TESTATE ESTATE OF THE DECEASED VALERIANA VELAYO, AMANDA DE GUZMAN, ADMINISTRATRIX-APPELLANT, VS. FELINO CH. FERNANDO AND MERCEDES T. DE FERNANDO, CLAIMANTS-APPELLEES.

The estate of the deceased Valeriana Velayo
became indebted to Dr. Felino Ch. Fernando and his wife Mercedes T.
Fernando because of a loan obtained by the deceased in the amount of
P12,000 with an annual interest of 10 percent secured by two deeds of
mortgage executed on September 15, 1942, and December 29, 1942.

The administratrix is agreeable to pay the principal of the
loan but not the interests, invoking in her favor the .moratorium law.
It was agreed to sell the properties mortgaged and to pay out of the
proceeds the principal in the amount of P12,000 with the understanding
that the balance will be deposited in court until after the question as
to whether the interests should be paid shall have been determined.
After the parties had submitted their respective memoranda in support
of their respective contentions, the court, on June 20, 1950, issued an
order holding that the moratorium law has the effect of suspending
merely the payment of the Interests, not of condoning them and,
therefore, ordered the administratrix to pay said Interests In
accordance with the stipulations agreed upon In the deeds of mortgage
under consideration. Prom this order the administratrix appealed.

The only question to be determined is whether the moratorium law
has the effect of condoning the interest due on a monetary obligation
or of merely suspending its payment as in the case of the principal
obligation.

Executive Order No. 25, as amended by Executive Order No. 32, provides:

“1.Enforcement of payment of all debts and other
monetary obligations payable within the Philippines, except debts and
other monetary obligations entered into in any area after declaration
by Presidential Proclamation that such area has been freed from enemy
occupation and control, is temporarily suspended pending action by the
Commonwealth Government.

Interpreting the effect of moratorium law on a monetary obligation, this Court in a recent case said:

“The law on debt moratorium does not condone debts
or the payments of obligations. It merely suspends collection and
payment. The right to such suspension may be invoked by the debtor; but
he may also waive or renounce it.” (Araneta vs. Marta Cui Vda. de Sanson, Off.Gaz., 2849; 85 Phil. 142.).

It, therefore, appears that the moratorium law has merely the
effect of suspending the collection or payment of the obligation. It
does not condone the debt. Inasmuch as the interest is but an accessory
to the obligation, the same must be deemed affected in the same manner.
The accessory follows the principal. The moratorium order is couched in
clear terms. It says that the enforcement of the payment of a debt or
other monetary obligations “is temporarily suspended pending action by
the Commonwealth Government”. When the law Is clear there is no room
for interpretation.

In this connection, it would not be amiss to invite attention to
Republic Act No. 401 approved by Congress on June 18, 1949, which
provides for the condonation of all unpaid interests accruing from
January 1, 1942, to December31, 1945, on all obligations outstanding on
December 8, 1941. Said Act condones all unpaid Interests due during the
period above mentioned In favor of the Government or government-owned
or controlled corporations under certain conditions. Section 1 of said
Act contains a declaration of policy on the matter, and it says:

“SEC. 1. Declaration of policy.—Rehabilitation
of those who have suffered the ravages of war constitutes a prime
concern of the Government. In order to afford opportunities to debtors
of the Government or Government-owned or controlled corporations to
rehabilitate themselves, and to enable them to pay their pre-war
obligations under terms and conditions beneficial to them, it is the
declared policy of the State that the condonation of interests
contemplated herein be extended.”

While it is true that the condonation of interests is made only as
regards debts due to the Government or any government-owned or
controlled corporations, the declaration of policy is very significant
for It indicates the trend of mind of the lawmaker regarding the
effects of moratorium on monetary obligations. If the interests due on
debts owed to the Government are not deemed condoned by virtue of the
moratorium order so much so that an express legislation was necessary
to effect their condonation, there is every reason to suppose that the
Interests due on other kinds of monetary obligations are not likewise
condoned simply because of the existence of the moratorium law. Said
Act No. 401 is a clear indication that the moratorium law does not have
the effect of condoning the interests but merely of suspending their
payment as correctly interpreted by the lower court.

Wherefore, the order appealed from is affirmed, with costs against the appellant.

Paras, C. J., Feria, Pablo, Bengzon, Padilla, Tuason, Reyes, and Jugo, JJ., concur.