Liboro v. Finance and Mining Investments Corporation
REITERATIONFacts
The Antecedents: Plaintiffs Agustin Liboro and Socorro Lopez de Liboro were the registered owners of Lot No. 2097. On October 13, 1938, they executed a second mortgage on this property in favor of Finance and Mining Investments Corporation to secure a debt of P15,207.42. This debt, with accrued interest, was further secured by another second mortgage on the same property executed on May 3, 1939. The plaintiffs allege that this debt was fully paid on June 26, 1940, using funds borrowed from the Philippine Bank of Commerce, for which a first mortgage was executed. They further claim that the defendant corporation executed a deed of cancellation for its second mortgage, which was subsequently lost during the war. After the war, the Liboros sold Lot No. 2097 to co-plaintiffs, with the obligation to clear the title of the defendant's mortgage annotations. The defendant, however, allegedly failed and refused to execute a confirmatory deed of cancellation. Procedural History: The plaintiffs initiated this action on January 7, 1952, seeking a court order compelling the defendant to execute a confirmatory deed of cancellation for the second mortgage and to pay P3,000 in attorney's fees and damages. The defendant, in its answer, denied the settlement of the debt and the execution of a cancellation deed. It counterclaimed for the outstanding debt, asserting it amounted to P6,855.55 as of December 31, 1941, and P13,784.33 as of February 8, 1952, praying for foreclosure in case of non-payment. The plaintiffs moved for a summary judgment, arguing the counterclaim was prescribed. The lower court denied this motion, citing unresolved factual issues and the suspension of the statute of limitations by the Moratorium Law. Following the Supreme Court's decision in Rutter vs. Esteban, which declared the Moratorium Law unconstitutional, the plaintiffs filed another motion for summary judgment. This motion was granted on November 19, 1953, dismissing the defendant's counterclaim and ordering the cancellation of the mortgage annotations. The defendant appealed this order. The Appeal: The defendant's appeal to the Supreme Court centers on the sole issue of whether its defense and counterclaim, based on an alleged outstanding balance of P6,855.55 as of December 31, 1941, are barred by the statute of limitations. The Supreme Court reversed the lower court's order, holding that the prescriptive period had not elapsed. The Court reasoned that while over ten years had passed between December 31, 1941, and the filing of the counterclaim on February 11, 1952, the running of the prescriptive period was suspended for three years, four months, and sixteen days due to Executive Orders Nos. 25 and 32. Therefore, the defendant's claim was not time-barred. The case was remanded to the lower court for further proceedings.
Issue(s)
Whether the defense and counterclaim of the defendant-appellant, based on the unpaid balance of P6,855.55 allegedly due as of December 31, 1941, are barred by the statute of limitations. Whether the Moratorium Law suspended the running of the prescriptive period.
Ruling
The order appealed from is reversed. The record is remanded to the court of origin for further proceedings. Costs against plaintiffs-appellees.
Ratio Decidendi
On the issue of whether the defense and counterclaim are barred by the statute of limitations: The Court held that the defendant-appellant's claim was not barred by the statute of limitations. The period from December 31, 1941, to February 11, 1952, when the counterclaim was filed, is ten (10) years, one (1) month, and ten (10) days. However, the running of the prescriptive period was suspended by Executive Orders Nos. 25 and 32 from March 10, 1945, to July 26, 1948, for a period of three (3) years, four (4) months, and sixteen (16) days. Deducting this suspension period, the claim was found not to have prescribed. On the issue of whether the Moratorium Law suspended the running of the prescriptive period: The Court reiterated its consistent stance that the Moratorium Law (Republic Act No. 342) did not suspend the running of the statute of limitations. While the Court in Rutter vs. Esteban did not declare the Moratorium Act unconstitutional ab initio, it ruled that its continued operation and enforcement at that time was unreasonable and oppressive and should not be prolonged. The Court clarified that its ruling in Rutter did not mean the law had no existence from the beginning, but rather that its enforcement was no longer permissible. The suspension of the statute of limitations was attributed to Executive Orders Nos. 25 and 32, not the Moratorium Law itself.
Main Doctrine
The Moratorium Law, having been declared unconstitutional, did not suspend the running of the statute of limitations. However, Executive Orders Nos. 25 and 32 did suspend the statute of limitations from March 10, 1945, to July 26, 1948, for a period of three (3) years, four (4) months, and sixteen (16) days.