G.R. No. 97218 - Provident Savings Bank vs. Court of Appeals

Provident Savings Bank (petitioner) filed a petition for certiorari to rectify the Court of Appeals’ decision barring it from foreclosing a real estate mortgage due to prescription.
Wilson Chua (private respondent) was the adverse party, claiming rights as successor-in-interest of the original mortgagors.
The underlying case involved Civil Case No. 977-NW filed in the Regional Trial Court (RTC) of Malabon, where the RTC directed Provident Savings Bank to pay Lorenzo and Liwayway Guarin’s personal obligation to Wilson Chua and ordered the return of the mortgaged title to Chua.

On February 16, 1967, the spouses Lorenzo K. Guarin and Liwayway J. Guarin obtained a loan of P62,500 from Provident Savings Bank, payable by June 20, 1967.
The loan was secured by a real estate mortgage over a parcel of land covered by Original Certificate of Title (OCT) No. 177014.

In September 1972, Provident Savings Bank was placed under receivership by the Central Bank of the Philippines, lasting until July 27, 1981, when the Supreme Court lifted the receivership.
During receivership, the bank was prohibited from conducting business operations.

In December 1984, Lorenzo Guarin requested a recomputation of his loan account and postponement of a foreclosure sale scheduled for December 27, 1984.
In February 1986, a Statement of Account indicated two outstanding accounts related to Lorenzo Guarin and L.K. Guarin Manufacturing Co., Inc.
Lorenzo Guarin expressed readiness to pay the amount of P591,088.80, but Provident Savings Bank refused to release the title even after payment, as it also secured the corporate debts.
Wilson Chua claimed he acquired the mortgaged property via an Absolute Sale with Assumption of Mortgage executed on July 10, 1986, agreeing to assume the mortgage obligations amounting to P591,088.80.
Chua requested Provident Savings Bank to release the mortgage and title to him as successor-in-interest, but the bank conditioned such release on settling the corporate obligations as well.
On August 21, 1986, Chua filed a complaint to compel the bank to release the mortgage and title, and to pay damages and attorney’s fees.

The RTC ruled in favor of Wilson Chua and directed Provident Savings Bank to pay the Guarins’ personal obligation and release the mortgage and title.
Both parties appealed. The Court of Appeals reversed the RTC ruling regarding Provident Savings Bank’s obligation to collect, holding the mortgage had prescribed and denying the foreclosure right due to lapse of prescription.
The Court of Appeals also found Wilson Chua was a real party-in-interest but concluded there was no legal interruption of prescription during the bank’s receivership, rejecting the argument that the period was a caso fortuito (force majeure).
It held that the bank’s acceptance of payment requirements from Wilson Chua after substitution of debtor did not amount to consent or novation, thus irrelevant to interrupt prescription.
The bank’s motions for reconsideration and new trial based on newly discovered evidence were denied by the Court of Appeals.

The bank argued that the receivership period was similar to force majeure (caso fortuito) and should not be counted against it in computing prescription.
The bank contended that foreclosure constitutes “doing business” and the Monetary Board’s prohibition effectively suspended the running of prescription.
It also argued that Wilson Chua’s written acceptance to pay the mortgage on August 6, 1986 represented an express acknowledgment of the debt, thus interrupting prescription anew.

Whether the period during which Provident Savings Bank was under receivership (1972-1981) should be considered as a case of force majeure and thus not counted in the prescription period to foreclose the mortgage.
Whether the prescription to foreclose the mortgage had already extinguished Provident Savings Bank’s right to enforce the mortgage due to lapse of ten (10) years from maturity.
Whether Wilson Chua, as successor-in-interest and purchaser of the mortgaged property, has the legal personality to compel the bank to release the mortgage and title.
Whether the substitution of debtor through the Deed of Absolute Sale with Assumption of Mortgage created a novation that affects Provident Savings Bank’s rights.
Whether Wilson Chua’s acknowledgment to pay the loan serves to interrupt prescription.