17. First Sarmiento Property Holdings vs. PBCom, G.R. No.

202836, June 19, 2018

RATIO: 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.

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.
Thereafter, the loan agreement was amended with the increase of the loan amount to P51,200,000.00
and was later 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 First Sarmiento
to file a Complaint for annulment of real estate mortgage with the RTC. 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, Executive Judge Francisco, First Vice-Executive Judge Mendoza Arcega,
Second Vice-Executive Judge Liban, and Third Vice-Executive Judge Gabo, Jr. of the RTC 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 the same day, the
mortgage properties were auctioned and sold to PBCOM as the highest bidder.
Thus, on January 2, 2012, claiming that it never received the loan proceeds of P100,000,000.00 from
PBCOM, 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. That same day, Judge Francisco issued an ex-parte temporary restraining
order for 72 hours, enjoining the registration of the certificate of sale with the Registry of Deeds of
Bulacan.
Consequently, the RTC directed the parties to observe the status quo ante. On January 24, 2012, the
Clerk of Court and Ex-Officio Sheriff of Malolos City, Bulacan issued a certificate of sale to PBCOM.
In its Opposition, PBCOM asserted that the RTC 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. PBCOM also pointed
out that the RTC’s directive to maintain the status quo order beyond 72 hours constituted an
indefinite extension of the temporary restraining order, a clear contravention of the rules.
The RTC dismissed the Complaint filed by First Sarmiento for lack of jurisdiction. The RTC likewise
denied its Motion for Reconsideration prompting First Sarmiento to seek direct recourse with the SC
via Petition for Review under Rule 45. Complying with the SC’s order to file a Comment on the said
petition, PBCOM contends that petitioner's action to annul the real estate mortgage and enjoin the
foreclosure proceedings did not hide the true objective of the action, which is to restore petitioner's
ownership of the foreclosed properties.
In its Reply, First Sarmiento denied that its Complaint was for the annulment of the foreclosure sale,
because when it filed its Complaint, the foreclosure sale had not yet happened.
Both parties also reiterated their arguments in their respective memoranda. Hence, the instant
petition.
ISSUE:
Whether the RTC obtained jurisdiction over First Sarmiento Corporation, Inc.'s Complaint for
annulment of real estate mortgage.

HELD:
Yes. Section 19(1) of Batas Pambansa Blg. 129, as amended, provides Regional Trial Courts with
exclusive, original jurisdiction over "all civil actions in which the subject of the litigation is incapable
of pecuniary estimation." Lapitan v. Scandia instructed that to determine whether the subject matter
of an action is incapable of pecuniary estimation, the nature of the principal action or remedy sought
must first be established. However, it also stressed that where the money claim is only a consequence
of the remedy sought, the action is said to be one incapable of pecuniary estimation.
Far East Bank and Trust Company v. Shemberg Marketing Corporation stated that an action for
cancellation of mortgage has a subject that is incapable of pecuniary estimation. Section 6 of Act No.
3135, as amended, provides that a property sold through an extrajudicial sale may be redeemed "at
any time within the term of one year from and after the date of the sale". As clarified in the case of
Mahinay v. Dura Tire & Rubber Industries Inc., "[t]he date of the sale' referred to in Section 6 is the
date the certificate of sale is registered with the Register of Deeds. This is because the sale of
registered land does not 'take effect as a conveyance, or bind the land' until it is registered."
In the case at bar, considering that petitioner paid the docket fees as computed by the clerk of court,
upon the direction of the Executive Judge, this Court is convinced that the RTC acquired jurisdiction
over the Complaint for annulment of real estate mortgage. Furthermore, even if it is assumed that the
instant case were a real action and the correct docket fees were not paid by petitioner, the case should
not have been dismissed; instead, the payment of additional docket fees should have been made a
lien on the judgment award. The records attest that in filing its complaint, petitioner readily paid the
docket fees assessed by the clerk of court; hence, there was no evidence of bad faith or intention to
defraud the government that would have rightfully merited the dismissal of the Complaint.
In light of the foregoing, 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.