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Attorneys of the Philippines Legal News

Welcome to our legal news pages. Here is where we provide updates about what's happening in Philippines legal news, and publish helpful articles and tips for Pinoys researching legal matters.

Lenders Have 10 Years To Collect Payment From Debtors

In times of financial difficulties, we turn to our relatives, friends and even colleagues for assistance. Once they extend a loan, we agree to pay the money we borrowed within the agreed period. If we borrow a large amount of money, a written agreement is created to ensure that money will be collected. However, not all of us can meet our payment obligations. Once we fail to pay, within the period agreed upon, the lender will be forced to impose penalties. When it comes to the lender's right to demand payment, it is essential to keep the prescriptive period into consideration. 

The New Civil Code of the Philippines states that:

Art. 1144. The following actions must be brought within 10 years from the time the right of action accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law;

(3) Upon a judgment.”

Art. 1423. Obligations are civil or natural. Civil obligations give a right of action to compel their performance. Natural obligations, not being based on positive law but on equity and natural law, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or rendered by reason thereof. Some natural obligations are set forth in the following articles.

A written agreement serves as evidence of the lender's right to demand payment. If the debtor fails to pay the debt within one year as agreed upon, it is imperative for lenders to put pressure on the debtor to make a payment. 

Article 1155 of the New Civil Code of the Philippines also states that, "The prescription of actions 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."

Does The Husband Have To Pay For The Wife's Debt?

When married couples separate, is the obligation of the husband limited only to supporting children who are in the care of the wife? What if the wife incurred debts? Does the husband have an obligation to make a payment of the debt?

According to Article 91 of the Family Code, the absolute community property of the spouse or the pieces of property, which belong to the spouse during marriage or acquired thereafter shall have legal liability. These include the following:

(2) All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the community, or by both spouses, or by one spouse with the consent of the other;

(3) Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have been benefited;

If the wife incurred the debt after the husband separated from her, the husband's obligation to pay the debt is considered jointly. This means that if the wife incurred the debt even when you have already separated, the husband still has an obligation to settle it, provided that the debt incurred benefited the family. It is also interesting to note that the husband assumes responsibility for the wife's debt if the consent was obtained from him.

On the other hand, Article 102 of the Absolute Community of Property states:

(1) An inventory shall be prepared, listing separately all the properties of the absolute community and the exclusive properties of each spouse.

(2) The debts and obligations of the absolute community shall be paid out of its assets. In case of insufficiency of said assets, the spouses shall be solidarily liable for the unpaid balance with their separate properties in accordance with the provisions of the second paragraph of Article 94.

(3) Whatever remains of the exclusive properties of the spouses shall thereafter be delivered to each of them.

(4) The net remainder of the properties of the absolute community shall constitute its net assets, which shall be divided equally between husband and wife, unless a different proportion or division was agreed upon in the marriage settlements, or unless there has been a voluntary waiver of such share provided in this Code. For purpose of computing the net profits subject to forfeiture in accordance with Articles 43, No. (2) and 63, No. (2), the said profits shall be the increase in value between the market value of the community property at the time of the celebration of the marriage and the market value at the time of its dissolution.

The Rule Of Procedure For Small Claims Cases

Patience is a virtue for making people pay for what they owe. You will need to remind them over and over again about the unpaid debts, but the result is not always what you expect. There can be times when you will get more lame excuses than payments until you decide to put the issue to rest. The good news is, you can still get paid, thanks to the existence of small claims court.

The Steps For Filing For A Small Claims Case

1. Go to either the first level court of the city where you reside or the first level court of the city where your debtor resides.

2. The first level courts are defined as the Municipal Circuit Trial Courts Municipal Trial Court, Metropolitan Trial Court and Municipal Trial Courts in Cities.

3. Go to the Office of the Clerk of Court and fill up the Statement of Claim, Certification of Non-Forum Shopping and Information for Plaintiff.

4. A Verified Statement of Claim must be accomplished as plaintiff and the information must be correct.

5. The important documents must also be provided as proof that the loan occurred. This will include the signed contracts by the defendants, promissory notes, bank deposit slips, receipts and checks, affidavits of witnesses and latest demand letter with proof of delivery or proof of receipt.

6. The plaintiff needs to pay a small amount to file the case, which may usually be around P1250.00

"This Rule applies to all actions that are: (a) purely civil in nature where the claim or relief prayed for by the plaintiff is solely for payment/reimbursement of a sum of money, and (b) the civil aspect of criminal actions, either filed prior to the institution of the criminal action, or reserved upon the filing of the criminal action in court, pursuant to Rule 111 of the Revised Rules of Criminal Procedure. These claims or demands may be:For money owed under any of the following:>Contract of lease;

>Contract of loan;

>Contract of services;

>Contract of sale; or

>Contract of mortgage;

For damages arising from:

>Fault or negligence;

>Quasi-contract; or

>Contract;

Enforcement of a barangay amicable settlement or an arbitration award involving money claims covered by this Rule pursuant to Sec. 417 of Republic Act No. 7160, otherwise known as the "Local Government Code of 1991."

Explanatory Note: The kinds of cases that can be filed in Small Claims Court vary, but the case must seek money only. For example, a suit cannot be brought in Small Claims Court to force a person or business to fix a damaged good; or to demand fulfillment of a promised obligation which is not purely for money, or to seek money to compensate for pain and suffering. Some of the kinds of cases which are allowed as small claims include the following:

>Actual damage caused to vehicles, other personal property, real property or person;

>Payment or reimbursement for property, deposit, or money loaned;

>Payment for services rendered, insurance claim, rent, commissions, or for goods sold and delivered;

>Money claim pursuant to contact, warranty or agreement; and

>Purely civil action for payment of money covered by bounced or stopped check."

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