Lender has 10 years to collect debt

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Persida Acosta

Persida Acosta

Dear PAO,
I extended a loan to my neighbor to be paid within a year. This is evidenced by a written agreement between the two of us. Before the one year period ended, I went abroad and returned after three years. Until when can I collect from my neighbor who failed to pay me within the period agreed upon?
Henry

Dear Henry,
Your question hinges on the prescriptive period of your right to demand payment from your debtor. The New Civil Code of the Philippines gives light to this, to wit:

“Art. 1144. The following actions must be brought within 10 years from the time the right of action accrues:

(1) Upon a written contract;


(2) Upon an obligation created by law;

(3) Upon a judgment.”

Your right to demand the payment of the loan which you extended to your neighbor as evidenced by a written agreement commenced from the time he defaulted in his obligation to pay you. Since he failed to pay you within the one-year period as agreed upon, your right to demand the same started immediately after the said one year period expired.

According to the above law, you have 10 years within which to collect the loan from your neighbor, to be reckoned with, from the time he defaulted. After the lapse of the said period, you can no longer compel your neighbor to pay you, as the obligation to pay has been reduced to moral or natural obligation, which cannot be enforced by the court but may be voluntarily fulfilled by the obligor (Article 1423, New Civil Code of the Philippines).

At any rate, the running of the prescriptive period is interrupted or halted when a case is filed in court, when a written extrajudicial demand is made by the creditor to the debtor or when there is any written acknowledgment of the debt by the debtor (Article 1155, New Civil Code of the Philippines).

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to guide you with our opinion on the matter.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

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