G.R. No. 97218 May 17, 1993
PROVIDENT SAVINGS BANK, petitioner, vs. COURT OF APPEALS, Former SPECIAL EIGHTH DIVISION and WILSON CHUA, respondents.

FACTS

On February 16, 1967, spouses Lorenzo K. Guarin and Liwayway J. Guarin obtained a loan from Provident Savings Bank in the amount of P62,500.00, payable on or before June 20, 1967, and executed a real estate mortgage over a parcel of land covered by TCT No. 177014 as security. In September 1972, Provident Savings Bank was placed under receivership by the Central Bank, which receivership was set aside by the Supreme Court on July 27, 1981. On July 10, 1986, the Guarins executed a Deed of Absolute Sale with Assumption of Mortgage, selling the mortgaged property to Wilson Chua for P250,000.00, with Chua undertaking to assume the mortgaged obligation. On August 21, 1986, Wilson Chua filed a complaint to compel Provident Savings Bank to release the real estate mortgage and surrender the owner’s duplicate certificate of title, arguing that the bank’s right to foreclose had prescribed. The Regional Trial Court ordered Chua to pay the obligation and the bank to release the mortgage. Both parties appealed. The Court of Appeals barred the bank from foreclosing on account of prescription, reversing the trial court’s order for Chua to pay and affirming the order for the bank to release the mortgage.

ISSUE

Whether the prescriptive period for Provident Savings Bank to foreclose the real estate mortgage was interrupted by the bank’s receivership and by Wilson Chua’s written acknowledgment of the obligation.

RULING

Yes. The Supreme Court granted the petition and dismissed Wilson Chua’s complaint. The Court held that the period during which the bank was under receivership and forbidden from doing business constituted a caso fortuito that interrupted the prescriptive period. Under Article 1154 of the Civil Code, the period during which the obligee was prevented by a fortuitous event from enforcing his right is not reckoned against him. The ten-year prescriptive period to foreclose under Article 1142 began to run anew after the receivership was lifted in 1981. Furthermore, Wilson Chua’s written communication on August 6, 1986, requesting to be allowed to pay the loan, constituted an express acknowledgment of the obligation, which again interrupted the prescriptive period under Article 1155. Consequently, the bank’s right to foreclose had not prescribed when Chua filed his complaint. The Court also found no valid novation by substitution of debtor, as the bank’s consent was conditional and not unequivocally given.