Republic v. Heirs of Martir
REITERATIONFacts
The Antecedents: On December 8, 1961, the Republic of the Philippines filed a complaint for foreclosure of mortgage against Cresencio V. Martir. The complaint was later amended to substitute the appellees as defendants after it was discovered that Cresencio V. Martir had died. The amended complaint alleged that the deceased obtained two loans totaling P2,000.00 from the Bank of Taiwan, Ltd. on May 11 and June 4, 1943, with interest at six percentum per annum, compounded quarterly, payable one year thereafter. As security, the deceased executed a real estate mortgage and a chattel mortgage on his growing crops. These mortgages were registered on June 22 and 23, 1943. The account was vested in the United States of America through the Alien Property Custodian on January 21, 1946, and subsequently transferred to the Republic of the Philippines on July 20, 1954. Despite demands, the debt remained unpaid. Procedural History: On December 27, 1961, the appellees filed a motion to dismiss the complaint, arguing that the cause of action was barred by the Statute of Limitations. The lower court sustained the motion and dismissed the case. The Petition: The Republic of the Philippines appealed the dismissal, contending that the lower court erred in holding that the property was subject to prescription, that the cause of action had prescribed, and in dismissing the complaint.
Issue(s)
Whether the property subject of the action is subject to prescription. Whether the appellant's cause of action had already prescribed when the action was filed. Whether the lower court erred in dismissing the complaint.
Ruling
The order appealed from is reversed and set aside, and the record of the case is remanded to the lower court for further proceedings.
Ratio Decidendi
On whether the property subject of the action is subject to prescription: The Court found it unnecessary to rule on this issue directly, as the decisive issue was whether the prescriptive period had elapsed. The Court's focus was on the computation of the prescriptive period for the cause of action, assuming the subject matter was indeed subject to prescription. On whether the appellant's cause of action had already prescribed when the action was filed: The Court held that the cause of action accrued on May 11, 1944, for the first promissory note. Under Article 1144 of the New Civil Code, actions to enforce written contracts prescribe after ten years. However, Executive Order No. 25 (November 18, 1944) and Executive Order No. 32 (March 10, 1945) suspended the payment of debts incurred during the war. This moratorium was in effect until May 18, 1953, when it was declared unconstitutional in Rutter v. Esteban. Therefore, the period of suspension was from November 18, 1944, to May 18, 1953, a total of eight years and six months. The total period from the accrual of the cause of action (May 11, 1944) to the filing of the action (December 8, 1961) was seventeen years. Deducting the moratorium period of eight years and six months leaves eight years and six months, which is less than the ten-year prescriptive period. Thus, the action was filed before the lapse of the prescriptive period. On whether the lower court erred in dismissing the complaint: Based on the finding that the action was filed within the prescriptive period, the Court concluded that the lower court erred in dismissing the complaint. The reversal of the dismissal order was therefore warranted, remanding the case for further proceedings.
Main Doctrine
The period during which a moratorium on payment of debts was in effect, as mandated by Executive Orders Nos. 25 and 32, must be excluded in the computation of the prescriptive period for actions to collect monetary obligations. The moratorium was declared unconstitutional in Rutter v. Esteban on May 18, 1953.