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Nunez Vs GSIS Family Bank

The bank filed an extrajudicial foreclosure against Leonilo Nuñez more than 19 years after his loans matured in 1978. Leonilo argued the foreclosure was void as the 10-year prescriptive period for foreclosing on a real estate mortgage had passed. The RTC agreed but the CA reversed, stating the bank's right to appeal should be upheld to prevent injustice. The SC ruled in favor of Leonilo, finding the mortgage foreclosure action had prescribed under Article 1142 of the Civil Code, as there was no evidence the bank undertook foreclosure proceedings within 10 years of the loans' maturity.

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186 views2 pages

Nunez Vs GSIS Family Bank

The bank filed an extrajudicial foreclosure against Leonilo Nuñez more than 19 years after his loans matured in 1978. Leonilo argued the foreclosure was void as the 10-year prescriptive period for foreclosing on a real estate mortgage had passed. The RTC agreed but the CA reversed, stating the bank's right to appeal should be upheld to prevent injustice. The SC ruled in favor of Leonilo, finding the mortgage foreclosure action had prescribed under Article 1142 of the Civil Code, as there was no evidence the bank undertook foreclosure proceedings within 10 years of the loans' maturity.

Uploaded by

Valerie Aileen Ancero
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Nuñez vs GSIS Family Bank

FACTS:
● Leonilo Nuñez obtained 3 loans from GSIS Family Bank and when the 3 loans were
maturing, he purportedly obtained a fourth loan.
● On maturity of the 3 loans on June 30, 1978, Leonilo executed a Promissory Note in the
amount of P1,539,135.00, due and payable on Dec. 27, 1978.

Loan Date Amount Maturity Title Subject of


Contracted the Real Estate
Mortgage

First Loan April 6, 1976 P55,900.00 June 30, 1978 NT-139575-A

Second Loan July 7, 1976 P127,000.00 June 30, 1978 NT-143002


NT-143003
NT-139575

Third Loan July 7, 1976 P105,900.00 June 30, 1978 NT-139575-A


(amended the
1st loan)

Fourth Loan June 30, 1978 P1,539,135.00 December 27, NT-145734


1978 NT-143001
NT-143004
NT-143005
NT-143006
NT-143007
● More than nineteen (19) years after Leonilo's June 30, 1978 Promissory Note matured
or on December 11, 1997, the bank undertook to extrajudicially foreclose the properties
which secured the first and second loans.
● In its petition for extrajudicial foreclosure, the bank alleged that Leonilo violated the
terms and conditions of the loans secured by the Real Estate Mortgages since June 30,
1978 when he failed, despite repeated demands, to pay his principal obligations, and
interest due thereon from Dec. 27, 1978, up to the time that the petition was filed
● The bank’s petition for EJF was granted and the auction took place with the bank as the
highest and only bidder in the amount of P33,026,100.00.
● On Sept. 1, 1999, two of the six parcels of land which secured the fourth loan was
auctioned with the bank as the highest bidder.
● Leonilo filed a complaint against GSIS Family Bank before the RTC of Gapan, Nueva
Ecija for Annulment of Extrajudicial Foreclosure Sale, Reconveyance and Cancellation
of Encumbrances.
○ Leonilo denied securing a “fourth loan” but nevertheless alleged that "for
purposes of the action, the same shall be assumed to have been validly
secured."
○ He invoked Art 1142 and 1144 of the Civil Code and contended that his first
three loans and the "fourth loan" matured on June 30, 1978 and December
27, 1978, hence, they had prescribed on June 28, 1988 and December 25,
1988, respectively. When, on December 11, 1997 and September 1, 1999,
then, the bank filed the Petitions for Extrajudicial Foreclosure of Mortgage,
Leonilo concluded that it no longer had any right as prescription had set in.
○ Leonilo contended that although six titles secured the purported “fourth loan” only
two titles were foreclosed and the mortgage was not annotated on the four other
mortgaged titles. He pointed out that the two properties were foreclosed more
than 11 years after the prescriptive period to foreclose had set in.
○ Leonilo died during the pendency of the trial, hence, his substitution by his heirs.
● RTC ruled in favor of Leonilo and declared the foreclosure as null and void.
● GSIS filed a motion for reconsideration but it did not comply with the notice of hearing
provision. It argued that it was due to the inadvertent deletion of the file of the handling
counsel. RTC denied the MR. GSIS filed a Notice of Appeal, but was dismissed for being
filed late. Hence, GSIS filed a petition for certiorari before the CA arguing that the rules
of procedure be liberally applied to avoid injustice and irreparable damage.
● CA ruled in favor of GSIS, stating that the right of appeal was a natural right, and that
the Notice of Appeal would better serve the ends, and prevent the miscarriage of justice.
ISSUE:
W/N the action for foreclosure of the REM has already prescribed
RULING:
● SC ruled that the action for foreclosure of REM has already prescribed.
● An action to foreclose a REM prescribes in 10 yrs, acc to Art. 1142. The running of such
period can be, however, interrupted. But in this case, there was no letter of demand,
court action or foreclosure proceeding that was undertaken prior to Dec. 11, 1997 and
Sept. 1, 1999.
● While GSIS alleged that it repeatedly demanded for payment, allegations are not proofs.
Unless a demand is proven, one cannot be held in default.
● GSIS contended that such demand would amount to a waiver of its right to foreclosure.
However, it could have initiated foreclosure proceedings early on, and not wait for more
than 19 years to do so.
● GSIS argues that what applies is Art. 1141, and not Art. 1142 of the Civil Code as Art.
1141 speaks of real actions over immovables or rights. Article 1142 of the Civil Code
speaks of a mortgage action which prescribes in ten years.
● However, the Court ruled that the strategic location of Article 1142 immediately
right after Article 1141 of the same Code, which speaks of real actions, indicates
that it is an exception to the rule in the previous article.
● In sum, an action for foreclosure of mortgage over real property prescribes in 10
years was already settled by previous jurisprudence.
○ In Buhat, et al. v. Besana, etc., et al. where an action was instituted on
December 6, 1952 for the foreclosure of mortgage over real property to secure
an obligation payable on or before May 31, 1930, this Court affirmed the
dismissal of the action by the then Court of First Instance as the action.
● Petition was granted and the decision of CA was reversed.

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