G.R. No. 255239 . February 13, 2023.
Spouses Tomas Libiran and Potenciana Feliciano (deceased), herein represented by their Attorney-in-Fact, Roning Santos, Petitioners, vs. Elisan Credit Corporation, Respondent.

FACTS

On January 8, 2003, Spouses Tomas Libiran and Potenciana Feliciano obtained a loan of PHP 200,000.00 from Elisan Credit Corporation, secured by a promissory note and a real estate mortgage over a parcel of land. The mortgage contract stipulated that the property would also secure any subsequent obligations. The spouses obtained additional loans on December 9, 2005 (PHP 609,000.00), March 9, 2006 (PHP 118,000.00), and June 15, 2006 (PHP 474,000.00), but failed to pay them in full. Despite demands, they failed to settle their total obligation of PHP 885,380.00, plus interests and penalties. Elisan filed a complaint for judicial foreclosure of mortgage with the Regional Trial Court (RTC) of Quezon City.
In their Answer, the Spouses Libiran denied the loan obligations, claimed improper venue as the mortgaged property is in Bulacan, alleged they were made to sign blank documents, and asserted that the mortgage was merely additional security for a loan of their daughter and son-in-law which was already paid. They also contended the mortgage contract and related documents were falsified. The RTC ruled in favor of Elisan, ordering payment of the principal, interests, penalties, and attorney’s fees, and authorizing foreclosure upon default. The Court of Appeals affirmed the RTC decision but reduced the interest rate to 12% per annum, finding the original rate unconscionable.

ISSUE

Whether the RTC of Quezon City has jurisdiction over the complaint for judicial foreclosure of mortgage.

RULING

The Petition is meritorious. The Supreme Court ruled that a complaint for judicial foreclosure of mortgage is a real action, and jurisdiction is determined by the assessed value of the mortgaged property. The Court held that pursuant to Section 19(2) of Batas Pambansa Blg. 129, as amended, for real actions like foreclosure, the RTC has exclusive original jurisdiction only if the assessed value of the property exceeds the jurisdictional threshold (PHP 400,000.00 in Metro Manila at the time). If the assessed value is below this threshold, the Metropolitan Trial Court has jurisdiction. The Complaint filed by Elisan did not allege the assessed value of the property. Therefore, it failed to establish that the RTC of Quezon City had jurisdiction over the case. The Court emphasized that jurisdiction over the subject matter is conferred by law and determined by the allegations in the complaint. Since the assessed value was not pleaded, the RTC did not acquire jurisdiction. The Supreme Court reversed the decisions of the lower courts and dismissed the complaint without prejudice to its refiling in the proper court.