Spouses Feliciano v. Elisan Credit Corporation

 

Spouses Feliciano v. Elisan Credit Corporation

G.R. No. 255239

February 13, 2023

 

FACTS:

                Spouses Tomas Libiran and Potenciana Feliciano 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 over a parcel of land covered by TCT No. T-405042. The mortgage was anotated on the titled. 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. The 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. Thereafter, Spouses Libiran obtained another lan 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. 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. Despite repeated demands, Spouuses Libiiran failed to pay their obligatioin totaling Php 885.380.00,, as well as the interests and penalties due. As a result, Elisan instituted a complaint for judicial foreclosure. Spouses Libiran denied the accusations against them and insisted they did not owe Elisan any money. They claimed that they were made to sign blank documents, making it appear that they obtained loan despite not receiving any money from Elisan. 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, which was already paid in full.

 

ISSUE:

                Whether or not a complaint for judicial foreclosure of mortgage is a real action.

 

HELD:

                Yes. A complaint for judicial foreclosure of mortgage is a real action and the assessed value of the property determines the jurisdiction of the court. Foreclosure of mortgage is the process by which a property covered may be subjected to sale to pay demand for which mortgages stand as security (Pacific Commercial Co. v. Alvarez, 38 OG 758). Foreclosure is the necessary consequence of non-payment of mortgage indebtedness. The mortgage can be foreclosed only when the debt remains unpaid at the time it is due (Producers Bank v. CA, GR No. 111584, 17 Sept. 2001; Gov’t of the PI v. Espejo, 57 Phil 496) or in case of default in the payment of obligation. Foreclosure of real estate mortgage is either done extra-judicially or judicially. The provisions of Rule 68 of the 1997 Rules of Civil Procedure govern judicial foreclosure. The extra-judicial foreclosure of real estate mortgage, on the other hand, is carried out in the procedure governed by the provisions of Act 3135 , as amended, otherwise known as “An Act to Regulate the Sale of Property Under Special Powers Inserted in or Annexed to Real Estate Mortgages.”

It is a hornbook doctrine that jurisdiction over the subject matter is conferred by law. It is determined through the allegations in the complaint comprising a concise statement of the ultimate facts of the plaintiff’s cause of action. 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. An action for foreclosure of mortgage is an action incapable of pecuniary estimation, and thus, within the jurisdiction of the RTC. This is pursuant to Sec. 19(1) of BP Blg. 1129, as amended by RA 7691. 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.

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. 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. The ruling of the Court in dismissing the case is without prejudice to the filing of another case in the proper court in accorande with the Rules of Court and Batas Pampabansa Blg. 1129, as amended.