- Petitioner
- Sps. Cesar A. Larrobis, Jr.
- Respondent
- Philippine Veterans Bank
- Citation
- G.R. No. 135706
- Court
- Supreme Court
- Division
- Second Division
- Ponente
- Austria-Martinez, J.
- Decided
- October 1, 2004
Summary
Spouses Larrobis borrowed P135,000 from Philippine Veterans Bank in 1980, secured by real estate mortgage due in 1981. When the bank faced financial difficulties and was placed under receivership from 1985-1992, it failed to foreclose within the 10-year prescriptive period. The bank eventually foreclosed in 1995, fourteen years after the loan matured. The RTC upheld the foreclosure, ruling that receivership constituted a fortuitous event interrupting prescription. The Supreme Court reversed, holding that bank receivership does not interrupt the prescriptive period since receivers are legally obligated to foreclose mortgages under the Central Bank Act. The Court also ruled that a 1985 demand letter for insurance premiums could not interrupt prescription as it pertained to obligations outside the original mortgage contract. The foreclosure was declared null and void.