REPUBLIC OF THE PHILIPPINES PLAINTIFF AND APPELLEE, VS. MAMBULAO LUMBER COMPANY AND GENERAL INSURANCE & SURETY CORPORATION, DEFENDANTS AND APPELLANTS.

Appeal by writ of error from a decision of the Court of First Instance of
Manila. Although originally elevated to the Court of Appeals, the latter has
forwarded the case to us, only questions of law being raised in the appeal.

It appears that defendant Mambulao Lumber Co. was indebted to plaintiff
herein, the Republic of the Philippines, in the sum of P2,972.71 as deficiency
sales taxes, including surcharges and penalties, for the year 1948. On July 20,
1954, said lumber company, as principal, and defendant Mambulao Insurance &
Surety Corporation, as surety, executed a bond, guaranteeing payment of said sum
to the plaintiff, in twelve (12) equal monthly installments beginning from
August, 1954, with the stipulation that, in case of default in the payment of
any installment, the entire balance may at once be considered due and payable.
On June 14, 1957, plaintiff filed this action against said lumber company and
its aforementioned surety for the recovery of said sum of P2,972.71 plus
interest, upon the ground that none of said installments had been paid despite
repeated demands. Defendant filed an answer admitting all of the allegations of
the complaint, but denied plaintiff’s right to recover said sum of P2,972.71,
upon the ground that, as a forest concessionaire, the lumber company had paid to
plaintiff the sum of P9,127.52, by way of reforestation charges under Republic
Act No. 115, which allegedly imposed upon plaintiff the obligation to spend said
amount in the rehabilitation and reforestation of the areas included in the
concession of said defendant when denuded and that plaintiff had failed and
refused to comply with said obligation, despite demands.

On September 14, 1957, the lower court ordered this case set for hearing on
October 15, 1957. Shortly before the latter date, or on October 12, 1957,
counsel for the defendants filed a motion for postponement of said hearing. When
the case was called for hearing on October 15, 1957, neither the defendants nor
their counsel appeared. Thereupon, the court proceeded to receive plaintiff’s
evidence and on August 25, 1958, rendered judgment for the plaintiff. In due
course, defendants moved for a new trial, which was denied. Hence, this appeal
by writ of error taken by the defendants, who allege that the lower court has
erred: (1) in not granting, first, their motion for continuance of the hearing,
and, later, their motion for new trial; (2) in not finding that plaintiff’s
action is barred by the statute of limitations; and (3) in not finding that
plaintiff has no cause of action, in view of its failure to spend the
reforestation charges paid by the lumber company in the reforestation of the
areas covered by its concession.

It is well settled that motions for continuance or postponement of hearing
are addressed to the sound discretion of the court, and that its action thereon
will not be disturbed by appellate courts in the absence of a patent and
manifest abuse of discretion (Panti vs. Provincial Board of Catanduanes, 106
Phil., 1093; Martir vs. Jalandoni, 107 Phil., 398; Republic of the Philippines
vs. Gumayan, 112 Phil., 476). The records before us do not disclose any such
abuse. On the contrary, defendants’ motion for postponement of October 12, 1957
is not even sworn to. Hence, His Honor, the trial Judge, had no reason to rely
on the allegations of fact made in said motion. Moreover, defendants have
offered no plausible excuse for not appearing before the lower court on October
15, 1957, despite the fact that no order granting said motion had been
issued.

For the same reasons, no error was committed in denying defendants’ motion
for a new trial. Besides, it was not alleged therein that the defense set up in
the answer could be established by the defendants. They averred in said motion
that the sum of P495.46 had been paid on account of plaintiff’s credit, which is
contrary to the admission, made in said answer, of the truth of all of
the allegations in plaintiff’s complaint.

Defendants’ plea of prescription of action, is based upon Section 331, in
relation to Section 183 (A) of the National Internal Revenue Code, pursuant to
which internal revenue taxes shall be assessed within five (5) years after the
filing of the corresponding return, and, if no such assessment has been made
within said period, no action after the expiration thereof may be brought in
court. These provisions are, however, inapplicable to the present case. Although
the original obligation of the lumber company arose from non-payment of taxes,
the complaint against said Company and the Surety is predicated upon the bond
executed by them. In other words, plaintiff’s right originally arising from law
has become a right based upon a written contract, enforceable within ten (10)
years from September 1954, upon defendants’ default in the payment of the first
installment due under said contract (Republic vs. Xavier Gun Trading and Luzon
Co., Inc., G. R. No. L-17325 and Republic vs. Dorego, G. R. No. L-16594, April
26, 1962; citing the cases of McCaughn vs. Philadelphia Barge Co. F [2d] 628; U.
S. vs. Barth Co., 72 h ed. 746, U. S., 278-279). This action was commenced on
June 14, 1957. or long before the expiration of said period. In any event, the
plea of prescription is deemed waived by the defendants, in view of their
failure to allege it in their answer (Boiiaga vs. Soler, 112 Phil., 651; Fawcett
vs. Balao 107 Phil., 570, 57 Off. Gaz. [30] 5395; Vicente vs. Lucas, 95 Phil.,
716).

The alleged obligation of the plaintiff to apply to the reforestation of the
lands covered by the concession to the lumber company the sum of P9,127.52,
claimed to have been paid by the latter by way of reforestation charges, is
predicated upon the allegation of fact, in defendants’ answer to the effect that
said lands are now denuded. There is, however, no proof in support of this
allegation.

Wherefore, the decision appealed from is hereby affirmed, with costs against
the defendants. It is so ordered.

Bengzon, C. J., Padilla, Bautista Angelo, Labrador, Reyes, J. B. L.,
Barrera, Paredes, Dizon, Regala, and Makalintal, JJ., concur.