Alba vs. Arollado: Prescription Period for Collection Based on an Oral Contract
### Facts:
Regina Q. Alba, proprietor of Libra Fishing, engaged in selling petroleum products, entered into several transactions with Nida Arollado from 2000, involving credit purchases of crude oil and other petroleum products. Three checks issued by Nida for these transactions were dishonored. On May 15, 2013, Regina demanded payment for the outstanding balance, leading to a complaint for sum of money filed on June 4, 2013, after Nida failed to respond to the demand.
Nida acknowledged issuing the dishonored checks but claimed to have settled her obligations via installment payments, denying any outstanding liability. She argued, should there be any debt, the right to collect had prescribed given the transactions dated back more than ten years.
The Regional Trial Court initially ruled in favor of Regina, focusing on the dishonored checks’ value. On appeal, the Court of Appeals reversed this decision, holding the claim had prescribed under the oral contract’s six-year prescriptive period.
### Issues:
1. Whether the transactions between Regina and Nida constitute an oral contract and its relevance in determining the prescriptive period for filing the action.
2. Whether the prescriptive period should commence from the date of the dishonored checks, the last partial payment, or the date of extrajudicial demand.
3. The effect of partial payments on the interruption of the prescription of actions.
### Court’s Decision:
The Supreme Court upheld the Court of Appeals’ ruling that the action had prescribed. It clarified that the transactions, not formalized in writing but through dishonored checks, constituted an oral contract. The prescriptive period for actions based on oral contracts is six years from the cause of action’s accrual, which in this case, was from the dates the checks were dishonored. The Court rejected Regina’s contention that the prescriptive period should start from the last partial payment or extrajudicial demand, as these occurred after the prescriptive period had already set in. Notably, the Court emphasized that for partial payments to interrupt the prescription, a written acknowledgment of the debt by the debtor is necessary, which was absent in this case.
### Doctrine:
This case reiterates the doctrine that the prescriptive period for actions based on oral contracts is six years from the cause of action’s accrual. It also highlights that for the prescription of actions to be interrupted by partial payments, a written acknowledgment of the debt by the debtor is essential.
### Class Notes:
– **Essential Elements of a Cause of Action:** A right in favor of the plaintiff, an obligation on the part of the defendant to respect that right, and an act or omission by the defendant violating such right.
– **Prescriptive Period for Oral Contracts:** Six years from the cause of action’s accrurrence (Civil Code, Art. 1145).
– **Interruption of Prescription:** Actions filed before the court, written extrajudicial demand by the creditors, or any written acknowledgment of the debt by the debtor (Civil Code, Art. 1155).
– **Application in Case:** Partial payments do not interrupt the prescriptive period without a written acknowledgment of the debt.
### Historical Background:
The case highlights the importance of formalized agreements and the procedural nuances in the Philippine legal framework regarding the collection of debts. It emphasizes the strict interpretations applied by the courts in matters of prescription, particularly how oral agreements are scrutinized and the necessity of written acknowledgments in debt payments.
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