rem 1 cases - eleazar

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FILING FEES

THIRD DIVISION

RUBY SHELTER BUILDERS AND REALTY DEVELOPMENT CORPORATION, Petitioner,

- versus-

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 PresidedBy HON. NOVELITA VILLEGAS-LLAGUNO (Retired 01 May 2006), ROMEO Y. TAN, ROBERTOL. OBIEDO and ATTY. TOMAS A. REYES, Respondents.G.R. No. 175914

Present:

YNARES-SANTIAGO, J., Chairperson,AUSTRIA-MARTINEZ,CHICO-NAZARIO,NACHURA, andPERALTA, JJ.

Promulgated:

February 10, 2009x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - -x

D E C I S I O N

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 Decision[1] dated 22 November2006 of the Court of Appeals in CA-G.R. SP No. 94800. The Court of Appeals, inits assailed Decision, affirmed the Order[2] 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 ofthe Rules of Court, as amended.The present Petition arose from the following facts:


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Petitioner obtained a loan[3] in the total amount of P95,700,620.00 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 whenit became due and demandable, respondents Tan and Obiedo agreed to an extensionof the same.

In a Memorandum of Agreement[9] dated 17 March 2005, respondents Tan and Obiedogranted petitioner until 31 December 2005 to settle its indebtedness, and condoned the interests, penalties and surcharges accruing thereon from 1 October 2004to 31 December 2005 which amounted to P74,678,647.00. 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 Price38376

P 9,340,000.0029918P 28,000,000.0038374P 12,000,000.0039232P 1,600,000.0039225P 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 Price38376P 25,328,939.0029918P 35,660,800.0038374P 28,477,600.00

39232P 6,233,381.0039225P 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 owners duplicate of the corresponding TCT to petitioner and also execute a


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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 theRegister 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 P10,000,000.00 as liquidated damages inclusive of costs and attorneys 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, jointlyand severally with petitioner, the latters monetary obligation to respondent Tanand Obiedo.

Respondent Atty. Tomas A. Reyes (Reyes) was the Notary Public who notarized the Memorandum of Agreement dated 17 March 2005 between respondent Tan andObiedo, 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, respondentsTan and Obiedo presented the Deeds of Absolute Sale dated 3 January 2006 beforethe 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 Complaint[12] against respondents Tan, Obiedo, and Atty. Reyes, for declaration of nullity of deeds of salesand 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 causesof 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 amountof 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 Memorandumof 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:


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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 processessuch as the remedy of foreclosure and its attendant procedures, solemnities andremedies 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 theuse 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 downa principal improvement on the properties consisting of a steel-and-concrete structure housing a motor vehicle terminal operated by petitioner. The actions ofrespondents Tan and Obiedo were to the damage and prejudice of petitioner and its tenants/lessees. Petitioner, alone, claimed to have suffered at least P300,000.00 in actual damages by reason of the physical invasion by respondents Tan andObiedo and their armed goons of the five parcels of land.Ultimately, petitioners prayer in its Complaint reads:

WHEREFORE, premises considered, it is most respectfully prayed of this HonorableCourt 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 [petitioners] certificates of title to the mortgaged properties cancelled and changed/registered in [respondents] Tans and Obiedos 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 commis

sorium;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 P300,000.00; attorneys fees in the amount of P100,000.00 plus P1,000.00 per court attendance of counsel as appearance fee; litigation expenses in the amount of at least P10,000.00 and exemplary damages in the amount of P300,000.00, plus the costs.


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[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 P13,644.25 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 Answer[15] to the Complaint of petitioner. Respondent Tan did admit that meetings were held with Mr. Sia, as the representative ofpetitioner, to thresh out Mr. Sias charge that the computation by respondents Tan and Obiedo of the interests, surcharges and penalties accruing on the loan ofpetitioner 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 Tanand 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. Siastill failed to establish his claim of errors and uncertainties in the computat

ion 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 ofpetitioner 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 the15-month interest which already accrued on the loan, while providing petitionerwith 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 torespondents 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 P10,000,000.00 as liquidated damages and the further sum of not less than P500,000.00 as attorneys fees. In the alternative, and should it become necessary, it is hereby prayed that [petitioner] be ordered to pay herein [respondents Tan and Obiedo] theentire principal loan of P95,700,620.00, plus interests, surcharges and penalties computed from March 17, 2005 until the entire sum is fully paid, including theamount of P74,678,647.00 foregone interest covering the period from October 1,


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2004 to December 31, 2005 or for a total of fifteen (15) months, plus incidentalexpenses as may be proved in court, in the event that Annexes Gto Lbe 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 feesfor 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 ofAbsolute 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 Order[17] granting respondent Tans 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 forDeclaration 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 payadditional filing fee and the [herein respondent], Romeo Tan is also ordered topay docket and filing fees on his counterclaim, both computed based on Section7(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 TrialCourt, Naga City and for the latter to compute and to collect the said fees accordingly.[19]

Petitioner moved[20] 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 petitioners first cause of action in its Complaint in Civil Case No. 2006-0030.In its Order[21] dated 29 March 2006, the RTC refused to reconsider its 24 March2006 Order, based on the following ratiocination:Analyzing, the action herein pertains to real property, for as admitted by the [


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herein petitioner], the deeds of sale in question pertain to real propertyx x x.The Deeds of Sale subject of the instant case have already been transferred inthe 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 tothe 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.x x x x

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 payfor 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 ofP720,392.60 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 RTC[24] acted with grave abuse of discretion, amou

nting 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 Section7(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 petitioners 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 inaccordance 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 ismeant capricious and whimsical exercise of judgment as is equivalent to lack of


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jurisdiction, and mere abuse of discretion is not enough it must be grave. Theabuse must be grave and patent, and it must be shown that the discretion was exercised arbitrarily and despotically.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 beattributed 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 pronouncementof 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 isallowed 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 thepayment of the prescribed docket fee. Hence, the payment of docket fees is notonly mandatory, but also jurisdictional.In Sun Insurance Office, Ltd. (SIOL) v. Asuncion,[29] the Court laid down guid

elines for the implementation of its previous pronouncement in Manchester underparticular 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 withjurisdiction 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 beyondthe 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 filingfee 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 orreglementary period.

3. Where the trial court acquires jurisdiction over a claim by the filing of theappropriate pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified thesame 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.


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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 ofdismissing outright petitioners 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, pursuantto Section 7(b)(1), Rule 141 of the Rules of Court, as amended.

Relevant to the present controversy are the following provisions under Rule 141of the Rules of Court, as amended by A.M. No. 04-2-04-SC[30] and Supreme Court Amended Administrative Circular No. 35-2004[31]: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 athird-party, fourth-party, etc. complaint, or a complaint-in-intervention, if the total sum claimed, INCLUSIVE OF INTERESTS, PENALTIES, SURCHARGES, DAMAGES OFWHATEVER KIND, AND ATTORNEYS FEES, LITIGATIO NEXPENSES AND COSTS and/or in casesinvolving 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 I

NTERNAL 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 ORTHE 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 will3. 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 pro

perty, 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. Thedictum 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, ratherthan by its title or heading.[32] However, the Court finds it necessary, in ascertaining the true nature of Civil Case No. 2006-0030, to take into account sign


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ificant facts and circumstances beyond the Complaint of petitioner, facts and circumstances which petitioner failed to state in its Complaint but were disclosedin the preliminary proceedings before the court a quo.

Petitioner persistently avers that its Complaint in Civil Case No. 2006-0030 isprimarily 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 andObiedo 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. RespondentsTan and Obiedo have also acquired possession of the said properties, enabling them, by petitioners 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 Complaintbefore the RTC on 16 March 2006. Petitioner never expressed surprise when such

facts and circumstances were established before the RTC, nor moved to amend itsComplaint accordingly. Even though the Memorandum of Agreement was supposed tohave long been registered on its TCTs over the five parcels of land, petitionerdid 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 respondentsTan 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 andreasonable 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 t

he 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 allegationsand reliefs it sought in its Complaint in Civil Case No. 2006-0030 appears to beultimately 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 realaction 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.


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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 favorof 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 theproperty, or the estimated value thereof as alleged in the complaint. But sinceMercedes 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/denominationof therein plaintiff Manalos amended petition as one for Mandamus with Revocationof 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 subjectproperty or, if there was none, the estimated value thereof. The Court expounded in Siapno that:

In his amended petition, respondent Manalo prayed that NTAs sale of the propertyin 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, albei

t the amended petition is styled as one for Mandamus with Revocation of Title andDamages,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 thetrue 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. Sanche

z, 94 Phil. 760, 1954)An action to annul a real estate mortgage foreclosure sale is no different froman action to annul a private sale of real property. (Muoz v. Llamas, 87 Phil. 737, 1950).While it is true that petitioner does not directly seek the recovery of title orpossession 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 ofwhich 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 toefface 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 Courts en banc resolution of 04 September 1990 (Re: Proposed Amendments to Rule 141 on Legal Fees).


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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 complaintthat 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 thespecial power of attorney, the affidavit, the new titles issued in the names ofSerrano, 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 P200,000.00, as well as attorneysfee of P200,000.00 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 writof injunction be made permanent. The Court dismissed Delicas complaint for thefollowing reasons:A careful examination of respondents complaint is that it is a real action. InPaderanga vs. Buissan, we held that in a real action, the plaintiff seeks the re

covery 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 ofa mortgage on a real property.Obviously, respondents complaint is a real action involving not only the recoveryof real properties, but likewise the cancellation of the titles thereto.Considering that respondents 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 valuenor the estimated valueof the qustioned 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 valuationof P1,200.00 per square meter. However, the alleged BIR zonal valuationis not the kind of valuation required by the Rule. It isthe 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 ofhis 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, respondents 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 SpousesDe Leon that an action for annulment or rescission of a contract of sale of realproperty 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


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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 ofeach. 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 rescissionof 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 P100,000.00.[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 ofthe 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 Rule141, as amended, provides that in cases involving real property, the FAIR MARKETvalue of the REAL property in litigation STATED IN THE CURRENT TAX DECLARATIONOR 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 xshall bethe 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 orthe 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 prope

rty. 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 Rulesof Court, as amended. The Court of Appeals, therefore, did not commit any error in affirming the RTC Orders requiring petitioner to pay additional docket feesfor 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 theprohibitive amount assessed against it. It is a sweeping assertion which lacks


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evidentiary support. Undeniably, before the Court can conclude that the amountof 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 P720,392.60 additional docket fees so it could champion before the courtsits rights over the disputed real properties. Moreover, even though the Court exempts individuals, as indigent or pauper litigants, from paying docket fees, ithas 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 theRTC, 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.

MINITA V. CHICO-NAZARIO Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGOAssociate JusticeChairperson

MA. ALICIA AUSTRIA-MARTINEZ ANTONIO EDUARDO B. NACHURA

Associate Justice Associate Justice

DIOSDADO M. PERALTA Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson, Third Division


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CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in theabove Decision were reached in consultation before the case was assigned to thewriter of the opinion of the Courts Division.

REYNATO S. PUNOChief Justice

[1] Penned by Associate Justice Mariano C. del Castillo with Associate Justices Conrado M. Vasquez, Jr. and Ramon R. Garcia, concurring; rollo, pp. 109-120.[2] Penned by Judge Novelita Villegas-Llaguno; id. at 74-79.[3] Records do not disclose other details regarding the said loan,i.e., when it was obtained, if it was reduced to writing, and when it exactly became due and demandable.[4] With an area of 4,343 square meters.[5] With an area of 17,183 square meters.

[6] With an area of 8,203 square meters.[7] With an area of 1,043 square meters.[8] With an area of 616 square meters.[9] Rollo, pp. 39-42.[10] According to paragraph 7 of the Memorandum of Agreement, the condoned interests, surcharges and penalties amounted to P55,167,000.00 (as statedin paragraph 2 hereof);but paragraph 2 of the said Memorandum computed the interests, penalties and surcharges from 1 October 2004 to 31 December 2005 condonedor written-off by respondents Tan and Obiedo to be P74,678,647.00.[11] Rollo, pp. 43-52.[12] Id. at 53-62.[13] Id. at 58.[14] Id. at 60-62.

[15] Id. at 65-71.[16] Id. at 69-70.[17] Id. at 74-79.[18] Id. at 75.[19] Id. at 78.[20] Id. at 80-84.[21] Penned by Judge Novelita Villegas-Llaguno; id. at 85-88.[22] Id.at 86-88.[23] Id. at 89.[24] Judge Pablo C. Fomaran, Presiding Judge of RTC Branch 21, NagaCity, was named as a respondent in CA-G.R. SP No. 94800 in his capacity as thePairing Judge for RTC Branch 22, Naga City, which was formerly presided by JudgeNovelita Villegas-Llaguno, who retired on 1 May 2006.

[25] Rollo, pp. 118-119.[26] Id.[27] Id. at 27.[28] G.R. No. L-75919, 7 May 1987, 149 SCRA 562, 569.[29] G.R. Nos. 79937-38, 13 February 1989, 170 SCRA 274, 285.[30] Re: Proposed Revision of Rule 141, Revised Rules of Court[31] Guidelines in the Allocation of Legal Fees Collected Under Rule141 of the Rules of Court, as Amended, between the Special Allowance for the Judiciary Fund and the Judiciary Development Fund.[32] Gochan v. Gochan, 423 Phil. 491, 501 (2001).


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[33] Id.; Serrano v. Delica, G.R. No. 136325, 29 July 2005, 465 SCRA82, 88.[34] Gochan v. Gochan, id.[35] G.R. No. 132260, 30 August 2005, 468 SCRA 330.[36] Id. at 340.[37] Supra note 33.[38] Rollo, pp. 88-89.[39] 350 Phil. 535 (1998).[40] Id. at 541-543.[41] Id. at 537.

G.R. No. 174975 January 20, 2009

LUISA KHO MONTAER, ALEJANDRO MONTAER, JR., LILLIBETH MONTAER-BARRIOS, AND RHODORA ELEANOR MONTAER-DALUPAN, Petitioners,vs.SHARI'A DISTRICT COURT, FOURTH SHARI'A JUDICIAL DISTRICT, MARAWI CITY, LILING DISANGCOPAN, AND ALMAHLEEN LILING S. MONTAER, Respondents.

D E C I S I O N

PUNO, C.J.:

This Petition for Certiorari and Prohibition seeks to set aside the Orders of the Sharia District Court, Fourth Sharia Judicial District, Marawi City, dated August 22, 20061 and September 21, 2006.2

On August 17, 1956, petitioner Luisa Kho Montaer, a Roman Catholic, married Alejandro Montaer, Sr. at the Immaculate Conception Parish in Cubao, Quezon City.3 Petitioners Alejandro Montaer, Jr., Lillibeth Montaer-Barrios, and Rhodora Eleanor Montaer-Dalupan are their children.4 On May 26, 1995, Alejandro Montaer, Sr. died.5

On August 19, 2005, private respondents Liling Disangcopan and her daughter, Almahleen Liling S. Montaer, both Muslims, filed a "Complaint" for the judicial partition of properties before the Sharia District Court.6 The said complaint was entitled "Almahleen Liling S. Montaer and Liling M. Disangcopan v. the Estates and P

roperties of Late Alejandro Montaer, Sr., Luisa Kho Montaer, Lillibeth K. Montaer,Alejandro Kho Montaer, Jr., and Rhodora Eleanor K. Montaer," and docketed as "Special Civil Action No. 7-05."7 In the said complaint, private respondents made thefollowing allegations: (1) in May 1995, Alejandro Montaer, Sr. died; (2) the late Alejandro Montaer, Sr. is a Muslim; (3) petitioners are the first family of thedecedent; (4) Liling Disangcopan is the widow of the decedent; (5) Almahleen Liling S. Montaer is the daughter of the decedent; and (6) the estimated value of and a list of the properties comprising the estate of the decedent.8 Private respondents prayed for the Sharia District Court to order, among others, the following: (1) the partition of the estate of the decedent; and (2) the appointment of an administrator for the estate of the decedent.9

Petitioners filed an Answer with a Motion to Dismiss mainly on the following gro

unds: (1) the Sharia District Court has no jurisdiction over the estate of the late Alejandro Montaer, Sr., because he was a Roman Catholic; (2) private respondents failed to pay the correct amount of docket fees; and (3) private respondentscomplaint is barred by prescription, as it seeks to establish filiation between Almahleen Liling S. Montaer and the decedent, pursuant to Article 175 of the Family Code.10

On November 22, 2005, the Sharia District Court dismissed the private respondentscomplaint. The district court held that Alejandro Montaer, Sr. was not a Muslim,and its jurisdiction extends only to the settlement and distribution of the esta


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te of deceased Muslims.11

On December 12, 2005, private respondents filed a Motion for Reconsideration.12On December 28, 2005, petitioners filed an Opposition to the Motion for Reconsideration, alleging that the motion for reconsideration lacked a notice of hearing.13 On January 17, 2006, the Sharia District Court denied petitionersopposition.14 Despite finding that the said motion for reconsideration "lacked notice of hearing," the district court held that such defect was cured as petitioners "were notified of the existence of the pleading," and it took cognizance of the said motion.15 The Sharia District Court also reset the hearing for the motion for reconsideration.16

In its first assailed order dated August 22, 2006, the Sharia District Court reconsidered its order of dismissal dated November 22, 2005.17 The district court allowed private respondents to adduce further evidence.18 In its second assailed order dated September 21, 2006, the Sharia District Court ordered the continuationof trial, trial on the merits, adducement of further evidence, and pre-trial conference.19

Seeking recourse before this Court, petitioners raise the following issues:

I.

RESPONDENT SHARIA DISTRICT COURT MARAWI CITY LACKS JURISDICTION OVER PETITIONERS

WHO ARE ROMAN CATHOLICS AND NON-MUSLIMS.II.

RESPONDENT SHARIA DISTRICT COURT MARAWI CITY DID NOT ACQUIRE JURISDICTION OVER "THE ESTATES AND PROPERTIES OF THE LATE ALEJANDRO MONTAER, SR." WHICH IS NOT A NATURAL OR JURIDICAL PERSON WITH CAPACITY TO BE SUED.

III.

RESPONDENT SHARIA DISTRICT COURT DID NOT ACQUIRE JURISDICTION OVER THE COMPLAINTOF PRIVATE RESPONDENTS AGAINST PETITIONERS DUE TO NON-PAYMENT OF THE FILING ANDDOCKETING FEES.

IV.

RESPONDENT SHARIA DISTRICT COURTMARAWI CITY COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT DENIED THE OPPOSITION OF PETITIONERS ANDTHEN GRANTED THE MOTION FOR RECONSIDERATION OF RESPONDENTS LILING DISANGCOPAN,ET AL. WHICH WAS FATALLY DEFECTIVE FOR LACK OF A "NOTICE OF HEARING."

V.

RESPONDENT SHARIA DISTRICT COURTMARAWI CITY COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT SET SPL. CIVIL ACTION 7-05 FOR TRIAL EVEN IF THE COMPLAINT PLAINLY REVEALS THAT RESPONDENT ALMAHLEEN LILING S. MONTAER SE

EKS RECOGNITION FROM ALEJANDRO MONTAER, SR. WHICH CAUSE OF ACTION PRESCRIBED UPONTHE DEATH OF ALEJANDRO MONTAER, SR. ON MAY 26, 1995.

In their Comment to the Petition for Certiorari, private respondents stress thatthe Sharia District Court must be given the opportunity to hear and decide the question of whether the decedent is a Muslim in order to determine whether it hasjurisdiction.20

Jurisdiction: Settlement of the Estate of Deceased Muslims


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Petitionersfirst argument, regarding the Sharia District Courts jurisdiction, is dependent on a question of fact, whether the late Alejandro Montaer, Sr. is a Muslim. Inherent in this argument is the premise that there has already been a determination resolving such a question of fact. It bears emphasis, however, that theassailed orders did not determine whether the decedent is a Muslim. The assailed orders did, however, set a hearing for the purpose of resolving this issue.

Article 143(b) of Presidential Decree No. 1083, otherwise known as the Code of Muslim Personal Laws of the Philippines, provides that the Sharia District Courtshave exclusive original jurisdiction over the settlement of the estate of deceased Muslims:

ARTICLE 143. Original jurisdiction. (1) The Shari'a District Court shall have exclusive original jurisdiction over:

x x x x

(b) All cases involving disposition, distribution and settlement of the estate of deceased Muslims, probate of wills, issuance of letters of administration or appointment of administrators or executors regardless of the nature or the aggregate value of the property.

The determination of the nature of an action or proceeding is controlled by theaverments and character of the relief sought in the complaint or petition.21 The

designation given by parties to their own pleadings does not necessarily bind the courts to treat it according to the said designation. Rather than rely on "afalsa descriptio or defective caption," courts are "guided by the substantive averments of the pleadings."22

Although private respondents designated the pleading filed before the Sharia District Court as a "Complaint" for judicial partition of properties, it is a petition for the issuance of letters of administration, settlement, and distribution of the estate of the decedent. It contains sufficient jurisdictional facts required for the settlement of the estate of a deceased Muslim,23 such as the fact ofAlejandro Montaer, Sr.s death as well as the allegation that he is a Muslim. The said petition also contains an enumeration of the names of his legal heirs, so far as known to the private respondents, and a probable list of the properties lef

t by the decedent, which are the very properties sought to be settled before a probate court. Furthermore, the reliefs prayed for reveal that it is the intention of the private respondents to seek judicial settlement of the estate of the decedent.24 These include the following: (1) the prayer for the partition of the estate of the decedent; and (2) the prayer for the appointment of an administrator of the said estate.

We cannot agree with the contention of the petitioners that the district court does not have jurisdiction over the case because of an allegation in their answerwith a motion to dismiss that Montaer, Sr. is not a Muslim. Jurisdiction of a court over the nature of the action and its subject matter does not depend upon the defenses set forth in an answer25 or a motion to dismiss.26 Otherwise, jurisdiction would depend almost entirely on the defendant27 or result in having "a cas

e either thrown out of court or its proceedings unduly delayed by simple stratagem.28 Indeed, the "defense of lack of jurisdiction which is dependent on a question of fact does not render the court to lose or be deprived of its jurisdiction."29

The same rationale applies to an answer with a motion to dismiss.30 In the caseat bar, the Sharia District Court is not deprived of jurisdiction simply becausepetitioners raised as a defense the allegation that the deceased is not a Muslim. The Sharia District Court has the authority to hear and receive evidence to determine whether it has jurisdiction, which requires an a priori determination tha


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t the deceased is a Muslim. If after hearing, the Sharia District Court determines that the deceased was not in fact a Muslim, the district court should dismissthe case for lack of jurisdiction.

Special Proceedings

The underlying assumption in petitionerssecond argument, that the proceeding before the Sharia District Court is an ordinary civil action against a deceased person, rests on an erroneous understanding of the proceeding before the court a quo. Part of the confusion may be attributed to the proceeding before the Sharia District Court, where the parties were designated either as plaintiffs or defendants and the case was denominated as a special civil action. We reiterate that theproceedings before the court a quo are for the issuance of letters of administration, settlement, and distribution of the estate of the deceased, which is a special proceeding. Section 3(c) of the Rules of Court (Rules) defines a special proceeding as "a remedy by which a party seeks to establish a status, a right, ora particular fact." This Court has applied the Rules, particularly the rules onspecial proceedings, for the settlement of the estate of a deceased Muslim.31 Ina petition for the issuance of letters of administration, settlement, and distribution of estate, the applicants seek to establish the fact of death of the decedent and later to be duly recognized as among the decedents heirs, which would allow them to exercise their right to participate in the settlement and liquidation of the estate of the decedent.32 Here, the respondents seek to establish thefact of Alejandro Montaer, Sr.s death and, subsequently, for private respondent Al

mahleen Liling S. Montaer to be recognized as among his heirs, if such is the case in fact.

Petitionersargument, that the prohibition against a decedent or his estate frombeing a party defendant in a civil action33 applies to a special proceeding suchas the settlement of the estate of the deceased, is misplaced. Unlike a civil action which has definite adverse parties, a special proceeding has no definite adverse party. The definitions of a civil action and a special proceeding, respectively, in the Rules illustrate this difference. A civil action, in which "a party sues another for the enforcement or protection of a right, or the preventionor redress of a wrong"34 necessarily has definite adverse parties, who are either the plaintiff or defendant.35 On the other hand, a special proceeding, "by which a party seeks to establish a status, right, or a particular fact,"36 has one

definite party, who petitions or applies for a declaration of a status, right, or particular fact, but no definite adverse party. In the case at bar, it bears emphasis that the estate of the decedent is not being sued for any cause of action. As a special proceeding, the purpose of the settlement of the estate of the decedent is to determine all the assets of the estate,37 pay its liabilities,38 and to distribute the residual to those entitled to the same.39

Docket Fees

Petitionersthird argument, that jurisdiction was not validly acquired for non-payment of docket fees, is untenable. Petitioners point to private respondentspetition in the proceeding before the court a quo, which contains an allegation estimating the decedents estate as the basis for the conclusion that what private res

pondents paid as docket fees was insufficient. Petitionersargument essentially involves two aspects: (1) whether the clerk of court correctly assessed the docket fees; and (2) whether private respondents paid the correct assessment of the docket fees.

Filing the appropriate initiatory pleading and the payment of the prescribed docket fees vest a trial court with jurisdiction over the subject matter.40 If theparty filing the case paid less than the correct amount for the docket fees because that was the amount assessed by the clerk of court, the responsibility of making a deficiency assessment lies with the same clerk of court.41 In such a case


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, the lower court concerned will not automatically lose jurisdiction, because ofa partys reliance on the clerk of courts insufficient assessment of the docket fees.42 As "every citizen has the right to assume and trust that a public officercharged by law with certain duties knows his duties and performs them in accordance with law," the party filing the case cannot be penalized with the clerk of courts insufficient assessment.43 However, the party concerned will be required topay the deficiency.44

In the case at bar, petitioners did not present the clerk of courts assessment ofthe docket fees. Moreover, the records do not include this assessment. There can be no determination of whether private respondents correctly paid the docket fees without the clerk of courts assessment.

Exception to Notice of Hearing

Petitionersfourth argument, that private respondentsmotion for reconsideration before the Sharia District Court is defective for lack of a notice of hearing, must fail as the unique circumstances in the present case constitute an exception to this requirement. The Rules require every written motion to be set for hearingby the applicant and to address the notice of hearing to all parties concerned.45 The Rules also provide that "no written motion set for hearing shall be actedupon by the court without proof of service thereof."46 However, the Rules allowa liberal construction of its provisions "in order to promote [the] objective of securing a just, speedy, and inexpensive disposition of every action and proce

eding."47 Moreover, this Court has upheld a liberal construction specifically ofthe rules of notice of hearing in cases where "a rigid application will resultin a manifest failure or miscarriage of justice especially if a party successfully shows that the alleged defect in the questioned final and executory judgmentis not apparent on its face or from the recitals contained therein."48 In theseexceptional cases, the Court considers that "no party can even claim a vested right in technicalities," and for this reason, cases should, as much as possible,be decided on the merits rather than on technicalities.49

The case at bar falls under this exception. To deny the Sharia District Court ofan opportunity to determine whether it has jurisdiction over a petition for thesettlement of the estate of a decedent alleged to be a Muslim would also deny its inherent power as a court to control its process to ensure conformity with the

law and justice. To sanction such a situation simply because of a lapse in fulfilling the notice requirement will result in a miscarriage of justice.

In addition, the present case calls for a liberal construction of the rules on notice of hearing, because the rights of the petitioners were not affected. ThisCourt has held that an exception to the rules on notice of hearing is where it appears that the rights of the adverse party were not affected.50 The purpose forthe notice of hearing coincides with procedural due process,51 for the court todetermine whether the adverse party agrees or objects to the motion, as the Rules do not fix any period within which to file a reply or opposition.52 In probate proceedings, "what the law prohibits is not the absence of previous notice, but the absolute absence thereof and lack of opportunity to be heard."53 In the case at bar, as evident from the Sharia District Courts order dated January 17, 2006

, petitionerscounsel received a copy of the motion for reconsideration in question. Petitioners were certainly not denied an opportunity to study the argumentsin the said motion as they filed an opposition to the same. Since the Sharia District Court reset the hearing for the motion for reconsideration in the same order, petitioners were not denied the opportunity to object to the said motion in ahearing. Taken together, these circumstances show that the purpose for the rules of notice of hearing, procedural process, was duly observed.

Prescription and Filiation


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Petitionersfifth argument is premature. Again, the Sharia District Court has notyet determined whether it has jurisdiction to settle the estate of the decedent.In the event that a special proceeding for the settlement of the estate of a decedent is pending, questions regarding heirship, including prescription in relation to recognition and filiation, should be raised and settled in the said proceeding.54 The court, in its capacity as a probate court, has jurisdiction to declare who are the heirs of the decedent.55 In the case at bar, the determination of the heirs of the decedent depends on an affirmative answer to the question ofwhether the Sharia District Court has jurisdiction over the estate of the decedent.

IN VIEW WHEREOF, the petition is DENIED. The Orders of the Sharia District Court,dated August 22, 2006 and September 21, 2006 respectively, are AFFIRMED. Cost against petitioners.

SO ORDERED.


WE CONCUR:

ANTONIO T. CARPIOAssociate Justice

RENATO C. CORONAAssociate Justice ADOLFO S. AZCUNAAssociate JusticeTERESITA J. LEONARDO-DE CASTROAssociate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been reached in consultation before the casewas assigned to the writer of the opinion of the Courts Division.


Footnotes

1 Rollo, pp. 110-111.

2 Id. at 115.

3 Id. at 60.

4 Id. at 63-65.

5 Id. at 73.

6 Id. at 74-82.

7 Id. at 74.

8 Id. at 75-77.

9 Id. at 78-79.


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10 Id. at 83, 89-96.

11 Id. at 99-101.

12 Id. at 102-109.

13 Id. at 128-129.

14 Id. at 138.

15 Id.

16 Id.

17 Id. at 110-111.

18 Id. at 111.

19 Id. at 115.

20 Id. at 191.

21 Vda. de Manalo v. Court of Appeals, 402 Phil. 152, 161 (2001).

22 Heirs of Celso Amarante v. Court of Appeals, G.R. No. 76386, May 21, 1990, 185 SCRA 585, 594.

23 Musa v. Moson, G.R. No. 95574, August 16, 1991, 200 SCRA 715, 719.

24 Vda. de Manalo v. Court of Appeals, supra note 21, at 162.

25 Salas v. Castro, G.R. No. 100416, December 2, 1992, 216 SCRA 198, 204.

26 Hilado v. Chavez, G.R. No. 134742, September 22, 2004, 438 SCRA 623, 641.

27 Salas v. Castro, supra note 25.


29 Salas v. Castro, supra note 25.

30 Mamadsual v. Moson, G.R. No. 92557, September 27, 1990, 190 SCRA 82, 87.

In the abovementioned case, the Court held that the Special Rules of Procedure in Sharia Courts, Ijra-at-al-Mahakim al Sharia, proscribe "the filing of a motion to dismiss in lieu of an answer which would stop the running of the period to file an answer and cause undue delay."

31 Musa v. Moson, supra note 23, at 721-722.


33 Ventura v. Hon. Militante, 374 Phil. 562 (1999).

34 Rules of Court, Rule 1, Sec. 3, par. (a).

35 Rules of Court, Rule 3, Sec. 1.

36 Rules of Court, Rule 1, Sec. 3, par. (c).


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37 Pacific Banking Corporation Employees Organization v. Court of Appeals, 312 Phil. 578, 593 (1995).

38 Id.


40 Sun Insurance Office, Ltd. v. Asuncion, G.R. Nos. 79937-38, February 13, 1989, 170 SCRA 274, 285.

41 Rivera v. Del Rosario, G.R. No. 144934, January 15, 2004, 419 SCRA 626, 635.

42 Id.

43 Ayala Land, Inc. v. Spouses Carpo, 399 Phil. 327, 334 (2000), citing Segoviav. Barrios, 75 Phil. 764, 767 (1946).

44 Fil-Estate Golf and Development, Inc. v. Navarro, G.R. No. 152575, June 29, 2007, 526 SCRA 51, 61.

45 Rules of Court, Rule 15, Secs. 4-5.



48 Vlason Enterprises Corporation v. Court of Appeals, 369 Phil. 269, 299 (1999).

49 Goldloop Properties, Inc. v. Court of Appeals, G.R. No. 99431, August 11, 1992, 212 SCRA 498, 504.

50 Victory Liner, Inc. v. Malinias, G.R. No. 151170, May 29, 2007, 523 SCRA 279,291-292.

51 Vlason Enterprises Corporation v. Court of Appeals, supra note 48, at 299-300

.

52 Victory Liner, Inc. v. Malinias, supra note 50, at 292.

53 De Borja, et al. v. Tan, et al., 93 Phil. 167, 171 (1953).

54 Portugal v. Portugal-Beltran, G.R. No. 155555, August 16, 2005, 467 SCRA 184,198.

55 Uriarte v. Court of First Instance Negros Occidental, et al., 144 Phil. 205,215-216 (1970).

G.R. No. 165147 July 9, 2008

PHILIPPINE FIRST INSURANCE CO., INC. and PARAMOUNT GENERAL INSURANCE CORPORATION, Petitioners,vs.PYRAMID LOGISTICS AND TRUCKING CORPORATION (formerly PANACOR INTEGRATED WAREHOUSING AND TRUCKING CORPORATION), Respondent.

D E C I S I O N


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CARPIO MORALES, J.:

The issue, in the main, in the present case is whether respondent, Pyramid Logistics and Trucking Corporation (Pyramid), which filed on November 7, 2001 a complaint,1 denominated as one for specific performance and damages, against petitioners Philippine First Insurance Company, Inc. (Philippine First) and Paramount General Insurance Corporation (Paramount) before the Regional Trial Court (RTC) ofMakati, docketed as Civil Case No. 01-1609, paid the correct docket fee; if inthe negative, whether the complaint should be dismissed or Pyramid can still beordered to pay the fee.

Pyramid sought to recover the proceeds of two insurance policies issued to it, Policy No. IN-002904 issued by petitioner Paramount, and Policy No. MN-MCL-HO-00-0000007-00 issued by petitioner Philippine First. Despite demands, petitioners allegedly failed to settle them, hence, it filed the complaint subject of the present petition.

In its complaint, Pyramid alleged that on November 8, 2000, its delivery van bearing license plate number PHL-545 which was loaded with goods belonging to California Manufacturing Corporation (CMC) valued at PESOS NINE HUNDRED SEVEN THOUSAND ONE HUNDRED FORTY NINE AND SEVEN/100 (P907,149.07) left the CMC Bicutan Warehouse but the van, together with the goods, failed to reach its destination and its driver and helper were nowhere to be found, to its damage and prejudice; thatit filed a criminal complaint against the driver and the helper for qualified th

eft, and a claim with herein petitioners as co-insurers of the lost goods but, in violation of petitionersundertaking under the insurance policies, they refusedwithout just and valid reasons to compensate it for the loss; and that as a direct consequence of petitionersfailure, despite repeated demands, to comply withtheir respective undertakings under the Insurance Policies by compensating for the value of the lost goods, it suffered damages and was constrained to engage the services of counsel to enforce and protect its right to recover compensation under said policies, for which services it obligated itself to pay the sum equivalent to twenty-five (25%) of any amount recovered as and for attorneys fees and legal expenses.2

Pyramid thus prayed

. . . that after due proceedings, judgment be rendered, ordering [herein petitioners] to comply with their obligation under their respective Insurance Policiesby paying to [it] jointly and severally, the claims arising from the subject losses.

THAT, [herein petitioners] be adjudged jointly and severally to pay to [it], inaddition to the foregoing, the following:

1. The sum of PHP 50,000.00 plus PHP 1,500.00 for each Court session attended bycounsel until the instant [case] is finally terminated, as and for attorneys fees;

2. The costs of suit[;]3 (Underscoring supplied)

and for other reliefs just and equitable in the premises.4

Pyramid was assessed P610 docket fee, apparently on the basis of the amount of P50,000 specified in the prayer representing attorneys fees, which it duly paid.5

Pyramid later filed a 1st Amended Complaint6 containing minor changes in its body7 but bearing the same prayer.8 Branch 148 of the Makati RTC to which the complaint was raffled admitted the Amended Complaint.9


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Petitioners filed a Motion to Dismiss on the ground of, inter alia, lack of jurisdiction, Pyramid not having paid the docket fees in full, arguing thus:

x x x x

In the body of the Amended Complaint, plaintiff alleged that the goods belongingto California Manufacturing Co., Inc. (CMC) is [sic] "valued at Php907,149.07"and consequently, "plaintiff incurred expenses, suffered damages and was constrained to engage the services of counsel to enforce and protect its right to recover compensation under the said policies and for which services, it obligated itself to pay the sum equivalent to twenty-five (25%) of any recovery in the instant action, as and for attorneys fees and legal expenses".

On the other hand, in the prayer in the Complaint, plaintiff deliberately omitted to specify what these damages are. x x x

x x x x

Verily, this deliberate omission by the plaintiff is clearly intended for no other purposes than to evade the payment of the correct filing fee if not to mislead the docket clerk, in the assessment of the filing fee. In fact, the docket clerk in the instant case charged the plaintiff a total of Php610.00 only as a filing fee, which she must have based on the amount of Php50,000.00 [attorneys fees]only.10 (Emphasis in the original; italics and underscoring supplied)

Petitioners cited11 Manchester Development Corporation v. Court of Appeals12 which held:

x x x [A]ll complaints, petitions, answers and other similar pleadings should specify the amount of damages being prayed for not only in the body of the pleading but also in the prayer, and said damages shall be considered in the assessmentof the filing fees in any case. Any pleading that fails to comply with this requirement shall not be accepted or admitted, or shall otherwise be expunged fromthe record.13 (Emphasis and underscoring supplied)

They cited too Sun Insurance Office, Ltd. v. Asuncion14 which held that "[i]t isnot simply the filing of the complaint or appropriate 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."15

Petitioners thus concluded:

With the above cases as a backdrop, the Supreme Court, in revising the rules ofpleading and practice in the 1997 Rules of Civil Procedure, added a tenth groundto a Motion to Dismiss to wit, "[t]hat a condition precedent for filing claim [sic] has not been complied with.["]

On the contrary, if plaintiff would insist that its claim against the defendantsis only Php50,000.00 plus Php 1,500.00 as appearance fee per court hearing, then it follows that it is the Metropolitan Trial Court which has jurisdiction over

this case, not this Honorable Court. Such amount is way below the minimum jurisdictional amount prescribed by the rules in order to confer jurisdiction to theRegional Trial Court.16 (Underscoring supplied)

To the Motion to Dismiss Pyramid filed its Opposition,17 alleging that if therewas a mistake in the assessment of the docket fees, the trial court was not precluded from acquiring jurisdiction over the complaint as "it has the authority todirect the mistaken party to complete the docket fees in the course of the proceedings . . ."18 The Opposition merited a Reply19 from petitioners.


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By Order of June 3, 2002, the trial court20 denied the Motion to Dismiss in thiswise:

x x x x

Indeed, a perusal of the Complaint reveals that while plaintiff made mention ofthe value of the goods, which were lost, the prayer of plaintiff did not indicate its exact claim from the defendants. The Complaint merely prayed defendants "to comply with their obligation under their respective insurance policies by paying to plaintiff jointly and severally, the claims arising from the subject losses" and did not mention the amount of PHP907,149.07, which is the value of the goods and which is also the subject of insurance. This resulted to the assessmentand payment of docket fees in the amount of P610 only. The Court, even without the Motion to Dismiss filed by defendant, actually noted such omission which is actually becoming a practice for some lawyers. For whatever purpose it may be, the Court will not dwell into it. In this instant case, this being for specific performance, it is not dismissible on that ground but unless proper docket fees are paid, the Court can only grant what was prayed for in the Complaint.

x x x x21 (Emphasis and underscoring supplied)

PetitionersMotion for Reconsideration22 of the denial of their Motion to Dismisshaving been denied23 by Order of August 1, 2002, they filed their Answer with Compulsory Counterclaim ad Cautelam,24 alleging that they intended to file a Peti

tion for Certiorari with the Court of Appeals.25Petitioners did indeed eventually file before the Court of Appeals a Petition for Certiorari (With Preliminary Injunction and Urgent Prayer for Restraining Order)26 posing the following two of three queries, viz:

First. Does [Pyramids] deliberate omission to pay the required correct docket andfiling fee vest the trial court [with] jurisdiction to entertain the subject matter of the instant case?

Second. [Is] the instant case an action for specific performance or simply one for damages or recovery of a sum of money?

x x x x27

By Decision of June 3, 2004,28 the Court of Appeals partially granted petitionerspetition for certiorari by setting aside the trial judges assailed orders and ordering Pyramid to file the correct docket fees within a reasonable time, it holding that while the complaint was denominated as one for specific performance, itsought to recover from petitioners Pyramids "claims arising from the subject losses." The appellate court ratiocinated:

x x x x

Indeed, it has been held that "it is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee tha

t vests a trial court with jurisdiction over the subject matter or nature of theaction." To determine the docket fees, it is necessary to determine the true nature of the action by examining the allegations of the complaint. x x x

x x x x

While the captions of the complaint and 1st amended complaint denominated the case as one for "Specific Performance and Damages", the allegations and prayer therein show that the specific performance sought by private respondent was for petitioners to "comply with their obligation under their respective Insurance Polic


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ies by paying to plaintiff jointly and severally, the claims arising from the subject losses" as well as the attorneys fees and costs of suit. Obviously, what constitutes specific performance is the payment itself by petitioners of private respondents claims arising from the losses it allegedly incurred. x x x29

x x x x

Public respondent should have ordered private respondent to pay the correct docket fees on the basis of the allegations of the complaint. x x x

x x x x

While it has been held in Manchester Development Corporation vs. Court of Appeals x x x that "any pleading that fails to comply with this requirement of specifying the amount of damages not only in the body of the pleading but also in the prayer shall not be accepted nor admitted, or shall otherwise be expunged from the record," this rule was relaxed in subsequent cases, wherein payment of the correct docket fees was allowed within a reasonable time. . .

x x x x30 (Emphasis and underscoring supplied)

Thus the appellate court disposed:

WHEREFORE, the petition is partially granted. The Orders dated June 3, 2002 and

August 1, 2002 of public respondent are partially set aside insofar as they dispensed with the payment of the correct docket fees. Consequently, [Pyramid] is hereby directed to pay the correct docket fees on the basis of the losses allegedin the body of the complaint, plus the attorneys fees mentioned in the prayer, within a reasonable time which should not go beyond the applicable prescriptive orreglementary period. In all other respects, the said Orders are affirmed.31 (Underscoring supplied)

Petitioners filed a Motion for Reconsideration32 of the appellate courts decision. Pyramid filed its Comment and Opposition to the Motion for Reconsideration,33arguing thus:

x x x x

In the present case, [Pyramid] thru its Complaint simply sought from petitionerscompliance with their contractual undertaking as insurers of the goods insuredwhich were lost in [its] custody. Private respondent did not specify the extentof petitionersobligation as it left the matter entirely in the judgment of the trial court to consider. Thus, the Complaint was labeled "Specific Performance" which [Pyramid] submitted to the Clerk of Court for assessment of the docket fee,after which, it paid the same based on the said assessment. There was no indication whatsoever that [Pyramid] had refused to pay; rather, it merely argued against petitionerssubmissions as it maintained the correctness of the assessment made.34 (Underscoring supplied)

By Resolution of August 23, 2004, the Court of Appeals denied petitionersMotion

for Reconsideration;35 hence, the present Petition for Review on Certiorari,36 raising the issues of whether the appellate court erred:

. . . WHEN IT APPLIED IN THE INSTANT CASE THE LIBERAL RULE ENUNCIATED IN SUN INSURANCE OFFICE, LTD. (SIOL) VS. ASUNCION, 170 SCRA 274 AND NATIONAL STEEL CORPORATION VS. COURT OF APPEALS, 302 SCRA 523 (1999) IN RESPECT TO THE PAYMENT OF THEPRESCRIBED FILING AND DOCKET FEES DESPITE CLEAR SHOWING OF RESPONDENTS INTENTIONTO EVADE THE PAYMENT OF THE CORRECT DOCKET FEE WHICH WARRANTS THE APPLICATION OFTHE DOCTRINE LAID DOWN IN MANCHESTER DEVELOPMENT CORPORATION VS. COURT OF APPEALS, 149 SCRA 562.


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. . . WHEN IT DID NOT APPLY THE RULING OF THIS HONORABLE TRIBUNAL IN MARCOPPER MINING CORPORATION VS. GARCIA, 143 SCRA 178, TAN VS. DIRECTOR OF FORESTRY, 125 SCRA 302, AND CHINA ROAD AND BRIDGE CORPORATION VS. COURT OF APPEALS, 348 SCRA 401.37 (Underscoring supplied)

Petitioners invoke the doctrine in Manchester Development Corporation v. Court of Appeals38 that a pleading which does not specify in the prayer the amount sought shall not be admitted or shall otherwise be expunged, and that the court acquires jurisdiction only upon the payment of the prescribed docket fee.39

Pyramid, on the other hand, insists, in its Comment on the Petition,40 on the application of Sun Insurance Office, Ltd. (SIOL) v. Asuncion41 and subsequent rulings relaxing the Manchester ruling by allowing payment of the docket fee withina reasonable time, in no case beyond the applicable prescriptive or reglementaryperiod, where the filing of the initiatory pleading is not accompanied by the payment of the prescribed docket fee.42

In Tacay v. Regional Trial Court of Tagum, Davao del Norte,43 the Court clarified the effect of the Sun Insurance ruling on the Manchester ruling as follows:

As will be noted, the requirement in Circular No. 7 [of this Court which was issued based on the Manchester ruling44 ] that complaints, petitions, answers, andsimilar pleadings should specify the amount of damages being prayed for not only

in the body of the pleading but also in the prayer, has not been altered. Whathas been revised is the rule that subsequent "amendment of the complaint or similar pleading will not thereby vest jurisdiction in the Court, much less the payment of the docket fee based on the amount sought in the amended pleading," the trial court now being authorized to allow payment of the fee within a reasonabletime but in no case beyond the applicable prescriptive period or reglementary period. Moreover, a new rule has been added, governing the awards of claims not specified in the pleading i.e., damages arising after the filing of the complaintor similar pleading as to which the additional filing fee therefore shall constitute a lien on the judgment.

Now, under the Rules of Court, docket or filing fees are assessed on the basis of the "sum claimed," on the one hand, or the "value of the property in litigatio

n or the value of the estate," on the other. . .

Where the action is purely for the recovery of money or damages, the docket feesare assessed on the basis of the aggregate amount claimed, exclusive only of interests and costs. In this case, the complaint or similar pleading should, according to Circular No. 7 of this Court, "specify the amount of damages being prayed for not only in the body of the pleading but also in the prayer, and said damages shall be considered in the assessment of filing fees in any case."

Two situations may arise. One is where the complaint or similar pleading sets out a claim purely for money and damages and there is no statement of the amountsbeing claimed. In this event the rule is that the pleading will "not be acceptednor admitted, or shall otherwise be expunged from the record." In other words,

the complaint or pleading may be dismissed, or the claims as to which amounts are unspecified may be expunged, although as aforestated the Court may, on motion,permit amendment of the complaint and payment of the fees provided the claim has not in the meantime become time-barred. The other is where the pleading does specify the amount of every claim, but the fees paid are insufficient; and here again, the rule now is that the court may allow a reasonable time for the paymentof the prescribed fees, or the balance thereof, and upon such payment, the defect is cured and the court may properly take cognizance of the action, unless inthe meantime prescription has set in and consequently barred the right of action.45 (Emphasis and underscoring supplied)


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Indeed, Pyramid captioned its complaint as one for "specific performance and damages" even if it was, as the allegations in its body showed, seeking in the mainthe collection of its claims-sums of money representing losses the amount of which it, by its own admission, "knew."46 And, indeed, it failed to specify in itsprayer in the complaint the amount of its claims/damages.

When Pyramid amended its complaint, it still did not specify, in its prayer, theamount of claims/damages it was seeking. In fact it has the audacity to informthis Court, in its Comment on the present Petition, that

x x x In the natural order of things, when a litigant is given the opportunity to spend less for a docket fee after submitting his pleading for assessment by the Office of the Clerk of Court, he would not decline it inasmuch as to request for a higher assessment under the circumstances [for such] is against his interest and would be senseless. Placed under the same situation, petitioner[s] would certainly do likewise. To say otherwise would certainly be dishonest,47

which comment drew petitioners to conclude as follows:

[This] only shows respondents dishonesty and lack of regard of the rules. Following this line of reasoning, respondent would do everything if only for it to spend less for

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