REPUBLIC OF THE PHILIPPINES, PLAINTIFF-APPELLEE, VS. JULIO HERIDA, DEFENDANT-APPELLANT.

This case was certified to Us by the
Court of Appeals on the ground that the issue in the decision sought to be
reviewed involves purely a question of law. 
The decision of the lower court, dated February 27, 1962, reads:

“When this case was called for hearing, the defendant and his
counsel failed to appear despite the fact that counsel was duly notified.  Counsel for the plaintiff prayed that he be
allowed to present his evidence in the absence of the defendant which was
granted.

“It appears that from May 10, 1943, defendant Julio Herida issued a promissory note in favor of the Bank of
Taiwan, Ltd. the sum of P750.00 payable on May 10, 1944; on June 8, 1943,
defendant issued again another promissory note for the amount of P750.00
payable on June 8, 1944; on June 10, 1943, defendant issued again another
promissory note for the amount of P280.00 payable on June 10, 1944.  All the promissory notes bear interest at the
rate of 6% per annum compounded quarterly (Exhibits A, B and C).  To secure the prompt and full payment of the
loans, defendant Julio Herida executed two real
estate mortgages affecting six parcels
of land, namely:  Lots Nos. 305, 502,
259, 303 and 235, all of the cadastral survey of Murcia and Lot No. 1085 of the
cadastral survey of Talisay, covered by Transfer
Certificates of Title Nos. 26613, 26612, 26611, 26614, 26615 and 28079,
respectively.  (Exhibits D, E, and
F).  Said mortgages were duly registered
in the Office of the Register of Deeds of Negros
Occidental as shown by the annotations found in said contracts, Exhibits D-1,
E-1, and F-1, respectively.  The contract
further provides that upon failure of the mortgagor to comply with the terms
and conditions stipulated in the contract, defendant will pay 10% of the total
indebtedness but not less than P200.00 as attorney’s fees and to pay the costs
(Exhibits G-1 and H-1).  Statement of
account of the defendant was prepared on August 2, 1961, showing the total
amount of P1,392.30 as reduced to peso equivalent under Ballantine
schedule of value, plus interest in the sum of P2,327.25 or a total of
P3,720.55 (Exhibit H).  Another statement
of account was issued as of December
31, 1960, showing a balance of P3,948.83
(Exhibit H-1).  On September 22, 1954, the plaintiff addressed a
letter to the defendant Julio Herida demanding
payment of his account due (Exhibit I), which letter was sent by registered
mail on September 30, 1954,
(Exhibit I-1).  Despite the said demand,
defendant failed and refused to pay the above-mentioned amount.

“WHEREFORE, judgment is hereby rendered, ordering the
defendant Julio Herida to pay the plaintiff, Republic
of the Philippines, the sum of P3,948.83 plus 6% interest, compounded
quarterly, from December 31, 1960 up to complete payment.  Defendant is further ordered to pay
attorney’s fees in the sum equivalent to 10% of the amount due and to pay the
costs.  Ninety days after the decision
has become final and defendant fails to pay the judgment amount, the mortgage
properties shall be sold at public auction in accordance with law and the
proceeds thereof shall be applied to the liquidation of the judgment amount
plus expenses.”

The reason this action was filed by the Republic of the Philippines
and not by the Bank of Taiwan, Ltd. from which the loans were obtained by the
defendant, is alleged in the complaint as follows:

“x x x                         x
x x                             x x x

“6.  That pursuant to the Transfer Agreement dated
July 20, 1954, as supple­mented by Transfer Agreement, dated June 15, 1957, the
Attorney General of the United States, as successor of the Phil­ippine Alien
Property Administration, the agency which took over the functions and authority
of the Alien Property Custodian, transferred, conveyed and assigned in favor of
the Government of the Republic of the Philippines, all the rights, title and
interest of the United States Government in and to the property mentioned in
the preceding paragraph;

“7.  That among the assets of the Bank of Taiwan,
Ltd., which by virtue of the aforecited Vesting Order
No. P-4 were vested in the government of the United States and in
pursuance of the above-mentioned Transfer Agreement were trans­ferred to the
Government of the Republic of the Philippines, are the loans secured by the said
mortgages referred to in paragraph 3 hereof, which are among others, now
Administered by the Board of Liquidators, a government agency under the Office
of the President, created under Executive Order No. 372, dated November 24,
1950, and in accordance with Republic Acts Nos. 477 and 8, and other pertinent
laws in connection with said Executive Order No. 372;

“x x
x                         x
x x                             x x x“

Dissatisfied with the decision of the lower court, the defendant
appealed, setting forth the following assignment of errors:

1.    The lower court erred in not taking into
consideration that the cause of action of the plaintiff against the defendant
was already barred by the statute of limitations.

2.    The
lower court erred in not taking into consideration that the chattel upon
which the chattel mortgage of standing crops were executed was totally
destroyed by “caso fortuito.”

3.    The lower court erred in ordering the
defendant Julio Herida to pay the plaintiff, Republic
of the Philippines, the sum of P3,948.83 plus 6% interest, compounded
quarterly, from December 31, 1960 up to complete payment.

The question presented is
whether or not the morato­rium laws, to wit: 
Executive Order No. 25 of November 10, 1944; Executive Order No. 32 of 1945, amending
the former; and, Act No. 342 are applicable to the loans at bar.  Appellant contends that:

“From 1948 to November
27, 1961 almost thirteen (13) years had expired and as such the
right of the Republic of the Philippines
to bring the present action against the defendant has already prescribed in
accordance with the above cited Art. 1144, New Civil Code.  Before Nov. 27, 1961, the nature of the indebtedness of the
defendant is a property of patrimonial in character as it relates to the
Philippine Government.  As such it is
subject to prescription.  All things are
susceptible of prescription, unless otherwise provided.  Property of the State or any of its
subdivisions not patrimonial in character shall not be the object of prescription.  (Art. 1113, New Civil Code.)”

On the other hand, appellee maintains that the above cited moratorium laws
suspended temporarily the enforce­ment of the payment of all debts and other
monetary obligations payable within the Philippines, except those
contracted in areas after they have been declared liberated and, therefore, the
present action was not barred by the statute of limitations when the complaint
was filed on November 27, 1961.  Appellee further explains that:

“x x x For purposes of pres­cription, the period during which a law
is in force is excluded from the computation of the prescriptive period (P.N.B.
vs. Oseña, et al., January 31, 1958).

“Since the moratorium laws were declared unconstitutional only
on May 18, 1953, the ten-year period within which to bring the action against
the appellant began the next day or, to be precise, on May 19, 1953.  Appellee’s cause of
action will, therefore, prescribe only on May 19, 1963.  The
com­plaint in this case was filed on November 27, 1961.  Consequently, the ten-year period within
which to bring the action has not yet prescribed.”

The appeal must be dismissed. 
The promissory notes executed by the appellant in favor of the Bank of
Taiwan, Ltd. were due for payment on May 10, 1944, June 8, 1944 and June 10,
1944, respectively.  Ordinarily, the
count­ing of the prescriptive period should be reckoned from said dates when
appellant’s debts became due and demandable. 
However, the moratorium decrees supervene suspending the enforcement of
payments of all debts and other monetary obligations contracted during the war,
although in the case of Royal L. Rutter vs. Placido J. Esteban, 93 Phil. 68, the moratorium laws
(Executive Orders Nos. 25 and 32 and Republic Act No. 342) were declared
unconstitutional:

“The continued operation and enforcement of Republic Act No.
342 at the present time is unreasonable and oppressive, and should not be
prolonged a minute longer, and, therefore, the same is declared null and void and
without effect.  And what is said here
with respect to said Act holds true as regards Executive Orders Nos. 25 and 32,
perhaps with greater force and reason as to the latter, considering that said
Orders contain no limitation whatsoever in point of time as regards the
suspension of the enforcement and effectivity of
monetary obligations.  And there is need
to make this pronounce­ment in view of the revival clause embodied in said Act
if and when it is declared unconstitutional or invalid.”

Nonetheless, said laws were in effect
from the time of their respective promulgations until May 18, 1953. 
As a consequence, before they were declared unconstitutional, they
suspended the running of the prescriptive period during their effectivity.  Thus, the 10-year period within which to institute the action
against herein appellant began the day after the moratorium laws were declared
unconstitutional or, to be precise, on May 19, 1953.  Appellee’s cause of
action will therefore pre­scribe only on May 19, 1963.  The
complaint in this case was filed in November 1961, which is within the 10-year
period and, therefore, the action has not yet prescribed.

ACCORDINGLY, the decision, dated February 27, 1962 of the court a quo is hereby AFFIRMED in toto.  With costs against the
defendant-appellant.

SO ORDERED.

Teehankee, (Chairman), Melencio-Herrera, Plana, Vasquez,
and Gutierrez, Jr., JJ.,
concur.