G.R. No. 92029-30 - De Guzman, Jr. vs. Court of Appeals

Petitioner NICANOR G. DE GUZMAN, JR. and respondent ENRIQUE KP. TAN share a long-standing friendship with mutual favors and accommodations, including the discounting of checks for cash.
More than seven (7) years prior to the complaint, petitioner issued several checks totaling P280,900.00 to respondent in exchange for cash.
The checks were allegedly “fully paid, settled, extinguished or condoned by agreement of the parties,” which led petitioner to cease redeeming them due to the friendly relationship.

ii. Legal Interest at 1% per month for 84 months: P235,956.00 iii. Attorney’s Collection Fee (at 10%): P51,685.00

The letter warned that failure to remit full payment within ten (10) days would result in proper legal action against petitioner.

The demand was contested by petitioner, who maintained that the checks had already been settled, and that the additional charges were unwarranted.

On September 15, 1988, petitioner filed a complaint in the Regional Trial Court of Manila seeking damages and other equitable relief.
The complaint alleged the following:

The checks were not due for payment since the obligation had been settled or condoned by mutual agreement.
Respondent’s demand letter was excessive, threatening, and in violation of the established settlement of obligations between the parties.
Respondent wrongfully withheld the checks, which rightfully belonged to petitioner.
The letter and its demands caused actual injury to petitioner, warranting the award of actual, exemplary, and nominal damages, as well as attorney’s fees and costs.

Petitioner further asserted that respondent’s actions were wanton, reckless, oppressive, and malevolent.

On October 8, 1988, respondent moved to dismiss the complaint on grounds of lack of cause of action and prescription.
The trial court dismissed the complaint for failure to state a cause of action on November 24, 1988.
A motion for reconsideration filed by petitioner was denied on March 17, 1989.
Petitioner elevated the case to the Court of Appeals through a petition for certiorari and mandamus.
On January 30, 1990, the Court of Appeals dismissed the appeal with costs against petitioner.
Petitioner then petitioned for review on certiorari, alleging grave abuse of discretion by both the trial court and the appellate court for dismissing the claim despite the factual allegations raised.

Whether the complaint sufficiently stated a cause of action despite allegations that the obligation had been settled, and whether the wrongful act of issuing the demand letter constituted a valid basis for judicial relief.
Whether the demand made by respondent, particularly the inclusion of unwarranted legal interest and attorney’s fees, violated petitioner’s primary rights by asserting an already settled obligation.
Whether the cause of action accrued on August 20, 1988, and whether the complaint was filed within the applicable four-year prescriptive period, thus avoiding prescription.