First Sarmiento Properly Holdings, Inc. vs Philippine Bank of Communications

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

Facts:
Petitioner First Sarmiento obtained from respondent bank Philippine Bank of Communications (PBCOM) a P40,000,000.00 loan, secured by a real estate mortgage over 1,076 parcels of land. The loan was later increased to an amount of P51.2, and finally P100 million. Respondent later filed a Petition for Extrajudicial Foreclosure of Real Estate Mortgage, claiming that petitioner failed to pay the principal amount and accrued interest on the loan. Petitioner attempted to file a Complaint for annulment of real estate mortgage with the Bulacan RTC on the grounds that they had yet to receive the loan proceeds from the respondent, but the complaint was refused by the clerk of court due to the absence of the mortgaged properties' tax declarations, Soon after, the court ruled that First Sarmiento's action for annulment of real estate mortgage was incapable of pecuniary estimation. The RTC subsequently dismissed the case due to lack of jurisdiction, as the petitioner failed to pay the appropriate filing fees. In the petition for review to the SC, petitioner insists that its Complaint for the annulment of real estate mortgage was incapable of pecuniary estimation, and that this was acknowledged by the RTC Executive Judge and Vice-Executive Judges.

Issue:
Whether or not Complaint for annulment of real estate mortgage has a subject incapable of pecuniary estimation because it was not intended to recover ownership or possession of the mortgaged properties sold to respondent during the auction sale.

Held:
Yes. Petition granted and set aside.
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.
In the current case, the petitioner never prayed for the reconveyance of the properties foreclosed during the auction sale, or that it ever asserted its ownership or possession over them. Rather, it assailed the validity of the loan contract because it supposedly never received the proceeds of the loan agreement. Furthermore, even if the properties had already been foreclosed when the Complaint was filed, their ownership and possession remained with petitioner since the certificate of sale was not registered with the Registry of Deeds since the Ex-Officio Sheriff was restrained from doing so and the certificate of sale was only issued to respondent after the Complaint for annulment of real estate mortgage was filed. This supports petitioner's claim that it never asked for the reconveyance of or asserted its ownership over the mortgaged properties when it filed its Complaint since it still enjoyed ownership and possession over them.