Roldan vs. Barrios

In foreclosure of real estate mortgage cases, jurisdiction is determined by the assessed value of the mortgaged property pursuant to Section 33(3) of B.P. 129 as amended by R.A. 7691, placing cases involving properties with assessed values not exceeding P20,000.00 within the exclusive original jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts, even though foreclosure is generally classified as an action incapable of pecuniary estimation within the RTC's jurisdiction under Section 19(1).

Petitioner Alona G. Roldan extended a loan of P250,000.00 to respondents Spouses Clarence I. Barrios and Anna Lee T. Barrios, secured by a real estate mortgage over a parcel of land in Baybay, Makato, Aklan. When the spouses defaulted on the loan, Roldan discovered that the same property had been subsequently mortgaged to respondent Rommel Matorres for P150,000.00. Roldan filed a complaint for judicial foreclosure of the mortgage before the Regional Trial Court of Kalibo, Aklan, Branch 6, docketed as Civil Case No. 9811.

• On October 13, 2008, respondents Spouses Clarence I. Barrios and Anna Lee T. Barrios borrowed P250,000.00 from petitioner, payable within one year with 5% monthly interest.
• To secure the loan, the spouses executed a Deed of Real Estate Mortgage over Lot 5891-A-4 situated in Baybay, Makato, Aklan, covered by OCT No. P-5561 pt., with an assessed value of P13,380.00 for the year 2008.
• The mortgage contract provided that if the obligation was not paid within the one-year period, the mortgage would remain in full force and effect and enforceable in the manner provided by law.
• Respondents failed to pay the principal and interest due starting from February 2011 despite repeated demands.
• Petitioner discovered that respondents had mortgaged the same property to respondent Rommel Matorres for P150,000.00 on June 11, 2012, without petitioner's consent or knowledge.
• Petitioner filed a complaint for judicial foreclosure praying that respondents pay P250,000.00 plus 5% monthly interest from February 2011, or in default, that the property be ordered sold to pay off the mortgage debt.
• Respondents Barrios filed an Answer raising special and affirmative defenses including inaccuracy of the loan computation and the pendency of a petition for rehabilitation under Special Proceeding No. 9845.
• Respondent Matorres filed an Answer admitting the mortgage to him and stating he had also filed a judicial foreclosure case (Civil Case No. 9642) against the spouses, while praying for damages and filing a cross-claim against the spouses for moral damages.

• Foreclosure of real estate mortgage is an action incapable of pecuniary estimation, thus falling within the exclusive original jurisdiction of the Regional Trial Court under Section 19(1) of B.P. 129.
• The Regional Trial Court committed grave abuse of discretion in dismissing the case for lack of jurisdiction and in denying the motion for reconsideration.

• Respondents Spouses Barrios alleged that petitioner violated the Tax Reform Act of 1997 for failure to issue official receipts on payments made and failed to show proof of authority from the Bangko Sentral ng Pilipinas for money-lending activities.
• Respondent Matorres joined the petitioner's position that foreclosure of mortgage is an action incapable of pecuniary estimation and therefore within the jurisdiction of the Regional Trial Court.
• Matorres claimed he had no transaction with petitioner and prayed for damages and attorney's fees, with a cross-claim against respondent spouses for moral damages.

• Procedural Issues:
  • Whether the Supreme Court should entertain the direct petition for certiorari despite the rule on hierarchy of courts.
• Substantive Issues:
  • Whether the Regional Trial Court committed grave abuse of discretion in dismissing the complaint for foreclosure of real estate mortgage for lack of jurisdiction based on the assessed value of the mortgaged property being below P20,000.00.

• Procedural:
  • While direct recourse to the Supreme Court generally violates the established policy of strict observance of the judicial hierarchy of courts, the Court entertained the petition because it raised a pure question of law regarding jurisdiction over foreclosure proceedings, which constitutes an exception to the hierarchy rule.
• Substantive:
  • Foreclosure of real estate mortgage is a real action so far as it is against property, seeking judicial recognition of a property debt and an order for the sale of the res.
  • As a real action involving title to or possession of real property, jurisdiction is determined by the assessed value of the property pursuant to Section 33(3) of B.P. 129 as amended by R.A. 7691.
  • With an assessed value of P13,380.00, which is below the P20,000.00 threshold, jurisdiction lies with the first level courts (MTC), not the Regional Trial Court.
  • While foreclosure is generally considered an action incapable of pecuniary estimation under Section 19(1) of B.P. 129, Section 33(3) specifically governs real actions involving title to or possession of real property based on assessed value, and this specific provision controls over the general provision.
  • The Regional Trial Court did not commit grave abuse of discretion in dismissing the case for lack of jurisdiction.

• Hierarchy of Courts — The principle that litigants must observe the proper judicial hierarchy by filing petitions first with lower appellate courts before the Supreme Court, subject to exceptions for pure questions of law that do not involve factual determinations.
• Jurisdiction over Real Actions — The rule that in civil actions involving title to or possession of real property, jurisdiction is determined by the assessed value of the property pursuant to Section 33(3) of B.P. 129, not by the amount of the loan or obligation being enforced.
• Actions Incapable of Pecuniary Estimation vs. Real Actions — While foreclosure of mortgage is generally considered an action incapable of pecuniary estimation falling under Section 19(1) of B.P. 129, it is also a real action subject to the assessed value threshold in Section 33(3), which takes precedence over the general provision when the subject is real property with a specific assessed value below the jurisdictional threshold.

• "Foreclosure is but a necessary consequence of non-payment of the mortgage indebtedness."
• "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."
• "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 involved does not exceed P20,000.00 in Metro Manila, or P50,000.00, if located elsewhere."

• Russell v. Vestil — Cited by petitioner to argue foreclosure is incapable of pecuniary estimation; distinguished by the Court to show that while foreclosure is indeed incapable of pecuniary estimation, Section 33(3) of B.P. 129 specifically assigns jurisdiction based on assessed value for real property cases.
• Singsong v. Isabela Sawmill — Cited within Russell v. Vestil regarding the criterion for determining actions incapable of pecuniary estimation based on the nature of the principal action sought.
• Heirs of Valeriano Concha, Sr. v. Sps. Lumocso — Cited for the principle that jurisdiction over the subject matter is conferred by law and cannot be waived by the parties.
• Equitable PCI Bank, Inc. v. Fernandez — Cited regarding the essence of mortgage contracts as security for payment and foreclosure as a consequence of non-payment.
• Banco Español-Filipino v. Palanca — Cited for the definition of foreclosure suit as a real action against property.
• Mangaliag v. Judge Catubig-Pastoral — Cited regarding the hierarchy of courts and the policy of strict observance thereof.

• Section 19(1) and (2), B.P. 129 (The Judiciary Reorganization Act of 1980) — Defines RTC jurisdiction over actions incapable of pecuniary estimation and civil actions involving title to real property where the assessed value exceeds P20,000.00.
• Section 33(3), B.P. 129 as amended by R.A. 7691 — Grants first level courts exclusive original jurisdiction over civil actions involving title to or possession of real property where the assessed value does not exceed P20,000.00 (or P50,000.00 in Metro Manila), exclusive of interest, damages, attorney's fees, litigation expenses and costs.