Pay vs. Palanca

An obligation payable "upon demand" is immediately due and demandable under Article 1179 of the Civil Code, and an action to enforce it through a written contract prescribes in ten years under Article 1144, counted from the date the right of action accrues. Where the creditor files suit more than ten years after execution of the promissory note, the claim is barred by prescription.

George Pay was a creditor of the late Justo Palanca, who died in Manila on July 3, 1963. Pay's claim arose from a promissory note dated January 30, 1952, executed by Justo Palanca and Rosa Gonzales Vda. de Carlos Palanca, promising to pay Pay P26,900.00 with interest at 12% per annum. The note provided for payment either upon receipt by either signer of cash payment from the Estate of the late Don Carlos Palanca or upon demand. Pay sought the appointment of Segundina Chua Vda. de Palanca, Justo Palanca's surviving spouse, as administratrix of a residential dwelling at 2656 Taft Avenue, Manila, covered by Tax Declaration No. 3114 in Justo Palanca's name and assessed at P41,800.00, so that he could file his claim against the estate.

George Pay was a creditor of the late Justo Palanca, who died in Manila on July 3, 1963. Pay's claim was based on a promissory note dated January 30, 1952, executed by Justo Palanca and Rosa Gonzales Vda. de Carlos Palanca, whereby they jointly and severally promised to pay Pay the sum of P26,900.00, with interest at 12% per annum. The note stated that payment was due either "upon receipt by either of the undersigned of cash payment from the Estate of the late Don Carlos Palanca or upon demand." The note recited that value had been received from time to time since 1947.

On August 26, 1967, more than fifteen years after the promissory note's execution, Pay filed a petition seeking the appointment of Segundina Chua Vda. de Palanca, Justo Palanca's surviving spouse, as administratrix of a residential dwelling located at 2656 Taft Avenue, Manila, covered by Tax Declaration No. 3114 in Justo Palanca's name and assessed at P41,800.00. The purpose was to bring the property under administration so that Pay, as creditor, could file his claim against the administratrix.

The parties agreed to submit the matter for resolution on the basis of their pleadings, annexes, and respective memoranda. The lower court inquired whether any cash payment had been received by either signer of the promissory note from the Estate of the late Carlos Palanca. Pay informed the court that he did not insist on that provision and was claiming only on his right under the promissory note based on the "upon demand" alternative. The lower court found that, the wording of the promissory note being "upon demand," the obligation was immediately due and demandable. Since the note was dated January 30, 1952, more than ten years had transpired from that date, and the action had prescribed. The petition was dismissed on July 24, 1968.

• Refusal of Surviving Spouse to Serve as Administratrix: Petitioner assailed the lower court's ruling that the petition could not prosper due to the refusal of Segundina Chua Vda. de Palanca to be appointed as administratrix.
• Property No Longer Belonging to Debtor: Petitioner challenged the lower court's finding that the property sought to be administered no longer belonged to the late Justo Palanca.
• Prescription: Petitioner contested the lower court's ruling that his rights as creditor had already prescribed, arguing that the obligation was not immediately due and demandable because it was conditional upon receipt of cash payment from the Estate of the late Don Carlos Palanca.

• Prescription: Whether a creditor is barred by prescription in attempting to collect on a promissory note executed more than fifteen years earlier, where the debtor promised to pay either upon receipt of cash payment from a certain estate or upon demand, the action being based on the latter alternative.
• Due and Demandable Character of the Obligation: Whether the obligation under the promissory note was immediately due and demandable, thereby triggering the prescriptive period, given the alternative stipulation for payment.

• Prescription: Yes. The creditor's action had prescribed, more than ten years having elapsed from the date of the promissory note to the filing of the petition, the prescriptive period for actions upon a written contract being ten years under Article 1144 of the Civil Code.
• Due and Demandable Character of the Obligation: Yes. The obligation was immediately due and demandable under Article 1179 of the Civil Code, because its performance did not depend upon a future or uncertain event, the creditor having elected to rely on the "upon demand" alternative rather than the condition of receipt of cash payment from the estate.

• Prescription: The promissory note was executed on January 30, 1952, and the petition was filed on August 26, 1967, more than fifteen years later. Article 1144 of the Civil Code, which is based on Section 43 of Act No. 190, provides that actions upon a written contract must be brought within ten years from the time the right of action accrues. Since the obligation was immediately due and demandable, the right of action accrued on the date of the note's execution. The ten-year prescriptive period therefore began to run from January 30, 1952, and had long since lapsed by the time the petition was filed. This Court has consistently adhered to the express language of this prescriptive norm, as reflected in a long line of decisions from Azarraga vs. Rodriguez (1908) onward.

• Due and Demandable Character of the Obligation: Article 1179 of the Civil Code provides that 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 provision corresponds to Article 1113 of the Spanish Civil Code of 1889 and has been applied according to its express language as early as Floriano vs. Delgado in 1908. The promissory note contained two alternatives: payment upon receipt of cash from the Estate of the late Don Carlos Palanca, or payment upon demand. Petitioner expressly informed the court that he did not insist on the first provision and was relying solely on the "upon demand" alternative. An obligation payable upon demand is not dependent on a future or uncertain event; it is a pure obligation, immediately due and demandable. Accordingly, the prescriptive period commenced from the date of execution, and the creditor's failure to sue within ten years rendered the claim unenforceable.

• Pure Obligation (Obligación Pura) — An 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 under Article 1179 of the Civil Code. The Court applied this principle to a promissory note payable "upon demand," holding that such an obligation is a pure obligation immediately due and demandable, because the creditor's election to rely on the demand alternative removed any dependence on a future or uncertain event. The prescriptive period therefore began to run from the date of execution of the note.

• Prescription of Actions on Written Contracts — Under Article 1144 of the Civil Code, actions upon a written contract must be brought within ten years from the time the right of action accrues. This provision traces its origin to Section 43 of Act No. 190. The Court applied the ten-year prescriptive period to a promissory note, holding that since the obligation was immediately due and demandable, the right of action accrued on the date of execution, and the creditor's suit filed more than fifteen years later was barred.

• "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 passage states the controlling statutory basis for classifying the promissory note obligation as a pure obligation, immediately due and demandable, which triggers the running of the prescriptive period.

• "The obligation being due and demandable, it would appear that the filing of the suit after fifteen years was much too late." — This sentence encapsulates the ratio decidendi: the conjunction of the obligation's immediate demandability and the elapsed prescriptive period renders the creditor's claim time-barred.

• "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 ten years." — This passage identifies the specific prescriptive period and its statutory lineage, establishing the ten-year bar applicable to actions on written contracts.

• Floriano vs. Delgado, 11 Phil. 154 (1908) — Early application of Article 1113 of the Spanish Civil Code of 1889 (the predecessor of Article 1179 of the Civil Code), cited to show that the rule on immediately demandable obligations has been consistently applied according to its express language since 1908.
• Azarraga vs. Rodriguez, 9 Phil. 637 (1908) — Cited as part of a long line of decisions consistently adhering to the ten-year prescriptive period for actions upon written contracts under Section 43 of Act No. 190 and Article 1144 of the Civil Code.
• Brillantes vs. Margarejo, 36 Phil. 202 (1917); Agoncillo vs. Javier, 38 Phil. 424 (1918); Sarmiento vs. Javellana, 43 Phil. 880 (1922) — Additional decisions cited in a string citation to demonstrate the Court's consistent adherence to the ten-year prescriptive period for written contracts.

• Article 1179, Civil Code of the Philippines — Provides that 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. Applied to classify the promissory note obligation as a pure obligation, immediately due and demandable, because the creditor elected to rely on the "upon demand" alternative rather than the conditional provision.
• Article 1144, Civil Code of the Philippines — Provides that actions upon a written contract must be brought within ten years from the time the right of action accrues. Applied to bar the creditor's claim, as more than ten years had elapsed from the date of the promissory note to the filing of the petition.
• Section 43, Act No. 190 — The historical statutory basis for the ten-year prescriptive period on written contracts, from which Article 1144 of the Civil Code was derived.

Zaldivar (Chairman), Barredo, Antonio, Fernandez, and Aquino, JJ., concurred.