The Action For Foreclosure of REM Has Already Prescribed

G.R. No.
163988 November 17, 2005 subjected to the foreclosure sale, and the titles of the other four
VALENTINA A. NUNEZ, et. al., petitioners, vs. GSIS FAMILY BANK, and properties had no mortgage annotation on them.
CA, respondents 8. RTC Ruling: in favor of Leonilo, who died during the pendency of
Topic: Action for foreclosure of mortgage prescribes in ten years the case and was substituted by his heirs.
9. GSIS filed a motion to reconsideration, but did not comply with the
Doctrine: An action to foreclose a real estate mortgage prescribes in ten requirement of notice of hearing. It argued that it was due to the
years, according to Art. 1142. inadvertent deletion of the file of the handling counsel. RTC denied
the MR. GSIS filed a Notice of Appeal, but was dismissed for being
Facts: filed late. Hence, GSIS filed a petition for certiorari before the CA,
1. Petitioners are heirs of Leonilo Nunez. Leonilo, during his lifetime, arguing that the rules of procedure be liberally applied to avoid
obtained three loans from GSIS Family Bank (GSIS). All three loans injustice and irreparable damage.
were maturing at June 30, 1978, and were secured by a real estate 10. CA: found in favor of GSIS, stating that the right of appeal was a
mortgage over 4 different properties. natural right, and that the Notice of Appeal would better serve the
2. On June 30, 1978, when the loans were maturing, Leonilo obtained a ends, and prevent the miscarriage of justice.
fourth loan of Php 1, 539, 135.00, for which was secured by a real 11. Hence, this petition for certiorari under R65.
estate mortgage over 6 different properties. He then executed a
Promissory Note in the same amount and payable on December 27, Issue: W/N the action for foreclosure of the REM has already prescribed
1978 to pay off the three previous loans.
3. On December 11, 1997, or MORE THAN 11 YEARS AFTER Held: YES!
LEONILOS PROMISSORY NOTE MATURED, GSIS under took to
extrajudicially foreclose the properties that secured the first two out The Action for Foreclosure of REM has already prescribed
of the three loans. GSIS alleged that Leonilo failed to pay the loans 1. An action to foreclose a real estate mortgage prescribes in ten years,
despite repeated demands. according to Art. 1142. The running of such period can be, however,
4. The Ex-Officio Sheriff of Gapan issued a Notice of Extra-Judicial interrupted. But in this case, there was no letter of demand, court
Sale of the properties. The auction took place and GSIS was the action or foreclosure proceeding that was undertaken prior to Dec.
highest and only bidder. 11, 1997, and September 1, 1999.
5. Again, on September 1, 1999, upon GSIS petition, 2/6 properties 2. While GSIS alleged that it repeatedly demanded for payment,
that secured the alleged fourth loan was extrajudicially foreclosed, allegations are not proofs. Unless a demand is proven, one cannot
and GSIS was the highest and only bidder. be held in default.
6. On June 20, 2000, Leonilo filed before RTC Gapan a complaint 3. GSIS contended that such demand would amount to a waiver of its
against GSIS for the Annulment of the Extrajudicial Foreclosure right to foreclose. However, it could have initiated foreclosure
Sale, Reconveyance, and Cancellation of Encumbrances. Leonilo proceedings early on, and not wait for more than 19 years to do so.
denied securing a fourth loan. Leonilo also invoked prescription, 4. GSIS argues that what applies if Art. 11413, and not Art. 1142 as the
citing Art. 11421 and 11442. Leonilo stated that the first three latter speaks of real actions over immovable. However, the location
loans matured on June 30, 1978 and the fourth loan matured of Art. 1142, immediately right after Art. 1141, indicates it is an
on December 27, 1978; hence, they had prescribed in 1988. exception to the previous article.
GSIS only filed their petitions on 1997 and 1999. 5. In sum, an action for foreclosure of mortgage of real property
7. Leonilo also questions the truth of the alleged fourth loan as prescribes in ten years. This has been in fact settled by previous
although 6 properties secured the fourth loan, only two were jurisprudence.
1 3
Art. 1142. A mortgage action prescribes after ten years. Art. 1141. Real actions over immovables prescribe after thirty years. This provision is without
2
Art. 1144. The following actions must be brought within ten years from the time the right of action prejudice to what is established for the acquisition of ownership and other real rights by
accrues: (1) upon a written contract; xxx prescription.
[not relevant to topic, but ruling of the case] The Notice of Appeal was Filed
Out of Time
1. According to Rule 41, the period to appeal is fifteen days from notice
of judgment, and shall only be interrupted by a timely motion for new
trial or reconsideration. Also, according to Rule 22, should an act be
done which effectively interrupts the running of the period, the
allowable period after such interruption shall start to run on the day
after the notice of the cessation of the cause thereof.
2. The requirement of notice of hearing of Sec. 4 and 5 of Rule 15, in
connection with Sec. 2 of Rule 37 is mandatory. When GSIS filed its
MR on the last day of the 15-day period, it only had one day from the
time it received a copy of the order denying the MR (or until Dec. 10)
within which to perfect its appeal. However, it filed its Notice of
Appeal on Dec. 11, one day out of time.
3. GSIS also failed to adequately explain his reasons to relax the
application of the Rules. Also, failure to perfect an appeal within the
reglementary period is not a mere technicality as it raises a
jurisdictional problem as it deprives the appellate court of jurisdiction
over the appeal.
Other Matters (in case he asks)

1. Petitioner filed their petition as Petition for Review under R45 with a
Petition for Certiorari under R65. However, they manifest that it is
filed pursuant to Rule 65 in relation to Rule 45. This Court, in
accordance with the liberal spirit and in the interest of justice, will
treat the petition as a petition for certiorari under R65 since it was
filed on time for both R45 or R65.
WHEREFORE, the petition is GRANTED. The assailed Court of Appeals

decision dated February 23, 2004 and Resolution dated May 25, 2004 are
REVERSED and SET ASIDE. The Decision dated August 9, 2002 of the
Regional Trial Court of Gapan, Nueva Ecija, Branch 34, which had become
final and executory, stands.

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Other Matters (in case he asks)

WHEREFORE, the petition is GRANTED. The assailed Court of Appeals

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