Mercene v. Government Service Insurance System
REITERATIONFacts
The Antecedents: Petitioner Floro Mercene obtained two loans from respondent Government Service Insurance System (GSIS) in 1965 and 1968, secured by real estate mortgages on his property in Quezon City. The mortgages were duly registered and annotated on the title. Procedural History: Mercene filed a complaint for Quieting of Title against GSIS, alleging that GSIS never exercised its rights as mortgagee since 1968, that the mortgages constituted a cloud on his title, and that GSIS' right to foreclose had prescribed. The Regional Trial Court (RTC) granted Mercene's motion for judgment on the pleadings, declaring the mortgages ineffective and ordering their cancellation, ruling that GSIS' right to foreclose had prescribed after more than ten years. The Court of Appeals (CA) reversed the RTC decision, holding that the RTC erred in declaring prescription because Mercene's complaint did not allege the maturity date of the loans or any demand for payment, thus the cause of action had not yet accrued. The Petition: Mercene filed a petition for review on certiorari, assailing the CA's decision for considering issues not raised before the RTC, disregarding alleged judicial admissions by GSIS, and erroneously ruling that the mortgages had not yet prescribed.
Issue(s)
Whether the Court of Appeals erred in considering issues not raised before the trial court. Whether the Court of Appeals erred in disregarding the judicial admission allegedly made by GSIS. Whether the Court of Appeals erred in ruling that the real estate mortgages had yet to prescribe.
Ruling
The petition is denied. The Court of Appeals' decision is affirmed in toto.
Ratio Decidendi
On the issue of whether the Court of Appeals erred in considering issues not raised before the trial court: The Court ruled that the CA did not err. While Mercene claimed GSIS raised the issue of non-payment for the first time on appeal, the CA's ruling focused on the accrual of the cause of action and the failure to state a cause of action, which was an affirmative defense raised by GSIS in its answer. The CA did not dwell on the issue of non-payment itself but on the legal consequence of the lack of allegations regarding the maturity date and demand, which are crucial for determining the accrual of a cause of action. Therefore, the CA's consideration of these aspects was within the scope of the issues presented. On the issue of whether the Court of Appeals erred in disregarding the judicial admission allegedly made by GSIS: The Court held that Mercene's conclusion that GSIS judicially admitted that its right to foreclose had prescribed was erroneous. While material averments not specifically denied are deemed admitted, conclusions of fact and law stated in the complaint are not admitted by failure to deny. The allegation of prescription in Mercene's complaint was a mere conclusion of law, as it did not specify the facts and circumstances that would establish prescription. Therefore, even if GSIS' denial was not considered specific, only the fact that GSIS had not commenced any action would be deemed admitted, not the legal conclusion of prescription itself. On the issue of whether the Court of Appeals erred in ruling that the real estate mortgages had yet to prescribe: The Court affirmed the CA's ruling. For a cause of action to arise, there must be a right in favor of the plaintiff, an obligation on the part of the defendant, and an act or omission by the defendant violative of the plaintiff's right. Prescription runs from the time the cause of action accrues, not from the execution of the contract. In mortgage contracts, the prescriptive period for foreclosure begins when the obligation becomes due and demandable, or upon demand by the creditor. Mercene's complaint lacked allegations regarding the maturity date of the loans and whether demand was made, which are essential to determine the accrual of the cause of action. Thus, the RTC erred in ruling that prescription had set in based solely on the dates of loan execution and mortgage annotation.
Main Doctrine
The prescriptive period for filing an action to foreclose a mortgage commences from the time the cause of action accrues, which is when the obligation becomes due and demandable, or upon demand by the creditor, not from the date of the execution of the contract or annotation of the mortgage. A complaint for quieting of title based on prescription must allege facts demonstrating when the cause of action accrued, not merely state conclusions of law.