G.R. No. L-12301; April 13, 1959
RIO Y COMPAÑIA (Successor to RIO Y OLABARRIETA), plaintiff-appellant, vs. DATU JOLKIPLI, defendant-appellee.

FACTS

In December 1936, Rio y Olabarrieta (now Rio y Compañia) entered into a contract with Datu Jolkipli for the exploitation of a timber concession in Brooke’s Point, Palawan. The plaintiff extended credit to the defendant for this venture. By January 1939, Jolkipli had incurred an outstanding obligation of P620.82. On April 19, 1954, the plaintiff filed a complaint to recover this debt, with accumulated interest amounting to P948.11. The Justice of the Peace Court dismissed the complaint on the ground of prescription. This dismissal was sustained by the Court of First Instance of Palawan, which also denied the plaintiff’s motion for reconsideration, prompting this appeal.

ISSUE

1. Whether the court below erred in denying the plaintiff an opportunity to prove that the Justice of the Peace Court at Brooke’s Point was not open during the Japanese occupation and liberation period, which could have suspended the running of the prescriptive period.
2. Whether the court below erred in its computation of the moratorium period applicable to the obligation, specifically regarding the effect of Executive Orders and Republic Act No. 342 .

RULING

The Supreme Court ruled in favor of the plaintiff-appellant on both points.
1. On the suspension of prescription due to war: The Court held that the statute of limitations is suspended when the regular course of justice is interrupted to such an extent that courts cannot be kept open, as established in prior cases. The determination of whether the Justice of the Peace Court of Brooke’s Point was closed or could not function due to the war is a question of fact. The lower court should not have refused the plaintiff an opportunity to substantiate this contention in a hearing on the merits.
2. On the computation of the moratorium period: The obligation was contracted before December 31, 1941, making Executive Order No. 32 (issued March 10, 1945) the applicable moratorium order. The suspension period depended on the defendant’s status:
* If the defendant was not a war sufferer, the suspension ran only from March 10, 1945, to July 26, 1948 (when Republic Act No. 342 took effect).
* If the defendant was a war sufferer who had filed a war damage claim, the suspension extended from March 10, 1945, to May 18, 1953 (the date of the Rutter vs. Esteban decision declaring the further operation of Republic Act No. 342 unconstitutional). In this latter case, the plaintiff’s complaint, filed in 1954, would be timely.
The Court found that the defendant did not plead nor prove that he was not a war sufferer or a war damage claimant. These negative averments were essential to his defense of prescription, and the burden of proving them lay with the defendant. The lower court’s rejection of the plaintiff’s offer to prove the defendant was a war damage claimant was reversible error.
DISPOSITIVE: The order dismissing the complaint is revoked and set aside. The records are ordered remanded to the court of origin for further proceedings. Costs against the appellee.