G.R. No. L-23232 https://lawphil.net/judjuris/juri1970/jun1970/gr_23232_1970.

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G.R. No. L-23232 June 17, 1970

VICENTE DIRA, plaintiff-appellant,

Gil Sta. Maria for plaintiff-appellant.

Ambrosio Padilla Law Offices and Lope Quimpo for defendant-appellee.

BARREDO, J.:

Direct appeal by plaintiff-appellant Vicente Dira from a decision of the Court of First Instance of Leyte, dated
February 13, 1964, dismissing, on the grounds of prescription and laches, the complaint in its Civil Case No. 2886,
an action for accounting of a share in an alleged partnership, payment of salaries and other money claims, without
pronouncement as to costs.

The material facts as found by the trial judge are as follows:

That sometime in March 1946, plaintiff and defendant together with Francisco Pagulayan entered into a
partnership for the purpose of engaging in the printing business in the City of Tacloban and that the
terms of the said partnership was for a period of five (5) years from the organization thereof; that this
fact was admitted by the defendant in his answer; that, in the articles of co-partnership, the plaintiff was
designated as President and his salary as such was P150.00 a month, that, during his incumbency as
President until the expiration of the period, the defendant who was the manager-treasurer of the
partnership never paid him his salary; that at the time the plaintiff was also the editor of the Leyte-
Samar Tribune and in accordance with their Articles of Partnership established the said periodicals, the
plaintiff as editor was to receive a salary of P100.00 a month; that this salary and the accrued amount
therein was not also paid by the defendant, who was the business manager of the enterprise; that the
capital of the said partnership was P5,000.00 equally divided among the partners; that this amount was
used by the partnership to purchase printing equipment from the 64th Naval Construction Battalion,
U.S.N. and which printing equipment are in the possession of the defendant up to now; that, before the
purchase by the three of them of the printing equipment, the plaintiff obtained a personal loan from
Francisco Pagulayan in the amount of P1,100.00 and he pledged his share in the said equipment to
pay the same; that upon the request of the plaintiff, the defendant paid the said amount to Francisco
Pagulayan and this time plaintiff used his share in the partnership as guarantee for the defendant's
payment; that on June 3, 1946, Francisco Pagulayan sold his share of the partnership to the defendant
and who by virtue thereof became 2/3 owner of the business; that the defendant presented Exhibit "5" which purports to be a letter of
demand to plaintiff asking him to settle his account, but due to his failure to do so, he (defendant) assumed full ownership of the business, he
changed the name from the Leyte-Samar Press to Tañega Press; that from the time the partnership was organized and went into business, the
defendant as Manager-Treasurer never rendered any accounting of the business operations, or paid the share of the plaintiff in the profits; and that
the present action of partnership accounting and sum of money was only filed in Court by the plaintiff against the defendant on February 10, 1961,
that is after a lapse of 9 years, 10 months and 11 days after the expiration of the contract of partnership, Exhibit 'A' on February 28, 1951. (Pp. 49-51,
R. on A.)

xxx xxx xxx

It is undisputed that the defendant had been in the exclusive possession of all the printing equipment
since 1946. Plaintiff himself admitted that the defendant conducted himself as absolute owner of the
printing equipment. He testified that defendant changed location of the printing press which place he
(Dira) did not know. According to defendant himself, he believed in good faith and acted accordingly
since 1947 that he was the sole owner of the printing press, after the refusal of the plaintiff to pay his
indebtedness of P1,100.00 to him. From the above facts, it can be deduced that defendant had
acquired ownership of the printing equipment and accessories in question as Article 1132 of the Civil
Code provides that the ownership of movables prescribes through uninterrupted possession of eight
years, without need of any condition. Surely 1946 or 1947 to 1961, more than four and/or eight years
had elapsed.

Plaintiff stated that defendant ignored him and did not give him any participation, since 1947, in the

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business, yet he did not demand an immediate accounting of the business. For his failure to demand
accounting five years before February 10, 1961, from the defendant, he had forfeited his right by
prescription. In support, Article 1153 of the Civil Code, among other things, provides that the period for
prescription of actions to demand accounting runs from the day the persons who should render same
cease in their functions, and Article 1149 of the Civil Code provides that "all other actions whose
periods are not fixed in this Code or in other laws within five years from the time the right of action
accrues."

It is an incontrovertible fact that the plaintiff had filed this action against the defendant on February 10,
1961, nearly ten years after the expiration of the contract of partnership between them on March, 1951.
... (Pp, 56-57, R. on A.)

In his complaint, plaintiff-appellant prayed for payment of his salaries not only as President of the partnership but
also as editor of the Leyte-Samar Tribune which admittedly he had not been paid from the start, for accounting of
the partnership affairs, for payment of his alleged share in the rental value of the printing equipment and accessories
used by the partnership, of which he also claimed part-ownership proportionally to his share in the partnership, and
for damages, attorney's fees and costs. The defendant-appellee admitted practically all the material allegations of
the complaint about the organization of the partnership and the terms thereof as well as the non-payment of the
salaries claimed by appellant, but, in defense, he alleged that the whole business of the partnership became his
alone in 1947 after he had acquired by purchase the share of Francisco Pagulayan and had taken over the share of
appellant, since the latter failed to pay the P1,100 he had requested appellee to pay to Pagulayan, as security for
the payment of which, he had pledge his said share to appellee; that since 1947, the place of the business was
transferred by him, he had its name changed to Tañega Press and he had always been operating openly and
publicly the said printing business from 1947 without any intervention or participation of appellant and without said
appellant making any claim of any kind in connection therewith until the filing of the complaint on February 10, 1961,
hence, all the claims and causes of action of the appellant had already prescribed.

Upon the facts found by His Honor quoted above, We agree with His Honor in upholding appellee's defense of
prescription. From any angle that this case may be viewed, it is obvious that appellant's causes of action barred by
the statute of limitations.

Appellee took exclusive control of the partnership affairs since 1947, publicly and openly and after having notified
appellant that he would do so should the latter fail to comply with his letter of demand, Exhibit "5", dated April 19,
1947. Nowhere in the facts found by the trial judge does it appear that appellant did anything about said demand or
that he ever contested the action of the appellee of transferring the place of business and changing its name to
Tañega Press. There is nothing to show that he had taken any move for the payment to him of his unpaid salaries
both as President of the business and as editor of the Leyte-Samar Tribune.

Under these circumstances, it would be giving premium to inaction and indifference to still hold that appellant could
sue appellee, almost fourteen years after the latter, with prior notice to the former, had openly and publicly taken
over exclusive control of the partnership business as if it were his own and only a little short of ten years after the
expiration of the stipulated term of partnership. His claims for salaries accrued after each month they were unpaid.
Whether we assume that these claims lost basis in 1947 when appellee took over the businesses of the printing
press and the newspaper or in 1951, upon the expiration of the term of the agreements, by all standards, these
claims had already prescribed when the present suit was filed. On the other hand, under Article 1153 of the Civil
Code, a demand for "accounting runs from the day the persons who should render the same ceases in their
functions," which in this case as in 1947, when the appellee began to operate the businesses as exclusively his
own. Again, inasmuch as the longest period in the chapter on prescription of the Civil Code is ten years, it is evident
that appellant's action for accounting is already barred. The same is true with the claim for rentals and recovery of
proportional ownership of the printing equipment and accessories, as to which, appellant's period to bring his
actions accrued also in 1947, fourteen years before this suit was filed.

As a matter of fact, appellant impliedly admits the correctness of this position, since in this appeal his only
contention is that both as his partner and as pledgee of his share, the appellee became his trustee, in legal
contemplation, or that, in the eyes of the law, a relationship of trusteeship arose between him and appellee, hence
his actions against him are imprescriptible. Appellant's pose is without merit. In bad faith or in good faith, after eight
years of actual adverse possession, appellee acquired clear ownership of appellant's share by acquisitive
prescription. According to Art. 1132 of the Civil Code, "the ownership of personal property also prescribes through
uninterrupted possession for eight years, without need of any other condition." So, appellee became undisputed
owner of appellant's share since 1955 or six years before this action was filed and since said year the allegation of
trusteeship had already lost any basis whatsoever. Under Article 1140 of same Code, "Actions to recover movables
shall prescribe eight years from the time the possession thereof is lost, unless the possessor has acquired the
ownership by prescription for a less period" or for an equal period, in which latter case, the right to sue prescribes
together with the title.

Equally untenable is appellant's reliance on the theory that as a member of the partnership, appellee continued as a
trustee even after 1947, when said appellee took the business for himself and even after 1951, the expiry date of the
agreements. The provisions of Article 1785 to the effect that: .

When a partnership for a fixed term or particular undertaking is continued after the termination of such
term or particular undertaking without any express agreement, the rights and duties of the partners
remain the same as they were at such termination, so far as is consistent with a partnership at will.

A continuation of the business by the partners or such of them as habitually acted therein during the
term, without any settlement or liquidation of the partnership affairs, is prima facie evidence of a

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continuation of the partnership.

and Article 1829 thus:

On dissolution the partnership is not terminated, but continues until the winding up of partnership affairs
is completed.

are clearly inapplicable here, for the simple reason that those articles are premised on a continuation of
the partnership as such, which is not our case, because here appellee repudiated the partnership as
early as 1947 with either actual or presumed knowledge of the appellant. By analogy, at least, with the
rule as to a co-ownership, which a partnership essentially is, prescription does not run in favor of any of
the co-owners only as long as the co-owner claiming against the others "expressly or impliedly
recognizes the co-ownership," a circumstance irreconcilably inconsistent with appellee's conduct of
transferring the place of business, changing its name and not paying appellant any of the salaries
agreed upon in the articles of partnership.

What is more, this case may well be decided on the basis of laches as was done by the trial judge. In other words,
even if prescription were not properly applicable, We could still hold that under the facts proven in the record and
found by the lower court, appellant has been guilty of laches and his stale demands may not gain the ears of the
court. We note, however, that in his answer, the appellee limit his defense specifically to prescription which is a
separate defense from laches. Not that such particularity of appellee's defense is fatal, because, after all, it does not
appear that the evidence proving laches were objected to by appellant, (Section 5, Rule 10, Rules of Court) but We
do not feel that in this case We need to go beyond the specific defense expressly invoked by the appellant. This is
mentioned only, lest appellant may still entertain any hope regarding this case.

WHEREFORE, the judgment of the lower court is affirmed, with costs against appellant.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee and Villamor, JJ.,
concur.

The Lawphil Project - Arellano Law Foundation

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