Soriano v. Philippine National Bank
REITERATIONFacts
The Antecedents: Eduardo Ubat obtained a P400.00 loan from Philippine National Bank (PNB) secured by a mortgage on his land. He paid three installments before his death. His son, Francisco Ubat, inherited the property. Francisco later borrowed P400.00 from PNB, secured by a chattel mortgage on his land's standing crops, with an unpaid balance of P82.00 at the time of his death. Francisco Ubat died leaving an unpaid balance of P82.00 on his loan. Procedural History: Jose L. Soriano, a creditor of Francisco Ubat, filed a summary settlement proceeding for Francisco's estate. The court dismissed this, deeming an intestate proceeding more appropriate. Subsequently, Soriano filed an intestate proceeding for Francisco's estate, where PNB filed two claims: one for Francisco's P82.00 debt, and another for Eduardo's P310.37 debt. The administratrix admitted Francisco's debt but opposed Eduardo's, arguing prescription for most installments. The trial court approved Francisco's claim and allowed only P55.23 plus interest and attorney's fees for Eduardo's claim, representing the last installment. PNB appealed this order. The Appeal: The Philippine National Bank appealed the trial court's order, arguing that the prescriptive period for Eduardo Ubat's loan should not have barred most of the installments. The bank contended that the trial court erred in limiting the recovery for Eduardo's loan to only the last installment, thereby effectively dismissing the claims for earlier unpaid installments based on prescription.
Issue(s)
Whether the prescriptive period for the installments of Eduardo Ubat's loan began to run from the date each installment became due, or from the maturity date of the entire loan. Whether the acceleration clause in the mortgage rendered all installments due and payable upon default, thereby starting the prescriptive period for the entire obligation. Whether the Moratorium Law suspended the running of the prescriptive period for the unpaid installments.
Ruling
The Supreme Court modified the appealed order. It affirmed the trial court's decision regarding the prescription of installments for Eduardo Ubat's loan, holding that only the last installment was collectible. However, it modified the calculation regarding the effect of the Moratorium Law, stating that the claim for installments from the sixth onwards was filed within the ten-year prescriptive period, thus correcting the trial court's computation of which installments had prescribed. The Court ordered the administratrix to pay PNB's first claim (Francisco's debt) and a modified amount for the second claim (Eduardo's debt), plus attorney's fees.
Ratio Decidendi
On Issue 1: The Court held that the prescriptive period for the installments of Eduardo Ubat's loan began to run from the date each installment became due and payable. The Court agreed with the appellee's construction that the obligation was divisible, as evidenced by the stipulation in the promissory note that payment "shall be made in ten equal annual installments." Each unpaid installment gave rise to a separate cause of action, and under Article 1150 of the Civil Code, the time for prescription is counted from the day the action may be brought. Therefore, the prescriptive period for each installment commenced on its respective due date. On Issue 2: The Court found that the acceleration clause in the mortgage, which stated that upon failure to pay any amortization, "all the other amortizations shall then be and become due and payable," was mandatory in tenor. While it granted the bank a permissive right to foreclose, it also made all remaining installments due and payable. Consequently, the right of the bank to sue for the whole mortgage debt accrued when the fourth installment was not paid, and the prescriptive period for the entire obligation began to run from that point, absent any waiver by the bank of this right. On Issue 3: The Court sustained the bank's contention regarding the suspensive effect of the Moratorium Law on the unpaid account. It clarified that the claim for installments beginning with the sixth (which fell due on October 7, 1942) was filed within the ten-year prescriptive period. The Court corrected the appellee's erroneous assertion that the sixth installment had already prescribed because it matured on October 7, 1941, stating that it became payable on October 7, 1942, as the promissory note was executed on October 7, 1936. This meant that only the fourth and fifth installments were no longer collectible due to prescription.
Main Doctrine
The Supreme Court affirmed the principle that the prescriptive period for all kinds of actions, in the absence of a special provision to the contrary, is counted from the day the action may be brought. In the context of an installment loan, each installment, if unpaid, constitutes a separate cause of action, and the statute of limitations begins to run from the date each installment becomes due and payable. Furthermore, the Court clarified that an acceleration clause, even if stated permissively for the creditor's benefit (e.g., to foreclose), renders all remaining installments due and payable upon default, thereby triggering the commencement of the prescriptive period for the entire debt, unless the creditor expressly waives this right.