Lichauco v. Soriano
REITERATIONFacts
The Antecedents: On November 29, 1889, Raymunda Soriano borrowed P6,600 from Cornelia Laochangco, promising to repay the sum in one year, without interest, in sugar, out of the crop of 1890, in May. The contract allowed for an extension of the repayment period for an additional year at the creditor's will. To secure the debt, Soriano executed a mortgage on a parcel of land on April 29, 1889. Procedural History: Cornelia Laochangco died, and her heirs commenced an action on November 2, 1910, in the Court of First Instance (CFI) of Pampanga to recover the debt and foreclose the mortgage. The defendant answered, alleging payment as a special defense and a counterclaim for P16,107. The CFI, on June 27, 1912, ruled that the defendant owed P6,600 with interest from November 2, 1910. Both parties appealed to the Supreme Court (R.G. No. 8787). The Supreme Court affirmed the CFI judgment on July 14, 1914. Subsequently, the defendant filed a motion for rehearing on January 22, 1915, amended on March 9, 1915, alleging that not all necessary parties plaintiff were included and that some original plaintiffs had died before the action commenced. The Supreme Court granted the motion, declared its decision void, and remanded the case. On April 28, 1915, the plaintiffs filed an amended petition, including all interested parties. The defendant answered on July 23, 1915, denying the allegations and raising prescription as a special defense. The CFI, on July 30, 1915, rendered judgment for the defendant, absolving her from liability. The plaintiffs appealed. The Appeal: The plaintiffs appealed the CFI's decision, arguing that the lower court erred in declaring them without a right of action, in dismissing the complaint, and in failing to render judgment against the defendant. Their sole argument was that the cause of action had not prescribed, contending that the twenty-year period under Article 1964 of the Civil Code had not expired. They argued that the prescription period did not begin to run until after the lapse of two years from the contract date (April 29, 1889), which would be April 30, 1891, based on the one-year term plus a potential one-year extension.
Issue(s)
Whether the cause of action for the collection of the debt had prescribed. Whether the prescriptive period began to run from the end of the first year or the end of the second year of the loan term. Whether the commencement of the original action interrupted the prescriptive period for the newly added plaintiffs in the amended complaint.
Ruling
The Supreme Court affirmed the judgment of the lower court, absolving the defendant from liability. The Court ruled that the cause of action had prescribed.
Ratio Decidendi
On Whether the cause of action for the collection of the debt had prescribed: The Court held that the cause of action had prescribed. The debt was due in May 1890, with a provision for extension for another year at the creditor's will. However, the record did not show any express election by the creditor to extend the payment period to the second year. In the absence of such proof, the prescriptive period began to run from the earliest date the action could have been brought, which was June 1, 1890 (the day after the end of May 1890, the payment month). The twenty-year prescriptive period under Article 1964 of the Civil Code would therefore expire on June 1, 1910. Since the original action was filed on November 2, 1910, the action was barred by prescription. On Whether the prescriptive period began to run from the end of the first year or the end of the second year of the loan term: The Court clarified that the prescriptive period began to run from the end of the first year, specifically on June 1, 1890. This was because the contract stipulated payment in May 1890, and while there was an option for the creditor to extend the period for another year, there was no evidence that the creditor expressly elected to do so. The mere failure to demand payment at the end of the first year did not constitute an election to extend the time. Therefore, the earliest date the action could have been filed was June 1, 1890, marking the commencement of the prescriptive period. On Whether the commencement of the original action interrupted the prescriptive period for the newly added plaintiffs in the amended complaint: The Court noted that while the original action filed on November 2, 1910, stopped the running of the statute of prescription as to the original plaintiffs, it was "very doubtful" whether it stopped the running of the statute with reference to the new plaintiffs added in the amended complaint presented on April 28, 1915. For these new parties, their right of action was not only barred by Article 1964 of the Civil Code (twenty years) but also by the ten-year prescriptive period under Act No. 190, as more than ten years had expired after October 1, 1901, before the amended complaint was filed. However, the Court also stated that the amended complaint was presented within a reasonable time after the cause was returned to the lower court, and as to the original parties, the running of the prescription, having been stopped by the initial filing, did not begin to run again.
Main Doctrine
The Supreme Court held that the prescriptive period for an action to collect a debt begins to run from the date the action could have been legally brought. In this case, the debt was payable in May 1890, with an option for the creditor to extend the payment for another year. Since there was no proof of the creditor's express election to extend the payment to the second year, the action could have been brought as early as June 1, 1890. Consequently, the twenty-year prescriptive period under Article 1964 of the Civil Code had already expired by November 2, 1910, when the original action was filed, barring the plaintiffs' claim.