The mortgage contracts in this case were executed by Saturnino Petalcorin in 1982. The maturity dates of FISLAI's loans were repeatedly extended until the loans became due and demandable only in 1990. Respondent informed petitioner of its decision to foreclose its properties and demanded payment in 1999.
The running of the prescriptive period of respondent's action on the mortgages did not start when it executed the mortgage contracts with Saturnino Petalcorin in 1982.1âwphi1
The prescriptive period for filing an action may run either (1) from 1990 when the loan became due, if the obligation was covered by the exceptions under Article 1169 of the Civil Code; (2) or from 1999 when respondent demanded payment, if the obligation was not covered by the exceptions under Article 116919 of the Civil Code. [emphasis supplied]
In Maybank Philippines, Inc. v. Spouses Tarrosa, 20 the Court explained that the right to foreclose prescribes after ten (10) years from the time a demand for payment is made, or when then loan becomes due and demandable in cases where demand is unnecessary, viz:
An action to enforce a right arising from a mortgage should be enforced within ten (10) years from the time the right of action accrues, i.e., when the mortgagor defaults in the payment of his obligation to the mortgagee; otherwise, it will be barred by prescription and the mortgagee will lose his rights under the mortgage. However, mere delinquency in payment does not necessarily mean delay in the legal concept. To be in default is different from mere delay in the grammatical sense, because it involves the beginning of a special condition or status which has its own peculiar effects or results.
In order that the debtor may be in default, it is necessary that: (a) the obligation be demandable and already liquidated; (b) the debtor delays performance; and (c) the creditor requires the performance judicially or extrajudicially, unless demand is not necessary - i.e., when there is an express stipulation to that effect; where the law so provides; when the period is the controlling motive or the principal inducement for the creation of the obligation; and where demand would be useless. Moreover, it is not sufficient that the law or obligation fixes a date for performance; it must further state expressly that after the period lapses, default will commence. Thus, it is only when demand to pay is unnecessary in case of the aforementioned circumstances, or when required, such demand is made and subsequently refused that the mortgagor can be considered in default and the mortgagee obtains the right to file an action to collect the debt or foreclose the mortgage.
Thus, applying the pronouncements of the Court regarding prescription on the right to foreclose mortgages, the Court finds that the CA did not err in concluding that Mercene's complaint failed to state a cause of action. It is undisputed that his complaint merely stated the dates when the loan was contracted and when the mortgages were annotated on the title of the lot used as a security. Conspicuously lacking were allegations concerning: the maturity date of the loan contracted and whether demand was necessary under the terms and conditions of the loan.
As such, the RTC erred in ruling that GSIS' right to foreclose had prescribed because the allegations in Mercene's complaint were insufficient to establish prescription against GSIS. The only information the trial court had were the dates of the execution of the loan, and the annotation of the mortgages on the title. As elucidated in the above-mentioned decisions, prescription of the right to foreclose mortgages is not reckoned from the date of execution of the contract. Rather, prescription commences from the time the cause of action accrues; in other words, from the time the obligation becomes due and demandable, or upon demand by the creditor/mortgagor, as the case may be.
In addition, there was no judicial admission on the part of GSIS with regard to prescription because treating the obligation as prescribed, was merely a conclusion of law. It would have been different if Mercene's complaint alleged details necessary to determine when GSIS' right to foreclose arose, i.e., date of maturity and whether demand was necessary.
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