GR 126568; (April, 2003) (Digest)
G.R. No. 126568; April 30, 2003
QUIRINO GONZALES LOGGING CONCESSIONAIRE, QUIRINO GONZALES and EUFEMIA GONZALES, petitioners, vs. THE COURT OF APPEALS and REPUBLIC PLANTERS BANK, respondents.
FACTS
Petitioner Quirino Gonzales Logging Concessionaire (QGLC), through proprietor Quirino Gonzales, obtained a credit line from respondent Republic Planters Bank in 1962, secured by a real estate mortgage. The credit line included an overdraft facility and a letter of credit (LC) line. The Bank issued several LCs to finance QGLC’s purchase of logging equipment. Upon QGLC’s default, the Bank foreclosed the mortgage in 1965, consolidated ownership of the properties, and applied the foreclosure proceeds to the debt. In 1977, the Bank filed a complaint for sum of money, claiming a remaining balance on the overdraft and LC obligations, plus unpaid promissory notes executed in 1964 and 1967. Petitioners admitted securing the credit line and the foreclosure but denied receiving the loan proceeds or the equipment, asserting prescription and lack of cause of action.
ISSUE
Whether the Bank’s action to collect the unpaid obligations had already prescribed.
RULING
The Supreme Court ruled that the action had prescribed. The legal logic is anchored on the applicable prescriptive periods under the Civil Code. An action upon a written contract prescribes in ten years from the time the right of action accrues. The right of action accrues when the creditor can legally demand payment. For the overdraft and LC obligations, the right of action accrued at the latest in 1965 upon foreclosure, making the 1977 complaint filed beyond the ten-year period. For the promissory notes, which are negotiable instruments payable at a fixed date, the prescriptive period is also ten years from maturity. The notes matured 30 days after their respective dates in 1964 and 1967. The Bank’s right to sue accrued upon maturity, and the 1977 filing was again beyond ten years from those dates. The Court rejected the Bank’s claim of acknowledgment restarting the period, finding petitioners’ Answer did not constitute a clear and unequivocal acknowledgment of the debt but merely admitted the historical facts of the loan application and foreclosure. Consequently, all causes of action were time-barred.