G.R. No. L-46541 December 28, 1979
THE OVERSEAS BANK OF MANILA, petitioner-appellant, vs. HON. AMBROSIO M. GERALDEZ, Presiding Judge of Branch I, Court of First Instance of Manila, TEODOSIO VALENTON and ANDRES A. JUAN, respondents-appellees.

FACTS

The Overseas Bank of Manila filed a complaint on October 22, 1976, against Teodosio Valenton and Andres A. Juan for the recovery of a P150,000 loan plus interest and attorney’s fees. The loan was obtained on February 16, 1966, and was secured by a chattel mortgage. The bank alleged it made written extrajudicial demands for payment on several dates: February 9, March 1, and March 27, 1968; November 13 and December 8, 1975; and February 7 and August 27, 1976. The debtors refused to pay, claiming their obligation had been assumed by a third party, an assertion the bank contested as being without its consent.
The trial court dismissed the complaint on grounds of prescription. It ruled that the ten-year prescriptive period for actions upon a written contract began on February 16, 1966, and expired on February 15, 1976. The court held that the written extrajudicial demands merely suspended the prescriptive period only for the specific time given for payment within each letter. Since the demand letters indicated no specific period, the court construed it as a demand for payment within one day per letter. Thus, it concluded the six timely demands extended the period by only six days to February 21, 1976, rendering the October 1976 filing untimely.

ISSUE

Whether the trial court correctly held that the bank’s action had prescribed, specifically regarding the legal effect of the written extrajudicial demands on the ten-year prescriptive period.

RULING

The Supreme Court reversed the trial court’s dismissal, holding that the action had not prescribed. The lower court erred in its interpretation of how a written extrajudicial demand affects prescription. The correct principle is that such a demand interrupts the prescriptive period, not merely suspends it for a brief duration. Interruption, under Article 1155 of the Civil Code, completely nullifies the period that has already elapsed and causes the full ten-year prescriptive period to commence anew from the date of the creditor’s written demand.
This doctrine, of civil law origin, means each valid written demand restarts the ten-year clock. Consequently, the bank’s demands in 1968 and 1975 effectively renewed the prescriptive period from those dates. Following the last timely demand before the original period’s expiry (February 7, 1976), a new ten-year period began to run. Therefore, the complaint filed in October 1976 was well within the renewed prescriptive period. The Court cited analogous jurisprudence, including Marella vs. Agoncillo and National Marketing Corporation vs. Marquez, which consistently affirm that interruption renews the entire prescriptive term. The case was remanded to the trial court for further proceedings.