G.R. No. 202836 . June 19, 2018.
FIRST SARMIENTO PROPERTY HOLDINGS, INC., PETITIONER, VS. PHILIPPINE BANK OF COMMUNICATIONS, RESPONDENT.

FACTS

Petitioner First Sarmiento obtained loans from respondent PBCOM, secured by a real estate mortgage over numerous parcels of land. After alleged default, PBCOM initiated extrajudicial foreclosure proceedings. First Sarmiento then filed a Complaint for annulment of the real estate mortgage and its amendments, claiming it never received the loan proceeds. It paid a filing fee of P5,545.00, asserting the action was incapable of pecuniary estimation. The Executive Judges initially agreed with this characterization.
PBCOM opposed, arguing the action was a real action where jurisdiction depended on payment of filing fees based on the mortgaged properties’ value. The Regional Trial Court (RTC) dismissed the Complaint for lack of jurisdiction, relying on Home Guaranty Corporation v. R-II Builders, which held that an action for annulment or rescission of a contract, where the ultimate objective is to recover real property, is capable of pecuniary estimation. First Sarmiento’s motion for reconsideration was denied.

ISSUE

Whether the Complaint for annulment of real estate mortgage is an action capable of pecuniary estimation, thereby requiring the payment of filing fees based on the value of the mortgaged properties to confer jurisdiction upon the RTC.

RULING

Yes, the action is capable of pecuniary estimation. The Supreme Court En Banc affirmed the RTC’s dismissal. The nature of an action is determined by the principal relief sought. An action is deemed capable of pecuniary estimation if the primary objective is the recovery of a sum of money or real property. Here, while the Complaint was denominated as one for annulment, the essential and ultimate relief sought was to invalidate the mortgage to prevent the foreclosure and recover title to the properties. This objective is inherently pecuniary.
The Court clarified that the doctrine in Bunayog v. Tunas, which characterized an action to annul a mortgage as incapable of pecuniary estimation, had been modified by subsequent jurisprudence. The ruling in Home Guaranty Corporation is consistent with the prevailing principle that courts must look beyond the complaint’s title to ascertain its true nature. Since the annulment directly affected title to and recovery of the mortgaged real properties, the action was real and necessarily capable of pecuniary estimation. Consequently, the correct filing fees must be computed based on the property’s value as stated in the tax declarations or current market value. First Sarmiento’s failure to pay the proper fees meant the RTC did not acquire jurisdiction over the case.