Quintin de Borja vs. Francisco de Borja

Counterclaims founded on written instruments prescribe in ten years under section 43(1) of the Code of Civil Procedure, not six years; an attorney-in-fact is not liable for interest on money entrusted to him absent evidence of conversion under article 1742 of the Civil Code; and a mere gratuitous commodatum does not entitle the defendant to collect rents for the use of the property.

Marcelo de Borja died, and Quintin de Borja became judicial administrator of his intestate estate. Francisco de Borja, the deceased's son, had acted as attorney-in-fact for Marcelo in collecting sums from other persons and had use of an earthen jar factory and its buildings. The dispute required liquidation of accounts between the estate and Francisco under the Code of Civil Procedure and the Civil Code provisions on prescription, agency, and commodatum.

Marcelo de Borja died, leaving an intestate estate. Quintin de Borja was appointed judicial administrator. Francisco de Borja, son of Marcelo, had acted as attorney-in-fact of his father in transactions involving sums of money loaned to and collected from other persons, with the obligation to render an accounting to Marcelo. There was also an earthen jar factory and buildings, over which the trial court later found the parties' relationship was a mere gratuitous commodatum, with Marcelo bound only to pay taxes.

After Marcelo's death, Quintin, as administrator, sued Francisco in the Court of First Instance of Rizal to recover P61,376.56 allegedly owed to the estate for those sums. Francisco answered with counterclaims for alleged sums owed to him by Marcelo. After trial and voluminous evidence, the trial court found the plaintiff entitled to recover P33,218.86 and the defendant entitled to P39,683 on his counterclaims. It rendered judgment for Francisco in the net amount of P6,464.14 with legal interest from the date of the counterclaim, plus costs.

The trial court found that Francisco had acted as attorney-in-fact of Marcelo in the transactions, that there was no evidence he converted the entrusted money to his own use, and that the relationship over the earthen jar factory and buildings was a mere gratuitous commodatum under which Marcelo bound himself only to pay taxes. Both parties appealed from the judgment.

• Prescription of Counterclaims: Plaintiff-appellant maintained that the defendant's counterclaims had already prescribed, invoking a six-year period.
• Interest on Entrusted Sums: Plaintiff-appellant claimed interest on the sums loaned to and collected by the defendant from various persons for the deceased, arguing that the defendant was liable for interest thereon.

• Rents for Earthen Jar Factory and Buildings: Defendant-appellant claimed that he was entitled to collect rents for the use of the earthen jar factory and the buildings thereof.
• Counterclaims: Defendant-appellant sought recovery on his counterclaims for alleged sums of money owed to him by the deceased.

• Prescription of Counterclaims: Whether the defendant's counterclaims based on written instruments had prescribed, and whether the applicable period was six years or ten years under section 43(1) of the Code of Civil Procedure.
• Liability for Interest: Whether the plaintiff was entitled to interest on the sums loaned to and collected by the defendant as attorney-in-fact of the deceased, absent evidence of conversion.
• Rents Under Commodatum: Whether the defendant was entitled to collect rents for the use of the earthen jar factory and buildings, given the trial court's finding of a mere gratuitous commodatum.
• Modification of Trial Court's Liquidation: Whether the trial court's liquidation of accounts should be altered or modified.

• Prescription of Counterclaims: No. The counterclaims were based on instruments in writing marked Exhibits 1 to 6, and they prescribe in ten years under section 43(1) of the Code of Civil Procedure, not six years.
• Liability for Interest: No. The defendant acted as attorney-in-fact of his deceased father, and absent evidence of conversion, he is not liable for interest under article 1742 of the Civil Code.
• Rents Under Commodatum: No. The trial court found a mere gratuitous commodatum, with the deceased bound only to pay taxes, and the records did not justify reversal.
• Modification of Trial Court's Liquidation: No. The trial court's liquidation was the nearest approach to its findings of fact and was supported by a preponderance of evidence; the judgment was affirmed.

• Prescription of Counterclaims: The counterclaims were founded on written instruments, Exhibits 1 to 6. Under section 43(1) of the Code of Civil Procedure, the period is ten years, not six. The plaintiff's contention that they had prescribed was therefore untenable.
• Liability for Interest: In all the transactions, the defendant acted as attorney-in-fact of his deceased father. No evidence showed he converted the money entrusted to him to his own use. Under article 1742 of the Civil Code, he is not liable for interest. Thus, the plaintiff was not entitled to the interest claimed.
• Rents Under Commodatum: The defendant's claim to collect rents for the earthen jar factory and buildings was unfounded. The trial court held that only a mere gratuitous commodatum existed and that the deceased bound himself only to pay taxes. Nothing in the records justified reversing that judgment.
• Modification of Trial Court's Liquidation: The trial court carefully analyzed the oral and documentary evidence and inferred its findings from the preponderance thereof. The Supreme Court was convinced that the liquidation was the nearest approach to the findings of fact and declined to alter or modify it. The judgment was in accordance with law and sufficiently supported by preponderance of evidence.

• Prescription of Written Contracts — Under section 43(1) of the Code of Civil Procedure, actions or claims based on written instruments prescribe in ten years. The Court applied this to the defendant's counterclaims based on Exhibits 1 to 6, rejecting the plaintiff's six-year prescription theory.
• Non-Liability of Agent for Interest Absent Conversion — An attorney-in-fact or agent who receives money for the principal is not liable for interest thereon where there is no evidence that he converted the money to his own use, pursuant to article 1742 of the Civil Code. The Court applied this to the defendant, who acted as attorney-in-fact of his deceased father.
• Gratuitous Commodatum — A mere gratuitous commodatum does not give rise to an obligation to pay rents for the use of the property; the owner's obligation may be limited to paying taxes. The Court affirmed the trial court's finding that the relationship over the earthen jar factory and buildings was a gratuitous commodatum and that the deceased bound himself only to pay taxes.
• Preponderance of Evidence in Factual Findings — The trial court's findings and liquidation based on a careful analysis of oral and documentary evidence and preponderance thereof will not be altered or modified absent sufficient justification. The Court applied this to affirm the judgment.

• "The counterclaims in question are based on instruments in writing marked Exhibit 1 to 6. The period of prescription thereof is not six (6) years, as claimed, but ten (10) years, in accordance with the provisions of section 43 (1) of the Code of Civil Procedure." — States the controlling prescription rule for written instruments and rejects the six-year period.
• "In all the aforementioned transactions, the defendant acted in his capacity as attorney-in-fact of his deceased father, and there being no evidence showing that he converted the money entrusted to him to his own use, he is not liable for interest thereon, in accordance with the provisions of article 1742 of the Civil Code." — States the rule on an agent's non-liability for interest absent conversion.
• "The trial court held that all there existed between the parties was a mere gratuitous commodatum and that the most that the deceased bound himself to do was to pay the taxes on the properties in question." — States the factual and legal characterization of the property arrangement that defeated the defendant's rent claim.
• "The judgment appealed from being, in our opinion, in accordance with the law and sufficiently supported by a preponderance of the evidence presented therein, it is hereby affirmed, without special pronouncement as to the costs of this instance." — States the dispositive ruling and standard of review.

• Section 43(1), Code of Civil Procedure — Provides that claims based on written instruments prescribe in ten years. Applied to the defendant's counterclaims based on Exhibits 1 to 6, making them not yet prescribed.
• Article 1742, Civil Code — Governs an agent's liability for interest on money entrusted to him. Applied to hold the defendant, as attorney-in-fact, not liable for interest absent evidence of conversion.

Avanceña, C.J.; Malcolm, J.; Villa-Real, J.; and Hull, J., concur.