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[MANILA MOTOR COMPANY v. R. F. FERNANDEZ](https://www.lawyerly.ph/juris/view/c374b?user=fbGU2WFpmaitMVEVGZ2lBVW5xZ2RVdz09)
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[ GR No. L-8377, Aug 28, 1956 ]

MANILA MOTOR COMPANY v. R. F. FERNANDEZ +

DECISION

99 Phil. 782

[ G.R. No. L-8377, August 28, 1956 ]

MANILA MOTOR COMPANY, INC., PLAINTIFF AND APPELLANT, VS. R. F. FERNANDEZ, DEFENDANT AND APPELLEE.

D E C I S I O N

PARAS, C.J.:

On February 24, 1939, the defendant-appellee  purchased from the plaintiff-appellant a second-hand Ford Sedan for P1,125, P100 being paid  in cash  and  the balance  being payable in 34 fifteen-day installments with interest at the rate of twelve per cent per annum.  As a  security,  the  appellee executed in favor of the appellant a  chattel mortgage on the car.  Up  to  July 21, 1940, the  appellee had paid the first ten installments and a part of the eleventh installment, thereby  leaving  a balance  of P775.17.   The appellee having defaulted in paying the other installments, the appellant filed in 1940 a  suit in which judgment was rendered  in  March  1941, sentencing the appellee to pay to the appellant the sum of P775.17, with interest at twelve per cent per annum, plus twenty-five per cent of the total amount due as liquidated damages  and attorney's  fees. This judgment was never executed  due to the outbreak of the last war and the promulgation of the debt moratorium orders.   The  judicial  records,  including  the  judgment, were neither saved nor duly  reconstituted.   On February 19, 1954,  the appellant filed in the Court of First Instance of Manila the present  complaint for the collection of appellee's  indebtedness, alleging substantially the foregoing facts; but upon motion  of the appellant, the court dismissed the case so as to enable it to file another with the Municipal Court of Manila which has jurisdiction over the amount involved.  Accordingly, on April 13,  1954,  the appellant filed with the latter court a similar complaint, whereupon the appellee filed a motion to dismiss which was granted by the Court on the ground thdt appellant's cause of action was barred by  the statute of limitations.   The appellant elevated the case to the Court of First Instance of Manila wherein the appellee again filed a motion to dismiss which was also  granted, on the grounds  that  appellant's cause of action had  prescribed and that appellee's  foreclosure suit in  1940 constituted a  waiver  of any unpaid balance. Hence this  appeal by  the  plaintiff.

It is  contended for  the  appellant that the debt moratorium interrupted the running of the statute of limitations. This contention finds support in Ma-ao Sugar Central Co. vs. Barrios, 45  Off.  Gaz.,  2444, wherein it  was held:

"While the debt moratorium is in  force the defendant-petitioner has no obligation  yet to pay the  plaintiffs,  and the latter can not file a suit against him  in the courts of justice requiring him to recognize his debts to  the plaintiffs  and to pay them (after the moratorium) not only the  amount of the indebtedness, but the legal interest thereon from the filing of the complaint, the attorney's fees of ten per centum of the  amounts due, and the costs of the suits. There is no such action to compel defendant to acknowledge or recognize his debt which is not yet payable, distinct and different from the action  for recovery  or  payment of  a debt already  due and payable, against the  debtor who refuses to pay  it. * * *

"* * *  Said  Executive Order No.  25  as amended by Executiye Order No.  32  not only suspends  the execution  of the judgment that the court may render so far as it orders the payment of debts and other monetary obligations, as stated in the resolution  in said case, but also suspends the filing of suit in the courts of justice for the enforcement of  the  payment of debts and  other  monetary obligations therein referred to, if timely objection is set up by the defendant debtor."

The complaint was filed  on April 13, 1954, or  13  years, 1 month and  12 days after March 1,  1941 (assuming that this was the  date when  the judgment rendered in March 1941  became  final).  The debt moratorium lasted from November  18, 1944, when Executive Order No. 25  was promulgated,  to July 26, 1948, when it was partially lifted by Republic  Act  No.  342, or 3 years, 8  months  and  8 days.  Deducting  this from  13  years,  1 month and 12 days, or less  than the 10-year prescriptive  period for an action based  on judgment.

The lower  court  erred in considering  the present complaint as  one based on  a  chattel mortgage. The following allegations sufficiently serve to  make  the judgment rendered in March  1941 as the  basis of  appellant's cause of  action,  or they  would  otherwise be  unnecessary and meaningless:

"7.  That because defendant was delinquent in the payment of his obligations, plaintiff was forced to  institute court action  against the defendant sometime  in 1940;  that, in due course, judgment  was rendered  against the defendant  sometime  in March,  1941;

"8.  That to the best of plaintiff's knowledge  and  recollection, the said judgment  ordered the defendant to pay plaintiff the amount of P775.17 plus interest thereon at the contract rate of 12 per cent per annum,  until the whole account be  fully  paid, and  an additional amount of 25 per cent of the  total amount due owing the plaintiff, as  liquidated damages  and  attorney's fees;

"9.  That the  said judgment was never executed due to the  out break of the war and the Debt Moratorium orders;

"'10. That plaintiff's copy of the said judgment was lost or destroyed daring the Battle for Liberation of Manila."  (Allegations 7-10, Complaint.)

Although a copy of the chattel mortgage was attached to the complaint and reference was made to  certain provisions thereof,  the purpose undoubtedly was to demonstrate the propriety of the judgment of 1941 and, as stated by  counsel for  appellant,  to  allow  the introduction of secondary evidence of the contents of said judgment which Was not reconstituted.

The lower court likewise committed  a mistake in assuming that the suit in 1940 was one of foreclosure.   The allegations with reference to said suit and the corresponding judgment of  1941  do not contain  any suggestion in support of the assumption.  Upon  the other hand, in appellee's motion to dismiss,  it was  stated that the car in question was  commandeered from him by the  Japanese occupation forces,  thereby indicating that, even during the war period, the property was in appellee's possession and had not been  sold at public auction.  At any rate,  it is the actual sale of the mortgaged chattel in accordance with section  14  of  Act  No. 1508 that would bar  the creditor (who chooses  to foreclose) from recovering  any  unpaid balance (Pacific Commercial  Company  vs. De la  Rama, 72 Phil., 380).

Wherefore, the appealed order is reversed and the case will be as it is hereby remanded to the court of origin for further proceedings.  So ordered  with costs  against the defendant-appellee.

Bengzon, Padilla, Montemayor, Bautista Angelo,  Labrador, Concepcion, Reyes, J. B. L., and Endencia, JJ., concur.


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