Case Summary (G.R. No. L-16631)
Facts of the Case
The indebtedness, amounting to P800.00, was incurred by Leon Cunat on August 7, 1941, with the expectation of payment in five yearly installments, the final installment being due on August 7, 1946. Following Cunat's death in 1942, neither he nor his heirs made repayments on the loan. The Development Bank of the Philippines filed a foreclosure action against the estate on July 13, 1959. The key issue presented was whether the action was barred by the prescription of the claim.
Legal Basis for Non-Interruption of Prescription
The lower court ruled that the action had indeed prescribed, with the cause of action accruing on August 7, 1946. However, the bank contended that the prescription was interrupted by various acts, including alleged inducements by Cunat's heirs, the filing of a petition for the appointment of an administrator, and extrajudicial demands for payment made to Cunat and his heirs. The court, however, found these arguments unpersuasive, leading to the dismissal of the complaint.
Effect of Debt Moratorium
The Court addressed the impact of a debt moratorium (Executive Order No. 32, March 10, 1945) on the prescription period. This moratorium was lifted by Republic Act No. 342 on July 26, 1948. The Court determined that since it was undisputed that Leon Cunat was not a war damage claimant, the 10-year prescription period for enforcing the indebtedness should be calculated from this date.
Arguments on Interruptions of Prescription
The appellant's claims of interruption relied on three main circumstances: alleged acts of the heirs to delay payment, the appointment of an administrator, and various letters demanding payment for the debt. The Court asserted that these actions did not constitute an interruption of the prescription under applicable law, reinforcing that a petition to open an estate’s administration does not equate to an enforcement of a debt claim.
Application of Legal Principles
The ruling reaffirmed the principle established in prior case law under Act No. 190, which maintains that extrajudicial demands do not interrupt the running of prescription if the right to action was already in effect before the enactment of the New Civil Code. Further, the appellant's reliance on provisions of the new Civil Code was deemed misplaced since the prescription period had already begun prior to its enactment.
Resolution of Reconsideration Motion
In response to the motion for reconsideration, the Court upheld its p
...continue readingCase Syllabus (G.R. No. L-16631)
Case Overview
- This case involves a foreclosure action filed by the Development Bank of the Philippines (plaintiff-appellant) against Manuel S. Ozaraga, the administrator of the intestate estate of Leon Cunat (defendant-appellee).
- The case centers on the issue of whether the action for foreclosure has prescribed.
Background of the Case
- The indebtedness of P800.00 was incurred by Leon Cunat on August 7, 1941, with a payment schedule consisting of five yearly installments, the last due on August 7, 1946.
- Leon Cunat executed a mortgage on a parcel of land as security for the loan.
- Cunat passed away in 1942, and neither he nor his heirs made any payments on the loan.
- The Development Bank filed the foreclosure suit on July 13, 1959, which raised the question of prescription.
Legal Framework of Prescription
- The cause of action for foreclosure should have accrued on August 7, 1946, but was suspended due to a debt moratorium established by Executive Order No. 32, issued on March 10, 1945.
- The moratorium was lifted by Republic Act No. 342 on July 26, 1948, except for those who filed war damage claims.
- Since it was not shown that Leon Cunat was a war damage claimant, the ten-year prescription period began from July 26, 1948.
Court Rulings on Prescription
- The lower court dismissed the compla