Facts:

On December 8, 1961, the Republic of the Philippines initiated a foreclosure of mortgage action against Cresencio V. Martir in the Court of First Instance of Occidental Negros, under Civil Case No. 6386. The case arose after it was discovered that Martir had passed away, leading to the substitution of his heirs—Mario Martir, Esther M. Tupas, and Ruth C. Vda. de Martir—as defendants. The Republic's amended complaint detailed that Martir had secured two loans from the former Bank of Taiwan, Ltd. on May 11 and June 4, 1943, amounting to P2,000.00, with a six percent annual interest rate, compounded quarterly, and due one year after the loans were taken. To secure these loans, Martir executed a real estate mortgage on a parcel of land, covered by Transfer Certificate of Title No. 34979, and a chattel mortgage on the growing crops on the property, both of which were registered in June 1943. The loans became part of the assets of the Bank of Taiwan, which were vested in the Uni...

Facts:

1. Parties Involved:

   • Plaintiff and Appellant: Republic of the Philippines.
   • Defendants and Appellees: Heirs of Cresencio V. Martir (Mario Martir, Esther M. Tupas, Ruth C. Vda. de Martir, et al.).

2. Background of the Case:

   • On December 8, 1961, the Republic of the Philippines filed a complaint for foreclosure of mortgage against Cresencio V. Martir (Civil Case No. 6386) in the Court of First Instance of Occidental Negros.
   • The complaint was later amended to substitute the heirs of Cresencio V. Martir as defendants, as Cresencio had already passed away.

3. Loan and Mortgage Details:

   • On May 11 and June 4, 1943, Cresencio V. Martir obtained two separate loans from the Bank of Taiwan, Ltd., totaling P2,000.00, with 6% interest per annum, compounded quarterly, payable one year later.
   • The loans were secured by a real estate mortgage on a parcel of land (covered by Transfer Certificate of Title No. 34979) and a chattel mortgage on the growing crops on the land.
   • The mortgages were registered on June 22 and 23, 1943, respectively.

4. Transfer of Debt:

   • The debt was part of the assets of the Bank of Taiwan, Ltd., which were vested in the United States of America through the Alien Property Custodian on January 21, 1946, under the Trading With the Enemy Act.
   • The debt was later transferred to the Republic of the Philippines on July 20, 1954.

5. Failure to Pay:

   • Despite repeated demands, Cresencio V. Martir (and later his heirs) failed to pay the mortgage debt and the accrued interest.

6. Motion to Dismiss:

   • On December 27, 1961, the defendants filed a motion to dismiss the complaint, arguing that the cause of action was barred by the Statute of Limitations.
   • The lower court granted the motion and dismissed the case, prompting the Republic to appeal.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Prescriptive Period for Written Contracts:

   • Under Article 1144 of the New Civil Code, actions to enforce written contracts prescribe after ten (10) years from the accrual of the cause of action.

2. Effect of Moratorium Laws:

   • Executive Order No. 25 (issued on November 18, 1944) and Executive Order No. 32 (issued on March 10, 1945) suspended the payment of debts and other monetary obligations incurred during and before the war.
   • Republic Act No. 342 (enacted on July 26, 1948) lifted the moratorium for pre-war obligations, except for war sufferers who filed claims with the War Damage Commission.
   • The moratorium was declared unconstitutional on May 18, 1953, in Rutter vs. Esteban.

3. Computation of Prescriptive Period:

   • The prescriptive period was suspended from November 18, 1944, to May 18, 1953 (8 years and 6 months).
   • The cause of action accrued on May 11, 1944, and the complaint was filed on December 8, 1961.
   • Deducting the moratorium period (8 years and 6 months) from the total elapsed time (17 years), the remaining period was 8 years and 6 months, which is within the 10-year prescriptive period.

4. Conclusion:

   • The Republic’s action was filed before the lapse of the prescriptive period. Thus, the lower court erred in dismissing the complaint.