GR L 48049; (October, 1948) (Digest)
G.R. No. L-48049; October 18, 1948
C. N. HODES, plaintiff-appellee, vs. FELIX S. YULO, defendant-appellant.
FACTS
Defendant-appellant Felix S. Yulo, as attorney-in-fact for Paz Salas and Carlota Salas, obtained a loan of P28,000 from plaintiff-appellee C.N. Hodges on March 27, 1926, secured by a mortgage on the principals’ property. From this loan, Yulo applied P10,188.29 to pay his personal debts to Hodges (two promissory notes from 1920 and a partial payment for property). When the mortgage was breached, Hodges foreclosed against the Salas sisters. The Supreme Court, in a 1936 decision, ruled that Yulo had no authority to apply the P10,188.29 to his personal account, limiting the sisters’ liability to P17,811.71. On April 16, 1938, Hodges filed an action against Yulo to recover the P10,188.29. The trial court awarded Hodges P8,188.29 (disallowing P2,000 due to usury). Yulo appealed, arguing prescription.
ISSUE
Whether Hodges’ action to recover the amount Yulo misapplied had prescribed.
RULING
Yes, the action had prescribed. The applicable provision is Section 49 of Act No. 190 (Code of Civil Procedure), which allows a plaintiff one year to commence a new action if a prior action failed otherwise than upon the merits and the original limitation period had expired. Hodges’ foreclosure suit against the Salas sisters was, as to the P10,188.29, an action against the wrong defendants (a failure otherwise than upon the merits). The Supreme Court’s final judgment on that issue was promulgated on October 21, 1936. At that time, the ten-year prescriptive period for Hodges to sue Yulo (whether counted from 1920 when Yulo’s notes matured or from March 27, 1926, when the misapplication occurred) had already expired. Therefore, Hodges had only one year from the finality of the 1936 judgment to file a new action against the right defendant, Yulo. Since Hodges filed his action on April 16, 1938, which was beyond the one-year saving period, his claim was barred by prescription. The Court rejected arguments based on laches or equitable estoppel, finding no basis to prevent Yulo from invoking the statute of limitations.
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