GR 160741; (March, 2007) (Digest)
G.R. No. 160741, March 22, 2007
Herminia Cando, Petitioner, vs. Sps. Aurora Olazo and Claudio Olazo, Respondents.
FACTS
On April 27, 1987, respondents Spouses Olazo mortgaged a parcel of land to petitioner Herminia Cando to secure a loan. The mortgage contract stipulated that if the loan was not paid within one year, the mortgage would be foreclosed. Alleging non-payment, petitioner filed a complaint for judicial foreclosure of mortgage on February 16, 1998. Respondents moved to dismiss the complaint on the ground of prescription.
The Regional Trial Court dismissed the complaint, ruling that the action had prescribed. It held that under Article 1142 of the Civil Code, an action for foreclosure prescribes after ten years, and computed the period from the date of the mortgage contract’s execution on April 27, 1987. Since the complaint was filed in 1998, it was filed beyond the ten-year period. Petitioner appealed to the Court of Appeals.
ISSUE
Whether the Court of Appeals correctly dismissed the appeal on jurisdictional grounds, and whether the trial court correctly ruled that the action for foreclosure had prescribed.
RULING
The Supreme Court granted the petition. On the procedural issue, the Court of Appeals correctly dismissed the appeal for lack of jurisdiction, as petitioner raised only a pure question of law—the computation of the prescriptive period—which is not reviewable by the Court of Appeals in an ordinary appeal under Rule 41. However, the Supreme Court, in the interest of equity and to correct a patent error, addressed the substantive issue.
On the merits, the trial court committed a grave error. The ten-year prescriptive period for a foreclosure action under Article 1142 is counted not from the date of the mortgage contract’s execution, but from the time the right of action accrues. A right of action accrues only upon the mortgagor’s default. Here, the contract gave the respondents one year to pay. Default, and thus the accrual of the right to foreclose, could only occur after the lapse of that period on April 27, 1988. Consequently, the ten-year prescriptive period began to run on April 28, 1988. Petitioner’s filing of the complaint on February 16, 1998, was well within the prescriptive period. The trial court’s order of dismissal was reversed, and the case was remanded for further proceedings.