Far East Bank and Trust Company v. Spouses Romulo Plaza
REITERATIONFacts
The Antecedents: Charlie Ang obtained loans from petitioners Far East Bank and Trust Company (FEBTC) and/or Bank of the Philippine Islands (BPI), using a piece of land owned by respondent-spouses Romulo and Wilma Plaza as collateral for the initial loan of ₱2,158,000.00. Ang subsequently obtained additional loans amounting to ₱4,800,000.00. Upon Ang's failure to pay, petitioners initiated foreclosure proceedings. Procedural History: Respondent-spouses offered to pay the mortgage indebtedness of ₱2,158,000.00, but petitioners refused unless respondents also assumed Ang's other obligations. Respondents filed a civil action for release of the real estate mortgage and damages. Petitioners moved to dismiss, arguing lack of jurisdiction due to non-payment of docket fees for a real action. The RTC denied the motion, as did the Court of Appeals on petition for certiorari. The RTC later issued a writ of preliminary injunction enjoining the foreclosure. The Petition: Respondents sent a formal offer to pay ₱2,158,000.00 and requested the release of the mortgage, enclosing a cashier's check. Petitioners accepted the check as partial payment, reserving their rights regarding the remaining balance. Respondents insisted on full payment and release, while petitioners maintained the action was real and thus jurisdiction was not acquired due to insufficient docket fees. The issue of whether the mortgage secured only the initial loan or also subsequent loans was also raised.
Issue(s)
Whether the civil action for the release of a real estate mortgage is a real action or a personal action for the purpose of determining the correct docket fees and trial court jurisdiction.
Ruling
The petition is denied. The Court of Appeals did not commit any reversible error. The action filed by respondent-spouses is a personal action. The issue regarding the extent of the mortgage coverage is deemed premature for resolution in this petition.
Ratio Decidendi
On Issue 1: The Supreme Court ruled that the action to compel the mortgagee to accept payment and cancel the real estate mortgage is a personal action. Applying the doctrine in Hernandez v. Rural Bank of Lucena, the Court explained that such an action does not involve title to or possession of the property if the mortgagee has not yet foreclosed and the mortgagor remains in possession. In this instance, the respondent-spouses are not questioning the validity of the mortgage but are actually affirming it by seeking to satisfy the debt and extinguish the lien. Because the title remains in the names of the respondents and they are in actual physical possession, the outcome of the case does not affect the ownership of the land itself. Consequently, the suit is essentially one for specific performance or to compel the release of a lien upon the fulfillment of a contract, which is a personal action. Therefore, the docket fees were properly assessed, and the Regional Trial Court (RTC) correctly exercised jurisdiction over the case.
Main Doctrine
An action to compel the mortgagee to accept payment and for the consequent cancellation of a real estate mortgage is a personal action if the mortgagee has not foreclosed the mortgage and the mortgagor is in possession of the premises, as neither the mortgagor's title to nor possession of the property is in question.