Philippine National Bank vs. Purificacion Vda. de Villarin

A money judgment creditor's filing of a petition for the issuance of letters of administration within the ten-year prescriptive period for reviving the judgment constitutes a timely notice of its claim against the decedent's estate, and the subsequent formal filing of the claim retroacts to the date of such petition. The filing of the petition for letters of administration is the first concrete step to ensure that creditors of the estate may be known and recognized, and a creditor who has made known its claim on time has sufficient cause of action to assert its claim against the estate.

The Philippine National Bank (PNB) was a judgment creditor of Porfirio Villarin, who died intestate on January 18, 1961, in Misamis Occidental. The decedent's widow and heirs did not institute proceedings for the settlement of his estate, prompting the bank to seek the appointment of an administrator. The dispute concerns the interplay between the ten-year prescriptive period for reviving a money judgment under Article 1144 of the Civil Code and the rules on filing creditors' claims against a decedent's estate under Rule 86 of the Rules of Court.

On July 7, 1955, the Philippine National Bank obtained a judgment in its favor and against Porfirio Villarin in Civil Case No. 22360 of the Court of First Instance of Manila. The judgment ordered Villarin to pay the bank (a) on the first cause of action, the sum of P13,669.60 as of June 23, 1953, plus a daily interest of P2.84 on P13,000.00 from June 24, 1953 until fully paid, plus 10% of the amount due as attorney's fees; and (b) on the second cause of action, the sum of P31,625.74 as of June 23, 1953, plus a daily interest of P6.57 on P30,000.00 from June 24, 1953 until fully paid, plus 10% of the amount due as attorney's fees, and to pay the costs of the suit. The judgment became final and executory on August 11, 1955.

On January 18, 1961, Porfirio Villarin died in Misamis Occidental without leaving any will. The Philippine National Bank claimed to have learned of his death only sometime in the middle of 1963. No proceedings for the settlement of his estate had been instituted by his widow or any of his heirs up to that time.

On July 13, 1965, the Philippine National Bank filed a petition in the Court of First Instance of Misamis Occidental for the issuance of letters of administration of the intestate estate of Porfirio Villarin. On September 24, 1965, letters of administration were issued in favor of the widow, Mrs. Purificacion Vda. de Villarin, who thereupon assumed her duties as administratrix. On March 9, 1966, the bank filed with the Court of First Instance of Misamis Occidental its claims against the intestate estate for the amount awarded in the judgment.

The administratrix filed her answer alleging that the claim had prescribed under Article 1144, No. (3) of the Civil Code, which limits to ten years the prescriptive period within which an action to revive a judgment may be filed. Porfirio Villarin, Jr., assisted by his mother, likewise filed an opposition contending that the claim had been barred by the Statute of Limitations; that the money judgment could have been enforced by an independent civil action for revival of judgment under Section 6, Rule 39 of the Rules of Court; and that the failure of the bank to institute such action within the ten-year period from the time the judgment became final and executory had reduced its claim to a mere natural obligation.

The trial court, without receiving any evidence, oral or documentary, and merely allowing counsels of both parties to argue, issued an order denying the claim. The court noted that the bank neither filed a motion for execution within five years from July 7, 1955, nor filed an action to revive the judgment within ten years from that date, and thus allowed the judgment to prescribe. The bank appealed to the Court of Appeals, which certified the appeal to the Supreme Court for the reason that no issue of fact was involved.

• Prescription of the Claim: The petitioner argued that its claim had not yet prescribed because its right to file an action to revive the money judgment was still subsisting when the judgment debtor died on January 18, 1961, and that after his death, this right was converted into a claim enforceable only in the settlement of the intestate estate proceedings of the deceased.
• Applicable Prescriptive Period: The petitioner maintained that the applicable period of prescription was not the ten-year period for filing an action to revive a judgment, but rather the period for filing a creditor's claim against the judgment debtor's estate under Section 2, Rule 86 of the Rules of Court.
• Interruption of Prescription: The petitioner contended before the trial court that the prescriptive period was interrupted by partial payments made by the judgment debtor after the judgment became executory, the last of which was on March 14, 1956, and that partial payment before the prescriptive period expired was an implied acknowledgment of the debt, citing Veloso vs. Fontanoza, 13 Phil. 79, and Article 1155 of the Civil Code.

• Prescription Under Article 1144: The respondent administratrix argued that the claim of the bank as judgment creditor had prescribed under Article 1144, No. (3) of the Civil Code, which limits to ten years the prescriptive period within which an action to revive a judgment may be filed.
• Bar by Statute of Limitations: The respondent further contended that the money judgment could have been enforced by an independent civil action for revival of judgment under Section 6, Rule 39 of the Rules of Court, and that the bank's failure to institute such action within the ten-year period from the time the judgment became final and executory on August 11, 1955, had reduced its claim to a mere natural obligation which does not grant a right of action to enforce its performance.

• Timeliness of the Claim: Whether the claim of the appellant bank, consisting of a money judgment that became final and executory on August 11, 1955, could still be filed in the intestate estate of Porfirio Villarin after the ten-year prescriptive period for the revival of the judgment had lapsed.
• Effect of the Petition for Letters of Administration: Whether the filing of the petition for the issuance of letters of administration within the ten-year prescriptive period constituted a timely notice of the bank's claim against the estate.

• Timeliness of the Claim: Yes. The claim was filed on time. When the bank filed its petition for the issuance of letters of administration on July 13, 1965, within the ten-year prescriptive period for the revival of the money judgment, it may be deemed to have filed its claim on time, as the petition made known its claim against the estate for all legal intents and purposes.
• Effect of the Petition for Letters of Administration: Yes. The filing of the formal claim on March 9, 1966, can be made to retroact to the date when the petition for letters of administration was filed on July 13, 1965, because that was the time the bank had made known to the court that it had a claim against the estate of the deceased.

• Timeliness of the Claim: The Court reasoned that under Section 6, Rule 39 of the Rules of Court, a judgment may be executed on motion within five years from the date of its entry or from the date it becomes final and executory, and after the lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by action. The judgment became final and executory on August 11, 1955, giving the bank until August 11, 1965, to file an action to revive the judgment. The bank did not file such an action but instead filed a claim against the estate on March 9, 1966. However, the bank had previously filed a petition for the issuance of letters of administration on July 13, 1965, which was within the ten-year period. The Court held that when the bank filed this petition, stating that it was one of the creditors of the estate, it can be considered for all legal intents and purposes that the bank had made known its claim against the estate. Since the petition was filed within the ten-year prescriptive period, the bank may be deemed to have filed its claim on time.
• Effect of the Petition for Letters of Administration: The Court explained that the filing of the petition for the issuance of letters of administration is the first concrete step to take so that the creditors of the estate of the deceased may be known and recognized. Once a creditor has filed such a petition, the court shall issue letters of administration to a qualified person, and immediately after the granting of the letters, the court shall issue notice requiring all persons having money claims against the decedent to file them with the clerk of court. In this case, there was no showing that the lower court had issued such a notice to creditors. Even before the lower court could issue such notice, the bank filed its formal claim on March 9, 1966. Although this filing appeared to be out of time because it was more than seven months after the ten-year prescriptive period had lapsed, the Court held that considering the bank had already filed its petition for letters of administration on July 13, 1965, within the ten-year period, the filing of the formal claim on March 9, 1966, can be made to retroact to the date of the petition. Having made known on time its claim against the estate by means of its petition for letters of administration, the bank had sufficient cause of action to assert its claim against the estate.

• Timely Notice of Claim Through Petition for Letters of Administration — A judgment creditor who files a petition for the issuance of letters of administration within the prescriptive period for reviving the judgment is deemed to have made known its claim against the estate for all legal intents and purposes. The subsequent formal filing of the claim retroacts to the date of the petition, and the creditor is considered to have filed its claim on time. The filing of the petition for letters of administration is the first concrete step to ensure that creditors of the estate may be known and recognized.

• "When appellant Bank filed a petition for the issuance of letters of administration stating therein that it was one of the creditors of the estate of the deceased, it can be considered for all legal intents and purposes that appellant Bank has made known its claim against it and since the aforesaid petition was filed within the 10-year prescriptive period for the revival of the money judgment in question, appellant Bank may be deemed to have filed its claim on time." — This passage articulates the core ratio decidendi: the petition for letters of administration serves as a timely notice of the creditor's claim, and the formal claim filed later is deemed timely.
• "In effect, the filing of the petition for the issuance of letters of administration is the first concrete step to take so that the creditors of the estate of the deceased may be known and recognized." — This statement defines the legal significance of the petition for letters of administration in the context of estate settlement and creditor claims.
• "the filing of the formal claim on March 9, 1966 can be made to retroact to the date when the petition for letters of administration was filed with the lower court because that was actually the time the appellant bank had made known to the court that it has a claim against the estate of the deceased." — This passage establishes the retroactivity principle applied by the Court to validate the bank's claim despite the lapse of the prescriptive period between the petition and the formal claim.

• Veloso vs. Fontanoza, 13 Phil. 79 — Cited by the petitioner before the trial court for the proposition that partial payment before the prescriptive period expires is an implied acknowledgment of the debt; the trial court found this case not in point.
• Demetriou & Madrid vs. Lesaca and Chuanco, 63 Phil. 112 — Cited by the trial court for the proposition that after the lapse of ten years, a judgment creditor loses all rights based on the judgment; the Supreme Court's ruling effectively superseded this application in the context of estate proceedings.
• General de Tabacos vs. Martinez, 17 Phil. 160 — Cited by the trial court in support of the prescription of the judgment; referenced in the trial court's order denying the claim.
• Paterno vs. Aguila, 22 Phil. 427 — Cited by the trial court in support of the prescription of the judgment.
• Compania General de Tabacos vs. Martinez and Nolan, 29 Phil. 515 — Cited by the trial court in support of the prescription of the judgment.
• Arambulo vs. Court of First Instance of Laguna & Municipality of Santa Rosa, 53 Phil. 302 — Cited by the trial court in support of the prescription of the judgment.

• Article 1144, No. (3), Civil Code — Provides that an action to enforce a judgment or decree must be brought within ten years from the time the judgment or decree has become final and executory. The respondent invoked this provision to argue that the bank's claim had prescribed.
• Section 6, Rule 39, Rules of Court — Provides that a judgment may be executed on motion within five years from the date of its entry or from the date it becomes final and executory, and after the lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by action. The Court applied this provision to determine the prescriptive period for reviving the judgment.
• Section 2, Rule 86, Rules of Court — Provides the time within which claims against an estate shall be filed, which shall not be more than twelve nor less than six months after the date of the first publication of the notice. The petitioner argued that this provision, rather than the ten-year period for reviving a judgment, governed the filing of its claim.
• Section 1, Rule 86, Rules of Court — Requires the court to issue a notice requiring all persons having money claims against the decedent to file them with the clerk of court immediately after granting letters of administration. The Court noted that no such notice was issued in this case.
• Section 6, Rule 78, Rules of Court — Provides for the grant of administration to the surviving spouse, next of kin, or principal creditors. The Court referenced this provision in the context of the bank's petition for letters of administration.
• Article 1423, Civil Code — Defines civil and natural obligations; the respondent argued that the bank's claim had been reduced to a mere natural obligation due to the lapse of the prescriptive period.

• Chief Justice Makalintal
• Justice Castro
• Justice Fernando
• Justice Makasiar
• Justice Esguerra
• Justice Aquino
• Justice Concepcion, Jr.
• Justice Teehankee (concurring opinion)
• Justice Barredo (concurring opinion)

N/A — No dissenting opinions were rendered. Justice Antonio was on leave, and Justice Muñoz Palma took no part.