G.R. No. 237140 . October 05, 2020
REGINA Q. ALBA, JOINED BY HER HUSBAND, RUDOLFO D. ALBA, PETITIONERS, VS. NIDA AROLLADO, JOINED BY HER HUSBAND, PEDRO AROLLADO, JR., RESPONDENTS.

FACTS

Petitioner Regina Q. Alba, a sole proprietor, sold petroleum products on credit to respondent Nida Arollado beginning in 2000. For purchases made on July 26, November 12, and November 27, 2000, Nida issued three checks as payment, all of which were subsequently dishonored. On June 4, 2013, Regina filed a complaint for sum of money to recover the value of the dishonored checks and other alleged unpaid purchases. In her defense, Nida claimed the obligations had been settled and, alternatively, that the action had prescribed.
The Regional Trial Court (RTC) ruled in favor of Regina but limited Nida’s liability to the total amount of the three dishonored checks, P170,260.50, having found insufficient proof for the other claimed amounts. On appeal, the Court of Appeals (CA) reversed the RTC and dismissed the complaint on the ground of prescription. The CA held that the transaction was based on an oral contract of sale, prescribing in six years from the date the checks were dishonored, which occurred in 2000. Since the complaint was filed only in 2013, the action had prescribed.

ISSUE

Whether the Court of Appeals correctly ruled that the action to recover the value of the dishonored checks had prescribed.

RULING

Yes, the Court of Appeals is correct. The Supreme Court affirmed the dismissal of the complaint on the ground of prescription. The core legal principle is that the prescriptive period for an action is determined by the nature of the underlying obligation. Here, the sale of petroleum products was based on a verbal agreement, constituting an oral contract. Under Article 1145 of the Civil Code, actions upon an oral contract prescribe in six years.
The issuance of the dishonored checks did not convert the oral contract into a written contract that would be subject to a ten-year prescriptive period. Citing Manuel v. Rodriguez and Philippine National Bank v. Francisco Buenaseda, the Court reiterated that for a contract to be considered “written” for prescription purposes, the promise to pay must be evident from the writing itself without the need for extrinsic evidence. The checks were merely evidence of the mode of payment for the oral contract of sale; they did not embody the entire agreement. Therefore, the six-year prescriptive period applies.
The prescriptive period commenced from the time the cause of action accrued, which was upon the dishonor of the checks in 2000, as this was when Regina’s right to institute the action for sum of money arose. The complaint filed in 2013 was clearly beyond the six-year period. Regina’s arguments regarding reckoning from the date of last payment or extrajudicial demand fail. The alleged last payment in 2012 was not proven to have been made for the specific obligations covered by the 2000 checks. Furthermore, the extrajudicial demand in 2013 was ineffective to interrupt prescription, as it was made long after the prescriptive period had already lapsed. Consequently, the right to enforce the obligation had been extinguished.