PHILIPPINE NATIONAL BANK, PLAINTIFF AND APPELLANTS, VS. HERMOGENES HIPOLITO AND LEONOR JUNSAY, DEFENDANTS AND APPELLEES.

Appeal from the order of dismissal by the Court of First Instance of Negros
Occidental.

The complaint, filed on June 18, 1959, allege that defendants obtained
various sugar crop loans from plaintiff through its Victorias Branch, evidenced
by promissory notes (reproduced as annexes to the complaint) respectively dated
January 25, 1941, February 13, 1941, March 8, 1941, April 3, 1941, May 2, 1941
and June 23, 1941; that of the total amount of P9,692.00 represented by said
notes defendants paid P3,905.61, leaving a balance of P6,786.39, which, added to
accrued interest of P5,213. 34, summed up to P11.999.73 as of January 17, 1957;
that despite repeated demands, defendants failed and refused to pay said amount;
that in view of such demands defendants, on May 7, 1957, went to Attorney
Francis I. Medel of the legal department of plaintiff’s Victorias branch and
offered a plan of payment of the account, but for reasons unknown to plaintiff
and probably due to the transfer of defendant Hipolito as supervising teacher to
some other province, his proposed plan of payment did not materialize; that said
ofFer of plan of payment was an acknowledgement of defendants’ just and valid
obligation. The prayer is for the court to order defendants to pay to plaintifF
the said amount of P11,993.73, with accrued annual interest thereon at the rate
of 5% from January 17, 1957 up to the date of payment, plus attorney’s fees
equivalent to 10%.

Defendants move for a bill of particulars, but the motion was denied. They
then moved to dismiss on the ground that plaintiff’s cause of action, if any,
had already prescribed. To the motion they attached a joint affidavit of merit,
wherein they averred that they never made any acknowledgement of indebtedness
nor offered a plan of payment, but on the contrary had always maintained that
plaintiff’s action had prescribed.

Plaintiff opposed the motion, contending that the prescriptive period had
been suspended by “Executive Order No. 32, otherwise known as the Moratorium
Law,” and interrupted, pursuant to Article 1973 of the old Civil Code, by
plaintiff’s written extra-judicial demands as well as by defendants’
acknowledgment of the indebtedness. Attached to the opposition were (1) a
statement of defendants’ account dated July 22, 1947; (2) plaintiffs’ letter
dated October 31, 1953, asking defendants to make arrangements for the
liquidation of the debt (3) letter of plaintiffs’ Victorias Branch Manager,
dated February 4, 1959, addressed to defendant Hipolito (at Iloilo City)
requesting him to settle his account, otherwise drastic action would be taken
against him as a government employee, and reminding him of his May 7, 1957
interview with Brancli Attorney Medel, wherein he proposed a plan of payment
which however did not materialize; and (4) defendant Hipolito’s answer dated
February 16, 1959, requesting said Manager, in his personal and not in his
official capacity, to be more “sensitive” to the financial plight of defendants;
and requesting further that he or any of his investigators study the case by
seeing Mrs. Hipolito (who was then staying very near the Victorias Branch
Office) about “the actual insolvency of the family,” ending up with an appeal
for help “in this matter.”

Defendants replied to plaintiff’s opposition, stating among other things that
Executive Order No. 32, if at all, suspended the prescriptive period “only for
two (2) years, four (4) months and sixteen (16) days, from March 10, 1945, or
only up to July 26, 1948,” citing Bachrach Motors Co., Inc. vs. Chua fia Hian,
101 Phil., 184; 53 Off. Gaz., 6524; that the alleged written extrajudi-cial
demands constitute self-serving evidence; and that defendant Hipolito’s letter
of February 16, 1959 can not be considered as an acknowledgment of
indebtedness.

In dismissing the complaint the lower court ruled that since the seven
promissory notes constituted one single obligation, arising as it did from
plaintiff’s fmanciation of defendants’ sugar crop for 1941-42, the date of the
last promissory note, June 23, 1941, should be considered as the true date of
the written contract, from which the ten year prescriptive period (Art. 1144,
par. 1 of the new Civil Code) started; that said period was suspended only for
two (2) years, four (4) months and sixteen (16) days (by reason of Executive
Order No. 32) until said Order was declared unconstitutional; that prescription
set in on November 8, 1953, five (5) years, five (5) months and ten (10) days
before the complaint was filed on June 18, 1959; that the alleged letters of
demand cannot be considered as extrajudicial demands “under Art. 1155 of the
Civil Code” because there is no proof that defendants received them; that
plaintiff’s letter of demand of February 4, 1959, which was admittedly received
by defendant Hipolito, did not work to interrupt the prescriptive period which
had already previously elapsed; and that defendant Hipolito’s answering letter
of February 16, 1959 does not contain any express or tacit acknowledgement of
the obligation nor promise to pay the same and hence did not renew the
obligation.

We are of the opinion that the dismissal of the complaint is erroneous. In a
motion to dismiss defendant hypotheticaly admits the truth of the allegations of
fact contained in the complaint. (Pangan vs. Evening News Publishing Co., Inc.
110 Phil., 409; Pascual vs. Secretary of Public Works and Communications, 110
Phil., 331; Republic vs. Ramos, G.R. No. L-15484, Jan. 31, 1963).

An examination of the complaint herein does not indicate clearly that
prescription has set in. On the contrary, it is belied by the allegation
concerning defendant’s offer of payment made on May 7, 1957. Such offer
hypothetically admitted in the motion, worked as a renewal of the
obligation.

It is true that defendants attached to the motion a joint affidavit of merit
wherein they deny having made an offer of a plan of payment. Such denial,
however, being a contrary averment of fact, would be proper in the answer to the
complaint but not in a motion for dismissal, for the contradictory allegations
would require presentation of evidence (Alquigue vs. De Leon, G.R. No. L-15059,
March 30, 1963). The same is true of the other allegations in the complaint
concerning the demands for payment sent by plaintiff upon defendants and the
partial payments made by them, all or some of which may have a material bearing
on the question of prescription. In other words, the ground for dismissal not
being indubitable, the lower court should have deferred determination of the
issue until after trial of the case on the merits. (Sec. 3, Rule 16, Revised
Rules of Court; Geganto vs. Katalbas, G.R. L-17105, July 31, 1963).

The order appealed from is set aside and the case is remanded to the lower
court for further proceedings, with costs against appellees.

Bengzon, C. J., Bautista Angelo, Reyes, J.B.L., Barrera, Paredes, Dizon,
Regala, Bengzon, J. P. and Zaldivar, JJ. concur.