G.R. No. L-15666. June 30, 1962.
Rio y Compañia (Successor to Rio y Olabarrieta), petitioner, vs. Court of Appeals and Manuel Rey, respondents.

FACTS

Rio y Compañia filed an action to foreclose a mortgage executed by Manuel Rey to secure a loan. The mortgage term was for one year from February 11, 1938, extendible for another year. The evidence did not show an express agreement for an extension. The action for foreclosure thus accrued, at the latest, by February 11, 1940. The complaint was filed on April 10, 1954. The lower court and the Court of Appeals found the action had prescribed. They computed the prescriptive period by deducting only the general moratorium period (March 10, 1945, to July 26, 1948) from the time elapsed since the cause of action arose. This resulted in a lapse exceeding the ten-year prescriptive period for foreclosure.
The appellate court applied the short moratorium period because it held that the burden was on the creditor, Rio y Compañia, to prove that the debtor, Rey, was a war sufferer or had filed a war damage claim to be entitled to the longer moratorium period (which would have tolled the statute of limitations until May 18, 1953). Since Rio y Compañia failed to present such proof, the court ruled only the short moratorium applied, leading to prescription.

ISSUE

Who has the burden of proof regarding the defense of prescription when the debtor invokes it, and does this burden include proving the debtor is not a war sufferer or war damage claimant to preclude the application of the longer moratorium period?

RULING

The Supreme Court reversed the Court of Appeals. The legal logic is centered on the proper allocation of the burden of proof. When a debtor pleads the statute of limitations as a defense, he must prove all facts essential to support that plea. Here, the defense of prescription could only succeed if the shorter, general moratorium applied. For the shorter period to apply, the debtor must not be a war sufferer or war damage claimant entitled to the longer moratorium.
Therefore, the burden was on respondent Rey to prove, as a necessary component of his prescription defense, that he was not a war sufferer and had not filed a war damage claim. These are negative averments but are of the essence of his contention that the action was barred. Since Rey failed to present evidence on these points, his defense of prescription was not satisfactorily established. Consequently, the presumption remains that he could be a war sufferer, entitling the petitioner to the benefit of the longer moratorium period, which would toll the running of the prescriptive period until the moratorium law was declared unconstitutional in 1953. Under that computation, the action filed in 1954 had not yet prescribed. The case was remanded to the trial court to determine the actual amount due.