G.R. No. L-7708; March 29, 1913
RAMON SORIANO, plaintiff-appellee, vs. FRANCISCO ENRIQUEZ, ET AL., defendants-appellants.

FACTS

On August 16, 1861, Antonio Enriquez executed a mortgage for P5,000 in favor of Obras Pias. Interest was paid up to May 30, 1881. On March 27, 1881, Antonio Enriquez sold the mortgaged property to Carmen de la Cavada, who assumed the mortgage debt. In 1905, Obras Pias filed a foreclosure action against the subsequent owners/possessors of the property, but did not include the original mortgagor or Carmen de la Cavada as parties. A foreclosure decree was issued on September 16, 1910, allowing recovery of the principal and two years’ interest from the property only, without personal liability. Obras Pias then assigned its rights to Ramon Soriano. The property was sold at foreclosure on January 31, 1911, satisfying the principal and the two years’ interest. On May 30, 1911, Soriano filed this personal action against Carmen de la Cavada and her husband to recover the unpaid interest accruing from 1881 up to the two-year period covered by the foreclosure decree.

ISSUE

Whether the plaintiff’s action to recover the unpaid mortgage interest from the defendants is barred by prescription or procedural defect.

RULING

Yes, the action is barred. The Court affirmed the trial court’s finding that the personal action to recover the mortgage debt (including interest) prescribed fifteen years after the Civil Code took effect in December 1889, or by December 1905. The foreclosure action was filed in 1905, but the defendants (the parties personally liable) were not made parties to that action. Under the Code of Civil Procedure, all persons obligated to pay the mortgage debt are necessary parties to a foreclosure action to avoid multiplicity of suits and to allow a deficiency judgment. Since they were not joined, and the personal action had already prescribed by the time this separate suit was filed, the plaintiff cannot recover. The judgment of the trial court was reversed, and the complaint was dismissed.