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    Active Wood

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    CE Sher
    1) Active Wood Products Co. (AWP) took out loans from State Investment House Inc. (SIHI) secured by real estate mortgages. AWP defaulted on payments starting in 1981. SIHI attempted extrajudicial foreclosure in 1983 but was prevented by a temporary restraining order from the court. 2) AWP argued the foreclosure could not proceed due to novation of the loan terms by SIHI accepting late payments of interest and charges. SIHI countered that the loans were restructured multiple times upon AWP's request. 3) The Supreme Court ruled that SIHI's right to foreclose had not prescribed, as the 10-year pres

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    Active Wood

    Uploaded by

    CE Sher
    53 views2 pages
    1) Active Wood Products Co. (AWP) took out loans from State Investment House Inc. (SIHI) secured by real estate mortgages. AWP defaulted on payments starting in 1981. SIHI attempted extrajudicial foreclosure in 1983 but was prevented by a temporary restraining order from the court. 2) AWP argued the foreclosure could not proceed due to novation of the loan terms by SIHI accepting late payments of interest and charges. SIHI countered that the loans were restructured multiple times upon AWP's request. 3) The Supreme Court ruled that SIHI's right to foreclose had not prescribed, as the 10-year pres

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    1) Active Wood Products Co. (AWP) took out loans from State Investment House Inc. (SIHI) secured by real estate mortgages. AWP defaulted on payments starting in 1981. SIHI attempted extrajudicial foreclosure in 1983 but was prevented by a temporary restraining order from the court. 2) AWP argued the foreclosure could not proceed due to novation of the loan terms by SIHI accepting late payments of interest and charges. SIHI countered that the loans were restructured multiple times upon AWP's request. 3) The Supreme Court ruled that SIHI's right to foreclose had not prescribed, as the 10-year pres

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    53 views2 pages

    Active Wood

    Uploaded by

    CE Sher
    1) Active Wood Products Co. (AWP) took out loans from State Investment House Inc. (SIHI) secured by real estate mortgages. AWP defaulted on payments starting in 1981. SIHI attempted extrajudicial foreclosure in 1983 but was prevented by a temporary restraining order from the court. 2) AWP argued the foreclosure could not proceed due to novation of the loan terms by SIHI accepting late payments of interest and charges. SIHI countered that the loans were restructured multiple times upon AWP's request. 3) The Supreme Court ruled that SIHI's right to foreclose had not prescribed, as the 10-year pres

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    © All Rights Reserved
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    Prescription

    G.R. No. 240277 |October 14, 2020 | DELOS SANTOS, J. | Second Division

    1. ACTIVE WOOD PRODUCTS CO., INC., REPRESENTED BY ITS PRESIDENT AND CHAIRMAN, CHUA TIONG
    SIO, PETITIONER, VS. STATE INVESTMENT HOUSE, INC., RESPONDENT.

    HEIRS OF RODRIGUEZ, INTERVENOR.

    Nature of Action: Complaint for Injunction

    Facts: Active Wood Products Co. (AWP) filed a Complaint for Injunction with Prayer for Temporary
    Restraining Order and Writ of Preliminary Injunction against State Investment House Inc. (SIHI) to
    prevent the extrajudicial foreclosure of the real estate mortgage it had executed in favor of SIHI. AWP
    alleged that the real estate mortgage contracts were given as securities for the payment of credit
    accommodations in the total amount of P6,420,490. AWP asserted that by allowing it to pay the interest
    and related charges even after the maturity dates of the promissory notes that it had executed in favor
    of SIHI, the latter has expressly novated the terms and conditions stipulated in those documents. Thus, it
    claimed that SIHI could not foreclose the mortgaged properties based on the stipulations in the original
    real estate mortgage contracts and promissory notes particularly the acceleration clause which rendered
    due and demandable the entire loan obligation if not paid on the maturity dates.

    The RTC then issued a TRO and then ordered AWP to post an injunction bond of P6,000,000.
    Then issued another order that restrained the foreclosure to maintain status quo. SIHI countered that
    the real estate mortgage contracts over a parcel of land were given as securities for the payment of
    credit accommodations which obligations have been restructured many times. AWP executed Financing
    Agreements whereby AWP agreed to pay SIHI additional 12% per annum in case of default in the
    payment of the obligations on their respective maturity dates and a penalty of a minimum amount of
    P50 or 2% per month, whichever is higher,]as liquidated damages. On the allegation of novation, it
    maintained that AWP's original obligation was not extinguished because it was restructured several
    times.

    Meanwhile, on 28 June 1983, SIHI filed a Petition for Extrajudicial Foreclosure with the Office of
    the Provincial Sheriff of Bulacan. On November 28, 1983, the RTC directed the issuance of a Writ of
    Preliminary Injunction however the sheriff still proceeded with the foreclosure sale. The RTC nullified
    the auction sale conducted by Sheriff Evangelista but denied the motion to cite Sheriff Evangelista in
    contempt of court. RTC issued a Writ of Preliminary Injunction in favor of AWP and ordered SIHI and ex
    sheriff to refrain from proceeding with the foreclosure sale.

    Issue: Whether or not SIHI’s right to foreclose has prescribed

    Held: No. It is settled that SIHI's right of action started to accrue in 1981, when AWP defaulted in paying
    its obligation. AWP's defaults can be gleaned from the following undisputed facts: (1) AWP paid interest
    and related charges even after the maturity dates; (2) the obligation had to be restructured several
    times upon the request of AWP; and (3) AWP sought extensions of payment on its unpaid obligation.
    Under Article 1155, the prescription of action is interrupted when: (1) they are filed before the court; (2)
    there is a written extrajudicial demand by the creditors; and (3) there is any written acknowledgment of
    the debt by the debtor. The Court agrees with the conclusion of the CA that the 10-year prescriptive
    period was interrupted on June 7, 1982 when AWP filed a complaint for injunction to restrain the
    intended foreclosure and commenced to run again on September 5, 2016 when the RTC dismissed the
    complaint and lifted the writ of preliminary injunction. In sum, the Court finds that SIHI's right to
    foreclose has not prescribed.

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