Pay vs Palanca (Civil Law)

IN THE MATTER OF THE INTESTATE ESTATE OF JUSTO PALANCA, Deceased, GEORGE PAY, petitioner-appellant, vs. SEGUNDINA CHUA VDA. DE PALANCA, oppositor-appellee.

G.R. No. L-29900 June 28, 1974

 FERNANDO, J.:

FACTS:

George Pay is a creditor of the Late Justo Palanca who died in Manila on July 3, 1963. The claim of the petitioner is based on a promissory note dated January 30, 1952, whereby the late Justo Palanca and Rosa Gonzales Vda. de Carlos Palanca promised to pay George Pay the amount of P26,900.00, with interest thereon at the rate of 12% per annum.

Pay filed a petition to the trial court praying that respondent Segundina, the surviving spouse of the late Justo Palanca, be appointed as administratrix of a residential dwelling at Taft Avenue, Manila, in the name of Justo Palanca, and assessed at P41,800.00. The idea is that once said property is brought under administration, George Pay, as creditor, can file his claim against the administratrix.

The lower court dismissed the petition due to the following:

1) Segundina refuses to be appointed as administratrix;

2) the property sought to be administered no longer belonged to the debtor, the late Justo Palanca; and

3) the rights of Pay had already prescribed considering that Pay himself admitted expressly that he was relying on the wording "upon demand."; thus the 10-yr prescriptive period applies and has, by the time of the filing of the petition, lapsed.

Furthermore, when the “lower court inquired whether any cash payment has been received by either of the signers of this promissory note from the Estate of the late Carlos Palanca. Petitioner informed that he does not insist on this provision but that petitioner is only claiming on his right under the promissory note.”

The promissory note, dated January 30, 1952, is worded thus: " `For value received from time to time since 1947, we [jointly and severally promise to] pay to Mr. [George Pay] at his office at the China Banking Corporation the sum of (P26,900.00), with interest thereon at the rate of 12% per annum upon receipt by either of the undersigned of cash payment from the Estate of the late Don Carlos Palanca or upon demand'. . . .

As stated, this promissory note is signed by Rosa Gonzales Vda. de Carlos Palanca and Justo Palanca."

Pay appealed to the SC, assailing the correctness of the rulings of the lower court as to the effect of the refusal of the surviving spouse of the late Justo Palanca to be appointed as administratrix, as to the property sought to be administered no longer belonging to the debtor, the late Justo Palanca, and as to the rights of petitioner-creditor having already prescribed.

ISSUE:

Whether a creditor is barred by prescription in his attempt to collect on a promissory note executed more than 15 years earlier with the debtor sued promising to pay either upon receipt by him of his share from a certain estate or upon demand (the basis for the action being the latter alternative)

HELD: Yes

From the manner in which the promissory note was executed, it would appear that petitioner was hopeful that the satisfaction of his credit could he realized either through the debtor sued receiving cash payment from the estate of the late Carlos Palanca presumptively as one of the heirs, or, as expressed therein, "upon demand." There is nothing in the record that would indicate whether or not the first alternative was fulfilled. What is undeniable is that on August 26, 1967, more than 15 years after the execution of the promissory note on January 30, 1952, this petition was filed. The defense interposed was prescription. Its merit is rather obvious.

Article 1179 of the Civil Code provides: "Every obligation whose performance does not depend upon a future or uncertain event, or upon a past event unknown to the parties, is demandable at once." This used to be Article 1113 of the Spanish Civil Code of 1889. As far back as Floriano v. Delgado, ⁵ a 1908 decision, it has been applied according to its express language.

The obligation being due and demandable, it would appear that the filing of the suit after 15 years was much too late. For again, according to the Civil Code, which is based on Section 43 of Act No. 190, the prescriptive period for a written contract is that of 10 years. This is another instance where this Court has consistently adhered to the express language of the applicable norm. There is no necessity therefore of passing upon the other legal questions as to whether or not it did suffice for the petition to fail just because the surviving spouse refuses to be made administratrix, or just because the estate was left with no other property.