BROWNELL vs SUN LIFE

G.R. No. L-5731 June 22, 1954

Ponente: LABRADOR, J.:

Parties involved in this case:

1. Insurer: Sun Life
2. Insured: Aihara (Japanese) and Gayapan (Filipina)
3. Brownell: Atty general of the United States

FACTS:

Subject of this petition is the endowment policy which insured Aihara and Gayapan and upon its maturity the proceeds were
payable to said insured. Under the policy Aihara and his wife, Filomena Gayapan, were insured jointly for the sum of P1,000, and
upon its maturity the proceeds thereof were payable to said insured, share and share alike, or P310.10 each. The defenses set up in the
court of origin are: (1) that the immunities provided in section 5 (b) (2) of the Trading With the Enemy Act of the United States are of
doubtful application in the Philippines, and have never been adopted by any law of the Philippines as applicable here or obligatory on
the local courts; (2) that the defendant is a trustee of the funds and is under a legal obligation to see it to that it is paid to the person or
persons entitled thereto, and unless the petitioner executes a suitable discharge and an adequate guarantee to indemnify and keep it
free and harmless from any further liability under the policy, it may not be compelled to make the payment demanded.

On July 3, 1946, the Congress of the United States passed Public Law 485-79th Congress, known as the Philippine Property
Act of 1946. Section 3 thereof provides that "The Trading with the Enemy Act of October 6, 1917 (40 Stat. 411), as amended, shall
continue in force in the Philippines after July 4, 1946, ...." To implement the provisions of the act, the President of the United States
on July 3, 1946, promulgated Executive Order No. 9747, "continuing the functions of the Alien Property Custodian and the
Department of the Treasury in the Philippines."

Brownell instituted this case to compel Sun Life to comply with the demand to pay representing the half of the proceeds of
endowment policy and payable to one Naogiro Aihara, a Japanese national. Such claim is based on Section 5(b) (2) of the Trading
with the Enemy Act of the United States. Which claim was approved and granted by the lower court ordering SLACOC to pay herein
petitioner.

Ruling of the CA: None

Ruling of the SC: Did not reach SC

ISSUE:

Whether or not such Act is still binding despite the complete independence of the Philippines from American government?

Ruling of the Trial Court:

Yes.

The extension of the Philippine Property Act of 1946 is clearly implied from the acts of the President of the Philippines and
the Secretary of Foreign Affairs, as well as by the enactment of R.A. Nos. 7, 8 and 477. We must emphasize the fact that the operation
of the Philippine Property Act of 1946 in the Philippines is not derived from the unilateral act of the United States Congress, which
made it expressly applicable, or from the saving provision contained in the proclamation of independence. It is well-settled in the
United States that its laws have no extraterritorial effect. The application of said law in the Philippines is based concurrently on said
act (Philippine Property Act of 1946) and on the tacit consent thereto and the conduct of the Philippine Government itself in receiving
the benefits of its provisions.