Wilson Sy invested P200,000 in a money market placement with respondent FMIC which was

evidenced by a promissory note. They payee indicated in the note was “Bearer W. Sy ITF
Lourdes Ong,” and prescribed terms and conditions, among of which are that the amount due
shall be paid on the specified maturity date upon surrender of this note at FMIC and that in
accordance with Central Bank regulations, the PN shall not be honored or paid by FMIC before
the maturity date.

A year after Lourdes died, hear husband, Jose, discovered the PN in the vault where Lourdes
kept her important documents. With a copy furnished to BSP, Jose asked FMIC to verify the
status of the note as it could not have been settled because its original copy remained in the
custody of his deceased wife which FMIC replied that it did not appear in their list of
outstanding money market placements as it was settled prior to or on its maturity date.
However, FMIC was unable to provide supporting documents because the five-year period for
storing the original documents of settled transactions had already lapsed. FMIC also explained
that there were instances in the past when clients requested for the release of the proceeds of
their money market placements by presenting either an affidavit of loss, or a letter of
undertaking to surrender the original note at a later date.

Unsatisfied with the explanation of FMIC, the Heirs of Ma. Lourdes Ong, as represented by Jose
(Heirs of Lourdes), filed a complaint before the MTCC in Iloilo City for the recovery of the
proceeds of the subject note. FMIC raised the defense of prescription since the PN matured, the
cause of action accrued from that date and expired after the lapse of ten (10) years, pursuant to
Article 1144 of the Civil Code. MTCC ruled in favor of the heirs and ordered defendant to pay
the principal obligation of P200,000 with 15% interest per annum computed from the time of
the maturity of the note. The trial court reversed and set aside the MTCC’s judgment. The CA
affirmed the RTC's decision. According to the CA, the money market placement was in the
nature of a loan, which is evidenced by a written debt instrument. As such, the prescriptive
period of ten (10) years applies to the present case.

Issue: whether the Heirs of Lourdes's complaint for the collection of a sum of money was
already barred by prescription or laches

Ruling: Yes. It is well-settled that the nature of a money market placement is a simple loan or
mutuum.

Further, we defined a money market in Cebu International Finance Corporation v. Court of

Appeals, as follows:

the money market placement is clearly an obligation involving a sum of money, with Wilson as
the creditor of FMIC. In accordance with the terms and conditions of the subject PN, he is
entitled to payment upon the maturity of the placement.
Thus, the money market placement is clearly an obligation involving a sum of money, with
Wilson as the creditor of FMIC. In accordance with the terms and conditions of the subject PN,
he is entitled to payment upon the maturity of the placement.

Aside from payment, FMIC may also be released from its obligation, when the claim of the
creditor becomes barred by prescription. In this regard, the pertinent provisions of the Civil Code
of the Philippines state: Article 1144. The following actions must be brought within ten 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. xxx xxx xxx Article 1150. The time for prescription for all
kinds of actions, when there is no special provision which ordains otherwise, shall be counted
from the day they may be brought. xxx xxx xxx Article 1155. 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 of the debtor. (Emphasis
Ours)

In any case, the extrajudicial demand of the Heirs of Lourdes on February 28, 2006 for the
payment of the note only serves to interrupt the prescriptive period. 30 But since this demand
was made after the lapse of ten (10) years, the period of prescription to collect the loan
obligation already lapsed. In this light, the obligation of FMIC under the PN was extinguished. As
a necessary consequence, the action for the collection of the PN that was belatedly filed on
October 27, 2008, or seventeen (17) years after the loan matured, is barred by prescription.