INTESTATE ESTATE OF THE LATE AGUSTIN B. MONTILLA, JR., ADELA SANTOS VDA. DE MONTILLA, ADMINISTRATRIX AND APPELLEE, VS. PACIFIC COMMERCIAL COMPANY, CLAIMANT AND APPELLANT.

The Pacific Commercial Company is a corporation organized under the laws of
the Philippines with principal office in the City of Manila. All its
stockholders and officers were Americans. On August 24, 1940, the Court of First
Instance of Iloilo ordered Agustin Montilla, Jr. to pay to said company P905.24,
with 12 per cent interest; per annum from November 5, 1939 until its
full payment, plus 10 per cent attorney’s fees and costs. Of said judgment debt
only a partial payment of P29.10 was made leaving a balance of P876.14.

On July 5, 1939, Agustin Montilla, Jr. executed a promissory note in favor of
the same company to cover the balance of the purchase price of one La Salle
Touring Sedan car. Only a portion of the note was paid and on August 9, 1941,
the unpaid balance was P583.15, with 12 per cent interest per annum.
War broke out on December 8, 1941 between the United States and Japan with the
result that the offices of the Pacific Commercial Company were closed. Its
officers were all Americans who were either interned or went hiding. Among them
was Francis A. Whitney, the auditor of the company who was in charge of the
collection of accounts of the Iloilo office.

Iloilo City was liberated on March 19, 1945. The Province of Negros Oriental
was liberated on March 24, 1945. Agustin Montilla, Jr. died on May 16, 1951 and.
administrative proceedings for the settlement of hisij.e.state were, instituted
in the court of first instance of said province sometime in September, 1951. The
probate court gave notice to the creditors to file their claims within six
months from September 1, 1951 and, accordingly, the Pacific Commercial Company
filed its claim on October 2, 1951 covering the two pending accounts of the
deceased in the amounts of P876.14 and P583.15 as mentioned above. The
administratrix opposed the claim on two grounds: (1) that the claimant had no
cause of action because of the debt moratorium, and (2) that its cause of
action, if any, had already prescribed. The court denied the claim on the ground
of prescription, and after the case was taken to the Court of Appeals, the same
was certified to us on the ground that the issues raised are purely of law.

The claim of appellant which was denied by the trjial court involves two
items, one for P876.14 representing ^he balance of a judgment rendered against
the deceased payment of which accrued on September 28, 1940, and the other for
the sum of P583.15 being the unpaid balance of a promissory note payment of
which accrued on November 7, 1940. Since then no action has been taken for their
collection by appellant until October 2, 1951 when the present claim was filed
in the intestate proceedings of the deceased debtor. It therefore appears that a
period of more than 11 years had elapsed before this step was taken since the
right to enforce their collection by judicial action had arisen. It is perhaps
for this reason that the trial court has decreed that the claim of appellant had
already prescribed in the light of our statutes of limitations (Section 43, Act
No. 190; Article 1144, new Civil Code). Is this decree.correct in the light of
the facts of this case?

We should not overlook the fact that war broke out in the Pacific on December
8, 1941 between the United States and Japan the effects of which affected
adversely the Philippines. Its immediate result was the occupation of Manila by
the Japanese Imperial Forces on January 1, 1942 and of the City of Iloilo on
April 16, 1942 and the consequent establishment of the occupation government.
This, situation cannot but cause disturbance in the normal life of the people
and the regular processes of our courts. In fact, these processes became
paralyzed until they were restored in those places where a semblance of peace
existed upon orders of the army of occupation. While it may be said that in
those places where our courts of justice resumed their functions, including
Manila and Iloilo City, the statutes of limitations may not be said to have been
suspended by the state of war, because then any citizen or national could invoke
the aid of the courts for the enforcement or vindication of his rights, as was
stated by this Court in a number of cases (Palma, et al. vs. Celda,
Supp. Off. Gaz., Vol. 46, p. 198; España vs. Lucido, 8 Phil., 419), the
same situation does not obtain when the parties affected are enemy aliens who by
the laws of war are generally interned or placed in concentration camps. And
while it has been held that “a resident alien of any nationality is not
necessarily debarred from maintaining an action by the circumstance of his
internment as a civilian prisoner of war” (56 Am. Jur., 247), however, this only
holds true in the absence of any governmental regulation to the contrary, and as
a rule, for obvious reasons, an occupation government adopts a restricted
measure on this ‘ matter (Ex parte Kawato, 317 U. S. 69). And so it has
been generally held that “A foreign or international war suspends the operation
of the statute of limitations between the citizens of the countries at war as
long as the war lasts, at least as regards enemy aliens resident in enemy
territory.” (54 C. J. S., p. 289.) And in connection with enemy aliens residing
in the Philippines during the war, the Japanese Military Administration issued
Instruction No. 28 decreeing the suspension of court actions affecting enemy
aliens except in cases where express authority is obtained from the military
authorities (Vol. 1, Off. Gaz., No. 5, p. 216).

It would therefore appear that our statutes of limitations cannot apply to
herein appellant which is an American owned company whose stockholders and
officers were enemy aliens who were then interned or hiding during the
occupation and who because of their precarious situation were not in a position
to invoke the aid of the courts, even if they wanted to, for the protection of
their interest or of their company. And it would be most unfair if we were now
to apply to appellant the effects of such statute simply because of the
alternatives afforded to enemy aliens by the military order that they could
secure the requisite authority for the enforcement, of their right. As the court
can take judicial notice, such a predicament was most difficult, if not fraught
with danger to life and security, and so it is our considered, opinion that, in
the light of the situation above outlined, the cause of action of appellant to
enforce the present claim cannot be deemed to have been barred by the statute of
limitations.

Another circumstance that may be invoked in favor of appellant is the
adoption of Executive Orders Nos. 25 and 32, known as Debt Moratorium,
promulgated on November 18, 1944 and March 10, 1945, respectively, and Republic,
Act 342 passed on July 26, 1948, limiting the moratorium to war sufferers, which
have the effect of tolling further the limitation of the period for the
institution of a court action, for the general rule is that “moratorium acts
ordinarily operate to suspend, the running of limitations as to suits barred by
the provisions of the act, irrespective of whether or not the debtor has sought
relief thereunder.” (54 C. J. S., p. 288) And this seems to be also the rule in
this jurisdiction when this Court has repeatedly held in a number of cases that
during the time the moratorium was in force no action could be taken to collect
any outstanding monetary obligations “within the purview of the moratorium
orders (Cruz vs. Avila, 42 Off. Ga2., No. 9, p. 2114; De la Fuente
vs. Borromeo, 42 Off. Gaz., p. 3172; Ma-ao Sugar Central Co.
vs. Barrios, 45 Off. Gaz., 2444).

Wherefore, the decision appealed from is reversed. The case shall be remanded
to the lower court in order that it may act on the claim of appellant in
accordance with its merits, with, costs.

Paras, C. J., Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Labrador,
Concepcion, and Reyes, J. B. L., JJ., concur.