28th December 2018 CASE DIGEST: G.R. No. 192971, FLORO MERCENE vs.

GOVERNMENT SERVICE INSURANCE SYSTEM,

FACTS:

On
19 January 1965, petitioner Floro Mercene  (Mercene)  obtained
a loan from respondent Government Service Insurance
System  (GSIS)  in
the amount of ₱29,500.00. As security, a real estate mortgage was
executed over Mercene's property in
Quezon City, registered under
Transfer Certificate of Title No. 90535. The mortgage was registered
and annotated on the title on
24 March 1965

On
14 May 1968, Mercene contracted another loan with GSIS for the amount
of ₱14,500.00. The loan was likewise secured by a
real estate
mortgage on the same parcel of land. The following day, the loan was
registered and duly annotated on the title.
On
11 June 2004, Mercene opted to file a complaint for Quieting of Title
against GSIS. He alleged that: since 1968 until the time
the
complaint was filed, GSIS never exercised its rights as a mortgagee;
the real estate mortgage over his property constituted a
cloud on the
title; GSIS' right to foreclose had prescribed. In its answer, GSIS
assailed that the complaint failed to state a cause
of action and
that prescription does not run against it because it is a government
entity.
During
the pre-trial conference, Mercene manifested that he would file a
motion for judgment on the pleadings. There being no
objection, the
RTC granted the motion for judgment on the pleadings.
In
its 15 September 2005 decision, the RTC granted Mercene's complaint
and ordered the cancellation of the mortgages
annotated on the title.
It ruled that the real estate mortgages annotated on the title
constituted a cloud thereto, because the
annotations appeared to be
valid but was ineffective and prejudicial to the title. The trial
court opined that GSIS' right as a
mortgagee had prescribed because
more than ten (10) years had lapsed from the time the cause of action
had accrued. The R
TC stated that prescription ran against GSIS
because it is a juridical person with a separate personality, and
with the power to
sue and be sued.
In
its 30 January 2015 decision, the CA reversed the RTC decision. The
appellate court posited that the trial court erred in
declaring that
GSIS' right to foreclose the mortgaged properties had prescribed. It
highlighted that Mercene's complaint neither
alleged the maturity
date of the loans, nor the fact that a demand for payment was made.
The CA explained that prescription
commences only upon the accrual of
the cause of action, and that a cause of action in a written contract
accrues only when
there is an actual breach or violation. Thus, the
appellate court surmised that no prescription had set in against GSIS
because it
has not made a demand to Mercene.

Mercene
moved for reconsideration, but the same was denied by the CA in its
assailed 7 April 2011 resolution.

ISSUE:

(1)
Whether or not the CA erred in considering issues not
raised before the trial court;

(2)
Whether or not the CA errred in disregarding the judicial admission
allegedly made by GSIS

(3)
Whether or not the CA erred in ruling that the real estate mortgages
had yet to prescribe.
HELD:

(1)
NO.

Mercene
assails the CA decision for entertaining issues that were not
addressed by the trial court. He claims that for the first
time on
appeal, GSIS raised the issue on whether the loans were still
effective in view of his nonpayment. A reading of the CA
decision,
however, reveals that the appellate court did not dwell on the issue
of nonpayment, but instead ruled that prescription
had not commenced
because the cause of action had not yet accrued. Hence, it concluded
that the complaint failed to state a
cause of action. The appellate
court did not focus on the question of payment precisely because it
was raised for the first time
on appeal. It is noteworthy that, in
its answer, GSIS raised the affirmative defense that Mercene's
complaint failed to state a
cause of action.

(2)
YES.

The
Court agrees with Mercene that material averments not specifically
denied are deemed admitted. Nonetheless, his
conclusion that GSIS
judicially admitted that its right to foreclose had prescribed is
erroneous. It must be remembered that
conclusions of fact and law
stated in the complaint are not deemed admitted by the failure to
make a specific denial. This is true
considering that only ultimate
facts must be alleged in any pleading and only material allegation of
facts need to be specifically
denied.

A
conclusion of law is a legal inference on a question of law made as a
result of a factual showing where no further evidence is
required.
The allegation of prescription in Mercene's complaint is a mere
conclusion of law.

In
the same vein, labelling-an obligation to have prescribed without
specifying the circumstances behind it is a mere conclusion
of law.
As would be discussed further, the fact that GSIS had not instituted
any action within ten (10) years after the loan had
been contracted
is insufficient to hold that prescription had set in. Thus, even if
GSIS' denial would not be considered as a
specific denial, only the
fact that GSIS had not commenced any action, would be deemed admitted
at the most. This is true
considering that the circumstances to
establish prescription against GSIS have not been alleged with
particularity.

(3) NO.

In  University
of Mindanao, Inc. v. Bangko Sentral ng Pilipinas, et al., 
the
Court clarified that prescription runs in mortgage
contract from the
time the cause of action arose and not from the time of its
execution.

In Maybank
Philippines, Inc. v. Spouses Tarrosa, 20 [https://lawphil.net/judjuris/juri2018/jan2018/gr_192971_2018.html#fnt20]  the
Court
explained that the right to foreclose prescribes after ten (10)
years from the time a demand for payment is made, or when then
loan
becomes due and demandable in cases where demand is unnecessary.

Thus,
applying the pronouncements of the Court regarding prescription on
the right to foreclose mortgages, the Court finds that
the CA did not
err in concluding that Mercene's complaint failed to state a cause of
action. It is undisputed that his complaint
merely stated the dates
when the loan was contracted and when the mortgages were annotated on
the title of the lot used as a
security. Conspicuously lacking were
allegations concerning: the maturity date of the loan contracted and
whether demand was
necessary under the terms and conditions of the
loan.
As
such, the RTC erred in ruling that GSIS' right to foreclose had
prescribed because the allegations in Mercene's complaint were
insufficient to establish prescription against GSIS. The only
information the trial court had were the dates of the execution of
the
loan, and the annotation of the mortgages on the title. As
elucidated in the above-mentioned decisions, prescription of the
right
to foreclose mortgages is not reckoned from the date of
execution of the contract. Rather, prescription commences from the
time the cause of action accrues; in other words, from the time the
obligation becomes due and demandable, or upon demand
by the
creditor/mortgagor, as the case may be.
In
addition, there was no judicial admission on the part of GSIS with
regard to prescription because treating the obligation as
prescribed,
was merely a conclusion of law. It would have been different if
Mercene's complaint alleged details necessary to
determine when GSIS'
right to foreclose arose, i.e., date of maturity and whether demand
was necessary.
WHEREFORE,
the petition is DENIED. The 29 April 2010 Decision and 20 July 2010
Resolution of the Court of Appeals  (CA) in
CAG. R.
CV No. 86615 are AFFIRMED in toto.

Posted 28th December 2018 by legallymanila