The Supreme Court’s decision in Quizon-Arciga v. Baluyut clarifies that a party cannot belatedly challenge a court’s jurisdiction after actively participating in the proceedings and losing the case. Specifically, the Court ruled that the petitioners were estopped from questioning the Regional Trial Court’s (RTC) jurisdiction over a foreclosure case because they raised the issue only after participating in the trial and failing to obtain a favorable judgment. This means that if a party fully engages in a legal battle, they cannot later claim the court lacked the authority to hear the case simply because they are unhappy with the outcome. This decision emphasizes the importance of promptly addressing jurisdictional concerns to avoid being barred by estoppel.

Mortgage Dispute: Can a Party Challenge Jurisdiction After Years of Litigation?

This case arose from a complaint for judicial foreclosure of mortgage filed by Jaycee P. Baluyut (respondent) against Rita Quizon-Arciga and Relia Q. Arciga (petitioners). The dispute centered on a loan secured by a real estate mortgage (REM) over a property in Concepcion, Tarlac. The petitioners initially defended the case on the ground that Relia lacked the authority to mortgage the property on behalf of Rita. After trial, the RTC ruled in favor of the respondent, ordering the petitioners to pay the loan amount with interest, and in default thereof, to have the property sold at public auction. The petitioners did not appeal the decision but later sought to nullify the public auction sale, arguing that the monthly interest rate was unconscionable and void. They then filed a Petition for Annulment of Judgment with the Court of Appeals (CA), which was dismissed. The core legal question is whether the petitioners could challenge the RTC’s jurisdiction at such a late stage in the proceedings.

The petitioners argued that the RTC lacked jurisdiction because the respondent’s complaint did not specify the assessed value of the property. Without this information, it was impossible to determine whether the RTC or the Municipal Trial Court had proper jurisdiction. They also claimed that their previous counsel’s gross negligence constituted extrinsic fraud, justifying the annulment of the judgment. In response, the respondent contended that the petitioners were estopped from raising the jurisdictional issue because they had actively participated in the trial without objection. The respondent further argued that the decision had become final and executory due to the petitioners’ voluntary decision not to appeal.

Rule 47 of the Rules of Court governs actions for annulment of judgments, providing only two grounds: extrinsic fraud and lack of jurisdiction. Extrinsic fraud refers to situations where a party is prevented from fully participating in the trial through fraud or deception by the opposing party. The petitioners argued that their counsel’s negligence constituted extrinsic fraud. However, the Court emphasized that for fraud to be considered extrinsic, it must be committed by the prevailing litigant, not by the party’s own counsel. Thus, even if the counsel was indeed negligent, it does not constitute a valid ground for annulment of judgment.

Regarding the issue of jurisdiction, the Court acknowledged that a complaint for foreclosure of REM, being a real action, must be filed with the appropriate court based on the assessed value of the property. Section 19 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, states:

Sec. 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise exclusive original jurisdiction.

x x x x

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty thousand pesos (P20,000,00) or, for civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts.

The Court noted that the respondent’s complaint failed to allege the assessed value of the subject property, making it impossible to readily determine the proper court with jurisdiction. However, the Court invoked the principle of estoppel to prevent the petitioners from belatedly challenging the RTC’s jurisdiction. Citing the case of Lagundi v. Bautista, the Court reiterated that estoppel by laches may bar a party from invoking lack of jurisdiction when the issue is raised only after active participation in the trial and a loss on the merits.

The Court found that the petitioners actively participated in all stages of the case before the RTC, raising defenses on the validity of the REM but never questioning the court’s jurisdiction. They presented themselves as witnesses, opposed the issuance of a writ of possession, and only raised the jurisdictional issue in their motion for reconsideration before the CA, twelve years after the filing of the complaint. The Supreme Court stated that:

Estoppel sets in when “a party participates in all stages of a case before challenging the jurisdiction of the lower court. One cannot belatedly reject or repudiate its decision after voluntarily submitting to its jurisdiction, just to secure affirmative relief against one’s opponent or after failing to obtain such relief.”

Therefore, the Court held that the petitioners were estopped from challenging the RTC’s jurisdiction due to their prolonged participation in the proceedings without objection. This decision underscores the importance of raising jurisdictional issues promptly to avoid being barred by estoppel, especially after actively participating in the trial and losing the case. The Supreme Court affirmed the CA’s dismissal of the petition for annulment of judgment, emphasizing that estoppel can prevent a party from belatedly questioning a court’s jurisdiction after actively participating in the legal process.

FAQs

What was the key issue in this case?	The key issue was whether the petitioners could challenge the Regional Trial Court’s (RTC) jurisdiction after actively participating in the trial and only raising the issue years later in a motion for reconsideration.
What is the doctrine of estoppel in relation to jurisdiction?	Estoppel prevents a party from challenging a court’s jurisdiction if they have actively participated in the case without raising the issue promptly, especially after losing on the merits.
What is extrinsic fraud, and how does it relate to annulment of judgment?	Extrinsic fraud occurs when a party is prevented from fully participating in a trial due to fraud or deception by the opposing party. It is a ground for annulment of judgment, but does not include negligence of one’s own counsel.
Why did the Court rule against the petitioners’ claim of extrinsic fraud?	The Court ruled against the petitioners because the alleged negligence was committed by their own counsel, not by the opposing party, and therefore did not constitute extrinsic fraud.
What information should be included in a complaint for judicial foreclosure of mortgage?	A complaint for judicial foreclosure of mortgage should include the assessed value of the property to determine which court (RTC or Municipal Trial Court) has jurisdiction.
What happens if the assessed value is not stated in the complaint?	If the assessed value is not stated, it can create uncertainty about the court’s jurisdiction, but a party may be estopped from raising this issue if they participate in the case without objection.
How long did the petitioners wait before challenging the RTC’s jurisdiction?	The petitioners waited twelve years from the filing of the complaint before challenging the RTC’s jurisdiction, raising the issue for the first time in their motion for reconsideration before the CA.
What is the significance of actively participating in a case?	Actively participating in a case without raising jurisdictional issues can lead to estoppel, preventing a party from later challenging the court’s authority.
What was the basis for the original complaint?	The original complaint was for judicial foreclosure of mortgage based on a loan secured by a real estate mortgage over a property in Concepcion, Tarlac.

This case serves as a reminder that jurisdictional challenges should be raised promptly to avoid being barred by estoppel. Parties must diligently assess the court’s jurisdiction at the outset of litigation and cannot wait until after an unfavorable judgment to raise such concerns. The Supreme Court’s decision reinforces the principle that active participation in legal proceedings implies a waiver of the right to later question the court’s authority.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Rita Quizon-Arciga and Relia Q. Arciga vs. Jaycee P. Baluyut, G.R. No. 256612, June 14, 2023