GR L 3469; (April, 1951) (Digest)
G.R. No. L-3469; April 20, 1951
BERNARDO P. TIMBOL, plaintiff-appellant, vs. JOHN MARTIN, ET AL., defendants-appellees.
FACTS
In August 1949, Bernardo P. Timbol filed a suit in the Court of First Instance of Manila against the defendant spouses, John Martin et al., to recover the value of eight promissory notes. Six notes were executed on different dates in 1944, and two were executed in January 1945. The first two notes were payable in April and July 1945, while the remaining six were due “sixty days after the declaration of peace in the Philippines.” The plaintiff, alleging the defendants intended to dispose of their properties in the Philippines and return to America, obtained a writ of preliminary attachment. The defendants moved to dismiss the complaint, invoking the moratorium orders (Republic Act No. 342) and several Supreme Court decisions. After both sides submitted memoranda, the trial court dismissed the case, prompting this appeal.
ISSUE
Whether the defendants are deemed to have waived the benefits of the moratorium law due to insolvency, pursuant to Article 1129 of the Civil Code, thereby allowing the collection suit to proceed.
RULING
The Supreme Court affirmed the dismissal of the case, holding that the theory of waiver or forfeiture of the moratorium benefits under Article 1129 of the Civil Code could not be sustained. The Court provided three reasons: First, Article 1129 contemplates a period fixed by the contracting parties, whereas the moratorium law was not fixed or foreseen by them. Second, under Article 1129, the insolvency must occur after the term was fixed, and there was no proof the defendants became insolvent after the promulgation of the moratorium orders. Third, the insolvency of debtors was precisely the reason for the moratorium law’s suspension of collection suits; thus, allowing financial difficulties to deprive a debtor of its benefits would be inconsistent. The Court deemed it unnecessary to address the defendants’ additional contention regarding the notes payable after the declaration of peace, as the moratorium law barred the litigation from proceeding. The dismissal was without prejudice, and costs were assessed against the appellant.