1.    Mercene insists that GSIS had judicially admitted that its right to foreclose the mortgage had prescribed. He assails that GSIS failed to specifically deny the allegations in his complaint,

Rule on the contention.


The contention is bereft of merit. Conclusions of fact and law stated in the complaint are not deemed admitted by the failure to make a specific denial. The allegation of prescription in Mercene's complaint is a mere conclusion of law.


2.    What is conclusion of law?


Conclusion of law is a legal inference on a question of law made as a result of a factual showing where no further evidence is required.


3.    What are the elements of cause of action?


In order for cause of action to arise, the following elements must be present: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of obligation of the defendant to the plaintiff.


4.    In a mortgage contract, when may prescription run?


In University of Mindanao, Inc. v. Bangko Sentral ng Pilipinas, et al., the Court clarified that prescription runs in mortgage contract from the time the cause of action arose and not from the time of its execution.


5.    When may the right to foreclose prescribe?


In Maybank Philippines, Inc. v. Spouses Tarrosa, 20 the Court explained that the right to foreclose prescribes after ten (10) years from the time a demand for payment is made, or when then loan becomes due and demandable in cases where demand is unnecessary.


6.    Is delinquency in payment equivalent to delay in the legal concept?


No. To be in default is different from mere delay in the grammatical sense, because it involves the beginning of a special condition or status which has its own peculiar effects or results.


7.    What are the elements to be in default?


In order that the debtor may be in default, it is necessary that: (a) the obligation be demandable and already liquidated; (b) the debtor delays performance; and (c) the creditor requires the performance judicially or extrajudicially, unless demand is not necessary -i.e., when there is an express stipulation to that effect; where the law so provides; when the period is the controlling motive or the principal inducement for the creation of the obligation; and where demand would be useless. Moreover, it is not sufficient that the law or obligation fixes a date for performance; it must further state expressly that after the period lapses, default will commence. Thus, it is only when demand to pay is unnecessary in case of the aforementioned circumstances, or when required, such demand is made and subsequently refused that the mortgagor can be considered in default and the mortgagee obtains the right to file an action to collect the debt or foreclose the mortgage.


8.    On 14 May 1968, Mercene contracted another loan with GSIS for the amount of P14,500.00. The loan was likewise secured by a real estate mortgage on the same parcel of land. The following day, the loan was registered and duly annotated on the title.

On 11 June 2004, Mercene opted to file a complaint for Quieting of Title against GSIS. He alleged that: since 1968 until the time the complaint was filed, GSIS never exercised its rights as a mortgagee; the real estate mortgage over his property constituted a cloud on the title; GSIS' right to foreclose had prescribed. In its answer, GSIS assailed that the complaint failed to state a cause of action and that prescription does not run against it because it is a government entity.

Rule on the contention.


The complaint failed to state a cause of action. It is undisputed that his complaint merely stated the dates when the loan was contracted and when the mortgages were annotated on the title of the lot used as a security. Conspicuously lacking were allegations concerning: the maturity date of the loan contracted and whether demand was necessary under the terms and conditions of the loan.

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