Article 1142 & Article 1144 Prescription of Contract and Statute of Limitations G.R. No.

. 167071 October 31, 2006 RUDY S. AMPELOQUIO, SR., Petitioner, vs., ROMEO NAPIZA, Respondent. CHICO-NAZARIO, J. Facts: Respondent and the Maderals are the co-owners of Palolang Malapit and Palolang Malayo properties in Lucban, Quezon; while petitioner is the developer invited to turn the Palolang Malapit property into a residential subdivision. To facilitate this transaction, a written contract known as Assignment of Rights, dated September 11, 1981, was entered into, whereby the respondent would persuade his co-owners to agree to the development for a commission of 5% of the disposable portion appertaining to petitioners share as developer. However, after the development of Palolang Malapit property began, respondent claimed that petitioner failed to comply with his undertaking, and made numerous verbal and written demands for the settlement of obligations. Meanwhile, petitioner averred that the obligations on the Assignment of Rights were pertaining to the development of Palolang Malayo property, which never prospered. He alleged that respondent failed to induce his co-owners to the development thereof, hence, disqualifying him to a formal deed of conveyance. Moreover, petitioner asserted that the rights of respondent had already prescribed. Issue: Whether or not the cause of action of respondent against petitioner had already prescribed Ruling: The cause of action had not yet prescribed. Actions based upon a written contract should be brought within 10 years from the time the right of action accrues (the occurrence of breach) and not from the date of the execution of the contract. Prescription of actions, however, is interrupted when they are filed before the court, when there is a written extrajudicial demand by the creditors and when there is any written acknowledgment of the debt by the debtor. In this case, the ten-year period is to be reckoned not from the date of execution of the Assignment of Rights, i.e., on 11 September 1981, but only in March 1995 when petitioner in a Reply Letter denied any obligation to respondent. Thus, when respondent filed a complaint before the RTC on 22 June 1995, his action had not yet prescribed. Assuming arguendo that the cause of action accrues on 11 September 1981, still the same could not have been barred by prescription because there had been several interruptions in the form of demand letters dated 11 January 1989 and 8 February 1990. Moreover, the ten-year period which commenced in February 1990 was again renewed through respondents final demand letter dated 2 March 1995. Quite clearly, respondents cause of action was filed within the prescriptive period. Fallo:

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated 26 October 2004 and its Resolution dated 3 February 2005 in CA-G.R. CV No. 69206 are AFFIRMED. Costs against petitioner. SO ORDERED.

Prepared by: jkad