1) The legal nature of credit card debt

A credit card balance is generally a civil obligation: the card issuer (bank or financing company) extends a revolving line of credit, and the cardholder agrees to repay amounts advanced, plus agreed interest, fees, and charges. In ordinary cases of nonpayment, the remedy is collection (extrajudicial demand or a civil case)—not criminal prosecution.

A common pressure tactic is to imply that unpaid credit card debt is “criminal.” As a rule, nonpayment of debt is not a crime; the Constitution prohibits imprisonment for debt. Criminal liability may arise only in exceptional scenarios involving fraud, deceit, forged documents, bounced checks, or similar acts, not mere inability or refusal to pay a credit card bill.

2) “Prescription” in Philippine law: what it is (and what it is not)

A. Prescription bars the remedy, not the historical fact of the debt

In Philippine civil law, extinctive prescription is the loss of the right to enforce an obligation through court action because of the lapse of time. In practical terms:

If the claim has prescribed, the creditor may lose the right to sue successfully.
The underlying debt may still exist morally or naturally, and voluntary payment cannot generally be recovered as a rule on natural obligations.

B. Prescription is usually a defense that must be invoked

In civil cases, prescription is typically an affirmative defense. Courts generally do not apply it automatically if the debtor does not raise it in the proper pleading and at the proper time. If you are sued, ignoring the summons can lead to default, even if the claim is potentially time-barred.

3) The key Civil Code prescriptive periods relevant to credit card collection

Philippine prescriptive periods for actions are mainly found in the Civil Code:

A. Ten (10) years: actions upon a written contract

Civil Code, Article 1144 provides a 10-year prescriptive period for actions “upon a written contract.”

A credit card issuer will usually argue that the card relationship is based on a written contract (e.g., signed application form, cardholder agreement, terms and conditions incorporated by reference), so the 10-year period applies.

B. Six (6) years: actions upon an oral contract or quasi-contract

Civil Code, Article 1145 provides a 6-year period for actions “upon an oral contract” and “upon a quasi-contract.”

A debtor may argue for a shorter period if the creditor cannot prove a written contract covering the obligation being enforced, or if the creditor’s theory of the case effectively relies on an implied or unwritten undertaking.

C. Five (5) years: catch-all period when no specific period applies

Civil Code, Article 1149 sets 5 years for actions “whose period is not fixed” elsewhere.

This sometimes appears in arguments where the cause of action is framed outside the classic written/oral contract categories, though credit card collection is most commonly litigated as contract-based.

D. Why the “correct” period can be disputed

In real cases, the prescriptive period may turn on:

How the creditor pleads the cause of action (written contract vs. other theory), and
What evidence the creditor can present (signed application, proof of assent to terms, account statements, business records, etc.).

Bottom line: Many credit card suits are pursued under the 10-year period as written-contract actions, but shorter periods may be argued depending on proof and legal theory.

4) When does the prescriptive period start running? (Accrual of the cause of action)

A. General rule: from the day the action may be brought

Under Civil Code, Article 1150, prescription begins to run from the day the action may be brought—i.e., when the creditor’s right to sue arises.

B. Applying this to credit cards: common accrual theories

Credit card debt is “revolving,” billed monthly, and usually governed by terms on:

payment due dates (minimum amount due and total amount due),
default provisions, and
an acceleration clause (the issuer may declare the entire balance due upon default).

Because of that structure, accrual is commonly argued in one of these ways:

Per-statement / per-installment approach Each unpaid monthly obligation (or each installment, if applicable) may be viewed as separately due. Under installment jurisprudence concepts, each installment can prescribe separately from its due date.
Acceleration approach (often decisive in practice) If the contract allows acceleration and the creditor validly accelerates (often by declaring the account in default and demanding full payment), the creditor may argue that the cause of action for the entire outstanding balance accrues from the date of acceleration/demand (or from the time default triggers acceleration under the contract).

C. “Date of last payment” vs. “date of default”

People often use “last payment” as a shortcut marker, but legally the trigger is when the obligation became demandable (due and enforceable). Still, the last payment date matters because it can:

affect what remains unpaid,
affect when default occurred, and
sometimes serve as evidence of acknowledgment (see interruption below).

5) Interruption of prescription: how the clock stops and restarts

Civil Code, Article 1155 lists the classic ways prescription is interrupted:

A. By filing of an action in court (judicial demand)

Once a collection case is filed, prescription is interrupted. While the case is pending, prescription generally does not run in the same way against that judicially asserted claim.

B. By a written extrajudicial demand by the creditor

A written demand (e.g., demand letter) can interrupt prescription. In disputes, the practical issues become:

Was the demand in writing?
Can the creditor prove it was sent and received (or at least properly served)?
Was it made by the creditor or a duly authorized representative?

C. By a written acknowledgment of the debt by the debtor

A debtor’s written acknowledgment interrupts prescription. Common real-world examples that can function as acknowledgment (depending on proof and context) include:

signing a restructuring agreement or promissory note,
signing a settlement agreement,
sending emails/messages that clearly admit the debt,
documents reflecting an agreement on the outstanding balance.

Important practical consequence: Actions that look like “good faith” negotiation—especially anything in writing that admits the debt—can potentially reset the prescriptive period.

D. What about partial payments?

A partial payment is often treated as recognition of the obligation. Even if Article 1155 speaks of “written acknowledgment,” payments usually generate paper trails (receipts, transaction records) that can be argued as written evidence of acknowledgment. In short: paying, signing, or writing can revive time in ways that surprise people.

6) What happens when credit card debt has prescribed?

A. The court remedy is barred if prescription is properly raised

If the claim is time-barred and the debtor properly raises prescription, the court may dismiss the suit.

B. The debt may become a “natural obligation”

Under the Civil Code’s concept of natural obligations (including situations where the right to sue has prescribed), voluntary performance is generally effective and cannot simply be demanded back later on the theory that it was not legally collectible.

C. Prescription can be waived

A debtor can waive the defense—explicitly or implicitly—especially by failing to raise it in court, or by entering into arrangements that effectively revive enforceability (e.g., a new written promise, restructuring, or settlement that creates a fresh actionable undertaking).

7) Debt assignment and collection agencies: does “selling the debt” reset prescription?

A. Assignment does not erase time already elapsed

Banks commonly endorse or assign delinquent accounts to:

third-party collection agencies (as agents), or
entities that purchase receivables (as assignees).

An assignment generally means the new holder steps into the old holder’s shoes. It does not magically restart the prescriptive period by itself.

B. But later acts can still interrupt or revive

Even if assignment does not reset time, written demands and written acknowledgments occurring afterward can still interrupt prescription.

C. Collectors must prove authority

In disputes, it can matter whether the collector is:

merely an agent of the bank, or
the actual assignee/owner of the account.

Proof of authority/assignment can be important if the matter goes to court.

8) What collectors can and cannot do (practical and legal limits)

A. Collectors have no special “seizure” powers

Without a court judgment and writ of execution, collectors generally cannot:

garnish bank accounts,
levy or seize property,
force entry into a home,
take salary directly,
threaten “immediate” arrest for nonpayment.

Those enforcement measures are court-supervised and typically occur only after a judgment becomes final and executory.

B. Harassment, threats, and public shaming carry legal risk

While the Philippines does not have a single FDCPA-style statute identical to the U.S., abusive collection conduct can trigger liability under various legal frameworks depending on the act, including:

civil liability for damages,
criminal laws on threats, coercion, unjust vexation, libel/slander (fact-specific), and
privacy and data protection rules when personal data is mishandled, disclosed to unauthorized persons, or used in a manner inconsistent with lawful processing.

As a practical matter, collection efforts that involve contacting neighbors, posting on social media, or shaming at the workplace can create exposure far beyond the debt itself.

9) The court collection routes used for credit card debt

A. Regular civil action for sum of money

A creditor may file an ordinary civil case for collection. Key features:

The creditor must prove the obligation and the amount due.
The debtor can raise defenses (including prescription).
If judgment is obtained and becomes final, the creditor may pursue execution (levy/garnishment), subject to exemptions and procedural rules.

B. Small claims procedure (when the amount qualifies)

For qualifying money claims within the threshold set by the Supreme Court’s small claims rules (which are amended from time to time), creditors may file under small claims, which is designed to be faster and less technical. Even in small claims:

defenses like prescription can matter, and
ignoring a case can still lead to an adverse judgment.

10) Evidence issues that frequently decide old credit card cases

In litigation, “old debt” disputes often turn on whether the creditor can present competent proof such as:

the signed application form and/or proof of acceptance of terms,
cardholder agreement/terms and conditions,
monthly statements and account ledgers,
proof of default, finance charges, and how interest/fees were computed,
proof of written demands (for interruption),
proof of assignment and authority (if not suing in the original creditor’s name).

Where documentation is incomplete or poorly authenticated, creditors can face proof problems—especially for very old accounts.

11) Computing prescription in practice: a workable framework

Because credit card timelines can be messy, a practical computation usually follows these steps:

Identify the legal theory pleaded (written contract vs. other).
Identify the accrual date (when the obligation became demandable for the amount sued upon).
Select the prescriptive period (often 10 years for written contract claims).
List all potential interruption events:
- filing of a case,
- written demand letters,
- written acknowledgments (including signed restructuring/settlement),
- payments with documentary trail.
Recompute from the last valid interruption event.

Illustrative example (conceptual)

Account defaulted and creditor’s right to sue accrued on June 30, 2015.
Creditor sent a written demand received on May 1, 2018 (interrupts).
New prescriptive period runs from May 1, 2018.
If treated as a written contract claim (10 years), suit must generally be filed on or before May 1, 2028, absent further interruption.

(Real cases depend on the contract terms, proof of acceleration/demand, and evidence of receipt/acknowledgment.)

12) Common myths about “old” credit card debt in the Philippines

Myth: “It automatically disappears after X years.”

Prescription is not a magical eraser. It is a defense that can bar court enforcement if properly invoked, and timelines can be interrupted.

Myth: “Changing collection agencies resets the clock.”

Assignment or outsourcing alone does not reset time; interruption depends on legally recognized acts like written demand or written acknowledgment.

Myth: “You can be arrested for unpaid credit card debt.”

Ordinary nonpayment is a civil matter. Arrest threats are commonly used as pressure but do not reflect the general rule.

Myth: “A phone call interrupts prescription.”

Interruption is classically tied to judicial action, written extrajudicial demand, or written acknowledgment. Purely oral collection efforts are not the standard interruption mechanism.

13) Key takeaways

Credit card collection is typically governed by the Civil Code rules on extinctive prescription, most often argued under the 10-year period for written contracts.
The start date depends on when the obligation became demandable (default, maturity, and often acceleration/demand).
Prescription can be interrupted by filing suit, written demands, or written acknowledgments (often including documented payments or signed restructurings).
Even a potentially time-barred debt can still lead to problems if the debtor fails to assert prescription when sued.
Collectors generally cannot seize property or garnish assets without a court judgment and writ, and abusive tactics can create separate legal exposure.