JOSEPH REICH, PETITIONER, VS. EDMUND SCHWESINGER AND THE COURT OF APPEALS, RESPONDENTS.

Appeal by certiorari from the decision rendered by the Court of
Appeals in C. A.—G.R. No. 17935-R affirming that of the Court of First
Instance of Manila in Civil Case No. 26610, of the following tenor:

“Wherefore, judgment is hereby rendered in favor of
the plaintiff and against the defendant ordering Van latter to pay to
the plaintiff the sum of four thousand five hundred pesos (P4,500.00)
plus interest thereon at 9% per annum from February 1, 1937, and the
sum of four thousand pesos (P4,000.00) with interest thereon at 9% per
annum from October 1, 1937, until paid (Exhibit B). The claim for
attorney’s fees and damages is denied. “With costs against the
defendant.”

The facts found by the Court of Appeals are as follows:

“The evidence discloses that in 1937 the defendant
Joseph Reich borrowed from the plaintiff Edmund Schwesinger 10,000
shares of stock of the Nielson and Company, Inc. exhs. 1 and J). Due to
his failure or inability to return these shares, Reich executed on
February 1, 1937 the promissory note, exh. A, in favor of Schwesinger
for the sum of P4,500.

“The evidence further shows that in
1936 the defendant borrowed P4,000 from the plaintiff, in connection
with which he executed in favor of the latter on October 1, 1937 the
promissory note, exh. B. “The above mentioned notes do not state the
dates of their respective maturity; they must therefore be deemed
payable on demand.

“The evidence for the plaintiff shows
conclusively that he has made repeated demands upon the defendant for
payment, with interest, of the amounts covered by the promissory noted,
consisting of statements of accounts (exhs. C to C-28) mailed from time
to time to the defendant, but the latter has failed to pay.”

As the two promissory noted in question were payable on demand, the
Court of Appeals correctly held—citing Falkner vs. Protective Insurance
Company (1934), 228 Ala. 57—that they were due immediately after
delivery, and that the corresponding period of prescription started to
run from the date of such delivery (Muhas vs. Koisha, 276 Pac. 315). As
a consequence said court held that, as the promissory note Exhibit A,
matured o February 1 1937 , and the second marked Exhibit B matured on
October 1, 1937 , the causes of action of respondent Schwesinger were
supposed to prescribe on February 1, 1947 and October 1, 1947,
respectively.

Affirming the decision of the lower court, however, the Court of Appeals rules that—

“* * * the Moratoruim Law which was in force form
May 1945 to May 1953 interrupted the running of the prescriptive period
of ten years. Moreover, the said period was also interrupted on
December 8, 1941, upon the outbreak of World War II (Adela Vda. De
Montilla vs. Pacific Commercial Co., 98 Phil., 133), as well
as by the written demands made by the appellee upon the appellant.
Without the need of making a detailed exposition of the periods of
suspension, it is clear that when the present action was commenced on
June 21, 1955 , the ten-year period of prescription for bringing action
on the two promissory noted had not yet elapsed.”

In this appeal petitioner insists that the causes of action of
above named respondent had already prescribed when the present action
was commenced on June 21, 1955, considering that Republic Act 342
lifted the moratorium with respect to petitioner—a British subject who
had no right to file a claim for war damage—and considering further
that the outbreak of the war on December 8, 1941 did not suspend the
running of the period of prescription as far as it concerned the causes
of action of Schwesinger—a Filipino citizen—against petitioner.

We find no merit in petitioner’s contentions.

In the case of Adella Santos Vda. de Montilla vs. Pacific
Commercial Company, 98 Phil., 133 promulgated on December 20, 1955 , we
held:

“We should not overlook the fact that war broke out
in the Pacific on December 2, 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, 81 Phil., 416, 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 or lien of any nationality is not necessarily debarred
form maintaining an action by the circumstance of his interment 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’s (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
authority (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 alternative 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.”

It is clear from the above decision that our statutes of limitation
do not apply to an alien who, because he was interned during the war,
was not in a position to invoke the aid of the courts, and that it
would be most unfair to apply to such alien the effects of said
statutes simply because of the alternatives given to any enemy alien,
by Instruction No. 28 issued by the Japanese Military Administration.
Otherwise stated, our statutes of limitation were suspended upon the
outbreak of the Second World War in this country on December 8, 1941 ,
as far as interned aliens were concerned.

But petitioner contends that the above ruling applied only to an interned alien creditor,
and that it should not apply to the present case where the creditor is
a Filipino citizen who was free to sue his debtor—an interned alien.
This argument loses sight of the fact that Instruction No. 28 issued by
the Japanese Military Administration mentioned above decreed the
suspension of court actions affecting enemy aliens, without
limiting the suspension to the case of an enemy alien who had a right
to enforce through the courts. Of course the Instruction provided that
a court action affecting an enemy alien could be commenced or
prosecuted if this was expressly authorized by the military authorities
at the time. In this connection we said in the Montilla case that we
can take judicial notice of the fact that, to ask for such express
authority “was most difficult, if not fraught with danger to life and
security” and that because of this we said that it would be “most
unfair if we were now to apply to appellant (Pacific Commercial
Company) the effects of such statutes 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
rights”. These considerations apply with equal if not greater force to
the case of a Filipino creditor—like Schwesinger—whose debtor was an
interned alien, whose properties must have been confiscated by the
enemy. Why should such creditor be expected to enforce his right
against his debtor while the latter was money-less and helpless to
defend himself? Would not that have made the interned alien’s
misfortune more serious and unbearable? And then, considering that the
invader must have confiscated the debtor’s properties, why should the
creditor be expected to court “danger to life and security” by asking
the Japanese Military Authorities permission to sue his debtor?

In line with what has been stated, it is clear that the period of
prescription, as far as respondent Schwesinger’s cause of action based
on the promissory note Exhibit A was concerned, was suspended on
December 8, 1941, after four (4) years and ten (10) months of the said
period had been consumed; that it remained so suspended after the war
by reason of the Moratorium Law, and began to run anew only in the
month of May 1953 when said law was declared void. As the present
action was commenced on Juno 21, 1955, it appears abundantly clear that
it was filed very well within the prescriptive period of ten years.

What has been said heretofore applies to the cause of action in
favor of respondent Schwesinger against petitioner based on the
promissory note Exhibit B.

Having arrived at the above conclusions, we hold that the decision
appealed from should be, as it is hereby, affirmed, with costs.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador , Concepcion , Reyes, J. B.L., Barrera, Paredes and Regala, JJ., concur.