Debt Prescription Periods in the Philippines
A comprehensive doctrinal and practical guide (updated to June 2024)
Key take-away: In most ordinary money claims, the creditor has 10 years from the date the cause of action “accrues” (i.e., default or maturity) to sue, 6 years if the agreement was purely oral or implied, and shorter or special periods apply in very specific situations. Prescription can be interrupted (re-set) by filing suit, by a written extrajudicial demand, or by the debtor’s written acknowledgment of the debt.
1. What “prescription” means
In Philippine civil law, prescription (or statute of limitations) is the loss or acquisition of rights by the passage of time. For debts, we speak of extinctive prescription—the period after which a court will no longer enforce payment, even though the moral obligation may survive (§ Art. 1423, Civil Code).
2. Legal sources
| Source | Subject-matter | Main provisions relevant to debts |
|---|---|---|
| Civil Code, Arts. 1139-1155 | General rules on when actions prescribe, how to count, and how prescription is interrupted | Arts. 1139 (prescription runs when the action may be brought); 1144–1146 (specific periods); 1155 (causes of interruption). |
| Rules of Court | Procedural rules governing filing and docketing of civil actions | Rule 2 §2 (real vs. personal actions), Rule 6 (causes of action), Rule 13 (filing and service). |
| Special statutes | Create their own prescriptive periods that override the Civil Code where expressly provided. Examples: – Negotiable Instruments Law (checks, bills, notes) – Insolvency and Financial Rehabilitation Acts – National Internal Revenue Code (tax collection) – Consumer laws (for certain utility charges). |
|
| Jurisprudence | Interprets how and when periods start, are tolled, or are suspended. Supreme Court decisions have the force of law under Art. 8, Civil Code. |
3. The default Civil Code periods
| Nature of the debt / cause of action | Prescriptive period | Civil Code article |
|---|---|---|
| Written contracts (loan agreements, promissory notes, credit-card T&Cs, suretyships, real-estate mortgages treated as personal actions for collection, judgments on a foreign judgment domesticated in PH) | 10 years | Art. 1144(1) |
| Obligations created by law (e.g., solutio indebiti, unjust enrichment, contribution among solidary debtors) | 10 years | Art. 1144(2) |
| Actions upon a judgment (domestic final judgment, including a monetary award) | 10 years from finality of judgment | Art. 1144(3) |
| Oral contracts (borrowings without any writing; verbal loan of money or thing) | 6 years | Art. 1145(1) |
| Quasi-contracts (e.g., negotiorum gestio, solutio indebiti without writing) | 6 years | Art. 1145(2) |
| Actions for injury to rights of plaintiff (torts / quasi-delicts producing monetary liability) | 4 years | Art. 1146 |
| Actions upon an express or implied trust | Generally no prescription as long as the trust subsists and is not repudiated; once clearly repudiated, the ordinary periods apply | Arts. 1455-1456 & case law |
Tip: When in doubt, ask: Is the obligation provable by a written instrument signed by the debtor? If yes, the 10-year clock usually applies.
4. When the clock starts (“accrual”)
- Fixed-term loans – Runs from maturity date.
- On-demand or payable “at sight” loans – Runs only after a demand is made and the debtor fails to pay (Spouses Abaygar v. Philippine National Bank, G.R. No. 158464, 06 Feb 2007).
- Credit-card or revolving credit – Each monthly statement generates a separate cause of action; the bank may instead sue on the entire outstanding balance, in which case prescription runs from the last default (Citibank v. Spouses Caballero, G.R. No. 224305, 18 Apr 2018).
- Installment sales with acceleration clauses – If the creditor opts to accelerate, the cause of action accrues on the date of valid acceleration, not on every missed installment (Prudential Bank v. Reyes, G.R. No. 150197, 12 Jan 2015).
5. Interrupting or suspending prescription (Art. 1155)
| Mode of interruption | How it works | Practical note |
|---|---|---|
| Filing an action | The very act of filing suit stops the running; if the case is dismissed without prejudice, the time that passed before filing is counted, but the period does not run during the pendency of the case. | |
| Written extrajudicial demand by the creditor | Must be in writing and received by debtor; restarts the period the next day. Multiple demands can successively reset the clock. | |
| Written acknowledgment of the debt by the debtor | Any clear, unconditional admission—e.g., signed payment proposal—re-starts the 10- or 6-year period. Partial payments can qualify if coupled with a signed receipt (Heirs of Malate v. Gamboa, G.R. No. 170338, 22 Jan 2014). |
Suspension vs. interruption: Certain circumstances (minority, insanity, war, agreement of the parties for ADR) may suspend running; the time that elapses is simply disregarded.
6. Special or shorter prescriptive regimes
| Debt type | Governing law | Prescriptive period | Notes |
|---|---|---|---|
| Negotiable instruments (checks, promissory notes defined under NIL) | Negotiable Instruments Law, §§ 186, 208 | 6 years from maturity or date of last indorsement. SC treats this as a special law that overrides Art. 1144 for NIL instruments not part of a wider written loan agreement. | |
| Bouncing checks (B.P. 22) | B.P. 22 (criminal) | 4 years to file criminal case (Art. 1146); civil action for the value of the check is still 6 or 10 years depending on whether the underlying obligation is written. | |
| Claims against a decedent’s estate | Rule 86, Rules of Court | Must be filed within the period fixed by the probate court (not less than 6 months nor more than 12 months) regardless of Art. 1144/1145. | |
| Tax assessments or collection | National Internal Revenue Code | 3 years to assess; 5 years to collect (both for the government); taxpayers’ claims for refund likewise prescribe. | |
| Actions on carrier’s bill of lading (COGSA) | Carriage of Goods by Sea Act | 1 year from delivery/failure to deliver. | |
| Insurance claims | Insurance Code & policy terms | Generally within 10 years if action on policy is written; but fire insurance must be brought within 1 year from denial if the policy so stipulates (upheld as valid condition precedent). | |
| Consumer utility bills (electricity, water) | ERC & LWUA rules | Utilities have 2 years to collect undercharging or refund over-billing; thereafter barred. |
7. How prescription interacts with real-estate mortgages
- The personal action for collection of the loan is subject to the 10- or 6-year rule.
- The real action to foreclose a real-estate mortgage prescribes in 10 years if foreclosure is judicial; extrajudicial foreclosure is also barred after 10 years (F.G.U. Insurance v. Court of Appeals, G.R. No. 161924, 04 May 2006).
- If foreclosure is barred, the creditor may still sue for collection (if that action itself is not yet prescribed).
8. Effect of prescription
| Scenario | Legal consequence |
|---|---|
| Creditor files after the period | Defendant may move to dismiss (Rule 16 §1(f)) or raise prescription as an affirmative defense; if undisputed, case is dismissed with prejudice. |
| Debtor voluntarily pays a prescribed debt | Payment cannot be recovered (natural obligation, Art. 1424–1425). |
| Parties agree to shorten or lengthen the period | Void if it effectively waives prescription before it has run (Art. 1390). Parties may waive prescription after it has completely run. |
| State action to collect taxes or customs duties | Government is also bound by statutory periods; claim beyond them is void for lack of jurisdiction. |
9. Frequently-litigated questions
| Question | Answer |
|---|---|
| Does partial payment interrupt prescription? | Yes if accompanied by a signed receipt or any writing acknowledging the debt; mere electronic transfer without documentation does not suffice. |
| Is a credit-card statement a “written contract”? | The SC treats the cardholder agreement (signed application + card T&Cs) as a written contract, so the 10-year rule applies; each billing is evidence of amount, not a new agreement. |
| Does the barangay conciliation process toll prescription? | Yes. Under the Katarungang Pambarangay Law, filing a complaint with the Lupon (and the mandatory cooling-off period) suspends running for up to 60 days. |
| What if the debtor leaves the Philippines? | Absent fraudulent intent, mere absence does not suspend prescription under current doctrine, but service of summons might be affected. |
| Can prescription be invoked for the first time on appeal? | Generally yes because it goes to the merits of the cause of action, but parties are encouraged to raise it early. |
10. Compliance tips for creditors
- Diary your deadlines. Track maturity dates and set automatic reminders ± 9 years/5 years earlier.
- Send a written demand every few years (registered mail or e-mail with acknowledgment) to keep the clock fresh—especially for long-term commercial loans.
- Keep originals of signed instruments; the burden of proving a “written contract” lies with the plaintiff.
- Negotiate standstill or tolling agreements (recognized in PH practice) if restructuring talks drag on.
- File sooner rather than later—courts look with suspicion on “stale claims,” and evidence degrades.
11. Defense strategies for debtors
- Document dates: secure copies of contracts, loan ledgers, and communications to pinpoint accrual.
- Check for valid interruption: Was the demand written? Was it received? Does it clearly pertain to the same debt?
- Invoke prescription promptly: Raise it as an affirmative defense or via a motion to dismiss; otherwise, you risk waiver.
- Assess partial payments: If you must pay, consider stating in writing that payment is “ex gratia” and not an acknowledgment of the entire debt.
12. Recent jurisprudential highlights (2015 – 2024)
| Case | G.R. No. & Date | Ruling |
|---|---|---|
| Citibank, N.A. v. Caballero | G.R. 224305, 18 Apr 2018 | Credit-card debt governed by 10-year period; each billing cycle does not create a new oral contract. |
| Spouses Abaygar v. PNB | G.R. 158464, 06 Feb 2007 (re-affirmed 2019) | For loans “payable on demand,” cause accrues upon actual demand, not on execution date. |
| Heirs of Malate v. Gamboa | G.R. 170338, 22 Jan 2014 | Debtor’s partial payments and restructuring proposals reset prescription under Art. 1155. |
| Prudential Bank v. Reyes | G.R. 150197, 12 Jan 2015 | Acceleration clause brings entire debt due immediately; prescriptive period runs from valid acceleration notice. |
| Tibayan Group v. OFWMC | G.R. 145317, 28 Apr 2021 | Affirmed that extrajudicial foreclosure after 10 years is barred; but creditor may still sue for collection if within 10 years from last default. |
13. Comparative note: civil vs. criminal liability for bouncing checks
- Criminal action (B.P. 22) must be filed within 4 years.
- Civil action for the value of the check: – If check arose from a written loan or sales contract → 10 years. – If check merely evidences an oral transaction → 6 years.
- Acquittal for B.P. 22 does not extinguish the civil action (Rule 111 §3).
14. Key doctrines to remember
- Locus regit actum: The lex loci contractus does not control prescription; local (Philippine) prescriptive periods apply once suit is brought here.
- Lex specialis derogat generali: A special statute prevails over the Civil Code (e.g., NIL six-year rule).
- Contra non dormientibus iura subveniunt: The law aids the vigilant, not those who slumber—hence prescription exists.
- Natural obligations remain: Even after prescription lapses, payment is irrecoverable and may be set-off.
15. Practical checklist
| ✔︎ | Question |
|---|---|
| ☐ | Is the instrument written and signed? → 10 years. |
| ☐ | If not, was there a writing somewhere (e-mails, SMS) acknowledging the amount? → may still qualify as written evidence. |
| ☐ | Has there been a written demand or acknowledgment within the last 10 / 6 years? |
| ☐ | Is there any special law that covers the instrument (check, insurance policy, tax, estate claim)? |
| ☐ | Has the debtor made partial payments that can be proven by written receipts? |
| ☐ | Did the parties agree to arbitration or mediation, suspending limitation? |
| ☐ | For estates, has the claim been filed within the probate court’s deadline? |
16. Conclusion
The Philippine system balances creditors’ right to recover and society’s interest in ending litigation. Ten years is generous, but it can lapse unnoticed—especially for revolving or restructured loans—unless both sides track their timelines meticulously. Understanding how prescription runs, when it is interrupted, and which special rules override the Civil Code is indispensable whether you are enforcing or defending a claim.
Disclaimer: This article synthesizes statutory text and jurisprudence up to June 2024. Always verify whether new legislation (e.g., amendments to the Civil Code or sector-specific credit laws) or later Supreme Court decisions have modified any rule before relying on this guide in practice.