Civil Law

Permanent Savings and Loan Bank vs Mariano Velarde

Can't share this digest on Facebook? Here's why.

image_printPrint this!

G.R. No. 140608 – 482 Phil. 193 – 439 SCRA 1 – Civil Law – Obligations and Contracts – Prescription of Actions – Collection of Sum of Money – Period to Collect Debts – Prescriptive Period; Interruption vs Suspension

Remedial Law – Civil Procedure – Manner of Pleading Allegations – Answer – Specific Denial – How to specifically deny actionable documents

In September 1983, Mariano Velarde obtained a 1M peso loan from Permanent Savings and Loan Bank. Velarde executed a promissory note for the loan whereby he promised to pay the loan in October 1983. It was only in 1988 that the bank sent a demand letter to Velarde for him to pay his debt. Velarde received the letter but he ignored it. In February 1994, another demand letter was sent but Velarde still failed to pay. In September 1994, a collection suit was filed by the bank against Velarde. In his Answer, Velarde stated that the signature in the promissory note appears to be his but he denies receiving the loan. Trial ensued. Since Velarde impliedly admitted the promissory note, the bank no longer presented further evidence to prove the promissory note’s due execution. After the bank presented its evidence, Velarde filed a demurrer to evidence which was granted by the trial court. The trial court agreed with Velarde that the evidence presented by the bank was insufficient. The trial court ruled that the bank should have presented more evidence to prove the due execution of the promissory note. The trial court explained that the promissory note was an actionable document which was specifically denied by Velarde in his Answer and that since it was specifically denied, then the bank should have presented further evidence to prove its due execution. The trial court further ruled that even if the bank’s evidence was sufficient, the bank’s cause of action was already barred by prescription considering that the promissory note was executed and was due and demandable in 1983 yet the case was only filed in 1994. The Court of Appeals affirmed the trial court.

ISSUE: Whether or not the trial court is correct.

HELD: No.  The Supreme Court ruled that Velarde’s denial of the promissory note is not the proper way to make a specific denial. The proper way to deny the genuineness and due execution of an actionable document is that the defendant must declare under oath that he did not sign the document or that it is otherwise false or fabricated. Here, Velarde only impliedly denied the promissory note as he merely stated that the signature appeared to be his. Further, the bank was able to present other documents which showed that Velarde received the loan amount.

When an allegation is not specifically denied or was not properly specifically denied, then the same is deemed admitted. With Velarde’s implied admission or admission, it was not necessary for the bank to present further evidence to establish the due execution and authenticity of the loan documents sued upon.

Anent the issue of prescription, it is true that an action upon a written contract must be brought within ten years from the time the right of action accrues. However, the running of the prescriptive period is interrupted when there is a written extrajudicial demand by the creditor. Here, it is true that the prescriptive period began to run in 1983 however in 1988, or five years thereafter, the running of the prescriptive period was interrupted when the bank sent and Velarde received the demand letter.

What does interruption mean?

The interruption of the prescriptive period by written extrajudicial demand means that the said period would commence anew from the receipt of the demand. Interruption is not mere suspension or tolling.

In this case, when the demand letter was sent and received in 1988, a new 10-year prescriptive period began to run. Hence, when the case was filed in 1994, only about six years had lapsed which is well within the ten-year prescriptive period.

Read full text.

image_printPrint this!

Leave a Reply