Case Summary (G.R. No. 181335)
Key Dates
Mortgage executed: October 13, 2008. Petition for foreclosure filed by petitioner: February 3, 2014. RTC Order dismissing cases for lack of jurisdiction: July 22, 2014. RTC Order denying reconsideration: August 18, 2014. Petition for certiorari filed with the Supreme Court and decision rendered by the Court on April 23, 2018.
Procedural History
Petitioner filed an action for judicial foreclosure of real estate mortgage (Civil Case No. 9811) against the spouses Barrios and named Matorres as a party after discovering a subsequent mortgage to him. The spouses answered alleging inaccurate computation of indebtedness and that they had filed a petition for rehabilitation (Special Proceeding No. 9845). Matorres answered admitting he held a mortgage and stated he had a separate pending judicial foreclosure action (Civil Case No. 9642). The RTC (Branch 6, Kalibo) dismissed both foreclosure cases for lack of jurisdiction on July 22, 2014, concluding the assessed value of the subject property (P13,380.00) placed jurisdiction in the first-level courts. Motions for reconsideration by petitioner and by Matorres were denied. Petitioner then sought relief by way of certiorari before the Supreme Court alleging grave abuse of discretion by the RTC.
Facts Material to the Case
Petitioner alleged that on October 13, 2008 the Barrios spouses borrowed P250,000.00 payable in one year with an agreed interest of 5% per month, and executed a deed of real estate mortgage over Lot 5891-A-4 as security. Petitioner alleged default beginning February 2011 and sought payment, attorney’s fees, costs, exemplary damages, and, in default, judicial sale of the property to satisfy the mortgage debt. Petitioner also alleged the spouses later mortgaged the same property to Matorres on June 11, 2012 for P150,000.00 and characterized Matorres as a mortgagee in bad faith. Matorres admitted the mortgage to him and had already filed a foreclosure action against the spouses.
Issue Presented
Whether the RTC committed grave abuse of discretion in dismissing the foreclosure actions for lack of jurisdiction and in denying the motions for reconsideration.
Applicable Law and Constitutional Basis
The applicable statutory framework as applied by the Court was Batas Pambansa Blg. 129, as amended by Republic Act No. 7691 (sections quoted in the decision): (1) Sec. 19(1) (RTC jurisdiction over actions incapable of pecuniary estimation) and Sec. 19(2) (RTC jurisdiction where assessed value of real property exceeds P20,000.00); and (2) Sec. 33(3) (exclusive original jurisdiction of first-level courts over actions involving title to or possession of real property where assessed value does not exceed P20,000.00). Because the decision date is after 1990, the 1987 Constitution is the governing constitutional framework for the Court’s exercise of judicial power and the hierarchy of courts relied upon in the decision.
Threshold Procedural Note on Relief to the Supreme Court
The Court reiterated the general rule that direct recourse to the Supreme Court is ordinarily improper because of the hierarchical judicial structure; however, it acknowledged established exceptions where the question presented is purely one of law and therefore permitted direct resort. The Court accepted the petition because the jurisdictional issue raised presented a pure question of law.
Court’s Analysis on Nature of Foreclosure and Determination of Jurisdiction
The Court analyzed the nature of an action for judicial foreclosure of mortgage. It reaffirmed that foreclosure is a real action insofar as it is directed against property (the res) and seeks judicial recognition of a property-based debt and an order for sale of the mortgaged property. The Court described the mortgage relationship: a specific parcel of property is identified as security for payment of money, and upon default the mortgagee may foreclose and have the property seized and sold to satisfy the obligation. Because foreclosure is a real action against property, the Court held that the court’s jurisdiction over such an action is determined by the assessed value of the property involved, in accordance with the statutory scheme of BP 129 as amended.
Application of Statutory Jurisdictional Threshold to the Facts
Applying the statutory test, the Court observed that the assessed value of the mortgaged property was P13,380.00, which is below the P20,000.00 jurisdictional threshold set in Sec. 19(2) of BP 129 (as amended). Under Sec. 33(3), therefore, exclusive original jurisdiction over civil actions involving title to or possession of real property with an assessed value not exceeding P20,000.00 lies with the first-level courts (Municipal Trial Courts / Municipal C
...continue readingCase Syllabus (G.R. No. 181335)
Case Citation, Panel and Procedural Posture
- Reported as 830 Phil. 583; 114 OG No. 53, 9032 (December 31, 2018); Second Division; G.R. No. 214803, April 23, 2018.
- Decision authored by Justice Peralta; Acting Chief Justice Carpio (Chairperson), Justices Perlas-Bernabe, Caguioa, and Reyes, Jr., concurred.
- Petition for certiorari under Rule 65 assailing: (a) Order dated July 22, 2014 issued by the Regional Trial Court (RTC), Branch 6, Kalibo, Aklan (Presiding Judge Jemena Abellar Arbis) (Order [1]); and (b) Order dated August 18, 2014 denying reconsideration (Order [2]).
- Case originated from Civil Case No. 9811 (petitioner’s foreclosure action filed February 3, 2014) and related Civil Case No. 9642 (respondent Matorres’ foreclosure action).
Antecedent Facts (Loan, Mortgage and Property)
- On October 13, 2008, defendants Spouses Clarence I. Barrios and Anna Lee T. Barrios allegedly borrowed P250,000.00 from petitioner Alona G. Roldan, payable within one year from that date, with interest at 5% per month.
- To secure payment, defendants executed a Deed of Real Estate Mortgage on October 13, 2008 in favor of petitioner over:
- A parcel of land (Lot 5891-A-4) situated in Baybay, Makato, Aklan,
- Containing an area of 478 square meters, more or less,
- Declared in the names of Spouses Clarence Barrios and Anna Lee T. Barrios,
- Assessed in the sum of P13,380.00, tax effectivity for the year 2008,
- Covered by OCT No. P-5561 pt.
- Mortgage condition: if within one year from October 13, 2008 defendants pay P250,000.00 plus agreed interest, mortgage shall be discharged; otherwise it remains in full force and is enforceable by law.
- Petitioner alleged default: time for payment overdue; defendants failed and refused to pay principal and interest due starting from February 2011 to present notwithstanding repeated demands.
- Petitioner alleged no other persons had interest in the mortgaged property except Romel D. Matorres, whom petitioner discovered had a subsequent mortgage over the same property for P150,000.00 on June 11, 2012; petitioner alleged Matorres was a mortgagee in bad faith.
Reliefs Sought by Petitioner (Civil Case No. 9811)
- Primary prayers in complaint (as summarized):
- Order defendants to pay into court within 90 days the sum of P250,000.00 plus stipulated interest at 5% per month from February 2011 to present, plus P25,000.00 for attorney’s fees, litigation expenses and costs; and in default, order sale of the mortgaged property to pay off mortgage debt and accumulated interest.
- Award exemplary damages of P50,000.00 against defendants for mortgaging the property without plaintiff’s consent or knowledge.
- Grant such other reliefs in law and equity.
Answers, Special and Affirmative Defenses, and Cross-claims
- Spouses Barrios (defendants) Answer:
- Contended computation of alleged loan obligation was inaccurate.
- Alleged they filed with the RTC a petition for rehabilitation of financially distressed individuals under Special Proceeding No. 9845, thus foreclosure should be suspended.
- Romel D. Matorres (respondent mortgagee) Answer:
- Admitted the subject land was mortgaged to him.
- Filed a judicial foreclosure case against the Barrios (Civil Case No. 9642) pending with RTC, Branch 6.
- Asserted petitioner had no cause of action against him as they had no transaction; prayed for damages and attorney’s fees; filed cross-claim against spouses Barrios for moral damages.
RTC Proceedings and Orders
- RTC Order dated July 22, 2014 (assailed Order [1]):
- Noted Civil Cases Nos. 9642 and 9811 involved the same property, Lot 5891-A-4.
- Observed assessed value of the property is only P13,380.00.
- Stated foreclosure of real estate mortgage is a real action and the assessed value determines jurisdiction; since assessed value is below P20,000.00, first level court (Municipal/Metropolitan/Municipal Circuit Trial Court) has jurisdiction.
- Concluded lack of jurisdiction by RTC; ordered Civil Cases Nos. 9642 and 9811 dismissed without prejudice.
- Petitioner and respondent Matorres filed motions for reconsideration.
- RTC Order dated August 18, 2014 (denying petitioner’s motion for reconsideration) (Order [2]):
- Reiterated that foreclosure of real estate mortgage is a real action and assessed value of the property determines jurisdiction, while location determines venue.
- Denied petitioner’s motion for lack of merit.
- RTC Order dated September 1, 2014 (denying Matorres’ motion for reconsideration) referenced.
Petition for Certiorari and Parties’ Contentions in the Supreme Court
- Petitioner’s petition:
- Alleged grave abuse of discretion by RTC in dismissing her foreclosure case and denying reconsideration.
- Argued foreclosure of mortgage is an action incapable of pecuniary estimation and therefore within exclusive jurisdiction of the RTC.
- Respondent Matorres’ Comment:
- Joined petitioner’s position that foreclosure is incapable of pecuniary estimation and thus within RTC jurisdiction.
- Spouses Barrios’ Explanation and Comment:
- Alleged petitioner violated the Tax Reform Act of 1997 for failure to issue official receipts for payments made by them.
- Alleged petitioner failed to show proof of authority from Bangko Sentral ng Pilipinas relative to her money-lending activities.
Legal Issue Presented
- Whether the RTC committed grave abuse of discretion in dismissing the foreclosure cases for lack of jurisdiction, specifically whether a compl