Prescription Period for Credit Card Debt in the Philippines

This is general information, not legal advice.

1) Why “prescription” matters

“Prescription” (extinctive prescription) is the time limit for filing a lawsuit. When the period lapses, the creditor’s judicial remedy is barred—though the underlying obligation becomes a natural obligation (you may pay voluntarily, but you can’t be compelled in court).

2) The legal backbone (Civil Code overview)

Art. 1144 (10 years): Actions upon a written contract, upon an obligation created by law, and upon a judgment.
Art. 1145 (6 years): Actions upon an oral contract and quasi-contracts.
Art. 1150: Prescription starts from the day the action may be brought (when the cause of action accrues).
Art. 1155: Prescription is interrupted by (a) filing an action, (b) a written extrajudicial demand by the creditor, or (c) a written acknowledgment by the debtor.
Arts. 1423–1430: Effects of natural obligations (e.g., payments on a prescribed debt are generally not recoverable).

3) Which period applies to credit card debt?

A. The default: 10 years (written contract)

Most card relationships are governed by a signed card application and cardholder agreement (both in writing). When the bank sues on the written agreement (or on monthly statements issued pursuant to it), the action is typically treated as one upon a written contract, so the 10-year period under Art. 1144 applies.

Practical upshot: If the bank can prove a written card contract (or actionable written documents that embody the obligation), the prescriptive period is 10 years.

B. When it may drop to 6 years

If the creditor cannot establish a written contract (e.g., no signed application/terms, or suit proceeds purely on an open account theory without actionable written instruments), some courts may treat it as not based on a written contract, triggering 6 years under Art. 1145.

Practical upshot: Documentation matters. The bank’s ability to produce signed forms/agreements is often outcome-determinative on prescription.

4) When does the clock start? (accrual rules)

Credit card debts commonly involve installments or revolving balances. Accrual depends on how and when default occurs.

Missed installment without acceleration: Prescription runs per installment from each due date missed.
With an acceleration clause: If the contract allows the creditor to declare the entire balance due upon default, the cause of action for the full amount accrues when acceleration is validly invoked (often via written demand declaring acceleration).
Obligations requiring demand: If the contract or the nature of the obligation requires demand before default, delay (mora) and accrual generally begin upon demand (unless demand is excused or waived).
Payment arrangements/restructuring: A new promissory note or restructure agreement can be a novation that resets accrual and prescription based on the new terms.

5) How is prescription interrupted?

Under Art. 1155, any of these resets the clock:

Filing a case in court.
Written extrajudicial demand by the creditor (e.g., a demand letter).
- Best practice for creditors is proof of receipt (e.g., registered mail with return card, courier proof, or email with acknowledgment).
Written acknowledgment of the debt by the debtor.
- Examples: a signed letter admitting liability; a signed payment plan; an email from you explicitly recognizing the outstanding balance; a signed receipt for partial payment that references the debt.
- Mere verbal acknowledgment or unattributed partial payments are risky bases for interruption; the safer rule is that it must be in writing and traceable to the debtor.

Effect: A valid interruption restarts the full prescriptive period (10 or 6 years, as applicable) from the date of interruption.

6) Judgments and post-judgment timelines

If the creditor sues in time and wins:

Actions upon a judgment prescribe in 10 years (Art. 1144[3]).
Execution of judgment: As a separate procedural matter, a money judgment is immediately executory; within 5 years from entry, it may be enforced by motion; afterward, the creditor must file an independent action to revive the judgment (which itself must be brought within 10 years from entry).
Once revived, execution can proceed again under the revived judgment.

7) Special situations affecting the clock

Bankruptcy/rehabilitation (FRIA): A Commencement Order imposes a stay on actions. While the stay primarily halts suits and enforcement, creditors often send no new demands; prescription computations should account for court orders that suspend proceedings during rehabilitation.
Arbitration clauses: Many card contracts have arbitration or venue clauses. These typically do not change statutory prescription, but commencing arbitration within the period should likewise interrupt prescription, since it is an “action” to enforce rights.
Choice-of-law/forum: As a rule, prescription is procedural and the forum’s (Philippine) limitation periods apply. A foreign choice-of-law clause won’t usually override local prescriptive periods if the case is brought in the Philippines.
Minority/other disabilities: General rules on capacity and representation still apply, but credit card cases rarely hinge on these.

8) Common litigation/evidence issues (why cases get won or lost)

Proving the written basis: Creditors should present the signed card application, cardholder agreement, amendments, and complete statements. Failure to produce key writings may drop the case into the 6-year bucket—or lead to outright dismissal for lack of proof.
Computation of balance: Itemized statements, interest/fees schedules, and BSP-compliant finance charges are needed to substantiate the amount due.
Demand and acceleration: Creditors should show clear written demand and, if accelerating, proof that contractual conditions for acceleration were met.
Aging of debt: Debtors often raise prescription as an affirmative defense; meticulous timelines of demands, payments, and communications decide cases.

9) Defenses and debtor strategies (lawful)

Invoke prescription: If the bank files beyond the proper period—counted from accrual and considering interruptions—the defense can bar the suit.
Challenge the paper trail: Require proof of the written contract and amount due; absent that, argue 6 years (or even failure of proof).
Question interruption: Demand proof that any alleged interrupting demand or acknowledgment was in writing and properly attributable.
Interest and charges issues: Even if not about prescription, disputing unreasonable or unsupported charges can reduce exposure and affect settlement dynamics.
Settlement/novation: A written restructure can both resolve the case and reset clear terms and timelines.

10) After prescription: what it means, practically

The creditor’s right to sue is barred, but the debt can still be voluntarily paid (natural obligation).
If you pay voluntarily after prescription, you generally cannot recover that payment.
Credit reporting/collections: While civil action is barred, non-judicial collection attempts must still comply with fair collection norms and data privacy obligations; abusive tactics can be actionable on other grounds.

11) Quick reference checklist

Is there a signed, written card contract?
- Yes → 10 years (Art. 1144).
- No/unclear → 6 years (Art. 1145).
When did default occur?
- Per-installment due dates or date of valid acceleration.
Any interruption?
- Filed case? Written demand? Written acknowledgment? → Restart the clock from that date.
Any novation/restructure?
- New written terms → new accrual and period.
Any judgment already?
- Judgment enforcement and revival timelines apply.

12) Practical tips

For debtors: Keep records. If you receive a written demand, note the date of receipt. Be careful what you sign; a written acknowledgment can restart prescription.
For creditors: Maintain complete document trails, send tracked written demands, and file within the applicable 10- or 6-year period; consider small claims procedures when amounts fit.

Bottom line

Most Philippine credit card suits are governed by the 10-year prescriptive period for written contracts. The 6-year period applies when the creditor cannot anchor the claim on a written obligation. The clock starts at default (or valid acceleration) and restarts only through filing, written demand, or written acknowledgment. After prescription, the obligation survives only as a natural obligation—payable voluntarily but not judicially enforceable.