Anda di halaman 1dari 46

STIPULATION OF PARTIES AS TO VENUE

G.R. No. 227146, November 14, 2016

RADIOWEALTH FINANCE COMPANY, INC., Petitioner, v. ROMEO T. NOLASCO


AND REYNALDO T. NOLASCO, Respondents.

RESOLUTION

REYES, J.:

This is a petition for review on certiorari1 filed under Rule 45 of the Rules of Court
assailing the Amended Order2 dated July 21, 2016 and Order3 dated September 1,
2016 of the Regional Trial Court (RTC) of San Mateo, Rizal, Branch 75, in Civil Case
No. 2806-15 SM, on pure questions of law.chanroblesvirtuallawlibrary
Factual Antecedents

Radiowealth Finance Company, Inc. (petitioner) is a domestic financing corporation


duly organized and existing under the laws of the Philippines, with principal address at
7th Floor, DMG Center, Domingo M. Guevara Street, Mandaluyong City. On the other
hand, Romeo Nolasco and Reynaldo Nolasco (respondents) are obligors of the
petitioner who both maintain residence in Mandaluyong City.4

On March 31, 2014, the respondents secured a loan from the petitioner in the amount
of P1,908,360.00, payable in installments within a period of 36 months, as evidenced
by a Promissory Note5 executed on the same day. To secure the payment of the loan,
the respondents constituted a Chattel Mortgage6 over a Fuso Super Great Dropside
Truck, 2001 Model.7

Unfortunately, the respondents defaulted in the payment of the installments which


caused the entire amount to become due and demandable. The petitioner repeatedly
demanded from the respondents the payment of the balance of the loan, but they
would not take heed and even refused to surrender the possession of the motor
vehicle which stood as security for the loan. Thus, on September 30, 2015, the
petitioner filed a complaint8 for Sum of Money and Damages with Application for Writ of
Replevin with the RTC of San Mateo, Rizal, praying that the respondents be ordered to
pay their balance of P1,600,153.02 or, in the alternative, surrender the possession of
the motor vehicle subject of the Chattel Mortgage dated March 31, 2014 so that the
same may be put up on sale to answer for the obligation and the deficiency, if any,
may be determined.

After an ex parte hearing, the RTC issued an Order9 dated March 28, 2016, directing
the issuance of the Writ of Replevin. Subsequently, however, the RTC of San Mateo,
Rizal issued an Amended Order10 dated July 21, 2016, dismissing motu proprio the
case for lack of jurisdiction. Citing Section 2, Rule 4 of the 1997 Rules of Civil
Procedure, it ruled that since neither the petitioner nor the respondents reside within
the jurisdiction of the trial court, that is, either in San Mateo or Rodriguez, Rizal, the
case must be dismissed.11

On August 16, 2016, the petitioner filed a Motion for Reconsideration12 arguing that the
RTC of San Mateo, Rizal has jurisdiction over the case. It pointed out that the sum of
money involved amounting to P1,600,153.02 is well within the jurisdiction of the RTC.
Further, the venue is also proper, considering that there is a provision in the
promissory note which states that any action to enforce payment of any sums due shall
exclusively be brought in the proper court within the National Capital Judicial
Region or in any place where the petitioner has a branch or office at its sole option.

In an Order13 dated September 1, 2016, the RTC reiterated its earlier ruling and denied
the petitioner's motion for reconsideration.

The petitioner now comes before this Court, challenging the order of the RTC on pure
questions of law. It contends that the RTC erred in concluding that it had no jurisdiction
over the case and in motu propriodismissing the same on the ground of improper
venue.chanroblesvirtuallawlibrary

Ruling of the Court

The petition is meritorious.

A reading of the questioned orders shows that the RTC confused the terms jurisdiction
and venue, which are completely different concepts. There is no question that the RTC
has jurisdiction over the complaint filed by the petitioner considering the nature of the
case and the amount involved.

It bears noting that "'[j]urisdiction' is the court's authority to hear and determine a case.
The court's jurisdiction over the nature and subject matter of an action is conferred by
law."14 Section 19(8) of Batas Pambansa Bilang 129,15 as amended by Republic Act
(R.A.) No. 7691, provides:
chanRoblesvirtualLawlibrary
SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive
original jurisdiction:

xxxx

(8) In all other cases in which the demand, exclusive of interest, damages of
whatever kind, attorney's fees, litigation expenses, and costs or the value of the
property in controversy exceeds One hundred thousand pesos (P100,000.00)
or, in such other cases in Metro Manila, where the demand, exclusive of the
abovementioned items, exceeds Two hundred thousand pesos (P200,000.00).
This had been amended by Section 5 of R.A. No. 7691 which reads:
chanRoblesvirtualLawlibrary
SEC. 5. After five (5) years from the effectivity of this Act, the jurisdictional amounts
mentioned in Sec. 19(3), (4), and (8); and Sec. 33(1) of Batas Pambansa Blg. 129 as
amended by this Act, shall be adjusted to Two hundred thousand pesos
(P200,000.00). Five (5) years thereafter, such jurisdictional amounts shall be adjusted
further to Three hundred thousand pesos (P300,000.00): Provided, however, That in
the case of Metro Manila, the abovementioned jurisdictional amounts shall be adjusted
after five (5) years from the effectivity of this Act to Four hundred thousand pesos
(P400,000.00).ChanRoblesVirtualawlibrary
The amount of P1,600,153.02 involved in the instant case is undoubtedly within the
jurisdiction of the RTC, as all money claims exceeding P400,000.00 are within its
authority to hear and decide. It is an error, therefore, for the RTC to claim lack of
jurisdiction over the case.

At one point, the RTC anchored its ruling of dismissal on the fact that the complaint
should have been filed in Mandaluyong City where the petitioner holds its main office
and where the respondents both reside, and not in San Mateo, Rizal.

Apparently, the RTC mistook jurisdiction for the more lenient concept of venue. To
clarify, jurisdiction and venue are not synonymous concepts. Primarily, jurisdiction is
conferred by law and not subject to stipulation of the parties. It relates to the nature of
the case. On the contrary, venue pertains to the place where the case may be filed.
Unlike jurisdiction, venue may be waived and subjected to the agreement of the parties
provided that it does not cause them inconvenience.

Section 2, Rule 4 of the 1997 Rules of Civil Procedure, which was relied upon by the
RTC to support its ruling of dismissal, reads as follows:
chanRoblesvirtualLawlibrary
Section 2. Venue of personal actions. - All other actions may be commenced and tried
where the plaintiff or any of the principal plaintiffs resides, or where the defendant or
any of the principal defendants resides, or in the case of a non-resident defendant
where he may be found, at the election of the plaintiff. (Emphasis
ours)ChanRoblesVirtualawlibrary
The foregoing provision is not restrictive. A plain reading of the provision shows that it
is merely permissive as manifested by the use of the term "may." Moreover, the clear
language of the ensuing provision of Section 4 expressly allows the venue of personal
actions to be subjected to the stipulation of the parties. It reads, thus:
chanRoblesvirtualLawlibrary
Section 4. When rule not applicable. - This Rule shall not apply.
(a) In those cases where a specific rule or law provides otherwise;
or
(b) Where the parties have validly agreed in writing before the filing of the
action on the exclusive venue thereof. (Emphasis ours)
Clearly, stipulation on venue is permitted and must be recognized for as long as it does
not defeat the purpose of the Rules which primarily aims for the convenience of the
parties to the dispute. In Unimasters Conglomeration, Inc. v. CA,16 the Court
emphasized:
chanRoblesvirtualLawlibrary
Parties may by stipulation waive the legal venue and such waiver is valid and effective
being merely a personal privilege, which is not contrary to public policy or prejudicial to
third persons. It is a general principle that a person may renounce any right which the
law gives unless such renunciation would be against public policy.

xxxx

Since convenience is the raison d'etre of the rules of venue, it is easy to accept the
proposition that normally, venue stipulations should be deemed permissive merely, and
that interpretation should be adopted which most serves the parties' convenience. In
other words, stipulations designating venues other than those assigned by Rule 4
should be interpreted as designed to make it more convenient for the parties to
institute actions arising from or in relation to their agreements; that is to say, as simply
adding to or expanding the venues indicated in said Rule 4.17 (Citations
omitted)ChanRoblesVirtualawlibrary
There is, therefore, nothing that prohibits the parties to decide on a different venue for
any dispute or action that may arise from their agreement. In this case, in the
promissory note executed and signed by the parties, there is a provision which states
that "[a]ny action to enforce payment of any sums due under this Note shall exclusively
be brought in the proper court within the National Capital Judicial Region or in any
place where [the petitioner] has a branch/office, at its sole option."18 Thus, the
petitioner's filing of the case in San Mateo, Rizal, where it maintains a branch is proper
and should have been respected by the RTC especially when there appears no
objection on the part of the respondents.

Moreover, the Court has emphasized in several cases that the RTC may not motu
proprio dismiss the case on the ground of improper venue. It is a matter personal to the
parties and without their objection at the earliest opportunity, as in a motion to dismiss
or in the answer, it is deemed waived.

The discussion m Dacoycoy v. Intermediate Appellate Court19 is squarely in point, viz.:


chanRoblesvirtualLawlibrary
Dismissing the complaint on the ground of improper venue is certainly not the
appropriate course of action at this stage of the proceeding, particularly as venue, in
inferior courts as well as in the Courts of First Instance (now RTC), may be waived
expressly or impliedly. Where defendant fails to challenge timely the venue in a motion
to dismiss as provided by Section 4 of Rule 4 of the Rules of Court, and allows the trial
to be held and a decision to be rendered, he cannot on appeal or in a special action be
permitted to challenge belatedly the wrong venue, which is deemed waived.

Thus, unless and until the defendant objects to the venue in a motion to dismiss, the
venue cannot be truly said to have been improperly laid, as for all practical intents and
purposes, the venue, though technically wrong, may be acceptable to the parties for
whose convenience the rules on venue had been devised. The trial court cannot pre-
empt the defendant's prerogative to object to the improper laying of the venue by motu
propriodismissing the case.20ChanRoblesVirtualawlibrary
In the present case, the RTC carelessly interfered with the parties' agreement on the
venue of their dispute and interrupted what could have been an expeditious flow of the
proceeding. To reiterate, the choice of venue is a matter addressed to the sound
judgment of the parties based on considerations personal to them, i.e. convenience. It
is only the parties who may raise objection on the same. Absent such protest, it is an
error for the RTC to decide that the venue was improperly laid as it is tantamount to
needlessly interfering to a mutually agreed term.

WHEREFORE, the petition is GRANTED. The Amended Order dated July 21, 2016
and Order dated September 1, 2016 of the Regional Trial Court of San Mateo, Rizal,
Branch 75, are REVERSED and SET ASIDE and Civil Case No. 2806-15 SM is hereby
ordered REINSTATED. The RTC is ordered to proceed with dispatch in the disposition
of the mentioned case.

SO ORDERED.

G.R. No. 175914 February 10, 2009

RUBY SHELTER BUILDERS AND REALTY DEVELOPMENT


CORPORATION, Petitioner,
vs.
HON. PABLO C. FORMARAN III, Presiding Judge of Regional Trial Court Branch
21, Naga City, as Pairing Judge for Regional Trial Court Branch 22, Formerly
Presided By HON. NOVELITA VILLEGAS-LLAGUNO (Retired 01 May 2006),
ROMEO Y. TAN, ROBERTO L. OBIEDO and ATTY. TOMAS A.
REYES, Respondents.

DECISION

CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court seeking the reversal of the Decision1 dated 22 November 2006 of the Court of
Appeals in CA-G.R. SP No. 94800. The Court of Appeals, in its assailed Decision,
affirmed the Order2 dated 24 March 2006 of the Regional Trial Court (RTC), Branch 22,
of Naga City, in Civil Case No. RTC-2006-0030, ordering petitioner Ruby Shelter
Builders and Realty Development Corporation to pay additional docket/filing fees,
computed based on Section 7(a) of Rule 141 of the Rules of Court, as amended.

The present Petition arose from the following facts:

Petitioner obtained a loan3 in the total amount of ₱95,700,620.00 from respondents


Romeo Y. Tan (Tan) and Roberto L. Obiedo (Obiedo), secured by real estate
mortgages over five parcels of land, all located in Triangulo, Naga City, covered by
Transfer Certificates of Title (TCTs) No. 38376,4 No. 29918,5 No. 38374,6 No.
39232,7 and No. 39225,8 issued by the Registry of Deeds for Naga City, in the name of
petitioner. When petitioner was unable to pay the loan when it became due and
demandable, respondents Tan and Obiedo agreed to an extension of the same.

In a Memorandum of Agreement9 dated 17 March 2005, respondents Tan and Obiedo


granted petitioner until 31 December 2005 to settle its indebtedness, and condoned the
interests, penalties and surcharges accruing thereon from 1 October 2004 to 31
December 2005 which amounted to ₱74,678,647.00. The Memorandum of Agreement
required, in turn, that petitioner execute simultaneously with the said Memorandum, "by
way of dacion en pago," Deeds of Absolute Sale in favor of respondents Tan and
Obiedo, covering the same parcels of land subject of the mortgages. The Deeds of
Absolute Sale would be uniformly dated 2 January 2006, and state that petitioner sold
to respondents Tan and Obiedo the parcels of land for the following purchase prices:

TCT No. Purchase Price


38376 ₱ 9,340,000.00
29918 ₱ 28,000,000.00
38374 ₱ 12,000,000.00
39232 ₱ 1,600,000.00
39225 ₱ 1,600,000.00

Petitioner could choose to pay off its indebtedness with individual or all five parcels of
land; or it could redeem said properties by paying respondents Tan and Obiedo the
following prices for the same, inclusive of interest and penalties:

TCT No. Redemption Price


38376 ₱ 25,328,939.00
29918 ₱ 35,660,800.00
38374 ₱ 28,477,600.00
39232 ₱ 6,233,381.00
39225 ₱ 6,233,381.00

In the event that petitioner is able to redeem any of the afore-mentioned parcels of
land, the Deed of Absolute Sale covering the said property shall be nullified and have
no force and effect; and respondents Tan and Obiedo shall then return the owner’s
duplicate of the corresponding TCT to petitioner and also execute a Deed of Discharge
of Mortgage. However, if petitioner is unable to redeem the parcels of land within the
period agreed upon, respondents Tan and Obiedo could already present the Deeds of
Absolute Sale covering the same to the Office of the Register of Deeds for Naga City
so respondents Tan and Obiedo could acquire TCTs to the said properties in their
names.

The Memorandum of Agreement further provided that should petitioner contest,


judicially or otherwise, any act, transaction, or event related to or necessarily
connected with the said Memorandum and the Deeds of Absolute Sale involving the
five parcels of land, it would pay respondents Tan and Obiedo ₱10,000,000.00 as
liquidated damages inclusive of costs and attorney’s fees. Petitioner would likewise
pay respondents Tan and Obiedo the condoned interests, surcharges and
penalties.10 Finally, should a contest arise from the Memorandum of Agreement, Mr.
Ruben Sia (Sia), President of petitioner corporation, personally assumes, jointly and
severally with petitioner, the latter’s monetary obligation to respondent Tan and
Obiedo.

Respondent Atty. Tomas A. Reyes (Reyes) was the Notary Public who notarized the
Memorandum of Agreement dated 17 March 2005 between respondent Tan and
Obiedo, on one hand, and petitioner, on the other.

Pursuant to the Memorandum of Agreement, petitioner, represented by Mr. Sia,


executed separate Deeds of Absolute Sale,11 over the five parcels of land, in favor of
respondents Tan and Obiedo. On the blank spaces provided for in the said Deeds,
somebody wrote the 3rd of January 2006 as the date of their execution. The Deeds
were again notarized by respondent Atty. Reyes also on 3 January 2006.

Without payment having been made by petitioner on 31 December 2005, respondents


Tan and Obiedo presented the Deeds of Absolute Sale dated 3 January 2006 before
the Register of Deeds of Naga City on 8 March 2006, as a result of which, they were
able to secure TCTs over the five parcels of land in their names.

On 16 March 2006, petitioner filed before the RTC a Complaint12 against respondents
Tan, Obiedo, and Atty. Reyes, for declaration of nullity of deeds of sales and damages,
with prayer for the issuance of a writ of preliminary injunction and/or temporary
restraining order (TRO). The Complaint was docketed as Civil Case No. 2006-0030.

On the basis of the facts already recounted above, petitioner raised two causes of
action in its Complaint.

As for the first cause of action, petitioner alleged that as early as 27 December 2005,
its President already wrote a letter informing respondents Tan and Obiedo of the
intention of petitioner to pay its loan and requesting a meeting to compute the final
amount due. The parties held meetings on 3 and 4 January 2006 but they failed to
arrive at a mutually acceptable computation of the final amount of loan payable.
Respondents Tan and Obiedo then refused the request of petitioner for further
dialogues. Unbeknownst to petitioner, despite the ongoing meetings, respondents Tan
and Obiedo, in evident bad faith, already had the pre-executed Deeds of Absolute Sale
notarized on 3 January 2006 by respondent Atty. Reyes. Atty. Reyes, in connivance
with respondents Tan and Obiedo, falsely made it appear in the Deeds of Absolute
Sale that Mr. Sia had personally acknowledged/ratified the said Deeds before Atty.
Reyes.

Asserting that the Deeds of Absolute Sale over the five parcels of land were executed
merely as security for the payment of its loan to respondents Tan and Obiedo; that the
Deeds of Absolute Sale, executed in accordance with the Memorandum of Agreement,
constituted pactum commisorium and as such, were null and void; and that the
acknowledgment in the Deeds of Absolute Sale were falsified, petitioner averred:

13. That by reason of the fraudulent actions by the [herein respondents], [herein
petitioner] is prejudiced and is now in danger of being deprived, physically and legally,
of the mortgaged properties without benefit of legal processes such as the remedy of
foreclosure and its attendant procedures, solemnities and remedies available to a
mortgagor, while [petitioner] is desirous and willing to pay its obligation and have the
mortgaged properties released.13

In support of its second cause of action, petitioner narrated in its Complaint that on 18
January 2006, respondents Tan and Obiedo forcibly took over, with the use of armed
men, possession of the five parcels of land subject of the falsified Deeds of Absolute
Sale and fenced the said properties with barbed wire. Beginning 3 March 2006,
respondents Tan and Obiedo started demolishing some of the commercial spaces
standing on the parcels of land in question which were being rented out by petitioner.
Respondents Tan and Obiedo were also about to tear down a principal improvement
on the properties consisting of a steel-and-concrete structure housing a motor vehicle
terminal operated by petitioner. The actions of respondents Tan and Obiedo were to
the damage and prejudice of petitioner and its tenants/lessees. Petitioner, alone,
claimed to have suffered at least ₱300,000.00 in actual damages by reason of the
physical invasion by respondents Tan and Obiedo and their armed goons of the five
parcels of land.
Ultimately, petitioner’s prayer in its Complaint reads:

WHEREFORE, premises considered, it is most respectfully prayed of this Honorable


Court that upon the filing of this complaint, a 72-hour temporary restraining order be
forthwith issued ex parte:

(a) Restraining [herein respondents] Tan and Obiedo, their agents, privies or
representatives, from committing act/s tending to alienate the mortgaged
properties from the [herein petitioner] pending the resolution of the case,
including but not limited to the acts complained of in paragraph "14", above;

(b) Restraining the Register of Deeds of Naga City from entertaining moves by
the [respondents] to have [petitioner’s] certificates of title to the mortgaged
properties cancelled and changed/registered in [respondents] Tan’s and
Obiedo’s names, and/or released to them;

(c) After notice and hearing, that a writ of preliminary injunction be issued
imposing the same restraints indicated in the next preceding two paragraphs of
this prayer; and

(d) After trial, judgment be rendered:

1. Making the injunction permanent;

2. Declaring the provision in the Memorandum of Agreement requiring the


[petitioner] to execute deed of sales (sic) in favor of the [respondents Tan
and Obiedo] as dacion en pago in the event of non-payment of the debt as
pactum commissorium;

3. Annulling the Deed[s] of Sale for TCT Nos. 29918, 38374, 38376, 39225
and 39232, all dated January 3, 2006, the same being in contravention of
law;

4. Ordering the [respondents] jointly and solidarily to pay the [petitioner]


actual damages of at least ₱300,000.00; attorney’s fees in the amount of
₱100,000.00 plus P1,000.00 per court attendance of counsel as
appearance fee; litigation expenses in the amount of at least ₱10,000.00
and exemplary damages in the amount of ₱300,000.00, plus the costs.

[Petitioner] further prays for such other reliefs as may be proper, just and equitable
under the premises.14

Upon filing its Complaint with the RTC on 16 March 2006, petitioner paid the sum of
₱13,644.25 for docket and other legal fees, as assessed by the Office of the Clerk of
Court. The Clerk of Court initially considered Civil Case No. 2006-0030 as an action
incapable of pecuniary estimation and computed the docket and other legal fees due
thereon according to Section 7(b)(1), Rule 141 of the Rules of Court.

Only respondent Tan filed an Answer15 to the Complaint of petitioner. Respondent Tan
did admit that meetings were held with Mr. Sia, as the representative of petitioner, to
thresh out Mr. Sia’s charge that the computation by respondents Tan and Obiedo of
the interests, surcharges and penalties accruing on the loan of petitioner was replete
with errors and uncertainties. However, Mr. Sia failed to back up his accusation of
errors and uncertainties and to present his own final computation of the amount due.
Disappointed and exasperated, respondents Tan and Obiedo informed Mr. Sia that
they had already asked respondent Atty. Reyes to come over to notarize the Deeds of
Absolute Sale. Respondent Atty. Reyes asked Mr. Sia whether it was his signature
appearing above his printed name on the Deeds of Absolute Sale, to which Mr. Sia
replied yes. On 4 January 2006, Mr. Sia still failed to establish his claim of errors and
uncertainties in the computation of the total amount which petitioner must pay
respondent Tan and Obiedo. Mr. Sia, instead, sought a nine-month extension for
paying the loan obligation of petitioner and the reduction of the interest rate thereon to
only one percent (1%) per month. Respondents Tan and Obiedo rejected both
demands.

Respondent Tan maintained that the Deeds of Absolute Sale were not executed
merely as securities for the loan of petitioner. The Deeds of Absolute Sale over the five
parcels of land were the consideration for the payment of the total indebtedness of
petitioner to respondents Tan and Obiedo, and the condonation of the 15-month
interest which already accrued on the loan, while providing petitioner with the golden
opportunity to still redeem all or even portions of the properties covered by said Deeds.
Unfortunately, petitioner failed to exercise its right to redeem any of the said properties.

Belying that they forcibly took possession of the five parcels of land, respondent Tan
alleged that it was Mr. Sia who, with the aid of armed men, on board a Sports Utility
Vehicle and a truck, rammed into the personnel of respondents Tan and Obiedo
causing melee and disturbance. Moreover, by the execution of the Deeds of Absolute
Sale, the properties subject thereof were, ipso jure, delivered to respondents Tan and
Obiedo. The demolition of the existing structures on the properties was nothing but an
exercise of dominion by respondents Tan and Obiedo.

Respondent Tan, thus, sought not just the dismissal of the Complaint of petitioner, but
also the grant of his counterclaim. The prayer in his Answer is faithfully reproduced
below:

Wherefore, premises considered, it is most respectfully prayed that, after due hearing,
judgment be rendered dismissing the complaint, and on the counterclaim, [herein
petitioner] and Ruben Sia, be ordered to indemnify, jointly and severally [herein
respondents Tan and Obiedo] the amounts of not less than ₱10,000,000.00 as
liquidated damages and the further sum of not less than ₱500,000.00 as attorney’s
fees. In the alternative, and should it become necessary, it is hereby prayed that
[petitioner] be ordered to pay herein [respondents Tan and Obiedo] the entire principal
loan of ₱95,700,620.00, plus interests, surcharges and penalties computed from March
17, 2005 until the entire sum is fully paid, including the amount of ₱74,678,647.00
foregone interest covering the period from October 1, 2004 to December 31, 2005 or
for a total of fifteen (15) months, plus incidental expenses as may be proved in court, in
the event that Annexes "G" to "L" be nullified. Other relief and remedies as are just and
equitable under the premises are hereby prayed for.16

Thereafter, respondent Tan filed before the RTC an Omnibus Motion in which he
contended that Civil Case No. 2006-0030 involved real properties, the docket fees for
which should be computed in accordance with Section 7(a), not Section 7(b)(1), of
Rule 141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC which took effect
on 16 August 2004. Since petitioner did not pay the appropriate docket fees for Civil
Case No. 2006-0030, the RTC did not acquire jurisdiction over the said case. Hence,
respondent Tan asked the RTC to issue an order requiring petitioner to pay the correct
and accurate docket fees pursuant to Section 7(a), Rule 141 of the Rules of Court, as
amended; and should petitioner fail to do so, to deny and dismiss the prayer of
petitioner for the annulment of the Deeds of Absolute Sale for having been executed in
contravention of the law or of the Memorandum of Agreement as pactum
commisorium.

As required by the RTC, the parties submitted their Position Papers on the matter. On
24 March 2006, the RTC issued an Order17 granting respondent Tan’s Omnibus
Motion. In holding that both petitioner and respondent Tan must pay docket fees in
accordance with Section 7(a), Rule 141 of the Rules of Court, as amended, the RTC
reasoned:

It must be noted that under paragraph (b) 2. of the said Section 7, it is provided that
QUIETING OF TITLE which is an action classified as beyond pecuniary estimation
"shall be governed by paragraph (a)". Hence, the filing fee in an action for Declaration
of Nullity of Deed which is also classified as beyond pecuniary estimation, must be
computed based on the provision of Section 7(A) herein-above, in part, quoted.

Since [herein respondent], Romeo Tan in his Answer has a counterclaim against the
plaintiff, the former must likewise pay the necessary filling (sic) fees as provided for
under Section 7 (A) of Amended Administrative Circular No. 35-2004 issued by the
Supreme Court.18

Consequently, the RTC decreed on the matter of docket/filing fees:

WHEREFORE, premises considered, the [herein petitioner] is hereby ordered to pay


additional filing fee and the [herein respondent], Romeo Tan is also ordered to pay
docket and filing fees on his counterclaim, both computed based on Section 7(a) of the
Supreme Court Amended Administrative Circular No. 35-2004 within fifteen (15) days
from receipt of this Order to the Clerk of Court, Regional Trial Court, Naga City and for
the latter to compute and to collect the said fees accordingly.19

Petitioner moved20 for the partial reconsideration of the 24 March 2006 Order of the
RTC, arguing that Civil Case No. 2006-0030 was principally for the annulment of the
Deeds of Absolute Sale and, as such, incapable of pecuniary estimation. Petitioner
submitted that the RTC erred in applying Section 7(a), Rule 141 of the Rules of Court,
as amended, to petitioner’s first cause of action in its Complaint in Civil Case No. 2006-
0030.

In its Order21 dated 29 March 2006, the RTC refused to reconsider its 24 March 2006
Order, based on the following ratiocination:

Analyzing, the action herein pertains to real property, for as admitted by the [herein
petitioner], "the deeds of sale in question pertain to real property" x x x. The Deeds of
Sale subject of the instant case have already been transferred in the name of the
[herein respondents Tan and Obiedo].

Compared with Quieting of Title, the latter action is brought when there is cloud on the
title to real property or any interest therein or to prevent a cloud from being cast upon
title to the real property (Art. 476, Civil Code of the Philippines) and the plaintiff must
have legal or equitable title to or interest in the real property which is the subject matter
of the action (Art. 447, ibid.), and yet plaintiff in QUIETING OF TITLE is required to pay
the fees in accordance with paragraph (a) of Section 7 of the said Amended
Administrative Circular No. 35-2004, hence, with more reason that the [petitioner] who
no longer has title to the real properties subject of the instant case must be required to
pay the required fees in accordance with Section 7(a) of the Amended Administrative
Circular No. 35-2004 afore-mentioned.

Furthermore, while [petitioner] claims that the action for declaration of nullity of deed of
sale and memorandum of agreement is one incapable of pecuniary estimation,
however, as argued by the [respondent Tan], the issue as to how much filing and
docket fees should be paid was never raised as an issue in the case of Russell vs.
Vestil, 304 SCRA 738.

xxxx

WHEREFORE, the Motion for Partial Reconsideration is hereby DENIED.22

In a letter dated 19 April 2006, the RTC Clerk of Court computed, upon the request of
counsel for the petitioner, the additional docket fees petitioner must pay for in Civil
Case No. 2006-0030 as directed in the afore-mentioned RTC Orders. Per the
computation of the RTC Clerk of Court, after excluding the amount petitioner previously
paid on 16 March 2006, petitioner must still pay the amount of ₱720,392.60 as docket
fees.23
Petitioner, however, had not yet conceded, and it filed a Petition for Certiorari with the
Court of Appeals; the petition was docketed as CA-G.R. SP No. 94800. According to
petitioner, the RTC24 acted with grave abuse of discretion, amounting to lack or excess
of jurisdiction, when it issued its Orders dated 24 March 2006 and 29 March 2006
mandating that the docket/filing fees for Civil Case No. 2006-0030, an action for
annulment of deeds of sale, be assessed under Section 7(a), Rule 141 of the Rules of
Court, as amended. If the Orders would not be revoked, corrected, or rectified,
petitioner would suffer grave injustice and irreparable damage.

On 22 November 2006, the Court of Appeals promulgated its Decision wherein it held
that:

Clearly, the petitioner’s complaint involves not only the annulment of the deeds of sale,
but also the recovery of the real properties identified in the said documents. In other
words, the objectives of the petitioner in filing the complaint were to cancel the deeds
of sale and ultimately, to recover possession of the same. It is therefore a real action.

Consequently, the additional docket fees that must be paid cannot be assessed in
accordance with Section 7(b). As a real action, Section 7(a) must be applied in the
assessment and payment of the proper docket fee.

Resultantly, there is no grave abuse of discretion amounting to lack or excess of


jurisdiction on the part of the court a quo. By grave abuse of discretion is meant
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction,
and mere abuse of discretion is not enough – it must be grave. The abuse must be
grave and patent, and it must be shown that the discretion was exercised arbitrarily
and despotically.1avvphi1

Such a situation does not exist in this particular case. The evidence is insufficient to
prove that the court a quo acted despotically in rendering the assailed orders. It acted
properly and in accordance with law. Hence, error cannot be attributed to it.25

Hence, the fallo of the Decision of the appellate court reads:

WHEREFORE, the petition for certiorari is DENIED. The assailed Orders of the court a
quo are AFFIRMED.26

Without seeking reconsideration of the foregoing Decision with the Court of Appeals,
petitioner filed its Petition for Review on Certiorari before this Court, with a lone
assignment of error, to wit:

18. The herein petitioner most respectfully submits that the Court of Appeals
committed a grave and serious reversible error in affirming the assailed Orders of the
Regional Trial Court which are clearly contrary to the pronouncement of this Honorable
Court in the case of Spouses De Leon v. Court of Appeals, G.R. No. 104796, March 6,
1998, not to mention the fact that if the said judgment is allowed to stand and not
rectified, the same would result in grave injustice and irreparable damage to herein
petitioner in view of the prohibitive amount assessed as a consequence of said
Orders.27

In Manchester Development Corporation v. Court of Appeals,28 the Court explicitly


pronounced that "[t]he court acquires jurisdiction over any case only upon the payment
of the prescribed docket fee." Hence, the payment of docket fees is not only
mandatory, but also jurisdictional.

In Sun Insurance Office, Ltd. (SIOL) v. Asuncion,29 the Court laid down guidelines for
the implementation of its previous pronouncement in Manchester under particular
circumstances, to wit:

1. It is not simply the filing of the complaint or appropriate initiatory pleading, but
the payment of the prescribed docket fee, that vests a trial court with jurisdiction
over the subject matter or nature of the action. Where the filing of the initiatory
pleading is not accompanied by payment of the docket fee, the court may allow
payment of the fee within a reasonable time but in no case beyond the applicable
prescriptive or reglementary period.

2. The same rule applies to permissive counterclaims, third-party claims and


similar pleadings, which shall not be considered filed until and unless the filing
fee prescribed therefor is paid. The court may also allow payment of said fee
within a reasonable time but also in no case beyond its applicable prescriptive or
reglementary period.

3. Where the trial court acquires jurisdiction over a claim by the filing of the
appropriate pleading and payment of the prescribed filing fee but, subsequently,
the judgment awards a claim not specified in the pleading, or if specified the
same has been left for determination by the court, the additional filing fee therefor
shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of
Court or his duly authorized deputy to enforce said lien and assess and collect
the additional fee.

In the Petition at bar, the RTC found, and the Court of Appeals affirmed, that petitioner
did not pay the correct amount of docket fees for Civil Case No. 2006-0030. According
to both the trial and appellate courts, petitioner should pay docket fees in accordance
with Section 7(a), Rule 141 of the Rules of Court, as amended. Consistent with the
liberal tenor of Sun Insurance, the RTC, instead of dismissing outright petitioner’s
Complaint in Civil Case No. 2006-0030, granted petitioner time to pay the additional
docket fees. Despite the seeming munificence of the RTC, petitioner refused to pay the
additional docket fees assessed against it, believing that it had already paid the correct
amount before, pursuant to Section 7(b)(1), Rule 141 of the Rules of Court, as
amended.
Relevant to the present controversy are the following provisions under Rule 141 of the
Rules of Court, as amended by A.M. No. 04-2-04-SC30 and Supreme Court Amended
Administrative Circular No. 35-200431 :

SEC. 7. Clerks of Regional Trial Courts. –

(a) For filing an action or a permissive OR COMPULSORY counterclaim, CROSS-


CLAIM, or money claim against an estate not based on judgment, or for filing a third-
party, fourth-party, etc. complaint, or a complaint-in-intervention, if the total sum
claimed, INCLUSIVE OF INTERESTS, PENALTIES, SURCHARGES, DAMAGES OF
WHATEVER KIND, AND ATTORNEY’S FEES, LITIGATIO NEXPENSES AND COSTS
and/or in cases involving property, the FAIR MARKET value of the REAL property in
litigation STATED IN THE CURRENT TAX DECLARATION OR CURRENT ZONAL
VALUATION OF THE BUREAU OF INTERNAL REVENUE, WHICHEVER IS HIGHER,
OR IF THERE IS NONE, THE STATED VALUE OF THE PROPERTY IN LITIGATION
OR THE VALUE OF THE PERSONAL PROPERTY IN LITIGATION OR THE VALUE
OF THE PERSONAL PROPERTY IN LITIGATION AS ALLEGED BY THE CLAIMANT,
is:

[Table of fees omitted.]

If the action involves both a money claim and relief pertaining to property, then THE
fees will be charged on both the amounts claimed and value of property based on the
formula prescribed in this paragraph a.

(b) For filing:

1. Actions where the value of the subject matter cannot be estimated

2. Special civil actions, except judicial foreclosure of mortgage,


EXPROPRIATION PROCEEDINGS, PARTITION AND QUIETING OF TITLE
which will

3. All other actions not involving property

[Table of fees omitted.]

The docket fees under Section 7(a), Rule 141, in cases involving real property depend
on the fair market value of the same: the higher the value of the real property, the
higher the docket fees due. In contrast, Section 7(b)(1), Rule 141 imposes a fixed or
flat rate of docket fees on actions incapable of pecuniary estimation.

In order to resolve the issue of whether petitioner paid the correct amount of docket
fees, it is necessary to determine the true nature of its Complaint. The dictum adhered
to in this jurisdiction is that the nature of an action is determined by the allegations in
the body of the pleading or Complaint itself, rather than by its title or
heading.32However, the Court finds it necessary, in ascertaining the true nature of Civil
Case No. 2006-0030, to take into account significant facts and circumstances beyond
the Complaint of petitioner, facts and circumstances which petitioner failed to state in
its Complaint but were disclosed in the preliminary proceedings before the court a quo.

Petitioner persistently avers that its Complaint in Civil Case No. 2006-0030 is primarily
for the annulment of the Deeds of Absolute Sale. Based on the allegations and reliefs
in the Complaint alone, one would get the impression that the titles to the subject real
properties still rest with petitioner; and that the interest of respondents Tan and Obiedo
in the same lies only in the Deeds of Absolute Sale sought to be annulled.

What petitioner failed to mention in its Complaint was that respondents Tan and
Obiedo already had the Memorandum of Agreement, which clearly provided for the
execution of the Deeds of Absolute Sale, registered on the TCTs over the five parcels
of land, then still in the name of petitioner. After respondents Tan and Obiedo had the
Deeds of Absolute Sale notarized on 3 January 2006 and presented the same to
Register of Deeds for Naga City on 8 March 2006, they were already issued TCTs over
the real properties in question, in their own names. Respondents Tan and Obiedo have
also acquired possession of the said properties, enabling them, by petitioner’s own
admission, to demolish the improvements thereon.

It is, thus, suspect that petitioner kept mum about the afore-mentioned facts and
circumstances when they had already taken place before it filed its Complaint before
the RTC on 16 March 2006. Petitioner never expressed surprise when such facts and
circumstances were established before the RTC, nor moved to amend its Complaint
accordingly.1avvphi1.zw+ Even though the Memorandum of Agreement was supposed
to have long been registered on its TCTs over the five parcels of land, petitioner did not
pray for the removal of the same as a cloud on its title. In the same vein, although
petitioner alleged that respondents Tan and Obiedo forcibly took physical possession
of the subject real properties, petitioner did not seek the restoration of such possession
to itself. And despite learning that respondents Tan and Obiedo already secured TCTs
over the subject properties in their names, petitioner did not ask for the cancellation of
said titles. The only logical and reasonable explanation is that petitioner is reluctant to
bring to the attention of the Court certain facts and circumstances, keeping its
Complaint safely worded, so as to institute only an action for annulment of Deeds of
Absolute Sale. Petitioner deliberately avoided raising issues on the title and
possession of the real properties that may lead the Court to classify its case as a real
action.

No matter how fastidiously petitioner attempts to conceal them, the allegations and
reliefs it sought in its Complaint in Civil Case No. 2006-0030 appears to be ultimately a
real action, involving as they do the recovery by petitioner of its title to and possession
of the five parcels of land from respondents Tan and Obiedo.
A real action is one in which the plaintiff seeks the recovery of real property; or, as
indicated in what is now Section 1, Rule 4 of the Rules of Court, a real action is an
action affecting title to or recovery of possession of real property. 33

Section 7, Rule 141 of the Rules of Court, prior to its amendment by A.M. No. 04-2-04-
SC, had a specific paragraph governing the assessment of the docket fees for real
action, to wit:

In a real action, the assessed value of the property, or if there is none, the estimated
value thereof shall be alleged by the claimant and shall be the basis in computing the
fees.

It was in accordance with the afore-quoted provision that the Court, in Gochan v.
Gochan,34 held that although the caption of the complaint filed by therein respondents
Mercedes Gochan, et al. with the RTC was denominated as one for "specific
performance and damages," the relief sought was the conveyance or transfer of real
property, or ultimately, the execution of deeds of conveyance in their favor of the real
properties enumerated in the provisional memorandum of agreement. Under these
circumstances, the case before the RTC was actually a real action, affecting as it did
title to or possession of real property. Consequently, the basis for determining the
correct docket fees shall be the assessed value of the property, or the estimated value
thereof as alleged in the complaint. But since Mercedes Gochan failed to allege in their
complaint the value of the real properties, the Court found that the RTC did not acquire
jurisdiction over the same for non-payment of the correct docket fees.

Likewise, in Siapno v. Manalo,35 the Court disregarded the title/denomination of therein


plaintiff Manalo’s amended petition as one for Mandamus with Revocation of Title and
Damages; and adjudged the same to be a real action, the filing fees for which should
have been computed based on the assessed value of the subject property or, if there
was none, the estimated value thereof. The Court expounded in Siapno that:

In his amended petition, respondent Manalo prayed that NTA’s sale of the property in
dispute to Standford East Realty Corporation and the title issued to the latter on the
basis thereof, be declared null and void. In a very real sense, albeit the amended
petition is styled as one for "Mandamus with Revocation of Title and Damages," it is, at
bottom, a suit to recover from Standford the realty in question and to vest in
respondent the ownership and possession thereof. In short, the amended petition is in
reality an action in res or a real action. Our pronouncement in Fortune Motors (Phils.),
Inc. vs. Court of Appeals is instructive. There, we said:

A prayer for annulment or rescission of contract does not operate to efface the true
objectives and nature of the action which is to recover real property. (Inton, et al., v.
Quintan, 81 Phil. 97, 1948)
An action for the annulment or rescission of a sale of real property is a real action. Its
prime objective is to recover said real property. (Gavieres v. Sanchez, 94 Phil. 760,
1954)

An action to annul a real estate mortgage foreclosure sale is no different from an action
to annul a private sale of real property. (Muñoz v. Llamas, 87 Phil. 737, 1950).

While it is true that petitioner does not directly seek the recovery of title or possession
of the property in question, his action for annulment of sale and his claim for damages
are closely intertwined with the issue of ownership of the building which, under the law,
is considered immovable property, the recovery of which is petitioner's primary
objective. The prevalent doctrine is that an action for the annulment or rescission of a
sale of real property does not operate to efface the fundamental and prime objective
and nature of the case, which is to recover said real property. It is a real action.

Unfortunately, and evidently to evade payment of the correct amount of filing fee,
respondent Manalo never alleged in the body of his amended petition, much less in the
prayer portion thereof, the assessed value of the subject res, or, if there is none, the
estimated value thereof, to serve as basis for the receiving clerk in computing and
arriving at the proper amount of filing fee due thereon, as required under Section 7 of
this Court’s en banc resolution of 04 September 1990 (Re: Proposed Amendments to
Rule 141 on Legal Fees).

Even the amended petition, therefore, should have been expunged from the records.

In fine, we rule and so hold that the trial court never acquired jurisdiction over its Civil
Case No. Q-95-24791.36

It was in Serrano v. Delica,37 however, that the Court dealt with a complaint that bore
the most similarity to the one at bar. Therein respondent Delica averred that undue
influence, coercion, and intimidation were exerted upon him by therein petitioners
Serrano, et al. to effect transfer of his properties. Thus, Delica filed a complaint before
the RTC against Serrano, et al., praying that the special power of attorney, the
affidavit, the new titles issued in the names of Serrano, et al., and the contracts of sale
of the disputed properties be cancelled; that Serrano, et al. be ordered to pay Delica,
jointly and severally, actual, moral and exemplary damages in the amount of
₱200,000.00, as well as attorney’s fee of ₱200,000.00 and costs of litigation; that a
TRO and a writ of preliminary injunction be issued ordering Serrano, et al. to
immediately restore him to his possession of the parcels of land in question; and that
after trial, the writ of injunction be made permanent. The Court dismissed Delica’s
complaint for the following reasons:

A careful examination of respondent’s complaint is that it is a real action. In Paderanga


vs. Buissan, we held that "in a real action, the plaintiff seeks the recovery of real
property, or, as stated in Section 2(a), Rule 4 of the Revised Rules of Court, a real
action is one ‘affecting title to real property or for the recovery of possession of, or for
partition or condemnation of, or foreclosure of a mortgage on a real property.’"

Obviously, respondent’s complaint is a real action involving not only the recovery of
real properties, but likewise the cancellation of the titles thereto.

Considering that respondent’s complaint is a real action, the Rule requires that "the
assessed value of the property, or if there is none, the estimated value thereof shall be
alleged by the claimant and shall be the basis in computing the fees."

We note, however, that neither the "assessed value" nor the "estimated value" of the
questioned parcels of land were alleged by respondent in both his original and
amended complaint. What he stated in his amended complaint is that the disputed
realties have a "BIR zonal valuation" of ₱1,200.00 per square meter. However, the
alleged "BIR zonal valuation" is not the kind of valuation required by the Rule. It is the
assessed value of the realty. Having utterly failed to comply with the requirement of the
Rule that he shall allege in his complaint the assessed value of his real properties in
controversy, the correct docket fee cannot be computed. As such, his complaint should
not have been accepted by the trial court. We thus rule that it has not acquired
jurisdiction over the present case for failure of herein respondent to pay the required
docket fee. On this ground alone, respondent’s complaint is vulnerable to dismissal.38

Brushing aside the significance of Serrano, petitioner argues that said decision,
rendered by the Third Division of the Court, and not by the Court en banc, cannot
modify or reverse the doctrine laid down in Spouses De Leon v. Court of
Appeals.39 Petitioner relies heavily on the declaration of this Court in Spouses De Leon
that an action for annulment or rescission of a contract of sale of real property is
incapable of pecuniary estimation.

The Court, however, does not perceive a contradiction between Serrano and the
Spouses De Leon. The Court calls attention to the following statement in Spouses De
Leon: "A review of the jurisprudence of this Court indicates that in determining whether
an action is one the subject matter of which is not capable of pecuniary estimation, this
Court has adopted the criterion of first ascertaining the nature of the principal action or
remedy sought." Necessarily, the determination must be done on a case-to-case basis,
depending on the facts and circumstances of each. What petitioner conveniently
ignores is that in Spouses De Leon, the action therein that private respondents
instituted before the RTC was "solely for annulment or rescission" of the contract of
sale over a real property.40 There appeared to be no transfer of title or possession to
the adverse party. Their complaint simply prayed for:

1. Ordering the nullification or rescission of the Contract of Conditional Sale


(Supplementary Agreement) for having violated the rights of plaintiffs (private
respondents) guaranteed to them under Article 886 of the Civil Code and/or
violation of the terms and conditions of the said contract.
2. Declaring void ab initio the Deed of Absolute Sale for being absolutely
simulated; and

3. Ordering defendants (petitioners) to pay plaintiffs (private respondents)


attorney's fees in the amount of ₱100,000.00.41

As this Court has previously discussed herein, the nature of Civil Case No. 2006-0030
instituted by petitioner before the RTC is closer to that of Serrano, rather than of
Spouses De Leon, hence, calling for the application of the ruling of the Court in the
former, rather than in the latter.

It is also important to note that, with the amendments introduced by A.M. No. 04-2-04-
SC, which became effective on 16 August 2004, the paragraph in Section 7, Rule 141
of the Rules of Court, pertaining specifically to the basis for computation of docket fees
for real actions was deleted. Instead, Section 7(1) of Rule 141, as amended, provides
that "in cases involving real property, the FAIR MARKET value of the REAL property in
litigation STATED IN THE CURRENT TAX DECLARATION OR CURRENT ZONAL
VALUATION OF THE BUREAU OF INTERNAL REVENUE, WHICH IS HIGHER, OR
IF THERE IS NONE, THE STATED VALUE OF THE PROPERTY IN LITIGATION x x
x" shall be the basis for the computation of the docket fees. Would such an
amendment have an impact on Gochan, Siapno, and Serrano? The Court rules in the
negative.

A real action indisputably involves real property. The docket fees for a real action
would still be determined in accordance with the value of the real property involved
therein; the only difference is in what constitutes the acceptable value. In computing
the docket fees for cases involving real properties, the courts, instead of relying on the
assessed or estimated value, would now be using the fair market value of the real
properties (as stated in the Tax Declaration or the Zonal Valuation of the Bureau of
Internal Revenue, whichever is higher) or, in the absence thereof, the stated value of
the same.

In sum, the Court finds that the true nature of the action instituted by petitioner against
respondents is the recovery of title to and possession of real property. It is a real action
necessarily involving real property, the docket fees for which must be computed in
accordance with Section 7(1), Rule 141 of the Rules of Court, as amended. The Court
of Appeals, therefore, did not commit any error in affirming the RTC Orders requiring
petitioner to pay additional docket fees for its Complaint in Civil Case No. 2006-0030.

The Court does not give much credence to the allegation of petitioner that if the
judgment of the Court of Appeals is allowed to stand and not rectified, it would result in
grave injustice and irreparable injury to petitioner in view of the prohibitive amount
assessed against it. It is a sweeping assertion which lacks evidentiary support.
Undeniably, before the Court can conclude that the amount of docket fees is indeed
prohibitive for a party, it would have to look into the financial capacity of said party. It
baffles this Court that herein petitioner, having the capacity to enter into multi-million
transactions, now stalls at paying ₱720,392.60 additional docket fees so it could
champion before the courts its rights over the disputed real properties. Moreover, even
though the Court exempts individuals, as indigent or pauper litigants, from paying
docket fees, it has never extended such an exemption to a corporate entity.

WHEREFORE, premises considered, the instant Petition for Review is hereby


DENIED. The Decision, dated 22 November 2006, of the Court of Appeals in CA-G.R.
SP No. 94800, which affirmed the Orders dated 24 March 2006 and 29 March 2006 of
the RTC, Branch 22, of Naga City, in Civil Case No. RTC-2006-0030, ordering
petitioner Ruby Shelter Builders and Realty Development Corporation to pay additional
docket/filing fees, computed based on Section 7(a), Rule 141 of the Rules of Court, as
amended, is hereby AFFIRMED. Costs against the petitioner.

SO ORDERED.

G.R. No. 180321 March 20, 2013

EDITHA PADLAN, Petitioner,


vs.
ELENITA DINGLASAN and FELICISIMO DINGLASAN, Respondents.

DECISION

PERALTA, J.:

This is a petition for review on certiorari assailing the Decision1 dated June 29, 2007 of
the Court of Appeals (CA) in CA-G.R. CV No. 86983, and the Resolution2 dated
October 23, 2007 denying petitioner's Motion for Reconsideration.3

The factual and procedural antecedents are as follows:

Elenita Dinglasan (Elenita) was the registered owner of a parcel of land designated as
Lot No. 625 of the Limay Cadastre which is covered by Transfer Certificate of Title
(TCT) No. T-105602, with an aggregate area of 82,972 square meters. While on board
a jeepney, Elenita’s mother, Lilia Baluyot (Lilia), had a conversation with one Maura
Passion (Maura) regarding the sale of the said property. Believing that Maura was a
real estate agent, Lilia borrowed the owner’s copy of the TCT from Elenita and gave it
to Maura. Maura then subdivided the property into several lots from Lot No. 625-A to
Lot No. 625-O, under the name of Elenita and her husband Felicisimo Dinglasan
(Felicisimo).

Through a falsified deed of sale bearing the forged signature of Elenita and her
husband Felicisimo, Maura was able to sell the lots to different buyers. On April 26,
1990, Maura sold Lot No. 625-K to one Lorna Ong (Lorna), who later caused the
issuance of TCT No. 134932 for the subject property under her name. A few months
later, or sometime in August 1990, Lorna sold the lot to petitioner Editha Padlan for
₱4,000.00. Thus, TCT No. 134932 was cancelled and TCT No. 137466 was issued in
the name of petitioner.

After learning what had happened, respondents demanded petitioner to surrender


possession of Lot No. 625-K, but the latter refused. Respondents were then forced to
file a case before the Regional Trial Court (RTC) of Balanga, Bataan for the
Cancellation of Transfer Certificate of Title No. 137466, docketed as Civil Case No.
438-ML. Summons was, thereafter, served to petitioner through her mother, Anita
Padlan.

On December 13, 1999, respondents moved to declare petitioner in default and prayed
that they be allowed to present evidence ex parte.4

On January 17, 2000, petitioner, through counsel, filed an Opposition to Declare


Defendant in Default with Motion to Dismiss Case for Lack of Jurisdiction Over the
Person of Defendant.5 Petitioner claimed that the court did not acquire jurisdiction over
her, because the summons was not validly served upon her person, but only by means
of substituted service through her mother. Petitioner maintained that she has long been
residing in Japan after she married a Japanese national and only comes to the
Philippines for a brief vacation once every two years.

On April 5, 2001, Charlie Padlan, the brother of petitioner, testified that his sister is still
in Japan and submitted a copy of petitioner’s passport and an envelope of a letter that
was allegedly sent by his sister. Nevertheless, on April 5, 2001, the RTC issued an
Order6 denying petitioner’s motion to dismiss and declared her in default. Thereafter,
trial ensued.

On July 1, 2005, the RTC rendered a Decision7 finding petitioner to be a buyer in good
faith and, consequently, dismissed the complaint.

Not satisfied, respondents sought recourse before the CA, docketed as CA-G.R. No.
CV No. 86983.

On June 29, 2007, the CA rendered a Decision8 in favor of the respondent.


Consequently, the CA reversed and set aside the Decision of the RTC and ordered the
cancellation of the TCT issued in the name of Lorna and the petitioner, and the revival
of respondents’ own title, to wit:

WHEREFORE, in view of the foregoing, the Decision dated July

1, 2005 of the Regional Trial Court, Third Judicial Region, Branch 4, Mariveles, Bataan
(Stationed in Balanga, Bataan) in Civil Case No. 438-ML is hereby REVERSED and
SET ASIDE.
The Transfer Certificate of Title No. 134932 issued in the name of Lorna Ong and
Transfer Certificate of Title No. 137466 issued in the name of defendant-appellee
Editha Padlan are CANCELLED and Transfer Certificate of Title No. 134785 in the
name of the plaintiffs-appellants is REVIVED.

SO ORDERED.9

The CA found that petitioner purchased the property in bad faith from Lorna. The CA
opined that although a purchaser is not expected to go beyond the title, based on the
circumstances surrounding the sale, petitioner should have conducted further inquiry
before buying the disputed property. The fact that Lorna bought a 5,000-square-meter
property for only ₱4,000.00 and selling it after four months for the same amount should
have put petitioner on guard. With the submission of the Judgment in Criminal Case
No. 4326 rendered by the RTC, Branch 2, Balanga, Bataan, entitled People of the
Philippines v. Maura Passion10 and the testimonies of respondents, the CA concluded
that respondents sufficiently established that TCT No. 134932 issued in the name of
Lorna and TCT No. 137466 issued in the name of petitioner were fraudulently issued
and, therefore, null and void.

Aggrieved, petitioner filed a Motion for Reconsideration. Petitioner argued that not only
did the complaint lacks merit, the lower court failed to acquire jurisdiction over the
subject matter of the case and the person of the petitioner.

On October 23, 2007, the CA issued a Resolution11 denying the motion. The CA
concluded that the rationale for the exception made in the landmark case of Tijam v.
Sibonghanoy12 was present in the case. It reasoned that when the RTC denied
petitioner’s motion to dismiss the case for lack of jurisdiction, petitioner neither moved
for a reconsideration of the order nor did she avail of any remedy provided by the
Rules. Instead, she kept silent and only became interested in the case again when the
CA rendered a decision adverse to her claim.

Hence, the petition assigning the following errors:

WHETHER OR NOT THE HONORABLE COURT HAS JURISDICTION OVER THE


PERSON OF THE PETITIONER.

II

WHETHER OR NOT THE HONORABLE COURT HAS JURISDICTION OVER THE


SUBJECT MATTER OF THE CASE.

III

WHETHER OR NOT PETITIONER IS A BUYER IN GOOD FAITH AND FOR VALUE.13


Petitioner maintains that the case of Tijam v. Sibonghanoy finds no application in the
case at bar, since the said case is not on all fours with the present case. Unlike in
Tijam, wherein the petitioner therein actively participated in the proceedings, petitioner
herein asserts that she did not participate in any proceedings before the RTC because
she was declared in default.

Petitioner insists that summons was not validly served upon her, considering that at the
time summons was served, she was residing in Japan. Petitioner contends that
pursuant to Section 15, Rule 14 of the Rules of Civil Procedure, when the defendant
does not reside in the Philippines and the subject of the action is property within the
Philippines of the defendant, service may be effected out of the Philippines by personal
service or by publication in a newspaper of general circulation. In this case, summons
was served only by substituted service to her mother. Hence, the court did not acquire
jurisdiction over her person.

Also, petitioner posits that the court lacks jurisdiction of the subject matter, considering
that from the complaint, it can be inferred that the value of the property was only
₱4,000.00, which was the amount alleged by respondents that the property was sold to
petitioner by Lorna.

Finally, petitioner stresses that she was a buyer in good faith. It was Maura who
defrauded the respondents by selling the property to Lorna without their authority.

Respondents, on the other hand, argue that the CA was correct in ruling in their favor.

The petition is meritorious.

Respondents filed the complaint in 1999, at the time Batas Pambansa Blg. (BP) 129,
the Judiciary Reorganization Act of 1980, was already amended by Republic Act (RA)
No. 7691, An Act Expanding the Jurisdiction of the Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts, amending for the purpose BP Blg.
129.14

Section 1 of RA 7691, amending BP Blg. 129, provides that the RTC shall exercise
exclusive original jurisdiction on the following actions:

Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary
Reorganization Act of 1980," is hereby amended to read as follows:

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

(1) In all civil actions in which the subject of the litigation is incapable of
pecuniary estimation;
(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 (₱20,000.00) or for civil actions in Metro Manila, where
such value exceeds Fifty Thousand Pesos (₱50,000.00), 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; x x x

Section 3 of RA 7691 expanded the exclusive original jurisdiction of the first level
courts, thus:

Section 3. Section 33 of the same law BP Blg. 129 is hereby amended to read as
follows:

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts in Civil Cases. – Metropolitan Trial Courts, Municipal Trial Courts,
and Municipal Circuit Trial Courts shall exercise:

xxxx

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession
of, real property, or any interest therein where the assessed value of the property or
interest therein does not exceed Twenty Thousand Pesos (₱20,000.00) or, in civil
actions in Metro Manila, where such assessed value does not exceed Fifty Thousand
Pesos (₱50,000.00) exclusive of interest, damages of whatever kind, attorney's fees,
litigation expenses and costs: Provided, That in cases of land not declared for taxation
purposes, the value of such property shall be determined by the assessed value of the
adjacent lots.

Respondents filed their Complaint with the RTC; hence, before proceeding any further
with any other issues raised by the petitioner, it is essential to ascertain whether the
RTC has jurisdiction over the subject matter of this case based on the above-quoted
provisions.

However, in order to determine which court has jurisdiction over the action, an
examination of the complaint is essential. Basic as a hornbook principle is that
jurisdiction over the subject matter of a case is conferred by law and determined by the
allegations in the complaint which comprise a concise statement of the ultimate facts
constituting the plaintiff's cause of action. The nature of an action, as well as which
court or body has jurisdiction over it, is determined based on the allegations contained
in the complaint of the plaintiff, irrespective of whether or not the plaintiff is entitled to
recover upon all or some of the claims asserted therein. The averments in the
complaint and the character of the relief sought are the ones to be consulted. Once
vested by the allegations in the complaint, jurisdiction also remains vested irrespective
of whether or not the plaintiff is entitled to recover upon all or some of the claims
asserted therein.15

What determines the jurisdiction of the court is the nature of the action pleaded as
appearing from the allegations in the complaint. The averments therein and the
character of the relief sought are the ones to be consulted.16

Respondents’ Complaint17 narrates that they are the duly registered owners of Lot No.
625 of the Limay Cadastre which was covered by TCT No. T-105602. Without their
knowledge and consent, the land was divided into several lots under their names
through the fraudulent manipulations of Maura. One of the lots was Lot 625-K, which
was covered by TCT No. 134785. On April 26, 1990, Maura sold the subject lot to
Lorna. By virtue of the fictitious sale, TCT No. 134785 was cancelled and TCT No.
134932 was issued in the name of Lorna. Sometime in August 1990, Lorna sold the lot
to petitioner for a consideration in the amount of ₱4,000.00. TCT No. 134932 was later
cancelled and TCT No. 137466 was issued in the name of petitioner. Despite demands
from the respondents, petitioner refused to surrender possession of the subject
property. Respondents were thus constrained to engage the services of a lawyer and
incur expenses for litigation. Respondents prayed for the RTC (a) to declare TCT No.
137466 null and to revive TCT No. T-105602 which was originally issued and
registered in the name of the respondents; and (b) to order petitioner to pay attorney’s
fees in the sum of ₱50,000.00 and litigation expenses of ₱20,000.00, plus cost of
suit.18

An action "involving title to real property" means that the plaintiff's cause of action is
based on a claim that he owns such property or that he has the legal rights to have
exclusive control, possession, enjoyment, or disposition of the same. Title is the "legal
link between (1) a person who owns property and (2) the property itself." "Title" is
different from a "certificate of title" which is the document of ownership under the
Torrens system of registration issued by the government through the Register of
Deeds. While title is the claim, right or interest in real property, a certificate of title is the
evidence of such claim.19

In the present controversy, before the relief prayed for by the respondents in their
complaint can be granted, the issue of who between the two contending parties has
the valid title to the subject lot must first be determined before a determination of who
between them is legally entitled to the certificate of title covering the property in
question.1âwphi1

From the Complaint, the case filed by respondent is not simply a case for the
cancellation of a particular certificate of title and the revival of another. The
determination of such issue merely follows after a court of competent jurisdiction shall
have first resolved the matter of who between the conflicting parties is the lawful owner
of the subject property and ultimately entitled to its possession and enjoyment. The
action is, therefore, about ascertaining which of these parties is the lawful owner of the
subject lot, jurisdiction over which is determined by the assessed value of such lot. 20

In no uncertain terms, the Court has already held that a complaint must allege the
assessed value of the real property subject of the complaint or the interest thereon to
determine which court has jurisdiction over the action.21In the case at bar, the only
basis of valuation of the subject property is the value alleged in the complaint that the
lot was sold by Lorna to petitioner in the amount of ₱4,000.00. No tax declaration was
even presented that would show the valuation of the subject property. In fact, in one of
the hearings, respondents’ counsel informed the court that they will present the tax
declaration of the property in the next hearing since they have not yet obtained a copy
from the Provincial Assessor’s Office.22 However, they did not present such copy.

To reiterate, where the ultimate objective of the plaintiffs is to obtain title to real
property, it should be filed in the proper court having jurisdiction over the assessed
value of the property subject thereof.23 Since the amount alleged in the Complaint by
respondents for the disputed lot is only ₱4,000.00, the MTC and not the RTC has
jurisdiction over the action. Therefore, all proceedings in the RTC are null and void.24

Consequently, the remaining issues raised by petitioner need not be discussed further.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-
G.R. CV No. 86983, dated June 29, 2007, and its Resolution dated October 23, 2007,
are REVERSED and SET ASIDE. The Decision of the Regional Trial Court, dated July
I, 2005, is declared NULL and VOID. The complaint in Civil Case No. 438-ML is
dismissed without prejudice.

SO ORDERED.

G.R. No. 192649 March 9, 2011

HOME GUARANTY CORPORATION, Petitioner,


vs.
R-II BUILDERS INC., and NATIONAL HOUSING AUTHORITY, Respondents.

DECISION

PEREZ, J.:

Primarily assailed in this petition for review filed pursuant to Rule 45 of the 1997 Rules
of Civil Procedure, is the Decision dated 21 January 2010 rendered by the Former
Fifteenth Division of the Court of Appeals (CA) in CA-G.R. SP No. 111153,1 the
dispositive portion of which states as follows:

WHEREFORE, the petition for certiorari and prohibition is hereby DENIED.


The assailed Orders, dated March 3, 2009 and September 29, 2009, of the Regional
Trial Court of Manila, Branch 22 are hereby AFFIRMED.

Consequently, the injunction earlier issued on December 4, 2009, restraining the


proceedings in Civil Case No. 05-113407, is hereby DISSOLVED.2

The Facts

On 19 March 1993, a Joint Venture Agreement (JVA) was entered into between
respondents National Housing Authority (NHA) and R-II Builders, Inc. (R-II Builders) for
the implementation of the Smokey Mountain Development and Reclamation Project
(SMDRP). Amended and restated on 21 February 19943 and 11 August 1994,4 the JVA
was aimed at implementing a two-phase conversion of the Smokey Mountain Dumpsite
"into a habitable housing project inclusive of the reclamation of the area across Radial
Road 10 (R-10)".5 By the terms of the JVA, R-II Builders, as developer, was entitled to
own 79 hectares of reclaimed land and the 2.3 hectare commercial area at the Smokey
Mountain. As landowner/implementing agency, NHA, on the other hand, was entitled to
own the 2,992 temporary housing units agreed to be built in the premises, the cleared
and fenced incinerator site consisting of 5 hectares, 3,520 units of permanent housing
to be awarded to qualified on site residents, the industrial area consisting of 3.2
hectares and the open spaces, roads and facilities within the Smokey Mountain Area.6

On 26 September 1994, NHA and R-II Builders, alongside petitioner Housing Guaranty
Corporation (HGC) as guarantor and the Philippine National Bank (PNB) as trustee,
entered into an Asset Pool Formation Trust Agreement which provided the mechanics
for the implementation of the project.7 To back the project, an Asset Pool was created
composed of the following assets: (a) the 21.2 hectare Smokey Mountain Site in
Tondo, Manila; (b) the 79-hectare Manila Bay foreshore property in the name of the
NHA; (c) the Smokey Mountain Project Participation Certificates (SMPPCs) to be
issued, or their money proceeds; (d) disposable assets due to R-II Builders and/or its
proceeds as defined in the JVA; (e) the resulting values inputted by R-II Builders for
pre-implementation activities and some start-up works amounting to ₱300,000,000.00;
(f) the 2,992 temporary housing facilities/units to be constructed by R-II Builders; and,
(g) all pertinent documents and records of the project.8

On the same date, the parties likewise executed a Contract of Guaranty whereby HGC,
upon the call made by PNB and conditions therein specified, undertook to redeem the
regular SMPPCs upon maturity and to pay the simple interest thereon to the extent of
8.5% per annum.9 The foregoing agreements led to the securitization of the project
through the issuance of 5,216 SMPPCs upon the Asset Pool, with a par value of 1
Million each, classified and to be redeemed by the trustee or, in case of call on its
guaranty, by HGC, in the following order of priority:

a) Regular SMPPCs worth ₱2.519 Billion, issued for value to the general public
at specified interests and maturity dates. These were to be redeemed by the
PNB which was obliged to exhaust all liquid assets of the Asset Pool before
calling on the HGC guarantee;

b) Special SMPPCs worth ₱1.403 Billion, issued exclusively to the NHA for
conveyance of the Smokey Mountain Site and Manila Bay foreshore property to
the Asset Pool, redeemable upon turnover of the developed project; and

c) Subordinated SMPPCs worth ₱1.294 Billion, issued exclusively to R-II Builders


for its rights and interests in the JVA, redeemable with the turnover of all residual
values, assets and properties remaining in the Asset Pool after both the Regular
and Special SMPPCs are redeemed and all the obligations of the Asset Pool are
settled.10

Subsequent to R-II Builders' infusion of ₱300 Million into the project, the issuance of
the SMPPCs and the termination of PNB’s services on 29 January 2001, NHA, R-II
Builders and HGC agreed on the institution of Planters Development Bank (PDB) as
trustee on 29 January 2001.11 By 24 October 2002, however, all the Regular SMPPCs
issued had reached maturity and, unredeemed, already amounted to an aggregate
face value of ₱2.513 Billion. The lack of liquid assets with which to effect redemption of
the regular SMPPCs prompted PDB to make a call on HGC’s guaranty and to execute
in the latter’s favor a Deed of Assignment and Conveyance (DAC) of the entire Asset
Pool, consisting of: (a) 105 parcels of land comprising the Smokey Mountain Site and
the Reclamation Area, with a total area of 539,471.47 square meters, and all the
buildings and improvements thereon; (b) shares of stock of Harbour Centre Port
Terminal, Inc. (HCPTI); and, (c) other documents.12

On 1 September 2005, R-II Builders filed the complaint against HGC and NHA which
was docketed as Civil Case No. 05-113407 before Branch 24 of the Manila Regional
Trial Court, a Special Commercial Court (SCC). Contending that HGC’s failure to
redeem the outstanding regular SMPPCs despite obtaining possession of the Asset
Pool ballooned the stipulated interests and materially prejudiced its stake on the
residual values of the Asset Pool, R-II Builders alleged, among other matters, that the
DAC should be rescinded since PDB exceeded its authority in executing the same
prior to HGC’s redemption and payment of the guaranteed SMPPCs; that while the
estimated value of Asset Pool amounted to ₱5,919,716,618.62 as of 30 June 2005, its
total liabilities was estimated at ₱2,796,019,890.41; and, that with the cessation of
PDB’s functions as a trustee and HGC’s intention to use the Asset Pool to settle its
obligations to the Social Security System (SSS), it was best qualified to be appointed
as new trustee in the event of the resolution of the DAC. Assessed docket fees
corresponding to an action incapable of pecuniary estimation, the complaint sought the
grant of the following reliefs: (a) a temporary restraining order/preliminary and
permanent injunction, enjoining disposition/s of the properties in the Asset Pool; (b) the
resolution or, in the alternative, the nullification of the DAC; (c) R-II Builders'
appointment as trustee pursuant to Rule 98 of the Rules of Court; (d) HGC’s rendition
of an accounting of the assets and the conveyance thereof in favor of R-II Builders;
and, (e) ₱500,000.00 in attorney’s fees.13

On 26 October 2005, Branch 24 of the Manila RTC issued the writ of preliminary
injunction sought by R-II Builders which, upon the challenge thereto interposed by
HGC, was later affirmed by the CA in the 17 December 2007 decision rendered in CA-
G.R. SP No. 98953.14 Having filed its answer to the complaint, in the meantime, HGC
went on to move for the conduct of a preliminary hearing on its affirmative defenses
which included such grounds as lack of jurisdiction, improper venue and the then
pendency before this Court of G.R. No. 164537, entitled Francisco Chavez vs. National
Housing Authority, et al., a case which challenged, among other matters, the validity of
the JVA and its subsequent amendments.15 On 2 August 2007, R-II Builders, in turn,
filed a motion to admit16 its Amended and Supplemental Complaint which deleted the
prayer for resolution of the DAC initially prayed for in its original complaint. In lieu
thereof, said pleading introduced causes of action for conveyance of title to and/or
possession of the entire Asset Pool, for NHA to pay the Asset Pool the sum of
₱1,803,729,757.88 representing the cost of the changes and additional works on the
project and for an increased indemnity for attorney’s fees in the sum of
₱2,000,000.00.17

Consistent with its joint order dated 2 January 2008 which held that R-II Builders’
complaint was an ordinary civil action and not an intra-corporate controversy,18 Branch
24 of the Manila RTC issued a clarificatory order dated 1 February 2008 to the effect,
among other matters, that it did not have the authority to hear the case.19 As a
consequence, the case was re-raffled to respondent Branch 22 of the Manila RTC
(respondent RTC) which subsequently issued the 19 May 2008 order which, having
determined that the case is a real action, admitted the aforesaid Amended and
Supplemental Complaint, subject to R-II Builders’ payment of the "correct and
appropriate" docket fees.20 On 15 August 2008, however, R-II Builders filed a motion to
admit it Second Amended Complaint, on the ground that its previous Amended and
Supplemental Complaint had not yet been admitted in view of the non-payment of the
correct docket fees therefor.21 Said Second Amended Complaint notably resurrected
R-II Builders’ cause of action for resolution of the DAC, deleted its causes of action for
accounting and conveyance of title to and/or possession of the entire Asset Pool,
reduced the claim for attorney’s fees to ₱500,000.00, sought its appointment as
Receiver pursuant to Rule 59 of the Rules of Court and, after an inventory in said
capacity, prayed for approval of the liquidation and distribution of the Asset Pool in
accordance with the parties’ agreements.22

On 2 September 2008, HGC filed its opposition to the admission of R-II Builders’
Second Amended Complaint on the ground that respondent RTC had no jurisdiction to
act on the case until payment of the correct docket fees and that said pleading was
intended for delay and introduced a new theory inconsistent with the original complaint
and the Amended and Supplemental Complaint. Claiming that R-II Builders had defied
respondent court’s 19 May 2008 order by refusing to pay the correct docket fees, HGC
additionally moved for the dismissal of the case pursuant to Section 3, Rule 17 of the
1997 Rules of Civil Procedure.23 On 24 November 2008, R-II Builders also filed an
Urgent Ex-Parte Motion for Annotation of Lis Pendens on the titles of the properties in
the Asset Pool, on the ground that HGC had sold and/or was intending to dispose of
portions thereof, in violation of the writ of preliminary injunction issued in the
premises.24 Finding that jurisdiction over the case was already acquired upon payment
of the docket fees for the original complaint and that the Second Amended Complaint
was neither intended for delay nor inconsistent with R-II Builders’ previous pleadings,
respondent RTC issued its first assailed order dated 3 March 2009 which: (a) denied
HGC’s motion to dismiss; (b) granted R-II Builders’ motion to admit its Second
Amended Complaint; and, (c) noted R-II Builders’ Urgent Ex-Parte Motion for
Annotation of Lis Pendens, to which the attention of the Manila Register of Deeds was
additionally called.25

Undaunted, HGC filed its 22 March 2009 motion for reconsideration of the foregoing
order, arguing that: (a) the case is real action and the docket fees paid by R-II Builders
were grossly insufficient because the estimated value of properties in the Asset Pool
exceeds ₱5,000,000,000.00; (b) a complaint cannot be amended to confer jurisdiction
when the court had none; (c) the RTC should have simply denied the Urgent Ex-Parte
Motion for Annotation of Lis Pendens instead of rendering an advisory opinion thereon.
In addition, HGC faulted R-II Builders with forum shopping, in view of its 10 September
2008 filing of the complaint docketed as Civil Case No. 08-63416 before Branch 91 of
the Quezon City RTC, involving a claim for receivables from the NHA. 26 In turn, R-II
Builders opposed the foregoing motion27 and, on the theory that the Asset Pool was
still in danger of dissipation, filed an urgent motion to resolve its application for the
appointment of a receiver and submitted its nominees for said position.28

On 29 September 2009, respondent RTC issued its second assailed order which (a)
denied HGC’s motion for reconsideration; (b) granted R-II Builders’ application for
appointment of receiver and, for said purpose: [i] appointed Atty. Danilo Concepcion as
Receiver and, [ii] directed R-II Builders to post a bond in the sum of
₱10,000,000.00.29Imputing grave abuse of discretion against the RTC for not
dismissing the case and for granting R-II Builders’ application for receivership, HGC
filed the Rule 65 petition for certiorari and prohibition docketed as CA-G.R. SP No.
111153 before the CA30 which, thru its Former Special Fifteenth Division, rendered the
herein assailed 21 January 2010 decision,31 upon the following findings and
conclusions:

a) Irrespective of whether it is real or one incapable of pecuniary estimation, the


action commenced by R-II Builders indubitably falls squarely within the
jurisdiction of respondent RTC;

b) From the allegations of R-II Builders’ original complaint and amended


complaint the character of the relief primarily sought, i.e., the declaration of nullity
of the DAC, the action before respondent RTC is one where the subject matter is
incapable of pecuniary estimation;

c) R-II Builders need not pay any deficiency in the docket fees considering its
withdrawal of its Amended and Supplemental Complaint;

d) A receiver may be appointed without formal hearing, particularly when it is


within the interest of both parties and does not result in the delay of any
government infrastructure projects or economic development efforts;

e) Respondent RTC’s act of calling the attention of the Manila Registrar of Deeds
to R-II Builders’ Urgent Ex-Parte Motion for Annotation of Lis Pendens is well-
within its residual power to act on matters before it; and

f) The withdrawal of R-II Builders’ Amended and Supplemental Complaint


discounted the forum shopping imputed against it by HGC.32

HGC’s motion for reconsideration of the foregoing decision33 was denied for lack of
merit in the CA’s resolution dated 21 June 2010, hence, this petition.

The Issues

HGC urges the affirmative of the following issues in urging the grant of its petition, to
wit:

"Did the Honorable Court of


Appeals Seriously Err When It
Failed to Rule That:

I. The Regional Trial Court a quo had no jurisdiction to proceed with the case
considering that:

(1) the original court was without authority to hear the case and;

(2) despite an unequivocal order from the trial court a quo, Private Respondent
(R-II Builders) failed and refused to pay the correct and proper docket fees,
whether it be for a real or personal action, based on the values of the properties
or claims subject of the complaints.

II. Since the Honorable Court of Appeals had characterized the case as a personal
action, the action before the Regional Trial Court a quo should have been dismissed
for improper venue.

III. The order appointing a receiver was made with grave abuse of discretion as
amounting to lack of jurisdiction for having been issued under the following
circumstances:
(1) It was made without a hearing and without any evidence of its necessity;

(2) It was unduly harsh and totally unnecessary in view of other available
remedies, especially considering that Petitioner HGC is conclusively presumed to
be solvent;

(3) It effectively prevented the performance of HGC’s functions in recovering


upon its guaranty exposure and was in contravention of Presidential Decree Nos.
385 and 1818, Republic Act No. 8927 and Supreme Court Circular Nos. 2-91, 13-
93, 68-94 and Administrative Circular No. 11-00."34

Acting on HGC’s motion for resolution of its application for a temporary restraining
order and/or preliminary injunction,35 the Court issued the resolution dated 23 August
2010, enjoining the enforcement of respondent RTC’s assailed orders.36

The Court’s Ruling

We find the petition impressed with merit.

Jurisdiction is defined as the authority to hear and determine a cause or the right to act
in a case.37 In addition to being conferred by the Constitution and the law,38 the rule is
settled that a court’s jurisdiction over the subject matter is determined by the relevant
allegations in the complaint,39 the law in effect when the action is filed,40 and the
character of the relief sought irrespective of whether the plaintiff is entitled to all or
some of the claims asserted.41Consistent with Section 1, Rule 141 of the Revised
Rules of Court which provides that the prescribed fees shall be paid in full "upon the
filing of the pleading or other application which initiates an action or proceeding", the
well-entrenched rule is to the effect that a court acquires jurisdiction over a case only
upon the payment of the prescribed filing and docket fees.42

The record shows that R-II Builders’ original complaint dated 23 August 2005 was
initially docketed as Civil Case No. 05-113407 before Branch 24 of the Manila, a
designated Special Commercial Court.43 With HGC’s filing of a motion for a preliminary
hearing on the affirmative defenses asserted in its answer44 and R-II Builders’ filing of
its Amended and Supplemental Complaint dated 31 July 2007,45 said court issued an
order dated 2 January 2008 ordering the re-raffle of the case upon the finding that the
same is not an intra-corporate dispute.46 In a clarificatory order dated 1 February
2008,47 the same court significantly took cognizance of its lack of jurisdiction over the
case in the following wise:

At the outset, it must be stated that this Court is a designated Special Commercial
Court tasked to try and hear, among others, intra-corporate controversies to the
exclusion of ordinary civil cases.
When the case was initially assigned to this Court, it was classified as an intra-
corporate case. However, in the ensuing proceedings relative to the affirmative
defences raised by defendants, even the plaintiff conceded that the case is not an
intra-corporate controversy or even if it is, this Court is without authority to hear the
same as the parties are all housed in Quezon City.

Thus, the more prudent course to take was for this Court to declare that it does not
have the authority to hear the complaint it being an ordinary civil action. As to whether
it is personal or civil, this Court would rather leave the resolution of the same to Branch
22 of this Court. (Italics supplied).

We find that, having squarely raised the matter in its Rule 65 petition for certiorari and
prohibition docketed as CA-G.R. SP No. 111153,48 HGC correctly faults the CA for not
finding that Branch 24 of the Manila RTC had no authority to order the transfer of the
case to respondent RTC.49 Being outside the jurisdiction of Special Commercial
Courts, the rule is settled that cases which are civil in nature, like the one commenced
by R-II Builders, should be threshed out in a regular court.50 With its acknowledged
lack of jurisdiction over the case, Branch 24 of the Manila RTC should have ordered
the dismissal of the complaint, since a court without subject matter jurisdiction cannot
transfer the case to another court.51 Instead, it should have simply ordered the
dismissal of the complaint, considering that the affirmative defenses for which HGC
sought hearing included its lack of jurisdiction over the case.

Calleja v. Panday,52 while on facts the other way around, i.e., a branch of the RTC
exercising jurisdiction over a subject matter within the Special Commercial Court’s
authority, dealt squarely with the issue:

Whether a branch of the Regional Trial Court which has no jurisdiction to try and
decide a case has authority to remand the same to another co-equal Court in order to
cure the defects on venue and jurisdiction.

Calleja ruled on the issue, thus:

Such being the case, RTC Br. 58 did not have the requisite authority or power to order
the transfer of the case to another branch of the Regional Trial Court. The only action
that RTC-Br. 58 could take on the matter was to dismiss the petition for lack of
jurisdiction.

Certainly, the pronouncement of Br. 24, the Special Commercial Court, in its Joint
Order of 2 January 2008 that the case is not an intracorporate controversy, amplified in
its Order of 1 February 2008 that it "does not have the authority to hear the complaint it
being an ordinary civil action" is incompatible with the directive for the re-raffle of the
case and to "leave the resolution of the same to Branch 22 of this Court." Such a
directive is an exercise of authority over the case, which authority it had in the same
breath declared it did not have. What compounds the jurisdictional error is the fact that
at the time of its surrender of jurisdiction, Br. 24 had already acted on the case and had
in fact, on 26 October 2005, issued the writ of preliminary injunction sought by herein
respondent R-II Builders. At that point, there was absolutely no reason which could
justify a re-raffle of the case considering that the order that was supposed to have
caused the re-raffle was not an inhibition of the judge but a declaration of absence of
jurisdiction. So faulty was the order of re-raffle that it left the impression that its
previously issued preliminary injunction remained effective since the case from which it
issued was not dismissed but merely transferred to another court. A re-raffle which
causes a transfer of the case involves courts with the same subject matterjurisdiction; it
cannot involve courts which have different jurisdictions exclusive of the other. More apt
in this case, a re-raffle of a case cannot cure a jurisdictional defect.

Prescinding from the foregoing considerations, and to show that the proceedings below
was error upon error, we find that the CA also gravely erred in not ruling that
respondent RTC’s (Branch 22, the regular court) jurisdiction over the case was
curtailed by R-II Builders’ failure to pay the correct docket fees. In other words, the
jurisdictionally flawed transfer of the case from Branch 24, the SCC to Branch 22, the
regular court, is topped by another jurisdictional defect which is the non-payment of the
correct docket fees. In its order dated 19 May 2008 which admitted R-II Builders’
Amended and Supplemental Complaint, respondent RTC distinctly ruled that the case
was a real action and ordered the re-computation and payment of the correct docket
fees.53 In patent circumvention of said order, however, R-II Builders filed its 14 August
2008 motion to admit its Second Amended Complaint which effectively deleted its
causes of action for accounting and conveyance of title to and/or possession of the
entire Asset Pool and, in addition to reducing the claim for attorney’s fees and seeking
its appointment as a receiver, reinstated its cause of action for resolution of the
DAC.54 Acting on said motion as well as the opposition and motion to dismiss
interposed by HGC,55 respondent RTC ruled as follows in its assailed 3 March 2009
order,56 to wit:

1. The docket fees of the original complaint has been paid, thus, the Court
already acquired jurisdiction over the instant case. The admission of the
Amended and Supplemental Complaint, is subject to the payment of docket fees
pursuant to the Order of this Court dated May 18, 2008. The non-payment of the
docket fees stated in the Order dated May 18, 2008 will result only in the non-
admission of the Amended and Supplemental Complaint, which means that the
Original Complaint remains. However, since the Amended and Supplemental
Complaint is being withdrawn and in lieu thereof a new Amended Complaint is
sought to be admitted, there is no more need to pay the docket fees as provided
for in the said Order.

2. It is settled that once jurisdiction is acquired and vested in a Court, said Court
maintains its jurisdiction until judgment is had (Aruego, Jr., et al. vs. CA). Such
acquired jurisdiction is not lost by the amendment of a pleading that raises
additional/new cause(s) of action. The jurisdiction of a Court is not even lost even
if the additional docket fees are required by reason of the amendment.

Indeed, the Supreme Court held in PNOC vs. Court of Appeals (G.R. No. 107518,
October 8, 1998) that:

"Its failure to pay the docket fee corresponding to its increased claim for damages
under the amended complaint should not be considered as having curtailed the lower
court’s jurisdiction. Pursuant to the ruling in Sun Insurance Office, Ltd. (SIOL) v.
Asuncion, the unpaid docket fees should be considered as a lien on the judgment even
though private respondent specified the amount of ₱600,000.00 as its claim for
damages in its amended complaint.

Thus, even on the assumption that additional docket fees are required as a
consequence of any amended complaint, its non-payment will not result in the court’s
loss of jurisdiction over the case.57

Distinctly, the principal reference remained to be the "original complaint," in which R-II
Builders itself submitted that the case "is a real action as it affects title and possession
of real property or interest therein." It was precisely this submission which was the
basis of the conclusion of the SCC court, Br. 24 that the case is not an intra-corporate
controversy and therefore is outside its authority.

We see from the assailed Order that the regular court accepted the case on the reason
that "the docket fees of the original complaint has been paid," so that, furthermore, the
Amended and Supplemental Complaint may be admitted "subject to the payment of
docket fees." When the required fees were not paid, the court considered it as resulting
in the non-admission of the Amended and Supplemental Complaint such that "the
original complaint remains." That remaining original complaint can then be amended by
"a new Amended Complaint" which is no longer subject to the conditions attached to
the unadmitted Amended and Supplemental Complaint.

The Order of 3 March 2009, with its logic and reason, is wholly unacceptable.

In upholding the foregoing order as well as its affirmance in respondent RTC’s 29


September 2009 order,58 the CA ruled that the case – being one primarily instituted for
the resolution/nullification of the DAC – involved an action incapable of pecuniary
estimation. While it is true, however, that R-II Builder's continuing stake in the Asset
Pool is "with respect only to its residual value after payment of all the regular SMPPCs
holders and the Asset Pool creditors",59 the CA failed to take into account the fact that
R-II Builders’ original complaint and Amended and Supplemental Complaint both
interposed causes of action for conveyance and/or recovery of possession of the entire
Asset Pool. Indeed, in connection with its second cause of action for appointment as
trustee in its original complaint,60 R-II Builders distinctly sought the conveyance of the
entire Asset Pool61 which it consistently estimated to be valued at ₱5,919,716,618.62
as of 30 June 2005.62 In its opposition to HGC’s motion to dismiss, R-II Builders even
admitted that the case is a real action as it affects title to or possession of real property
or an interest therein.63With R-II Builders' incorporation of a cause of action for
conveyance of title to and/or possession of the entire Asset Pool in its Amended and
Supplemental Complaint,64 on the other hand, no less than respondent RTC, in its 19
May 2008 order, directed the assessment and payment of docket fees corresponding
to a real action.

Admittedly, this Court has repeatedly laid down the test in ascertaining whether the
subject matter of an action is incapable of pecuniary estimation by determining the
nature of the principal action or remedy sought. While a claim is, on the one hand,
considered capable of pecuniary estimation if the action is primarily for recovery of a
sum of money, the action is considered incapable of pecuniary estimation 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.65 To our mind, the application of foregoing test does not, however, preclude
the further classification of actions into personal actions and real action, for which
appropriate docket fees are prescribed. In contrast to personal actions where the
plaintiff seeks the recovery of personal property, the enforcement of a contract, or the
recovery of damages, real actions are those which affect title to or possession of real
property, or interest therein.66While personal actions should be commenced and tried
where the plaintiff or any of the principal plaintiffs resides, or where the defendant or
any of the principal defendants resides, or in the case of a non-resident defendant
where he may be found, at the election of the plaintiff,67 the venue for real actions is
the court of the place where the real property is located.68

Although an action for resolution and/or the nullification of a contract, like an action for
specific performance, fall squarely into the category of actions where the subject
matter is considered incapable of pecuniary estimation,69 we find that the causes of
action for resolution and/or nullification of the DAC was erroneously isolated by the CA
from the other causes of action alleged in R-II Builders' original complaint and
Amended and Supplemental Complaint which prayed for the conveyance and/or
transfer of possession of the Asset Pool. In Gochan v. Gochan,70 this Court held that
an action for specific performance would still be considered a real action where it
seeks the conveyance or transfer of real property, or ultimately, the execution of deeds
of conveyance of real property. More to the point is the case of Ruby Shelter Builders
and Realty Development Corporation v. Hon. Pablo C. Formaran III71 where, despite
the annulment of contracts sought in the complaint, this Court upheld the directive to
pay additional docket fees corresponding to a real action in the following wise, to wit:

x x x [I]n Siapno v. Manalo, the Court disregarded the title/denomination of therein


plaintiff Manalo's amended petition as one for Mandamus with Revocation of Title and
Damages; and adjudged the same to be a real action, the filing fees for which should
have been computed based on the assessed value of the subject property or, if there
was none, the estimated value thereof. The Court expounded in Siapno that:
In his amended petition, respondent Manalo prayed that NTA's sale of the property in
dispute to Standford East Realty Corporation and the title issued to the latter on the
basis thereof, be declared null and void. In a very real sense, albeit the amended
petition is styled as one for "Mandamus with Revocation of Title and Damages", it is, at
bottom, a suit to recover from Standford the realty in question and to vest in
respondent the ownership and possession thereof. In short, the amended petition is in
reality an action in res or a real action. Our pronouncement in Fortune Motors (Phils.),
Inc. vs. Court of Appeals is instructive. There, we said:

A prayer for annulment or rescission of contract does not operate to efface the true
objectives and nature of the action which is to recover real property. (Inton, et al., v.
Quintan, 81 Phil. 97, 1948)

An action to annul a real estate mortgage foreclosure sale is no different from an action
to annul a private sale of real property. (Muñoz v. Llamas, 87 Phil. 737, 1950).

While it is true that petitioner does not directly seek the recovery of title or possession
of the property in question, his action for annulment of sale and his claim for damages
are closely intertwined with the issue of ownership of the building which, under the law,
is considered immovable property, the recovery of which is petitioner's primary
objective. The prevalent doctrine is that an action for the annulment or rescission of a
sale of real property does not operate to efface the fundamental and prime objective
and nature of the case, which is to recover said real property. It is a real action.72

Granted that R-II Builders is not claiming ownership of the Asset Pool because its
continuing stake is, in the first place, limited only to the residual value thereof, the
conveyance and/or transfer of possession of the same properties sought in the original
complaint and Amended and Supplemental Complaint both presuppose a real action
for which appropriate docket fees computed on the basis of the assessed or estimated
value of said properties should have been assessed and paid. In support of its original
complaint’s second cause of action for appointment as trustee and conveyance of the
properties in the Asset Pool, R-II Builders distinctly alleged as follows:

5.12. As the Court-appointed Trustee, R-II Builders shall have and exercise the
same powers, rights and duties as if [it] had been originally appointed, having the
principal duty of redeeming and buying back the Regular SMPPC’s and
thereafter liquidating the Asset Pool, which are also the end goals of the
Agreement.

5.12.1. R-II Builders, as the Trustee, shall have the power and right to invest,
transfer, convey or assign any of the assets of the Asset Pool, whether funds,
receivables, real or personal property, in exchange for shares of stocks, bonds,
securities, real or personal properties of any kind, class or nature, provided that
any such investment, transfer, conveyance or assignment shall not impair the
value of the Asset Pool.
5.12.2. R-II Builders, as the Trustee, shall have the power and right to sell,
change, assign or otherwise dispose of any stocks, bonds, securities, real or
personal properties or other assets constituting the Asset Pool.

5.12. 3. R-II Builders, as the Trustee, shall have the power and right to enter into
lease agreements as lessor or any other related contract for the benefit of the
Asset Pool; and

5.12.4. It is understood that the aforecited powers and rights of R-II Builders as
the court-appointed Trustee, are non-exclusive; and is deemed to include all the
rights and powers necessary and incidental to achieve the goals and objectives
of the Agreement.73

From the foregoing allegations in its original complaint, it cannot be gainsaid that R-II
Builders was unquestionably seeking possession and control of the properties in the
Asset Pool which predominantly consisted of real properties. Having admitted that "the
case is a real action as it affects title to or possession of real property or (an) interest
therein",74 R-II Builders emphasized the real nature of its action by seeking the grant of
the following main reliefs in the Amended and Supplemental Complaint it subsequently
filed, to wit:

5. After trial on the merits, render judgment:

(i) Declaring the annulment of the Deed of Assignment and conveyance executed
by PDB in favor of HGC; or in the alternative, declaring the nullity of the said
instrument;

(ii) Appointing R-II Builders as the Trustee of the Asset Pool Properties, with
powers and responsibilities including but not limited to those stated in 5.12.1,
5.12.2, 5.12.3 and 5.12.4 herein and those spelled out in the Re-Stated Smokey
Mountain Asset Pool Formation Trust Agreement;

(iii) Ordering HGC to render an accounting of all properties of the Asset Pool
transferred thereto under the Deed of Assignment and Conveyance and
thereafter convey title to and/or possession of the entire Asset Pool to R-II
Builders as the Trustee thereof which assets consist of, but is not limited to the
following:

(a) 105 parcels of land comprising the Smokey Mountain Site, and, the
Reclamation Area, consisting of the 539,471.47 square meters, and all the
buildings and improvements thereon, with their corresponding certificates
of title;
(b) shares of stock of Harbour Center Port Terminal, Inc. which are
presently registered in the books of the said company in the name of PDB
for the account of the Smokey Mountain Asset Pool; and

(c) other documents as listed in Annex E of the Contract of Guaranty.

(iv) Ordering NHA to pay the Asset Pool the amount of Php1,803,729,757.88
including the direct and indirect cost thereon as may be found by this Honorable
Court to be due thereon;

(v) Making the injunction permanent;

(vi) Ordering HGC and the NHA to pay Attorney’s fees in the amount
of ₱2,000,000 and the costs of suit.75

For failure of R-II Builders to pay the correct docket fees for its original complaint or, for
that matter, its Amended and Supplemental Complaint as directed in respondent RTC's
19 May 2008 order, it stands to reason that jurisdiction over the case had yet to
properly attach. Applying the rule that "a case is deemed filed only upon payment of
the docket fee regardless of the actual date of filing in court" in the landmark case of
Manchester Development Corporation v. Court of Appeals,76 this Court ruled that
jurisdiction over any case is acquired only upon the payment of the prescribed docket
fee which is both mandatory and jurisdictional. To temper said ruling, the Court
subsequently issued the following guidelines in Sun Insurance Office, Ltd. v. Hon.
Maximiano Asuncion,77viz.:

1. It is not simply the filing of the complaint or appropriate initiatory pleading, but
the payment of the prescribed docket fee, that vests a trial court with jurisdiction
over the subject matter or nature of the action. Where the filing of the initiatory
pleading is not accompanied by payment of the docket fee, the court may allow
payment of the fee within a reasonable time but in no case beyond the applicable
prescriptive or reglementary period.

2. The same rule applies to permissive counterclaims, third-party claims and


similar pleadings, which shall not be considered filed until and unless the filing
fee prescribed therefor is paid. The court may also allow payment of said fee
within a reasonable time but also in no case beyond its applicable prescriptive or
reglementary period.

3. Where the trial court acquires jurisdiction over a claim by the filing of the
appropriate pleading and payment of the prescribed filing fee but, subsequently,
the judgment awards a claim not specified in the pleading, or if specified the
same has been left for determination by the court, the additional filing fee therefor
shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of
Court or his duly authorized deputy to enforce said lien and assess and collect
the additional fee.

True to the foregoing guidelines, respondent RTC admitted R-II Builder’s Amended
and Supplemental Complaint and directed the assessment and payment of the
appropriate docket fees in the order dated 19 May 2008. Rather than complying with
said directive, however, R-II Builders manifested its intent to evade payment of the
correct docket fees by withdrawing its Amended and Supplemental Complaint and, in
lieu thereof, filed its Second Amended Complaint which deleted its cause of action for
accounting and conveyance of title to and/or possession of the entire Asset Pool,
reduced its claim for attorney’s fees, sought its appointment as Receiver and prayed
for the liquidation and distribution of the Asset Pool.78 In upholding the admission of
said Second Amended Complaint in respondent RTC’s assailed 3 March 2009 Order,
however, the CA clearly lost sight of the fact that a real action was ensconced in R-II
Builders’ original complaint and that the proper docket fees had yet to be paid in the
premises. Despite the latter’s withdrawal of its Amended and Supplemental Complaint,
it cannot, therefore, be gainsaid that respondent RTC had yet to acquire jurisdiction
over the case for non-payment of the correct docket fees.

In the 15 February 2011 Resolution issued in the case of David Lu v. Paterno Lu Ym,
Sr.,79 this Court, sitting En Banc, had occasion to rule that an action for declaration of
nullity of share issue, receivership and corporate dissolution is one where the value of
the subject matter is incapable of pecuniary estimation. Subsequent to the trial court's
rendition of a decision on the merits declared to be immediately executory and the
CA's denial of their application for a writ of preliminary injunction and/or temporary
restraining order to enjoin enforcement of said decision, the defendants questioned the
sufficiency of the docket fees paid a quo which supposedly failed take into
consideration the value of the shares as well as the real properties involved for which
the plaintiff additionally caused notices of lis pendens to be annotated. Finding that
defendants were already estopped in questioning the jurisdiction of the trial court on
the ground of non-payment of the correct docket fees, the Court discounted intent to
defraud the government on the part of the plaintiff who can, at any rate, be required to
pay the deficiency which may be considered a lien on the judgment that may be
rendered, without automatic loss of the jurisdiction already acquired, in the first
instance, by the trial court.1avvphi1

The factual and legal milieus of the case at bench could not, however, be more
different. While R-II Builders styled its original complaint and Amended and
Supplemental Complaint as one primarily for the resolution and/or declaration of the
DAC, it simultaneously and unmistakably prayed for the conveyance, possession and
control of the Asset Pool. Alongside the fact that HGC has consistently questioned the
sufficiency of the docket fees paid by R-II Builders, estoppel cannot be said to have set
in since, the lapse of more than five years from the commencement of the complaint
notwithstanding, it appears that the case has yet to be tried on the merits. Having
admitted that its original complaint partook the nature of a real action and having been
directed to pay the correct docket fees for its Amended and Supplemental Complaint,
R-II Builders is, furthermore, clearly chargeable with knowledge of the insufficiency of
the docket fees it paid. Unmistakably manifesting its intent to evade payment of the
correct docket fees, moreover, R-II Builders withdrew its Amended and Supplemental
Complaint after its admission and, in lieu thereof, filed its’ Second Amended Complaint
on the ground that said earlier pleading cannot be considered admitted in view of its
non-payment of the docket and other fees it was directed to pay. In so doing, however,
R-II Builders conveniently overlooked the fact that the very same argument could very
well apply to its original complaint for which – given its admitted nature as a real action
- the correct docket fees have also yet to be paid.

The importance of filing fees cannot be over-emphasized for they are intended to take
care of court expenses in the handling of cases in terms of costs of supplies, use of
equipment, salaries and fringe benefits of personnel, and others, computed as to man-
hours used in the handling of each case. The payment of said fees, therefore, cannot
be made dependent on the result of the action taken without entailing tremendous
losses to the government and to the judiciary in particular.80 For non-payment of the
correct docket fees which, for real actions, should be computed on the basis of the
assessed value of the property, or if there is none, the estimated value thereof as
alleged by the claimant,81 respondent RTC should have denied admission of R-II
Builders’ Second Amended Complaint and ordered the dismissal of the case. Although
a catena of decisions rendered by this Court eschewed the application of the doctrine
laid down in the Manchester case,82 said decisions had been consistently premised on
the willingness of the party to pay the correct docket fees and/or absence of intention
to evade payment of the correct docket fees. This cannot be said of R-II Builders which
not only failed to pay the correct docket fees for its original complaint and Amended
and Supplemental Complaint but also clearly evaded payment of the same by filing its
Second Amended Complaint.

By itself, the propriety of admitting R-II Builders’ Second Amended Complaint is also
cast in dubious light when viewed through the prism of the general prohibition against
amendments intended to confer jurisdiction where none has been acquired yet.
Although the policy in this jurisdiction is to the effect that amendments to pleadings are
favored and liberally allowed in the interest of justice, amendment is not allowed where
the court has no jurisdiction over the original complaint and the purpose of the
amendment is to confer jurisdiction upon the court.83 Hence, with jurisdiction over the
case yet to properly attach, HGC correctly fault the CA for upholding respondent RTC’s
admission of R-II Builders’ Second Amended Complaint despite non-payment of the
docket fees for its original complaint and Amended and Supplemental Complaint as
well as the clear intent to evade payment thereof.

With the determination of the jurisdictional necessity of the dismissal of the complaint
of R-II Builders docketed as Civil Case No. 05-113407, first before Br. 24 and later
before Br. 22 both of the RTC of Manila, we no longer find any reason to go into a
discussion of the remaining issues HGC proffers for resolution. In view, particularly, of
its non-acquisition of jurisdiction over the case, respondent RTC clearly had no
authority to grant the receivership sought by R-II Builders. It needs pointing out though
that the prayer for receivership clearly indicates that the R-II Builders sought the
transfer of possession of property consisting of the assets of the JVA from HGC to the
former’s named Receiver. As already noted, said transfer of possession was sought by
respondent R-II Builders since the very start, overtly at the first two attempts, covertly
in the last, the successive amendments betraying the deft maneuverings to evade
payment of the correct docket fees.

WHEREFORE, premises considered, the assailed Decision dated 21 January 2010 is


REVERSED and SET ASIDE. In lieu thereof, another is entered NULLIFYING the
regular court’s, RTC Branch 22’s Orders dated 3 March 2009 and 29 September 2009
as well as the SCC’s, RTC Branch 24’s Order dated 26 October 2005 which was
rendered void by the SCC’s subsequent declaration of absence of authority over the
case. The complaint of R-II Builders docketed as Civil Case No. 05-113407 first before
Br. 24 and thereafter before Br. 22 both of the RTC of Manila is hereby DISMISSED.

SO ORDERED.

G.R. No. 192649 June 22, 2011

HOME GUARANTY CORPORATION, Petitioner,


vs.
R-II BUILDERS INC. and NATIONAL HOUSING AUTHORITY, Respondents.

RESOLUTION

PEREZ, J.:

Before the Court are: (a) the Entry of Appearance filed by Atty. Lope E. Feble of the
Toquero Exconde Manalang Feble Law Offices as collaborating counsel for
respondent R-II Builders, Inc. (R-II Builders), with prayer to be furnished all pleadings,
notices and other court processes at its given address; and (b) the motion filed by R-II
Builders, seeking the reconsideration of Court's decision dated 9 March 2011 on the
following grounds:1

THE HONORABLE COURT ERRED IN RULING THAT RTC MANILA, BRANCH


22, HAD NO JURISDICTION OVER THE PRESENT CASE SINCE RTC-
MANILA, BRANCH 24, TO WHICH THE INSTANT CASE WAS INITIALLY
RAFFLED HAD NO AUTHORITY TO HEAR THE CASE BEING A SPECIAL
COMMERCIAL COURT.

II.
THE HONORABLE COURT ERRED IN RULING THAT THE CORRECT
DOCKET FEES WERE NOT PAID.

In urging the reversal of the Court's decision, R-II Builders argues that it filed its
complaint with the Manila RTC which is undoubtedly vested with jurisdiction over
actions where the subject matter is incapable of pecuniary estimation; that through no
fault of its own, said complaint was raffled to Branch 24, the designated Special
Commercial Court (SCC) tasked to hear intra-corporate controversies; that despite the
determination subsequently made by Branch 24 of the Manila RTC that the case did
not involve an intra-corporate dispute, the Manila RTC did not lose jurisdiction over the
same and its Executive Judge correctly directed its re-raffling to Branch 22 of the same
Court; that the re-raffle and/or amendment of pleadings do not affect a court's
jurisdiction which, once acquired, continues until the case is finally terminated; that
since its original Complaint, Amended and Supplemental Complaint and Second
Amended Complaint all primarily sought the nullification of the Deed of Assignment
and Conveyance (DAC) transferring the Asset Pool in favor of petitioner Home
Guaranty Corporation (HGC), the subject matter of the case is clearly one which is
incapable of pecuniary estimation; and, that the court erred in holding that the case
was a real action and that it evaded the payment of the correct docket fees computed
on the basis of the assessed value of the realties in the Asset Pool.

R-II Builders' motion is bereft of merit.

The record shows that, with the raffle of R-II Builders’ complaint before Branch 24 of
the Manila RTC and said court’s grant of the application for temporary restraining order
incorporated therein, HGC sought a preliminary hearing of its affirmative defenses
which included, among other grounds, lack of jurisdiction and improper venue. It
appears that, at said preliminary hearing, it was established that R-II Builders’
complaint did not involve an intra-corporate dispute and that, even if it is, venue was
improperly laid since none of the parties maintained its principal office in Manila. While
it is true, therefore, that R-II Builders had no hand in the raffling of the case, it cannot
be gainsaid that Branch 24 of the RTC Manila had no jurisdiction over the case. Rather
than ordering the dismissal of the complaint, however, said court issued the 2 January
2008 order erroneously ordering the re-raffle of the case. In Atwel v. Concepcion
Progressive Association, Inc.2 and Reyes v. Hon. Regional Trial Court of Makati,
Branch 1423which involved SCCs trying and/or deciding cases which were found to be
civil in nature, this Court significantly ordered the dismissal of the complaint for lack of
jurisdiction instead of simply directing the re-raffle of the case to another branch.

Even then, the question of the Manila RTC's jurisdiction over the case is tied up with R-
II Builder's payment of the correct docket fees which should be paid in full upon the
filing of the pleading or other application which initiates an action or proceeding. 4 While
it is, consequently, true that jurisdiction, once acquired, cannot be easily ousted,5 it is
equally settled that a court acquires jurisdiction over a case only upon the payment of
the prescribed filing and docket fees.6 Already implicit from the filing of the complaint in
the City of Manila where the realties comprising the Asset Pool are located, the fact
that the case is a real action is evident from the allegations of R-II Builders’ original
Complaint, Amended and Supplemental Complaint and Second Amended Complaint
which not only sought the nullification of the DAC in favor of HGC but, more
importantly, prayed for the transfer of possession of and/or control of the properties in
the Asset Pool. Its current protestations to the contrary notwithstanding, no less than
R-II Builders – in its opposition to HGC’s motion to dismiss – admitted that the case is
a real action as it affects title to or possession of real property or an interest
therein.7 Having only paid docket fees corresponding to an action where the subject
matter is incapable of pecuniary estimation, R-II Builders cannot expediently claim that
jurisdiction over the case had already attached.

In De Leon v. Court of Appeals,8 this Court had, of course, ruled that a case for
rescission or annulment of contract is not susceptible of pecuniary estimation although
it may eventually result in the recovery of real property. Taking into consideration the
allegations and the nature of the relief sought in the complaint in the subsequent case
of Serrano v. Delica,9 however, this Court determined the existence of a real action and
ordered the payment of the appropriate docket fees for a complaint for cancellation of
sale which prayed for both permanent and preliminary injunction aimed at the
restoration of possession of the land in litigation is a real action. In discounting the
apparent conflict in said rulings, the Court went on to rule as follows in Ruby Shelter
Builders and Realty Development Corporation v. Hon. Pablo C, Formaran,10 to wit:

The Court x x x does not perceive a contradiction between Serrano and the Spouses
De Leon. The Court calls attention to the following statement in Spouses De Leon: "A
review of the jurisprudence of this Court indicates that in determining whether an action
is one the subject matter of which is not capable of pecuniary estimation, this Court
has adopted the criterion of first ascertaining the nature of the principal action or
remedy sought." Necessarily, the determination must be done on a case-to-case basis,
depending on the facts and circumstances of each. What petitioner conveniently
ignores is that in Spouses De Leon, the action therein that private respondents
instituted before the RTC was "solely for annulment or rescission" of the contract of
sale over a real property. There appeared to be no transfer of title or possession to the
adverse party x x x. (Underscoring Supplied)1avvphi1

Having consistently sought the transfer of possession and control of the properties
comprising the Asset Pool over and above the nullification of the Deed of Conveyance
in favor of HGC, it follows R-II Builders should have paid the correct and appropriate
docket fees, computed according to the assessed value thereof. This much was
directed in the 19 May 2008 Order issued by Branch 22 of the Manila RTC which
determined that the case is a real action and admitted the Amended and Supplemental
Complaint R-II Builders subsequently filed in the case.11 In obvious evasion of said
directive to pay the correct docket fees, however, R-II Builders withdrew its Amended
and Supplemental Complaint and, in lieu thereof, filed its Second Amended Complaint
which, while deleting its causes of action for accounting and conveyance of title to
and/or possession of the entire Asset Pool, nevertheless prayed for its appointment as
Receiver of the properties comprising the same. In the landmark case of Manchester
Development Corporation v. Court of Appeals,12 this Court ruled that jurisdiction over
any case is acquired only upon the payment of the prescribed docket fee which is both
mandatory and jurisdictional. Although it is true that the Manchester Rule does not
apply despite insufficient filing fees when there is no intent to defraud the
government,13R-II Builders’ evident bad faith should clearly foreclose the relaxation of
said rule.

In addition to the jurisdictional and pragmatic aspects underlying the payment of the
correct docket fees which have already been discussed in the decision sought to be
reconsidered, it finally bears emphasizing that the Asset Pool is comprised of
government properties utilized by HGC as part of its sinking fund, in pursuit of its
mandate as statutory guarantor of government housing programs. With the adverse
consequences that could result from the transfer of possession and control of the
Asset Pool, it is imperative that R-II Builders should be made to pay the docket and
filing fees corresponding to the assessed value of the properties comprising the same.

WHEREFORE, the Court resolves to:

(a) NOTE the Entry of Appearance of Atty. Lope E. Feble of Tuquero Exconde
Manalang Feble Law Offices as collaborating counsel for respondent R-II
Builders, Inc.; and DENY counsel’s prayer to be furnished with all pleadings
notices and other court processes at Unit 2704-A, West Tower, Philippine Stock
Exchange Centre, Exchange Road, Ortigas Center Pasig, since only the lead
counsel is entitled to service of court processes;

(b) DENY with FINALITY R-II Builders, Inc.’s Motion for Reconsideration of the
Decision dated 9 March 2011 for lack of merit, the basic issues having been
already passed upon and there being no substantial argument to warrant a
modification of the same. No further pleadings or motions shall be entertained
herein.

Let an Entry of Judgment in this case be made in due course.

SO ORDERED.