G.R. No. L-4120 October 25, 1951
Testate estate of the deceased VALERIANA VELAYO. AMANDA DE GUZMAN, administratrix-appellant, vs. FELINO CH. FERNANDO and MERCEDES T. DE FERNANDO, claimants-appellees.

FACTS

The estate of the deceased Valeriana Velayo was indebted to Dr. Felino Ch. Fernando and his wife Mercedes T. Fernando due to a loan of P12,000 obtained by the deceased, with 10% annual interest, secured by two mortgages executed in 1942. The administratrix, Amanda de Guzman, agreed to pay the principal amount from the proceeds of the sale of the mortgaged properties but refused to pay the accrued interests, invoking the debt moratorium law (Executive Orders). The balance from the sale was to be deposited in court pending resolution on the interest payment. The lower court issued an order on June 20, 1950, holding that the moratorium law merely suspended, and did not condone, the payment of interests, and thus ordered the administratrix to pay the interests according to the mortgage stipulations. The administratrix appealed this order.

ISSUE

Whether the moratorium law has the effect of condoning the interest due on a monetary obligation or merely suspending its payment.

RULING

The Supreme Court affirmed the lower court’s order. The moratorium law (Executive Order No. 25, as amended) only temporarily suspends the enforcement of payment of debts and monetary obligations; it does not condone or forgive the debt itself. Since interest is an accessory obligation, it follows the principal obligation and is likewise merely suspended, not condoned. The Court cited its previous ruling in Araneta vs. Marta Cui Vda. de Sanson and noted that Republic Act No. 401 , which condoned unpaid interests for a specific period on obligations to the Government, indicated that condonation requires express legislation and does not arise from the moratorium law alone. Therefore, the administratrix is liable to pay the accrued interests as stipulated.