FILING FEES THIRD DIVISION RUBY SHELTER BUILDERS AND REALTY DEVELOPMENT CORPORATION, Petitioner, - versusHON. PABLO C.

FORMARAN III, Presiding Judge of Regional Trial Court Branch 21, N aga 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. G.R. No. 175914 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, and PERALTA, JJ.

Promulgated:

February 10, 2009 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -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 November 2006 of the Court of Appeals in CA-G.R. SP No. 94800. The Court of Appeals, in its assailed Decision, affirmed the Order[2] dated 24 March 2006 of the Regiona l Trial Court (RTC), Branch 22, of Naga City, in Civil Case No. RTC-2006-0030, o rdering petitioner Ruby Shelter Builders and Realty Development Corporation to p ay 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 loan[3] in the total amount of P95,700,620.00 from respond ents Romeo Y. Tan (Tan) and Roberto L. Obiedo (Obiedo), secured by real estate m ortgages over five parcels of land, all located in Triangulo, Naga City, covere d 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 Ci ty, 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 Agreement[9] dated 17 March 2005, respondents Tan and Obiedo granted petitioner until 31 December 2005 to settle its indebtedness, and condon ed the interests, penalties and surcharges accruing thereon from 1 October 2004 to 31 December 2005 which amounted to P74,678,647.00. The Memorandum of Agreeme nt required, in turn, that petitioner execute simultaneously with the said Memor andum, by way of dacion en pago, Deeds of Absolute Sale in favor of respondents Ta n and Obiedo, covering the same parcels of land subject of the mortgages. The D eeds of Absolute Sale would be uniformly dated 2 January 2006, and state that pe titioner sold to respondents Tan and Obiedo the parcels of land for the followin g purchase prices: TCT No. Purchase Price 38376 P 9,340,000.00 29918 P 28,000,000.00 38374 P 12,000,000.00 39232 P 1,600,000.00 39225 P 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 an d Obiedo the following prices for the same, inclusive of interest and penalties: TCT No. Redemption Price 38376 P 25,328,939.00 29918 P 35,660,800.00 38374 P 28,477,600.00 39232 P 6,233,381.00 39225 P 6,233,381.00 In the event that petitioner is able to redeem any of the afore-mentioned parcel s of land, the Deed of Absolute Sale covering the said property shall be nullifi ed and have no force and effect; and respondents Tan and Obiedo shall then retur n 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 p arcels of land within the period agreed upon, respondents Tan and Obiedo could a lready 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 TCT s to the said properties in their names. The Memorandum of Agreement further provided that should petitioner contest, jud icially or otherwise, any act, transaction, or event related to or necessarily c onnected with the said Memorandum and the Deeds of Absolute Sale involving the f ive parcels of land, it would pay respondents Tan and Obiedo P10,000,000.00 as l iquidated damages inclusive of costs and attorney s fees. Petitioner would likewi se pay respondents Tan and Obiedo the condoned interests, surcharges and penalti es.[10] Finally, should a contest arise from the Memorandum of Agreement, Mr. R uben 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 nota rized 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, exe cuted separate Deeds of Absolute Sale,[11] over the five parcels of land, in fav or 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. T he 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 w ere 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 respon dents 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 a nd/or temporary restraining order (TRO). The Complaint was docketed as Civil Ca se 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 Decembe r 2005, its President already wrote a letter informing respondents Tan and Obied o of the intention of petitioner to pay its loan and requesting a meeting to com pute the final amount due. The parties held meetings on 3 and 4 January 2006 bu t 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 petiti oner for further dialogues. Unbeknownst to petitioner, despite the ongoin g meetings, respondents Tan and Obiedo, in evident bad faith, already had the pr e-executed Deeds of Absolute Sale notarized on 3 January 2006 by respondent Atty . Reyes. Atty. Reyes, in connivance with respondents Tan and Obiedo, falsely ma de it appear in the Deeds of Absolute Sale that Mr. Sia had personally acknowled ged/ratified the said Deeds before Atty. Reyes. Asserting that the Deeds of Absolute Sale over the five parcels of land were exe cuted merely as security for the payment of its loan to respondents Tan and Obie do; that the Deeds of Absolute Sale, executed in accordance with the Memorandum of Agreement, constituted pactum commisorium and as such, were null and void; an d that the acknowledgment in the Deeds of Absolute Sale were falsified, petition er 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, physic ally 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 t o pay its obligation and have the mortgaged properties released.[13] In support of its second cause of action, petitioner narrated in its Complaint t hat 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 falsifie d Deeds of Absolute Sale and fenced the said properties with barbed wire. Begin ning 3 March 2006, respondents Tan and Obiedo started demolishing some of the co mmercial spaces standing on the parcels of land in question which were being ren ted 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 str ucture housing a motor vehicle terminal operated by petitioner. The actions of respondents Tan and Obiedo were to the damage and prejudice of petitioner and it s tenants/lessees. Petitioner, alone, claimed to have suffered at least P300,00 0.00 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 o rder be forthwith issued ex parte: (a) Restraining [herein respondents] Tan and Obiedo, their agents, privies or r epresentatives, from committing act/s tending to alienate the mortgaged properti es from the [herein petitioner] pending the resolution of the case, including bu t not limited to the acts complained of in paragraph 14 , above; (b) Restraining the Register of Deeds of Naga City from entertaining moves by t he [respondents] to have [petitioner s] certificates of title to the mortgaged pro perties 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 i mposing the same restraints indicated in the next preceding two paragraphs of th is prayer; and (d) 1. After trial, judgment be rendered: Making the injunction permanent;

2. Declaring the provision in the Memorandum of Agreement requiring the [pe titioner] to execute deed of sales (sic) in favor of the [respondents Tan and Ob iedo] 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 an d 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; attorney s fees in the amount of P100,00 0.00 plus P1,000.00 per court attendance of counsel as appearance fee; litigatio n expenses in the amount of at least P10,000.00 and exemplary damages in the amo unt of P300,000.00, plus the costs.

[Petitioner] further prays for such other reliefs as may be proper, just and equ itable under the premises.[14] Upon filing its Complaint with the RTC on 16 March 2006, petitioner pa id the sum of P13,644.25 for docket and other legal fees, as assessed by the Off ice of the Clerk of Court. The Clerk of Court initially considered Civil Case N o. 2006-0030 as an action incapable of pecuniary estimation and computed the doc ket and other legal fees due thereon according to Section 7(b)(1), Rule 141 of t he Rules of Court. Only respondent Tan filed an Answer[15] to the Complaint of petitioner. Respond ent 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 Ta n and Obiedo of the interests, surcharges and penalties accruing on the loan of petitioner was replete with errors and uncertainties. However, Mr. Sia failed t o back up his accusation of errors and uncertainties and to present his own fina l computation of the amount due. Disappointed and exasperated, respondents Tan and Obiedo informed Mr. Sia that they had already asked respondent Atty. Reyes t o come over to notarize the Deeds of Absolute Sale. Respondent Atty. Reyes aske d Mr. Sia whether it was his signature appearing above his printed name on the D eeds 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 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 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 mere ly as securities for the loan of petitioner. The Deeds of Absolute Sale over th e five parcels of land were the consideration for the payment of the total indeb tedness 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 properti es covered by said Deeds. Unfortunately, petitioner failed to exercise its righ t to redeem any of the said properties. Belying that they forcibly took possession of the five parcels of land, responde nt Tan alleged that it was Mr. Sia who, with the aid of armed men, on board a Sp orts Utility Vehicle and a truck, rammed into the personnel of respondents Tan a nd Obiedo causing melee and disturbance. Moreover, by the execution of the Deed s of Absolute Sale, the properties subject thereof were, ipso jure, delivered to respondents Tan and Obiedo. The demolition of the existing structures on the p roperties was nothing but an exercise of dominion by respondents Tan and Obiedo. Respondent Tan, thus, sought not just the dismissal of the Complaint of petition er, but also the grant of his counterclaim. The prayer in his Answer is faithfu lly reproduced below: Wherefore, premises considered, it is most respectfully prayed that, after due h earing, judgment be rendered dismissing the complaint, and on the counterclaim, [herein petitioner] and Ruben Sia, be ordered to indemnify, jointly and severall y [herein respondents Tan and Obiedo] the amounts of not less than P10,000,000.0 0 as liquidated damages and the further sum of not less than P500,000.00 as atto rney s fees. In the alternative, and should it become necessary, it is hereby pra yed that [petitioner] be ordered to pay herein [respondents Tan and Obiedo] the entire principal loan of P95,700,620.00, plus interests, surcharges and penaltie s computed from March 17, 2005 until the entire sum is fully paid, including the amount of P74,678,647.00 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 here by prayed for.[16] Thereafter, respondent Tan filed before the RTC an Omnibus Motion in which he co ntended 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 to ok effect on 16 August 2004. Since petitioner did not pay the appropriate docke t fees for Civil Case No. 2006-0030, the RTC did not acquire jurisdiction over t he said case. Hence, respondent Tan asked the RTC to issue an order requiring p etitioner 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 Mem orandum of Agreement as pactum commisorium. As required by the RTC, the parties submitted their Position Papers on the matte r. On 24 March 2006, the RTC issued an Order[17] granting respondent Tan s Omnibu s Motion. In holding that both petitioner and respondent Tan must pay docket fe es 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 provid ed that QUIETING OF TITLE which is an action classified as beyond pecuniary esti mation 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 est imation, must be computed based on the provision of Section 7(A) herein-above, i n part, quoted. Since [herein respondent], Romeo Tan in his Answer has a counterclaim against th e plaintiff, the former must likewise pay the necessary filling (sic) fees as pr ovided for under Section 7 (A) of Amended Administrative Circular No. 35-2004 is sued 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 fif teen (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 acco rdingly.[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 annulm ent of the Deeds of Absolute Sale and, as such, incapable of pecuniary estimatio n. Petitioner submitted that the RTC erred in applying Section 7(a), Rule 141 o f the Rules of Court, as amended, to petitioner s first cause of action in its Com plaint in Civil Case No. 2006-0030. In its Order[21] 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 clou d on the title to real property or any interest therein or to prevent a cloud fr om being cast upon title to the real property (Art. 476, Civil Code of the Phili ppines) and the plaintiff must have legal or equitable title to or interest in t he real property which is the subject matter of the action (Art. 447, ibid.), an d yet plaintiff in QUIETING OF TITLE is required to pay the fees in accordance w ith paragraph (a) of Section 7 of the said Amended Administrative Circular No. 3 5-2004, 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 req uired fees in accordance with Section 7(a) of the Amended Administrative Circula r No. 35-2004 afore-mentioned. Furthermore, while [petitioner] claims that the action for declaration of nullit y of deed of sale and memorandum of agreement is one incapable of pecuniary esti mation, however, as argued by the [respondent Tan], the issue as to how much fil ing and docket fees should be paid was never raised as an issue in the case of R ussell 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 reque st 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 petit ioner previously paid on 16 March 2006, petitioner must still pay the amount of P720,392.60 as docket fees.[23] Petitioner, however, had not yet conceded, and it filed a Petition for Certiorar i 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 Marc h 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 r evoked, corrected, or rectified, petitioner would suffer grave injustice and irr eparable damage. On 22 November 2006, the Court of Appeals promulgated its Decision wherein it he ld that: Clearly, the petitioner s complaint involves not only the annulment of the deeds o f sale, but also the recovery of the real properties identified in the said docu ments. 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 s ame. 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 i n the assessment and payment of the proper docket fee. Resultantly, there is no grave abuse of discretion amounting to lack or excess o f 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 exe rcised arbitrarily and despotically. Such a situation does not exist in this particular case. The evidence is insuff icient to prove that the court a quo acted despotically in rendering the assaile d 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 co urt a quo are AFFIRMED.[26] Without seeking reconsideration of the foregoing Decision with the Court of Appe als, petitioner filed its Petition for Review on Certiorari before this Court, w ith a lone assignment of error, to wit: 18. The herein petitioner most respectfully submits that the Court of Appe als committed a grave and serious reversible error in affirming the assailed Ord ers 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 an d irreparable damage to herein petitioner in view of the prohibitive amount asse ssed as a consequence of said Orders.[27] In Manchester Development Corporation v. Court of Appeals,[28] the Court explici tly 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 guid elines 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 pleadi ng, 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 o f the initiatory pleading is not accompanied by payment of the docket fee, the c ourt 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 sim ilar 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 wi thin 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 th erefor shall constitute a lien on the judgment. It shall be the responsibility o f the Clerk of Court or his duly authorized deputy to enforce said lien and asse ss and collect the additional fee.

In the Petition at bar, the RTC found, and the Court of Appeals affirmed, that p etitioner did not pay the correct amount of docket fees for Civil Case No. 20060030. According to both the trial and appellate courts, petitioner should pay d ocket fees in accordance with Section 7(a), Rule 141 of the Rules of Court, as a mended. Consistent with the liberal tenor of Sun Insurance, the RTC, instead of dismissing outright petitioner s Complaint in Civil Case No. 2006-0030, granted p etitioner time to pay the additional docket fees. Despite the seeming munificen ce of the RTC, petitioner refused to pay the additional docket fees assessed aga inst 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-SC[30] and Supreme Court A mended Administrative Circular No. 35-2004[31]: SEC. 7. Clerks of Regional Trial Courts. (a) For filing an action or a permissive OR COMPULSORY counterclaim, CROS S-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 t he 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 STA TED 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 T HE 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, the n THE fees will be charged on both the amounts claimed and value of property bas ed on the formula prescribed in this paragraph a. (b) stimated 2. Special civil actions, except judicial foreclosure of mor tgage, 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 d epend 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 i mposes a fixed or flat rate of docket fees on actions incapable of pecuniary est imation. In order to resolve the issue of whether petitioner paid the correct amount of d ocket 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 determ ined by the allegations in the body of the pleading or Complaint itself, rather than by its title or heading.[32] However, the Court finds it necessary, in asc ertaining the true nature of Civil Case No. 2006-0030, to take into account sign For filing: 1. Actions where the value of the subject matter cannot be e

ificant facts and circumstances beyond the Complaint of petitioner, facts and ci rcumstances 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 allegat ions and reliefs in the Complaint alone, one would get the impression that the t itles to the subject real properties still rest with petitioner; and that the in terest of respondents Tan and Obiedo in the same lies only in the Deeds of Absol ute 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 e xecution of the Deeds of Absolute Sale, registered on the TCTs over the five par cels of land, then still in the name of petitioner. After respondents Tan and O biedo had the Deeds of Absolute Sale notarized on 3 January 2006 and presented t he same to Register of Deeds for Naga City on 8 March 2006, they were already is sued TCTs over the real properties in question, in their own names. Respondents Tan and Obiedo have also acquired possession of the said properties, enabling t hem, by petitioner s own admission, to demolish the improvements thereon. It is, thus, suspect that petitioner kept mum about the afore-mentioned facts an d 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. 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 v ein, although petitioner alleged that respondents Tan and Obiedo forcibly took p hysical possession of the subject real properties, petitioner did not seek the r estoration 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 attentio n of the Court certain facts and circumstances, keeping its Complaint safely wor ded, 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 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 it s title to and possession of the five parcels of land from respondents Tan and O biedo. 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 proper ty.[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 f or real action, to wit: In a real action, the assessed value of the property, or if there is none, the e stimated value thereof shall be alleged by the claimant and shall be the basis i n 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 r espondents Mercedes Gochan, et al. with the RTC was denominated as one for specif ic performance and damages, the relief sought was the conveyance or transfer of r eal 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, a ffecting as it did title to or possession of real property. Consequently, the b asis 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 prope rties, the Court found that the RTC did not acquire jurisdiction over the same f or 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 fee s 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 expound ed 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 latt er 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 and Damages, it is, at bottom, a suit to recover from Standford the realty in questi on and to vest in respondent the ownership and possession thereof. In short, th e amended petition is in reality an action in res or a real action. Our pronoun cement in Fortune Motors (Phils.), Inc. vs. Court of Appeals is instructive. The re, 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. (Int on, et al., v. Quintan, 81 Phil. 97, 1948) An action for the annulment or rescission of a sale of real property is a real a ction. 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 from an 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 or possession of the property in question, his action for annulment of sale and hi s claim for damages are closely intertwined with the issue of ownership of the b uilding which, under the law, is considered immovable property, the recovery of which is petitioner's primary objective. The prevalent doctrine is that an actio n 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 fe e, respondent Manalo never alleged in the body of his amended petition, much les s in the prayer portion thereof, the assessed value of the subject res, or, if t here is none, the estimated value thereof, to serve as basis for the receiving c lerk in computing and arriving at the proper amount of filing fee due thereon, a s required under Section 7 of this Court s en banc resolution of 04 September 199 0 (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 ov er 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 aver red that undue influence, coercion, and intimidation were exerted upon him by th erein petitioners Serrano, et al. to effect transfer of his properties. Thus, D elica 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 cancel led; that Serrano, et al. be ordered to pay Delica, jointly and severally, actua l, moral and exemplary damages in the amount of P200,000.00, as well as attorney s fee of P200,000.00 and costs of litigation; that a TRO and a writ of preliminar y injunction be issued ordering Serrano, et al. to immediately restore him to hi s 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 re covery of real property, or, as stated in Section 2(a), Rule 4 of the Revised Ru les of Court, a real action is one affecting title to real property or for the re covery 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 th e assessed value of the property, or if there is none, the estimated value there of 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 que stioned parcels of land were alleged by respondent in both his original and amen ded complaint. What he stated in his amended complaint is that the disputed rea lties have a BIR zonal valuation of P1,200.00 per square meter. However, the alle ged 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 requ irement 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 thu s rule that it has not acquired jurisdiction over the present case for failure o f herein respondent to pay the required docket fee. On this ground alone, respo ndent 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, can not modify or reverse the doctrine laid down in Spouses De Leon v. Court of Appe als.[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 Sp ouses 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 determinin g whether an action is one the subject matter of which is not capable of pecunia ry estimation, this Court has adopted the criterion of first ascertaining the na ture of the principal action or remedy sought. Necessarily, the determination mu st 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 acti on therein that private respondents instituted before the RTC was solely for annu lment or rescission of the contract of sale over a real property.[40] There appe ared to be no transfer of title or possession to the adverse party. Their compl aint simply prayed for: 1. Ordering the nullification or rescission of the Contract of Conditional Sal e (Supplementary Agreement) for having violated the rights of plaintiffs (privat e respondents) guaranteed to them under Article 886 of the Civil Code and/or vio lation of the terms and conditions of the said contract. 2. Declaring void ab initio the Deed of Absolute Sale for being absolutely sim ulated; and 3. Ordering defendants (petitioners) to pay plaintiffs (private respondents) a ttorney'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, rath er 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 computa tion 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, O R 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 a ction would still be determined in accordance with the value of the real propert y involved therein; the only difference is in what constitutes the acceptable va lue. In computing the docket fees for cases involving real properties, the cour ts, instead of relying on the assessed or estimated value, would now be using th e 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 petitio ner 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 f or 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 erro r 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 th e judgment of the Court of Appeals is allowed to stand and not rectified, it wou ld 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 th e financial capacity of said party. It baffles this Court that herein petitione r, having the capacity to enter into multi-million transactions, now stalls at p aying P720,392.60 additional docket fees so it could champion before the courts its rights over the disputed real properties. Moreover, even though the Court e xempts 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 N o. 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 petitio ner Ruby Shelter Builders and Realty Development Corporation to pay additional d ocket/filing fees, computed based on Section 7(a), Rule 141 of the Rules of Cour t, as amended, is hereby AFFIRMED. Costs against the petitioner. SO ORDERED.

MINITA V. CHICO-NAZARIO Associate Justice WE CONCUR:

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson

MA. ALICIA AUSTRIA-MARTINEZ Associate Justice

ANTONIO EDUARDO B. NACHURA Associate Justice

DIOSDADO M. PERALTA Associate Justice ATTESTATION I attest that the conclusions in the above Decision were reached in co nsultation before the case was assigned to the writer of the opinion of the Cour t s Division.

CONSUELO YNARES-SANT IAGO As sociate Justice Chairperson , Third Division

CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Divi sion Chairperson s Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court s Division.

REYNATO S. PUNO Chief Justice [1] Penned by Associate Justice Mariano C. del Castillo with Assoc iate 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 b ecame 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 co ndoned interests, surcharges and penalties amounted to P55,167,000.00 (as stated in paragraph 2 hereof); but paragraph 2 of the said Memorandum computed the inter ests, penalties and surcharges from 1 October 2004 to 31 December 2005 condoned or 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, Naga City, was named as a respondent in CA-G.R. SP No. 94800 in his capacity as the Pairing Judge for RTC Branch 22, Naga City, which was formerly presided by Judge Novelita 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 Rule 141 of the Rules of Court, as Amended, between the Special Allowance for the Ju diciary Fund and the Judiciary Development Fund. [32] Gochan v. Gochan, 423 Phil. 491, 501 (2001).

[33] 82, 88. [34] [35] [36] [37] [38] [39] [40] [41] G.R. No. 174975

Id.; Serrano v. Delica, G.R. No. 136325, 29 July 2005, 465 SCRA Gochan v. Gochan, id. G.R. No. 132260, 30 August 2005, 468 SCRA 330. Id. at 340. Supra note 33. Rollo, pp. 88-89. 350 Phil. 535 (1998). Id. at 541-543. Id. at 537. January 20, 2009

LUISA KHO MONTAER, ALEJANDRO MONTAER, JR., LILLIBETH MONTAER-BARRIOS, AND RHODORA E LEANOR MONTAER-DALUPAN, Petitioners, vs. SHARI'A DISTRICT COURT, FOURTH SHARI'A JUDICIAL DISTRICT, MARAWI CITY, LILING DI SANGCOPAN, 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 th e Shari a District Court, Fourth Shari a Judicial District, Marawi City, dated Augus t 22, 20061 and September 21, 2006.2 On August 17, 1956, petitioner Luisa Kho Montaer, a Roman Catholic, married Aleja ndro Montaer, Sr. at the Immaculate Conception Parish in Cubao, Quezon City.3 Pet itioners Alejandro Montaer, Jr., Lillibeth Montaer-Barrios, and Rhodora Eleanor Mo ntaer-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, Alm ahleen Liling S. Montaer, both Muslims, filed a "Complaint" for the judicial part ition of properties before the Shari a District Court.6 The said complaint was ent itled "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 "Spec ial Civil Action No. 7-05."7 In the said complaint, private respondents made the following allegations: (1) in May 1995, Alejandro Montaer, Sr. died; (2) the lat e Alejandro Montaer, Sr. is a Muslim; (3) petitioners are the first family of the decedent; (4) Liling Disangcopan is the widow of the decedent; (5) Almahleen Li ling S. Montaer is the daughter of the decedent; and (6) the estimated value of a nd a list of the properties comprising the estate of the decedent.8 Private resp ondents prayed for the Shari a District Court to order, among others, the followin g: (1) the partition of the estate of the decedent; and (2) the appointment of a n 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 Shari a District Court has no jurisdiction over the estate of the la te Alejandro Montaer, Sr., because he was a Roman Catholic; (2) private responden ts failed to pay the correct amount of docket fees; and (3) private respondents c omplaint is barred by prescription, as it seeks to establish filiation between A lmahleen Liling S. Montaer and the decedent, pursuant to Article 175 of the Famil y Code.10 On November 22, 2005, the Shari a District Court dismissed the private respondents complaint. 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

te of deceased Muslims.11 On December 12, 2005, private respondents filed a Motion for Reconsideration.12 On December 28, 2005, petitioners filed an Opposition to the Motion for Reconsid eration, alleging that the motion for reconsideration lacked a notice of hearing .13 On January 17, 2006, the Shari a District Court denied petitioners opposition.1 4 Despite finding that the said motion for reconsideration "lacked notice of hea ring," the district court held that such defect was cured as petitioners "were n otified of the existence of the pleading," and it took cognizance of the said mo tion.15 The Shari a District Court also reset the hearing for the motion for recon sideration.16 In its first assailed order dated August 22, 2006, the Shari a District Court reco nsidered its order of dismissal dated November 22, 2005.17 The district court al lowed private respondents to adduce further evidence.18 In its second assailed o rder dated September 21, 2006, the Shari a District Court ordered the continuation of trial, trial on the merits, adducement of further evidence, and pre-trial co nference.19 Seeking recourse before this Court, petitioners raise the following issues: I. RESPONDENT SHARI A DISTRICT COURT MARAWI CITY LACKS JURISDICTION OVER PETITIONERS WHO ARE ROMAN CATHOLICS AND NON-MUSLIMS. II. RESPONDENT SHARI A DISTRICT COURT MARAWI CITY DID NOT ACQUIRE JURISDICTION OVER "T HE ESTATES AND PROPERTIES OF THE LATE ALEJANDRO MONTAER, SR." WHICH IS NOT A NATU RAL OR JURIDICAL PERSON WITH CAPACITY TO BE SUED. III. RESPONDENT SHARI A DISTRICT COURT DID NOT ACQUIRE JURISDICTION OVER THE COMPLAINT OF PRIVATE RESPONDENTS AGAINST PETITIONERS DUE TO NON-PAYMENT OF THE FILING AND DOCKETING FEES. IV. RESPONDENT SHARI A DISTRICT COURT MARAWI CITY COMMITTED GRAVE ABUSE OF DISCRETION AM OUNTING TO LACK OF JURISDICTION WHEN IT DENIED THE OPPOSITION OF PETITIONERS AND THEN GRANTED THE MOTION FOR RECONSIDERATION OF RESPONDENTS LILING DISANGCOPAN, ET AL. WHICH WAS FATALLY DEFECTIVE FOR LACK OF A "NOTICE OF HEARING." V. RESPONDENT SHARI A DISTRICT COURT MARAWI CITY COMMITTED GRAVE ABUSE OF DISCRETION AM OUNTING TO LACK OF JURISDICTION WHEN IT SET SPL. CIVIL ACTION 7-05 FOR TRIAL EVE N IF THE COMPLAINT PLAINLY REVEALS THAT RESPONDENT ALMAHLEEN LILING S. MONTAER SE EKS RECOGNITION FROM ALEJANDRO MONTAER, SR. WHICH CAUSE OF ACTION PRESCRIBED UPON THE DEATH OF ALEJANDRO MONTAER, SR. ON MAY 26, 1995. In their Comment to the Petition for Certiorari, private respondents stress that the Shari a District Court must be given the opportunity to hear and decide the q uestion of whether the decedent is a Muslim in order to determine whether it has jurisdiction.20 Jurisdiction: Settlement of the Estate of Deceased Muslims

Petitioners first argument, regarding the Shari a District Court s jurisdiction, is d ependent on a question of fact, whether the late Alejandro Montaer, Sr. is a Musl im. Inherent in this argument is the premise that there has already been a deter mination resolving such a question of fact. It bears emphasis, however, that the assailed orders did not determine whether the decedent is a Muslim. The assaile d 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 M uslim Personal Laws of the Philippines, provides that the Shari a District Courts have exclusive original jurisdiction over the settlement of the estate of deceas ed Muslims: ARTICLE 143. Original jurisdiction. clusive original jurisdiction over: x x x x (b) All cases involving disposition, distribution and settlement of the estate o f deceased Muslims, probate of wills, issuance of letters of administration or a ppointment of administrators or executors regardless of the nature or the aggreg ate value of the property. The determination of the nature of an action or proceeding is controlled by the averments 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 t he courts to treat it according to the said designation. Rather than rely on "a falsa descriptio or defective caption," courts are "guided by the substantive av erments of the pleadings."22 Although private respondents designated the pleading filed before the Shari a Dist rict Court as a "Complaint" for judicial partition of properties, it is a petiti on for the issuance of letters of administration, settlement, and distribution o f the estate of the decedent. It contains sufficient jurisdictional facts requir ed for the settlement of the estate of a deceased Muslim,23 such as the fact of Alejandro Montaer, Sr. s death as well as the allegation that he is a Muslim. The s aid petition also contains an enumeration of the names of his legal heirs, so fa r 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 p robate court. Furthermore, the reliefs prayed for reveal that it is the intentio n of the private respondents to seek judicial settlement of the estate of the de cedent.24 These include the following: (1) the prayer for the partition of the e state of the decedent; and (2) the prayer for the appointment of an administrato r of the said estate. We cannot agree with the contention of the petitioners that the district court d oes not have jurisdiction over the case because of an allegation in their answer with a motion to dismiss that Montaer, Sr. is not a Muslim. Jurisdiction of a co urt over the nature of the action and its subject matter does not depend upon th e defenses set forth in an answer25 or a motion to dismiss.26 Otherwise, jurisdi ction 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 stratag em.28 Indeed, the "defense of lack of jurisdiction which is dependent on a quest ion 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 case at bar, the Shari a District Court is not deprived of jurisdiction simply because petitioners raised as a defense the allegation that the deceased is not a Muslim . The Shari a District Court has the authority to hear and receive evidence to det ermine whether it has jurisdiction, which requires an a priori determination tha (1) The Shari'a District Court shall have ex

t the deceased is a Muslim. If after hearing, the Shari a District Court determine s that the deceased was not in fact a Muslim, the district court should dismiss the case for lack of jurisdiction. Special Proceedings The underlying assumption in petitioners second argument, that the proceeding bef ore the Shari a District Court is an ordinary civil action against a deceased pers on, 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 Shari a Dis trict Court, where the parties were designated either as plaintiffs or defendant s and the case was denominated as a special civil action. We reiterate that the proceedings before the court a quo are for the issuance of letters of administra tion, settlement, and distribution of the estate of the deceased, which is a spe cial proceeding. Section 3(c) of the Rules of Court (Rules) defines a special pr oceeding as "a remedy by which a party seeks to establish a status, a right, or a particular fact." This Court has applied the Rules, particularly the rules on special proceedings, for the settlement of the estate of a deceased Muslim.31 In a petition for the issuance of letters of administration, settlement, and distr ibution of estate, the applicants seek to establish the fact of death of the dec edent and later to be duly recognized as among the decedent s heirs, which would a llow them to exercise their right to participate in the settlement and liquidati on of the estate of the decedent.32 Here, the respondents seek to establish the fact 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 cas e in fact. Petitioners argument, that the prohibition against a decedent or his estate from being a party defendant in a civil action33 applies to a special proceeding such as the settlement of the estate of the deceased, is misplaced. Unlike a civil a ction which has definite adverse parties, a special proceeding has no definite a dverse party. The definitions of a civil action and a special proceeding, respec tively, in the Rules illustrate this difference. A civil action, in which "a par ty sues another for the enforcement or protection of a right, or the prevention or redress of a wrong"34 necessarily has definite adverse parties, who are eithe r the plaintiff or defendant.35 On the other hand, a special proceeding, "by whi ch 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, o r particular fact, but no definite adverse party. In the case at bar, it bears e mphasis that the estate of the decedent is not being sued for any cause of actio n. As a special proceeding, the purpose of the settlement of the estate of the d ecedent is to determine all the assets of the estate,37 pay its liabilities,38 a nd to distribute the residual to those entitled to the same.39 Docket Fees Petitioners third argument, that jurisdiction was not validly acquired for non-pa yment of docket fees, is untenable. Petitioners point to private respondents peti tion in the proceeding before the court a quo, which contains an allegation esti mating the decedent s estate as the basis for the conclusion that what private res pondents paid as docket fees was insufficient. Petitioners argument essentially i nvolves two aspects: (1) whether the clerk of court correctly assessed the docke t fees; and (2) whether private respondents paid the correct assessment of the d ocket fees. Filing the appropriate initiatory pleading and the payment of the prescribed doc ket fees vest a trial court with jurisdiction over the subject matter.40 If the party filing the case paid less than the correct amount for the docket fees beca use that was the amount assessed by the clerk of court, the responsibility of ma king a deficiency assessment lies with the same clerk of court.41 In such a case

, the lower court concerned will not automatically lose jurisdiction, because of a party s reliance on the clerk of court s insufficient assessment of the docket fe es.42 As "every citizen has the right to assume and trust that a public officer charged by law with certain duties knows his duties and performs them in accorda nce with law," the party filing the case cannot be penalized with the clerk of c ourt s insufficient assessment.43 However, the party concerned will be required to pay the deficiency.44 In the case at bar, petitioners did not present the clerk of court s assessment of the docket fees. Moreover, the records do not include this assessment. There ca n be no determination of whether private respondents correctly paid the docket f ees without the clerk of court s assessment. Exception to Notice of Hearing Petitioners fourth argument, that private respondents motion for reconsideration b efore the Shari a District Court is defective for lack of a notice of hearing, mus t fail as the unique circumstances in the present case constitute an exception t o this requirement. The Rules require every written motion to be set for hearing by 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 acted upon by the court without proof of service thereof."46 However, the Rules allow a liberal construction of its provisions "in order to promote [the] objective o f securing a just, speedy, and inexpensive disposition of every action and proce eding."47 Moreover, this Court has upheld a liberal construction specifically of the rules of notice of hearing in cases where "a rigid application will result in a manifest failure or miscarriage of justice especially if a party successful ly shows that the alleged defect in the questioned final and executory judgment is not apparent on its face or from the recitals contained therein."48 In these exceptional cases, the Court considers that "no party can even claim a vested ri ght 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 Shari a District Court of an opportunity to determine whether it has jurisdiction over a petition for the settlement of the estate of a decedent alleged to be a Muslim would also deny it s 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 fulf illing the notice requirement will result in a miscarriage of justice. In addition, the present case calls for a liberal construction of the rules on n otice of hearing, because the rights of the petitioners were not affected. This Court has held that an exception to the rules on notice of hearing is where it a ppears that the rights of the adverse party were not affected.50 The purpose for the notice of hearing coincides with procedural due process,51 for the court to determine whether the adverse party agrees or objects to the motion, as the Rul es do not fix any period within which to file a reply or opposition.52 In probat e proceedings, "what the law prohibits is not the absence of previous notice, bu t the absolute absence thereof and lack of opportunity to be heard."53 In the ca se at bar, as evident from the Shari a District Court s order dated January 17, 2006 , petitioners counsel received a copy of the motion for reconsideration in questi on. Petitioners were certainly not denied an opportunity to study the arguments in the said motion as they filed an opposition to the same. Since the Shari a Dist rict Court reset the hearing for the motion for reconsideration in the same orde r, petitioners were not denied the opportunity to object to the said motion in a hearing. Taken together, these circumstances show that the purpose for the rule s of notice of hearing, procedural process, was duly observed. Prescription and Filiation

Petitioners fifth argument is premature. Again, the Shari a District Court has not yet 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 de cedent is pending, questions regarding heirship, including prescription in relat ion to recognition and filiation, should be raised and settled in the said proce eding.54 The court, in its capacity as a probate court, has jurisdiction to decl are who are the heirs of the decedent.55 In the case at bar, the determination o f the heirs of the decedent depends on an affirmative answer to the question of whether the Shari a District Court has jurisdiction over the estate of the deceden t. IN VIEW WHEREOF, the petition is DENIED. The Orders of the Shari a District Court, dated August 22, 2006 and September 21, 2006 respectively, are AFFIRMED. Cost a gainst petitioners. SO ORDERED. REYNATO S. PUNO Chief Justice WE CONCUR: ANTONIO T. CARPIO Associate Justice RENATO C. CORONA Associate Justice ADOLFO S. AZCUNA Associate Justice TERESITA J. LEONARDO-DE CASTRO Associate 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 con clusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court s Division. REYNATO S. PUNO Chief Justice 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.

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, 18 5 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. 28 Vda. de Manalo v. Court of Appeals, supra note 21, at 163. 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 i n Shari a Courts, Ijra-at-al-Mahakim al Shari a, proscribe "the filing of a motion t o dismiss in lieu of an answer which would stop the running of the period to fil e an answer and cause undue delay." 31 Musa v. Moson, supra note 23, at 721-722. 32 Vda. de Manalo v. Court of Appeals, supra note 21, at 165. 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).

37 Pacific Banking Corporation Employees Organization v. Court of Appeals, 312 P hil. 578, 593 (1995). 38 Id. 39 Vda. de Manalo v. Court of Appeals, supra note 21, at 165. 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 Segovia v. Barrios, 75 Phil. 764, 767 (1946). 44 Fil-Estate Golf and Development, Inc. v. Navarro, G.R. No. 152575, June 29, 2 007, 526 SCRA 51, 61. 45 Rules of Court, Rule 15, Secs. 4-5. 46 Rules of Court, Rule 15, Sec. 6. 47 Rules of Court, Rule 2, Sec. 6. 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, 199 2, 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 WAREHOUS ING AND TRUCKING CORPORATION), Respondent. D E C I S I O N

CARPIO MORALES, J.: The issue, in the main, in the present case is whether respondent, Pyramid Logis tics and Trucking Corporation (Pyramid), which filed on November 7, 2001 a compl aint,1 denominated as one for specific performance and damages, against petition ers Philippine First Insurance Company, Inc. (Philippine First) and Paramount Ge neral Insurance Corporation (Paramount) before the Regional Trial Court (RTC) of Makati, docketed as Civil Case No. 01-1609, paid the correct docket fee; if in the negative, whether the complaint should be dismissed or Pyramid can still be ordered to pay the fee. Pyramid sought to recover the proceeds of two insurance policies issued to it, P olicy No. IN-002904 issued by petitioner Paramount, and Policy No. MN-MCL-HO-000000007-00 issued by petitioner Philippine First. Despite demands, petitioners a llegedly failed to settle them, hence, it filed the complaint subject of the pre sent petition. In its complaint, Pyramid alleged that on November 8, 2000, its delivery van bea ring license plate number PHL-545 which was loaded with goods belonging to Calif ornia Manufacturing Corporation (CMC) valued at PESOS NINE HUNDRED SEVEN THOUSAN D ONE HUNDRED FORTY NINE AND SEVEN/100 (P907,149.07) left the CMC Bicutan Wareho use but the van, together with the goods, failed to reach its destination and it s driver and helper were nowhere to be found, to its damage and prejudice; that it 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, i n violation of petitioners undertaking under the insurance policies, they refused without just and valid reasons to compensate it for the loss; and that as a dir ect consequence of petitioners failure, despite repeated demands, to comply with their respective undertakings under the Insurance Policies by compensating for t he value of the lost goods, it suffered damages and was constrained to engage th e services of counsel to enforce and protect its right to recover compensation u nder said policies, for which services it obligated itself to pay the sum equiva lent to twenty-five (25%) of any amount recovered as and for attorney s fees and l egal expenses.2 Pyramid thus prayed . . . that after due proceedings, judgment be rendered, ordering [herein petitio ners] to comply with their obligation under their respective Insurance Policies by paying to [it] jointly and severally, the claims arising from the subject los ses. THAT, [herein petitioners] be adjudged jointly and severally to pay to [it], in addition to the foregoing, the following: 1. The sum of PHP 50,000.00 plus PHP 1,500.00 for each Court session attended by counsel until the instant [case] is finally terminated, as and for attorney s fee s; 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 P 50,000 specified in the prayer representing attorney s fees, which it duly paid.5 Pyramid later filed a 1st Amended Complaint6 containing minor changes in its bod y7 but bearing the same prayer.8 Branch 148 of the Makati RTC to which the compl aint was raffled admitted the Amended Complaint.9

Petitioners filed a Motion to Dismiss on the ground of, inter alia, lack of juri sdiction, 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 belonging to California Manufacturing Co., Inc. (CMC) is [sic] "valued at Php907,149.07" and consequently, "plaintiff incurred expenses, suffered damages and was constra ined to engage the services of counsel to enforce and protect its right to recov er compensation under the said policies and for which services, it obligated its elf to pay the sum equivalent to twenty-five (25%) of any recovery in the instan t action, as and for attorney s fees and legal expenses". On the other hand, in the prayer in the Complaint, plaintiff deliberately omitte d 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 oth er purposes than to evade the payment of the correct filing fee if not to mislea d the docket clerk, in the assessment of the filing fee. In fact, the docket cle rk in the instant case charged the plaintiff a total of Php610.00 only as a fili ng fee, which she must have based on the amount of Php50,000.00 [attorney s fees] only.10 (Emphasis in the original; italics and underscoring supplied) Petitioners cited11 Manchester Development Corporation v. Court of Appeals12 whi ch held: x x x [A]ll complaints, petitions, answers and other similar pleadings should sp ecify the amount of damages being prayed for not only in the body of the pleadin g but also in the prayer, and said damages shall be considered in the assessment of the filing fees in any case. Any pleading that fails to comply with this req uirement shall not be accepted or admitted, or shall otherwise be expunged from the record.13 (Emphasis and underscoring supplied) They cited too Sun Insurance Office, Ltd. v. Asuncion14 which held that "[i]t is not 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 t he 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 of pleading and practice in the 1997 Rules of Civil Procedure, added a tenth ground to 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 defendants is only Php50,000.00 plus Php 1,500.00 as appearance fee per court hearing, the n 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 juris dictional amount prescribed by the rules in order to confer jurisdiction to the Regional Trial Court.16 (Underscoring supplied) To the Motion to Dismiss Pyramid filed its Opposition,17 alleging that if there was a mistake in the assessment of the docket fees, the trial court was not prec luded from acquiring jurisdiction over the complaint as "it has the authority to direct the mistaken party to complete the docket fees in the course of the proc eedings . . ."18 The Opposition merited a Reply19 from petitioners.

By Order of June 3, 2002, the trial court20 denied the Motion to Dismiss in this wise: x x x x Indeed, a perusal of the Complaint reveals that while plaintiff made mention of the value of the goods, which were lost, the prayer of plaintiff did not indicat e its exact claim from the defendants. The Complaint merely prayed defendants "t o comply with their obligation under their respective insurance policies by payi ng to plaintiff jointly and severally, the claims arising from the subject losse s" and did not mention the amount of PHP907,149.07, which is the value of the go ods and which is also the subject of insurance. This resulted to the assessment and payment of docket fees in the amount of P610 only. The Court, even without t he Motion to Dismiss filed by defendant, actually noted such omission which is a ctually becoming a practice for some lawyers. For whatever purpose it may be, th e Court will not dwell into it. In this instant case, this being for specific pe rformance, it is not dismissible on that ground but unless proper docket fees ar e paid, the Court can only grant what was prayed for in the Complaint. x x x x21 (Emphasis and underscoring supplied) Petitioners Motion for Reconsideration22 of the denial of their Motion to Dismiss having been denied23 by Order of August 1, 2002, they filed their Answer with C ompulsory Counterclaim ad Cautelam,24 alleging that they intended to file a Peti tion for Certiorari with the Court of Appeals.25 Petitioners did indeed eventually file before the Court of Appeals a Petition fo r Certiorari (With Preliminary Injunction and Urgent Prayer for Restraining Orde r)26 posing the following two of three queries, viz: First. Does [Pyramid s] deliberate omission to pay the required correct docket and filing fee vest the trial court [with] jurisdiction to entertain the subject ma tter of the instant case? Second. [Is] the instant case an action for specific performance or simply one f or 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 petitioner s petition for certiorari by setting aside the trial judge s assailed orders and or dering Pyramid to file the correct docket fees within a reasonable time, it hold ing that while the complaint was denominated as one for specific performance, it sought to recover from petitioners Pyramid s "claims arising from the subject los ses." The appellate court ratiocinated: x x x x Indeed, it has been held that "it is not simply the filing of the complaint or a ppropriate 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 the action." To determine the docket fees, it is necessary to determine the true na ture 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 ca se as one for "Specific Performance and Damages", the allegations and prayer the rein show that the specific performance sought by private respondent was for pet itioners to "comply with their obligation under their respective Insurance Polic

ies by paying to plaintiff jointly and severally, the claims arising from the su bject losses" as well as the attorney s fees and costs of suit. Obviously, what co nstitutes specific performance is the payment itself by petitioners of private r espondent s 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 dock et 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 Appeal s x x x that "any pleading that fails to comply with this requirement of specify ing the amount of damages not only in the body of the pleading but also in the p rayer shall not be accepted nor admitted, or shall otherwise be expunged from th e record," this rule was relaxed in subsequent cases, wherein payment of the cor rect 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 disp ensed with the payment of the correct docket fees. Consequently, [Pyramid] is he reby directed to pay the correct docket fees on the basis of the losses alleged in the body of the complaint, plus the attorney s fees mentioned in the prayer, wi thin a reasonable time which should not go beyond the applicable prescriptive or reglementary period. In all other respects, the said Orders are affirmed.31 (Un derscoring supplied) Petitioners filed a Motion for Reconsideration32 of the appellate court s decision . Pyramid filed its Comment and Opposition to the Motion for Reconsideration,33 arguing thus: x x x x In the present case, [Pyramid] thru its Complaint simply sought from petitioners compliance with their contractual undertaking as insurers of the goods insured which were lost in [its] custody. Private respondent did not specify the extent of petitioners obligation as it left the matter entirely in the judgment of the t rial court to consider. Thus, the Complaint was labeled "Specific Performance" w hich [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 indica tion whatsoever that [Pyramid] had refused to pay; rather, it merely argued agai nst petitioners submissions as it maintained the correctness of the assessment ma de.34 (Underscoring supplied) By Resolution of August 23, 2004, the Court of Appeals denied petitioners Motion for Reconsideration;35 hence, the present Petition for Review on Certiorari,36 r aising the issues of whether the appellate court erred: . . . WHEN IT APPLIED IN THE INSTANT CASE THE LIBERAL RULE ENUNCIATED IN SUN INS URANCE OFFICE, LTD. (SIOL) VS. ASUNCION, 170 SCRA 274 AND NATIONAL STEEL CORPORA TION VS. COURT OF APPEALS, 302 SCRA 523 (1999) IN RESPECT TO THE PAYMENT OF THE PRESCRIBED FILING AND DOCKET FEES DESPITE CLEAR SHOWING OF RESPONDENT S INTENTION TO EVADE THE PAYMENT OF THE CORRECT DOCKET FEE WHICH WARRANTS THE APPLICATION OF THE DOCTRINE LAID DOWN IN MANCHESTER DEVELOPMENT CORPORATION VS. COURT OF APPEA LS, 149 SCRA 562.

. . . WHEN IT DID INING CORPORATION RA 302, AND CHINA .37 (Underscoring

NOT APPLY THE RULING OF THIS HONORABLE TRIBUNAL IN MARCOPPER M VS. GARCIA, 143 SCRA 178, TAN VS. DIRECTOR OF FORESTRY, 125 SC ROAD AND BRIDGE CORPORATION VS. COURT OF APPEALS, 348 SCRA 401 supplied)

Petitioners invoke the doctrine in Manchester Development Corporation v. Court o f Appeals38 that a pleading which does not specify in the prayer the amount soug ht shall not be admitted or shall otherwise be expunged, and that the court acqu ires 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 ap plication of Sun Insurance Office, Ltd. (SIOL) v. Asuncion41 and subsequent ruli ngs relaxing the Manchester ruling by allowing payment of the docket fee within a reasonable time, in no case beyond the applicable prescriptive or reglementary period, where the filing of the initiatory pleading is not accompanied by the p ayment of the prescribed docket fee.42 In Tacay v. Regional Trial Court of Tagum, Davao del Norte,43 the Court clarifie d 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 iss ued based on the Manchester ruling44 ] that complaints, petitions, answers, and similar 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. What has been revised is the rule that subsequent "amendment of the complaint or simi lar pleading will not thereby vest jurisdiction in the Court, much less the paym ent of the docket fee based on the amount sought in the amended pleading," the t rial court now being authorized to allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive period or reglementary pe riod. Moreover, a new rule has been added, governing the awards of claims not sp i.e., damages arising after the filing of the complaint ecified in the pleading or similar pleading as to which the additional filing fee therefore shall consti tute a lien on the judgment. Now, under the Rules of Court, docket or filing fees are assessed on the basis o f 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 fees are assessed on the basis of the aggregate amount claimed, exclusive only of in terests and costs. In this case, the complaint or similar pleading should, accor ding to Circular No. 7 of this Court, "specify the amount of damages being praye d for not only in the body of the pleading but also in the prayer, and said dama ges 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 ou t a claim purely for money and damages and there is no statement of the amounts being claimed. In this event the rule is that the pleading will "not be accepted nor 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 ar e 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 ha s not in the meantime become time-barred. The other is where the pleading does s pecify the amount of every claim, but the fees paid are insufficient; and here a gain, the rule now is that the court may allow a reasonable time for the payment of the prescribed fees, or the balance thereof, and upon such payment, the defe ct is cured and the court may properly take cognizance of the action, unless in the meantime prescription has set in and consequently barred the right of action .45 (Emphasis and underscoring supplied)

Indeed, Pyramid captioned its complaint as one for "specific performance and dam ages" even if it was, as the allegations in its body showed, seeking in the main the collection of its claims-sums of money representing losses the amount of wh ich it, by its own admission, "knew."46 And, indeed, it failed to specify in its prayer in the complaint the amount of its claims/damages. When Pyramid amended its complaint, it still did not specify, in its prayer, the amount of claims/damages it was seeking. In fact it has the audacity to inform this 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 t o spend less for a docket fee after submitting his pleading for assessment by th e Office of the Clerk of Court, he would not decline it inasmuch as to request f or a higher assessment under the circumstances [for such] is against his interes t and would be senseless. Placed under the same situation, petitioner[s] would c ertainly do likewise. To say otherwise would certainly be dishonest,47 which comment drew petitioners to conclude as follows: [This] only shows respondent s dishonesty and lack of regard of the rules. Followi ng this line of reasoning, respondent would do everything if only for it to spen d less for the filing fee, even to the extent of circumventing and defying the r ule on the payment of the filing fee. In spite of the fact that the respondent was already caught in the quagmire of i ts own cobweb of deception, it further justified its unethical act by ratiocinat ing that "placed under the same situation, petitioner would certainly do likewis e, to say otherwise would certainly be dishonest". This attitude of the responde nt is very alarming! Having been caught red-handed, the honorable thing that res pondent should have done is admit its own violation rather than justify an act w hich it knows is a clear contravention of the rules and jurisprudence.48 (Italic s and emphasis in the original) Pyramid s following justification for omitting to specify in the prayer of its com plaint the amount of its claims/damages, viz: x x x x x x x While respondent knew its losses and alleged them in the body of the Compl aint, it was not aware of the extent of petitioners respective liability under th e two insurance policies. The allegation of respondent s losses, albeit, without r epeating them in its prayer for relief was not motivated by an intention to misl ead, cheat or defraud the Court. It just left the matter of liability arising fr om two separate and distinct Insurance Policies covering the same insurable risk for the trial court s determination, hence, respondent came up with an action for "specific performance[,]"49 (Emphasis and underscoring supplied) fails to impress. As the salient allegations of Pyramid s complaint show and as priorly stated, they constitute, in the main, an action for collection of its claims it admittedly " knew." Assuming arguendo that Pyramid has other claims the amounts of which are yet to be determined by the trial court, the rule established in Manchester which was e mbodied in this Court s Circular No. 7-88 issued on March 24, 1988, as modified by the Sun Insurance ruling, still applies. Consider this Court s pronouncement bear ing on the matter in Ayala Corporation v. Madayag:501awphil

x x x x Apparently, the trial court misinterpreted paragraph 3 of the [Sun Insurance] ru ling of this Court wherein it stated that "where the judgment awards a claim not specified in the pleading, or if specified, the same has been left for the dete rmination of the court, the additional filing fee therefor shall constitute a li en on the judgment" by considering it to mean that where in the body and prayer of the complaint there is a prayer xxx the amount of which is left to the discre tion of the Court, there is no need to specify the amount being sought, and that any award thereafter shall constitute a lien on the judgment. x x x While it is true that the determination of certain damages x x x is left t o the sound discretion of the court, it is the duty of the parties claiming such damages to specify the amount sought on the basis of which the court may make a proper determination, and for the proper assessment of the appropriate docket f ees. The exception contemplated as to claims not specified or to claims although specified are left for determination of the court is limited only to any damage s that may arise after the filing of the complaint or similar pleading for then it will not be possible for the claimant to specify nor speculate as to the amou nt thereof. (Emphasis and underscoring supplied) If respondent Pyramid s counsel had only been forthright in drafting the complaint and taking the cudgels for his client and the trial judge assiduous in applying Circular No. 7 vis a vis prevailing jurisprudence, the precious time of this Co urt, as well as of that of the appellate court, would not have been unnecessaril y sapped. The Court at this juncture thus reminds Pyramid s counsel to observe Canon 12 of t he Code of Professional Ethics which enjoins a lawyer to "exert every effort and consider it his duty to assist in the speedy and efficient administration of ju stice," and Rule 12.04 of the same Canon which enjoins a lawyer "not [to] unduly delay a case, impede the execution of a judgment or misuse court processes." An d the Court reminds too the trial judge to bear in mind that the nature of an ac tion is determined by the allegations of the pleadings51 and to keep abreast of all laws and prevailing jurisprudence, consistent with the standard that magistr ates must be the embodiments of competence, integrity and independence.52 WHEREFORE, in light of the foregoing discussions, the petition is DENIED. SO ORDERED. G.R. No. 173002 July 4, 2008

BENJAMIN BAUTISTA, petitioner, vs. SHIRLEY G. UNANGST and OTHER UNKNOWN PERSONS, respondentS. D E C I S I O N REYES, R.T., J.: THE presumption of equitable mortgage imposes a burden on the buyer to present c lear evidence to rebut it. He must overthrow it, lest it persist.1 To overturn t hat prima facie presumption, the buyer needs to adduce substantial and credible evidence to prove that the contract was a bona fide deed of sale with right to r epurchase. This petition for review on certiorari impugns the Decision2 of the Court of App eals (CA) in CA-G.R. CV No. 859423 which reversed and set aside that4 of the Reg

ional Trial Court (RTC) in an action for specific performance or recovery of pos session, for sum of money, for consolidation of ownerships and damages. The Facts On November 15, 1996, Hamilton Salak rented a car from GAB Rent-A-Car, a car ren tal shop owned by petitioner Benjamin Bautista. The lease was for three (3) cons ecutive days at a rental fee of P1,000.00 per day.5 However, Salak failed to ret urn the car after three (3) days prompting petitioner to file a complaint agains t him for estafa, violation of Batas Pambansa Blg. 22 and carnapping.6 On February 2, 1997, Salak and his common-law wife, respondent Shirley G. Unangs t, were arrested by officers of the Criminal Investigation Service Group (CISG) of the Philippine National Police while riding the rented car along Quezon City. The next day, petitioner demanded from Salak at the CISG Office the sum of P232 ,372.00 as payment for car rental fees, fees incurred in locating the car, attor ney's fees, capital gains tax, transfer tax, and other incidental expenses.7 Salak and respondent expressed willingness to pay but since they were then short on cash, Salak proposed to sell to petitioner a house and lot titled in the nam e of respondent. Petitioner welcomed the proposal after consulting his wife, Cyn thia. Cynthia, on the other hand, further agreed to pay the mortgage loan of res pondent over the subject property to a certain Jojo Lee in the amount of P295,00 0.00 as the property was then set to be publicly auctioned on February 17, 1997. 8 To formalize their amicable settlement, Cynthia, Salak and respondent executed a written agreement.9 They stipulated that respondent would sell, subject to repu rchase, her residential property in favor of Cynthia for the total amount of P52 7,372.00 broken down, as follows: (1) P295,000.00 for the amount paid by Cynthia to Lee to release the mortgage on the property; and (2) P232,372.00, which is t he amount due to GAB Rent-A-Car. Cynthia also agreed to desist from pursuing the complaint against Salak and respondent.10 Respondent and petitioner also executed a separate deed of sale with right to re purchase,11 specifying, among others, that: (1) respondent, as vendor, shall pay capital gains tax, current real estate taxes and utility bills pertaining to th e property; (2) if respondent fails to repurchase the property within 30 days fr om the date of the deed, she and her assigns shall immediately vacate the premis es and deliver its possession to petitioner without need of a judicial order; an d (3) respondent's refusal to do so will entitle petitioner to take immediate po ssession of the property.12 Respondent failed to repurchase the property result, petitioner filed, on June 5, 1998, a or recovery of possession, for sum of money, damages against respondent and other unnamed City. within the stipulated period. As a complaint for specific performance for consolidation of ownership and persons before the RTC of Olongapo

In his complaint,13 petitioner alleged, among others, that after respondent fail ed to repurchase the subject realty, he caused the registration of the deed of s ale with the Register of Deeds and the transfer of the tax declarations in his n ame; that respondent failed to pay the capital gains taxes and update the real e state taxes forcing him to pay said amounts in the sum of P71,129.05 and P11,993 .72, respectively; and that respondent violated the terms of the deed when she, as well as the other unnamed persons, refused to vacate the subject property des pite repeated demands.14 Petitioner prayed before the RTC that an order be issued in his favor directing respondents to: (1) surrender the possession of the property; (2) pay P150,000.0

0 , , l

for the reasonable compensation for its use from March 7, 1997 to June 7, 1998 plus P10,000.00 per month afterward; (3) pay the amount advanced by petitioner to wit: P71,129.05 and P11,993.72 for the payment of capital gains tax and rea estate taxes, respectively; and P70,000.00 for attorney's fees.15

On June 16, 1998, petitioner filed an amended complaint,16 reiterating his previ ous allegations but with the added prayer for consolidation of ownership pursuan t to Article 1607 of the Civil Code.17 On the other hand, respondents controverted the allegations in the complaint and averred in their Answer,18 among others, that plaintiff had no cause of action inasmuch as respondent Unangst signed the subject deed of sale under duress and intimidation employed by petitioner and his cohorts; that, assuming that her con sent was freely given, the contract of sale was simulated and fictitious since t he vendor never received the stipulated consideration; that the sale should be c onstrued as an equitable mortgage pursuant to Articles 1602 and 1604 of the Civi l Code because of its onerous conditions and shockingly low consideration; that their indebtedness in the form of arrears in car rentals merely amounts to P90,0 00.00; and that the instant action was premature as plaintiff had not yet consol idated ownership over the property. Defendants counterclaimed for moral damages in the amount of P500,000.00 and attorney's fees in the amount of P50,000.00, pl us P500.00 per appearance.19 On July 29, 2004, after due proceedings, the RTC rendered a decision in favor of petitioner, disposing as follows: WHEREFORE, judgment is rendered finding the Deed of Sale with Right to Repurchas e (Exh. "C") as, indeed, a document of sale executed by the defendant in favor o f the plaintiff covering the parcel of land house (sic) situated at Lot 3-B, Blk . 10, Waterdam Road, Gordon Heights, Olongapo City, declared under Tax Declarati on Nos. 004-7756R and 7757R (Exhs. "I" and "I-1"). The defendant and any person taking rights from her is (sic) ordered to immediately vacate from the place and turn over its possession to the plaintiff. They are likewise directed not to re move any part of the building on the lot. The ownership of the said property is properly consolidated in the name of the p laintiff. The defendant is further ordered to pay to the plaintiff the amount of P10,000.0 0 a month from March 7, 1997 up to the time possession of the lot and house is r estored to the plaintiff representing the reasonable value for the use of the pr operty; the amount of P71,129.05 representing the payment made by the plaintiff on the capital gain taxes and the further amount of P70,000.00 for attorney's fe es and the costs of suit. SO ORDERED.20 Respondents respondent 97 Rules on RTC only on on filed by failed to interpose a timely appeal. However, on September 10, 2004, Unangst filed a petition for relief pursuant to Section 38 of the 19 Civil Procedure. She argued that she learned of the decision of the September 6, 2004 when she received a copy of the motion for executi petitioner.21

Petitioner, on the other hand, moved for the dismissal of respondent's petition on the ground that the latter paid an insufficient sum of P200.00 as docket fees .22 It appears that respondent Unangst initially paid P200.00 as docket fees as this was the amount assessed by the Clerk of Court of the RTC.23 Said amount was ins ufficient as the proper filing fees amount to P1,715.00. Nevertheless, the corre

ct amount was subsequently paid by said respondent on February 22, 2005.24 In their comment,25 respondents countered that they should not be faulted for pa ying deficient docket fees as it was due to an erroneous assessment of the Clerk of Court.26 The RTC granted the petition for relief. Subsequently, it directed respondents t o file a notice of appeal within twenty-four (24) hours from receipt of the orde r.27 Accordingly, on February 23, 2005, respondents filed their notice of appeal .28 Respondents contended before the CA that the RTC erred in: (1) not annulling the deed of sale with right to repurchase; (2) declaring that the deed of sale with right to repurchase is a real contract of sale; (3) ordering the consolidation of ownership of the subject property in the name of petitioner.29 They argued th at respondent Unangst's consent to the deed of sale with right to repurchase was procured under duress and that even assuming that her consent was freely given, the contract partakes of the nature of an equitable mortgage.30 On the other hand, petitioner insisted, among others, that although the petition for relief of respondents was filed on time, the proper filing fees for said pe tition were paid beyond the 60-day reglementary period. He posited that jurisdic tion is acquired by the court over the action only upon full payment of prescrib ed docket fees.31 CA Disposition In a Decision32 dated April 7, 2006, the CA reversed and set aside the RTC judgm ent.33 The dispositive part of the appellate court's decision reads, thus: IN VIEW OF ALL THE FOREGOING, the instant appeal is hereby GRANTED, the challeng ed Decision dated July 29, 2004 hereby (sic) REVERSED and SET ASIDE, and a new o ne entered declaring the Deed of Sale With Right Of Repurchase dated February 4, 1997 as an equitable mortgage. No cost. SO ORDERED.34 The CA declared that the Deed of Sale with Right of Repurchase executed by the p arties was an equitable mortgage. On the procedural aspect pertaining to the pet ition for relief filed by respondent Unangst, the CA ruled that "the trial court , in opting to apply the rules liberally, cannot be faulted for giving due cours e to the questioned petition for relief which enabled appellants to interpose th e instant appeal."35 It ratiocinated: Appellee recognizes the timely filing of appellants' petition for relief to be a ble to appeal judgment but nonetheless points out that the proper filing fees we re paid beyond the 60-day reglementary period. Arguing that the court acquires j urisdiction over the action only upon full payment of the prescribed docket fees , he submits that the trial court erred in granting appellants' petition for rel ief despite the late payment of the filing fees. While this Court is fully aware of the mandatory nature of the requirement of pa yment of appellate docket fee, the High Court has recognized that its strict app lication is qualified by the following: first, failure to pay those fees within the reglementary period allows only discretionary, not automatic, dismissal; sec ond, such power should be used by the court in conjunction with its exercise of sound discretion in accordance with the tenets of justice and fair play, as well as with a great deal of circumspection in consideration of all attendant circum stances (Meatmasters International Corporation v. Lelis Integrated Development C orporation, 452 SCRA 626 [2005], citing La Salette College v. Pilotin, 418 SCRA

380 [2003]). Applied in the instant case, the docket fees were admittedly paid only on Februa ry 22, 2005, or a little less than two (2) months after the period for filing th e petition lapsed. Yet, this matter was sufficiently explained by appellants. Th e records bear out that appellants initially paid P200.00 as docket fees because this was the amount assessed by the Clerk of Court of the RTC of Olongapo City (p. 273, Records). As it turned out, the fees paid was insufficient, the proper filing fees being P1,715.00, which was eventually paid by appellants on February 1, 2005 (p. 296, Records). As such, appellants cannot be faulted for their fail ure to pay the proper docket fees for, given the prevailing circumstances, such failure was clearly not a dilatory tactic nor intended to circumvent the Rules o f Court. On the contrary, appellants demonstrated their willingness to pay the d ocket fees when they subsequently paid on the same day they were assessed the co rrect fees (p. 299, Records). Notably, in Yambao v. Court of Appeals (346 SCRA 1 41 [2000]), the High Court declared therein that "the appellate court may extend the time for the payment of the docket fees if appellants is able to show that there is a justifiable reason for his failure to pay the correct amount of docke t fees within the prescribed period, like fraud, accident, mistake, excusable ne gligence, or a similar supervening casualty, without fault on the part of appell ant." Verily, the trial court, in opting to apply the rules liberally, cannot be faulted for giving due course to the questioned petition for relief which enabl ed appellants to interpose the instant appeal.36 On the substantial issues, the CA concluded that "While the records is bereft of any proof or evidence that appellee employed unlawful or improper pressure agai nst appellant Unangst to give her consent to the contract of sale, there is, nev ertheless, sufficient basis to hold the subject contract as one of equitable mor tgage."37 It explained: Jurisprudence has consistently held that the nomenclature used by the contractin g parties to describe a contract does not determine its nature. The decisive fac tor in determining the true nature of the transaction between the parties is the intent of the parties, as shown not necessarily by the terminology used in the contract but by all the surrounding circumstances, such as the relative situatio ns of the parties at that time; the attitudes, acts, conduct, and declarations o f the parties; the negotiations between them leading to the deed; and generally, all pertinent facts having a tendency to fix and determine the real nature of t heir design and understanding (Legaspi v. Ong, 459 SCRA 122 [2005]). It must be stressed, however, that there is no conclusive test to determine whet her a deed absolute on its face is really a simple loan accommodation secured by a mortgage. In fact, it is often a question difficult to resolve and is frequen tly made to depend on the surrounding circumstances of each case. When in doubt, courts are generally inclined to construe a transaction purporting to be a sale as an equitable mortgage, which involves a lesser transmission of rights and in terests over the property in controversy (Legaspi, ibid.). Article 1602 of the Civil Code enumerates the instances where a contract shall b e presumed to be an equitable mortgage when - (a) the price of a sale with right to repurchase is unusually inadequate; (b) the vendor remains in possession as lessee or otherwise; (c) upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed; (d) the purchaser retains for himself a part of the purchase price; (e) the vendor binds himself to pay taxes on the thing sold; and, (f) in any ot her case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation (Legaspi, supra; Martinez v. Court of Appeals, 358 SCRA 38 [2001]).

For the presumption of an equitable mortgage to arise under Article 1602, two (2 ) requisites must concur: (a) that the parties entered into a contract denominat ed as a contract of sale; and, (b) that their intention was to secure an existin g debt by way of a mortgage. Any of the circumstance laid out in Article 1602, n ot the concurrence nor an overwhelming number of the circumstances therein enume rated, suffices to construe a contract of sale to be one of equitable mortgage ( Lorbes v. Court of Appeals, 351 SCRA 716 [2001]). Applying the foregoing considerations in the instant case, there is hardly any d oubt that the true intention of the parties is that the transaction shall secure the payment of a debt. It is not contested that before executing the subject de ed, Unangst and Salak were under police custody and were sorely pressed for mone y. Such urgent prospect of prolonged detention helps explain why appellants woul d subscribe to an agreement like the deed in the instant case. This might very w ell explain appellants' insistence that Unangst was not truly free when she sign ed the questioned deed. Besides, there is no gainsaying that when appellee allow ed appellants to retain possession of the realty sold for 30 days, as part of th e agreement, that period of time surely signaled a time allotted to Salak and Un angst, as debtors, within which to pay their mortgage indebtedness. The High Court, in several cases involving similar situations, has declared that "while it was true that plaintiffs were aware of the contents of the contracts, the preponderance of the evidence showed, however, that they signed knowing tha t said contracts did not express their real intention, and if they did so notwit hstanding this, it was due to the urgent necessity of obtaining funds. Necessito us men are not, truly speaking, free men; but to answer a present emergency, wil l submit to any terms that the crafty may impose upon them" (Lorbes, ibid.; Reye s v. Court of Appeals, 339 SCRA 97 [2000]; Lao v. Court of Appeals, 275 SCRA 237 [1997]; Zamora v. Court of Appeals, 260 SCRA 10 [1996]; Labasan v. Lacuesta, 86 SCRA 16 [1978]). After all, Article 1602(6) provides that a contract of sale with right to repurc hase is presumed to be an equitable mortgage in any other case where it may be f airly inferred that the real intention of the parties is that the transaction sh all secure the payment of a debt or the performance of any obligation. In fine, a careful review of the records convincingly shows that the obtaining facts in t his case qualify the controversial agreement between the parties as an equitable mortgage under Article 1602 of the New Civil Code.38 Issues Petitioner has resorted to the present recourse under Rule 45, assigning to the CA the following errors: (a) The Honorable Court of Appeals committed grave error in finding that the res pondent perfected an appeal via Petition for Relief To Be Able To Appeal Judgmen t even when the proper docket fees were paid beyond the period prescribed to bri ng such action under Section 3 of Rule 38 of the 1997 Rules of Civil Procedure i n relation to the pronouncements by the Honorable Court in the cases of Philippi ne Rabbit Bus Lines, Inc. v. Arciaga [148 SCRA 433], Philippine Pryce Assurance Corp. v. Court of Appeals [148 SCRA 433] and Sun Insurance Office, Ltd. v. Asunc ion [170 SCRA 274]. (b) The Honorable Court of Appeals erred on a question of law in reversing the D ecision of the Court a quo finding the Deed of Sale with Right to Repurchase a d ocument of sale executed by the respondent in favor of the petitioner and in fur ther holding such contract as one of equitable mortgage.39 Our Ruling

On the first issue, petitioner contends that respondents' "Petition for Relief t o Be Able to Appeal Judgment," which paved the way for the allowance of responde nts' appeal of the RTC decision, was filed within the prescriptive period but th e proper docket fees for it were belatedly paid.40 He thus posits that the RTC d id not acquire jurisdiction over said petition. Having no jurisdiction, the RTC could not have allowed respondents to appeal. On this issue, respondent counters that the belated payment of proper docket fee s was not due to their fault but to the improper assessment by the Clerk of Cour t. Respondent asserts the ruling of the CA that the court may extend the time fo r the payment of the docket fees if there is a justifiable reason for the failur e to pay the correct amount. Moreover, respondent argues that petitioner failed to contest the RTC Order dated February 21, 2004 that allowed the payment of sup plementary docket fees. Petitioner failed to file a motion for reconsideration o r a petition for certiorari to the higher court to question said order. We agree with respondents. Their failure to pay the correct amount of docket fee s was due to a justifiable reason. The right to appeal is a purely statutory right. Not being a natural right or a part of due process, the right to appeal may be exercised only in the manner and in accordance with the rules provided therefor.41 For this reason, payment of t he full amount of the appellate court docket and other lawful fees within the re glementary period is mandatory and jurisdictional.42 Nevertheless, as this Court ruled in Aranas v. Endona,43 the strict application of the jurisdictional natur e of the above rule on payment of appellate docket fees may be mitigated under e xceptional circumstances to better serve the interest of justice. It is always w ithin the power of this Court to suspend its own rules, or to except a particula r case from their operation, whenever the purposes of justice require it.44 In not a few instances, the Court relaxed the rigid application of the rules of procedure to afford the parties the opportunity to fully ventilate their cases o n the merits. This is in line with the time-honored principle that cases should be decided only after giving all parties the chance to argue their causes and de fenses.45 For, it is far better to dispose of a case on the merit which is a pri mordial end, rather than on a technicality, if it be the case, that may result i n injustice.46 The emerging trend in the rulings of this Court is to afford ever y party-litigant the amplest opportunity for the proper and just determination o f his cause, free from the constraints of technicalities.47 As early as 1946, in Segovia v. Barrios,48 the Court ruled that where an appella nt in good faith paid less than the correct amount for the docket fee because th at was the amount he was required to pay by the clerk of court, and he promptly paid the balance, it is error to dismiss his appeal because "(e)very citizen has the right to assume and trust that a public officer charged by law with certain duties knows his duties and performs them in accordance with law. To penalize s uch citizen for relying upon said officer in all good faith is repugnant to just ice."49 Technicality and procedural imperfections should thus not serve as bases of deci sions.50 In that way, the ends of justice would be better served. For, indeed, t he general objective of procedure is to facilitate the application of justice to the rival claims of contending parties, bearing always in mind that procedure i s not to hinder but to promote the administration of justice.51 We go now to the crux of the petition. Should the deed of sale with right to rep urchase executed by the parties be construed as an equitable mortgage? This is t he pivotal question here. According to petitioner, the deed should not be construed as an equitable mortga

ge as it does not fall under any of the instances mentioned in Article 1602 of t he Civil Code where the agreement can be construed as an equitable mortgage. He added that the "language and terms of the Deed of Sale with Right to Repurchase executed by respondent in favor of the petition are clear and unequivocal. Said contract must be construed with its literal sense."52 We cannot agree. Respondent is correct in alleging that the deed of sale with right to repurchase qualifies as an equitable mortgage under Article 1602. She merely secured the p ayment of the unpaid car rentals and the amount advanced by petitioner to Jojo L ee. The transaction between the parties is one of equitable mortgage and not a sale with right to purchase as maintained by petitioners. Article 1602 of the New Civ il Code provides that the contract is presumed to be an equitable mortgage in an y of the following cases: (1) When the price of a sale with right to repurchase is unusually inadequate; (2) When the vendor remains in possession as lessee or otherwise; (3) When upon or after the expiration of the right to repurchase another instrum ent extending the period of redemption or granting a new period is executed; (4) When the purchaser retains for himself a part of the purchase price; (5) When the vendor binds himself to pay the taxes on the thing sold; (6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the p erformance of any other obligation. In any of the foregoing cases, any money, fruits, or other benefit to be receive d by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws.53 (Emphasis ours) The conclusion that the deed of sale with right to repurchase is an equitable mo rtgage is buttressed by the following: First, before executing the deed, respondent and Salak were under police custody due to the complaint lodged against them by petitioner. They were sorely presse d for money, as they would not be released from custody unless they paid petitio ner. It was at this point that respondent was constrained to execute a deed of s ale with right to repurchase. Respondent was in no position whatsoever to bargai n with their creditor, petitioner. Nel consensui tam contrarium est quam vis atq ui metus. There can be no consent when under force or duress. Bale wala ang pags ang-ayon kung ito'y nakuha sa pamimilit o paraang di malaya. It is established that respondent signed the deed only because of the urgent nec essity of obtaining funds.1avvphi1 When the vendor is in urgent need of money wh en he executes the sale, the alleged sale with pacto de retro will be construed as an equitable mortgage.54 "Necessitous men are not, truly speaking, free men; but to answer a present emergency will submit to any terms that the crafty may i mpose upon them."55 Second, petitioner allowed respondent and Salak to retain the possession of the property despite the execution of the deed. In fact, respondent and Salak were n ot bound to deliver the possession of the property to petitioner if they would p ay him the amount he demanded.56

Where in a contract of sale with pacto de retro, the vendor remains in possessio n, as a lessee or otherwise, the contract shall be presumed to be an equitable m ortgage.57 The reason for the presumption lies in the fact that in a contract of sale with pacto de retro, the legal title to the property is immediately transf erred to the vendee, subject to the vendor's right to redeem. Retention, therefo re, by the vendor of the possession of the property is inconsistent with the ven dee's acquisition of the right of ownership under a true sale.58 It discloses, i n the alleged vendee, a lack of interest in the property that belies the truthfu lness of the sale a retro.59 Third, it is likewise undisputed that the deed was executed by reason of: (1) th e alleged indebtedness of Salak to petitioner, that is, car rental payments; and (2) respondent's own obligation to petitioner, that is, reimbursement of what p etitioner paid to the mortgagee, Jojo Lee. Fact is, the purchase price stated in the deed was the amount of the indebtedness of both respondent and Salak to pet itioner.60 Apparently, the deed purports to be a sale with right to purchase. However, sinc e it was executed in consideration of the aforesaid loans and/or indebtedness, s aid contract is indubitably an equitable mortgage. The rule is firmly settled th at whenever it is clearly shown that a deed of sale with pacto de retro, regular on its face, is given as security for a loan, it must be regarded as an equitab le mortgage.61 The above-mentioned circumstances preclude the Court from declaring that the par ties intended the transfer of the property from one to the other by way of sale. They are more than sufficient to show that the true intention of the parties is to secure the payment of said debts. Verily, an equitable mortgage under paragr aphs 2 and 6 of Article 1602 exists here. Settled is the rule that to create the presumption enunciated by Article 1602, the existence of one circumstance is en ough.62 Moreover, under Article 1603 of the Civil Code it is provided that: "(i)n case o f doubt, a contract purporting to be a sale with right to repurchase shall be co nstrued as an equitable mortgage." In this case, We have no doubt that the trans action between the parties is that of a loan secured by said property by way of mortgage. In Lorbes v. Court of Appeals,63 the Court held that: The decisive factor in evaluating such agreement is the intention of the parties , as shown not necessarily by the terminology used in the contract but by all th e surrounding circumstances, such as the relative situation of the parties at th at time, the attitude, acts, conduct, declarations of the parties, the negotiati ons between them leading to the deed, and generally, all pertinent facts having a tendency to fix and determine the real nature of their design and understandin g. As such, documentary and parol evidence may be submitted and admitted to prov e the intention of the parties. Sales with rights to repurchase, as defined by the Civil Code, are not favored. We will not construe instruments to be sales with a right to repurchase, with th e stringent and onerous effects which follow, unless the terms of the document a nd the surrounding circumstances require it. Whenever, under the terms of the wr iting, any other construction can fairly and reasonably be made, such constructi on will be adopted and the contract will be construed as a mere loan unless the court can see that, if enforced according to its terms, it is not an unconsciona ble one.64 Article 1602 of the Civil Code is designed primarily to curtail the evils brough

t about by contracts of sale with right of repurchase, such as the circumvention of the laws against usury and pactum commissorium.65 WHEREFORE, the petition is DENIED for lack of merit. SO ORDERED. G.R. No. 151242 June 15, 2005

PROTON PILIPINAS CORPORATION, AUTOMOTIVE PHILIPPINES, ASEA ONE CORPORATION and A UTOCORP, Petitioners, vs. BANQUE NATIONALE DE PARIS,1 Respondent. D E C I S I O N CARPIO MORALES, J.: It appears that sometime in 1995, petitioner Proton Pilipinas Corporation (Proto n) availed of the credit facilities of herein respondent, Banque Nationale de Pa ris (BNP). To guarantee the payment of its obligation, its co-petitioners Automo tive Corporation Philippines (Automotive), Asea One Corporation (Asea) and Autoc orp Group (Autocorp) executed a corporate guarantee2 to the extent of US$2,000,0 00.00. BNP and Proton subsequently entered into three trust receipt agreements d ated June 4, 1996,3 January 14, 1997,4 and April 24, 1997.5 Under the terms of the trust receipt agreements, Proton would receive imported p assenger motor vehicles and hold them in trust for BNP. Proton would be free to sell the vehicles subject to the condition that it would deliver the proceeds of the sale to BNP, to be applied to its obligations to it. In case the vehicles a re not sold, Proton would return them to BNP, together with all the accompanying documents of title. Allegedly, Proton failed to deliver the proceeds of the sale and return the unso ld motor vehicles. Pursuant to the corporate guarantee, BNP demanded from Automotive, Asea and Auto corp the payment of the amount of US$1,544,984.406 representing Proton's total o utstanding obligations. These guarantors refused to pay, however. Hence, BNP fil ed on September 7, 1998 before the Makati Regional Trial Court (RTC) a complaint against petitioners praying that they be ordered to pay (1) US$1,544,984.40 plu s accrued interest and other related charges thereon subsequent to August 15, 19 98 until fully paid and (2) an amount equivalent to 5% of all sums due from peti tioners as attorney's fees. The Makati RTC Clerk of Court assessed the docket fees which BNP paid at P352,11 6.307 which was computed as follows:8 First Cause of Action ? $ 844,674.07 Second Cause of Action ? 171,120.53 Third Cause of Action ? 529,189.80 $1,544,984.40 5% as Attorney's Fees ? $ 77,249.22 TOTAL .. $1,622,233.62 Conversion rate to peso x 43_ TOTAL .. P69,756,000.00 (roundoff) Computation based on Rule 141:

COURT JDF P 69,756,000.00 P 69.606.000.00 - 150,000.00 x .003 69,606,000.00 208,818.00 x .002 + 450.00 139,212.00 P 209,268.00 + 150.00 P 139,362.00 LEGAL : P139,362.00 + 209,268.00 P348,630.00 x 1% = P3,486.30 P 139,362.00 + 209,268.00 3,486.00 P 352,116.30 - Total fees paid by the plaintiff To the complaint, the defendants-herein petitioners filed on October 12, 1998 a Motion to Dismiss9 on the ground that BNP failed to pay the correct docket fees to thus prevent the trial court from acquiring jurisdiction over the case.10 As additional ground, petitioners raised prematurity of the complaint, BNP not havi ng priorly sent any demand letter.11 By Order12 of August 3, 1999, Branch 148 of the Makati RTC denied petitioners' M otion to Dismiss, viz: Resolving the first ground relied upon by the defendant, this court believes and so hold that the docket fees were properly paid. It is the Office of the Clerk of Court of this station that computes the correct docket fees, and it is their duty to assess the docket fees correctly, which they did.1avvphi1.zw+ Even granting arguendo that the docket fees were not properly paid, the court ca nnot just dismiss the case. The Court has not yet ordered (and it will not in th is case) to pay the correct docket fees, thus the Motion to dismiss is premature , aside from being without any legal basis. As held in the case of National Steel Corporation vs. CA, G.R. No. 123215, Febru ary 2, 1999, the Supreme Court said: x x x Although the payment of the proper docket fees is a jurisdictional requirement, the trial court may allow the plaintiff in an action to pay the same within a re asonable time within the expiration of applicable prescription or reglementary p eriod. If the plaintiff fails to comply with this requirement, the defendant sho uld timely raise the issue of jurisdiction or else he would be considered in est oppel. In the latter case, the balance between appropriate docket fees and the a mount actually paid by the plaintiff will be considered a lien or (sic) any awar d he may obtain in his favor. As to the second ground relied upon by the defendants, in that a review of all a nnexes to the complaint of the plaintiff reveals that there is not a single form al demand letter for defendants to fulfill the terms and conditions of the three (3) trust agreements. In ly to e. this regard, the court cannot sustain the submission of defendant. As correct pointed out by the plaintiff, failure to make a formal demand for the debtor pay the plaintiff is not among the legal grounds for the dismissal of the cas Anyway, in the appreciation of the court, this is simply evidentiary.

x x x WHEREFORE, for lack of merit, the Motion to Dismiss interposed by the defendants is hereby DENIED.13 (Underscoring supplied) Petitioners filed a motion for reconsideration14 of the denial of their Motion t o Dismiss, but it was denied by the trial court by Order15 of October 3, 2000. Petitioners thereupon brought the case on certiorari and mandamus16 to the Court of Appeals which, by Decision17 of July 25, 2001, denied it in this wise: Section 7(a) of Rule 141 of the Rules of Court excludes interest accruing from t he principal amount being claimed in the pleading in the computation of the pres cribed filing fees. The complaint was submitted for the computation of the filin g fee to the Office of the Clerk of Court of the Regional Trial Court of Makati City which made an assessment that respondent paid accordingly. What the Office of the Clerk of Court did and the ruling of the respondent Judge find support in the decisions of the Supreme Court in Ng Soon vs. Alday and Tacay vs. RTC of Ta gum, Davao del Norte. In the latter case, the Supreme Court explicitly ruled tha t "where the action is purely for recovery of money or damages, the docket fees are assessed on the basis of the aggregate amount claimed, exclusive only of int erests and costs." Assuming arguendo that the correct filing fees was not made, the rule is that th e court may allow a reasonable time for the payment of the prescribed fees, or t he balance thereof, and upon such payment, the defect is cured and the court may properly take cognizance of the action unless in the meantime prescription has set in and consequently barred the right of action. Here respondent Judge did no t make any finding, and rightly so, that the filing fee paid by private responde nt was insufficient. On the issue of the correct dollar-peso rate of exchange, the Office of the Cler k of Court of the RTC of Makati pegged it at P 43.21 to US$1. In the absence of any office guide of the rate of exchange which said court functionary was duty b ound to follow, the rate he applied is presumptively correct. Respondent Judge correctly ruled that the matter of demand letter is evidentiary and does not form part of the required allegations in a complaint. Section 1, R ule 8 of the 1997 Rules of Civil Procedure pertinently provides: "Every pleading shall contain in a methodical and logical form, a plain, concise and direct statement of the ultimate facts on which the party pleading relies f or his claim or defense, as the case may be, omitted the statement of mere evide ntiary facts." Judging from the allegations of the complaint particularly paragraphs 6, 12, 18, and 23 where allegations of imputed demands were made upon the defendants to fu lfill their respective obligations, annexing the demand letters for the purpose of putting up a sufficient cause of action is not required. In fine, respondent Judge committed no grave abuse of discretion amounting to la ck or excess of jurisdiction to warrant certiorari and mandamus.18 (Underscoring supplied) Their Motion for Reconsideration19 having been denied by the Court of Appeals,20 petitioners filed the present petition for review on certiorari21 and pray for the following reliefs: WHEREFORE, in view of all the foregoing, it is most respectfully prayed of this Honorable Court to grant the instant petition by REVERSING and SETTING ASIDE the

questioned Decision of July 25, 2001 and the Resolution of December 18, 2001 fo r being contrary to law, to Administrative Circular No. 11-94 and Circular No. 7 and instead direct the court a quo to require Private Respondent Banque to pay the correct docket fee pursuant to the correct exchange rate of the dollar to th e peso on September 7, 1998 and to quantify its claims for interests on the prin cipal obligations in the first, second and third causes of actions in its Compla int in Civil Case No. 98-2180.22 (Underscoring supplied) Citing Administrative Circular No. 11-94,23 petitioners argue that BNP failed to pay the correct docket fees as the said circular provides that in the assessmen t thereof, interest claimed should be included. There being an underpayment of t he docket fees, petitioners conclude, the trial court did not acquire jurisdicti on over the case. Additionally, petitioners point out that the clerk of court, in converting BNP's claims from US dollars to Philippine pesos, applied the wrong exchange rate of US $1 = P43.00, the exchange rate on September 7, 1998 when the complaint was fi led having been pegged at US $1 = P43.21. Thus, by petitioners' computation, BNP 's claim as of August 15, 1998 was actually P70,096,714.72,24 not P69,756,045.66 . Furthermore, petitioners submit that pursuant to Supreme Court Circular No. 7,25 the complaint should have been dismissed for failure to specify the amount of i nterest in the prayer. Circular No. 7 reads: TO: JUDGES AND CLERKS OF COURT OF THE COURT OF TAX APPEALS, REGIONAL TRIAL COURT S, METROPOLITAN TRIAL COURTS IN CITIES, MUNICIPAL TRIAL COURTS, MUNICIPAL CIRCUI T TRIAL COURTS, SHARI'A DISTRICT COURTS;AND THE INTEGRATED BAR OF THE PHILIPPINE S SUBJECT: ALL COMPLAINTS MUST SPECIFY AMOUNT OF DAMAGES SOUGHT NOT ONLY IN THE BO DY OF THE PLEADING, BUT ALSO IN THE PRAYER IN ORDER TO BE ACCEPTED AND ADMITTED FOR FILING. THE AMOUNT OF DAMAGES SO SPECIFIED IN THE COMPLAINT SHALL BE THE BAS IS FOR ASSESSING THE AMOUNT OF THE FILING FEES. In Manchester Development Corporation vs. Court of Appeals, No. L-75919, May 7, 1987, 149 SCRA 562, this Court condemned the practice of counsel who in filing t he original complaint omitted from the prayer any specification of the amount of damages although the amount of over P78 million is alleged in the body of the c omplaint. This Court observed that "(T)his is clearly intended for no other purp ose than to evade the payment of the correct filing fees if not to mislead the d ocket clerk, in the assessment of the filing fee. This fraudulent practice was c ompounded when, even as this Court had taken cognizance of the anomaly and order ed an investigation, petitioner through another counsel filed an amended complai nt, deleting all mention of the amount of damages being asked for in the body of the complaint. xxx" For the guidance of all concerned, the WARNING given by the court in the afore-c ited case is reproduced hereunder: "The Court serves warning that it will take drastic action upon a repetition of this unethical practice. To put a stop to this irregularity, henceforth all complaints, petitions, answer s 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 damage s shall be considered in the assessment of the filing fees in any case. Any plea ding that fails to comply with this requirement shall not be accepted nor admitt

ed, or shall otherwise be expunged from the record. The Court acquires jurisdiction over any case only upon the payment of the presc ribed docket fee. An amendment of the complaint or similar pleading will not the reby vest jurisdiction in the Court, much less the payment of the docket fee bas ed on the amount sought in the amended pleading. The ruling in the Magaspi case (115 SCRA 193) in so far as it is inconsistent with this pronouncement is overtu rned and reversed." Strict compliance with this Circular is hereby enjoined. Let this be circularized to all the courts hereinabove named and to the Presiden t and Board of Governors of the Integrated Bar of the Philippines, which is here by directed to disseminate this Circular to all its members. March 24, 1988. (Sgd). CLAUDIO TEEHANKEE Chief Justice (Emphasis and underscoring supplied) On the other hand, respondent maintains that it had paid the filing fee which wa s assessed by the clerk of court, and that there was no violation of Supreme Cou rt Circular No. 7 because the amount of damages was clearly specified in the pra yer, to wit: 2. On the FIRST CAUSE OF ACTION (c) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS EIGHT HUNDRED F ORTY FOUR THOUSAND SIX HUNDRED SEVENTY FOUR AND SEVEN CENTS (US$ 844,674.07), pl us accrued interests and other related charges thereon subsequent to August 15, 1998, until fully paid; and (ii) an amount equivalent to 5% of all sums due from said Defendant, as and for attorney's fees; 3. On the SECOND CAUSE OF ACTION (d) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS ONE HUNDRED TWE NTY AND FIFTY THREE CENTS (US$171,120.53), plus accrued interests and other rela ted charges thereon subsequent to August 15, 1998 until fully paid; and (ii) an amount equivalent to 5% of all sums due from said Defendant, as and for attorney 's fees; 4. On the THIRD CAUSE OF ACTION (e) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS FIVE HUNDRED TW ENTY NINE THOUSAND ONE HUNDRED EIGHTY NINE AND EIGHTY CENTS (US$529,189.80), plu s accrued interests and other related charges thereon subsequent to August 15, 1 998 until fully paid; and (ii) an amount equivalent to 5% or all sums due from s aid Defendant, as and for attorney's fees; 5. On ALL THE CAUSES OF ACTION Defendants AUTOMOTIVE CORPORATION PHILIPPINES, ASEA ONE CORPORATION and AUTOCORP GROUP to be ordered to pay Plaintiff BNP the aggregate sum of (i) US DOLLARS ON E MILLION FIVE HUNDRED FORTY FOUR THOUSAND NINE HUNDRED EIGHTY FOUR AND FORTY CE NTS (US$1,544,984.40) (First through Third Causes of Action), plus accrued inter est and other related charges thereon subsequent to August 15, 1998 until fully paid; and (ii) an amount equivalent to 5% of all sums due from said Defendants, as and for attorney's fees.26

Moreover, respondent posits that the amount of US$1,544,984.40 represents not on ly the principal but also interest and other related charges which had accrued a s of August 15, 1998. Respondent goes even further by suggesting that in light o f Tacay v. Regional Trial Court of Tagum, Davao del Norte27 where the Supreme Co urt held, Where the action is purely for the recovery of money or damages, the docket fees are assessed on the basis of the aggregate amount claimed, exclusive only of in terests and costs.28 (Emphasis and underscoring supplied), it made an overpayment. When Tacay was decided in 1989, the pertinent rule applicable was Section 5 (a) of Rule 141 which provided for the following: SEC. 5. Clerks of Regional Trial Courts. - (a) For filing an action or proceedin g, or a permissive counter-claim or cross-claim not arising out of the same tran saction subject of the complaint, a third-party complaint and a complaint in int ervention and for all services in the same, if the sum claimed, exclusive of int erest, of the value of the property in litigation, or the value of the estate, i s: 1. Less than P 5,000.00 . P 32.00 2. P 5,000.00 or more but less than P 10,000.00 48.00 3. P 10,000.00 or more but less than P 20,000.00 .. 64.00 4. P 20,000.00 or more but less than P 40,000.00 .. 80.00 5. P 40,000.00 or more but less than P 60,000.00 .. 120.00 6. P 60,000.00 or more but less than P 80,000.00 . 160.00 7. P 80,000.00 or more but less than P 150,000.00 200.00 8. And for each P 1,000.00 in excess of P 150,000.00 ..... 4.00 9. When the value of the case cannot be estimated 400.00 10. When the case does not concern property (naturalization, adoption, legal separation, etc.) .. ... 64.00 11. In forcible entry and illegal detainer cases appealed from inferior courts . 40.00 If the case concerns real estate, the assessed value thereof shall be considered in computing the fees. In case the value of the property or estate or the sum claim is less or more in accordance with the appraisal of the court, the difference of fees shall be refu nded or paid as the case may be. When the complaint in this case was filed in 1998, however, as correctly pointed out by petitioners, Rule 141 had been amended by Administrative Circular No. 11 -9429 which provides: BY RESOLUTION OF THE COURT, DATED JUNE 28, 1994, PURSUANT TO SECTION 5 (5) OF AR TICLE VIII OF THE CONSTITUTION, RULE 141, SECTION 7 (a) AND (d), and SECTION 8 ( a) and (b) OF THE RULES OF COURT ARE HEREBY AMENDED TO READ AS FOLLOWS: RULE 141 LEGAL FEES x x x Sec. 7. Clerks of Regional Trial Courts (a) For filing an action or a permissive counterclaim or money claim against an estate not based on judgment, or for filing with leave of court a third-party, f

ourth-party, etc. complaint, or a complaint in intervention, and for all clerica l services in the same, if the total sum claimed, inclusive of interest, damages of whatever kind, attorney's fees, litigation expenses, and costs, or the state d value of the property in litigation, is: 1. 2. 3. x x x Not more than P 100,000.00 P 400.00 P 100,000.00, or more but not more than P 150,000.00 For each P 1,000.00 in excess of P 150,000.00 . 600.00 5.00

Sec. 8. Clerks of Metropolitan and Municipal Trial Courts (a) For each civil action or proceeding, where the value of the subject matter i nvolved, or the amount of the demand, inclusive of interest, damages or whatever kind, attorney's fees, litigation expenses, and costs, is: 1. Not more than P 20,000.00 ... P 120.00 2. More than P 20,000.00 but not more than P 100,000.00 . 400.00 3. More than P 100,000.00 but not more than P 200,000.00 850.00 (Emphasis and underscoring supplied) The clerk of court should thus have assessed the filing fee by taking into consi deration "the total sum claimed, inclusive of interest, damages of whatever kind , attorney's fees, litigation expenses, and costs, or the stated value of the pr operty in litigation." Respondent's and the Court of Appeals' reliance then on T acay was not in order. Neither was, for the same reason, the Court of Appeals' reliance on the 1989 cas e of Ng Soon v. Alday,30 where this Court held: The failure to state the rate of interest demanded was not fatal not only because it is the Courts which ultimately fix the same, but also because Rule 141, Sect ion 5(a) of the Rules of Court, itemizing the filing fees, speaks of "the sum cl aimed, exclusive of interest." This clearly implies that the specification of th e interest rate is not that indispensable. Factually, therefore, not everything was left to "guesswork" as respondent Judge has opined. The sums claimed were ascertainable, sufficient enough to allow a c omputation pursuant to Rule 141, section 5(a). Furthermore, contrary to the position taken by respondent Judge, the amounts cla imed need not be initially stated with mathematical precision. The same Rule 141 , section 5(a) (3rd paragraph), allows an appraisal "more or less."31 Thus: "In case the value of the property or estate or the sum claimed is less or more in accordance with the appraisal of the court, the difference of fee shall be re funded or paid as the case may be." In other words, a final determination is still to be made by the Court, and the fees ultimately found to be payable will either be additionally paid by the part y concerned or refunded to him, as the case may be. The above provision clearly allows an initial payment of the filing fees corresponding to the estimated amou nt of the claim subject to adjustment as to what later may be proved. ". . . there is merit in petitioner's claim that the third paragraph of Rule 141 , Section 5(a) clearly contemplates a situation where an amount is alleged or cl aimed in the complaint but is less or more than what is later proved. If what is proved is less than what was claimed, then a refund will be made; if more, addi tional fees will be exacted. Otherwise stated, what is subject to adjustment is the difference in the fee and not the whole amount" (Pilipinas Shell Petroleum C

orp., et als., vs. Court of Appeals, et als., G.R. No. 76119, April 10, 1989).32 (Emphasis and underscoring supplied) Respecting the Court of Appeals' conclusion that the clerk of court did not err when he applied the exchange rate of US $1 = P43.00 "[i]n the absence of any off ice guide of the rate of exchange which said court functionary was duty bound to follow,[hence,] the rate he applied is presumptively correct," the same does no t lie. The presumption of regularity of the clerk of court's application of the exchange rate is not conclusive.33 It is disputable.34 As such, the presumption may be overturned by the requisite rebutting evidence.35 In the case at bar, pet itioners have adequately proven with documentary evidence36 that the exchange ra te when the complaint was filed on September 7, 1998 was US $1 = P43.21. In fine, the docket fees paid by respondent were insufficient. With respect to petitioner's argument that the trial court did not acquire juris diction over the case in light of the insufficient docket fees, the same does no t lie. True, in Manchester Development Corporation v. Court of Appeals,37 this Court he ld that the court acquires jurisdiction over any case only upon the payment of t he prescribed docket fees,38 hence, it concluded that the trial court did not ac quire jurisdiction over the case. It bears emphasis, however, that the ruling in Manchester was clarified in Sun I nsurance Office, Ltd. (SIOL) v. Asuncion39 when this Court held that in the form er there was clearly an effort to defraud the government in avoiding to pay the correct docket fees, whereas in the latter the plaintiff demonstrated his willin gness to abide by paying the additional fees as required. The principle in Manchester could very well be applied in the present case. The pattern and the intent to defraud the government of the docket fee due it is obv ious not only in the filing of the original complaint but also in the filing of the second amended complaint. However, in Manchester, petitioner did not pay any additional docket fee until t he case was decided by this Court on May 7, 1987. Thus, in Manchester, due to th e fraud committed on the government, this Court held that the court a quo did no t acquire jurisdiction over the case and that the amended complaint could not ha ve been admitted inasmuch as the original complaint was null and void. In the present case, a more liberal interpretation of the rules is called for co nsidering that, unlike Manchester, private respondent demonstrated his willingne ss to abide by the rules by paying the additional docket fees as required. The p romulgation of the decision in Manchester must have had that sobering influence on private respondent who thus paid the additional docket fee as ordered by the respondent court. It triggered his change of stance by manifesting his willingne ss to pay such additional docket fee as may be ordered. Nevertheless, petitioners contend that the docket fee that was paid is still ins ufficient considering the total amount of the claim. This is a matter which the clerk of court of the lower court and/or his duly authorized docket clerk or cle rk in charge should determine and, thereafter, if any amount is found due, he mu st require the private respondent to pay the same. Thus, the Court rules as follows: 1. It is not simply the filing of the complaint or appropriate initiatory pleadi ng, 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 o

f the initiatory pleading is not accompanied by payment of the docket fee, the c ourt 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 sim ilar 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 wi thin 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 th erefor shall constitute a lien on the judgment. It shall be the responsibility o f the Clerk of Court or his duly authorized deputy to enforce said lien and asse ss and collect the additional fee.40 (Emphasis and underscoring supplied) The ruling in Sun Insurance Office was echoed in the 2005 case of Heirs of Bertu ldo Hinog v. Hon. Achilles Melicor:41 Plainly, while the payment of the prescribed docket fee is a jurisdictional requ irement, even its non-payment at the time of filing does not automatically cause the dismissal of the case, as long as the fee is paid within the applicable pre scriptive or reglementary period, more so when the party involved demonstrates a willingness to abide by the rules prescribing such payment. Thus, when insuffic ient filing fees were initially paid by the plaintiffs and there was no intentio n to defraud the government, the Manchester rule does not apply. (Emphasis and u nderscoring supplied; citations omitted) In the case at bar, respondent merely relied on the assessment made by the clerk of court which turned out to be incorrect. Under the circumstances, the clerk o f court has the responsibility of reassessing what respondent must pay within th e prescriptive period, failing which the complaint merits dismissal. Parenthetically, in the complaint, respondent prayed for "accrued interest subseq uent to August 15, 1998 until fully paid." The complaint having been filed on Se ptember 7, 1998, respondent's claim includes the interest from August 16, 1998 u ntil such date of filing. Respondent did not, however, pay the filing fee corresponding to its claim for i nterest from August 16, 1998 until the filing of the complaint on September 7, 1 998. As priorly discussed, this is required under Rule 141, as amended by Admini strative Circular No. 11-94, which was the rule applicable at the time. Thus, as the complaint currently stands, respondent cannot claim the interest from Augus t 16, 1998 until September 7, 1998, unless respondent is allowed by motion to am end its complaint within a reasonable time and specify the precise amount of int erest petitioners owe from August 16, 1998 to September 7, 199842 and pay the co rresponding docket fee therefor. With respect to the interest accruing after the filing of the complaint, the sam e can only be determined after a final judgment has been handed down. Respondent cannot thus be made to pay the corresponding docket fee therefor. Pursuant, how ever, to Section 2, Rule 141, as amended by Administrative Circular No. 11-94, r espondent should be made to pay additional fees which shall constitute a lien in the event the trial court adjudges that it is entitled to interest accruing aft er the filing of the complaint. Sec. 2. Fees as lien. - Where the court in its final judgment awards a claim not alleged, or a relief different or more than that claimed in the pleading, the p

arty concerned shall pay the additional fees which shall constitute a lien on th e judgment in satisfaction of said lien. The clerk of court shall assess and col lect the corresponding fees. In Ayala Corporation v. Madayag,43 in interpreting the third rule laid down in S un Insurance regarding awards of claims not specified in the pleading, this Cour t held that the same refers only to damages arising after the filing of the comp laint or similar pleading as to which the additional filing fee therefor shall c onstitute a lien on the judgment. The amount of any claim for damages, therefore, arising on or before the filing of the complaint or any pleading should be specified. While it is true that the determination of certain damages as exemplary or corrective damages is left to t he sound discretion of the court, it is the duty of the parties claiming such da mages to specify the amount sought on the basis of which the court may make a pr oper determination, and for the proper assessment of the appropriate docket fees . The exception contemplated as to claims not specified or to claims although sp ecified are left for determination of the court is limited only to any damages t hat may arise after the filing of the complaint or similar pleading for then it will not be possible for the claimant to specify nor speculate as to the amount thereof.44 (Emphasis and underscoring supplied; citation omitted)1avvphi1.zw+ WHEREFORE, the petition is GRANTED in part. The July 25, 2001 Decision and the D ecember 18, 2001 Resolution of the Court Appeals are hereby MODIFIED. The Clerk of Court of the Regional Trial Court of Makati City is ordered to reassess and d etermine the docket fees that should be paid by respondent, BNP, in accordance w ith the Decision of this Court, and direct respondent to pay the same within fif teen (15) days, provided the applicable prescriptive or reglementary period has not yet expired. Thereafter, the trial court is ordered to proceed with the case with utmost dispatch. SO ORDERED.