Concerning the Haw Pia Case ' By CII AULE5 CI-IE~EY HYDE ~'*

"-r 11E d((.,;O)) 1)1 lil t' 1\lIjJl"l'1)\t· COlin oj Ihe I'hilippj))(' R C)lllbli, in lhc

11.1\\" PIa , :1>1..' UUhlillll t , illl.TII;oiu llali y illegal nmdll/l "PO)) lin: p:lrI

( ,I lll" I'hilippilH: C()\ l'l Jlllll 'ni Wili']l j, J!rodllni\'c 01 a ,oJid daim for t-lll llpl' I),;nioll in hdwlf III alil 'll 1l;ll ioll;.h or f f('l iilOI",lo who 'IIHcn :d Ill,s

.), ;1 diler) ~ () lh"\JIIl'I)(l' uJ 'lilh d('lj~ilJJ). TIll: Japallc,c dl'crl'c~ \rhifh ]Jl"lwi lll') !-J:I\\ )'i:l, :1 j,Hal ,Ithl"r, lull: IU ':II;,J ) her pn'_\\,ar pc,o juddl­

II'l lm" )" du' i(Jed '11l1n' III . :! illrcign ( ret/ilo)' hank b; pa)))I('11i III a

grt'ad: d t pn:cia lL'd .Jap:mt~{' miJil;ll: (UITt 'Il'-}, w(:n: ill ,-joblion nr Inll'r-1I'lI i0I1;IILall'. I Ill } p{ 'll llinll l il l[" dd) I!)!' If) ';lli ~ f) Iwr d ebt ill :1 IIlITeIH. )'

II()I 1 (lIll"Il)l'bll',1 1;) Ihe IJarlil" and I lr lillk 01" lIn \':11 \11.: :11 Ihe limc

'1/ p;I;IIICll l. I ~} 'lI lh p;t\llIl.:lI l a morlg;tgl.: 01 projJl.:ri y gilcll 10 'Cfllrc

' 1I 1h d,llI 11':1, ,;lli ,JiLiI 01 I('(illll, The rClog'llilioll h) Ih e Sllpn:lIIe COIlII

,II lilt' I'hi l illililll"' o[ I !ll' J:'palw' l' dl' lr el'~ " '!Iilh fe'lIl1c,1 ill Ihi, knill,

JlII.d lllill )~ ;~I I i\ aho :1 ,illia ti oll of IllI l'I"II:lIi()Il:li l :Jw h; 'Lilh cOlin.

" 'Ii, ,ll'Ii,i,m lI"ill (10 Illl' 111111tl,1 h:lJ"1n I., \nlcr i(:11l illll'n:," ill Ih('

/'hilippif)I"' nl lk" n'lIlt(hd III Philippil \(' l lg-i-Llli' ))l 1)1 "IIIi(' killdrul

I ' I")('l " .

III rlll' f!:il\" l 'i :1 l:"~ Ihere ita.' ill'l')) I Willl,i'1I1 01 Ihotlghl lIl;mile'led

III \;ll"ioll' '111;1l'11"I", dill' ill 1':0'1 101 Jailllrt, III I)IN 'l"\ e all I!ll' rl'll:l;lIll fae"

ill !Ill' C IW, III 1;l i llll'! ' :tbll III Oh'l 'I'Il' litt" (h:lr:), 'l el" 01 Iht: pr:lllicc II iii I

1,,1'0 glllll"ll lIl' ill rc'l:lIioll I() Ihc pri,ikgl:' 01 :t bt'lliglTl'1l1 o'(llp:lnl I " ~ .

lit" i:lll; in rl'i:1l i"lI 1(1 Ihl" 101 hgal Itlltler. :mll I,) [ailurc I') ,Jh'cn'C Iht'

lI:II!l1,' "I t( 'I1<t i n :11 " on !hl' 1,:n'l or Jill: .Iap:JIH'\I' af.\("lI c~ (II 'o-ralkt!

li 'lu idal()) ill lhl' I IH'~l' lIl l :i'(;, :md lillall } , In ,,1;"Tl l" Ihl' l:Jil url' o[ lhe

I'hilippilil' Rq !lIblic 10 hlT d (1'I"1<lili «!IIILI(II!:ll ulld l'rl :tking-' 1\"I1;(h it

h'h :1(( (' 1'1(,,1. n)i, , n il ' 'II r:t i flln~ ha~ IIl1ul(lkd (li,nh~ ilJlI', balli,h l,.! (11 :111)1',," til 1ll'lI <g ili :111<1 prlld lln 'd "land alld 1I:lil l' n'lldll,illll' Oil 'Oll)('::

I'"illl" Illal Il' lH' ilr('/l 'I :III1. TIIII ~, ror (';o.. :tmpit', Ihe (:<l1I1"l il~l ' ll III !Ill' pn"t 'lll ( ;1 '1' ,11"1,11 ;':'1) ill l iITl:ll t'd Iklt if Ih, ' ,'))1<11111,)1' Ihe J;I]l:tIl l' \ C O(TUP;IIl I

11'1.:1"(' 11'11 r()lIri ~" ;lIC)ry (:llId Ihe (:ntln kll thai il W:h no!), then' 11':1' no

• See 23 P hjijppj~e L"w Jou'Mi, t~o . 3, p. 575, for ~ complt'~ '''po-t 01 the d eci.ion 01 the Supreme Court of the Fh ilippinc. in H~w Pi. v. C~:~~ B~n~ing Co,po·~tio n, ~,R. No. L-554 Ap,il 9, 1~4S. It wa. ruled the t th Jepene." md, tMY occupants 01 the Phol,p' pi n e~ d uring the luI we' h ~ d th power to orde, the liGuid .. tion of the ChiM Benling Corpor .. tion , .. n er.emy-owned in.litu!ion n,~bli$h~~ in, occupied I"rri/ory: ~,nd thet pft y· menh wi th J~p~ne'~ mili'MY note. of pre'WM obl'g ft hoM m .. de 10 the J'qu,d"lor 01 the b .. " ~ di.cha ,ged the obli9dtion •. ~Ediior. , "

., H~millon Fi,h P' nf~"or of In ·ern&tio- .. I I dW .. nd Oi" I,,-_cy, C"lu,.,S·~ U ',ve r"ty: Forr-e"ly the Solic ito r lor ihe O"pa rtme nt of 5t .. l& of t h~ ~n;:ed 5te~e, 01 An~r;c ,, ; A" c::ste 01 j1,,, In<tilu lo 01 l "te'netion~ 1 L .. w: ~ uj~or of Inler~ClI,o ~,,1 L"", .n th r ~ e .. olum~ •.

142 PI-ITLIPrTN E LA lV JOURNA L

rea30n nut to respect the Japanese faith wh ich, lJ y making small denomi­nations of Japanese pesos lega l tender , even at a time when they were practicall y \"a luc! css, allowed such pesos to be used as the means o[ pay­in~ a d ebt du e to the creditor or mortgagee. As a martel' of [act and of law the illlpropriety of the condu ct here complained of (embracing both that of th e J apanese Government includ ing the liqu id ato r, and that of I he Gm'erlll11 e llL of Ihe Philippin es incillding the SIIprclIl e Court) did not d epend upon its be ing satisfac to ry. The a bsence of that quality in what is complained of was in reality immaterial. Other [actors quite sufficed to re\"(~ al its internationall y illegal character.

In a word, various aspects of the case have been dealt with by the courts and comJl1entaLOrs in a fantastic way tha t might be called old­fas hioned , beca use of failure to seek light on what state practices ordained, a nd beca use ig norance thereof sen 'ed to bol ster up conclusions that could not have been reached if faithful and penetrat ing stud ies of that practice h ad bee n made. Again , loose treatment of some secondary materials has poinl ed to neglectflll a nd superficial work. T hus, for example. th e yiews o f Ihis writer ha\'e more tha ll once been quo ted or cited as indi ca ting th e ri g hts of a belligerent occupant as such when those views had reference

to a dillerent maltCr, and notabl y to what a belligerent State m ig ht do 'I' ilh res peC[ to a li en enem y property found within its own domain. iVluch more i m pOri a Ill. " no lIlI CS I ion has been ra ised as LO I he value of the money

paid." 1

"Des pit e the confusion that exists as to the precise meaning of legal tencier, it ma y he sa id with su ustanlial accuracy that today Ihe term refers

lO that CJualit y given money h y Ihe a ppropri a le leg-a I aUlhorilY " 'hi ch w ill enable a d ehlo r to meet the requirements of co ntract or the purchaser to mee t I he obI igat ions of cash tra nsacl ions. or a perso n to make payme n t 10 hi s gm'crnm ellt, in so far as the ques tio n o f what constitutes a legal illoney is co ncerned. " 2

In the prese nt case it appea rs that t.he Japanese GO\'ernment by appro­

prial e decrees in 1942 and 1 9~3 made Japanese military pesos of smail (it'noll1 i natio ns legal tender for I he pa yme nt of d ebts a nd that regardless uf lhe lack of consent of existing creditors.

The practice o[ states shows th:u belligerent occupants have not in­frequentl y, by reso rting to Lh e power to make a particular ClIrrency legal tencier, caused it to be accepted by all residents o f occupied territory eve n when t hat currency was some"'hat d epreciating. Thus at times the in­terested and o ffended credi tor has found that a debt clu e to him h;:.d , ilrllnk in I"a ill e whe ll pa vme nL " 'as soug ht to be m ade by Ih e new lega l

1 tv1 r. Just ice Perfecto in his concurring opinion, p. 4 . 2 Walte r E. Spahr, " Problems Cau,ed by Misconception, of the Meani ng of Leg al Tender.

Lawful Money, and Money Receivab le for Specified Purposes," Money and the Law, New yo,k

Univer'sity Y, School of Law, Proceedings, InstitUTe on Money and the Law 1945, p . 33 .

CONCEnNINC THE HA lr PTA CASE 14:1

lender. On lhe oLher hand, the pracLice o[ SLaLes, as will be notee! later, IT\uds also lllliLe clearly LhaL no belligerent State has been p ermitted or "allowed throllgh the exe rcise 01: t lw legal lender-making power to ca use lite creditor to accepL somelhing lhat was very g rea tl y deprecialed in pay­lI1ent of a debl due him by a loca l d ebtor so that paymenL ill the curre n cy 01 the occllpant was less lhan lwe llly -perce nt of lll e ex isting \'allle of lhe local currency.

Cert a in laCl~ in Lhe I-Jaw Pia case st and Olll. When Lh e J apanese

GovernmenL in 1~J42 made it s military pesos of small denominalions (Lhe larges t being te n-peso 1101.cs) lega l tender, lheywere in [act of about the ~allle \,:tlll e as Philippin c pesos_ tiul in the interval before Mrs_ PIa sought

tu pay hel: debt to the cred itor bank on August 29, 19'14, two or Lhree signilicalll things happe ned. In the first place J apanese pesos shrank in va lli e to such a <kgree that when the debtor sought LO pay her debt Lhey were abouL three or lour percent of Lh e "alue of a Philippine peso_ in fa cL a hUlldred and thirt y-five Philippine pesos would have suffi ced if she could have gotten the cquiva lelll valli e in Japanese pesos.

Next, it is to be not ed that vast al nounts of Japanese pesos of la rge deno!liinations had IJcen issllcd be fore Mrs. Pia sought LO pa y her deht­In fact ullnulllhered on e- t.ilousand pesos notes are st ill in e\' id f nce . Yet

no proclamatioll has iJer n seell indicating that the Japanese Government e\"er declared military nOles of d enomin at ions higher than te n pesos to be legal tender. 3 AgaIn, iL should here be observed thaL accord ing to in ­forlllat ion recei \'ed fronl a represe ntative of the Far Eastern Comn)issiun

at vVashingt01~ , between j a nuary 1~)42 and Jul y 1945, the alllOUI1l of pesos isslicd in the Philippines by Japanese authorities was betwefn (j.()~3,55 1,OOO pesos and 11 , I LI 8,6LI~ , ()OO pesos_4 If Mrs. Pia acquired thou­

sa nd peso J apanese !lot es thro ll g il which to pay her d eht she wou ld have sO l1ght to sett le it through a medillm lha t in a ll probability was not legal tcnder al the time. Again. quit e apart. from that ci rcumstance it r-Irs. Pia were permittcd 10 sat isfy her debt with Japanese pesos, she was permitt ed to do so with a currcncy that gave ·her llluch, in a debl.-paying

sense. for practicall y n o thing. This was so obyious that the Taiwan

Bank it se][, aware of th r grotcsqueness and injustice of rhe transaction

declined to release the l1lortgage 10 her. The prec ise reason for the de­clination are not known _ Still th e liqui[Iawr. if it Illa y br called su ch, :m'are at th e time of the lack o[ int.eres t o f th e Japanese Government in

th e came of the debtor. possibl y found it easy to aSS11l1l e that it was not

3 Spp Ross . Seloh. Carrasco,o & J~nda of !V1ani/a under date of November 4, 1948, to Mr_ Andrew Kirkpatrick, New York . The' statement in the decision of the Court . p. 18, that "As we Mve already stated, the J apanese war-notes were issued as legal tend er at par with the Phfiippine peso , and guaranteed by Japanese Government 'which takes full responsibility for their usa gn havi no thn correct amount t o back them UP 1 Proclamation of Jan . 3, t942)' ," can only be noplicnble, in vi ew of the lack of evidence, to what the Japa"pse Government did in t942, and in 1943.

4 See Annex sent by Ma jor Generdl FrBnk R. McCoy to the w riter, Oct. 22 , 1948,

til f'lffU{'/'fXE: L A!! JOCl:N.·1L

thl.: (k~igl1 ,,1 LIL t: III Ulp.LIII 10 roh du:: n"o.:ditor lUI" 1111: bendil ui the ddHOI',

ill a mall CI" ill 'Illicit lUI ],uIJii( J apalll.:'t: il1l1; I"(.'1 Ira, the n i1l11111t'lL

\\ 'l' 11"\\' IO!11(' Iff tlte 1[1I 1.: -.lioll II"ht:llllT " Ild lij .. (TrCI1C ocelll)alli 11:1' 11ll: riglll d!rough "lwl] II,C" of a dc pn.: .. ,cd nllT(' I1("\, h~ making it lq ':':d lelldlT :l11I1 ("nlilillillg' il '" '11 ('11. 11) 1II,ligc a cn'di(Or 1.1) acct:pt in \1 ;1\ ­

IlWlif, of <t ddl! "'1l1 l' lilili g 111:11 \\"a, at tilt: lilil " of 1';1111\(:111 pr::I( 'licalh ,,\

:tll1lll~1 Wfll"lhk". ,\, h;t~ h t,:c lI slIggc,t, 'd aho\(". Lilen: j, II , ) (: \;d(,II("("

l1I:mill '\led III aliI prarlin', Ihat hal'r bl;l'll ,ce ll which itldi ral( '~ 1/1<1\ IW_

ClIJ}\illg' PUII'"I"' (ollll'l" Ihan [;tll:lll ) hal'l ' ~l)lIg' hl III rau,il1 .~ a dl'pn·" ed

rIlITl'IIC\ 1" be kgal IClul('r. 1'1 4)hli~'c n cn:,1iI4)r (o ;l Cee l )1 ill p;J\rllC!l1 or :1

dd)! ' 0 111(:(11111).: 111;11 \\';. , of liull' , 'aille. The ,cope of ill(' o('( 'upnlll ' , rlg"llI dcpl' lul, II {lOll III(' dq~rf'f' flf {III I'III \\' rollf.!,hl 10 tile cr~dit()r II ~' the ('(Til

p:ml" deClT l" .

II I a ,,'on!. th e pr~Htife \\'lli,11 ha, dCleiull l'd ,lu)\I" a ,ig-Ilili(alll all d

n!lllpll.:Le ~fJ<'l e lilio ti [nml ,11(11 {'( mtiun nil IIII' pan n[ OlClllp;un" ;111\[ ;Iho

IlunrOll' ,11](1 '\t((c"rul rnlri4lioll <' ['rom fore i),!11 olklldl'd ,"'I:I[C, II'h e11 il .' . 'I'a~ ~llelllJll~d, In ge u l'!";]1 111l~ ah .. lclll i()1I ~I lld Ihe o ffn.:ctioll (If :liJlhl"

111:11 ue l'cg:lnkd :I_ l:,I:lIJli,hing' .. gcllt; r ,d nile of I lIt c rn:lli'JIlal Lall' r ll l ­

hidding Ihl: o( c!l I',nll 10 make il po"iblc for I[l{' d l.'hwr \0 n ,b hi, creditor_

Th~ wording i. as follo",s: "8, E./imole of Ih" Toiol Amounf o( Jopon~s~ Mili/ory Pe.o Noles In<J ~d in the Philippine .

The only ~nown and auilabla edima le of the toldl amounl of Japan",e milifllry peso note. inued in the Philipp in •• place. Ihi. amounl al 7,959,1>42,000 peso. , Thi, estimal .. is contained in an arlicle enlitled "Eilim~le of Monthly IUUel of Jdpa n~,e Mililary Note. in the P~ilippinel" in the 8"1I,,lin 01 Philippine Sloli. /i,s for December 1945 (Vol. 1., No, 21 . However, Iha aulhor of Ihi. article , a lud;ng official in Ihe Philippine 8uruu of th" C en.u. and Statistic"~ hinh al di.a9reemenl will, Ihe .ource on which hil eslim"lc ;~ ba,.d end .1,,1e< Ihlll the 101,,1 amoun t "could h~"e ruched" th e lum of 11 ,148,1>42,000 pesos,

I! .hould-be bome in mind that th" two fi9u res given a bove lire merely edimdle, and a , . not very well ,ub,lanliat"d in Ih e IIrticl" in queltion, Accordin9 to II, ,, article, II, ,, only defin'le ,ClYrce of info.malion i, ,, ' datemen! furnilhed to Ihe Office 01 Ih. Suprame Com­mander for the Allied Pow ... in Tokyo On Sept~mber 19, INS by a cer tain T. Kdl.ube. "liaison Offic". 01 the Centra l Liai.on Offic" in Tokyo," Accordin9 to the arlicle, Ihis ,Iat.ment 9ive. Ihe tolaf of J"pane'e military pelo notel inu. d by II.. Soulhe'" Region Development Bank (N~mpo Ka ihahu Kinko) in Ihe Philippin". b"tween July I, Iq42 and Decembe. 11 , 1944 al 4,87l,551,000 pe.os and e"imal~. thai appro.irna te ly 250,000,000 pel'" "' ... ;"ued by th is bank ev"y month from January 1945 through July 1945_lhu. ma ki"9 the lolal amounl i~.ued by tho b"~,, in the period July 1~42 throuqh July 1945 "p ' pro.imat"ly 1>,1>23,551,00 p"IOI, Th" Filipino au tho r of the articl" in Ihe Bulle/in of Philippine 5/0/i'/:(I th.n choo.~. the apparently arbitrary fi9ure 01 l ,l3l>,091 ,000 10 repre,enl II." IImounl of Japane.e pe.o currMCY th,,1 "'M i"ued in the p.riod JanuMy through June 1942 by anoth. r J apan.,e banI ,n Manila befor e the ella blhhme nl of Ih~ Sou lhern Region Deve­lopmenl B~nt Moreover , this Fil ipino olficial ,eache. Ihe highe r tohl called "po",ble" in fh ~ fitll paragraph by ca Wng Ka ~wbe'. edimate. lor amounts 01 Japane.e pe.o currency ;nued in the p~,iod January Ihrough July 1945 too low and .ubdilutir,g Som. app.'''nt ly arbitrary figurel of hil o",n,

In conclu.ion, On t~ e ba", of Ihe availa bl e evide~c e, it can merely b~ I'at~d tha t the fi9ur e lor Ihe lotal amounl 01 J a pane." maOtarv pe.o nol", I.sued in the Ph ;!;pp;"'" durin" the period January [942 and July 1945 probably lie. somewhere belween I~e two ligu'aI of appro.ima te ly 1>,1>23, 551,000 pelo. and appro.im,,: .ly 1I ,14S,t.42,OJD p",o •.

b~ Ihc ~;Il i~ra([ i oll of a d cLI throllgh a gr('alJ~ ti cprcciat l"tl and I'I":lni, ;dl ~

\\"' H"t h1c:;~ '"UlTl"IIII" Il ltkcd \\"11;11 11;" 1:lkell pklee arllOUlll' to ;111 illlpn"",­~i le Ilfilcli ce rell c(linH lliC crealion ur adlrulI"l C"tig llle llt ,If a 1' l"I lJlillilil l' I"ul l" ur IlIl ern;l1i(>I I:1I I.a \\"" r il e ;.{cllera l lCllOr uf lIu.: H :tg1H: RI:gul: t1i'-'lh ul

l!.Jui i~ ill IOlllpkl l" h:II"I IiOll} ,,"illl Ihi, lilllil:lli oll 01 Ihe ri ).\ ltI 01 the 01111 -

p:illl a) tllll ~ '>CI ,unit " Or" III l""prl"'~ il tlilfcrcml y" lho~l' Regulation, cdl lor Ihe lil11ila lioll " Ik hrre ("Iul,illl-ring lil c le:>" l or Ihelll all o ll !!.: !" lIlala"!" (ll-,crl e;, ("()lI,llleralj (lll" j' I" plll"jj(I~6 01 b:H:kg:l"olJnd "

lklligclT llI f1u"up;Ui"lI IIl"jug .. l: .... ~eIHial1 ~ prm i,ioll:t\"" dul." !lOt '1;1"11" to ll"an,rt;r ")()Icreiglll~ !lIcr the lcrritory (unlwllnJ. TIm, rig hh of Il l{"

I,dl i:.;"crc 'lI oCUlpant dUfiJJ~ l ire pl:riod of ib corHml Il\ef th e IHhli h.: lef­li lO I" ) COIICl"rIlCd :Ut" rtlca~ llrt'tl b} Illc (ll"CI 1II1;,I;llIce lh:II il i, II> be re" g;rnh.:d a~ the ICl1lpOra l"} po.~e'~llr of I\"hal it ("Olll!"o ], r:lthcl" Ilrall :1' :1

C( lllq UC)"(lf Lellt '111 II1C anlll i",i ti( 1tl "r Ille ' ICCllpi cd terfil(,r~" "I"h i, )llll ,I he eoml:lI11l } borne in mind" Til l" f;I[1 of lhc dislill l"l il>l1 h:h ,ulliled

10 I'rotiuC(" :r b(ld~ of 1:1\\" d el(: ]oping the cOllclu:.iun dlat Il'Hlllall~ lbe .. hid fUIiCl ion or IIll" 0I ll 'l ';1111 ill Iht" alt~I~I1Cc 01 rl ,i,t:lI){ C If) ib aUlh ll­rit ) , <Ill!! pl"H,r I" ;111 arllli'licc, i ~ Ihal (,I Ihe ;H illlirri,(r;IIOr 01 jll'lin" !O\l:r thc al"e;1 f"C 1I 1C(Tlll(1 r,ltller than lhal 01 :I Illililal"\ nlllte,ralit (.11-g agcd in :111 n["ft" lhi le operalioll , helll (111 an act Hc clld e;\lol" to d C~l rll l

thc C lle lll ~ , and 1l1ili/ing it, !)fl,iliun ;r~ UC(Upal ll fm ,u (.h all Cl111" -rhl " the lICCUP;Ull I, IInl ,I n ;med 1(1 be Il"eC, c\"(~n lor the pllrpo~ o f c nh<ll1linJ..:

ir ~ (;CO IIOIlII (" 11< 1\\",,"r. to lf l1l11llit act !> that do dirccl injuf} 101" ;11ll1 arc di,(\:tinful 01 th e I lrnpt" rt ~ or t' I1l"IlI ~ per,on, of all } 11aliollalil) within lh l'

onllpicd area, '" \(J11M";I, tilt} tl( 1 n'll ",ul 'jl"( t lh t! ll"'l'lll ~ If} lhc illl]" )'I " lion of pcn ;l llil'~ for nli~Lehal ior.

Tlli, lJOd ~ 01 bl\" i, uni'Jlle in proteillug Ih e illklbit;IlIl' 01 th e ,,/'­cUl'it.:d d i ~l riCl in Iheir relation, I\"ilh each olhel" ,uclt :I, th l"'~, for ex ­

a Ulple" rClc;tiul in their [Olliraet- ant! ddJh, and whell 111) mail er of rc­~isla llcC 10 the fillllcr of lhe o ccupant i, in l'oll"u l" Thm Ih e bdligcn" 11i occupanl b} re:l;')IJII 01 hi, ler~ achiclcllIelll ill ha ving- ).;":ol1 ed Ih e nl:l ~l c n

(JI C~" :l di ;') t rict und er Iii .. control lind .. hilll'>Clf ill lluit e :. (Iil fe relll n "I:ll ioll

II) pril:l le properl y wilhill hi, afl ll;!! :.;ra'l' th:m tloe .. ril e cOIlH ualltkr 01 an :trill } in the lidl! " Thc common ncc,1- or ~k11l:ll\i h of the l:Cll Lr chargeable Itt milll;lr> Ilt:("c;') ,itl" ami for Ih e pllrpl"C of pl"Oll:lting a f"ITC agai' ''1 allac\.., or I" L11;.hlt" il III 1"Ilg-age in;tll n!lcll,ilt: o pe ration" arc nOl likcl ~ 10 Ite kit 1)\ Ihc hd l ig"l"l"Cnl ol"Cll]l:lll1 whll Ii:r, Ollce c'l abli ' llcd h iul',cl l in b,,~tile lcnito!"}" \Yc find lh:tl th e 1-I;Jgllc Rq; ulatiom \1"llidl

a, int Cl"i l:lIio lial C()nllllflll law are cont rolling" allhough Iiol :II! lrclligt.:r .. "n h of lh e Second \\"orld \-\"ar wer c .. ign;r wrie\" hal c plan.:.! gTt:at 'liT" III'PI1

Ih e fa.' 1 o f p ri l";l tc ((\,"nl.: r,hip or I'IOI){;J"11 :r, a h;l~i , or a llai m for n ' llI­

PCI1',lIio ll ill r:h C of ,eifll l"e" "h the wril cr ha .. had Oila,i oll I" ' ;1\ cI,(""

whcn": '" rl i .. belil"ltd 111:11 I'" di,\ inni"l1 ,holiid hc nradc bltl\"L"l'l1 l:tngilrk

;.nd il ll;lngibk .)1" illtf,r!'tlt"!"a l ]>Iil :t l l" Jln )J«' rl ~" ' 1Ic11 '" dehi, 1111 I" lhe

1·16 l'IIIUl'I'INF. Lit]" ,lOUflNIlL

inhabilanl' of Ille occupit'tl tli'll ill. willi re'peel III 111(' tlUI' of Ihe Itdli ·

~"n' IH In I'drain fnllli {flllli~c;uillll, If 1Ill: IIdllOl i, a pril:tt(' iutlhitlua l

I\·,jllin;.: ill 111:11 It'IlilOl'} alltl Ihe nedil"" all illll;ll)ilalll of th,' u(oll'i('tl

tli,II'UL 110 n ';p,oll i, appan'lIl \1/1\ Ihe OClUjl,lII1 ,hould he I' milkd It )

('atilt"! Ill(' 11..111 ... ·· "'po·ali11).; ;':Ull·I-aIlI . thl' 1)( ' lli14el'l' lII (1(1111':1111 ('ui'''' 1111 'Ulh 11, l'1I01II willI 1'("lx'lt III aliell t'IIl'1U1 pl'ilalt· propl'1'I1 lI' illiin Ihl'

1l(llIpil 'd :til a :h 1, ' ·lIjolt·1I hI " Ix·l1i;.:t·!l'lll in Iht' Irt' :UI11O'11I "I ,lu ll pili'

I,I III '" il lilld, III ie- 1111'11 dllrHai n.

Il!n'oiTlt'

:. , ,. ",dill ;Illd :llIll1<uit:u:lt' !-\uidt'. , \ la ilh inl nlillUlo'1I1al"I' ha, P'li llll'll

tIl lilt' 1"1411,'111'" 01 li'lliLaLinlh (,11 Lht' ,coPt.' 01 Ih(' (1(( lIpant\ l-;I!I('nl-

11I1'III:iI pOlII'1 a, d dirll'alt'd ill the (ext 01 Iht' H. q~ul;lIillll" ~ Slill, Ihl·l i.'

:111' ,<line ddinilt' pl"ohillilion~ 11':11 , I:tnd 11111. ' I Ii",. 1111" t',aI IlJlIc il i,

.lL"II .. red in .\1'1 . 1:1 Ihal "~I Iw aUlho ril1 III Ih(' Iq;itit11:tIl' 1111I1't'r 11:1\ill){

ill lal I 1'",,1·01 illl" tilt' hall1l, of the IICnlp"lIl. thl: I:lHlI' ,hall !:Ill' all Ih e

I1It.a,"l'l·' ill hi, pUll ('I 10 rnlcrt:' :lIld cn'II1'1.·. a~ \al ", po"ihl(', pllhlic

~lHkl' :Ind ~a l e l\ . II'hi!l' rl"Ix:clill~. lillie" "INlllllt'l> 1"·ell'llll.'l l. the lal,'

II I Io,nl' III til\' ClIIIUlII."7 I'hl.' tllJligati~ln 10 1't'~I)l'ct "the I : t \\'~ in fOl'l e

in th~' l'IUllIll". "ullll:" ab'I'luuh Pl'lIl'l1ll:d 1"'1111 'u duill).(. II'illlld ;1111'11 an IIhliJ.::I1UII1 lUll Iii IITl'(-l Ih,' ddJlllr-in·dillJr rd'.lillll ill ptT ... III, I'c,ill,

IIIJ..\ in Iht ' IHllipil'd Ll:ITilflt'l :1Ilt! nOl"hh ,;" ill Ihe ]lft·,t·1lI (,:h(,. h) l'l'll ­

tlu i Ill-; "raCt it ;111 \ lIon hk~, I ht' dill ~ uf a n"illt' lll ddwlI' I ~ I p:t ~ a debl

to a 1I',ioll' ll1 alil'lI O'l·ditor. III l:to 'lldl all tllJli).;a l ion 1I1al Ix: lait! ,

~ajd 10 .,i,1 allol h.· a Iltl"il'l' IIIf111 III I 1111'1 11 :11 illnal I .a\\' ijllill' ap:1I1 11'0111

Ihl: 1I 'I!;Ilt' Rl·J.:llla ti<l 1l Ihal It;" hn'J1 '1"1111'.1.

111 IIh:II illlllll·diall'll 1'III"w, il j, '111IJ.:111 111 111"11111 11111 II'hai 111l' bct,

of IIII' illtt'ntati ill1:t1 lik l'('I,'al :h 1'1 rIll' pl-;Hlin~ III IHIIIJl;llIh in lite

lOllI''>\.' III \\ 'nIH 1\:11', ill :llll'llljlL il1;': I', ('011111111 ill 1I10,lifl tht· Ik!.I'" IH'·

i!lt~,r 11'1:1tilltl,hil)' III Ilri,;uI' inllil;dll:tI, alld patljllll:trl, ill "lil'lI 1'1"

~ioknl'. \l'ilhil1 ol(lIpiul :Il'l':l,. III i"lIil1~ OIIIl]l:lIiol1:" Ulrtt'11(\ 0111(1 hI

Illalilig il kgal 1(,lId .. r.

. \ hl ' I(' j, a \I'd I lllO\\'u pl'e(tI1VII' for the {'(lILII"I' 01 til(' Jal'arll',('

lHilit;lI ~ 1[II!'l' lln ill ICII 'l1t l imh. i.t', lilt' CI·t·lllall illllalioll alln' \Vlllid

\\':11' . I. I hI ' katliu!{ Chi' W:h decid"11 hI Ihl' 1-t l'irh,gl'l ilil1 011 ."\0\('11111('1'

:'. H1d •. Int . LaW', 2 Ed .. III . 18'15, r, Nanett , Dembi., Berman in hdual ear Journal. Jul1 19041. Volume 8. pp. 357.

3'10·3'11. 7 Decla .. d R. Lemlin in hi, A, i, Ru le in Occupied Europe. Lew, of Occup.tio __

Anel."i. of Government-Proposa l for Red"... 1'10404. p. 55, "Th, occupent viol.t" intern'Iional I.w by c.uling a sp.cial currenC1 51'Iem in o,der to enrich him .. l! be.,ot>d the limits impos.d b., ,h. Hague Regulations. He is entitled onl., to requisitions nnd conlrib..lions for the nud. of the arm1, with dlle relpeet lor the .. Iou"a. of tha occu­pifll country; he Clnnol leg,111 strip Ihe cOllntr1 of ih Iinanci.1 .nd economk rei"urc" by • Ipeci.lly crenled finanei ... 1 mechanism."

tONCE 1:NIN(; Tlll,; fI ,'" IF PIA CASE 1<17

!!8, 1 !,"62, ~ TIll.: lacts wcre ~cr~ :.imilu 10 litO,C in ollr case, T11(' debtor­plaintiff, 011 April I. l!l ~n, alTered 10 p~ y a J e bt witch \\,a., ~('curcd by J.

mongagc, AcccptilllCC hal'ing 1)I.:cll rcfmed the dehtor filet! a claim lor ('ntl") of ,:ltisfaClioll, The deci ~ iol1 wa~ ill plaillliff\ f:tI'or. The Germ:111

U llT(, II("\' 11';1" !lL1 ,\pril I, 1~12U (\epn.:ciat l'll b) ahollt !)O pcr ccm,9 T he , \\'ef'pinl{ judicia! rCl alliarioll W;h replaced h) il'),:" i, I,u ivl' J'cl-alllat ion k" dIan thl l'e lItollrh ~ later, i ,e. on F('!J!'u:IfY II, r ~~q.\O

The {'I' iticl1n: i ~ admitted! ), ~call1. (:ullapll(, oj :1 currcncy did nOI IICCL,!' ' II fn.:(ILI ('lll J ~ Ih:1I it (0111,1 be {Jlh('rwi ~c. l\:l'\'crthd('~~ the clidc llCC ,hmn Cfllllilicingly Ihal lc){i~latilln ami COUrt, did 1101 admit Ihe dc,· trUC! iOIl of propCr1 }' ill\'estl'cI ill 10:1 rho Tit i, pri !lei pic 01 b \I' :111\1 l'ljn i 1\

11101 ) lllli be liolat ed by Ihe Co\'et"T11l1CIll of lhe I'h ilippincs without a

b readl 01 irtt ernatitJllal law , Thi ~ bre:lch KouhI. it i, ~lIblll illed . ne ver haH: bl"t"1l lho ng-hl 0)[ il the d ll!l1 t:~ !i c bank~ had no t hecn protected IJ" lh e fart lhat they did rtrrn~nt IH!~ine ~ ~ a nd, tli erdol"c, the dUl )' 10 rep"" d cpo~ih ,u the minimum ra le lI"a, 110 burd en tn them,

Al lit e I!t acc CIllIfl-I"CIICe afl er th t: first \Vorfd \Var on January 2:),

1!j 1!J. :r C(trllllli~,iun W;l\ appoilil ed '"10 ilHluire and to re port UPOIi the liola tion, of imcrl1:lI io l1al law ('Olllillittcd b~ G ermal1~ ". I\Iateri:l i ",:! ,

collected IIml el" 3!! hcad~ 01 whidl numbcr IV W:b "Deb;lscmellt of the ( L1ITe ll C'), and i_"lIe 01 'puril)lI' nlr!'enc>."ll The lal h whi ch were deemed

11) th e C!lrnllli ,~ i(ln te) bc a \' iohniol1 of imernatiollal law arc dC~CI"ihed itl !hi, p:tlllph kl It <!, far a, Poland and ScrlJia arc ('IIH lT1I("1I. '1'" Ilwn­

lio n :m ex ampl c (lTle (If rhe fae" i~ tile

"I ss ue of 8(;2 millions of new (:oin under the name of 'Polbh marks ', curren t only in thai part of RU >;llia ll Poland ruled by the GovC rllor-General of Warsaw. All requisitions we re paid fol' h.\· thi s means."

The fac" in Serbia :lrc more fully k nown frolll a leiter which the I' rime ?l li lli ~ l e r 01. Serbi a, ?llr, I'a ~i(', wrOle to ?l1r. ClemCllCt;l 1l 011 ,\b y rj, l!jl ~, .

a~ billow,: 1:1

"Thc ellemy has put in cil'cu l:ltio n in Scrbia about 1.000,000,00' ) f rancs of paper money, whit:h is a t pl"ct<ent with out nny \·alul!. AI! llcgotiable property of Sct'bia which was not destl·oyed. stolen, or 1,IIIIHlcrcd was bought by the encmy lIuthOl'i li cs an d by their tH.-

~ Zi~il •• n~t V 31 / 23, Enlc~.idungen in ZiY;I.~ch. n 107, 78·9~, ~ h.n d.pr.ci~lion by no l muc~ mOt. t h~n on. 1. .. 11 "' .. , d.emed luflicient 10 ju.tify

uY .. lu~tion; Reich.gerithl, Dec. b, 1921. D.c. IS, 1927, and J .. nuary Ib, 1928, Ju ri .I'. ch. Woch.nlcrift 1928, Ise. 1384, ~nd t801 end th. nol., by Muge l, Jurillilche Wochen. sehrift 1928, IbO ~ nd ~94,

lO Third Em. rgency Tn Ordinanc., R.ich'g.,elzbldt, IH . II Comm'"ion of R.'por,.ibililia., Conf.rence of Paril, 1919, Viol .. tion of Ihe Lew. and

Cu.loml of WM, Carnaqi . Endowmenl for Int.rn .. lion~1 Pe~ce, Diyilion of 1t, I .rn~tion .. 1 l."" P .. mphl.t No. 32, e.ford, 191"', p. 18.

1~ p. 43. I ~ Pu ce Conference Bull. tin No. 300, May 22, 1919: reprinted by P. M. Burnelt, "R. _

pMalion. "I Ih. PM;' Pea ce Conference, From th . St .. ndpoinl of Ihe Americ .. n Deleq"l;on", Vol. II, 1940, p. 13. IS.

J--L8 I II IlL! / ' l'J.VJ~' LA 1 i' JO UR.\'.-l L

Lior.a!s fo r that pa per money which had been gi\'en lega l value. On the other hand. the Serbian nopulation was ob liged to exchan ge Subian ba nk-n otes st ill in the ir possess ion fo r that paper mon ey; at t he time of that fo r ced exc ha nge, the Serbi a n bank-notes were ex­changed for half of the ir face value, causing bea rers a loss of 50 % . It is one of the most impo rta nt a nd on e of th e most disastrous dam­agel: suffe r ed by Serbia among all those that she has suffer ed un­der the yoke of the ene my. The population is ther efo r e now in pos­session of a la r ge quantity of papel' money which is worthl ess. When these bank-n otes were put on the market, the ir value W H:::

guaranteed only by a cas h de posit in th e proportion of one kreutzer fo r one crown; as th e'e notes wer e used in payment for a ll transa ~~ ­tions in occupied Serbia, on e can say that they p layed the part of di sgui sed "bons of r e(! ui s itions". As it ha s been ad mi tted, without, opposition, that "bans of requisitions" mu s t be r eimbursed, we ask that thi s paper mon ey whi ch had no and has no r ea l mon etary va lue, and which rep resents rea ll y "bons of req uisition" should be r eimb ursed ; if thi s was not done and in view of the mass of those notes which th e enemy has put in circu lation on our territor y, the eco nomic r e-awake nin g of t he country wil l be imposs ibl e. "

The draft of the FirsL Sub,Colllm ittee of the P a ri s Peace Co n(ere J]ce

ta illil ated the caLegories or damages to be inde mnifi ed i n 31 sections . Sect io n 22 n :ads:

" Injury resultin g to All ied nations, f r om the necess ity to which thc>y have teen put of r edee min g monetary instruments and in genera l a ll ob li gations expressed in terms of enemy money he ld by the il:­hab itants (pub li c or private persons ) of ter r itori es wh ich haye beell in the power dr' j llrr' or dr' [({e/I) of the enemy I:'owers, or held by pri son er s of wa r alld inte r lled c i v il ians."I~

The pr<)\' 1~1011 \I'as lIot incorporatcd in th e final drarL beca use first.

appare lltl y Belg iulll had been able to make an agree Jl1Clll d irectly \\"ith GcnlJan y in D eccll JiJer, 1918 ,13 ~ ~ co lldl y it was dcemcd unnecessa r y to

repea l in th e Peace Trea ty o bligations \I'hich \I'e re cl earl y cS La b1ish ed b y

Ilil a te ral prearlllisli cc o illigalio ns; thirdl y, the re m a ining obl iga tio ns of

(;enllan y were obligations to th e gOl"(; rllmenl (arler the re turning go\'­

el" lllll e llt s had rcd ce lncd I h e ell rrc ll cy issued 011 orders or G e rilia n y) rather

t ha II 0111 iga Lion s to pri n t t e pe rsolls ; a llll fourth I y, th e d a m age cau sed

\I' a, comparabl y IIlino r s ill ce th e \'allle or the Inark had onl y been re­

d uccd 11 )' "J1 per ccnl. 16

The rull lcgis latil 'e a nd arIJni ni slrati l"(; dOculll c llla l ioll is accessib'lc

III tile cases of Belg illlll a lld Roulllan ia . By a G erlll a n decree d ated

14 Pre lim inary Peace Conference Comm issio~ on the Reparatio n of Da mage, Fi rst Sub·Comm ittee [ English Offic ial] Min ui es, 116· 233 ; Reprinted by Burnett, It , 529 , 539.

1~, Foreign Re la tions of the Unit ed Sta tes , Paris Peace Conferen ce, 1919, Vol. IX (1946) , p. 527.

16 For. ReI., op. cit. Vol. V (1944 ), 53·54, 323 , 344-345 , 375-376. The figure of 44 pe r cen t is based on a statemen t by fhe French Finance Min ist er Klotz that the va lue of the mark slood after the reoccup"tion a t 70 French centimes whilst the par valu e was francs 1.25, op. cit. , 54.

('ONG'/~'I:NI ,VG TIIF: IIA 1r J'/ , I CA S /'; 1 ·1 ~)

J anllary 9, I ~)I :) franc nOl e, to he i,," cd h~ a Belgian I)anl.:. llie Soci ete

(;e llcral e de IklgilJlI(' , wen ' ded ;l1"f'd In he 1c~al lellikorl7 Thc 1101l'~ i~ _

' lied 1J } Ihe .'loci ete (; cncr:ilc WITt:' C() \"('1'cd 1J ~' a d CjJo,il of l1larb at Ihe i{ c idl,bank III Ikrlil! :1I1101l11Iill).\ ;11 Ihe tillie of th e anlli,tict:' tn

1.(iulI,()./lI.\I,UI Illark,. B~' Ilj(' lJl'<II(lnll (,r "ip:! :'1-\TCl'd 111 ,on in December

I~JI t; , (; (: I'I11all ~ Il'arl ~felTed Ihc di(HI,IUUI,lItHI 1Il:,rb 10 the SoCiete (;e ne­

r: ,](', B> Ihl' ,alll l: a~ ITclllcnl Ihe right W;h rC' CITcti fllr till.' Belg ian

(;1)\ eI' IIIIICIi I In 1'( 'lllIi n' ti ll' l' ,\I!iall).tc oj' Ihl"C nlark, at the rai l' of I. :! :-,

1-1:1\111;.\ 1'('1 11 1' 111.'11 , lhl' Ik lgi:11I Gm f'rlllHCllt

l.'Mhangcd Illl' IIla!'k, \,'hi , 11 were III cirr uiatiu ll in I kl~'illm incllldilLg

t il e I,/;(UUIIIII,IUIlI 111:ll'k, :11 tl1\' ra il' t lf I.Z.-, Iranc for the Il lark , ' rllc

neglltial iom III I' ind el11nifi calion :11((1 relalll :t1ioll with the German COI'­

l'nllile ni ,,'(' rc Il r( lt 1":Jrt cll I" IT a lM.: r i')l1 of more than letl year, but e er· ilia II ) } i('lded finall } 10 Ih e d:lim of Belgilllll in Ihe " ,\ g rcclllelll re· g:lnlill~ the ,\I ;'I r"' '' , ~ ig-IIl:d :u Bru"d, Jlll y 1:1 , 19 2 !) , I ~

The b r b concerlling dte i."lI c of local cll1'l'l'n cy III RouJll;'lnia were , el·y ,imili:! .. , C I'nUall ) pbl;ncd tile i ~s U<I lI ce 01 llOH:S In ROUlilani:11I

lIlITell (,~ which \l'e l'e to I)e lctleclnetl in C;1,e ur :1 l' iclUriull' Ill'all' IJ ~ thl' ROllllla lli :11l (:(I\I 'rIlHl t: llt artd ill the oJlIHJ\il t, ChC b ~ th e R t: icJ h b :IIlJ... . ~1I

l ' ILc 1\:IIII":L (: e rt cl'<Ila R')lItall:t i'~ll ed ~,II l .i';! i . ~H i lei !It wlti(h II'tTC

rOH' rctI b ) a Ikpn,i l :It thl' Rc idl~bal1k ill Ikrlil! allloullting to I.ri~l. ·

iX ~ ,;! uti lII:lrk, .~1 It 11' ;1, Illl' lltiolled O il Ihe hark of th e 1101(:, thai till' pal ·

lil oe lH II'a, ~lI ar:ttH l'I'd h I' :1 d epthi l i ll m,lrk, I ) ill~ :11 the R l' id l,IJ:IIlk.2! CIIIH!'al'l to l hc Bdg i:lll (·:" e the de]-lo ... it at the R eidl~bank \,' '' ~ nllt tral"rvlT{'d III R(l lIll1;ll1ia alll'!' thc al'1I1i,tice, H owcI'cr, German y I'e· cof!, ni/c.J her (>ul;~:Jti ll ll 1H hdltl <II le<l~t . he d eposit at till: di'pmal o [ lit e ROll1l131liali (:0' crlHlle nt.~3 The Ili'llIll e \\'3' scttl ed 1111 j\'1)\embl'l' III, l~r!R b y an agrcelllCtll bClII'cell German y and ROllmania according I" \\'hi ch the Reich,hank IIlldcl'look 10 aid wilh Ihe slabilil:l1!oll 01 tI ll' 1{,lllmallian ClIlTl' nry.2 1

It will be ol).'iI'l'\'ctl Illat in lit e Gl~e~ of Ilclg- iulll and ROlIIl1:m ia , C c nn:lII Y had pkdgcd her own ClilTellcy by d cpu~itjng- thc equi\alclll ul the local r urrency ill mark~ al lhe R(:' icll ~b:tnk ,

17 Pir~nne et V~ut~ier , l~ leg"I~tion et I'~dm,ni<lr~tion all~m~nda en Belgique, hri. , New·H~ven , Inb, p. t4 I t seq.

t8 Krau. a nd Rodige •. Urlunden .um FriedlMverlr~ge, 1, 1920, p. bl. I H Lugue 01 N~tioM, Truty Serie~, No. 2390.

2Q Minute. 01 I muting at the WM OllicI, Berl,n, Od. 29, 1911:1, A Memo: r Showing the Roumanian Government'. Point 01 View Regarding Germany's Obligation of R.funding the Security lo r the Bank Note. I"uld by the 'Benea General. Roma M', p. 32,

~ I Ml morandum of the Anenor Deleg~t. of Roum.ni •• t the Final Service. of the Commi .. ion of Reparation., Jan , I. 192 1. Memoi r, 44·4B.

~~ Id .. 4. Id., 51·bl , ~~ Cocrespondenee between Germ~n and Roumanian Government. in th, yur 192t , ~ I Baron 80r,' Nolde, L. Monn." a n droit internalional public , Raeulil d .. Cou",

1929, II , 311.

150 PHILIPPINE L A TV JOURNAL

In the course of \Vorld War II , "Allied Military Currency" was is­slI ed by the U nit ed Stat C's and Grea t Bri ta in in ltal y.25 The denomina­

tions consisted o[ I , 2, 5, 10, r)o, 100, 500 and 1,000 lire. T he rate o f

exchange being o ne cent to the lira, the va lue of the highest nNe '\'as

no more tha n 10 d onars. Soldiers rece ived the ir pay in t hi s mo ney by

wh ich a lso suppli es and materials for the Arm y were procured. Simul ­taneo usly with the issuance of the so-ca ll cd :\,\1 lire a n appropriation

accoulHing' procedure was se t Lip by th e Arm y to prohibit the possibilitv dl a r the is-; ua nce of sLich currency would ha\'e the ef fect of in creasing

the ,\rlll y's appropriation be yo nd that provided by the Co ngress. AM lire

\\'e re not on ly di sbursed for wages to troo ps a-nd purchases of suppli es

ilttt also for paYlll enr o f loca l gOl'ernment emplo\'ees, 1ll:1imena nce o f h ospi ta ls a nd schools, and loans to lTlunicipa liti es and banks.1G

Appare ntl y it was plann ed at first to leave the redemption of that

latter ca t('gor y o f issuance to the It a li an authorities. Obviousl y this a t­titude was in accordan ce with the Rules of the Hag ue Convention. HOI\,­

evcr, it seems rh at the reserve whi ch was set u p in the A utumn of 19 H was des igned to red eem a lso thi s ca tegory of notes.~7

The pu rpose, d egree a nd m eas ures by which inflation is prevelHcd arc d ec isive of the propri et y or what is d o ne. What the American auth­

o riti es planned to d o mal' I)e described in the wo rds o[ th e Tre::l sury o pi ­

JltOll noted a bovc.28

"We Lhal l undoubtedly s upply the inhabitants with more goods than we take from them, and our whole aim will be to improve econom ic conditions in occ upied areas , r ather than use t hose a1'8 ;IS

for our own benefit. Our announced progr am is one of r elief and re ha bili tation rather than one of exploitation. As long as the wealth of the occu pi ed territory is not impai r ed, and is, in fact, enha nce d by our mili tary occupation, throu gh a ll ~t

ga in in useful goods, the currency is protected against the rea l infl aiion Germany is imposing by draining off economic wealth. As long as we fo llow so und policies of taxation in t he occupit!d territory , a nd protect the economi c structure against price infl a­tion, we will maintain the va lue of t he currency against any depre­ciati on clue to internal ca uses."

2:; The facts have been described by Mr, Donald L Kemmerer , Assistant Professor of Economics, University of Illinois, All ied Mil itary Currency in Italy, The Commercial and Financia l Chronicl e, Sept. 21, 1~44 and address On January 16, 1945, Allied Military Cur­rency in Constitutional and Inte rnatiora l Law, Money and the Law, Proceedings, The Ins li­tute on Money and the Law 19~,5 , New York University, 1945, p. 83-92,

26 Treasury Memorandum " Re O pi nion On the Legality of the Issuance of AMG currency in Sic ily" , December 23 , 1943 , Occupation Currency Transactions, Hearings Before th e Committees on Appropriations, Armed Services and Banking and Currency, United States Se nate, 80th Congress, First Session, p . 73, 82; Navy Department, Office of the Chief of Naval Operations, Civil Affairs Studies, I. Illustrative Cases from Milita ry Occupation, 10 June 1944, 51 ,

~7 See Kemmerer, loc . cit" 90. ~8 n. I. p. 82,

CONCERN I N G THE }-fA H' PIA CASE 1.)1

The United Slales lived up to lhese aims as need not lO be pro\'ed in our da ys of Ihe j\ larshall Plan and the Fore ign Econo llli c r\d ll1 inislralion .

The foregoing experiences o f Germany with respec l to ilS co nduct in Ihe firsl World War and also the later experi ence of Ihe Alli ed Powen embracing Ihe United Slates are seH-explanatory. They a re referred In at some length beca use th ey o lTn no precedenl (or what Japan sought 10

do as an occupant of Ihe Philippines.

In Ihe present case Ih e Ballk of Taiwan is constantl y referred 10 a, th e ' "Liquidalor" of Ih e China Banking Corpo ralion. ~!1 This leads 10

the qu es lio n whelher it properl y o r ad equatel y performed ils fun ction ~! , liquidalor. The liquidation of a c()rporation is ,y nonolllous wil h I he

winding lip of th e a ffa irs of the corporation . There is no proper or COIl1-

pl ete liquidation in whi ch debts to cred itors are not se ttl ed a nd paid as well as asse ls reduced 10 a liqllid sla le. 30 In the presenl case, on ly a bout len per cent of the deposits of fore ig n ba nks were a llowed to be with ­drawn .

The conduct of the liquida tor in the present case had a lso another sig nifi ca nce. Its retention o[ mon ey represe llling debts du e b y fore ig n

banks to d epositors sen 'ed in fact to be a conveni ent mea ns of preserving lhem so lhat lhey wOlild be subjected to the d angers of infla lion and d e tcri o ral io n o f currency ,,'hi ch the: Japa nese Go\'ernl1l e lll mig ht lal er appl y. Thus here wa, a process" hereby the occupant: held within its grip som e liling whi ch later by a method akin lO confisca lion it co uld ruin th e \'alu e o l, cOlllrary lo the injunclions of the Hague R egulatiom. Looked at in I h is way, th e cond L1ct o f the liq u ida tor as a n agency of the Japanese GOI'C rl1ment lege the r with the later action of that Government united jointl y to fa cilitate and also dfectuate the cOlllmission of a n inl ernational wrong. Tha I wrong was of a t\'pe which Articl es 43 and Llf i o f til e Hagll e R egulations oj 1(,07 appeared to forbid .

.-\. third concil ision is to be drawn [rom the same [act. There would be a discrimination against non-filipinos not permissible pursuant to

2~ The dec ision of the Court , p. I. HO Soviet government confiscating and appropriating properties of dissolved Russian

insurance companies did not become "liquidator" of assets of such corporations so that its title to New York assets of Ru ssian corporations and subsequent assignment to United States would be recognized in courts of United States, "liqu idation " of corporation im­plying wi nding up and distribution of assets among creditors and stockholders . United Sta tes v. Bank of New York & Trust Co., D.C. N.Y., 10 F. Supp. 269, 271."

See also: New York Title & Mortgage Co. v. Friedman , 276 N.Y.S. 72, 153 Misc. 697; Rohr v. Stanton Trust & Savings Bank of Grea t Falls , 245 P. 947 , 76 Mont. 248; Gilna v. Barker, 254 P. 174, 177, 78 Mont. 357 ; In re Silkman, 105 N.Y .S. 872, 875121 App. Div . 202; Peopl e ex reI. Palmer v. Acme Plate Glass Mut . Ins. Co., 10 N.E. 2d 988 , 991 , 292 III. App. 275 ; L. D. Garrett Co. v. Morton, 71 N.Y.S. 17, 19, 35 Misc . 10 ; Wilson v. Superior Court in and for Santa Clara Cou nty, 43 P. 2d 286, 288, 2 Cal. 2d 632; Gibson v . American Ry. Express Co., 193 N.W. 274, 278, 195 Iowa, 1126; No rthwest Bancorporation v. Com­missione r of Internal Revenue, C .C .A. 8, 88 F. 2d 293, 296; Henry v. Al exander, 194 S.E. 649, 651, 186 S.C. 17; Young v. Blandin, 9 N.H . 2d 313, 316, 215 Minn . III ; Gorn & Hardart Banki r g Co. v. United Stabs, D.C. Pa ., 34 r. Supp. 89 , 90.

]52 PHILTPPINE LA W JO U RNAL

illLernational law. Filipinos, axis nationals and neutrals were able to

utiliLe the payments rece ived b y them at a time when they had valu e.

The fore ign banks on the other hand could not pay m ore than ten per cent of the ir deposits and remained indebted to the ir d epositors in full.

Returnillg to the Hague R egulations, it will be no ted that Article

-46 d ecla red that Hpri\'a te properl y " * * * * t11U 't be respected". Debt~,

as wi ll be o bse n ed la ter, llla y be fairl y dee med to be embraced within

the concept of properly. At least a kindred obliga tion that rests UpOll the occupant for the be nclit 01 the residence o[ the occupied territory.

In Artide 53 it is sa id that "An army of occupation can only take

possess ioll or cash. funcis , and rea li7able securiti es wh ich arc stri c tl y the

IJl"O peny of the State, depot!'; 01 arms, m ea ns of tran. pon, stores and

su ppli es, a nd, ge neral I y, aJl mova ble property b e long ing to the State \\'hich may be used lor th e opera tiolls of t he war. " The perm ission h ere

g i\ 'e ll to the occupant is far [rom granting a pri\'il ege permitting inter­

l'cre ll ce in the financial relations between de btor and creditor who !t::p' pe n to reside w ithin the occupied area . ' Vhile the Un ited Srates Rulc~

01 Land Warfare print ed in 1940 quote the severa l injun ctions without

commell t, ex press i ng no a tt em pt to constrlle t hem a ny narrow way, there is a comlllent on the occupant 's privil ege .of se iZllre o r private property

by way or military necess it y for the support of other benelits of the Arlll\,

or o f the occupant. (.'i330) It may be observed in passing that evc n thi s interpre tation is a purel y military one, and nor necessari ly d eci sive of

the des ig n of the panics to the Hague Regu~lation .

The main point here to be noted is the de finite and clea n -cut o bli'ga ­

tion imposed by the Hag ue R egulation s upo n t he be lligerent OCCll­

pant as su ch to respect privare property of occupams of the di strict or­ulpied and by impli cation the contraclUa l relations ex isting between

the m. It is in the light of this background that it becomes important t o

o bse rve in a judicia l sp irit how far the acts complained of in th e Haw

Pia Case by the J a pan ese agc ncy coupled with th e subsequent action

taken by the Supreme Cou rt o f the Philippine R epublic sen 'e to defy the broad i nj un ction t hat has bee n laid down.

]n the Second Wodd War G erman y did not issne milit a ry cnrre ncy

in occllpied territories btlt ca used local curren cy to be iss ued to an ex­

cess ive degree. For example in Fran ce payment of occupa tion costs was

required at the rate of Fl'. Fcs. 4000,000,000 a da y from 25 Jun e, 1940 to 30 April , 194] ; Fr. frs. 300,000,000 a day f rom 1 May, 1941 to 10 November, 1942 ;:

a nd Fr. fcs. 500,000,000 a day from 11 November, 1942 to 11 August"

1944.31

Some racts with respect to cunency and inflation in France, Belgi um.

0.' e therla nel s a nd De n ma rk lll a y be seen [rom the table which follows :'

~ 1 Ban k for International Settlements. 14th, AnnuaJ Report. 1 st April . 1943.-31 s.t Marc.h;, 1,944 (1944) . 216,.,

1

France (Domestic expenditure

Belgium (Domestic expenditure

The Netherlands (Domestic expenditure

Denmark (Domestic expenditure

OCCUPATIO~ COSTS, l\'OTE CIRCULATIO:\!, H:,\~K DEPOSITS DEVELOPMENT DURING GERMAN OCCUPATION

Occupation CostS!]3

(Billions)

2

865 Fr. fcs 800 143 B. fcs 92.5

10.38 FI. 7.08 " 5.15 D. RI' .

3.926 "

IN WORLD WAR H .3 2

Note Circulation Increase Bank Deposits Increase

(Billions) Percent (Bill ions ) Percent

3 4 5 6

from 151 Fr. fcs from 137 Fl'. fcs ) to 640 324 to 414 " 202

from 28 B. fc s from 27.6 B. fcs to 104 272 to 70.3 155 from 1.15 FI. from 3.16 FI. to 4.38 " 281 t o 6.37 " 102 from . 6 D. Rr. from 4.706 D . RI'. to 1.658 176 to 9.128 94

Percentage by

Percent of ap- which the in-

preciation of crease in the

dol I a r ex- wholesale price

change rates, index exceed-ed tha : 0: U. S. mid··

July 31, 1945

compa red with

August 24,

1939 1945 compared

wi-lh 1939

7 8

24 217

33 Not ava ilable

30 162

o 67

32 Columns I to 6 are adapted from the 14th Annual Report , 213-237. Columns 7 and 8 from Frank A. Southard, Jr., Some European Currency and Exchange Experiences : 1943-1946, Princeton University, I nternational Finance Section , Department of Economics and Socia I Institutions, Essays in I nter­national Finance, No.7 (1946), 9. The figures stated by Mr. Southard are calculated trom the 15th Annual Report of the Bank for International Settle­ments, The Statist. The Economist, and the Federal Reserve Bulletin.

33 Including billeting, requisitions, and c learing deficit .

154 PfIlUPPINE LA TT ' JOURNAL

Contrary to Germany's a lLitllde in the first \ iVor ld W(lr the issuan ce

of local currency in th e seco nd W(lS not ba cked by a cieposit of Rei ch s­

n~ arks. The in rIa t ion(lr ), conseq uellces we re considerable bllt cert ai n I y silla ll er than llIight have been ex pected, Th e prin cipal g rowth of inrJation

took pl ace in Fra nce artcr th e l iberat ion w hil e it was prc\'e nLed b y legisl a­t i\ e I1H.: as u re~ in Be lgillill 31 and in /)e nmark. 3,;

Th e Japanese military admini stratio n , on' J a nuary 3, 1942, prodaill"

th a t "war-Il o tes (nlilita ry pa SS-IlIUI)(:» endorsed and issuctl b y the Im­

)lcria l Japanese COI'e mm e nt" in d e nomin a t ions lip LO Len pesos should I)e

kga! Lc ndcl'. Th e Kokuji No, tl , d ated J u ly 18, 19-:1 3. did no t go furth e r.

,'\ e \'enhcI ess notcs or h ighe r ci e ll Olllin at ion \\'cre issu ed , E\'e n thousa ntJ ­

peso not es ,,' itho llt numbe r arc ill e \'idellce . Totall y di srega rding Lhe

Il ccds of the n(ltion a l econ omy of th e Philippines, the Japanese military ad-

1llinisLration is~u eci noLe~ by which th e pre-w ar circulation or nOLes or Lh e

I'hilippines w as in creased a L leas t by 1l10re th a n 2,750 per cenL. As nOLcd

(l\)o\"e. a n "Est im aLe or Lli e To ta l }\11l 01 Int or .J (l pan ese M iliL2ry Peso Notes

Issued in the Phil ippines" \"hich th e \\TiLer rece i\'ed rrom the Far Eastern

CO lllmi ~s i o n , vVashi ngLOn, D ,C . will be [ound in th e Annex (a uached to

lootnoLe to page I"H abtl\'e) . \ iV het her G,G23'55 I ,000 or 7 ,9 :j~) ,(i -J2 ,000 or II , q8,(i.12,ooo Illilit a r y notcs wcre issued is no t d ecis ive [or our probl em,

The ci rClila t iOIl or notes 01' til e Phil i ppi nes before the w ar was 23 0,000,000

jlcsos.3r. 1--lcnce, the in crease of' circulating notes of all kinds was 2,78°,

g,;; ()1. or -1,7e17 per CClll. j\ comp(lrison w ith the in crease in Fran ce,

Jlcl g iun\, the i'\ etlierlands (lnc\ De nillark shO\\'s how excess i,'e alld uLterly

rep re il l'lls i hle t he a Lt i 1 ude of the .T (l pan e<;e occu pa ti o n a u thori tics wa'i,

\V I~ere th e il1rIatiD Il rcacliec\ th e sa ill e degree as in the P hili pp ines, i. e.

tile o tilCl' co unt r ies \\' hi ch are occ llp iccl by Lh c .Japa nese- Hong k o ng, Lh e

Colony 0/ SingClporc, and the N e Lh c rlallci s Ind ies- the situ aLion was re­

Ill cdi cd by legislat ion af ter th e \·iCLOriolis go\'ernmCn L re turned. PursuanL

tt) these ~ta lut es 37 paymcnts '\'hich were mad e on pre-occupation d e bLs dur­

ing the occupation (Ire not credi Led \I'ilh the [ace \'alue bur onl y accord­

ing to a ~c(li e , These sca les (lre dii'[e re lll in t ile three coullLries, <:Ith ough

th e prin c ipl e according to whi ch th ey \\'Crc ro unci is th e sa ill e i.e, the \'a lli e

01' the occupation curre n cy m easured by the \ a lu e of the Le rriLory's own

curre ncy during the sllccessive months of the occllpation. Some d e l.ail~

lIla y be see n in the table which fo llows.

34 See t4th Annua I Report, 226-227 , 3ii See t4th Annua I Report. 234-235, 36 Sixth Annual Report of the High Commissioner of the Phil ippines to the President and

Congress of the United States, covering th e Fisca l Period July I, t941-June 30, 1942, as quoted by Mr, Justice Hilado, p, 30.

37Hong Kong , June 4, (1948), 90 Supplement to the Hong Kong Government Gazette , t43 to t56; Colony of Singapore, publication of March tl" 1949 . Supplement to the Govern· ment Gazette, t949 , 33t to 345; Netherlands-Indies, May 3, t947, Staatsblad van Nederlandsch· Indie. 1947, No, 70 , p, t, 23 to 29 .

CONCERN1NG THE H A W l'1.1 CA SE

Percentage Credited to Pre-occupation Debts

When Pay ment s were mad e 111 O ccupat iol1 C,'rren cy ~R

2 5

N eth erla nels Colony of Indi es H o no'

'"' Ko no'

b Singa pore Ph ilipp in es 19.j 2

Decem ber 100 lOa 100 100

19-J3

J anll ary 100 I: ) 00 9:') Febrllary 100 75 8:) ~) I

M arch 100 75 l,O 87 ,\ pril 100 75 Go 8') .1

1\la )' 100 70 56 80

,Ju ne 100 (i :) 4:) 77 Jul y lno Go 3 ~) 71

r\ ug usr 100 'J9 3-: ) °7 Sept em I)('r 9 n 4° 33 (j:~ O cto be r 80 35 3 1 5!J ;\; O\'em her i n 3 " :) 3 0 di December (io 3 5 26 4°

'!lH J anll ary 50 33 22 25 Fel)rtJ<Il'\' 5 0 2-:J 17 20

j\O f arch 5° 20 I ~ 17 April :)0 I :) 12 II

1\Jay 50 15 1 1 ~

./une 50 11 I 1 7

.lui y :)0 10 10 5 Aug ust 5 0 8 8 4 Se pt cll1 ber 50 0 7 '3,3 O cwber 'Jo 5 7 <) --':J

1\ a velll bel' go 4 G 1.7

3~ Col, 2 taken from Art, 52 of the sta tute mentioned before; col. 3 and 4 compu ted from the schedule of the two statutes 11 Iso mentioned before; col. 5 computed from the so-ca li ed Ball antyne Formula which was proposed but did not become the law of the Philippines.

Hi6 I'HILlI'I'INT:.' I.A II' JOURNA L

~ r ". Hall' Pia owed '1,9Gi. 13 pesos before the occll pation began . This debt wa~ pa id in m ilitary not es as fo llo w.'>:

103.35 on October 7. 1942: Z,OOO in rates of 100.00 in the following 20 months:

400 on July 31, 1944 : 1.000 on Augu st 9, 1944:

1.01 1.92 on Augu st 29,194·1 ;and 451 .86 o n Augu st 29, 1944

.~(\lIe of t-. l l"s, Pia 's p:t ) lHe llt ~ II'hidl were made afler December Ig·r! would bc crcdil Cd 10 her on the bee I"al uc if the tramactions had tak e ll pl;wl' in H IHlg KOlIg, :"illg;lporl' o r the ,\'('(ht'rb lul, Imli c" allhough the

phra'il1!{ or the th rec SI31u, e~ i~ dirrercllt,

Section 3 (2) of thc I-long Ko ng sta lll tC prov idcs that paYII1cnts which \\'cre 111;]lle in IK:Cllll:ltiOIl cu n cnc), shall bl.! rc valued ill accord;ll lce Willi

the "I:-:lIe lHCliliollCd a[JOve and ~ hall bc a va li d discharge of such deht onl y Iv thl ' eXlcllt of ~uch revaluation " ,."

" ( ii ) if due was not deman ded by the creditor or by hi s agent 011 hi~' be half (a custodian or a !i(luidator are not put on n par) and was not pllY:lble undel' a con tract HI~ 111l. rties to whi ch expressly st ipu l­ated that it s hould be of the e!lse nce of s uch co ntract that Ilaymcll t s hould be made on :1 d:ltc certain or (i ii ) if due and de ma nded W l\S

made within three month s of such demand."

T he prmi.'> ion of the 51alll iC of Singapore which is illl ercsiing 10 u.o. i ~ Sl'ctillll" (:I ) (c), l'a) llIelllS which \\'erc made ill occupation curre ncy tu a Cu sto<iiall or liquidadoll officer in re~pcct of a pre-occupation capit al .tel" cM·ceding two hundred and fifty dolla rs in ;lInOIJlH were to be re­\ :lIu cd excep t wll('l'c sudl paYUl <.' nI S wa", cauS('d by dun'H or coercion {COlllUlitled II}' Ihe Cu,tO(.Iia n, a liquid;lI ion orficcr or a creditor agailht a de htur) .

r\ Cl'Ol'lli llg 10 Article~ 52 and 58 of Ihe .'> tallllC of Ihe Nelherland ... Jndi c, all )' 11:t}lt\Cllt malic dtlring thc occupation in occupation cUITcncy and all book Ir:tnsaclio lls arc 10 be rcvalued CVC Il if SUd1 pa yments wcn! m :1l1c ill :I<.'corclall ce with a jutigll1l'nt by a COlIri . :111 arbit ration a\\';lrd or a

1)l"il':l l e sClllemClll.

According to Ihc B,d lallt), lIe formula, whi ch oughl to be the law, Mrs. Pia would he creditcd onl y with a pa yment o f 1359.00 in Fil ipino pcsos; ;I('C'onliug" to Ihe law, of S i l1gap~")re, I-long Kong alld the Nelherlalld~ IlIdi c ...

with paYll1cnt s of 1233,'1;; 1 34~1. i7 anti 3, 165,24 pcsos respecli\'cl y.

1\ l r5. Pia was not the onl y onc who lOOk. advantage of tlte deprecialing curren c)' in Ihe Philippinc,. The follow ing pcrcentagn of Ihe loa ns OWCU to the Manila Bran ch o f the Natio nal C i l}' Ban k were paid 10 thc Ja pa ncse lilluidalOr in l!H+

CONCERN ING THE HA TV PTA CASE

J a nu a ry F ebru ar y March April May J un e . July August September October November .

1.42 . 77 .76 . 74 . 89

14 .17 12 .45 2 .64 4 .00 5 .20 9. 69

I G7

lL will bc o bscn 'cd th a t the pay mcnts madc in the first fi ve month"

were mOllthl y . 9!! o f one per cent. In June the percent age jumped to

1'1.1 7. The a ve rage in the six Illonths from .Jun e to Nove l1lbe r 1 ~ ) . ll was tl. 03 per cenl. T he cause of the sharp increase of paymen ts is not to be a ttributed to a ny known and new d emand o f the liquida tor.

It may be assumed tha t the Government o f the Philippines wo uld ha \ ' e enact ed a st a tu te si m i lar LO the th ree 01 the Ot her Eas t Asia Li c cou n­Iries if it had no t bee n a ble to protect its own ba nks by the minimllill balance rule thus discriminating against the fore ig n ba nks ,,,,hi ch had no t been able to d o current bu s in e~s dll r ing the oCCllpat io n.3 !1

T he re fu sal o r the liquidator, the Bank of Taiwa n, tw ice to release the Illortgage in the H aw Pi a case stands out as a significa nt facl. 01 co urse, it is poss ible th a t the liquida tor rece i\'ed pay me llt o i 4,563 .7tl pesos made by the d ebtor in August 1944 merel y for what it was worth . It ma y have been kno'wn to the liquidator at the time that Japanese milit a ry pesos o f larger denom inations than ten peso no tes had no t been made legal tender , or it may have doubted whether they had been tender. H ence the liquidal.Or may have felt. obliged, in case pa yrn ent were llI ade in such larger J a panese notes, not to regard thelll as ad equate fo r the se ttl e­ment of the d ebt. Or, the liquidator m ay have been influ enced by the vastness and impropriety of the Japa nese acts of inflation which if a llovv­cd to ena ble the d eb tor to pay her d ebt therewith, wo uld have amolln~ed

to sheer robbery o f the creditor, bOlh vio la ti ve o f p reced ent a nd hurtful

to the pres tige or the J a pa nese Government . In a word , there a re nUlll er­Oil S rt:aso ns an yone of which m ight have se rved to put the liquidator o n it s g uard, and to ca use it to leave the matter to its own later d ecision .

Be that as it ma y, it is a reasonable assumption that shrewd d ebtors ran to

the windows o [ the Bank of T a iwan in th e a ttempt to take advantage

o [ the d ecrease of the value o ( the occupa tion currency, o ne peso of the

Philippine~ be ing then equi \'al ent to a t least fift een pesos of the militar y

notes .

3:1 See page 152.

158 PHILIPPINE L.41f ' JOURNAL

\iVe now comc to an important colltracLUal undertaking by thc Philip­pine R epuhli c. The CO\'crnlllellL or th e Philippin<es undertook lO ill ­validate all Japanese dealing-~ by , ,: hich properly in whi ch nationals or Un ited i\: at ion s were illll' I'ester/ was hurt by violations of rulcs of ] m er­national Law, E"' idence of th is undertaking is seen in the " Inter-Allied Decl a ra t ion r\gainsL AC1 S or Disposse~, i()n CommiLted in Te rritori es under Enem y O ccupa tio n or ConLrol (with c()\ ering- Statement by His Majesty's CO\'ernlll e lll in the United Kingdom and Explanatory Memorandum i ,~Sll e (\ b\' the Pani c,) to th e Declaration) " , London, January 5, 19c13,40 to whi ch the Go\,crnlll ent of t he Co mmo nwealth o r the Phili p pi nes adh ered

on Ja!luary 19, 19-1i41

The exp la nato ry me1110randllnl on ,the "meaning. ' scope and appli ­raLio n" of the lllter-Allied l)cclaratiotl ,\'as issllecl by the sig na tori es o[

'th e rnte r-Allied Declaration, ;\." e ,'enhelcss, the m emora ndul1l has b een publish ed, as far as the writer is aware, o nl y b y the British Governmcnt. in a COl1lmand Paper. The coveri ng sLaLellliCIll of Lh e Bri t ish Covel'nrnen t ,> tat ed it to be tlw aim or the Inter-Allied Declara tion to comha t the policy

o J the cnemy and "to bring the whol e economy of the subjugated countries under contro l so that they must s lave to enri ch and strengthen their op­pressors."

I t was said by the Allied Governments to be "important to leave no doubt whatsoever of thei r resolution not to accept or to lerate t he misdeeds of t heir enem ies in the field of property, however, these may be cloaked."

In the Declaralion itself the Alli ed Cm'ernlll c llts ,rated their in-tention

"to do the ir utmost to defeat the methods of d ispossession practiced by t he Governments with which th ey a r e at war against the COUDt- . ries and peopl es who have been So wantonly assau lted and des­poil ed."

Accordingly these Governmcnts r eserved "all their rights to declare invalid any transfers of, or dealings with, property, rights and interests of any description whatsoever which are, or have been, s ituated in the territor ies which have come under the occupation or control, direct or in di rect, of the Govern­ments with wh ich they are at war, or which belong, or have be­longed, to persons (including juridical persons ) resident in such territories . This warnin g applies whether such transfers or deal­ings have taken the form of open looting or plunder, or of t r an s­actions apparently legal in form, e ven when they purpor t to tIe voluntari ly effected."

40 Cmd. 64 18, Misce ll aneous No. I ( 1943). 41 Ma nue l L. Qu ezon to Mr. Cord e ll Hull, Secretary of State repr inted (1 943 ) 3 The

United Na}ions Review, 78.

CONCEJ:N1NG Tl-IE HA 1l' ('fA CASr:

In Ihe cxplamu"l\ 1100e, i~~l!ed b\ Ihe Parli c~ the fo llowil1g ~l at elllCnl wa~ made:

" It is obviously im poss ibl e for 11 geneml dec laration of thi s nature to define t'Xilctly the action which will require to be taken when vidor,\' ha~ Leen WOIl and th e occupalion 01' contro l of foreign tC l'l'itol'Y by the ene my ha s been brought to an end , Dispossess ion has laKell rnnny forms and all will req uire eOllsider,ltiOIl ill the li~ht of circum~t:lI1 ce~ which n111Y well V:lI',\' from countJ'~' to cou nil'Y ," "[II so fill' a!; tl'llll s fel's 01' dealinJ!s are confined in their scope to th l' territory of :I purticu)al' country, the procedure of examiua­lio ll lind the dccisio ll reac hed I'('gan[illg their ill\"1didation will fall to h(> ulille r takeJ1 by the l e~itimate Government. of th e (;Ollutl',\' COIlCl'rll ed Oil its return, The Declaration marks, howevC!r, tht.· solid ari ty ill thi s important Illllttel' of a[[ th e P11rticipatill~ GOI'('rll ­nH'l1t:< :lIld uf the FI'elle h Nali ol1HI Commi tteI.' , and this mean s that thcy an' mutually pledged to a!'.;;ist Oll€' another a~ ma~' 1)(' 1'\."

quireJ." "The expression of so lidarity beh'>(~e n the parties also meallS that they al'e :tvrcC'd so fa I' as possible to follow in thi s maUer similil1' lines of policy, \\-ithout derogation to their national ~o\'('reij.("ll t.\'

and h:tvin~ l'(.'!,!aJ'(1 to the diffE'l'ences prevai[ing" in the va r ioll ,,! l;Olllltries" The pal'tie:;; making the Dec laration have accol'din!-(ly decided as a fi rs t step in thi s direc tioll to establish 11 l;ommittel' of experts, wh o wi[1 l;o ll :; ider the scope and sufficiellcy of thl' existillf[ legi slatio ll of tht' Al[i ed co untries co ncerned fol' the \lUl'­

pose of illV[l[idatill}.!" tl'lIn sfel'!'. 01 ' dealings of th e lliltlll'C iudicat ed ill lhe Dl'clal'Htion ill all proper cases ."

II i~ nol. [WI'l; (onl e llclnl lilal Ihe .\[Ii ecl ;\'atiom (I JllI l'lIlpbll'd on

.l alillar~ :-), lIlt :.; the {oll,iderali(JlI uf pa }IIIt'llt' l"ad t' 10 b:lIll., in tl" { lIln .. ' \!{1 "I' the (lClupil 'c1 Europea n ('ollillri l" :h ill\:L1id. Thl" illriatioll in t[le,l' CClulltril"~ had IH)J Il\"Ilg-1't "~l'C [ to a tlq~n't' lhat 'lICI! IluHl3lit' ,alll~'

to the Illilllh 1)f Ihe ~igllallffil'\. [1 i, hert cOlltended, 11I'1I"l;\e r, Ih;11 PIII­pCrl) i~ "dl'po"{',~ed" within 1[ll' meaning- (It t[1(' IUI l"!'- \lIil,.·d Ikc[ar;1I1oll \\'hN(' the dcgnT III inl1 :lI ioll i, ; I ~ gH'al a~ th:lI ind i(ill l'tl ill llll' fig:llll'

III thc lable abol (' g 'il{,11 Oil IJage 1,-,,) 01 thi~ d(lI\l)lI l·nt .

Ir thi~ h(' a corrt'ct ~ !a t('lllcnt. lit e g"Ull;l"llllll'nh panirip:nill!!, i ll 11K agl'CL'lll('ll1 of .I allllan :,. I!) I;I, 1.\I11ld Ihcm~('I\ n kg-all } oh[iged to 1( ':lrl1 ;) d ('lel"lnillaliflll 111;11 (kbl{)l'~ Wl're IHII reJiClctl i"n llli liabi[il~ b~ [J;)I!lIl'llt \ of deb" 10 occupatio" aulhnril ic,. Wh(' ll through a brg('r inflali,JII ,uch I'<l llllf'ni \\"01lld :ll!llllllll III prarli cl[ ro hlwn o! lIlt' credilor fill Ihe lwlldit oJ Ihl' dchllll".

lJ1tcrn:lIioll;l[ I.a\\" \\' a~ not changed bl !Ill' hIlCI"-. \[lin! J)('{!;J r;lIi <> 1I of J:!l1l1an !). 1~1 :I , but lI"a~ ,imp[y applied 10 Ihe chang;ing; l'("llll'lllli, \I"arrarl' 01 the C ll\:Lll\ . It I, ,i~llili(;1I11 Ill:l! ill Ihal app[i cation the ,lgll;1 !Oli('~ pkdgcd t!wlll~eht" 10 im;l[id:lll' ;1(, " ul 1111' l'fl( '1ll~

"/ wbidl Th \: r i"ht, (Ii Ill1'il ~1'llTa l ll;lllo11al, \\"1..'1'(' ,i(I!aI ('I!. , III {(lll'l'IIU!'lll'!

1"1 1(" I,ron'dlll"!'

IGO ('fllI.II ' /'INE (. .. 111 ' JO( ' I~,,"AI ,

lI'a ~ !ell (0 the lT lurllilli-\ ~Laln or C;"I Crtlllt l' lll\: lik <'" \\' i'>l.: Ilt l' , CitIng: 01 l illlit ~ ill lIonkrliut: la~l" . But whCl e tlH.;l"c IJI.:c;lII \l" c lid('111 a dea r liul ;uio ll oj lhe illjllll<LiOIl 01 Illl e rll:lliwml 1.:1 11', that li"lalioll \\'a ~ [0 be

n:Log'niH'd :md lI' a~ w ill' n:nu.:di l'd h) the n:1l1I"llill f.( Clllil ) vr ~Ialc.

I-lere wa, ad'III'wlcd),\l: ,1 an 111111G;11ioll [)I tIll: rnpeni, c lUlIll'l nilJ~ IJanie'> to lT ItH.: clI ,\-illl IC'Pl'l l I" calli .)[111' 1'. 1;1\1'1,'" n,lIdllC"i '1I,lailie d II ) the

lI:niona l, III all} 01 lil l 'll1 :11 Ihl' hand , tIt' IIIC Clll'1I1 } .

' I Ill' Illl c r·. \lli l'd lle(!:!r:!l i l>11 01 .1:1 1111:11' \ : , . I J!I:J. in thl' lig'ht Ilf lhl'

olli(i:.1 illlerprd:Lli(!I] g ill' lI I., ii , 11:1, ;r ,lin,'11 11(';1r'l113 IIJmll 111\': , .I ll iga. , iull :t"lIll1ul 11\ t hl' l'l li l ippitll' Ih' ptl b l i{ ill Ih l' Ibw l'i:1 CI't' , It j ,

l'l il ll ' ll fl' !II dL"lilli t(' ulIlkrt :tkinr; 11\ Ihl' R t' lJlllll ie I" (l iu le, lilt' \ 1111"'­

'ill (' lll'n 01 :I('h 1I 111IUall ) I'\').;'ankd a, \II'Ollgllll, :11 111 1I1 :lIli lr.:' II'11 ill III('

iltilali"lla q tOlldUlI ,,[ Jal'all 111:11 lI':h cOlil cHlpltlOlI~ of IIl l ' rir;IIl' oi

:dil'll fn:dilol" growillg 0111 01 d e bh dill' Iht 'lIl IJ) I' hilippim' tI'cllit;["'.

()I dirl" 1 \'IHhetlll t' ll f r.: III Iht' agr('('llll'1l1 \\";1, Ih e (11 ) )i~,llillll till lhl' )l;lll lit

111 l' Rqll!blil II) ,01111' :Ippl"t lpri a ll' pron'", III pc nuiL IlII 11)('al :t).\CIlII ,

judi.ial or ulhl' r , 10 I.!, il (, eifel! In Ihl' .l .lpallc-.c d l'O"cl''' . ' J cchlli, ':dl y Ihl'

1111'1h.ltl- .IJ "I doillg wt'rl' IIllilll ])(lrt:llll . . \ 11 appl"t)prialc Iq !,i )):uilt' l"Il '

:UIIII ClIl " 'l llIld hall' IIcl'lI a ,allll:lry 'I l' )1. "\1-\:1111 , Ihl' t':-.eClllil'C :llIlhorilil;'i

til IIl l' R l'Jlulllic I)y IIIL'I"l'I} illf"nllill~ Illc judi c iary ul whal had I:Ikl' ll pl:u c

wou ld 11:1\ (: ill :tIl prollabilil ) 'Idfill'd In C:1lI,r.: IIle COlirt 10 n'g'ard lite

.I"I':IIl l" I· ,II' lioll :I, ill\:l lid. l ~ 111 :1 mild, Ihc w luII(' I'hili l 'l'inl' R {'I"llll ic

\I a, 1IIIlIll d illl lTII :l li ll nall, III Ilw Il' rIlI' 01 Ihl ' inl l' rllaliollaJ agn't'IIIt ' 1l1 III

whi(h il \\'a ~ a pan ~, r hll' , whl' n 11ll' ,')IIIIt'CII I(' ( :Ollri. Ihrollgh i g IIOl~ III C('

lit whal hall I" k<:l1 pbin". 01 1"'1" all~ 1111tl' 1" r ea "!II . I"l'g:rrtled " , <: lllol"cl',rblc

Ill" 1:llid tilt' .I a 1':1 11("(' l'clich, il made ihdl tllC nlf'alh II) wh ich il~ 011'11

<"lItlln lin!:111,d ,III illl l' I"Il:lliollal "IIli14,lI ioll laid dO\I' 1I by ("01111":1( '1, I I

111('1"(,111 ('~I; II,li ')1l'd a l :tlit! cl:rilll ill hd lalr o t Ihc a l ien \ iCl inh who wc re

n:ll inll:lh III UIlt' III Ihe cOll lracl ing p"1"Iic ~ lor ('ollll ){ 'lh,ll ioll 0 11 acculint

III Ihe ir lo'~ . It Iml ) I~ lIh ' (']I('d al,o 111:11 lIii, CllIll l" aClilal ohlig;:llion oj

Ihe t'h ilippinc R qJltlll ic i, a ("0 111;11111111' 011(' , :tnt! rCIHailh a w:Jmil1g 1(1

III(> R CI'" b li (" [("I il" ("lill I''' or (l111l: " :tgcIH'k " hy r ntllifluiflg; 10 i){lIor("

wh:lI It", hee ll a~Tt'l'd lIP'IIl, lilli' c lll:u"!-\(' IIii.' ri'c,,1 obt ii{<llio rh of lite

R l'plllllit . iI l11ml' IJlIdit.: ~ procn·d 1t1'I"C,llt e r In ('111"01"1'\..' lit e .IaP:IllI.:Sl' III ,

JI.llitllJan l'(licI,_

II h", Ill'(' 11 1)(li llll 'd (ilil Ih:11 Ihc 1}c(i:tra liol1, IIr .I "I 11 t:I 1"1 F" I~II:\ di.1

11111 1'I111,I;llIl e n c w illI C["1lali(lIlal 1:11\' 1)111 :uhl'l eil Ih l.' (':-.i,lilll-\" i 111 1.:1'1 1:1 -

li.III:tJ tall' III dl' Illg i11); cf)l1d il i(m~. l:\ -I ltal ,1(];II II:llioll I"l '\ 't'akd Ih l.: ~harl}

ol)lil.;:lIil)1I 01 Ih(' govcrllllll' lli 01 tll (, l'hilippim" 10 do ('\ '(' r \' lh ill),\ ill i"

1"""('1' III n'_bl:thli,h :ll1d gain r('~ l'cci fql" Ihc d e li" :h oll' ('d

I,d orc Ihc hq::,in n ing' of Ihe ocrllp"ti()!! . Bill il I1Iml n m 11(' fo rg,()[II"II

I ~ The Decl"r~tion of J~~UMy 5, I'H3 iI 1101 men;;oned h Ihe Opinion of , .. " Cou,t in the Ha .... Pi. ,,,.e. loA .. Judi,e HiI"do, ...... o.e diuenl wu filed Iwo weeh laler, ,elers on page 46 of hi. opinion to Ihe adherence by the Gove'nment 01 Ihe Phili~pin". by quo ling tA ~di n Dom~e ' , wo,~ on T,ad;n9 .... ilh the Enemy in World War U.

HSee P"'l" 163 ,

CONCERNING THE HA HI PIA CASE 161

that a like obligation sprang also from the provisions of international law as they were known before the Deolaration of January 5," 1943 was accepted.

As suggested abO\'e on page 152 contractual obligations, embracing, of course, debts between residents of an occupied area, must be considered as property, and as such within the purview of the Hague Regulations, although they are not in terms therein distinguished from other kinds of properly. Reference may be made in this connection to the wording of the Treaty of Versailles, of June 28, 1919,-"Property, Rights and Interests." 44

. This wording was raken over by the Peace Treaties with the satellites.'J5 That language was chosen in order to exclude all doubts. The word "property" would have been sufficient. It is interesting in this connec­tion to note the text of Article 79, Part VII, Sec. II, (I) of the Peace Treaty with [tal)', signed on January 20, 1947 :

"Each of the All ied an d Associated Powers shall have the right to seize, retain , liquidate or take any other action with respect to all property, rights and interests which on the coming into force of the present Treaty are within its territory and belong to Italy or to Ita lian nationals and to apply such property or the proceeds thereof to :such purposes as it may desire. * * * * * All Ita lian property, or the proceeds thereof, in eXCeRlI of the amount of such claims, shall be returned."

It is inconceivable that a returning sovereign should be bound by the requirements of international law to recognize as lawful those acts of its enemy while a belligerellt occupant, which in the light of practice were contemptuous of what internationa l law forbade. Moreover it is un­thinkable that a returning sovereign would allege that , in dealing with the property of its co-belligerents in an occupied area, it possessed a free­dom that was not yielded to its enemy,46

III the Haw Pi a case the CIHlrt la id stress Oil the terllls of the Amer­ican Trading with the Enemy Act. In that document the words "Unired Star.es" were defi ned by the Act as meaning

"all land and water, continental or insular, in any way within the the juridsdiction of the United States or occupied by the military or naval forces thereof."

Section 2 in which the definitions are lodged has not been changed from the time when the Trading with the Enemy Act went into force on Oct­ober 6, 1917 47 until the present t ime. 'Yhen the Trading with the Enemy

44 Articl e 297 (b ), U.S. Treaty Vol. III , 3452. 45 See e.g . Treaty with Italy , Art. 79 ( I ). 46 The ' t ext-writer. Jo not me ntion, t he problem becau <e no co-bel! ig ere nt ever t hough t that

it mig ht be enti t led to VI o late property owned by nationa l< of a co. bel lig erent by recog nizi ng wro ngful a ct< of t he enemy and tak ing advantage of <uch recognition in fa vor of the national, of the " l ur ning G overnment a nd to th e detriment of na tiona l. of co-belligerent<.

4Yc . 106, 52, 40 Stat. 4 11.

162 PHILIPPINE LA TV JO URNAL

Act: went into force, thi s provision was not in contradiction o f the Hagu e Rul es of ]907, si nce the A li e n Propcrty Custodian was not e nti tI ed to do Illore Lhan co ntro l and sequestra te. ,\Vhen the CusLodian becam e e ntitl ed

to do more on NO\'em!Jer 4, 191 8,48 the FirsL Wor ld \Va r " 'as prac Li call y e nded a nd nobod y thoug'hL of utili zing the Trading with the Enemy Act

as a justifi e r of go ve rl1mclll.a l ac tiviti es \"i th in the occupied terr i LOr)' or Germany. Nor did an y o lTici ;li or COl1lmcntaLOr think o[ a ppl ying th e:

.\ ct 10 e ,'ents in occupied terr itory ( I taly or Germany) in the Second World \Va r. lfi

No tangible propert y or d e bts owed by d e btors resident in Germany (or other terri(()ri cs occupied by t he America n Army) to G erman banks

or o ther cre<iiLOrs of German or other natio nality reside nt in Germany

were La ke n LInder cOlllrol or inLO cus lOll y by the American Alien Pro perty Custodian or by th e Offi ce or A li en Prope rt y, of the D e partme nt of Jm­

tice. "o This is an import a nt [acLOr in t he present case , which has been comple tel y lost sight o[ by our oppon ents. There was so l id reason lor

thi s a bsLe n 1 ion b y the A l ien Property CusLOd ia n- namel y the terms o f

1 he H ague R egulations or I qo,. wh ich like ot her co n ITactual a nd non ­

contractual requirements o f Int erna ti o nal Law werc as a part of the law of th e la nd·iI directl y binding upo n a ll age ncies of the U nited States, and automatica ll y res tra illed the [reedoll1 o r th e Alien Properly C ustodi a n.

\Vhat [oUows is nOL by way of summar I o r recapitulation , but mere­

Iv a brief statem cnt of the 5e \'cr al di[[i clilti es and impropri e ti es in the

Ha w Pi a case tha i ha \'c been !luted abm'e. They \'a ry in importa nce a nd

sig n i li ca nce; bu L 1 hey dove ta i I LOgether in su ch a way as to reveal and

acce nt uate the wrong hil cOlld uct or both the occupalll and the Co urt, as well as thc rcs ulLing respon sib il ity LhaL has bee n thru st upon the R e­

publi c.

It is not shown that Ihe d ebLOr sought to pay h er debt to th e liCjuidator

in d e nomin a t ions o[ J a pa nese pesos that h ad beell made legal te nder iJv

Lh e occupalil. T he liquid a lor did no t fuJrilI its norma l fun ct ions as sllch

beca use it did not pay, except in small part, debts of forcign ba nks du e

to depositors. The liqui<iaLOr, for reaso ns o r its own, declined to release

48 c. 201 , 51 , 40 Sta t . 1020 , changing the wording of 57 (6) of the Trading with Enemy Act.

'I~ Only prope rty outsid e of Germany is embraced wit hin The La w No. 5, on Vesting and Marshaling of German Exte rn al Assets , iss ued O ctober 30, 1945, by the Allied Control Counci l. It will also be observed that Germany hac! ag reed to all conditions to be imposed upon her by the victo r ious powers in the so-ca lled " Unconditional Surrender" of Ma y 7 and 8, 1945 , in which the provisions number 4 are as follows : "Th is act of military surre nd er is without preiud~ce to a nd will be superseded by a ny general instrument of surrender imposed by, or on behalf of the Unit ed Na tio ns and applicable to German y a nd th e German armed forces as a who le ." The Axis in Defeat, A Coll ection of Documents on Ame rican Po l icy Toward Germany and J apan, De!?t . of State Publ. 2433 (1947), 23. 24.

:'0 The philippines may not be considered as e nemy t e rritory occupied by the American Army. They were re<;ard ed as part of the United States up to July 4, 1946 .

. ; 1 The Paquete Ha bana , 175 U.S. 677 ,700 ; Sk iriotes v. Flo rid a, 313 U.S. 69 , 72.

CONCERNING THE HA ltV PIA CASE 16J

Ihe mortgage to the mortgagee. 1n consequence o[ the inflation that en· sued , a pa yment of the del>t ill Japanese pesos, at the tim e of attempted paym ent in August, ' 944 , spelled a satis fact ion in worthl ess currency that to all intent and purposes robbed the creditor of its property, and was thu s sharpl y contrary to what pre \'ious practices had ordained and was witholl t precedent. It \ io latecl a lso the spiri l of the Hagll e R egulalioll s of 'g07 , whi ch notab ly in Article 43 stood for the yery antithesis of such acrion. o bliging the occupant to tak e all measures in its power to res tore a nd en­sure, as far as possible, publi c law and sakt)'. Fina ll y, through accept a nce of th e InlC'r- .-\lli ed Decla ra tion of Janllary 5, ' ~H3, as oHicially interpreted . the R epubli c made definite cOlll mitments obliging it to undo by some a ppropri a le process the harm done by the J apanese enactments. The R e­public [ailed to satisfy this obligation , and round itse lf contractually d e­

linquent when its tribunal proceeded to re lease the mortgage.

* * *

,----REPUBLICANISl\'I----,

Republicanism, in so far as it im­plies t he adopt ion of a representative type of government, necessar ily points to the en f ra nchized citizen as a par­t icle of popular sovereignty and as t he ultimate sou rce of the established auth­or ity. He has a vo ice in his govern­ment and whenever possible, it is t he solemn duty of the judiciary, when ca lled upon to act in justiciable cases, 10 g ive it efficacy an d n ot to s t ifle or frustrate it.

MAYA v. DEL FIERRO G. R. No. 46863