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Manila
SECOND DIVISION
[ G.R. No. 255239. February 13, 2023 ]
SPOUSES TOMAS LIBIRAN AND POTENCIANA FELICIANO (DECEASED), HEREIN REPRESENTED BY
THEIR ATTORNEY-IN-FACT, RONING SANTOS, PETITIONERS, VS. ELISAN CREDIT CORPORATION,
RESPONDENT.
DECISION
LOPEZ, J., J.:
This Court resolves the Petition for Review on Certiorari1 filed assailing the Decision2 and the Resolution3 of the
Court of Appeals (CA), which affirmed with modification the Regional Trial Court (RTC) Decision4 in favor of Elisan
Credit Corporation (Elisan).
The Antecedents
On January 8, 2003, Spouses Tomas Libiran and Potenciana Feliciano (Spouses Libiran) obtained a loan from
Elisan in the amount of PHP 200,000.00. This was secured by a promissory note and a real estate mortgage
(mortgage contract) over a parcel of land covered by Transfer Certificate of Title (TCT) No. T-405042 (M) (subject
property). The mortgage was annotated on the title.5 It was stipulated in the mortgage contract that the property
shall stand as security not only for the payment of the loan but also for all other obligations that they may
subsequently incur.6
On December 9, 2005, Spouses Libiran obtained another loan from Elisan in the amount of PHP 609,000.00 but
they were only able to pay PHP 293,000.00. Likewise, the interest due starting December 5, 2006 remained
unpaid.7
Thereafter, on March 9, 2006, Spouses Libiran obtained another loan in the amount of PHP 118,000.00 but they
were only able to pay PHP 13,500.00. In addition, interest beginning August 7, 2006 remained unpaid.8
On June 15, 2006, Spouses Libiran again obtained a loan for PHP 474,000.00 from Elisan but they only paid
PHP 9,120.00. Interest due beginning June 11, 2007 was also not settled.9
Despite repeated demands, Spouses Libiran failed to pay their obligation totaling PHP 885,380.00, as well as
the interests and penalties due.10 As a result, Elisan instituted a complaint for judicial foreclosure under Rule 68 of
the Rules of Court with the RTC of Quezon City.11
In their Answer,12 Spouses Libiran denied the accusations against them and insisted that they did not owe Elisan
any money.13 They contended that the venue of the action has been improperly laid considering that the subject
property is located in Bagong Barrio, Pandi, Bulacan.14 They claimed that they were made to sign blank documents,
making it appear that they obtained a loan despite not receiving any money from Elisan.15 They also averred that
Elisan was merely holding the owner's duplicate copy of the subject property in trust for the loan of their daughter,
Florentina Libiran Santos (Florentina), and son-in-law, Roning Santos (Roning), which was already paid in
full.16 They insisted that they did not mortgage the subject property to Elisan17 nor appear before any notary public to
acknowledge the mortgage contract.18 Spouses Libiran averred that the mortgage contract, promissory notes, and
vouchers were all falsified.19 By way of counterclaim, they prayed that they be awarded moral and exemplary
damages.20
Then, the RTC rendered its Decision,21 the dispositive portion of which states:
WHEREFORE, judgment is rendered in favor of plaintiff Elisan Credit Corporation and against
defendants Spouses Tomas Libiran and Potenciana Feliciano. Defendants are hereby ordered to pay
the plaintiff, within a period of 90 to 120 days from the entry of judgment, the following:
1. [PHP] 885,380.00 representing the balance of Defendants' principal obligation;
2. the sum equivalent to 26% interest per annum plus 2.5% penalty per month of [PHP]
316,000.00 from December 5, 2006, until fully paid;
3. the sum equivalent to 26% interest per annum plus 2.5% penalty per month of [PHP]
104,500.00 from August 7, 2006, until fully paid;
4. the sum equivalent to 26% interest per annum plus 2.5% penalty per month of [PHP]
464,880.00 from June 11, 2007, until fully paid;
5. [PHP] 100,000.00 as attorney's fees.
In the event of default of such payment/s the property covered by TCT No. T-405042 (M), subject of
the Real Estate Mortgage dated January 8, 2003 shall be sold at public auction to satisfy the judgment
upon motion by the plaintiff.
Accordingly, the Defendants['] counter-claims are dismissed.
SO ORDERED.22
The RTC found that Elisan was able to prove its claim by preponderance of evidence that Spouses Libiran
obtained several loans that they failed to pay in full.23 It noted that the evidence presented by Spouses Libiran
pertained to the loans that Roning obtained and the payments he made to Elisan, and not their own loan
obligation.24
The RTC declared that since the promissory notes clearly set forth stipulations on interests and penalties, the
same shall be applied to the outstanding obligations of Spouses Libiran.25
On appeal, the CA rendered its Decision,26 the dispositive portion of which states:
WHEREFORE, the appeal is DISMISSED. The Decision dated January 20, 2017
and Order dated June 2, 2017 of the Regional Trial Court of Quezon City, Branch 215 in Civil Case
No. Q-09-6539 are hereby AFFIRMED with the modification that the interest imposed in
said Decision is hereby reduced to 12% per annum.
SO ORDERED.27 (Emphasis in the original)
The CA held that the case was properly filed with the RTC. It reasoned that since the alternative cause of action
involved the collection of a sum of money, the amount of money sought to be collected was beyond the jurisdictional
threshold set by Section 19 of Batas Pambansa Blg. 129, as amended, for first level courts in Metro Manila.
Likewise, the CA declared that Quezon City is the exclusive venue for the case as it is the place where the mortgage
contract was executed.28 It added that the failure to pay the correct amount of docket fee should not give rise to the
dismissal of the complaint.29
The CA found that Elisan proved by preponderance of evidence its claim against Spouses Libiran through the
promissory notes, vouchers, mortgage contract, and the testimony of Joselito Manalac, vice-president of
Elisan.30 For the CA, the bare denial and self-serving statements of Roning, the sole witness for Spouses Libiran,
paled in comparison with the evidentiary weight that Elisan's documentary evidence had.31
On the claim of Spouses Libiran that the notarization of the mortgage contract was defective, the CA explained
that the noted irregularities only reduced the document into a private document and that it remained on a higher
evidentiary plane than their self-serving allegations.32
As regards the interest, the CA found the interest rate of 26% per annum, on top of the stipulated penalty of
2.5% per month, unconscionable. Thus, it reduced the interest to 12% per annum.33
In a Resolution,34 the CA denied the motion for reconsideration filed by Spouses Libiran for lack of merit.35
Aggrieved, Spouses Libiran filed the present Petition raising the following arguments: (1) the proper venue of an
action for foreclosure of real estate mortgage is in the place where the subject of the mortgage is situated;36 (2) the
court lacks jurisdiction over the case due to the plaintiff's failure to allege in the Complaint the assessed value of the
subject lot;37 (3) non-payment of correct docket fee due to Elisan's failure to state the assessed value of the subject
land should lead to the dismissal of the case for lack of jurisdiction;38 (4) they did not apply for a loan and the
certificate of title to the subject property registered in their names is with Elisan as additional security for the loans
Roning obtained and had already paid in full;39 and (5) the alleged mortgage contract is a void accessory contract
because the Securities and Exchange Commission certified that Elisan does not have any license nor authority to
engage in lending and financing business.40
Meanwhile, in the Comment41 filed by Elisan, it maintained that (1) the filing of the case in Quezon City was
proper, and Spouses Libiran cannot belatedly challenge the propriety of the venue after a decision had already been
rendered by the RTC;42 (2) the determination of the assessed value of the subject property is not necessary for the
assessment of correct docket fees as the complaint for judicial foreclosure of mortgage is incapable of pecuniary
estimation, thus falling within the jurisdiction of the RTC;43 (3) the bare allegation of Spouses Libiran's lone witness
that their loan application was denied or that they did not obtain any loan cannot overcome the evidence presented
by Elisan;44 and (4) the Securities and Exchange Commission issued its September 22, 2017 Decision granting the
appeal of Elisan and imposing only a fine of PHP 50,000.00 for operating two unauthorized branches.45
In addition to what Spouses Libiran already raised in their Petition, they insisted in their Reply46 that (1) the
issue of improper venue was properly raised in the affirmative defenses embodied in their Answer and raised again
before the CA;47 and (2) the venue stipulation in the promissory note providing that the action should be instituted in
Quezon City does not apply in this case because they did not sign any promissory note48 and there is no venue
stipulation in the mortgage contract.49
Issue
The central issue to be resolved in this case is whether the RTC of Quezon City has jurisdiction over the
complaint for judicial foreclosure of mortgage.
This Court's Ruling
The Petition is meritorious. 1aшphi1
A complaint for judicial foreclosure of
mortgage is a real action and the assessed
value of the property determines the
jurisdiction of the court
It is a hornbook doctrine that jurisdiction over the subject matter is conferred by law.50 It is determined through
the allegations in the complaint comprising a concise statement of the ultimate facts of the plaintiff's cause of
action.51 The defense of lack of jurisdiction over the subject matter may be raised at any stage of the proceedings,
whether during the trial or on appeal.52 Here, Spouses Libiran first raised this argument in their Answer53 and
reiterated it on appeal to the CA and this Court.54
In determining whether the court has the authority to hear and decide a case, it is necessary to examine the
allegations in the Complaint, the relevant portion of which states:
WHEREFORE, plaintiff respectfully prays from this Honorable Court, as follows:
1. That judgment be rendered in favor of the plaintiff and against the Defendants, ordering the latter
to pay within the time prescribed in Section 2, Rule 68 of the New Rules of Civil Procedure, the
following:
a) The amount of [PHP] 885,380.00 representing the balance of Defendants' principal obligation;
b) The sum equivalent to 26% per annum as interest and 2.5% per month as penalties,
respectively, on the following amounts:
i. the amount of [PHP] 316,000.00, from December 5, 2006, until fully paid;
ii. the amount of [PHP] 104,500.00, from August 7, 2006, until fully paid;
iii. the amount of [PHP] 464,880.00.00, from June 11, 2007 until fully paid;
c) The sum of [PHP] 100,000.00 as reasonable Attorney's Fees;
2. That in default of payment of the claims above set forth, the mortgaged property with all the
buildings and improvements thereon be ordered sold at public auction and the proceeds of the sale
applied to the payment of the total indebtedness due the plaintiff, and, in case said proceeds should not
cover the full amount of the Defendants' indebtedness, that judgment be further rendered and
execution issued for the deficiency, against any other property which Defendants may have.
Plaintiff likewise prays for such other measures of relief as may be just and proper in the
premises.55
This Court recognized in Russell v. Vestil56 that an action for foreclosure of mortgage is an action incapable of
pecuniary estimation, and thus, within the jurisdiction of the RTC.57 This is pursuant to Section 19(1) of Batas
Pambansa Blg. 129, as amended by Republic Act No. 7691, which states:
Section 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise exclusive original
jurisdiction.
1aшphi1
(1) In all civil actions in which the subject of the litigation is incapable of pecuniary
estimation[.] (Emphasis in the original)
However, in identifying the tribunal with proper jurisdiction over the case, this Court must also consider that
while a foreclosure suit is incapable of pecuniary estimation, it is also a real action. In Roldan v. Spouses
Barrios,58 this Court explained that:
... Foreclosure is but a necessary consequence of non-payment of the mortgage indebtedness. In a
real estate mortgage[,] when the principal obligation is not paid when due, the mortgagee has the
right to foreclose the mortgage and to have the property seized and sold with the view of applying
the proceeds to the payment of the obligation. Therefore, the foreclosure suit is a real action so far
as it is against property, and seeks the judicial recognition of a property debt, and an order for the
sale of the res.59 (Emphasis supplied; citations omitted)
It must be pointed out that in arguing that the Complaint was properly instituted with the RTC as a foreclosure
suit is an action incapable of pecuniary estimation, Elisan relied on Russell. however, a complete reading
of Russell will show that this Court made a clarification that a foreclosure suit is a real action and that it is important
to allege the assessed value. Noticeably, in Russell, this Court held that:
In Singsong vs. Isabela Sawmill, we had the occasion to rule that:
[I]n determining whether an action is one the subject matter of which is not capable
of pecuniary estimation this Court has adopted the criterion of first ascertaining the
nature of the principal action or remedy sought. If it is primarily for the recovery of a
sum of money, the claim is considered capable of pecuniary estimation, and whether
jurisdiction is in the municipal courts or in the courts of first instance would depend on
the amount of the claim. However, where the basic issue is something other than the
right to recover a sum of money, where the money claim is purely incidental to, or a
consequence of, the principal relief sought, this Court has considered such actions as
cases where the subject of the litigation may not be estimated in terms of money, and
are cognizable exclusively by courts of first instance (now Regional Trial Courts).
Examples of actions incapable of pecuniary estimation are those for specific performance, support,
or foreclosure of mortgage or annulment of judgment; also[,] actions questioning the validity of a
mortgage, annulling a deed of sale or conveyance and to recover the price paid and for rescession,
[sic] which is a counterpart of specific performance.
While actions under Sec. 33(3) of B.P. 129 are also incapable of pecuniary estimation, the law
specifically mandates that they are cognizable by the MTC, METC, or MCTC where the assessed value
of the real property involv ed does exceed [PHP] 20,000.00 in Metro Manila, or [PHP] 50,000.00, if
located elsewhere. If the value exceeds [PHP] 20,000.00 or [PHP] 50,000.00 as the case may be, it is
the Regional Trial Courts which have jurisdiction under Sec. 19(2)[.]60 (Citations omitted)
In Roldan, this Court underscored the significance of the last paragraph quoted from the case of Russell in
understanding the nature of an action for judicial foreclosure of mortgage. This Court clarified that:
[W]hile civil actions which involve title to, or possession of, real property, or any interest therein, are
also incapable of pecuniary estimation as it is not for recovery of money, the court's jurisdiction will
be determined by the assessed value of the property involved.61
As a rule, in real actions, jurisdiction is determined by the assessed value of the res.62 In this regard, the
provision of the law governing the jurisdiction of courts over real actions at the time the complaint was instituted on
August 7, 2009 is found in Sections 19 and 33(3) of Batas Pambansa Blg. 129,63 as amended by Republic Act No.
7691,64 which state:
Section 19. Jurisdiction of the Regional Trial Courts in Civil Cases. — Regional Trial Courts shall
exercise exclusive original jurisdiction:
....
(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein,
where the assessed value exceeds Four hundred thousand pesos ([PHP] 400,000.00), except for
forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is
conferred upon the Metropolitan Trial Courts, and Municipal Trial Courts in Cities, Municipal Trial
Courts, and Municipal Circuit Trial Courts[.]65
Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts in Civil Cases. — Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts shall exercise:
....
(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property,
or any interest therein where the assessed value of the property or interest therein does not exceed
Twenty thousand pesos ([PHP] 20,000.00) or, in civil actions in Metro Manila, where such assessed
value does not exceed Fifty thousand pesos ([PHP] 50,000.00) exclusive of interest, damages of
whatever kind, attorney's fees, litigation expenses and costs: Provided, [t]hat in cases of land not
declared for taxation purposes, the value of such property shall be determined by the assessed value
of the adjacent lots.66 (Emphasis in the original)
From the foregoing, it is clear that in a judicial foreclosure suit, the assessed value of the subject property must
be alleged. The failure to do so is fatal to the plaintiff's cause. Otherwise, there is no way to determine which tribunal
has original jurisdiction over the case. The failure to aver the assessed value of the subject property is a violation of
the Judiciary Reorganization Act of 1980, as amended, and gives rise to the dismissal of a case.67
It is worthy to point out that the failure to allege the proper valuation of the real property in litigation is fatal to the
plaintiff's cause as there will be no basis for the computation of docket fees.68 For the guidance of the bench and
bar, this Court finds it an opportune time to highlight the prevailing guidelines in the computation of docket fees in
cases involving real actions as outlined in Office of the Court Administrator (OCA) Circular No. 256-2022. The
pertinent portion of OCA Circular No. 256-2022 states:
2. The following are the basis for the ASSESSMENT of the filing fees in Real Actions with
the SECOND LEVEL COURTS:
2.1. Real Actions
(a) Fair Market Value of the Real Property in litigation stated in the
current tax declaration or Current Zonal Valuation of the Bureau of
Internal Revenue, whichever is higher, or if there is none, the stated
value of the property in litigation as alleged by the party in the initiatory
pleading.
2.2. Real Actions with Money Claim
(a) Fair Market Value of the Real Property in litigation stated in the
current tax declaration or Current Zonal Valuation of the Bureau of
Internal Revenue, whichever is higher, or if there is none, the stated
value of the property in litigation as alleged by the party in the initiatory
pleading; and
(b) The Total Sum Claimed, which includes the amount of claim or
demand as stated in the initiatory pleading, interests, penalties,
surcharges, damages of whatever kind, attorney's fees, and litigation
expenses and costs.
3. The following are the basis for the ASSESSMENT of the filing fees in Real Actions with the FIRST
LEVEL COURTS:
3.1 Real Actions other than for Forcible Entry and Unlawful Detainer
(a) Fair Market Value of the Real Property in litigation stated in the
current tax declaration or Current Zonal Valuation of the Bureau of
Internal Revenue, whichever is higher, or if there is none, the stated
value of the property in litigation as alleged by the party in the initiatory
pleading.
3.2 Real Actions with Money Claims, other than for Forcible Entry
and Unlawful Detainer,
(a) Fair Market Value of the Real Property in litigation stated in the
current tax declaration or Current Zonal Valuation of the Bureau of
Internal Revenue, whichever is higher, or if there is none, the stated
value of the property in litigation as alleged by the party in the initiatory
pleading; and
(b) The Total Sum Claimed, which includes the amount of claim or
demand as stated in the initiatory pleading, interests, penalties,
surcharges, damages of whatever kind, attorney's fees, and litigation
expenses and costs.69 (Emphasis in the original; citations omitted)
Be that as it may, the ruling of this Court dismissing the case is without prejudice to the filing of another case in
the proper court in accordance with the Rules of Court and Batas Pambansa Blg. 129, as amended.
In view of the foregoing, this Court deems it no longer necessary to discuss the other arguments raised by the
parties.
ACCORDINGLY, the Petition for Review on Certiorari is GRANTED. The Decision dated September 30, 2020
and the Resolution dated January 18, 2021 of the Court of Appeals in CA-G.R. CV No. 109587 are SET ASIDE. The
Complaint for judicial foreclosure of mortgage instituted by respondent Elisan Credit Corporation
is DISMISSED without prejudice to the filing of a separate case in the proper court.
SO ORDERED.
Leonen, SAJ. (Chairperson), Lazaro-Javier, M. Lopez, and Kho, Jr., JJ., concur.
Footnotes
1
Rollo, pp. 25-35.
2
Id. at 44-59. The September 30, 2020 Decision in CA-G.R. CV No. 109587 was penned by Associate
Justice Gabriel T. Robeniol, and concurred in by Associate Justices Edwin D. Sorongon and Carlito B.
Calpatura of the Special Fifteenth Division, Court of Appeals, Manila.
3
Id. at 61-63. The January 18, 2021 Resolution in CA-G.R. CV No. 109587 was penned by Associate Justice
Gabriel T. Robeniol, and concurred in by Associate Justices Edwin D. Sorongon and Carlito B. Calpatura of
the Former Special Fifteenth Division, Court of Appeals, Manila.
4
Id. at 84-99. The January 20, 2017 Decision was penned by Judge Rafael G. Hipolito of Branch 215,
Regional Trial Court, Quezon City.
5
Id. at 64-65 & 68-69.
6
Id. at 69.
7
Id. at 45 & 69-70.
8
Id. at 45 & 70.
9
Id. at 45 & 70-71.
10
Id. at 45 & 71.
11
Id. at 68-72.
12
Id. at 76-83.
13
Id. at 76.
14
Id. at 77-78.
15
Id. at 79.
16
Id.
17
Id.
18
Id. at 80.
19
Id.
20
Id. at 81.
21
Id. at 84-99.
22
Id. at 98-99.
23
Id. at 97.
24
Id. at 95-96.
25
Id. at 97-98.
26
Id. at 44-59.
27
Id. at 59.
28
Id. at 51.
29
Id. at 54-56.
30
Id. at 56.
31
Id. at 57.
32
Id. at 57-58.
33
Id. at 58.
34
Id. at 61-63. Dated January 18, 2021.
35
Id. at 62.
36
Id. at 28-29.
37
Id. at 29-30.
38
Id. at 30-31.
39
Id. at 31-33.
40
Id. at 33-34.
41
Id. at 8-18.
42
Id. at 9-10.
43
Id. at 10-11.
44
Id. at 14-17.
45
Id. at 17.
46
Id. at 259-264.
47
Id. at 259-260.
48
Id. at 260.
49
Id. at 261.
50
Salvador v. Patricia, Inc., 799 Phil. 116, 128 (2016) [Per J. Bersamin, First Division].
51
Padlan v. Dinglasan, 707 Phil. 83, 91 (2013) [Per J. Peralta, Third Division].
52
Amoguis v. Ballado, 839 Phil. 1, 5 (2018) [Per J. Leonen, Third Division].
53
Rollo, pp. 77-78.
54
Id. at 29-30.
55
Id. at 72.
56
364 Phil. 392 (1999) [Per J. Kapunan, First Division].
57
Id. at 397.
58
830 Phil. 583 (2018) [Per J. Peralta, Second Division].
59
Id. at 592-593.
60
Supra note 55, at 400-401.
61
Supra note 57, at 593.
62
Id.
63
The Judiciary Reorganization Act of 1980.
64
Republic Act No. 11576 (2021) further amended Sections 19 and 33 of Batas Pambansa Blg. 129. Sections
19 and 33 of Batas Pambansa Blg. 129, as amended, presently state:
Section 19. Jurisdiction of the Regional Trial Courts in Civil Cases. — Regional Trial Courts shall
exercise exclusive original jurisdiction:
....
(2) In all civil actions which involve the title to, or possession of, real property, or any interest
therein, where the assessed value exceeds Four hundred thousand pesos (P400,000.00),
except for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over
which is conferred upon the Metropolitan Trial Courts, and Municipal Trial Courts in Cities,
Municipal Trial Courts, and Municipal Circuit Trial Courts;
Section 33. Jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts in Cities,
Municipal Trial Courts, and Municipal Circuit Trial Courts in Civil Cases. - Metropolitan Trial
Courts, Municipal Trial Courts in Cities, Municipal Trial Courts, and Municipal Circuit Trial Courts
shall exercise:
....
(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real
property, or any interest therein where the assessed value of the property or any interest therein
does not exceed Four hundred thousand pesos ([PHP] 400,000.00) exclusive on interest,
damages of whatever kind, attorney's fees, litigation expenses and costs: Provided, That in
cases of land not declared for taxation purposes, the value of such property shall be determined
by the assessed value of the adjacent lots.
65
Republic Act No. 7691 (2004), sec. 1
66
Republic Act No. 7691 (2004), sec. 3.
67
Foronda-Crystal v. Son, 821 Phil. 1033, 1045 (2017) [Per J. Reyes, Jr., Second Division], citing Spouses
Cruz v. Spouses Cruz, 616 Phil. 519 (2009) [Per J. Corona, First Division]; Hilario v. Salvador, 497 Phil. 327,
336 (2005) [Per J. Callejo, Sr., Second Division].
68
Supra 66.
69
OCA Circular No. 256-2022, September 28, 2022.
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