Mortgage action lapses after 10 years

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Persida Acosta

Persida Acosta

Dear PAO,
My father mortgaged our house and lot in 2001 to secure a P100,000 loan, which he obtained from his friend. They agreed that the loan should be paid within one year. Due to the financial crisis which my family was undergoing at that time, my father failed to pay the loan. But since my father’s friend went abroad a year after the said transaction, he was not able to collect the loan from my father. Just last year, his friend returned home. He reminded my father of the loan and if my father fails to pay, the mortgage will be foreclosed. After more than ten years, is my father still under obligation to pay the loan?
Carl Joseph

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Dear Carl Joseph,
As can be inferred from your letter, you want to know whether your father’s obligation to pay the loan he incurred in 2001 has already prescribed due to the inaction of his creditor to collect the same. The provision of the New Civil Code of the Philippines gives light to your question. Article 1142 thereof provides:

“Art. 1142. A mortgage action prescribes after ten years.”

According to the ruling of the Supreme Court in the case of Herminia Cando vs.

Sps. Aurora Olazo and Claudio Olazo (G.R. No. 16074, March 22, 2007), the prescriptive period of mortgage shall commence to run from the time the mortgagor defaults in the payment of his/her loan. The Supreme Court explains:

“Even from a cursory reading of the appeal, it is indelibly clear that the trial court committed an appalling blunder when it ruled that an action for foreclosure of mortgage prescribes after 10 years from the date of the mortgage contract. Under Article 1142 of the Civil Code, a mortgage action prescribes after 10 years. Jurisprudence, however, has clarified this rule by holding that a mortgage action prescribes after 10 years from the time the right of action accrued, which is obviously not the same as the date of the mortgage contract. Stated differently, an action to enforce a right arising from a mortgage should be enforced within 10 years from the time the right of action accrues; otherwise, it will be barred by prescription and the mortgage creditor will lose his rights under the mortgage. The right of action accrues when the mortgagor defaults in the payment of his obligation to the mortgagee.”

Legally speaking, the mortgage which was entered into by your father and his friend has already prescribed. Considering the lapse of more than 10 years since your father defaulted in paying his debts to his friend. This is the same reason why his friend cannot legally compel your father to pay him.

The obligation of your father to pay his friend has been reduced to moral obligation which cannot be enforced by the court. The fulfillment of this moral obligation depends purely on the dictates of the conscience of your father. This is set forth in Article 1423 of the said law:

“Art. 1423. Obligations are civil or natural. Civil obligations give a right of action to compel their performance. Natural obligations, not being based on positive law but on equity and natural law, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or rendered by reason thereof. Some natural obligations are set forth in the following articles.”

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to guide you with our opinion on the matter.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

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