Philippine National Bank vs.

Abello
G.R. No. 242570
September 18, 2019

Topic: Real Estate Mortgage

Facts:
Spouses Abello filed a complaint for Cancellation/Discharge of Mortgage/Mortgage Liens
against Philippine National Bank (PNB) before the RTC involving parcels of land all situated in
Bacolod City.

Over the two lots, inscriptions of REM was obtained by the Spouses Abello from PNB for
P227,000.00. The Spouses Abello argue that they should be discharged as a matter of right and
the encumbrance cancelled for the reason that no action has been made against them by PNB
since 1975, the date of inscription, that the right to file an action has already prescribed.

After trial, the RTC ruled in favor of the Spouses Abello, holding that prescription has already
set in. The RTC reckoned the period of prescription from the date of inscription on the TCT. The
same was affirmed by the CA. Hence, the petition before Court.

Issue:
Whether or not the CA erred in ordering the cancellation of the annotated encumbrances on
the subject TCTs.

Ruling:
The Supreme Court, speaking through Justice Reyes, ruled that, YES, the CA erred in ordering
the cancellation of the annotated encumbrances on the subject TCTs.

For an action to foreclose REM to prosper, it is crucial that the creditor-mortgagee establishes
his right by alleging the terms and conditions of the mortgage contract, particularly the
maturity of the loan which it secures.

In this case, the date of annotation is irrelevant on the issue of whether the institution of a
mortgage action has already prescribed. Instead, as previously elucidated, what is crucial is the
date of maturity of the loan in instances when demand is not necessary, or the date of demand.

The respondents failed to adduce evidence to establish when the loan became due, and
consequently, when the right to foreclose the mortgage accrued.

Therefore, the petition is granted.

Nota Bene:
 Veloso vs. BDO
G.R. No. 256924
June 14, 2023

Topic: Chattel Mortgage

Facts:
Spouses Veloso executed a Mortgage Loan Agreement in favor of BDO to secure the payment
of a P,184,900 real estate loan obtained with the bank. A real estate mortgage over their real
properties was constituted.

Later, the Spouses Veloso defaulted. Thus, BDO filed with the RTC a petition for extrajudicial
foreclosure of mortgage while the spouses filed a complaint for accounting, judicial
determination or fixing of obligations, legal compensation or set-off, and damages against BDO
before the RTC for the stipulation in the promissory notes and related documents executed by
them in favor of BDO are void for being unconscionable and illegal.

Meanwhile, the mortgage properties were awarded to BDO for being the highest bidder. Thus,
a COC was issued to BDO. The spouses, upon knowledge of the same, filed a complaint against
BDO for the declaration of nullity of real estate mortgage for the same reason.

BDO filed a motion to dismiss on the ground that the RTC has no jurisdiction over the case
because the complaint involves title to or possession of real property or interest that
jurisdiction of the court is determined by the assessed value of the property which the spouses
failed to allege in their complaint.

For their part, the spouses argue that the instant case is not a real action. It is a personal action
where the objective is for the nullification of certain documents and that they are not seeking
to recover possession of the properties.

After trial, the RTC ruled in favor of BDO, dismissing the complaint. The same was affirmed by
the CA. Hence, the petition before the Court.

Issue:
Whether or not the RTC has jurisdiction over the subject matter of the action.

Ruling:
The Supreme Court, speaking through Justice Inting, ruled that, NO, the RTC has no jurisdiction
over the subject matter of the action because in real actions, the assessed value of the realty as
alleged in the complaint determines the trial court’s jurisdiction.

The Supreme Court held that the assessed value of the subject property must be averred in the
complaint; otherwise, "it cannot be ascertained which trial court shall exercise exclusive
jurisdiction over the action."
In Foronda-Crystal vs. Son, it was held that failure to allege the property’s assessed value in the
complaint would not be fatal if an allegation of the assessed value could be found.

Nota Bene: