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Updated 17th February 2025
Spouses Libiran vs. Elisan Credit Corporation
This case clarifies that while a judicial foreclosure of mortgage is an action incapable of pecuniary estimation, it is also a real action requiring the allegation of the property's assessed value to determine the proper court's jurisdiction. The failure to include this assessed value in the complaint is a fatal flaw, warranting dismissal without prejudice.

Primary Holding

The Regional Trial Court (RTC) lacked jurisdiction over the foreclosure case because the complaint failed to allege the assessed value of the mortgaged property.

Background

Spouses Libiran obtained loans from Elisan Credit Corporation, secured by a real estate mortgage. When they defaulted, Elisan filed a judicial foreclosure complaint. The case reached the Supreme Court concerning jurisdictional issues.

History

  • January 8, 2003: Spouses Libiran obtained an initial loan from Elisan, secured by a real estate mortgage.

  • December 9, 2005, March 9, 2006, June 15, 2006: Spouses Libiran obtained subsequent loans.

  • August 7, 2009: Elisan filed a complaint for judicial foreclosure with the RTC of Quezon City.

  • RTC Decision: Rendered judgment in favor of Elisan.

  • Court of Appeals (CA) Decision: Affirmed the RTC decision with modification, reducing the interest rate.

  • CA Resolution: Denied Spouses Libiran's motion for reconsideration.

  • Supreme Court: Petition for Review on Certiorari filed by Spouses Libiran.

Facts

  • 1. Spouses Libiran obtained multiple loans from Elisan Credit Corporation, secured by a real estate mortgage on their property.
  • 2. The mortgage contract stipulated that the property secured not only the initial loan but also any subsequent obligations.
  • 3. Spouses Libiran defaulted on their loan payments, leading to a total outstanding obligation of PHP 885,380.00, plus interests and penalties.
  • 4. Elisan filed a complaint for judicial foreclosure of the mortgage.
  • 5. Spouses Libiran claimed they didn't owe money, alleging they signed blank documents and that the title was held in trust for their daughter and son-in-law's loan, which was already paid.

Arguments of the Petitioners

  • 1. The proper venue for a foreclosure action is where the property is located.
  • 2. The court lacked jurisdiction because the complaint did not state the assessed value of the property.
  • 3. Failure to pay the correct docket fees due to the missing assessed value warrants dismissal.
  • 4. Spouses Libiran never applied for a loan; the title was held as security for their relatives' loan, which was already paid.
  • 5. The mortgage contract is void because Elisan lacked the license to engage in lending.

Arguments of the Respondents

  • 1. Filing in Quezon City was proper, and Spouses Libiran cannot belatedly challenge the venue.
  • 2. The assessed value is unnecessary for docket fee assessment as foreclosure is incapable of pecuniary estimation.
  • 3. Spouses Libiran's denial is insufficient to overcome Elisan's evidence.
  • 4. The SEC imposed only a fine on Elisan for operating unauthorized branches.

Issues

  • 1. Does the RTC of Quezon City have jurisdiction over the complaint for judicial foreclosure of mortgage, given the failure to allege the assessed value of the property in the complaint?

Ruling

  • 1. The Supreme Court ruled that the RTC did not have jurisdiction. A complaint for judicial foreclosure is a real action, and the failure to allege the assessed value of the property is fatal because it prevents determination of the proper court's jurisdiction. The case was dismissed without prejudice to refiling in the correct court.

Doctrines

  • 1. Jurisdiction over Subject Matter: Conferred by law and determined by the allegations in the complaint.
  • 2. Real Action: An action affecting title to or possession of real property.
  • 3. Action Incapable of Pecuniary Estimation: Actions where the subject matter cannot be quantified in monetary terms, but this does not negate the requirements for real actions.

Key Excerpts

  • 1. Russell vs. Vestij: Clarified that while foreclosure is incapable of pecuniary estimation, it's also a real action where assessed value is important.
  • 2. Roldan vs. Spouses Barrios: Reiterated that a foreclosure suit is a real action, seeking judicial recognition of a property debt and an order for the sale of the property.
  • 3. Singsong vs. Isabela Sawmill: Used to distinguish actions incapable of pecuniary estimation from those primarily for the recovery of a sum of money.

Precedents Cited

  • 1. Russell v. Vestil (1999) - Established foreclosure as action incapable of pecuniary estimation
  • 2. Roldan v. Spouses Barrios (2018) - Clarified foreclosure as real action requiring assessed value
  • 3. Singsong vs. Isabela Sawmill - Established criteria for determining pecuniary estimation

Statutory and Constitutional Provisions

  • 1. Section 19(1) of Batas Pambansa Blg. 129 (as amended by Republic Act No. 7691): Jurisdiction of Regional Trial Courts in civil cases.
  • 2. Sections 19 and 33(3) of Batas Pambansa Blg. 129 (as amended by Republic Act No. 7691): Jurisdiction over real actions based on assessed value.
  • 3. OCA Circular No. 256-2022: Guidelines in the computation of docket fees in cases involving real actions.