G.R. No. L-20192 February 28, 1967
Republic of the Philippines, plaintiff-appellant, vs. Heirs of Cresencio V. Martir; Mario Martir, Esther M. Tupas, Ruth C. Vda. De Martir, et al., defendants-appellees.

FACTS

The Republic of the Philippines filed a complaint for foreclosure of mortgage against Cresencio V. Martir, later amended to substitute his heirs as defendants after his death. The complaint alleged that on May 11 and June 4, 1943, Martir obtained two loans totaling P2,000 from the Bank of Taiwan, Ltd., secured by a real estate mortgage and a chattel mortgage. This account was vested in the United States Alien Property Custodian in 1946 and later transferred to the Republic of the Philippines in 1954. Despite demands, the debt remained unpaid. The defendants filed a motion to dismiss on the ground that the cause of action was barred by the Statute of Limitations. The lower court sustained the motion and dismissed the case, prompting the Republic’s appeal.

ISSUE

Whether the plaintiff’s cause of action for foreclosure of mortgage had already prescribed when the action was filed.

RULING

No. The Supreme Court reversed the lower court’s order of dismissal. The prescriptive period for actions upon a written contract is ten years. The cause of action for the first promissory note accrued on May 11, 1944. The period from the accrual (May 11, 1944) to the filing of the complaint (December 8, 1961) is 17 years. However, the running of the prescriptive period was suspended by the debt moratorium under Executive Orders No. 25 and No. 32, which lasted from November 18, 1944, until declared unconstitutional on May 18, 1953, in Rutter vs. Esteban—a period of 8 years and 6 months. Deducting this suspension period from the total 17 years results in 8 years and 6 months, which is within the 10-year prescriptive period. Therefore, the action was filed on time. The case was remanded to the lower court for further proceedings.