G.R. No. L-7097, October 23, 1912
VICENTE DELGADO, plaintiff-appellee, vs. PEDRO BONNEVIE and FRANCISCO ARANDEZ, defendants-appellants.

FACTS

Pedro Bonnevie and Francisco Arandez, operating as a partnership, received paddy (unhusked rice) from Vicente Delgado for threshing. They issued receipts from April to June 1898 for a total of 2,003.5 cavans, agreeing to return half the amount as rice and to be paid a fee. In 1909, Delgado sued to recover the paddy or its value. The trial court ordered the defendants to pay the value of the paddy plus interest from 1905. The defendants appealed, arguing that the action had prescribed under various provisions of the Code of Commerce and the Civil Code.

ISSUE

1. Did the action to recover the paddy or its value prescribe under the Code of Commerce (three-year period) or the Civil Code (six-year period)?
2. From when should legal interest on the debt accrue?

RULING

1. No, the action did not prescribe. The Supreme Court held:
The receipts were not commercial credit instruments under Article 950 of the Code of Commerce, so the three-year prescription period for such instruments did not apply. The transaction was a simple industrial contract for hire of services, not a mercantile exchange.
The six-year prescription period for ownership or real actions over personal property under the Civil Code (Articles 1955 & 1962) also did not apply. The defendants’ possession of the paddy/rice was not in the concept of an owner (adverse possession) but merely as depositary/lessee holding the goods in trust for Delgado. Prescription requires possession in the concept of an owner.
* The applicable prescription period was fifteen years, governed by Article 1964 of the Civil Code for personal actions arising from contracts. The action, filed in 1909 for obligations from 1898, was well within this period.

2. Legal interest should accrue from the date of the trial court’s judgment, not from the date of extrajudicial demand in 1905. Interest on a liquidated debt runs only from the time the amount becomes certain and demandable. The principal debt was only judicially determined and became certain with the trial court’s decision.

The appealed judgment was AFFIRMED with MODIFICATION regarding the reckoning date for legal interest. Costs were imposed on the appellants.