Add TAGS to your cases to easily locate them or to build your SYLLABUS.
Please SIGN IN to use this feature.
Highlight text as FACTS, ISSUES, RULING, PRINCIPLES to generate case DIGESTS and REVIEWERS.
Please LOGIN use this feature.
Show printable version with highlights

[ GR No. 7097, Oct 23, 1912 ]



23 Phil. 308

[ G. R. No. 7097, October 23, 1912 ]




When Pedro Bonnevie and Francisco Arandez formed in Nueva Caceres, Ambos Camarines, .a  regular general partnership for engaging  in the business of thresyttjr paddy, Vicente Delgado  undertook to deliver tojfaem paddy for this purpose to be cleaned and returned to him as rice, with  the agreement of paying them 10  centimos for each cavan and to have returned in rice one-half the amount received as paddy.  The paddy received for this purpose was credited by receipts made out in this way: "Receipt for (number) cavanes of paddy in favor of (owner of the paddy), Nueva Caceres,  (day) of (month),  1898."  And they issued to Vicente Delgado receipts Nos. 86-99 for a total of 2,003 cavanes and a half of paddy, from April 9 to June 8, 1898.

On  February 6, 1909,  Vicente Delgado appeared in  the Court of First Instance of Ambos Camarimes with said  receipts, demanding return of the said 2,003 and a half cavanes of paddy,  or1 in  the absence thereof, of the price of said article at the  rate of 3 pesos the cavan or 6,009 pesos and 50 centimos,  with interest thereon at 6 per  cent  a year reckoning from November 21,1905, until complete payment, and the costs.   The plaintiff asked that the interest run from November 21, 1905, because on that  date his  counsel demanded  of the defendants, Bonnevie and Arandez, their       partnership having been dissolved, that they settle the accounts in this matter.

The court decided the case by sentencing the defendants, Pedro Bonnevie and Francisco Arandez, to pay to Vicente Delgado two thousand  seven hundred and fifty-four pesos and 81 centimos (P2,754.81), the value of 2,003 1/2 cavanes of paddy at the rate of 11 reales the cavan and 6 per cent interest on said sum reckoned from November 21, 1905, and the costs.

On appeal this Supreme Court, the only grounds  of error assigned are: (1) Violation of articles 532 and 950 of the Code of Commerce; (2) violation of articles 309 of the Code of Commerce and 1955 and 1962 of the Civil Code; and (3) violation of section 296 of the Code of Civil Procedure.

With reference to the first assignment of errpr it is alleged that  the  receipts  in  question,  the  form whereof has been set forth, were all issued  before  July .11, 1898, and being credit paper as defined in paragraph 2 of article 532 of the Code of Commerce, the right of action arising therefrom prescribed before July 11, 1901,  in accordance  with article 950  of the Code of Commerce.

This conclusion  is  not  admissible.  It is  true  that, according  to article  950  of  the Code  of  Commerce, actions arising from bills of exchange, drafts, notes, checks, securities, dividends, coupons, and the amounts one amortization of obligations issued in accordance wrtli said code,  shall extinguish  three years after they have fallen due; but it is also true that as the receipts in question are not documents of any of the kinds enumerated in said article, the actions arising thereform do not extinguish  three years from their date (that, after all, they do not fall due).   It is true that paragraph  2 of article 950 also mentions, besides those already stated, "other instruments of draft or exchange;" but it is also true that the receipts in this case are not documents  of draft or exchange, they are not drafts payable to order, but they are, as the appellants acknowledge, simple promises to pay; or rather mere documents evidencing the receipt of some cavanes of paddy for Jne purpose already stated, which is nothing more than purely for industrial, and not for mercantile exchange.  They are documents such as would be issued by the thousand so-called ricemills scattered throughout the Islands, wherein a few poor women of the  people in like manner clean the paddy by pounding it with & pestle 'and return hulled rice.  The contract whereby one person receives from another a quantity of unhulled rice to return it hulled, for a fixed  compensation or remuneration, is  an  industrial, not a commercial act; it is,  as  the appellants say, a hire of services without mercantile character, for there is nothing mercantile about it, just as there is nothing mercantile about the operation of washing clothes. Articles 532 and 950 of the Code of Commerce have not, therefore, been violated, for they are not applicable to  the case at bar.

Neither are articles  309  of the Code  of Commerce and 1955 and 1962 of the Civil  Code applicable.  The first of these articles reads thus: 

"Whenever, with the consent of the depositor, the depositary disposes of the articles on deposit  either for himself or for his business,  or for  transactions intrusted to him by the former, the rjghts and obligations of the depositary. and of the depositor shall cease, and the rules and provisions applicable to the commercial loans, commission, or contract which took the place  of the deposit shall  be observed."

The appellants  say that,  in  accordance  with this legal provision, the paddy  received on deposit ceased to  continue under such character in order to remain in their possession under the contract of hire of services, in virtue whereof they could change  it by returning rice instead of paddy and a half less than the quantity received.  They further say that the ownership of personal property, according to article 1955 of the Civil Code,  prescribes by uninterrupted possession for six years, without the necessity  of any other condition, and in accordance with article 1962 of the same Code real  actions, with regard tp personal property, prescribe after the lapse of six years from the loss of possession.

Two questions are presented  in these allegations: One regarding the nature of the obligation contracted by the appellants; and the. other regarding prescription, not for a period of three years, but   of six years.

With reference to the first, it is acknowledged that the obligation of the appellants arose primarily out of the contract of deposit, but this deposit was later converted into  a contract of hire of services and this is true.   But it is also true that, after the object of  the hire of services had been fulfilled, the rice, in every way remained as a deposit in the possession of the appellants for them to return to the depositor at any time  they might be required to do so, and nothing has relieved them of this obligation; neither the dissolution of the partnership that united them, nor the revolutionary movement of a political character  that seems to have occurred in 1898, nor the fact that they may at some time have lost possession of the rice.

With reference to the second question, or  under title of deposit or hire of services, the possession of the appellants can in no way amount to prescription, for the thing received on deposit or for hire  of services could not prescribe, since for every prescription of ownership the possession must be in the  capacity of an  owner, public, peaceful,  and uninterrupted (Civil Code, 1941) ; and  the Appellants  could not possess the rice in the capacity of owners, taking for granted that the depositor or lessor never could have believed that he had transferred to them ownership of the thing deposited or leased, but merely the care of the thing on deposit and the use or profit thereof; which is expressed in legal terms by saying that the possession of the depositary or of the lessee is not adverse to that of the depositor or lessor,  who continues to  be the owner of the thing  which is merely held in trust by the depositary or lessee.

In  strict law, the deposit, when it is of fungible goods received by weight, number,  or measurement, becomes a mutual  loan, by reason of the  authorization'  which the depositary may  have from the depositor to make use of the goods deposited.  (Civil Code, 1768, and Code of Commerce, 309.)

But in the present case neither was there authorization of the depositor nor did the depositaries intend to make use of the rice for their own consumption of profit; they were merely released from  the obligation oi returning the same thing and contracted in lieu thereof the obligation of delivering something similar to the half of it, being bound by no fixed terms, the opposite of what happens in a mutual loan, to make the delivery or return when and how it might please the depositor.

In fact, it has happened that the  depositaries have, with the consent of the depositor, as provided in article 309 of the Code of Commerce,  disposed  of the paddy "for transactions he intrusted to them," and that in lieu of the deposit there has been a hire  of  services, which is the one entered into between the parties  to the end that one should return in rice half of the quantity of paddy delivered by the other, with the obligation on the latter's part of paying 10 cen`11times for each  cavan  of hulled rice.   The consequence of this is  that the rules  and regulations for contract of hire of services  must  be applied to the case,  one of which is that the thing  must be  returned after the operation entrusted and payment of compensation, and the other that the action for claiming the thing leased, being personal, does not prescribe for fifteen years under article 1964 of the Civil Code.

If the action  arising from the  receipts in question does not prescribe in three years, as does that from bills of exchange, because they are not drafts  payable  to order or anything but receipts that any warehouseman would sign if the  possession of the  paddy on the part of those who received it for threshing is not in  the capacity of owner but only in that  of depositary or  lessor of services and under such character ownership thereof could not prescribe in six years, or at any  time, because   lease for recovery of possession that has not been lost but maintained in the lessee in the name of the lessor; if prescription of any kind can  in no way be held, only because there could not have been either beginning or end of a fixed period for the prescription, it is useless to talk of interruption of the period for the  prescription, to which tends the third assignment of error,  wherein it is said that the court violated article 296 of the Code of Civil, Procedure in admitting as  proven facts  not alleged in  the  complaint, just as if by admitting them there would have  been a finding with  regard to the computation of the period for timely exercise of the action, taking into consideration the legal interruptions of the running of the period of prescription. The court has made no finding in the sense that this or that period of time during which these or those facts  occurred must be counted out, and therefore the action has not prescribed, because by eliminating such period  of time and comparing such and such date the action has been brought in due time.  Prescription  of three or six years cannot be presupposed in the terms alleged, but only of fifteen years, which is what is proper to oppose to the exercise of a right of action arising from hire of services,and even of deposit or mutual loan, whether common  or mercantile; and such is the prescription considered possible by the trial court, in conformity with articles 943 of the Code of  Commerce and 1964 of the Civil Code.

The trial judge confined himself to sentencing the defendants to payment of the  price of the paddy, ignoring the thing itself, return whereof ought to have been the subject of judgment in the  first place, because the thing itself appears  to have been extinguished and its price has taken its place.  But the assigning of legal  interest from November 21, 1905, can have no other ground than the demand made by plaintiff's  counsel  upon the  defendants  to settle this matter.  Legal interest  on  delinquent debts can  only  be owed from the time the principal amount constitutes a clear and certain debt, and in the present case the  principal debt has only been clear and certain since the date of the judgment of the lower court; so the  legal  interest can be owed only since then.

The judgment appealed from is affirmed, except that the legal interest shall be understood to be owed from the date thereof; with the costs  of this instance against the appellants.

Torres, Mapa, Johnson, and  Carson, JJ., concur.