G.R. No. L-3885 December 17, 1951
THE BACHRACH MOTOR CO., INC., plaintiff-appellee, vs. LEE TAY AND LEE CHAY, INC., defendant-appellant.

FACTS

The plaintiff, Bachrach Motor Co., Inc. (a domestic corporation owned by Filipino and American citizens), and the defendant, Lee Tay and Lee Chay, Inc. (a domestic corporation owned by Chinese nationals), submitted an agreed statement of facts to the Court of First Instance of Manila. On October 11, 1941, the defendant executed a promissory note in favor of the plaintiff for P3,472, payable in monthly installments, representing the unpaid balance for a White truck chassis purchased. As of October 6, 1948, the amount due was P2,861.24, plus 12% annual interest from that date and stipulated attorney’s fees of 25% of the amount due. Shortly after the outbreak of war on December 8, 1941, the truck was commandeered by the USAFFE. Neither party filed a claim with the U.S. Government for the truck or received compensation, and the defendant did not file a war damage claim. The agreed issues for resolution were: (a) whether the plaintiff is entitled to interest during the Japanese occupation (January 2, 1942, to February 3, 1945); (b) whether the plaintiff is entitled to attorney’s fees and to what extent; (c) whether the commandeering of the truck exempts the defendant from paying the obligation; and (d) whether the moratorium law on pre-war obligations applies to benefit the defendant. The trial court rendered judgment against the defendant for the amount due, with interest and attorney’s fees. The defendant appealed directly to the Supreme Court on purely legal questions.

ISSUE

1. Whether the obligation was extinguished or interest accrual suspended during the Japanese occupation.
2. Whether the defendant is liable for attorney’s fees.
3. Whether the commandeering of the truck by USAFFE relieves the defendant from paying the balance.
4. Whether the Moratorium Proclamation suspends payment of the obligation.

RULING

1. On interest during Japanese occupation: The Court held that no principle of law extinguished the obligation during the occupation. The question of interest accrual during that period was deemed academic because the plaintiff only demanded interest from October 6, 1948, well after the occupation ended.
2. On attorney’s fees: The Court, in the exercise of its discretion, reduced the attorney’s fees from 25% to 10% of the obligation, amounting to P286.12.
3. On commandeering of the truck: The Court ruled that the defendant was not relieved from payment. The truck became the defendant’s property upon delivery, so the loss should be borne by the defendant. The defendant could have filed a claim with the U.S. Government for compensation but negligently omitted to do so; this omission could not be imputed to the plaintiff, who was no longer the owner and thus could not file a claim.
4. On the Moratorium Proclamation: The Court held that the moratorium had been lifted for pre-war obligations, except for those who filed claims with the U.S. Philippines War Damage Commission. Since the defendant did not file a claim, the moratorium could not be invoked.
The judgment of the trial court was affirmed, with the modification reducing the attorney’s fees to 10%. Costs were imposed on the defendant-appellant.