Case Summary (G.R. No. 242570)
Key Dates
- Mortgage inscriptions: September 18, 1963; February 21, 1968; August 14 & October 8, 1973; March 18, 1974; November 4, 1975
- Death of Manuel V. Abello Sr.: October 14, 1998
- Complaint filed: November 21, 2008
- RTC decision: August 26, 2014
- CA decision: January 31, 2018
- CA resolution denying reconsideration: September 4, 2018
- Supreme Court decision: September 18, 2019
Applicable Law
- 1987 Philippine Constitution
- 1997 Rules of Civil Procedure, Rule 45 (petition for review on certiorari)
- New Civil Code, Article 1169 (prescription in obligations)
- Rules of Court, Rules 16, 132 (motions to dismiss; presentation of evidence)
Factual Background
The respondents, as heirs of Manuel V. Abello Sr. and Elenita V. Abello, owned three parcels of land in Negros Occidental covered by TCT Nos. T-127632, T-82974 and T-58311. Beginning in 1963, they executed successive real estate mortgages (REMs) in favor of PNB to secure various credit accommodations. The last REM entry (Entry No. 80024) secured a ₱227,000 loan on November 4, 1975. Manuel died in 1998; his heirs appointed Elenita as estate administrator in 2003. No foreclosure or demand was made by PNB thereafter.
RTC Ruling
The RTC granted respondents’ complaint for cancellation and discharge of mortgage liens, finding that the right to foreclose accrued on March 19, 1984 (for TCT No. T-127632) and on November 5, 1985 (for the other two titles). Because more than ten years had lapsed without action, the mortgages were held prescribed and ordered the Register of Deeds to cancel all annotated encumbrances. PNB’s counterclaim was dismissed.
CA Ruling
On certiorari, the CA denied PNB’s petition and affirmed the RTC in toto. It ruled that prescription ran from the date of default (December 31, 1985) and that PNB’s accounting notice of January 8, 2002 came too late. The CA also held that the complaint sufficiently alleged a cause of action without detailing loan terms or maturity.
Issue
Whether the cancellation orders were proper, given that respondents failed to allege and prove the dates when their mortgage loans matured or when demand was made—critical facts to determine accrual and prescription of the right to foreclose.
Supreme Court Ruling
The petition is GRANTED. Under Article 1169 of the New Civil Code and relevant jurisprudence, an action to foreclose a REM does not begin to prescribe upon inscription but from the date the underlying loan becomes due or from demand where required. A cause of action must allege (and, at trial, prove) the loan
...continue readingCase Syllabus (G.R. No. 242570)
Antecedent Facts
- On November 21, 2008, respondents filed a Complaint for Cancellation/Discharge of Mortgage Liens before RTC, Bacolod City, Branch 49.
- The subject properties are covered by TCT Nos. T-127632, T-82974, and T-58311, registered in the names of spouses Manuel and Elenita Abello.
- Encumbrances on TCT No. T-127632 consist of multiple real estate mortgages in favor of the petitioner, with the following entries:
• Entry No. 91194 (P 5,890.00 loan) — inscribed August 9, 1968 (mortgage dated September 18, 1963)
• Entry No. 131237 (P 6,600.00 loan) — inscribed February 22, 1968 (mortgage dated February 21, 1968)
• Entry No. 181203 (P 50,000.00 loan) — inscribed August 23, 1973 (mortgage dated August 14, 1973)
• Entry No. 182910 (increase to P 94,200.00) — inscribed October 11, 1973 (amendment of October 8, 1973)
• Entry No. 188486 (P 75,000.00 credit limit increase) — inscribed March 18, 1974 (Deed of Agreement dated March 18, 1974) - On TCT Nos. T-82974 and T-58311, a single real estate mortgage for P 227,000.00 was annotated under Entry No. 80024, executed October 30, 1975, and inscribed November 4, 1975.
- Manuel Abello died on October 14, 1998. His heirs executed a Declaration of Heirship on June 5, 2003, naming Elenita as estate administrator.
- Respondents argued that no action was taken by PNB since 1975, thus the right to enforce the mortgages had prescribed, entitling them to cancellation of the encumbrances.
Ruling of the Regional Trial Court
- Decision dated August 26, 2014, ordered:
• Cancellation of all mortgage entries (Nos. 91194, 131237, 181203, 182910, 188486) on TCT No. T-127632.
• Cancellation of Entry No. 80024 on TCT Nos. T-82974 and T-58311.
• Dismissal of PNB’s counterclaim.
• No award of costs. - The RTC held that prescription ran from date of inscription:
• Mortgage on TCT No. T-127632 became demandable March 19, 1984.
• Mortgages on TCT Nos. T-82974 a