Case Summary (G.R. No. 144101)
Background of the Mortgage and Legal Proceedings
On May 3, 1973, the respondents mortgaged their property to petitioner Antonio Tambunting, Jr. to secure a loan of P7,727.95. By August 1976, the respondents were informed that their debt had increased to P15,000 due to missed amortization payments. Following their default in May 1977, CHFI initiated foreclosure proceedings, which were halted by an injunction from the Court of First Instance (CFI) in a case filed by the respondents. This case was later dismissed for lack of appearance from both parties.
Subsequently, the respondents sought clarification regarding their indebtedness through an action for declaratory relief, which was also dismissed after the petitioners were declared in default for failing to respond. On January 8, 1981, the CFI determined the respondents’ liability to be P15,743.83, allowing them to consign this amount for payment.
Foreclosure Proceedings and Subsequent Developments
In March 1995, the respondents received a notice regarding the foreclosure of their mortgage by CHFI, indicated for a public auction scheduled on March 27, 1995. Despite the ongoing litigation initiated by the respondents to seek a preliminary injunction and other reliefs against this foreclosure, the auction proceeded, and the property was sold to CHFI. The respondents were unable to redeem their property in the designated period, resulting in the consolidation of title in favor of CHFI.
In light of these developments, the respondents amended their initial complaint to seek nullification of the foreclosure and the sheriff's sale, alongside claims for damages.
Decision of the Regional Trial Court
The RTC ruled on February 11, 2000, that the previous decision from 1981 had become final and that the mortgage was extinguished when the respondents made their consignation. The court further held that the petitioners had effectively allowed the ten-year prescription period for foreclosure to lapse, thus denying their entitlement to enforce the mortgage. The trial court declared the foreclosure, the subsequent sale, and the consolidation of title void, ordering the cancellation of TCT No. 310191 and reconveyance of the property to the respondents. Additionally, it awarded moral damages, exemplary damages, and attorney’s fees to the respondents.
Petitioners’ Arguments and Court’s Analysis
On appeal, the petitioners contested the RTC's findings, primarily arguing that the CFI lacked jurisdiction over the declaratory relief case because a breach of the mortgage had already occurred at the time the action was filed. They maintained that the earlier judgment was void and, consequently, the subsequent consignation based on that judgment was similarly void. The petitioners also disagreed with the court’s conclusion regarding the expiration of their right to foreclose.
The Supreme Court found merit in the petitioners' contentions regarding the jurisdiction over the declaratory relief action. It underscored that a court may only assume jur
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Case Overview
- This case pertains to a petition for review on certiorari under Rule 45 of the Rules of Court, challenging the decision of the Regional Trial Court (RTC) of Caloocan City, Branch 120, dated February 11, 2000.
- The dispute involves a parcel of land located in Caloocan City, previously registered under the names of respondents, spouses Emilio Sumabat and Esperanza Baello (TCT No. [87655] 18837).
- The property was mortgaged by the respondents to petitioner Antonio P. Tambunting, Jr. on May 3, 1973, to secure a loan of P7,727.95.
Background of the Case
- In August 1976, the respondents were notified that their indebtedness had increased to P15,000 due to non-payment of monthly amortizations.
- Following their default, petitioner Commercial House of Finance, Inc. (CHFI) initiated foreclosure proceedings in May 1977, which were subsequently halted by a restraining order from the Court of First Instance (CFI) of Caloocan City in Civil Case No. C-6329.
- The case for injunction was dismissed due to the parties' non-appearance on November 9, 1977.
Actions Taken by Respondents
- On March 16, 1979, the respondents filed an action for declaratory relief in CFI (Civil Case No. C-7496) to clarify their actual indebtedness.
- The petitioners were declared in default for failing to respond within the reglementary period.
- A decision was rendered on January 8, 1981, fixing the indebtedness at P15,743.83 and allowing the respondents to consign the payment to the court.