan to accept the payment of Haw Pia nor that Bank of Taiwan was an agency of the Japanese invading army. The lower court ordered Haw Pia to pay the debt under the threat that the mortgaged properties will be sold at auction and the proceeds thereof be applied to her obligation.

ISSUE

Whether or not the payment made by Haw Pia to the Bank of Taiwan extinguished her obligation to CBC.

RULING

Yes.

Under the law (Art 1240, NCC), payment shall be made to the person in whose favor the obligation had been constituted, or his successor in interest, or any person authorized to receive it.

In this cae, the Japanese Military Administration, under the principles of International Law, had the right to liquidate and freeze the assets of enemy banks. Payment made by Haw Pia to the Bank of Taiwan extinguished the mortgaged debt, inasmuch as under the law then prevailing, the Bank of Taiwan was authorized to receive payment.