FIRST SARMIENTO PROPERTY HOLDINGS, INC., Petitioner , v.

PHILIPPINE BANK OF PHILIPPINE BANK OF

COMMUNICATIONS COMMUNICATIONS , Respondent . G.R. No. 202836, June 19, 2018 G.R. No. 202836,
June 19, 2018 J. LEONEN J. LEONEN

FACTS: FACTS: In 2002, First Sarmiento obtained a P40,000,000.00 loan from PBCOM which was
secured by a real estate mortgage over 1,076 parcels of land. The loan was further amended twice with
the increase of the loan amount to P100,000,000.00. In 2011, PBCOM filed a Petition for Extrajudicial
Foreclosure of Real Estate Mortgage. It claimed in its Petition that it sent First Sarmiento several
demand letters, yet First Sarmiento still failed to pay the principal amount and accrued interest on the
loan. This prompted PBCOM to resort to extrajudicial foreclosure of the mortgaged properties, a
recourse granted to it under the loan agreement. First Sarmiento attempted to file a Complaint for
annulment of real estate mortgage with the Regional Trial Court. However, the Clerk of Court refused to
accept the Complaint in the absence of the mortgaged properties' tax declarations, which would be
used to assess the docket fees.

Judges of RTC Malolos granted First Sarmiento's Urgent Motion to Consider the Value of Subject
Matter of the Complaint as Not Capable of Pecuniary Estimation, and ruled that First Sarmiento's action
for annulment of real estate mortgage was incapable of pecuniary estimation. First Sarmiento filed a
Complaint for annulment of real estate mortgage and its amendments, with prayer for the issuance of
temporary restraining order and preliminary injunction from foreclosure. It paid a filing fee of P5,545.00.
PBCOM asserted that the RTC failed to acquire jurisdiction over First Sarmiento's Complaint because
the action for annulment of mortgage was a real action; thus, the filing fees filed should have been
based on the fair market value of the mortgaged properties.

ISSUE: ISSUE: Whether or not an action for annulment of real estate mortgage is an action incapable of
pecuniary estimation? – Yes.

HELD: HELD: Whatever confusion there might have been regarding the nature of actions for nullity of

contracts or legality of conveyances, which would also involve recovery of sum of money or real
property, was directly addressed by Lu v. Lu Ym. Lu underscored that "where the basic issue is
something other than the right to recover a sum of money, the money claim being only incidental to or
merely a consequence of, the principal relief sought, the action is incapable of pecuniary estimation.
This finds support in numerous decisions where this Court proclaimed that the test to determine
whether an action is capable or incapable of pecuniary estimation is to ascertain the nature of the
principal action or relief sought. Thus, if the principal relief sought is 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 money or real property and the money claim is only a consequence of the
principal relief, then the action is incapable of pecuniary estimation. In the case at bar, petitioner
contends that its complaint prayed for the annulment of the real estate mortgage it entered into with
respondent and not for the recovery or reconveyance of the mortgaged properties because it was still
the registered owner when it filed its complaint. The evidence on record supports petitioner's claim;
hence, there was no reason for the dismissal of its Complaint for lack of jurisdiction.
 In light of the foregoing, this Court reaffirms that the nature of an action is determined by the
principal relief sought in the complaint, irrespective of the other causes of actions that may also crop up
as a consequence of the principal relief prayed for. The contrary rule espoused in Home Guaranty v. R-II
Builders is thereby set aside.

DISPOSITIVE: DISPOSITIVE: Petition GRANTED.