Facts:

The case involves B & I Realty Co., Inc. as the petitioner and Teodoro Caspe and Purificacion Aguilar Caspe as the respondents. The events leading to this case began with a parcel of land owned by Consorcia L. Venegas, located in Barrio Bagong-Ilog, Pasig, Rizal, covered by Transfer Certificate of Title (TCT) No. 247434. In an attempt to secure a loan from Rizal Commercial Banking Corporation (RCBC), Venegas executed a simulated deed of sale in favor of Arturo G. Datuin, who claimed to have connections with the bank. Datuin, however, fraudulently prepared a deed of absolute sale, forged the Venegases' signatures, and transferred the title to himself, resulting in the issuance of TCT No. 377734. He subsequently secured a loan of P75,000 from B & I Realty Co., Inc. using the property as collateral, with the mortgage annotated on the title.

The Venegases discovered the fraud when they attempted to sell the property to the Caspes for P160,000. They filed a complaint...

Facts:

1. Ownership and Initial Transaction:

• Consorcia L. Venegas owned a parcel of land in Barrio Bagong-Ilog, Pasig, Rizal, covered by TCT No. 247434.
• She delivered the title to Arturo G. Datuin and executed a simulated deed of sale to secure a loan from Rizal Commercial Banking Corporation (RCBC).
• Datuin issued a receipt acknowledging that the deed of sale was only a device to obtain the loan.

2. Fraudulent Scheme:

• Datuin forged a deed of absolute sale, making it appear that the Venegases sold the property to him.
• He transferred the title to his name (TCT No. 377734) and used it as collateral to secure a P75,000 loan from petitioner B & I Realty Co., Inc.

3. Discovery and Legal Action:

• Venegas discovered the fraud when she sold the property to respondents Teodoro and Purificacion Caspe under a conditional deed of sale.
• Venegas and her husband filed a complaint against Datuin for recovery of property and nullification of TCT No. 377734. The case was dismissed due to their counsel's failure to appear.

4. Compromise Agreement:

• Venegas, Datuin, and respondents entered into a compromise agreement where respondents agreed to assume Datuin's mortgage debt to petitioner.
• Datuin executed a deed of absolute sale in favor of respondents, who began paying the mortgage on February 12, 1976.

5. Second Legal Action:

• Venegas filed another case (Civil Case No. 36852) to annul the transfer of the property to Datuin and the mortgage in favor of petitioner.
• The trial court ruled in favor of respondents, declaring the sale between Venegas and Datuin void and ordering the cancellation of TCT No. 377734.

6. Appeal and Final Decision:

• Petitioner appealed to the Court of Appeals (CA), which ruled that the trial court's decision did not bind petitioner due to lack of due process.
• The CA affirmed the rest of the judgment, and respondents did not appeal the denial of their motion for reconsideration.

7. Demand and Foreclosure Action:

• Petitioner demanded payment from respondents, who refused to pay.
• Petitioner filed an action for judicial foreclosure of mortgage, which the Regional Trial Court (RTC) ruled in favor of petitioner.
• The CA reversed the RTC decision, holding that the action had prescribed.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Prescription and Waiver:

   • Under the 1997 Rules of Court, defenses not pleaded in a motion to dismiss or answer are deemed waived, but exceptions exist when the defense appears from the pleadings or evidence.
   • The CA correctly ruled that the defense of prescription was not waived, as it was raised in the answer and supported by evidence.

2. Prescriptive Period:

   • The ten-year prescriptive period for mortgage actions under Article 1142 of the Civil Code began on January 14, 1980, when respondents stopped paying the mortgage.
   • Petitioner filed the foreclosure action on August 27, 1993, beyond the prescriptive period.

3. Retroactive Application of Rules:

   • Procedural laws, such as the 1997 Rules of Court, may be applied retroactively to pending cases.
   • The CA correctly applied the 1997 Rules, which allowed the defense of prescription to be raised even if not included in the motion to dismiss.

4. Interruption of Prescription:

   • The filing of Civil Case No. 36852 did not interrupt the prescriptive period for the foreclosure action, as it was not an action for foreclosure but for annulment of title and nullification of the mortgage.
   • Petitioner could have protected its rights by filing a cross-claim for foreclosure in Civil Case No. 36852 but failed to do so.