Hijos de F. Escaño, Inc. v. Nazareno
REITERATIONFacts
The Antecedents: Plaintiff corporation, successor to a partnership, sued defendant for P10,327.61, allegedly representing the balance of a current account from July 2, 1917, to December 31, 1922. Plaintiff claimed the defendant was furnished a statement of account, verbally admitted its correctness, and requested to pay "little by little." Defendant denied being furnished the statement, denied promising to pay, and contended his account was settled on December 31, 1922. Procedural History: The Court of First Instance of Cebu absolved the defendant. The trial court treated the delay in filing the complaint as weakening the plaintiff's contention, although its judgment was based on other grounds. The Petition: Plaintiff appealed the decision of the Court of First Instance.
Issue(s)
Whether the plaintiff's action to recover the alleged balance of the current account has prescribed. Whether the defendant verbally admitted the correctness of the account and agreed to pay the balance.
Ruling
The Supreme Court affirmed the decision of the Court of First Instance, holding that the plaintiff's action had prescribed. The Court found no evidence that the agreement to pay the alleged balance was in writing, and thus the six-year prescriptive period under Section 43 of the Code of Civil Procedure applied. The right of action accrued on December 31, 1922, and the complaint was filed on October 14, 1929, nearly seven years later.
Ratio Decidendi
On the issue of prescription: The Court applied Section 43 of the Code of Civil Procedure, which provides a six-year prescriptive period for actions upon a contract not in writing. The Court found no evidence that the current account agreement or the alleged promise to pay the balance was reduced to writing. Therefore, the six-year prescriptive period was applicable. The plaintiff's right of action to demand payment of the balance accrued on December 31, 1922, when the current account was closed. The complaint was filed on October 14, 1929, which is nearly seven years after the accrual of the cause of action. Consequently, the plaintiff's right of action had already prescribed before the suit was instituted. On the issue of verbal admission: While the plaintiff alleged that the defendant verbally admitted the correctness of the account and requested to pay "little by little," the Court noted that this alleged agreement was not in writing. The Court's decision on prescription rendered this point secondary, as the primary basis for dismissal was the lapse of the prescriptive period for an unwritten contract. The Court also highlighted that the defendant had never made any payment on the alleged balance since December 31, 1922, which could have served as an acknowledgment of the debt and interrupted prescription.
Main Doctrine
An action upon a contract not in writing, whether expressed or implied, must be brought within six years from the date the right of action accrues. For a current account, the right of action accrues on the date the last balance is struck.