Alba v. Arollado
REITERATIONFacts
The Antecedents: Regina Q. Alba (Regina), proprietor of Libra Fishing, sold crude oil and petroleum products on credit to Nida Arollado (Nida) starting in 2000. For purchases made on July 26, 2000, November 12, 2000, and November 27, 2000, Nida issued three checks which were subsequently dishonored by the drawee banks. Regina made an extrajudicial demand for payment on May 15, 2013, which Nida failed to heed. Consequently, Regina filed a complaint for sum of money on June 4, 2013, seeking payment for the outstanding balance. Procedural History: The Regional Trial Court (RTC) ruled in favor of Regina, ordering Nida to pay the amount of P170,260.50, representing the total value of the dishonored checks, plus attorney's fees and costs. Nida appealed to the Court of Appeals (CA). The CA reversed the RTC's decision, dismissing Regina's complaint on the ground of prescription. The CA held that the contract was oral, thus subject to a six-year prescriptive period, which had already expired. Regina's motion for reconsideration was denied. Hence, the present petition for review on certiorari. The Petition: Regina argued that the prescriptive period should be reckoned from the date of the last partial payment (November 8, 2012) or from the date of extrajudicial demand (May 15, 2013), contending that prescription had not yet set in. The Supreme Court agreed to review the case, focusing on the reckoning date of the prescriptive period for collecting the amount covered by the dishonored checks.
Issue(s)
Whether the Court of Appeals erred in dismissing the complaint for sum of money on the ground of prescription; specifically, whether the prescriptive period was interrupted by partial payments or extrajudicial demand. Whether the prescriptive period for actions based upon an oral contract should be reckoned from the date of dishonor of checks, the date of last partial payment, or the date of extrajudicial demand; and when the cause of action accrues.
Ruling
The petition is bereft of merit. The Decision dated September 8, 2017, and Resolution dated January 22, 2018, of the Court of Appeals - Cebu City in CA-G.R. CEB CV No. 05317 are affirmed.
Ratio Decidendi
On the Issue of Prescription for Oral Contracts and Interruption of Prescription: The Supreme Court reiterated that an oral contract for the sale of petroleum products on credit is not converted into a written contract by the issuance of checks. Following the ruling in Manuel v. Rodriguez, a contract partly in writing and partly oral is legally considered an oral contract. The checks themselves do not constitute the "writing" contemplated by law for the ten-year limitation period. Therefore, the applicable prescriptive period is six years, as provided under Article 1145 of the Civil Code, for actions based upon an oral contract. Under Article 1155 of the Civil Code, prescription is interrupted by filing a case in court, a written extrajudicial demand, or a written acknowledgment of the debt by the debtor. Regina's complaint was filed on June 4, 2013, and her demand letter was dated May 15, 2013, both dates falling after the prescriptive periods had already expired. Furthermore, Regina's claim that Nida made partial payments on November 8, 2012, which would allegedly interrupt prescription, was not substantiated by evidence. The Court noted that under the Civil Code of the Philippines, unlike the Spanish Civil Code, partial payments do not interrupt prescription unless they are in writing and constitute a written acknowledgment of the debt. On the Accrual of the Cause of Action: The Court clarified that the time for prescription is counted from the day the action may be brought, which is when the cause of action accrues. A cause of action arises when the last element is present, which is the act or omission by which a party violates the right of another. In this case, the cause of action for collection of a sum of money accrued upon the dishonor of the checks issued by Nida. The checks for the July 26, 2000 purchase were dishonored on August 25, 2000, and the checks for the November 12 and November 27, 2002 purchases were dishonored on April 4, 2003. Thus, Regina had until August 25, 2006, and April 4, 2009, respectively, to file her action.
Main Doctrine
The prescriptive period for actions based upon an oral contract is six (6) years from the accrual of the cause of action. Dishonor of checks issued for an oral contract does not convert it into a written contract for purposes of prescription. Partial payments, if not in writing, do not interrupt the prescriptive period under Article 1155 of the Civil Code.