Philippine Bank of Communications v. Diamond Seafoods Corporation
REITERATIONFacts
The Antecedents: On August 19, 1981, Diamond Seafoods Corporation (Diamond), represented by Romeo V. Jacinto, and Francisco Yu and Sheolin Yu, as sureties, executed a continuing surety agreement in favor of Philippine Bank of Communications (PBCom). On December 3, 1982, Diamond executed a Trust Receipt No. 63725 for P78,595.99, obligating itself to sell merchandise and turn over the proceeds to PBCom by March 3, 1983, or return the goods if unsold. On February 14, 1983, Diamond executed another Trust Receipt No. L-17572 for P85,147.00, with a similar undertaking to sell merchandise and remit proceeds by May 15, 1983, or return the goods if unsold. Diamond defaulted on these obligations. As of June 15, 1983, the total obligation was P327,844.03, less marginal deposits. PBCom made demands for payment, but Diamond failed to comply. PBCom filed a complaint with the City Fiscal's Office of Manila for Violation of P.D. 115, which was dismissed on January 16, 1985, for failure to prosecute. Procedural History: On July 27, 1993, PBCom filed a civil complaint for a sum of money with prayer for a writ of attachment against Diamond, Romeo V. Jacinto, Francisco Yu, and Sheolin Yu. The Regional Trial Court (RTC) of Manila, Branch 55, dismissed the complaint on February 18, 1994, on the ground of prescription, holding that the action, based on written contracts (trust receipts), prescribed under Article 1144 of the Civil Code as it was filed more than ten years after the maturity dates of the trust receipts. The RTC also ruled that the prior filing of the criminal complaint did not interrupt the prescriptive period as per Luz M. Zaldivia vs. Hon. Andres R. Reyes, Jr.. The Court of Appeals (CA) affirmed the RTC's dismissal in a Decision dated May 30, 1997, and reiterated in a Resolution dated March 15, 2000. The CA found that Act No. 3326, not Article 1155 of the Civil Code, was applicable for interruption of prescription in criminal cases, and that even if Article 1155 were applicable, the demands made by PBCom were not validly made as the demand letters were returned unclaimed. The Petition: PBCom filed a petition for review with the Supreme Court, assailing the CA's dismissal of its complaint, arguing that the courts below erred in dismissing the civil complaint on the ground of prescription based on Act No. 3326 instead of Article 1155 of the Civil Code, and in computing the period of prescription contrary to jurisprudence.
Issue(s)
Whether the civil complaint for a sum of money based on trust receipts was filed within the prescriptive period. Whether the filing of a criminal complaint for violation of P.D. 115, which was dismissed for failure to prosecute, interrupted the prescriptive period for the civil action. Whether the demands made by the petitioner constituted a valid extrajudicial demand that interrupted the prescriptive period under Article 1155 of the Civil Code.
Ruling
The petition is denied for lack of merit. The Supreme Court affirmed the dismissal of the civil complaint on the ground of prescription.
Ratio Decidendi
On the prescription of the civil action: The Supreme Court held that the civil action for a sum of money based on the trust receipts is an action based upon a written contract, and thus, it prescribes in ten (10) years pursuant to Article 1144, paragraph 1, of the Civil Code. The trust receipts matured on March 3, 1983, and May 15, 1983, respectively. The civil complaint was filed on July 27, 1993, which is more than ten (10) years after the maturity dates. Therefore, the action had long prescribed. On the interruption of the prescriptive period by the criminal complaint: The Court reiterated that the filing of a criminal complaint for violation of P.D. 115 (Trust Receipts Law) before the City Fiscal's Office, which was subsequently dismissed for failure to prosecute, does not interrupt the prescriptive period for filing a civil action. Act No. 3326, as amended, which governs the prescription of offenses under special laws, provides that prescription is interrupted only when judicial proceedings are instituted against the guilty person. The dismissal of the criminal complaint means no judicial proceedings were effectively instituted against the respondents. Moreover, the Trust Receipts Law is a penal statute, and its application in computing the prescriptive period for a civil suit for breach of contract is inappropriate. On the interruption of the prescriptive period by extrajudicial demand: The Court found that PBCom's claim of extrajudicial demand, as a ground for interruption under Article 1155 of the Civil Code, was not substantiated. The petitioner itself admitted that the demand letters sent on July 17, 1984, were never received by the respondents and were returned unclaimed. For an extrajudicial demand to be valid and effective in interrupting prescription, it must be written and actually received by the debtor. The petitioner's alternative claim that the filing of the criminal complaint constituted an extrajudicial demand was also dismissed, as there was no proof of due notification to the respondents, and the complaint was ultimately dismissed for failure to prosecute. Therefore, there was nothing that interrupted the running of the ten-year prescriptive period from the time the cause of action accrued.
Main Doctrine
The filing of a criminal complaint for violation of the Trust Receipts Law, which is subsequently dismissed for failure to prosecute, does not interrupt the prescriptive period for filing a civil action for sum of money based on the same trust receipts. Furthermore, an extrajudicial demand for payment is only effective in interrupting prescription if it is validly made and received by the debtor.