Letter of His Excellency, Jose P. Laurel, President of the Republic of the Philippines, to the National Assembly, explaining his veto of Bill No. 268. Manila. March 8, 1944:

I have the honor to inform you that I have today disapproved Bill No. 268, entitled “An Act suspending for a period of three years the operation of all contracts involving agricultural loan granted by the Philippine National Bank and the Agricultural and Industrial Bank on or before December eight, nineteen hundred and forty-one.”

If the bill is to be construed as condoning interests on agricultural loans during the period of three years, the Agricultural and Industrial Bank would sustain a loss of about ₱3,000,000 and the Philippine National Bank would stand to lose around ₱6,000,000 in the form of uncollectible interests on their outstanding agricultural loans. Considering that debtors, due to the prevailing easy money situation on account of the monetary inflation, find it advantageous to pay their obligations at present, it would seem that the expected loss of interests receivable by these banks really overbalances whatever relief the debtors would receive under this measure.

Furthermore, it is believed that the matter of suspending all proceedings for the recovery of loans or for the foreclosure of mortgages should be left to the sound judgment of the President of the Republic of the Philippines who now assumes the powers heretofore exercised by the board of directors of these banks and who may, therefore, order such suspension in proper and meritorious cases. This latter arrangement has the advantage of flexibility and elasticity.

The fact that the bill favors only debtors of the Philippine National Bank and Agricultural and Industrial Bank and discriminates against all other debtors also taints it with the character of class legislation. The power of the legislature to pass acts declaring a moratorium being conceded, there is no reason why the same relief should not be extended to all other debtors who are not presumed to be in a better financial situation than debtors of these two banks.

In view hereof, I am constrained to veto this bill.

Source: Office of the Solicitor General Library