G.R. No. L-8223 December 20, 1955
Intestate Estate of the Late Agustin B. Montilla, Jr., ADELA SANTOS VDA. DE MONTILLA, administratrix-appellee, vs. PACIFIC COMMERCIAL COMPANY, claimant-appellant.

FACTS

The Pacific Commercial Company, a Philippine corporation with American stockholders and officers, had two monetary claims against Agustin Montilla, Jr.: (1) a judgment debt balance of P876.14 from a 1940 court order, and (2) an unpaid promissory note balance of P583.15 from 1941. Following the outbreak of war between the United States and Japan on December 8, 1941, the company’s offices closed, and its American officers, including the auditor in charge of collections, were interned or went into hiding. Agustin Montilla, Jr. died on May 16, 1951. In the subsequent intestate proceedings, the probate court required creditors to file claims. The Pacific Commercial Company filed its claim on October 2, 1951. The administratrix opposed the claim, arguing the debt moratorium applied and the cause of action had prescribed. The trial court denied the claim on the ground of prescription.

ISSUE

Whether the claim of the Pacific Commercial Company had already prescribed under the statutes of limitations.

RULING

No. The Supreme Court reversed the trial court’s decision. The operation of the statute of limitations was suspended for the appellant company during the war. As an American-owned company with enemy alien stockholders and officers who were interned or hiding, it was not in a position to invoke the aid of the courts for the protection of its interests. This was compounded by Japanese Military Administration Instruction No. 28, which suspended court actions affecting enemy aliens without express military authority. Furthermore, the Debt Moratorium (Executive Orders Nos. 25 and 32, and Republic Act 342) had the effect of tolling the limitation period. The cause of action, therefore, was not barred. The case was remanded to the lower court for action on the claim’s merits.