G.R. No. L-18942; November 30, 1962
Republic of the Philippines, plaintiff-appellee, vs. Mambulao Lumber Company and General Insurance & Surety Corporation, defendants-appellants.

FACTS

Defendant Mambulao Lumber Co. was indebted to the Republic for deficiency sales taxes. On July 20, 1954, the company and its surety executed a bond guaranteeing payment of the sum in twelve monthly installments, with a stipulation that default on any installment would make the entire balance due. The Republic filed an action for recovery on June 14, 1957, alleging no installments were paid. Defendants admitted the complaint’s allegations but interposed a special defense, claiming the Republic had an obligation to spend reforestation charges paid by the company on the denuded areas of its concession and had failed to do so.
The lower court set the case for hearing. Defendants’ counsel filed an unsworn motion for postponement shortly before the hearing date. When the case was called, neither defendants nor counsel appeared. The court proceeded to receive the plaintiff’s evidence ex parte and later rendered judgment for the Republic. Defendants moved for a new trial, which was denied, prompting this appeal.

ISSUE

The issues are: (1) whether the trial court erred in denying the motion for postponement and the subsequent motion for new trial; (2) whether the action is barred by the statute of limitations; and (3) whether the Republic has no cause of action due to its alleged failure to apply reforestation charges.

RULING

The Supreme Court affirmed the lower court’s decision. On the first issue, motions for continuance are addressed to the court’s sound discretion. No patent abuse of discretion was shown, as the motion was unsworn and defendants offered no plausible excuse for their non-appearance despite no order granting the postponement. The denial of the new trial was also proper, as defendants did not allege they could establish their defense, and their new claim of a partial payment contradicted their prior judicial admission in the answer.
On the second issue, the plea of prescription is unavailing. While the original tax obligation is governed by a five-year assessment period under the Tax Code, the present action is based on the written bond contract executed in 1954. A contract-based action prescribes in ten years. This suit, filed in 1957, was well within that period. Moreover, prescription was deemed waived as it was not specifically pleaded in the answer.
On the third issue, the alleged obligation of the Republic to apply reforestation charges to the specific concession area is a factual claim predicated on the denudation of the lands. However, defendants presented no proof whatsoever to support this allegation. Their admission of the complaint’s factual allegations and failure to substantiate their special defense left the Republic’s right to recover on the bond unimpaired.