IN THE MATTER OF THE TESTATE ESTATE OF THE DECEASED GERMAN GASTON.  VICTORIA VDA. DE GASTON, ADMINISTRATRIX AND APPELLEE, VS. REPUBLIC OF THE PHILIPPINES, CLAIMANT AND APPELLANT.

It appears that on February 1, 1962 appellant filed in the Court
of First Instance of Occidental Negros
a money claim against the Testate Estate of the deceased German Gaston
(Special Pro­ceeding No. 6226) praying that the Administratrix, Victoria Vda.
de Gaston, be ordered to pay the amount of P4,889.91, with in­terest thereon as
of December 31, 1960 at the rate of 6%, per annum compounded quarterly from
January 1961 until the amount is fully paid. 
The claim alleged that from March 30 to December 1, 1943, the deceased
German Gaston obtained five separate loans amounting to ‘2,500.00 from the
former Bank of Taiwan, Ltd., with the interest at the rate of six per centum
(6%) per annum, com­pounded quarterly, evidenced by five (5) promissory notes executed, signed and delivered by him to
said Bank, copies of which were at­tached
to the claim as
Annexes “A”, “B”, “C”, “D”, and
“E” there­of; that as security, the debtor executed in favor of said
Bank a chattel mortgage on the standing crops growing on the lands leased to
him (deceased), more particularly described as Lots No. 655, 1074-C 916 of the
Cadastral Survey of Bacolod and Silay, Negros Occidental, exclusively belonging
to Enriqueta Lacson known as Hacienda Vesta Alegre and Marigasa, which
instrument was registered on May
8, 1943 with the Office of the
Register of Deeds of Negros Occidental (Annex “F”); that said account comprising several loans amounting to
P4,880.91 including interest (reduced under the Ballantyne
Schedule to P1,758.44) were among the properties/assets
of the Bank of Taiwan, Ltd. sequestered by virtue of Vesting Order No.
P-4 dated January 21, 1946 and subsequently transferred to the Republic of the Philippines on July 20, 1954 pursuant
to the Transfer Agree­ments of 1954 and 1957 between the United States and the
Philip­pines; that said assets were being administered by the Board of
Liquidators, Office of the President; and that during his life­time, despite
repeated demands, German Gaston failed to pay the principal obligation and the
interest due thereon.

The administratrix filed on June 11, 1962 an opposition to the
claim on the ground that the same was barred by the Statute of Limitations,
appellant having filed its claim
14 years after accrual of the cause of action. 
Ten days later, appellant filed
its reply to the opposition claiming that the Statute of Limitations
does not run against the right of action of the Philippine Government and that,
moreover, the Moratorium Law (Executive
Order Nos. 25 & 32, promulgated on November 18, 1944 and June 18,
1949, respectively) interrupted the
running of the period of prescription.

In its order of
July 19, 1962, the Court sustained the administratrix’s opposition and
disapproved the claim of the appellant. 
Thereupon the Government interposed the present appeal.

The first of the promissory notes in question was executed on
April 30, 1943, the second on May 17, the third on June 11, the fourth on July
14, and the fifth and last on December 1st, all of the year 1943, but all of
them bear no specific date of maturity (Record on Appeal, pp. 7-10).  Because of this last circumstance, appellee
claimed and the lower court adopted the view that they are demand notes; that
they became due and demand­able immediately after delivery, and that,
therefore, the period within which action thereon could be brought started
running immediately upon their execution. 
We find this to be untenable.

There is no question that the five promissory notes in question
evidence crop loans granted by the Taiwan
Bank to the deceased German Gaston to be used during the agricultural year 1943-1944 for
plowing, purchasing seeds, planting, cultivation, harvesting, marketing,
transportation etc. as provided for in the chattel mortgage contract executed
to secure their payment.  Said contract
further provided that should the mortgagor use the loans granted or any part
thereof for purposes other than those thus specified, or fails or neglects to
comply with any or all of the conditions setforth in the contract, the
mortgagee may
consider the loans immediately due, demandable and payable.  These
circumstances clearly indicate that, provided the mortgagor did not violate any
of the terms and conditions setforth in the chattel mortgage contract, the
loans could be considered as ma­turing and becoming payable only upon the
expiration of the 1943­1944 agricultural year. 
Indeed, the theory of the lower court and of appellee to the effect that
the loans were immediately demandable and payable upon the execution of the
promissory notes appear to be absurd and incompatible with the undisputed fact
that the money borrowed by Gaston was to be spent for plowing, purchase of
seeds, etc., to be done in the course of the aforesaid agricultural year
1943-1944.

It is, therefore, our conclusion that the promissory notes in
question became due and demandable only at the end of the aforesaid
agricultural year – more or less around the month of April 1944.

From April 1944 to the date when the claim was filed, – February
1, 1962 – We have a period of
approximately seventeen (17) years and ten (10) months.  From this period must be deducted the period
during which the moratorium on monetary obligations con­tracted before and
during the last World War was in force, because it is already settled law in
this jurisdiction
that during that time the period of prescription affecting monetary
obligations covered by its provisions was suspended.  In this connection, We have already held in
Manila Motor Company Inc. vs. R. F. Fernandez 52 O. G. No. 16 p. 6884 and in
Republic vs.
Heirs of Cresencio B. Martir, promulgated in the month of February 1967,
that the mora­torium applicable to monetary obligations contracted before and
during the last World War started from November 18, 1944, when Executive Order
No. 25 was issued, and lasted until May 18, 1953, when the moratorium was
declared unconstitutional in Rutter vs. Esteban, G. R. No. L-3708, or for a period of
eight (8) years and six (6) months.

It
is obvious from the foregoing that when appellant’s claim was filed on February
1, 1962, only nine (9) years and four (4) months, more or less, had expired and
that, therefore, the claim was filed within the corresponding prescriptive
period of ten years.

In view of all the foregoing, We deem it unnecessary to dis­cuss
in detail the other issues raised in this appeal.

WHEREFORE, the decision appealed from is reversed and set
aside, and the present case is remanded below for further pro­ceedings.  With costs.

Concepcion, C.J., Reyes, Regala, Makalintal, Bengzon, Zaldivar,
Sanchez, and Castro, JJ., concur.