First Sarmiento Property Holdings, Inc. vs. Phil Bank of Communications, G.R. No. 202836, June 19, 2018.

Facts:
On June 19, 2002, First Sarmiento obtained from Philippine Bank of Communications (PBCOM) a P40,000,000.00 loan, which was secured by a real estate mortgage over 1,076 parcels of land. On March 15, 2003, the loan agreement was amended with the increase of the loan amount to P51,200,000.00. On September 15, 2003, the loan agreement was further amended when the loan amount was increased to P100,000,000.00.

On January 2, 2006, PBCOM filed a Petition for Extrajudicial Foreclosure of Real Estate Mortgage. It claimed in its Petition that it sent First Sarmiento several demand letters, yet First Sarmiento still failed to pay the principal amount and accrued interest on the loan. This prompted PBCOM to resort to extrajudicial foreclosure of the mortgaged properties, a recourse granted to it under the loan agreement.

On December 27, 2011, First Sarmiento attempted to file a Complaint for annulment of real estate mortgage with the Regional Trial Court. However, the Clerk of Court refused to accept the Complaint in the absence of the mortgaged properties’ tax declarations, which would be used to assess the docket fees. On December 29, 2011, Regional Trial Court of City of Malolos, Bulacan, granted First Sarmiento’s Urgent Motion to Consider the Value of Subject Matter of the Complaint as Not Capable of Pecuniary Estimation, and ruled that First Sarmiento’s action for annulment of real estate mortgage was incapable of pecuniary estimation.

On January 2, 2012, First Sarmiento filed a Complaint for annulment of real estate mortgage and its amendments, with prayer for the issuance of temporary restraining order and preliminary injunction. It paid a filing fee of P5,545.00.

First Sarmiento claimed in its Complaint that it never received the loan proceeds of P100,000,000.00 from PBCOM, yet the latter still sought the extrajudicial foreclosure of real estate mortgage. It prayed for the issuance of a temporary restraining order and preliminary injunction to enjoin the Ex-Officio Sheriff from proceeding with the foreclosure of the real estate mortgage or registering the certificate of sale in PBCOM’s favor with the Registry of Deeds of Bulacan.

PBCOM asserted that the Regional Trial Court failed to acquire jurisdiction over First Sarmiento’s Complaint because the action for annulment of mortgage was a real action; thus, the filing fees filed should have been based on the fair market value of the mortgaged properties.

On April 3, 2012, Regional Trial Court dismissed the Complaint for lack of jurisdiction following the ruling in the case of Home Guaranty Corporation v. R. II Builders, Inc. and National Housing Authority.

Issue:
Whether the action for the for annulment of real estate mortgage was incapable of pecuniary estimation.

Held:
Yes, to determine the nature of an action, whether or not its subject matter is capable or incapable of pecuniary estimation, the nature of the principal action or relief sought must be ascertained. If the principal relief is for the recovery of a sum of money or real property, then the action is capable of pecuniary estimation. However, if the principal relief sought is not for the recovery of sum of money or real property, even if a claim over a sum of money or real property results as a consequence of the principal relief, the action is incapable of pecuniary estimation.

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