PERMANENT SAVINGS AND LOAN BANK vs MARIANO VELARDE

G.R. NO. 140608 September 23, 2004

PONENTE: Austria-Martinez J.
FACTS:
Respondent obtained a loan from petitioner bank, in the sum of P1,000,000.00
evidenced by the following: (1) promissory note dated September 28, 1983;1 (2) loan
release sheet dated September 28, 1983;2 and (3) loan disclosure statement dated
September 28, 1983.3
July 27,1988, Petitioner bank, represented by its Deputy Liquidator after it was placed
under liquidation, sent a letter of demand to respondent demanding full payment of the
loan. Despite receipt of said demand letter respondent failed to settle his account.
February 22,1994, another letter of demand was sent and this time, respondents
counsel replied, stating that the obligation "is not actually existing but covered by
contemporaneous or subsequent agreement between the parties "
In his Answer, respondent disclaims any liability on the instrument.
September 6, 1995, petitioner bank presented its sole witness, Antonio Marquez, the
Assistant Department Manager of the Philippine Deposit Insurance Corporation (PDIC)
and the designated Deputy Liquidator for petitioner bank, who identified the Promissory
Note11 dated September 28, 1983, the Loan Release Sheet12 dated September 28,
1983, and the Disclosure Statement of Loan Credit Transaction.
After petitioner bank rested its case, respondent, instead of presenting evidence, filed
with leave of court his demurrer to evidence, alleging the grounds that Plaintiff failed to
prove its case by preponderance of evidence and that the cause of action, concluding
arguenti that it exists is barred by prescription and/or lache.
January 26, 1996, the trial court found merit in respondents demurrer to evidence and
dismissed the complaint including respondents counterclaims, without pronouncement
as to costs.
October 27, 1999, the Court of Appeals agreed with the trial court and affirmed the
dismissal of the complaint in its Decision. The appellate court found that petitioner failed
to present any evidence to prove the existence of respondents alleged loan obligations,
considering that respondent denied petitioners allegations in its complaint. It also found
that petitioner banks cause of action is already barred by prescription.
ISSUE:
Whether or not the action is barred by prescription.
HELD:
The action is not barred by prescription.
Petitioners action for collection of a sum of money was based on a written contract and
prescribes after ten years from the time its right of action arose. The prescriptive period is
interrupted when there is a written extrajudicial demand by the creditors. The interruption of the
prescriptive period by written extrajudicial demand means that the said period would commence
anew from the receipt of the demand.

Respondents obligation under the promissory note became due and demandable on October
13, 1983. On July 27, 1988, petitioners counsel made a written demand for petitioner to settle
his obligation. From the time respondents obligation became due and demandable on October
13, 1983, up to the time the demand was made, only 4 years, 9 months and 14 days had
elapsed. The prescriptive period then commenced anew when respondent received the demand
letter on August 5, 1988.39 Thus, when petitioner sent another demand letter on February 22,
1994, the action still had not yet prescribed as only 5 years, 6 months and 17 days had lapsed.
While the records do not show when respondent received the second demand letter,
nevertheless, it is still apparent that petitioner had the right to institute the complaint on
September 14, 1994, as it was filed before the lapse of the ten-year prescriptive period.