GR 163988; (November, 2005) (Digest)
G.R. No. 163988 November 17, 2005
VALENTINA A. NUÑEZ, et al., as heirs of LEONILO S. NUÑEZ, Petitioners, vs. GSIS FAMILY BANK and the COURT OF APPEALS, Respondents.
FACTS
Leonilo S. Nuñez obtained three loans from GSIS Family Bank, secured by real estate mortgages, which matured on June 30, 1978. On that same maturity date, he executed a promissory note for a purported “fourth loan” amounting to ₱1,539,135.00, due on December 27, 1978, and secured by an antedated real estate mortgage over additional properties. More than nineteen years later, on December 11, 1997, the bank extrajudicially foreclosed the mortgages securing the first three loans. On September 1, 1999, it also foreclosed two of the six properties securing the “fourth loan.” Leonilo (substituted by his heirs upon his death) filed a complaint for annulment of the foreclosure sales, arguing the bank’s right to foreclose had prescribed.
ISSUE
Whether the bank’s right to foreclose the real estate mortgages had prescribed, rendering the foreclosure sales null and void.
RULING
Yes, the right to foreclose had prescribed. An action to foreclose a mortgage prescribes in ten years from the time the right of action accrues, pursuant to Article 1142 of the Civil Code. The right of action accrues upon the maturity of the obligation secured. The first three loans matured on June 30, 1978, and the “fourth loan” matured on December 27, 1978. The bank’s foreclosure petitions were filed only on December 11, 1997, and September 1, 1999, respectively, which were clearly beyond the ten-year prescriptive period. The Court rejected the bank’s claim that the period was interrupted by the debtor’s execution of the promissory note for the “fourth loan” on the maturity date of the first loans. This act did not constitute a written acknowledgment of the old debt that would restart the prescriptive period under Article 1155, as it was a promise to pay a new and distinct obligation. Consequently, the bank’s cause of action had long prescribed, and the foreclosure proceedings were null and void. The Court affirmed the trial court’s decision annulling the sales and ordering reconveyance.