Spouses Libiran vs. Elisan Credit Corporation

In a judicial foreclosure suit, the assessed value of the subject property must be alleged in the complaint to determine the court's jurisdiction, as a foreclosure suit is a real action; failure to allege the assessed value is fatal to the plaintiff's cause and warrants dismissal.

Spouses Libiran obtained a loan from Elisan secured by a real estate mortgage over their property in Pandi, Bulacan. They subsequently obtained additional loans but defaulted. Elisan filed a complaint for judicial foreclosure under Rule 68 of the Rules of Court. Spouses Libiran denied the loans, claimed the documents were falsified, and argued the property title was merely held in trust for their daughter's fully paid loan.

• Original Filing: RTC of Quezon City, Branch 215, Civil Case No. Q-09-6539
• Lower Court Decision: January 20, 2017 — RTC ruled in favor of Elisan, ordering Spouses Libiran to pay the principal, interest, penalties, and attorney's fees, with foreclosure of the mortgage in case of default.
• Appeal: CA-G.R. CV No. 109587
• CA Decision: September 30, 2020 — CA affirmed the RTC with modification, reducing the unconscionable 26% per annum interest plus 2.5% monthly penalty to 12% per annum.
• SC Action: Spouses Libiran filed a Petition for Review on Certiorari assailing the CA Decision and Resolution.

• The Loans and Mortgage: On January 8, 2003, Spouses Libiran obtained a PHP 200,000.00 loan from Elisan, secured by a promissory note and a real estate mortgage over a parcel of land covered by TCT No. T-405042 (M). The mortgage contract stipulated the property would secure present and future obligations.
• Subsequent Defaults: Between December 2005 and June 2006, Spouses Libiran obtained three more loans (PHP 609,000.00, PHP 118,000.00, and PHP 474,000.00). They made partial payments but ultimately defaulted on the principal balances and interest payments, leaving a total outstanding obligation of PHP 885,380.00.
• The Foreclosure Suit: After repeated demands went unheeded, Elisan filed a complaint for judicial foreclosure with the RTC of Quezon City.
• Spouses Libiran's Defense: They denied owing any money, claiming they signed blank documents and never received loan proceeds. They asserted the owner's duplicate title was merely held in trust as security for their daughter and son-in-law's fully paid loan. They also claimed the mortgage contract, promissory notes, and vouchers were falsified and that they did not appear before a notary public.
• RTC Findings: The RTC found Elisan's evidence—promissory notes, vouchers, mortgage contract, and corporate testimony—more credible than the bare denial of Spouses Libiran's lone witness (their son-in-law, Roning). The RTC granted the foreclosure.
• CA Findings: The CA affirmed the RTC. It held that Quezon City was the proper venue as the place of contract execution. It ruled the defective notarization merely reduced the mortgage to a private document, which still held more evidentiary weight than self-serving allegations. The CA reduced the interest and penalties to 12% per annum for being unconscionable.

• The proper venue for a foreclosure action is where the mortgaged property is situated (Bulacan), not where the contract was executed (Quezon City).
• The RTC lacks jurisdiction because the complaint failed to allege the assessed value of the subject property.
• Failure to state the assessed value resulted in the non-payment of the correct docket fee, which should lead to dismissal for lack of jurisdiction.
• They did not apply for a loan; the property title was merely additional security for their daughter's paid loan.
• The mortgage contract is void because Elisan lacked an SEC license/authority to engage in lending and financing at the time.

• Filing in Quezon City was proper, and petitioners cannot belatedly challenge venue after the RTC rendered a decision.
• The assessed value is unnecessary for docket fee assessment because a foreclosure suit is incapable of pecuniary estimation, placing it under RTC jurisdiction.
• Petitioners' bare denial cannot overcome Elisan's documentary evidence.
• The SEC already granted Elisan's appeal regarding its authority, imposing only a PHP 50,000.00 fine for operating two unauthorized branches.

• Procedural Issues:
  • Whether the RTC has jurisdiction over the complaint for judicial foreclosure of mortgage despite the failure to allege the assessed value of the subject property.
• Substantive Issues:
  • N/A (The SC resolved the case purely on the procedural/jurisdictional ground, rendering discussion of other issues unnecessary.)

• Procedural: The SC granted the petition and dismissed the complaint. While a foreclosure suit is an action incapable of pecuniary estimation (which generally falls under RTC jurisdiction under Sec. 19(1) of BP 129), it is simultaneously a real action because it is against property and seeks the sale of the res. For real actions, jurisdiction is determined by the assessed value of the property under Secs. 19(2) and 33(3) of BP 129, as amended. Because Elisan failed to allege the assessed value of the mortgaged property in the complaint, there is no basis to determine whether the RTC or the MTC has original jurisdiction. This failure is fatal to the plaintiff's cause and violates the Judiciary Reorganization Act of 1980. Furthermore, the failure to allege the proper valuation means there is no basis for computing the correct docket fees. The SC highlighted OCA Circular No. 256-2022, which bases the assessment of filing fees in real actions on the fair market value of the property (per current tax declaration or zonal valuation, whichever is higher) plus the total sum claimed.
• Substantive: N/A

• Jurisdiction in Real Actions — In real actions (actions involving title to, possession of, or any interest in real property), jurisdiction is determined by the assessed value of the property. If the assessed value exceeds PHP 400,000.00 (or the applicable threshold at the time of filing), the RTC has jurisdiction; if it does not, the MTC has jurisdiction.
• Foreclosure Suit as a Real Action — A judicial foreclosure suit is a real action insofar as it is against property, seeking the judicial recognition of a property debt and an order for the sale of the res. While it is also an action incapable of pecuniary estimation, its character as a real action requires the plaintiff to allege the assessed value of the property to properly vest jurisdiction.

• Section 19(2), Batas Pambansa Blg. 129 (as amended by RA 7691) — Grants RTCs exclusive original jurisdiction over civil actions involving title to, possession of, or interest in real property where the assessed value exceeds PHP 400,000.00 (or the applicable threshold at the time of filing). Applied to establish that jurisdiction over the foreclosure suit hinges on the assessed value of the mortgaged property.
• Section 33(3), Batas Pambansa Blg. 129 (as amended by RA 7691) — Grants MTCs exclusive original jurisdiction over real actions where the assessed value does not exceed PHP 400,000.00 (or the applicable threshold at the time of filing). Applied to show the necessity of alleging assessed value to determine if MTC or RTC has jurisdiction.
• OCA Circular No. 256-2022 — Outlines the guidelines for the assessment of filing fees in real actions. Applied to emphasize that the fair market value of the real property (based on tax declaration or zonal valuation) must be stated to properly compute docket fees.