### Facts
– **January 15, 1939:** Rio y Olabarrieta, the predecessor of Rio y Compania, entered a “Contrato de Servicios Personales” with Anastacio Manalo to manage its forest concession. Anastacio Manalo was extended a credit line up to P5,000.00 at 9% per annum.
– **May 30, 1941:** Anastacio Manalo died intestate in Puerto Princesa, Palawan. His daughter, Elvira Maslog, continued managing her father’s financial obligations and maintained payments until December 31, 1941.
– **December 31, 1941:** The balance due from Anastacio Manalo’s account to Rio y Compania stood at P18,614.58.
– **November 19, 1953:** Elvira Maslog executed an affidavit of extrajudicial settlement, adjudicating to herself her late father’s properties.
– **January 29, 1954:** Rio y Compania filed a complaint in the Court of First Instance of Palawan, seeking to recover the P18,614.58 from Elvira Maslog and her husband, as Elvira was the sole heir of Anastacio Manalo.
– **Pretrial Proceedings:** Defendants filed a motion to dismiss on the grounds of prescription. The trial court ruled in favor of the defendants, dismissing the complaint for having been filed late.
### Issues
1. **Whether the action to recover the debt from Elvira Maslog was barred by prescription and laches.**
2. **Whether the moratorium law could excuse the delay in filing the claim for the debt.**
### Court’s Decision
**Issue 1: Prescription and Laches**
– The Supreme Court held that Rio y Compania’s action was barred by laches. Despite knowledge of Anastacio Manalo’s death on May 30, 1941, and the existing obligation, Rio y Compania did not take any steps to institute administration proceedings or to collect the debt until January 29, 1954, more than 12 years later.
– The Court emphasized the requirement for prompt presentation and disposition of claims against a decedent’s estate as prescribed by Rule 87, Sections 2 and 5 of the Rules of Court. Rio y Compania’s failure to act promptly led to the application of the doctrine of laches, rendering their claim, otherwise within a ten-year prescriptive period for written contracts, barred.
**Issue 2: Moratorium Law Defense**
– The Court noted that the moratorium law, which aimed at the rehabilitation of debtors, could not excuse the delay in settling the estate of a deceased person. The urgent need to settle the estate and distribute its residue among heirs took precedence over the moratorium’s general objectives.
– The Court cited Jison vs. Warner, Barnes & Co. Ltd., where it previously ruled that the moratorium law must give way to the necessity of quickly settling the estate of a decedent to minimize, if not entirely avoid, the costs involved in prolonged administration.
### Doctrine
– **Laches in Estate Settlements:** A creditor who, being aware of a debtor’s death and not initiating administration or intestate proceedings within a reasonable time, resulting in delays in the settlement of the debtor’s estate, would find their claim barred by laches.
– **Special Limitation on Claims Against Estates:** Sec. 5, Rule 87 of the Rules of Court overrides ordinary prescription periods to ensure all claims against a decedent’s estate are brought promptly within the time fixed by the court, otherwise, they are barred forever.
### Class Notes
1. **Laches:** A legal principle where a claimant’s undue delay in asserting a right or claim can result in it being barred due to prejudice caused to the opposing party.
2. **Rule 87, Rules of Court (Philippines):** Governs the presentation of claims against a deceased person’s estate, emphasizing prompt filing to ensure timely settlement and distribution.
3. **Moratorium Law:** While aimed at rehabilitating debtors, it cannot supersede the requirements for prompt settlement of decedent estates to avoid indefinite delays in distribution to rightful heirs.
4. **Section 6(b), Rule 79:** Authorizes creditors to file for letters of administration if no estate proceedings initiate timely.
### Historical Background
– **Post-Commonwealth Era Policies:** The case illustrates post-Commonwealth Philippines’ regulatory focus on promptly settling estates to prevent undue delays and complications in administering decedents’ estates.
– **Legal Precedents:** Marrying principles from earlier precedents like Tan Sen Guan vs. Ga Siu San and Sikat vs. Villanueva, this case perpetuates the importance of laches and strict timelines, reflecting the judiciary’s emphasis on efficiency and finality in estate settlements.
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