PILAR S. VDA. DE MANALO, ANTONIO S. MANALO, ORLANDO S.

MANALO, and ISABELITA MANALO, petitioners, vs. HON. COURT

OF APPEALS, HON. REGIONAL TRIAL COURT OF MANILA
(BRANCH 35), PURITA S. JAYME, MILAGROS M. TERRE, BELEN
M. ORILLANO, ROSALINA M. ACUIN, ROMEO S. MANALO,
ROBERTO S. MANALO, AMALIA MANALO and IMELDA
MANALO, respondents.

DECISION
DE LEON, JR., J.:

This is a petition for review on certiorari filed by petitioners Pilar S. Vda. De Manalo, et.
al., seeking to annul the Resolution[1] of the Court of Appeals[2] affirming the Orders[3] of the
Regional Trial Court and the Resolution[4]which denied petitioners motion for reconsideration.
The antecedent facts[5] are as follows:
Troadio Manalo, a resident of 1966 Maria Clara Street, Sampaloc, Manila died intestate on
February 14, 1992. He was survived by his wife, Pilar S. Manalo, and his eleven (11) children,
namely: Purita M. Jayme, Antonio Manalo, Milagros M. Terre, Belen M. Orillano, Isabelita
Manalo, Rosalina M. Acuin, Romeo Manalo, Roberto Manalo, Amalia Manalo, Orlando Manalo,
and Imelda Manalo, who are all of legal age.
At the time of his death on February 14, 1992, Troadio Manalo left several real properties
located in Manila and in the province of Tarlac including a business under the name and style
Manalos Machine Shop with offices at No. 19 Calavite Street, La Loma, Quezon City and at No.
45 Gen. Tinio Street, Arty Subdivision, Valenzuela, Metro Manila.
On November 26, 1992, herein respondents, who are eight (8) of the surviving children of
the late Troadio Manalo, namely: Purita, Milagros, Belen, Rosalina, Romeo, Roberto, Amalia,
and Imelda filed a petition[6] with the respondent Regional Trial Court of Manila[7] for the judicial
settlement of the estate of their late father, Troadio Manalo, and for the appointment of their
brother, Romeo Manalo, as administrator thereof.
On December 15, 1992, the trial court issued an order setting the said petition for hearing on
February 11, 1993 and directing the publication of the order for three (3) consecutive weeks in a
newspaper of general circulation in Metro Manila, and further directing service by registered
mail of the said order upon the heirs named in the petition at their respective addresses
mentioned therein.
On February 11, 1993, the date set for hearing of the petition, the trial court issued an order
declaring the whole world in default, except the government, and set the reception of evidence of
the petitioners therein on March 16, 1993. However, this order of general default was set aside
by the trial court upon motion of herein petitioners (oppositors therein) namely: Pilar S. Vda. De
Manalo, Antonio, Isabelita and Orlando who were granted ten (10) days within which to file
their opposition to the petition.
 Several pleadings were subsequently filed by herein petitioners, through counsel,
culminating in the filing of an Omnibus Motion[8] on July 23, 1993 seeking: (1) to set aside and
reconsider the Order of the trial court dated July 9, 1993 which denied the motion for additional
extension of time to file opposition; (2) to set for preliminary hearing their affirmative defenses
as grounds for dismissal of the case; (3) to declare that the trial court did not acquire jurisdiction
over the persons of the oppositors; and (4) for the immediate inhibition of the presiding judge.
On July 30, 1993, the trial court issued an order[9] which resolved, thus:
A. To admit the so-called Opposition filed by counsel for the oppositors on July 20, 1993, only
for the purpose of considering the merits thereof;
B. To deny the prayer of the oppositors for a preliminary hearing of their affirmative defenses
as ground for the dismissal of this proceeding, said affirmative defenses being irrelevant and
immaterial to the purpose and issue of the present proceeding;
C. To declare that this court has acquired jurisdiction over the persons of the oppositors;
D. To deny the motion of the oppositors for the inhibition of this Presiding Judge;
E. To set the application of Romeo Manalo for appointment as regular administrator in the
intestate estate of the deceased Troadio Manalo for hearing on September 9, 1993 at 2:00
oclock in the afternoon.
Herein petitioners filed a petition for certiorari under Rule 65 of the Rules of Court with the
Court of Appeals, docketed as CA-G.R. SP. No. 39851, after their motion for reconsideration of
the Order dated July 30, 1993 was denied by the trial court in its Order [10] dated September 15,
1993. In their petition for certiorari with the appellate court, they contend that: (1) the venue was
improperly laid in SP. PROC. No. 92-63626; (2) the trial court did not acquire jurisdiction over
their persons; (3) the share of the surviving spouse was included in the intestate proceedings; (4)
there was absence of earnest efforts toward compromise among members of the same family;
and (5) no certification of non-forum shopping was attached to the petition.
Finding the contentions untenable, the Court of Appeals dismissed the petition for certiorari
in its Resolution[11] promulgated on September 30, 1996. On May 6, 1997 the motion for
reconsideration of the said resolution was likewise dismissed.[12]
The only issue raised by herein petitioners in the instant petition for review is whether or not
the respondent Court of Appeals erred in upholding the questioned orders of the respondent trial
court which denied their motion for the outright dismissal of the petition for judicial settlement
of estate despite the failure of the petitioners therein to aver that earnest efforts toward a
compromise involving members of the same family have been made prior to the filing of the
petition but that the same have failed.
Herein petitioners claim that the petition in SP. PROC No. 92-63626 is actually an ordinary
civil action involving members of the same family. They point out that it contains certain
averments which, according to them, are indicative of its adversarial nature, to wit:
xxx
Par. 7. One of the surviving sons, ANTONIO MANALO, since the death of his father,
TROADIO MANALO, had not made any settlement, judicial or extra-judicial of the
properties of the deceased father, TROADIO MANALO.
 Par. 8. xxx the said surviving son continued to manage and control the properties
aforementioned, without proper accounting, to his own benefit and advantage xxx.
xxx
Par. 12. That said ANTONIO MANALO is managing and controlling the estate of the deceased
TROADIO MANALO to his own advantage and to the damage and prejudice of the herein
petitioners and their co-heirs xxx.
xxx
Par. 14. For the protection of their rights and interests, petitioners were compelled to bring this
suit and were forced to litigate and incur expenses and will continue to incur expenses of not
less than, P250,000.00 and engaged the services of herein counsel committing to pay
P200,000.00 as and for attorneys fees plus honorarium of P2,500.00 per appearance in court
xxx.[13]
Consequently, according to herein petitioners, the same should be dismissed under Rule 16,
Section 1(j) of the Revised Rules of Court which provides that a motion to dismiss a complaint
may be filed on the ground that a condition precedent for filing the claim has not been complied
with, that is, that the petitioners therein failed to aver in the petition in SP. PROC. No. 92-63626,
that earnest efforts toward a compromise have been made involving members of the same family
prior to the filing of the petition pursuant to Article 222[14] of the Civil Code of the Philippines.
The instant petition is not impressed with merit.
It is a fundamental rule that, in the determination of the nature of an action or proceeding,
the averments[15] and the character of the relief sought[16] in the complaint, or petition, as in the
case at bar, shall be controlling. A careful scrutiny of the Petition for Issuance of Letters of
Administration, Settlement and Distribution of Estate in SP. PROC. No. 92-63626 belies herein
petitioners claim that the same is in the nature of an ordinary civil action. The said petition
contains sufficient jurisdictional facts required in a petition for the settlement of estate of a
deceased person such as the fact of death of the late Troadio Manalo on February 14, 1992, as
well as his residence in the City of Manila at the time of his said death. The fact of death of the
decedent and of his residence within the country are foundation facts upon which all the
subsequent proceedings in the administration of the estate rest.[17] The petition in SP. PROC. No.
92-63626 also contains an enumeration of the names of his legal heirs including a tentative list of
the properties left by the deceased which are sought to be settled in the probate proceedings. In
addition, the reliefs prayed for in the said petition leave no room for doubt as regard the intention
of the petitioners therein (private respondents herein) to seek judicial settlement of the estate of
their deceased father, Troadio Manalo, to wit:

PRAYER

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

Court:

(a) That after due hearing, letters of administration be issued to petitioner ROMEO MANALO
for the administration of the estate of the deceased TORADIO MANALO upon the giving of
a bond in such reasonable sum that this Honorable Court may fix.
 (b) That after all the properties of the deceased TROADIO MANALO have been inventoried
and expenses and just debts, if any, have been paid and the legal heirs of the deceased fully
determined, that the said estate of TROADIO MANALO be settled and distributed among
the legal heirs all in accordance with law.
c) That the litigation expenses o these proceedings in the amount of P250,000.00 and attorneys
fees in the amount of P300,000.00 plus honorarium of P2,500.00 per appearance in court in
the hearing and trial of this case and costs of suit be taxed solely against ANTONIO
MANALO.[18]
Concededly, the petition in SP. PROC. No. 92-63626 contains certain averments which may
be typical of an ordinary civil action. Herein petitioners, as oppositors therein, took advantage of
the said defect in the petition and filed their so-called Opposition thereto which, as observed by
the trial court, is actually an Answer containing admissions and denials, special and affirmative
defenses and compulsory counterclaims for actual, moral and exemplary damages, plus
attorney's fees and costs[19] in an apparent effort to make out a case of an ordinary civil action an
ultimately seek its dismissal under Rule 16, Section 1(j) of the Rules of Court vis--vis, Article
222 of the Civil Code.
It is our view that herein petitioners may not be allowed to defeat the purpose of the
essentially valid petition for the settlement of the estate of the late Troadio Manalo by raising
matters that are irrelevant and immaterial to the said petition. It must be emphasized that the trial
court, sitting, as a probate court, has limited and special jurisdiction[20] and cannot hear and
dispose of collateral matters and issues which may be properly threshed out only in an ordinary
civil action. In addition, the rule has always been to the effect that the jurisdiction of a court, as
well as the concomitant nature of an action, is determined by the averments in the complaint and
not by the defenses contained in the answer. If it were otherwise, it would not be too difficult to
have a case either thrown out of court or its proceedings unduly delayed by simple
strategem.[21] So it should be in the instant petition for settlement of estate.
Herein petitioners argue that even if the petition in SP. PROC. No. 92-63626 were to be
considered as a special proceeding for the settlement of estate of a deceased person, Rule 16,
Section 1(j) of the Rules of Court vis-a-vis Article 222 of the Civil Code of the Philippines
would nevertheless apply as a ground for the dismissal of the same by virtue of Rule 1, Section 2
of the Rules of Court which provides that the rules shall be liberally construed in order to
promote their object and to assist the parties in obtaining just, speedy and inexpensive
determination of every action and proceeding. Petitioners contend that the term proceeding is so
broad that it must necessarily include special proceedings.
The argument is misplaced. Herein petitioners may not validly take refuge under the
provisions of Rule 1, Section 2, of the Rules of Court to justify the invocation of Article 222 of
the Civil Code of the Philippines for the dismissal of the petition for settlement of the estate of
the deceased Troadio Manalo inasmuch as the latter provision is clear enough, to wit:

Art. 222. No suit shall be filed or maintained between members of the same family
unless it should appear that earnest efforts toward a compromise have been made, but
that the same have failed, subject to the limitations in Article 2035 (underscoring
supplied).[22]
 The above-quoted provision of the law is applicable only to ordinary civil actions. This is
clear from the term suit that it refers to an action by one person or persons against another or
others in a court of justice in which the plaintiff pursues the remedy which the law affords him
for the redress of an injury or the enforcement of a right, whether at law or in equity.[23] A civil
action is thus an action filed in a court of justice, whereby a party sues another for the
enforcement of a right, or the prevention or redress of a wrong.[24] Besides, an excerpt from the
Report of the Code Commission unmistakably reveals the intention of the Code Commission to
make that legal provision applicable only to civil actions which are essentially adversarial and
involve members of the same family, thus:

It is difficult to imagine a sadder and more tragic spectacle than a litigation between
members of the same family. It is necessary that every effort should be made toward a
compromise before a litigation is allowed to breed hate and passion in the family. It is
known that lawsuit between close relatives generates deeper bitterness than
strangers.[25]

It must be emphasized that the oppositors (herein petitioners) are not being sued in SP.
PROC. No. 92-63626 for any cause of action as in fact no defendant was impleaded therein. The
Petition for Issuance of Letters of Administration, Settlement and Distribution of Estate in SP.
PROC. No. 92-63626 is a special proceeding and, as such, it is a remedy whereby the petitioners
therein seek to establish a status, a right, or a particular fact.[26] The petitioners therein (private
respondents herein) merely seek to establish the fact of death of their father and subsequently to
be duly recognized as among the heirs of the said deceased so that they can validly exercise their
right to participate in the settlement and liquidation of the estate of the decedent consistent with
the limited and special jurisdiction of the probate court.
WHEREFORE, the petition in the above-entitled case, is DENIED for lack of merit. Costs
against petitioners.
SO ORDERED.

G.R. No. 75919 May 7, 1987

MANCHESTER DEVELOPMENT CORPORATION, ET AL., petitioners,

vs.
COURT OF APPEALS, CITY LAND DEVELOPMENT CORPORATION, STEPHEN ROXAS,
ANDREW LUISON, GRACE LUISON and JOSE DE MAISIP, respondents.

Tanjuatco, Oreta and Tanjuatco for petitioners.

Pecabar Law Offices for private respondents.

RESOLUTION

GANCAYCO, J.:
Acting on the motion for reconsideration of the resolution of the Second Division of January 28,1987
and another motion to refer the case to and to be heard in oral argument by the Court En Banc filed
by petitioners, the motion to refer the case to the Court en banc is granted but the motion to set the
case for oral argument is denied.

Petitioners in support of their contention that the filing fee must be assessed on the basis of the
amended complaint cite the case of Magaspi vs. Ramolete. 1 They contend that the Court of Appeals erred in that
the filing fee should be levied by considering the amount of damages sought in the original complaint.

The environmental facts of said case differ from the present in that

1. The Magaspi case was an action for recovery of ownership and possession of a parcel of land
with damages. 2While the present case is an action for torts and damages and specific performance with
prayer for temporary restraining order, etc. 3

2. In the Magaspi case, the prayer in the complaint seeks not only the annulment of title of the
defendant to the property, the declaration of ownership and delivery of possession thereof to
plaintiffs but also asks for the payment of actual moral, exemplary damages and attorney's fees
arising therefrom in the amounts specified therein. 4 However, in the present case, the prayer is for the
issuance of a writ of preliminary prohibitory injunction during the pendency of the action against the
defendants' announced forfeiture of the sum of P3 Million paid by the plaintiffs for the property in
question, to attach such property of defendants that maybe sufficient to satisfy any judgment that maybe
rendered, and after hearing, to order defendants to execute a contract of purchase and sale of the subject
property and annul defendants' illegal forfeiture of the money of plaintiff, ordering defendants jointly and
severally to pay plaintiff actual, compensatory and exemplary damages as well as 25% of said amounts
as maybe proved during the trial as attorney's fees and declaring the tender of payment of the purchase
price of plaintiff valid and producing the effect of payment and to make the injunction permanent. The
amount of damages sought is not specified in the prayer although the body of the complaint alleges the
total amount of over P78 Million as damages suffered by plaintiff. 5

3. Upon the filing of the complaint there was an honest difference of opinion as to the nature of the
action in the Magaspi case. The complaint was considered as primarily an action for recovery of
ownership and possession of a parcel of land. The damages stated were treated as merely to the
main cause of action. Thus, the docket fee of only P60.00 and P10.00 for the sheriff's fee were
paid. 6

In the present case there can be no such honest difference of opinion. As maybe gleaned from the
allegations of the complaint as well as the designation thereof, it is both an action for damages and
specific performance. The docket fee paid upon filing of complaint in the amount only of P410.00 by
considering the action to be merely one for specific performance where the amount involved is not
capable of pecuniary estimation is obviously erroneous. Although the total amount of damages
sought is not stated in the prayer of the complaint yet it is spelled out in the body of the complaint
totalling in the amount of P78,750,000.00 which should be the basis of assessment of the filing fee.

4. When this under-re assessment of the filing fee in this case was brought to the attention of this
Court together with similar other cases an investigation was immediately ordered by the Court.
Meanwhile plaintiff through another counsel with leave of court filed an amended complaint on
September 12, 1985 for the inclusion of Philips Wire and Cable Corporation as co-plaintiff and by
emanating any mention of the amount of damages in the body of the complaint. The prayer in the
original complaint was maintained. After this Court issued an order on October 15, 1985 ordering the
re- assessment of the docket fee in the present case and other cases that were investigated, on
November 12, 1985 the trial court directed plaintiffs to rectify the amended complaint by stating the
amounts which they are asking for. It was only then that plaintiffs specified the amount of damages
in the body of the complaint in the reduced amount of P10,000,000.00. 7 Still no amount of damages
were specified in the prayer. Said amended complaint was admitted.

On the other hand, in the Magaspi case, the trial court ordered the plaintiffs to pay the amount of
P3,104.00 as filing fee covering the damages alleged in the original complaint as it did not consider
the damages to be merely an or incidental to the action for recovery of ownership and possession of
real property. 8 An amended complaint was filed by plaintiff with leave of court to include the government
of the Republic as defendant and reducing the amount of damages, and attorney's fees prayed for to
P100,000.00. Said amended complaint was also admitted. 9

In the Magaspi case, the action was considered not only one for recovery of ownership but also for
damages, so that the filing fee for the damages should be the basis of assessment. Although the
payment of the docketing fee of P60.00 was found to be insufficient, nevertheless, it was held that
since the payment was the result of an "honest difference of opinion as to the correct amount to be
paid as docket fee" the court "had acquired jurisdiction over the case and the proceedings thereafter
had were proper and regular." 10 Hence, as the amended complaint superseded the original complaint, the allegations of
damages in the amended complaint should be the basis of the computation of the filing fee. 11

In the present case no such honest difference of opinion was possible as the allegations of the
complaint, the designation and the prayer show clearly that it is an action for damages and specific
performance. The docketing fee should be assessed by considering the amount of damages as
alleged in the original complaint.

As reiterated in the Magaspi case the rule is well-settled "that a case is deemed filed only upon
payment of the docket fee regardless of the actual date of filing in court . 12 Thus, in the present case the trial
court did not acquire jurisdiction over the case by the payment of only P410.00 as docket fee. Neither can the amendment of the complaint
thereby vest jurisdiction upon the Court. 13 For an legal purposes there is no such original complaint that was duly filed which could be
amended. Consequently, the order admitting the amended complaint and all subsequent proceedings and actions taken by the trial court are
null and void.

The Court of Appeals therefore, aptly ruled in the present case that the basis of assessment of the
docket fee should be the amount of damages sought in the original complaint and not in the
amended complaint.

The Court cannot close this case without making the observation that it frowns at the practice of
counsel who filed the original complaint in this case of omitting any specification of the amount of
damages in the prayer although the amount of over P78 million is alleged in the body of the
complaint. This is clearly intended for no other purpose than to evade the payment of the correct
filing fees if not to mislead the docket clerk in the assessment of the filing fee. This fraudulent
practice was compounded when, even as this Court had taken cognizance of the anomaly and
ordered an investigation, petitioner through another counsel filed an amended complaint, deleting all
mention of the amount of damages being asked for in the body of the complaint. It was only when in
obedience to the order of this Court of October 18, 1985, the trial court directed that the amount of
damages be specified in the amended complaint, that petitioners' counsel wrote the damages sought
in the much reduced amount of P10,000,000.00 in the body of the complaint but not in the prayer
thereof. The design to avoid payment of the required docket fee is obvious.

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, answers and other similar
pleadings should specify the amount of damages being prayed for not only in the body of the
pleading but also in the prayer, and said damages shall be considered in the assessment of the filing
fees in any case. Any pleading that fails to comply with this requirement shall not bib accepted nor
admitted, or shall otherwise be expunged from the record.

The Court acquires jurisdiction over any case only upon the payment of the prescribed docket fee.
An amendment of the complaint or similar pleading will not thereby vest jurisdiction in the Court,
much less the payment of the docket fee based on the amounts sought in the amended pleading.
The ruling in the Magaspi case 14 in so far as it is inconsistent with this pronouncement is overturned and reversed.

WHEREFORE, the motion for reconsideration is denied for lack of merit.

SO ORDERED.

G.R. Nos. 79937-38 February 13, 1989

SUN INSURANCE OFFICE, LTD., (SIOL), E.B. PHILIPPS and D.J. WARBY, petitioners,
vs.
HON. MAXIMIANO C. ASUNCION, Presiding Judge, Branch 104, Regional Trial Court, Quezon
City and MANUEL CHUA UY PO TIONG, respondents.

Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles Law Offices for petitioners. Tanjuatco,
Oreta, Tanjuatco, Berenguer & Sanvicente Law Offices for private respondent.

GANCAYCO, J.:

Again the Court is asked to resolve the issue of whether or not a court acquires jurisdiction over a
case when the correct and proper docket fee has not been paid.

On February 28, 1984, petitioner Sun Insurance Office, Ltd. (SIOL for brevity) filed a complaint with
the Regional Trial Court of Makati, Metro Manila for the consignation of a premium refund on a fire
insurance policy with a prayer for the judicial declaration of its nullity against private respondent
Manuel Uy Po Tiong. Private respondent as declared in default for failure to file the required answer
within the reglementary period.

On the other hand, on March 28, 1984, private respondent filed a complaint in the Regional Trial
Court of Quezon City for the refund of premiums and the issuance of a writ of preliminary attachment
which was docketed as Civil Case No. Q-41177, initially against petitioner SIOL, and thereafter
including E.B. Philipps and D.J. Warby as additional defendants. The complaint sought, among
others, the payment of actual, compensatory, moral, exemplary and liquidated damages, attorney's
fees, expenses of litigation and costs of the suit. Although the prayer in the complaint did not
quantify the amount of damages sought said amount may be inferred from the body of the complaint
to be about Fifty Million Pesos (P50,000,000.00).

Only the amount of P210.00 was paid by private respondent as docket fee which prompted
petitioners' counsel to raise his objection. Said objection was disregarded by respondent Judge Jose
P. Castro who was then presiding over said case. Upon the order of this Court, the records of said
case together with twenty-two other cases assigned to different branches of the Regional Trial Court
of Quezon City which were under investigation for under-assessment of docket fees were
transmitted to this Court. The Court thereafter returned the said records to the trial court with the
directive that they be re-raffled to the other judges in Quezon City, to the exclusion of Judge Castro.
Civil Case No. Q-41177 was re-raffled to Branch 104, a sala which was then vacant.

On October 15, 1985, the Court en banc issued a Resolution in Administrative Case No. 85-10-
8752-RTC directing the judges in said cases to reassess the docket fees and that in case of
deficiency, to order its payment. The Resolution also requires all clerks of court to issue certificates
of re-assessment of docket fees. All litigants were likewise required to specify in their pleadings the
amount sought to be recovered in their complaints.

On December 16, 1985, Judge Antonio P. Solano, to whose sala Civil Case No. Q-41177 was
temporarily assigned, issuedan order to the Clerk of Court instructing him to issue a certificate of
assessment of the docket fee paid by private respondent and, in case of deficiency, to include the
same in said certificate.

On January 7, 1984, to forestall a default, a cautionary answer was filed by petitioners. On August
30,1984, an amended complaint was filed by private respondent including the two additional
defendants aforestated.

Judge Maximiano C. Asuncion, to whom Civil Case No. Q41177 was thereafter assigned, after his
assumption into office on January 16, 1986, issued a Supplemental Order requiring the parties in the
case to comment on the Clerk of Court's letter-report signifying her difficulty in complying with the
Resolution of this Court of October 15, 1985 since the pleadings filed by private respondent did not
indicate the exact amount sought to be recovered. On January 23, 1986, private respondent filed a
"Compliance" and a "Re-Amended Complaint" stating therein a claim of "not less than Pl0,000,000.
00 as actual compensatory damages" in the prayer. In the body of the said second amended
complaint however, private respondent alleges actual and compensatory damages and attorney's
fees in the total amount of about P44,601,623.70.

On January 24, 1986, Judge Asuncion issued another Order admitting the second amended
complaint and stating therein that the same constituted proper compliance with the Resolution of this
Court and that a copy thereof should be furnished the Clerk of Court for the reassessment of the
docket fees. The reassessment by the Clerk of Court based on private respondent's claim of "not
less than P10,000,000.00 as actual and compensatory damages" amounted to P39,786.00 as
docket fee. This was subsequently paid by private respondent.

Petitioners then filed a petition for certiorari with the Court of Appeals questioning the said order of
Judie Asuncion dated January 24, 1986.

On April 24, 1986, private respondent filed a supplemental complaint alleging an additional claim of
P20,000,000.00 as d.qmages so the total claim amounts to about P64,601,623.70. On October 16,
1986, or some seven months after filing the supplemental complaint, the private respondent paid the
additional docket fee of P80,396.00. 1

On August 13, 1987, the Court of Appeals rendered a decision ruling, among others, as follows:

WHEREFORE, judgment is hereby rendered:

1. Denying due course to the petition in CA-G.R. SP No. 1, 09715 insofar as it seeks
annulment of the order

(a) denying petitioners' motion to dismiss the complaint, as amended, and

 (b) granting the writ of preliminary attachment, but giving due course to the portion
thereof questioning the reassessment of the docketing fee, and requiring the
Honorable respondent Court to reassess the docketing fee to be paid by private
respondent on the basis of the amount of P25,401,707.00. 2

Hence, the instant petition.

During the pendency of this petition and in conformity with the said judgment of respondent court,
private respondent paid the additional docket fee of P62,432.90 on April 28, 1988. 3

The main thrust of the petition is that the Court of Appeals erred in not finding that the lower court did
not acquire jurisdiction over Civil Case No. Q-41177 on the ground of nonpayment of the correct and
proper docket fee. Petitioners allege that while it may be true that private respondent had paid the
amount of P182,824.90 as docket fee as herein-above related, and considering that the total amount
sought to be recovered in the amended and supplemental complaint is P64,601,623.70 the docket
fee that should be paid by private respondent is P257,810.49, more or less. Not having paid the
same, petitioners contend that the complaint should be dismissed and all incidents arising therefrom
should be annulled. In support of their theory, petitioners cite the latest ruling of the Court
in Manchester Development Corporation vs. CA, 4 as follows:

The Court acquires jurisdiction over any case only upon the payment of the
prescribed docket fee. An amendment of the complaint or similar pleading will not
thereby vest jurisdiction in the Court, much less the payment of the docket fee based
on the amounts sought in the amended pleading. The ruling in the Magaspi Case in
so far as it is inconsistent with this pronouncement is overturned and reversed.

On the other hand, private respondent claims that the ruling in Manchester cannot apply retroactively
to Civil Case No. Q41177 for at the time said civil case was filed in court there was no
such Manchester ruling as yet. Further, private respondent avers that what is applicable is the ruling
of this Court in Magaspi v. Ramolete, 5wherein this Court held that the trial court acquired jurisdiction
over the case even if the docket fee paid was insufficient.

The contention that Manchester cannot apply retroactively to this case is untenable. Statutes
regulating the procedure of the courts will be construed as applicable to actions pending and
undetermined at the time of their passage. Procedural laws are retrospective in that sense and to
that extent. 6

In Lazaro vs. Endencia and Andres, 7 this Court held that the payment of the full amount of the docket
fee is an indispensable step for the perfection of an appeal. In a forcible entry and detainer case before
the justice of the peace court of Manaoag, Pangasinan, after notice of a judgment dismissing the case,
the plaintiff filed a notice of appeal with said court but he deposited only P8.00 for the docket fee, instead
of P16.00 as required, within the reglementary period of appeal of five (5) days after receiving notice of
judgment. Plaintiff deposited the additional P8.00 to complete the amount of the docket fee only fourteen
(14) days later. On the basis of these facts, this court held that the Court of First Instance did notacquire
jurisdiction to hear and determine the appeal as the appeal was not thereby perfected.

In Lee vs. Republic, 8 the petitioner filed a verified declaration of intention to become a Filipino citizen by
sending it through registered mail to the Office of the Solicitor General in 1953 but the required filing fee
was paid only in 1956, barely 5V2 months prior to the filing of the petition for citizenship. This Court ruled
that the declaration was not filed in accordance with the legal requirement that such declaration should be
filed at least one year before the filing of the petition for citizenship. Citing Lazaro, this Court concluded
that the filing of petitioner's declaration of intention on October 23, 1953 produced no legal effect until the
required filing fee was paid on May 23, 1956.
In Malimit vs. Degamo, 9 the same principles enunciated in Lazaro and Lee were applied. It was an
original petition for quo warranto contesting the right to office of proclaimed candidates which was mailed,
addressed to the clerk of the Court of First Instance, within the one-week period after the proclamation as
provided therefor by law. 10 However, the required docket fees were paid only after the expiration of said
period. Consequently, this Court held that the date of such payment must be deemed to be the real date
of filing of aforesaid petition and not the date when it was mailed.

Again, in Garica vs, Vasquez, 11 this Court reiterated the rule that the docket fee must be paid before a
court will act on a petition or complaint. However, we also held that said rule is not applicable when
petitioner seeks the probate of several wills of the same decedent as he is not required to file a separate
action for each will but instead he may have other wills probated in the same special proceeding then
pending before the same court.

Then in Magaspi, 12 this Court reiterated the ruling in Malimit and Lee that a case is deemed filed only
upon payment of the docket fee regardless of the actual date of its filing in court. Said case involved a
complaint for recovery of ownership and possession of a parcel of land with damages filed in the Court of
First Instance of Cebu. Upon the payment of P60.00 for the docket fee and P10.00 for the sheriffs fee, the
complaint was docketed as Civil Case No. R-11882. The prayer of the complaint sought that the Transfer
Certificate of Title issued in the name of the defendant be declared as null and void. It was also prayed
that plaintiff be declared as owner thereof to whom the proper title should be issued, and that defendant
be made to pay monthly rentals of P3,500.00 from June 2, 1948 up to the time the property is delivered to
plaintiff, P500,000.00 as moral damages, attorney's fees in the amount of P250,000.00, the costs of the
action and exemplary damages in the amount of P500,000.00.

The defendant then filed a motion to compel the plaintiff to pay the correct amount of the docket fee
to which an opposition was filed by the plaintiff alleging that the action was for the recovery of a
parcel of land so the docket fee must be based on its assessed value and that the amount of P60.00
was the correct docketing fee. The trial court ordered the plaintiff to pay P3,104.00 as filing fee.

The plaintiff then filed a motion to admit the amended complaint to include the Republic as the
defendant. In the prayer of the amended complaint the exemplary damages earlier sought was
eliminated. The amended prayer merely sought moral damages as the court may determine,
attorney's fees of P100,000.00 and the costs of the action. The defendant filed an opposition to the
amended complaint. The opposition notwithstanding, the amended complaint was admitted by the
trial court. The trial court reiterated its order for the payment of the additional docket fee which
plaintiff assailed and then challenged before this Court. Plaintiff alleged that he paid the total docket
fee in the amount of P60.00 and that if he has to pay the additional fee it must be based on the
amended complaint.

The question posed, therefore, was whether or not the plaintiff may be considered to have filed the
case even if the docketing fee paid was not sufficient. In Magaspi, We reiterated the rule that the
case was deemed filed only upon the payment of the correct amount for the docket fee regardless of
the actual date of the filing of the complaint; that there was an honest difference of opinion as to the
correct amount to be paid as docket fee in that as the action appears to be one for the recovery of
property the docket fee of P60.00 was correct; and that as the action is also one, for damages, We
upheld the assessment of the additional docket fee based on the damages alleged in the amended
complaint as against the assessment of the trial court which was based on the damages alleged in
the original complaint.

However, as aforecited, this Court overturned Magaspi in Manchester. Manchester involves an

action for torts and damages and specific performance with a prayer for the issuance of a temporary
restraining order, etc. The prayer in said case is for the issuance of a writ of preliminary prohibitory
injunction during the pendency of the action against the defendants' announced forfeiture of the sum
of P3 Million paid by the plaintiffs for the property in question, the attachment of such property of
defendants that may be sufficient to satisfy any judgment that may be rendered, and, after hearing,
the issuance of an order requiring defendants to execute a contract of purchase and sale of the
subject property and annul defendants' illegal forfeiture of the money of plaintiff. It was also prayed
that the defendants be made to pay the plaintiff jointly and severally, actual, compensatory and
exemplary damages as well as 25% of said amounts as may be proved during the trial for attorney's
fees. The plaintiff also asked the trial court to declare the tender of payment of the purchase price of
plaintiff valid and sufficient for purposes of payment, and to make the injunction permanent. The
amount of damages sought is not specified in the prayer although the body of the complaint alleges
the total amount of over P78 Millon allegedly suffered by plaintiff.

Upon the filing of the complaint, the plaintiff paid the amount of only P410.00 for the docket fee
based on the nature of the action for specific performance where the amount involved is not capable
of pecuniary estimation. However, it was obvious from the allegations of the complaint as well as its
designation that the action was one for damages and specific performance. Thus, this court held the
plaintiff must be assessed the correct docket fee computed against the amount of damages of about
P78 Million, although the same was not spelled out in the prayer of the complaint.

Meanwhile, plaintiff through another counsel, with leave of court, filed an amended complaint on
September 12, 1985 by the inclusion of another co-plaintiff and eliminating any mention of the
amount of damages in the body of the complaint. The prayer in the original complaint was
maintained.

On October 15, 1985, this Court ordered the re-assessment of the docket fee in the said case and
other cases that were investigated. On November 12, 1985, the trial court directed the plaintiff to
rectify the amended complaint by stating the amounts which they were asking for. This plaintiff did
as instructed. In the body of the complaint the amount of damages alleged was reduced to
P10,000,000.00 but still no amount of damages was specified in the prayer. Said amended
complaint was admitted.

Applying the principle in Magaspi that "the case is deemed filed only upon payment of the docket fee
regardless of the actual date of filing in court," this Court held that the trial court did not acquire
jurisdiction over the case by payment of only P410.00 for the docket fee. Neither can the
amendment of the complaint thereby vest jurisdiction upon the Court. For all legal purposes there
was no such original complaint duly filed which could be amended. Consequently, the order
admitting the amended complaint and all subsequent proceedings and actions taken by the trial
court were declared null and void. 13

The present case, as above discussed, is among the several cases of under-assessment of docket
fee which were investigated by this Court together with Manchester. The facts and circumstances of
this case are similar to Manchester. In the body of the original complaint, the total amount of
damages sought amounted to about P50 Million. In the prayer, the amount of damages asked for
was not stated. The action was for the refund of the premium and the issuance of the writ of
preliminary attachment with damages. The amount of only P210.00 was paid for the docket fee. On
January 23, 1986, private respondent filed an amended complaint wherein in the prayer it is asked
that he be awarded no less than P10,000,000.00 as actual and exemplary damages but in the body
of the complaint the amount of his pecuniary claim is approximately P44,601,623.70. Said amended
complaint was admitted and the private respondent was reassessed the additional docket fee of
P39,786.00 based on his prayer of not less than P10,000,000.00 in damages, which he paid.

On April 24, 1986, private respondent filed a supplemental complaint alleging an additional claim of
P20,000,000.00 in damages so that his total claim is approximately P64,601,620.70. On October 16,
1986, private respondent paid an additional docket fee of P80,396.00. After the promulgation of the
decision of the respondent court on August 31, 1987 wherein private respondent was ordered to be
reassessed for additional docket fee, and during the pendency of this petition, and after the
promulgation of Manchester, on April 28, 1988, private respondent paid an additional docket fee of
P62,132.92. Although private respondent appears to have paid a total amount of P182,824.90 for
the docket fee considering the total amount of his claim in the amended and supplemental complaint
amounting to about P64,601,620.70, petitioner insists that private respondent must pay a docket fee
of P257,810.49.

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 obvious 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] the case was decided
by this Court on May 7, 1987. Thus, in Manchester, due to the fraud committed on the government,
this Court held that the court a quo did not acquire jurisdiction over the case and that the amended
complaint could not have 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 considering that, unlike
Manchester, private respondent demonstrated his willingness to abide by the rules by paying the
additional docket fees as required. The promulgation 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 willingness to pay such
additional docket fee as may be ordered.

Nevertheless, petitioners contend that the docket fee that was paid is still insufficient 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 clerk in-charge should determine and, thereafter, if any amount is found
due, he must 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 pleading, but the payment of the
prescribed docket fee, that vests a trial court with jurisdiction over the subject matter or nature of the
action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee,
the court may allow payment of the fee within a reasonable time but in no case beyond the
applicable prescriptive or reglementary period.

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

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

WHEREFORE, the petition is DISMISSED for lack of merit. The Clerk of Court of the court a quo is
hereby instructed to reassess and determine the additional filing fee that should be paid by private
respondent considering the total amount of the claim sought in the original complaint and the
supplemental complaint as may be gleaned from the allegations and the prayer thereof and to
require private respondent to pay the deficiency, if any, without pronouncement as to costs.

SO ORDERED.

G.R. No. 104658. April 7, 1993.

PILIPINAS SHELL PETROLEUM CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and CLARITA T. CAMACHO, respondents.

Angara, Abello, Concepcion, Regala & Cruz for petitioner.

Yolanda Quisumbing-Javellana & Associates for private respondent.

SYLLABUS

1. LABOR LAWS AND SOCIAL LEGISLATION; EMPLOYER-EMPLOYEE RELATIONSHIP;

FACTORS CONSIDERED IN DETERMINING EXISTENCE THEREOF; CASE AT BAR. It is firmly
settled that the existence or non-existence of the employer-employee relationship is commonly to be
determined by examination of certain factors or aspects of that relationship. These include: (a) the
manner of selection and engagement of the putative employee; (b) the mode of payment of wages;
(c) the presence or absence of a power to control the putative employee's conduct, although the
latter is the most important element . . . As aptly held by the trial court, petitioner did not exercise
control and supervision over Feliciano with regard to the manner in which he conducted the hydro-
pressure test. All that petitioner did, through its Field Engineer, Roberto Mitra, was relay to Feliciano
the request of private respondent for a hydro-pressure test, to determine any possible leakages in
the storage tanks in her gasoline station. The mere hiring of Feliciano by petitioner for that particular
task is not the form of control and supervision contemplated by law which may be the basis for
establishing an employer-employee relationship between petitioner and Feliciano. The fact that there
was no such control is further amplified by the absence of any shell representative in the job site at
the time when the test was conducted. Roberto Mitra was never there. Only Feliciano and his men
were. True, it was petitioner who sent Feliciano to private respondent's gasoline station to conduct
the hydro-pressure test as per the request of private respondent herself. But this single act did not
automatically make Feliciano an employee of petitioner. As discussed earlier, more than mere hiring
is required. It must further be established that petitioner is the one who is paying Feliciano's salary
on a regular basis; that it has the power to dismiss said employee, and more importantly, that
petitioner has control and supervision over the work of Feliciano. The last requisite was sorely
missing in the instant case.

2. ID.; JOB CONTRACTING; REQUISITES; HALLMARKS OF INDEPENDENT CONTRACTOR.

Section 8 of Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides: "Sec.
8. Job contracting. There is job contracting permissible under the Code if the following conditions
are met: (1) The contractor carries on an independent business and undertakes the contract work on
his own account under his own responsibility according to his own manner and method, free from
the control and direction of his employer or principal in all matters connected with the performance of
the work except as to the results thereof; and (2) The contractor has substantial capital or
investment in the form of tools, equipment, machineries, work premises, and other materials which
are necessary in the conduct of his business." Feliciano is independently maintaining a business
under a duly registered business name, "JFS Repair and Maintenance Service," and is duly
registered with the Bureau of Domestic Trade. He does not enjoy a fixed salary but instead charges
a lump sum consideration for every piece of work he accomplishes. If he is not able to finish his
work, he does not get paid, as what happened in this case. Further, Feliciano utilizes his own tools
and equipment and has a complement of workers. Neither is he required to work on a regular basis.
Instead, he merely awaits calls from clients such as petitioner whenever repairs and maintenance
services are requested. Moreover, Feliciano does not exclusively service petitioner because he can
accept other business but not from other oil companies. All these are the hallmarks of an
independent contractor.

3. CIVIL LAW; QUASI-DELICTS; INDEPENDENT CONTRACTOR RESPONSIBLE FOR HIS OWN

ACTS AND OMISSIONS. Being an independent contractor, Feliciano is responsible for his own
acts and omissions. As he alone was in control over the manner of how he was to undertake the
hydro-pressure test, he alone must bear the consequences of his negligence, if any, in the conduct
of the same.

DECISION

CAMPOS, JR., J p:

Was the hydro-pressure test of the underground storage tank in private respondent Clarita T.
Camacho's gasoline station conducted by an independent contractor or not? A negative answer will
make petitioner Pilipinas Shell Petroleum Corporation (Shell, for brevity) liable for the said
independent contractor's acts or omissions; otherwise, no. This is the issue that this Court is called
upon to resolve in this case.

The facts are as follows:

Private respondent Clarita T. Camacho (private respondent for short) was the operator of a gasoline
station in Naguilian Road, Baguio City, wherein she sells petitioner Shell's petroleum products.
Sometime in April 1983, private respondent requested petitioner to conduct a hydro-pressure test on
the underground storage tanks of the said station in order to determine whether or not the sales
losses she was incurring for the past several months were due to leakages therein. Petitioner
acceded to the said request and on April 27, 1983, one Jesus "Jessie" Feliciano together with other
workers, came to private respondent's station with a Job Order from petitioner to perform the hydro-
pressure test.

On the same day, Feliciano and his men drained the underground storage tank which was to be
tested of its remaining gasoline. After which, they filled the tank with water through a water hose
from the deposit tank of private respondent. Then, after requesting one of private respondent's
gasoline boys to shut off the water when the tank was filled, Feliciano and his men left. At around
2:00 a.m. the following day, private respondent saw that the water had reached the lip of the pipe of
the underground storage tank and so, she shut off the water faucet.

At around 5:30 a.m., private respondent's husband opened the station and started selling gasoline.
But at about 6:00 a.m., the customers who had bought gasoline returned to the station complaining
that their vehicles stalled because there was water in the gasoline that they bought. On account of
this, private respondent was constrained to replace the gasoline sold to the said customers.
However, a certain Eduardo Villanueva, one of the customers, filed a complaint with the police
against private respondent for selling the adulterated gasoline. In addition, he caused the incident to
be published in two local newspapers.

Feliciano, who arrived later that morning, did not know what caused the water pollution of the
gasoline in the adjacent storage tank. So he called up Nick Manalo, Superintendent of Shell's Poro
Point Installation at San Fernando, La Union, and referred the matter to the latter. Manalo went up to
Baguio in the afternoon to investigate. Thereafter, he and Feliciano again filled with water the
underground storage tank undergoing hydro-pressure test whereat they noticed that the water was
transferring to the other tanks from whence came the gasoline being sold. Manalo asked permission
from Shell's Manila Office to excavate the underground pipes of the station. Upon being granted
permission to do so, Feliciano and his men began excavating the driveway of private respondent's
station in order to expose the underground pipeline. The task was continued by one Daniel "Danny"
Pascua who replaced Feliciano, Pascua removed the corroded pipeline and installed new
independent vent pipe for each storage tank.

Meanwhile, petitioner undertook to settle the criminal complaint filed by Villanueva. Subsequently,
Villanueva filed an Affidavit of Desistance, 1 declaring, inter alia

"THAT, after careful evaluation of the surrounding circumstances, especially the explanation of the
representatives of SHELL Phils., that the gasoline tanks of Mrs. Camacho were subject to Hydro
test, in such a way that water was used for the said test, I believe that she may not have had
anything to do with the filling of water in the tank of my car;

xxx xxx xxx

THAT, said representatives of SHELL Phils. have interceded for and in behalf of Mrs. Camacho and
have fully satisfied my claim against her.

THAT, in view of all the foregoing I do not intend to prosecute the case and I am therefore asking for
the dismissal of the case against Mrs. Camacho."

Thereafter, private respondent demanded from petitioner the payment of damages in the amount of
P10,000.00. Petitioner, instead, offered private respondent additional credit line and other beneficial
terms, which offer was, however, rejected. cdrep

Subsequently, or on October 12, 1983, private respondent filed before the trial court a complaint for
damages against petitioner due to the latter's alleged negligence in the conduct of the hydro-
pressure test in her gasoline station. For its part, petitioner denied liability because, according to it,
the hydro-pressure test on the underground storage tanks was conducted by an independent
contractor.

The trial court dismissed private respondent's complaint for damages for the reason that:

"The hydro-pressure test which brought about the incident was conducted by Jesus Feliciano, who
was neither an employee nor agent nor representative of the defendant. Jesus Feliciano is
responsible for his own acts and omissions. He alone was in control of the manner of how he is to
undertake the hydro-pressure test.

Considering that the conduct of said hydro-pressure test was under the sole and exclusive control
and supervision of Jesus Feliciano, the overflow with water causing the same to sip into the
adjoining tank cannot be attributed to the fault or negligence of defendant. 2

From the adverse decision of the trial court, private respondent appealed to the Court of Appeals
which court reversed the decision of the trial court. Thus,

"PREMISES CONSIDERED, the decision being appealed from is hereby SET ASIDE and, in lieu
thereof, another rendered ordering defendant to pay plaintiff:
1. P100,000.00 as moral damages;

2. P2,639.25 and P15,000.00 representing the actual losses suffered by plaintiff as a result of the
water pollution of the gasoline.

No costs.

SO ORDERED." 3

Petitioner moved to have the above decision reconsidered but the same was denied in a Resolution
dated March 9, 1992. Hence, this recourse.

As stated at the very outset, the pivotal issue in this case is whether or not petitioner should be held
accountable for the damage to private respondent due to the hydro-pressure test conducted by
Jesus Feliciano.

It is a well-entrenched rule that an employer-employee relationship must exist before an employer

may be held liable for the negligence of his employee. It is likewise firmly settled that the existence
or non-existence of the employer-employee relationship is commonly to be determined by
examination of certain factors or aspects of that relationship. These include: (a) the manner of
selection and engagement of the putative employee; (b) the mode of payment of wages; (c) the
presence or absence of a power to control the putative employee's conduct, 4 although the latter is
the most important element. 5

In this case, respondent Court of Appeals held petitioner liable for the damage caused to private
respondent as a result of the hydro-pressure test conducted by Jesus Feliciano due to the following
circumstances: 6

1. Feliciano was hired by petitioner;

2. He received his instructions from the Field Engineer of petitioner, Mr. Roberto Mitra;

3. While he was at private respondent's service station, he also received instructions from Nick
Manalo, petitioner's Poro Point Depot Superintendent;

4. Instructions from petitioner's Manila Office were also relayed to him while he was at .the job site at
Baguio City;

5. His work was under the constant supervision of petitioner's engineer;

6. Before he could complete the work, he was instructed by Mr. Manalo, petitioner's Superintendent,
to discontinue the same and it was turned over to Daniel Pascua, who was likewise hired by
petitioner.

Based on the foregoing, respondent Court of Appeals concluded that Feliciano was not an
independent contractor but was under the control and supervision of petitioner in the performance of
the hydro-pressure test, hence, it held petitioner liable for the former's acts and omissions.

We are not in accord with the above finding of respondent Court of Appeals. As aptly held by the trial
court, petitioner did not exercise control and supervision over Feliciano with regard to the manner in
which he conducted the hydro-pressure test. All that petitioner did, through its Field Engineer,
Roberto Mitra, was relay to Feliciano the request of private respondent for a hydro-pressure test, to
determine any possible leakages in the storage tanks in her gasoline station. The mere hiring of
Feliciano by petitioner for that particular task is not the form of control and supervision contemplated
by may be the basis for establishing an employer-employee relationship between petitioner and
Feliciano. The fact that there was no such control is further amplified by the absence of any Shell
representative in the job site time when the test was conducted. Roberto Mitra was never there. Only
Feliciano and his men were.

True, it was petitioner who sent Feliciano to private respondent's gasoline station in conduct the
hydro-pressure test as per the request of private respondent herself. But this single act did not
automatically make Feliciano an employee of petitioner. As discussed earlier, more than mere hiring
is required. It must further be established that petitioner is the one who is paying Felicia's salary on a
regular basis; that it has the power to dismiss said employee, and more importantly, that petitioner
has control and supervision over the work of Feliciano. The last requisite was sorely missing in the
instant case.

A careful perusal of the records will lead to the conclusion that Feliciano is an independent
contractor. Section 8 of Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code
provides:

"Sec. 8. Job contracting. There is job contracting permissible under the Code if the following
conditions are met:

(1) The contractor carries on an independent business and undertakes the contract work on his own
account under his own responsibility according to his own manner and method, free from the control
and direction of his employer or principal in all matters connected with the performance of the work
except as to the results thereof; and

(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries,
work premises, and other materials which are necessary in the conduct of his business."

Feliciano is independently maintaining a business under a duly registered business name, "JFS
Repair and Maintenance Service," and is duly registered with the Bureau of Domestic Trade. 7 He
does not enjoy a fixed salary but instead charges a lump sum consideration for every piece of work
he accomplishes. 8 If he is not able to finish his work, he does not get paid, as what happened in this
case. 9 Further, Feliciano utilizes his own tools and equipment and has a complement of workers.
Neither is he required to work on a regular basis. Instead, he merely awaits calls from clients such
as petitioner whenever repairs and maintenance services are requested. Moreover, Feliciano does
not exclusively service petitioner because he can accept other business but not from other oil
companies. 10 All these are the hallmarks of an independent contractor.

Being an independent contractor, Feliciano is responsible for his own acts and omissions. As he
alone was in control over the manner of how he was to undertake the hydro-pressure test, he alone
must bear the consequences of his negligence, if any, in the conduct of the same.

Anent the issue of damages, the same has been rendered moot by the failure of private respondent
to establish an employer-employee relationship between petitioner and Feliciano. Absent said
relationship, petitioner cannot be held liable for the acts and omissions of the independent
contractor, Feliciano.
WHEREFORE, premises considered, the appealed decision of respondent Court of Appeals is
hereby SET ASIDE and the decision of the trial court REINSTATED. Without pronouncement as to
costs.

SO ORDERED.

AMANTE SIAPNO, CRISTINA G.R. No. 132260

LOPEZ and MINDA GAPUZ,
Petitioners, Present:

PANGANIBAN, J., Chairman

SANDOVAL-GUTIERREZ,
CORONA,
- versus - CARPIO MORALES, and
GARCIA, JJ.

MANUEL V. MANALO, Promulgated:

Respondent,
August 30, 2005

x---------------------------------------------------------------------------------x

DECISION

GARCIA, J.:

As far back as 1987, in Manchester Development Corporation, et al. vs.

Court of Appeals,[1] this Court has made it clear that any complaint,
petition, answer and other similar pleading that does not specify in its body
and prayer the amount of damages claimed should not be accepted or
admitted or otherwise expunged from the records. It is unfortunate that to
this date, there are still those who failed to hearken to our teaching
in Manchester. The present case exemplifies one.
 Before the Court is this petition for review on certiorari to nullify and
set aside the decision dated 13 January 1998[2] of the Court of Appeals
(CA) in CA- G.R. SP No. 45434, dismissing, for lack of merit, the earlier
petition for certiorari and prohibition thereat filed by the petitioners against
the Hon. Eudarlio B. Valencia, Presiding Judge, RTC, Quezon City, Branch
222, and the herein respondent, Manuel V. Manalo.

The underlying facts are not disputed:

As then Administrator of the National Tobacco Administration (NTA),
petitioner Amando Siapno, thru a special order dated 12 April 1995,
created a negotiating panel with the responsibility of undertaking the
disposal of NTAs 31,159 square-meter real property at Barrio Prinza, Las
Pias City, and accepting offers relative to the purchase thereof by
interested party/parties. As constituted, the panel was composed of
Ricardo Briones, as chairman, and petitioners Cristina Lopez and Minda
Gapuz, as members.

Thru a letter dated 02 June 1995, respondent Manuel Manalo offered to

buy the real property in question, which offer was accepted and approved
by the NTA Board of Directors in its Resolution No. 336-95 bearing date 15
June 1995, of which respondent Manalo was duly informed by the NTA
Corporate Secretary.

In yet another Resolution dated 19 June 1995, the NTA Board of Directors
directed the Corporate Secretary to assist the negotiating panel in the
preparation of the necessary document for the final disposition and transfer
of ownership of the subject real asset in favor of Manalo.
Accordingly, there was prepared a format of a Deed of Sale to be entered
into by and between NTA and Manalo, which format was duly approved by
the NTA Board of Directors in its Resolution No. 341-95 dated 23 June
1995.

On 27 June 1995, Manalo signed the prepared Deed of Sale, with one NTA
Board member acting as a witness. However, the chairman of the
negotiating panel Ricardo Briones, deferred affixing his signature thereon
unless and until Manalo shall have paid twenty percent (20%) of the
agreed purchase price, as downpayment.

The next day - 28 June 1995 - Manalo paid NTA the sum of P4,424,598.00
by way of downpayment, and, on 24 July 1995, he sent a letter to NTA
attaching thereto the original of the domestic letter of credit he established
in NTAs favor for the balance.

However, despite the above, petitioners refused to implement NTA Board

Resolutions No. 336-95 and 431-95, hence the sale to Manalo of the
subject real property was never consummated.

Such was the state of things when, on 20 August 1995, in the

Regional Trial Court at Quezon City, Manalo filed against petitioners a
petition for Mandamus with Damages, thereat docketed as Civil Case No.
Q-95-24792 which was raffled to Branch 222 of the court. In it, Manalo
prayed for the following reliefs, to wit:

WHEREFORE, it is respectfully prayed that:

1. Immediately upon filing of this petition, an order be issued requiring
Corporate Secretary Lino Eugenio, Jr. or anyone acting in his behalf, to
turn over to the Court all the minutes --- and other documents/vouchers
including the partially signed Deed of Sale allied thereto --- of the
meetings of the NTA Board of Directors wherein Resolutions Nos. 336-
95- 339-95 and 341-95 were adopted, in order to insure preservation of
their integrity;
2. After hearing, to compel respondents [now petitioners] to honor, respect [and]
implement NTA Board Resolutions Nos. 336-95, 339-95 and 341-95 by
signing in behalf of NTA the prepared Deed of Sale covering the Prinza,
Las Pias property.
Petitioner further prays for such other reliefs as may be deemed, just and
equitable in the premises.[3]

On 25 August 1998, or before the petitioners could have submitted

their responsive pleading, Manalo filed directly with the Branch Clerk of
Branch 222 instead of with the Clerk of Court an Amended Petition for
Mandamus with Revocation of Title and Damages,[4] thereunder impleading
Stanford East Realty Corporation (Stanford), as additional respondent, it
being alleged in the same amended petition that herein petitioner Amante
Siapno as NTA Administrator, unlawfully executed a deed of sale over the
same NTA property in favor of Stanford, on the basis of which the Register
of Deeds of Las Pias issued in Stanfords favor TCT No. T-4948 for said
property. Manalo thus prayed in his amended petition for a judgment
declaring the sale to Stanford and the latters title as null and void and
adjudging the petitioners liable to pay him P1,000,000.00 as moral
damages; P1,000,000.00 as exemplary damages; P2,000,000.00 by way of
actual damages; and P500,000.00 as and for attorneys fees. We quote
Manalos prayer in his amended petition:
WHEREFORE, it is respectfully prayed of this Hon. Court that
IMMEDIATELY UPON FILING OF THIS PETITION
1. A temporary restraining order be issued to all the respondents to stop and
desist from making any transaction involving the subject property;

2. An order be issued requiring Corporate Secretary Lino Eugenio Jr. or anyone

acting or substituting in his behalf to turn over [to] the court all the minutes ---
and other documents/vouchers including the partially signed Deed of Sale
allied thereto -- of meetings of the NTA Board of Directors wherein
Resolutions Nos. 336-95, 339-95 and 341-95 were adopted, in order to ensure
preservation of their integrity;

AFTER NOTICE AND HEARING

3. A writ of preliminary injunction of the same tenor as in first prayer be issued;

4. A decision rendered:

4.1 Compelling the respondent NTA officials to honor, respect and implement
NTA Board Resolutions Nos. 336-95, 339-95 and 341-95 by signing in
behalf of NTA the prepared Deed of Sale covering the Prinza, Las Pias
property;

4.2 Declaring as null and void the Deed of Sale executed by the NTA in favor
of respondent Stanford and TCT No. 49418 issued in the latters name on
the basis thereof;

4.3 Ordering the respondents to jointly and severally pay the petitioner: P1
million as moral damages; P1 million as exemplary damages; P2 million
as actual damages and P500,000.00 as attorneys fees.

Petitioner further prays for such other reliefs as may be deemed just
equitable in the premises.[5]
On 29 November 1995, petitioners filed their Answer With Counter-claim
and Crossclaim, thereunder raising the defense, inter alia, that the suit filed
by Manalo involves a conveyance of real property, hence the docket fee
therefor should be based on the value of the real asset involved in the suit
but which is not stated in Manalos amended petition. And since Manalo has
not paid the proper amount of docket fee for his amended petition, the trial
court never acquired jurisdiction over the case.

On 24 April 1996, petitioners filed a third-party complaint, which the trial

court admitted in open court on 23 May 1996. Manalo, however, moved to
strike out petitioners third-party complaint, arguing that the docket fees
therefor were not paid.

To Manalos motion to strike, petitioners interposed an opposition with an

accompanying motion for preliminary hearing on their affirmative defense
of lack of jurisdiction based on Manalos deficient filing fee for his amended
petition.

On 08 June 1996, Manalo paid the sum of P15,150.00 as additional

docket fee, followed by his manifestation to that effect.

In an order dated 08 August 1996, the trial court deemed the

question of inadequate filing fee as having become moot and academic by
reason of Manalos subsequent payment of the additional filing fee.

In yet another order dated 09 August 1996, the trial court denied
petitioners prayer for a preliminary hearing on their affirmative defense of
lack of jurisdiction, explaining that Manalo has already paid the additional
docketing fee. In the same order, the trial court set the case for pre-trial.

In time, petitioners moved for reconsideration of the trial courts two

(2) aforementioned orders, which motion was likewise denied by the court
in its subsequent order of 08 August 1997.

Therefrom, petitioners went to the Court of Appeals on a petition for

certiorari and prohibition, thereat docketed as CA-G.R. SP No.
45434, imputing grave abuse of discretion amounting to lack or in excess
of jurisdiction on the part of the trial court in issuing its three (3)
aforementioned orders of 08 August 1996, 09 August 1996 and 08 August
1997.

As stated at the outset hereof, the appellate court, in its assailed

decision of 13 January 1998, denied petitioners recourse for lack of merit.

Hence, petitioners present petition for review on certiorari under Rule

45 of the Rules of Court, it being their submission that the appellate court
erred:

I.

IN HOLDING, PER THE QUESTIONED DECISION DATED 13 JANUARY

1998, THAT RESPONDENTS PETITION IN THE COURT OF ORIGIN IS A
PERSONAL ACTION, NOT A REAL ACTION, THEREBY SANCTIONING
THE COGNIZANCE BY THE COURT A QUO OF WHAT IS IN ESSENCE A
REAL ACTION WITHOUT THE PAYMENT OF THE PRESCRIBED AND
CORRECT DOCKET FEES THEREFOR, WHICH IS A CONDITION SINE
QUA NON TO THE COURTS ACQUISITION AND EXERCISE OF
JURISDICTION.

II.

IN SANCTIONING AND APPROVING, IN CONTRAVENTION OF

APPLICABLE JURISPRUDENCE AND IN CLEAR DEPARTURE FROM THE
ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS, THE
DELIBERATE PLOY OF RESPONDENT IN STATING THE DAMAGES HE
CLAIMS ONLY IN THE BODY BUT NOT IN THE PETITORY (PRAYER)
PORTION OF THE PETITION TO EVADE PAYMENT OF THE CORRECT
DOCKET/FILING FEES THEREFOR.

Simply put, the issue is: whether or not the trial court acted with or
without jurisdiction in its Civil Case No. Q-95-24791. Upon the resolution of
this issue rests the corollary question of whether or not the appellate court
acted with grave abuse of discretion or in excess of jurisdiction in coming
out with its challenged decision of 13 January 1998, sustaining the trial
courts three (3) orders in the basic case for Mandamus With Revocation of
Title and Damages in Civil Case No. Q-95-24791.

We rule for the petitioners.

Consistent with our ruling in Manchester, supra, that the amount of
damages claimed must be alleged not only in the body of the complaint,
petition or answer but also in the prayer portion thereof, the lower court
should have outrightly dismissed respondents original petition for
mandamus with revocation of title and damages in its Civil Case No. Q-95-
24791, or, if already admitted, should have expunged the same from the
records.

We note that while paragraphs 20, 21 and 22 of Manalos original petition

somehow alleged the amount of moral and exemplary damages and
attorneys fees, all in the aggregate amount of P4,500,000.00, which he
claimed to have sustained by reason of petitioners inaction/refusal to
implement the NTA Board Resolutions relative to the sale of the questioned
property to him, the prayer, supra, embodied in the same original petition
made no mention whatsoever of the same damages. In fact, there was not
even a prayer for the payment thereof.

The requirement that the amount of damages claimed has to be

specified not only in the body of the pleading but also in its prayer
portion came about to put an end to the then prevailing practice by
counsels of reciting the damages prayed for only in the body of the
complaint to evade payment of the correct filing fees. To quote
from Manchester:

The Court cannot close this case without making the observation
that it frowns at the practice of counsel who filed the original complaint
in this case of omitting any specification of the amount of damages in
the prayer although the amount of over P78 million is alleged in the
body of the complaint. This is clearly intended for no other purpose than
to evade the payment of the correct filing fees if not to mislead the
docket clerk in the assessment of the filing fee. This fraudulent practice
was compounded when, even as this Court had taken cognizance of the
anomaly and ordered an investigation, petitioner through another counsel
filed an amended complaint, deleting all mention of the amount of
damages being asked for in the body of the complaint. It was only when
in obedience to the order of this Court of October 18, 1985, the trial
court directed that the amount of damages be specified in the amended
complaint, that petitioners' counsel wrote the damages sought in the
 much reduced amount of P10,000,000.00 in the body of the complaint
but not in the prayer thereof. The design to avoid payment of the
required docket fee is obvious.

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,

answers and other similar pleadings should specify the amount of damages
being prayed for not only in the body of the pleading but also in the prayer,
and said damages shall be considered in the assessment of the filing fees in
any case. Any pleading that fails to comply with this requirement shall not be
accepted nor admitted, or shall otherwise be expunged from the record.
(Emphasis supplied)

The irrelevant circumstance that respondent Manalo subsequently

paid additional filing fees in connection with his amended petition is of no
moment. For, with the reality that his original petition suffered from the
defect in its prayer vis a vis the amount of damages claimed, and,
therefore, should not have been admitted, or, if already accepted, should
have been ordered expunged from the records, the amended petition could
have served no valid purpose because in law, there is, in the first place, no
existing petition to be amended. Accordingly, it was error for the trial court
to have entertained and assumed jurisdiction over the same by issuing the
orders assailed in CA-G.R. SP No. 45434.

There is more.

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

the property in dispute to Standford East Realty Corporation and the title
issued to the latter on the basis thereof, be declared null and void. In a
very real sense, albeit the amended petition is styled as one for Mandamus
with Revocation of Title and Damages, it is, at bottom, a suit to recover
from Standford the realty in question and to vest in respondent the
ownership and possession thereof. In short, the amended petition is in
reality an action in res or a real action. Our pronouncement in Fortune
Motors (Phils.), Inc. vs. Court of Appeals[6] is instructive. There, we said:
 A prayer for annulment or rescission of contract does not
operate to efface the true objectives and nature of the action which is
to recover real property. (Inton, et al., v. Quintan, 81 Phil. 97, 1948)
An action for the annulment or rescission of a sale of real
property is a real action. Its prime objective is to recover said real
property. (Gavieres v. Sanchez, 94 Phil. 760, 1954)
An action to annul a real estate mortgage foreclosure sale is no
different from an action to annul a private sale of real property. (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 his claim for damages are closely intertwined with the issue of
ownership of the building which, under the law, is considered immovable
property, the recovery of which is petitioner's primary objective. The
prevalent doctrine is that an action for the annulment or rescission of a sale
of real property does not operate to efface the fundamental and prime
objective and nature of the case, which is to recover said real property. It is a
real action.

Unfortunately, and evidently to evade payment of the correct amount

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

Even the amended petition, therefore, should have been expunged

from the records.

In fine, we rule and so hold that the trial court never acquired
jurisdiction over its Civil Case No. Q-95-24791. It follows that the appellate
court itself acted without or in excess of jurisdiction or with grave abuse of
discretion amounting to lack or in excess of jurisdiction, when it sustained
the unlawful orders of the trial court, subject of petitioners petition for
certiorari and prohibition in CA-G.R. SP No. 45434.
 WHEREFORE, the instant petition is GRANTED and the assailed
decision of the Court of Appeals REVERSED and SET ASIDE. Civil Case
No. Q-95-24791 of the trial court is accordingly DISMISSED.

SO ORDERED.
MAXIMO TACAY, PONCIANO PANES and ANTONIA NOEL, petitioners,
vs.
REGIONAL TRIAL COURT OF TAGUM Davao del Norte, Branches 1 and 2, Presided by Hon.
Marcial Fernandez and Hon. Jesus Matas, respectively, PATSITA GAMUTAN, Clerk of Court,
and GODOFREDO PINEDA, respondents.

Eduardo C. De Vera for petitioners.

RESOLUTION

NARVASA, J.:

In the Regional Trial Court at Tagum, Davao del Norte, 1 three

(3) actions for recovery of possession (acciones publicianas 2 ) were separately instituted by
Godofredo Pineda against three (3) defendants, docketed as follows:

1) vs. Antonia Noel Civil Case No. 2209

2) vs. Ponciano Panes Civil Case No. 2210

3) vs. Maximo Tacay Civil Case No. 2211.

Civil Cases Numbered 2209 and 2211 were raffled to Branch I of the Trial Court, presided over by
Judge Marcial Hernandez. Civil No. 2210 was assigned to Branch 2, presided over by Judge Jesus
Matas.

The complaints 3 all alleged the same essential facts (1) Pineda was the owner of a parcel of land
measuring 790 square meters, his ownership being evidenced by TCT No. T-46560; (2) the previous
owner had allowed the defendants to occupy portions of the land by mere tolerance; (3) having himself
need to use the property, Pineda had made demands on the defendants to vacate the property and pay
reasonable rentals therefor, but these demands had been refused; and (4) the last demand had been
made more than a year prior to the commencement of suit. The complaints prayed for the same reliefs, to
wit:

1) that plaintiff be declared owner of the areas occupied by the defendants;

2) that defendants and their "privies and allies" be ordered to vacate and deliver the
portions of the land usurped by them;
 3) that each defendant be ordered to pay:

1 ) P 2,000 as monthly rents from February, 1987;

2 ) Actual damages, as proven;

3 ) Moral and nominal damages as the Honorable Court may fix ;

4) P30,000.00, "as attorney's fees, and representation fees of P5,000.00 per day of
appearance;" 4

and

4) that he (Pineda) be granted such "further relief and remedies ... just and equitable
in the premises.

The prayer of each complaint contained a handwritten notation (evidently made by plaintiff's counsel)
reading, "P5,000.00 as and for," immediately above the typewritten words, "Actual damages, as
proven," the intention apparently being to make the entire phrase read, " P5,000.00 as and for actual
damages as proven. 5

Motions to dismiss were filed in behalf of each of the defendants by common counsel . 6 Every motion
alleged that the Trial Court had not acquired jurisdiction of the case

. . . for the reason that the ... complaint violates the mandatory and clear provision of
Circular No. 7 of the ... Supreme Court dated March 24,1988, by failing to specify all
the amounts of damages which plaintiff is claiming from defendant;" and

. . . for ... failure (of the complaint) to even allege the basic requirement as to the
assessed value of the subject lot in dispute.

Judge Matas denied the motion to dismiss filed in Civil Case No. 2210 but ordered the expunction of
the "allegations in paragraph 11 of the ... complaint regarding moral as well as nominal damages
. 7 On motion of defendant Panes, Judge Matas later ordered the striking out, too, of the "handwritten
amount of 'P5,000. 00 as and for.' including the typewritten words 'actual damages as proven' ... in sub-
paragraph b of paragraph 4 in the conclusion and prayer of the complaint ..." 8

The motions to dismiss submitted in Civil Cases Numbered 2211 and 2209 were also denied in separate
orders promulgated by Judge Marcial Fernandez. 9 His Order in Case No. 2209 dated March 15, 1989 (a)
declared that since the "action at bar is for Reivindicatoria, Damages and Attorney's fees ... (d)efinitely
this Court has the exclusive jurisdiction," (b) that the claims for actual, moral and nominal damages "are
only one aspect of the cause of action," and (c) because of absence of specification of the amounts
claimed as moral, nominal and actual damages, they should be "expunged from the records."

Ascribing grave abuse of discretion to both Judges Matas and Fernandez in the rendition of the
Orders above described, the defendants in all three (3) actions have filed with this Court a "Joint
Petition" for certiorari, prohibition and mandamus, with prayer for temporary restraining order and/or
writ of preliminary prohibitory injunction," praying essentially that said orders be annulled and
respondent judges directed to dismiss all the complaints "without prejudice to private respondent
Pineda's re-filing a similar complaint that complies with Circular No. 7." The joint petition (a) re-
asserted the proposition that because the complaints had failed to state the amounts being claimed
as actual, moral and nominal damages, the Trial Courts a quo had not acquired jurisdiction over the
three (3) actions in question-indeed, the respondent Clerk of Court should not have accepted the
complaints which initiated said suits, and (b) it was not proper merely to expunge the claims for
damages and allow "the so-called cause of action for "reivindicatoria" remain for trial" by itself. 10

The joint petition should be, as it is hereby, dismissed.

It should be dismissed for failure to comply with this Court's Circular No. 1-88 (effective January 1,
1989). The copies of the challenged Orders thereto attached 11 were not certified by the proper Clerk
of Court or his duly authorized representative. Certification was made by the petitioners' counsel, which is
not allowed.

The petition should be dismissed, too, for another equally important reason. It fails to demonstrate
any grave abuse of discretion on the part of the respondent Judges in rendering the Orders
complained of or, for that matter, the existence of any proper cause for the issuance of the writ of
mandamus. On the contrary, the orders appear to have correctly applied the law to the admitted
facts.

It is true that the complaints do not state the amounts being claimed as actual, moral and nominal
damages. It is also true, however, that the actions are not basically for the recovery of sums of
money. They are principally for recovery of possession of real property, in the nature of an accion
publiciana. Determinative of the court's jurisdiction in this type of actions is the nature thereof, not
the amount of the damages allegedly arising from or connected with the issue of title or possession,
and regardless of the value of the property. Quite obviously, an action for recovery of possession of
real property (such as an accion plenaria de possesion) or the title thereof, 12or for partition or
condemnation of, or the foreclosure of a mortgage on, said real property 13 - in other words, a real action-
may be commenced and prosecuted without an accompanying claim for actual, moral, nominal or
exemplary damages; and such an action would fall within the exclusive, original jurisdiction of the
Regional Trial Court.

Batas Pambansa Bilang 129 provides that Regional Trial Courts shall exercise exclusive original
jurisdiction inter alia over "all civil actions which involve the title to, or possession of, real property, or
any interest therein, except actions for forcible entry into and unlawful detainer of lands or buildings,
original jurisdiction over which is conferred upon Metropolitan Trial Courts, Municipal Trial Courts,
and Municipal Circuit Trial Courts." 14 The rule applies regardless of the value of the real property
involved, whether it be worth more than P20,000.00 or not, infra. The rule also applies even where the
complaint involving realty also prays for an award of damages; the amount of those damages would be
immaterial to the question of the Court's jurisdiction. The rule is unlike that in other cases e.g., actions
simply for recovery of money or of personal property, 15 or actions in admiralty and maritime
jurisdiction 16 in which the amount claimed, 17 or the value of the personal property, is determinative of
jurisdiction; i.e., the value of the personal property or the amount claimed should exceed twenty thousand
pesos (P20,000.00) in order to be cognizable by the Regional Trial Court.

Circular No. 7 of this Court, dated March 24, 1988, cannot thus be invoked, as the petitioner does,
as authority for the dismissal of the actions at bar. That circular, avowedly inspired by the doctrine
laid down in Manchester Development Corporation v. Court of appeals, 149 SCRA 562 (May 7,
1987), has but limited application to said actions, as shall presently be discussed. Moreover, the
rules therein laid down have since been clarified and amplified by the Court's subsequent decision
in Sun Insurance Office, Ltd. (SIOL) v. Asuncion, et al., G.R. Nos. 79937-38, February 13, 1989.

Circular No. 7 was aimed at the practice of certain parties who omit from the prayer of their
complaints "any specification of the amount of damages," the omission being "clearly intended for no
other purposes than to evade the payment of the correct filing fees if not to mislead the docket clerk,
in the assessment of the filing fee." The following rules were therefore set down:
1. All 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, and said damages shall
be considered in the assessment of the filing fees in any case.

2. Any pleading that fails to comply with this requirement shall not be accepted nor admitted, or shall
otherwise be expunged from the record.

3. The Court acquires jurisdiction over any case only upon the payment of the prescribed docket fee.
An amendment of the complaint or similar pleading will not thereby vest jurisdiction in the Court,
much less the payment of the docket fee based on the amount sought in the amended pleading.

The clarificatory and additional rules laid down in Sun Insurance Office, Ltd. v. Asuncion, supra, read
as follows:

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

2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which
shall not be considered filed until and unless the filing fee prescribed therefor is paid. The court may
also allow payment of said fee within a reasonable time but also in no case beyond its applicable
prescriptive or reglementary period.

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

As will be noted, the requirement in Circular No. 7 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 similar pleading will not thereby vest jurisdiction in the
Court, much less the payment of the docket fee based on the amount sought in the amended
pleading," the trial court now being authorized to allow payment of the fee within a reasonable time
but in no case beyond the applicable prescriptive or reglementary period. Moreover, a new rule has
been added, governing awards of claims not specified in the pleading - i.e., damages arising after
the filing of the complaint or similar pleading-as to which the additional filing fee therefor shall
constitute a lien on the judgment.

Now, under the Rules of Court, docket or filing fees are assessed on the basis of the "sum claimed,"
on the one hand, or the "value of the property in litigation or the value of the estate," on the
other. 18 There are, in other words, as already above intimated, actions or proceedings involving real
property, in which the value of the property is immaterial to the court's jurisdiction, account thereof being
taken merely for assessment of the legal fees; and there are actions or proceedings, involving personal
property or the recovery of money and/or damages, in which the value of the property or the amount of
the demand is decisive of the trial court's competence (aside from being the basis for fixing the
corresponding docket fees). 19
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 interests and costs. In this case, the complaint
or similar pleading should, according to Circular No. 7 of this Court, "specify the amount of damages
being prayed for not only in the body of the pleading but also in the prayer, and said damages shall be
considered in the assessment of the filing fees in any case."

Two situations may arise. One is where the complaint or similar pleading sets out a claim purely for
money or damages and there is no precise 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
the amounts are unspecified may be expunged, although as aforestated the Court may, on motion,
permit amendment of the complaint and payment of the fees provided the claim has not in the
meantime become time-barred. The other is where the pleading does specify the amount of every
claim, but the fees paid are insufficient; and here again, the rule now is that the court may allow a
reasonable time for the payment of the prescribed fees, or the balance thereof, and upon such
payment, the defect is cured and the court may properly take cognizance of the action, unless in the
meantime prescription has set in and consequently barred the right of action.

Where the action involves real property and a related claim for damages as well, the legal fees shall
be assessed on the basis of both (a) the value of the property and (b) the total amount of related
damages sought. The Court acquires jurisdiction over the action if the filing of the initiatory pleading
is accompanied by the payment of the requisite fees, or, if the fees are not paid at the time of the
filing of the pleading, as of the time of full payment of the fees within such reasonable time as the
court may grant, unless, of course, prescription has set in the meantime. But where-as in the case at
bar-the fees prescribed for an action involving real property have been paid, but the amounts of
certain of the related damages (actual, moral and nominal) being demanded are unspecified, the
action may not be dismissed. The Court undeniably has jurisdiction over the action involving the real
property, acquiring it upon the filing of the complaint or similar pleading and payment of the
prescribed fee. And it is not divested of that authority by the circumstance that it may not have
acquired jurisdiction over the accompanying claims for damages because of lack of specification
thereof. What should be done is simply to expunge those claims for damages as to which no
amounts are stated, which is what the respondent Courts did, or allow, on motion, a reasonable time
for the amendment of the complaints so as to allege the precise amount of each item of damages
and accept payment of the requisite fees therefor within the relevant prescriptive period.

WHEREFORE, the petition is DISMISSED, without pronouncement as to costs.

DO-ALL METALS INDUSTRIES, G.R. No. 176339

INC., SPS. DOMINGO LIM and
LELY KUNG LIM,
Petitioners, Present:
CARPIO, J., Chairperson,
- versus - NACHURA,
PERALTA,
BERSAMIN,* and
ABAD, JJ.
SECURITY BANK CORP.,
TITOLAIDO E. PAYONGAYONG,
EVYLENE C. SISON, PHIL.
INDUSTRIAL SECURITY Promulgated:
AGENCY CORP. and GIL SILOS,
Respondents. January 10, 2011

x --------------------------------------------------------------------------------------- x

DECISION
ABAD, J.:

This case is about the propriety of awarding damages based on claims

embodied in the plaintiffs supplemental complaint filed without prior payment of
the corresponding filing fees.

The Facts and the Case

From 1996 to 1997, Dragon Lady Industries, Inc., owned by petitioner

spouses Domingo Lim and Lely Kung Lim (the Lims) took out loans from
respondent Security Bank Corporation (the Bank) that
totaled P92,454,776.45. Unable to pay the loans on time, the Lims assigned some
of their real properties to the Bank to secure the same, including a building and the
lot on which it stands (the property), located at M. de Leon St., Santolan, Pasig
City.[1]

In 1998 the Bank offered to lease the property to the Lims through petitioner
Do-All Metals Industries, Inc. (DMI) primarily for business although the Lims
were to use part of the property as their residence. DMI and the Bank executed a
two-year lease contract from October 1, 1998 to September 30, 2000 but the Bank
retained the right to pre-terminate the lease. The contract also provided that, should
the Bank decide to sell the property, DMI shall have the right of first refusal.

On December 3, 1999, before the lease was up, the Bank gave notice to DMI
that it was pre-terminating the lease on December 31, 1999. Wanting to exercise its
right of first refusal, DMI tried to negotiate with the Bank the terms of its
purchase. DMI offered to pay the Bank P8 million for the property but the latter
rejected the offer, suggesting P15 million instead. DMI made a second offer of P10
million but the Bank declined the same.

While the negotiations were on going, the Lims claimed that they continued
to use the property in their business. But the Bank posted at the place private
security guards from Philippine Industrial Security Agency (PISA). The Lims also
claimed that on several occasions in 2000, the guards, on instructions of the Bank
representatives Titolaido Payongayong and Evylene Sison, padlocked the entrances
to the place and barred the Lims as well as DMIs employees from entering the
property. One of the guards even pointed his gun at one employee and shots were
fired. Because of this, DMI was unable to close several projects and contracts with
prospective clients. Further, the Lims alleged that they were unable to retrieve
assorted furniture, equipment, and personal items left at the property.

The Lims eventually filed a complaint with the Regional Trial Court (RTC)
of Pasig City for damages with prayer for the issuance of a temporary restraining
order (TRO) or preliminary injunction against the Bank and its co-defendants
Payongayong, Sison, PISA, and Gil Silos.[2] Answering the complaint, the Bank
pointed out that the lease contract allowed it to sell the property at any time
provided only that it gave DMI the right of first refusal. DMI had seven days from
notice to exercise its option. On September 10, 1999 the Bank gave notice to DMI
that it intended to sell the property to a third party. DMI asked for an extension of
its option to buy and the Bank granted it. But the parties could not agree on a
purchase price. The Bank required DMI to vacate and turnover the property but it
failed to do so. As a result, the Banks buyer backed-out of the sale. Despite what
happened, the Bank and DMI continued negotiations for the purchase of the leased
premises but they came to no agreement.

The Bank denied, on the other hand, that its guards harassed DMI and the
Lims. To protect its property, the Bank began posting guards at the building even
before it leased the same to DMI. Indeed, this arrangement benefited both
parties. The Bank alleged that in October of 2000, when the parties could not come
to an agreement regarding the purchase of the property, DMI vacated the same and
peacefully turned over possession to the Bank.
 The Bank offered no objection to the issuance of a TRO since it claimed that
it never prevented DMI or its employees from entering or leaving the building. For
this reason, the RTC directed the Bank to allow DMI and the Lims to enter the
building and get the things they left there. The latter claimed, however, that on
entering the building, they were unable to find the movable properties they left
there. In a supplemental complaint, DMI and the Lims alleged that the Bank
surreptitiously took such properties, resulting in additional actual damages to them
of over P27 million.

The RTC set the pre-trial in the case for December 4, 2001. On that date,
however, counsel for the Bank moved to reset the proceeding. The court denied the
motion and allowed DMI and the Lims to present their evidence ex parte. The
court eventually reconsidered its order but only after the plaintiffs had already
presented their evidence and were about to rest their case. The RTC declined to
recall the plaintiffs witnesses for cross- examination but allowed the Bank to
present its evidence.[3] This prompted the Bank to seek relief from the Court of
Appeals (CA) and eventually from this Court but to no avail.[4]

During its turn at the trial, the Bank got to present only defendant
Payongayong, a bank officer. For repeatedly canceling the hearings and incurring
delays, the RTC declared the Bank to have forfeited its right to present additional
evidence and deemed the case submitted for decision.

On September 30, 2004 the RTC rendered a decision in favor of DMI and
the Lims. It ordered the Bank to pay the plaintiffs P27,974,564.00 as actual
damages, P500,000.00 as moral damages, P500,000 as exemplary damages,
and P100,000.00 as attorneys fees. But the court absolved defendants
Payongayong, Sison, Silos and PISA of any liability.

The Bank moved for reconsideration of the decision, questioning among

other things the RTCs authority to grant damages considering plaintiffs failure to
pay the filing fees on their supplemental complaint. The RTC denied the
motion. On appeal to the CA, the latter found for the Bank, reversed the RTC
decision, and dismissed the complaint as well as the counterclaims.[5] DMI and the
Lims filed a motion for reconsideration but the CA denied the same, hence this
petition.
 The Issues Presented

The issues presented in this case are:

1. Whether or not the RTC acquired jurisdiction to hear and adjudicate plaintiffs
supplemental complaint against the Bank considering their failure to pay the filing
fees on the amounts of damages they claim in it;

2. Whether or not the Bank is liable for the intimidation and harassment
committed against DMI and its representatives; and

3. Whether or not the Bank is liable to DMI and the Lims for the
machineries, equipment, and other properties they allegedly lost after they were
barred from the property.

The Courts Rulings

One. On the issue of jurisdiction, respondent Bank argues that plaintiffs

failure to pay the filing fees on their supplemental complaint is fatal to their action.

But what the plaintiffs failed to pay was merely the filing fees for their
Supplemental Complaint. The RTC acquired jurisdiction over plaintiffs action
from the moment they filed their original complaint accompanied by the payment
of the filing fees due on the same. The plaintiffs non-payment of the additional
filing fees due on their additional claims did not divest the RTC of the jurisdiction
it already had over the case.[6]

Two. As to the claim that Banks representatives and retained guards

harassed and intimidated DMIs employees and the Lims, the RTC found ample
proof of such wrongdoings and accordingly awarded damages to the plaintiffs. But
the CA disagreed, discounting the testimony of the police officers regarding their
investigations of the incidents since such officers were not present when they
happened. The CA may be correct in a way but the plaintiffs presented
eyewitnesses who testified out of personal knowledge. The police officers testified
merely to point out that there had been trouble at the place and their investigations
yielded their findings.
 The Bank belittles the testimonies of the petitioners witnesses for having
been presented ex parte before the clerk of court. But the ex parte hearing, having
been properly authorized, cannot be assailed as less credible. It was the Banks fault
that it was unable to attend the hearing. It cannot profit from its lack of diligence.

Domingo Lim and some employees of DMI testified regarding the Bank
guards unmitigated use of their superior strength and firepower. Their testimonies
were never refuted. Police Inspector Priscillo dela Paz testified that he responded
to several complaints regarding shooting incidents at the leased premises and on
one occasion, he found Domingo Lim was locked in the building. When he asked
why Lim had been locked in, a Bank representative told him that they had
instructions to prevent anyone from taking any property out of the premises. It was
only after Dela Paz talked to the Bank representative that they let Lim out.[7]

Payongayong, the Banks sole witness, denied charges of harassment against

the Banks representatives and the guards. But his denial came merely from reports
relayed to him. They were not based on personal knowledge.

While the lease may have already lapsed, the Bank had no business
harassing and intimidating the Lims and their employees. The RTC was therefore
correct in adjudging moral damages, exemplary damages, and attorneys fees
against the Bank for the acts of their representatives and building guards.

Three. As to the damages that plaintiffs claim under their supplemental

complaint, their stand is that the RTC committed no error in admitting the
complaint even if they had not paid the filing fees due on it since such fees
constituted a lien anyway on the judgment award. But this after-judgment lien,
which implies that payment depends on a successful execution of the judgment,
applies to cases where the filing fees were incorrectly assessed or paid or where the
court has discretion to fix the amount of the award.[8]None of these circumstances
obtain in this case.

Here, the supplemental complaint specified from the beginning the actual
damages that the plaintiffs sought against the Bank. Still plaintiffs paid no filing
fees on the same.And, while petitioners claim that they were willing to pay the
additional fees, they gave no reason for their omission nor offered to pay the
same. They merely said that they did not yet pay the fees because the RTC had not
assessed them for it. But a supplemental complaint is like any complaint and the
rule is that the filing fees due on a complaint need to be paid upon its filing. [9] The
rules do not require the court to make special assessments in cases of supplemental
complaints.

To aggravate plaintiffs omission, although the Bank brought up the question

of their failure to pay additional filing fees in its motion for reconsideration,
plaintiffs made no effort to make at least a late payment before the case could be
submitted for decision, assuming of course that the prescription of their action had
not then set it in. Clearly, plaintiffs have no excuse for their continuous failure to
pay the fees they owed the court. Consequently, the trial court should have treated
their Supplemental Complaint as not filed.

Plaintiffs of course point out that the Bank itself raised the issue of non-
payment of additional filing fees only after the RTC had rendered its decision in
the case. The implication is that the Bank should be deemed to have waived its
objection to such omission. But it is not for a party to the case or even for the trial
court to waive the payment of the additional filing fees due on the supplemental
complaint. Only the Supreme Court can grant exemptions to the payment of the
fees due the courts and these exemptions are embodied in its rules.

Besides, as correctly pointed out by the CA, plaintiffs had the burden of
proving that the movable properties in question had remained in the premises and
that the bank was responsible for their loss. The only evidence offered to prove the
loss was Domingo Lims testimony and some undated and unsigned
inventories. These were self-serving and uncorroborated.

WHEREFORE, the Court PARTIALLY GRANTS the petition

and REINSTATES with modification the decision of
the Regional Trial Court of Pasig City in Civil Case 68184. The
Court DIRECTS respondent Security Bank Corporation to pay petitioners DMI
and spouses Domingo and Lely Kung Lim damages in the following
amounts: P500,000.00 as moral damages, P500,000.00 as exemplary damages,
and P100,000.00 for attorneys fees. The Court DELETES the award of actual
damages of P27,974,564.00.

SO ORDERED.

Spouses GREGORIO GO and JUANA TAN GO, petitioners, vs.

JOHNSON Y. TONG; COURT OF APPEALS; and Honorable
Judge JUAN NABONG of the Regional Trial Court, Branch 32,
Manila, respondents.

DECISION
PANGANIBAN, J.:

As a rule, docket fees should be paid upon the filing of the initiatory
pleadings. However, for cogent reasons to be determined by the trial judge,
staggered payment thereof within a reasonable period may be
allowed. Unless grave abuse of discretion is demonstrated, the discretion of
the trial judge in granting staggered payment shall not be disturbed.

The Case

Petitioner assails the September 18, 2001 Decision and the January 21,
[1]

2002 Resolution of the Court of Appeals (CA) in CA-GR SP No. 58942.

[2]

The decretal portion of the Decision reads as follows:

WHEREFORE, the petition is hereby DENIED. [3]

The assailed Resolution denied petitioners Motion for Reconsideration.

The Facts

The facts of the case are summarized by the CA in this wise:

Petitioner Juana Tan Go (petitioner Juana) purchased a cashiers check

dated September 13, 1996 from the Far East Bank and Trust Company
(FEBTC) Lavezares, Binondo Branch in the amount of P500,000.00, payable to
Johnson Y. Tong (private respondent).
On petitioner Juanas instruction, the cashiers check bore the words Final
Payment/Quitclaim after the name of payee private respondent allegedly to insure that
private respondent would honor his commitment that he would no longer ask for
further payments for his interest in the informal business partnership which he and she
had earlier dissolved.

After the check was delivered to private respondent, he deposited it with the words
Final Payment/Quitclaim already erased, hence, it was not honored.

Private respondents counsel subsequently wrote the manager of

FEBTC Lavezares Branch informing that the words Final Payment/Quitclaim on the
check had been inadvertently erased without being initialed by your bank or the
purchaser thereof and thus requesting that the check be replaced with another payable
to Johnson Tong-Final Settlement/Quitclaim with the same amount, the bank
charges therefor to be paid by his client-private respondent.

FEBTC did not grant the request of private respondents counsel, hence, private
respondent filed a complaint against FEBTC and petitioner Juana and her husband
Gregorio Go at the Manila RTC, for sum of money, damages, and attorneys fees,
subject of the case at bar.

Answering the Complaint, therein defendants-herein petitioners Juana and her

husband and FEBTC alleged that the erasure of the words Final Payment/Quitclaim
was intentional on private respondents part, reflective of his intention to collect more
from petitioner Juana, hence, the non-issuance of a replacement check was justified,
unless private respondent was sincere in abiding with the terms agreed upon.

During the pendency of the case, petitioners son, George Tan Go, filed a criminal
complaint against private respondent for falsification of the check. The criminal
complaint was dismissed, however, by the Manila Prosecutors Office.

On July 17, 1998, private respondent requested public respondent for leave to file
Supplemental Complaint. Acting on the request, public respondent suggested to him
to file a Motion to admit within fifteen (15) days, copy furnished petitioners who were
given the same number of days from receipt to file their Comment.

On August 25, 1998, private respondent filed a Motion for Leave to File a
Supplemental Complaint and to Admit the Attached Supplemental Complaint which
Supplemental Complaint alleged that petitioners used their son to file the criminal
complaint for falsification against him which caused damages, hence, the prayer
for an increase in the amount of moral and exemplary damages sought to be recovered
from P2.5 million to P55 million and praying for the award of actual damages
of P58,075.00. The motion was set for hearing on September 4, 1998. Copy of the
motion to petitioners was sent by registered mail.

Public respondent, by Order of September 4, 1998, noting that petitioners had been
furnished copy of the Motion for Leave x x x but that there had been no comment
thereon, granted the motion and admitted the Supplemental Complaint.

Petitioners and FEBTCs Comment-Opposition were subsequently filed.

Petitioners and FEBTC filed their respective Motions for Reconsideration of

the September 4, 1998 Order.

On November 18, 1998, petitioners filed a Manifestation of Deposit and deposited to

the RTC Clerk of Court the amount of P500,000.00 representing the amount of the
check, subject to the condition that it shall remain deposited until the disposition
of the case.

Petitioners and FEBTCs separate Motions for Reconsideration of the September 4,

1998 Order were later denied by Order of December 4, 1998, hence, petitioners filed
their Answer dated December 18, 1998 to the Supplemental Complaint with
Counterclaim, alleging as Special Affirmative defenses the following:

5. As already intimated, the defendants are not a party to the aforementioned criminal
complaint, but only their son George who took it upon himself to file it in his own
right, without their involvement in any way, hence, said incident cannot be pleaded as
supplement to the original complaint, much less as a new cause of action
without impleading George Go as party defendant.

6. Plaintiff cannot prosecute his Supplemental Complaint, and the same should be
dismissed, unless the corresponding docket fee and legal fees for the monetary claims
in the amount of P55,057,075.00 are paid for. x x x.

On February 5, 1999, public respondent, acting on the verbal

manifestation/motion of private respondents counsel, allowed the release of
petitioners P500,000.00 deposit to private respondent.

By order of November 17, 1999, public respondent, in the interest of justice and
because of the huge amount of outlay involved (the Court considers the business
climate and the peso crunch prevailing), allowed private respondent to first
deposit P25,000.00 on or before December 15, 1999 and P20,000.00 every month
thereafter until the full amount of docket fees is paid, and only then shall the deposits
be considered as payment of docket fees.
Petitioners filed a Motion for Reconsideration of the November 17, 1999 Order which
was, by Order of April 11, 2000, denied.

Thus arose the present petition filed on May 30, 2000 which ascribes to public
respondent the commission of grave abuse of discretion in issuing the Orders of
February 5, 1999 (allowing the release of the P500,000.00 deposit to private
respondent), November 17, 1999 (allowing the payment, on staggered basis, of the
docket fees for the Supplemental Complaint) and April 11, 2000 (denying the Motion
for Reconsideration of the November 17, 1999 Order). [4]

Ruling of the Court of Appeals

In their Petition for Certiorari before the CA, petitioners alleged that
respondent judge committed grave abuse of discretion when he issued the
Orders dated February 5, 1999, November 17, 1999 and April 11, 2000.
[5] [6] [7]

According to the CA, petitioners failed to assail, within the prescribed

period, respondent judges February 5, 1999 Order allowing the release of the
money deposited by them. It was only in their May 30, 2000 Petition before
the CA that they questioned the Order. Moreover, the appellate court held
that, anyway, private respondent was entitled to the deposit, which
represented the amount indicated on the check that belonged to him.
As to the November 17, 1999 Order allowing private respondent to pay the
docket fee on a staggered basis and the April 11, 2000 Order denying the
Motion for Reconsideration thereof, the CA held that Sun Insurance Office
Ltd. x x x permits the payment of the prescribed docket fee within a
reasonable period but in no case beyond the applicable prescriptive or regular
period. In that case, the court a quo opined that the docket fee payment
[8]

scheme imposed by the respondent judge cannot be said to have been issued
with grave abuse of discretion. [9]

Hence, this Petition. [10]

The Issues

In their Memorandum, petitioners submit the following issues for our

[11]

consideration:

Whether or not the Honorable Court of Appeals committed grave and serious errors
which [are] tantamount to grave abuse of discretion when it upheld the validity of the
Orders dated Feb[ruary] 5, 1999, November 17, [1999] and April 11, 2000 issued by
public respondent Hon. Judge Juan Nabong of RTC Branch 32 of Manila, in Civil
Case No. 97-81935.

Whether or not public respondent Judge Juan Nabong committed grave abuse of
discretion in not suspending the proceedings pending appeal with the Honorable Court
of Appeals, and in x x x refusing to inhibit himself.
[12]

The Courts Ruling

The Petition has no merit.

Preliminary Issue:
Mode of Appeal

Private respondent argues that the instant Petition should have been
brought under Rule 45 of the Revised Rules of Court and not under Rule 65.
On the other hand, petitioners maintain that their suit questions interlocutory
orders issued by the RTC and thus falls within the ambit of Rule 65, under
which questions of law and facts may be raised.
We clarify. A petition for certiorari under Rule 65 of the Revised Rules of
Court may be filed under the following condition:

When any tribunal, board or officer exercising judicial or quasi-judicial functions has
acted without or in excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain,
speedy, and adequate remedy in the ordinary course of law x x x. [13]

On the other hand, Rule 45 prevails under this circumstance:

A party desiring to appeal by certiorari from a judgment or final order or resolution of

the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts
whenever authorized by law, may file with the Supreme Court a verified petition for
review on certiorari. x x x.
[14]

Rule 45 of the Rules of Court specifically states that in all cases, the CAs
decisions, final orders or resolutions -- regardless of the nature of the action or
proceedings involved -- may be appealed to this Court through a petition for
review, which is just a continuation of the appellate process involving the
original case. On the other hand, a special civil action under Rule 65 is an
[15]

independent suit based on the specific grounds provided therein. As a general

rule, certiorari cannot be availed of as a substitute for the lost remedy of an
ordinary appeal, including that under Rule 45. [16]

Very recently, in Fortune Guarantee and Insurance Corporation v.

CA, this Court had the occasion to discuss this matter. In that case, the
[17]

petitioner alleged grave abuse of discretion on the part of the respondent trial
court judge when the latter issued the assailed Order granting a Motion for
Execution Pending Appeal. Said the Court in that case:

[I]t must be pointed out that petitioner adopted the wrong mode of appeal in bringing
this case before us. The proper remedy of a party aggrieved by a decision of the Court
of Appeals is a petition for review under Rule 45 which is not similar to a petition for
certiorari under Rule 65 of the Rules of Court. x x x. [18]

In the present case, petitioners are appealing a final decision of the CA by

resorting to Rule 65, when their remedy should be based on Rule 45. When [19]

an error of judgment of the CA is brought up to this Court for review, the

action is properly designated as a petition for review and not a special civil
action. Thus, while the instant Petition is one for certiorari under Rule 65 of
[20]

the Rules of Court, the assigned errors are more properly addressed in a
petition for review under Rule 45.
Accordingly, when parties adopt an improper remedy, as in this case, their
petitions may be dismissed outright. However, in the interest of substantial
[21]

justice, we deem it wise to overlook procedural technicalities in order to rule

speedily on this case and demonstrate that even without the procedural
[22]

infirmity, the Petition should be rejected due to its lack of merits.

First Issue:
Release of the Money Deposited

Petitioners argue that respondent judge committed grave abuse of

discretion when he issued the February 5, 1999 Order allowing the release of
their P500,000 bank deposit. According to them, he demonstrated his capacity
for abuse of judicial authority as the release of the money was made in direct
contravention of [their] condition thereto which was that the money shall
remain deposited until the disposition of this case. [23]

We disagree. As correctly found by the CA, there was a prior

understanding between the parties that petitioners would deposit P500,000,
which private respondent could withdraw if he so desired. Because [24]

petitioners claim that they deposited the money as a sign of good faith, we
see no reason why they should not abide by their earlier agreement with
private respondent. In fact, in their Manifestation of Deposit, they even
[25]

referred to the earlier hearing during which the deposit had been agreed
upon. This Manifestation shows that the deposit was indeed made pursuant to
their earlier agreement.
The CA was likewise correct in finding that petitioners had failed to assail,
within the prescribed period, the Order allowing the release of the
money. The Manifestation of Deposit was received and approved by the
[26]

RTC on November 18, 1998. On February 5, 1999, private respondent,

through his counsel, made his oral manifestation to withdraw the amount
deposited. It was only on May 30, 2000, upon the filing of their Petition for
[27]

Certiorari with the CA, when petitioners questioned the Order allowing the
withdrawal of the deposit.
If petitioners honestly believed that respondent judge had acted with grave
abuse of discretion when he issued the Order, why did they allow more than
one year to lapse before assailing it? In fact, they had not even filed a motion
for reconsideration. Elementary is the rule that before certiorari may be
availed of, a petitioner must have filed with the lower court a motion for
reconsideration of the act or order complained of. This requirement enables
[28]

the lower court to pass upon and correct its mistakes in the first instance,
without the intervention of the higher tribunal. While there are exceptions to
[29]

this rule, petitioners have not convinced this Court that they are entitled
[30]

thereto.
Petitioners claim that they learned of the existence of the Order only after
more than one year had passed, and of the withdrawal of the deposit only
after their new counsel had appeared.
We are not persuaded. It is undeniable that petitioners actively prosecuted
their case during the period when they were allegedly still ignorant of the
existence of the Order dated February 5, 1999. Whether such ignorance was
due to negligence or mere oversight will not release them from its effects.
More important, the CA was correct in holding that, ultimately, private
respondent was entitled to the deposit, because it represented the amount
indicated on the check that undeniably belonged to him. In all the pleadings
they filed, petitioners never denied that the amount of P500,000 properly
belonged to him. He correctly argued as follows:
There is no question, and it is admitted by petitioners in their Manifestation of
Deposit, dated November 16, 1998 x x x that the amount of P500,000 deposited by
them with the Regional Trial Court of Manila, represented the amount covered
by Far East Bank & Trust Company Cashiers Check No. 041A-0000032561.

It is likewise admitted by the parties that the said FEBTC Cashiers Check No. 041A-
0000032561 was paid (payable) to and belong to private respondent. [31]

Second Issue:
Payment of Docket Fee

Petitioners argue that respondent judge and the CA erred in allowing

private respondent to pay the docket fee on a staggered basis. According to
them, the Order dated November 17, 1999 was unprecedented in the annals
of the Philippine judicial system. They describe the allegedly anomalous
[32]

situation in this wise:

Thus, we have perhaps x x x in the case at bar x x x the only known case in Philippine
judicial history where a supplemental complaint was admitted without the payment of
the FULL docket fees. And not only that, said fees were made payable over a mind-
boggling, over-expanded period of nearly two (2) years! [33]

Petitioners make contradictory assertions when they aver that the

circumstances in the present case do not meet the parameters set by the
Court in Sun Insurance Office Ltd. (SIOL) v. Asuncion, then make a [34]

complete volte face by arguing that the former is inapplicable, because there
is no under-assessment of the docket fee in the instant case.
The Court clarified the rule in Sun Insurance thus:

x x x. It is not simply the filing of the complaint or appropriate initiatory pleading, but
the payment of the prescribed docket fee, that vests a trial court with jurisdiction over
the subject-matter or nature of the action. Where the filing of the initiatory pleading is
not accompanied by payment of the docket fee, the court may allow payment of the fee
within a reasonable time but in no case beyond the applicable prescriptive
or reglementary period. (Italics supplied)
[35]

Plainly, while the payment of the prescribed docket fee is a jurisdictional

requirement, even its nonpayment at the time of filing does not automatically
cause the dismissal of the case, as long as the fee is paid within the
applicable prescriptive or reglementary period; more so when the party
[36]
involved demonstrates a willingness to abide by the rules prescribing such
payment. [37]

While the cause of action of private respondent was supposed to prescribe

in four (4) years, he was allowed to pay; and he in fact paid the docket fee in
[38]

a years time. We do not see how this period can be deemed

[39]

unreasonable. Moreover, on his part there is no showing of any pattern or

intent to defraud the government of the required docket fee. We sustain the
CAs findings absolving respondent judge of any capricious or whimsical
exercise of judgment equivalent to lack of jurisdiction. Ruled the appellate
court:

The Sun Insurance Office Ltd. case permits the payment of the prescribed docket fee
within a reasonable period but in no case beyond the applicable prescriptive or regular
period. Since the prescriptive period to file the complaint subject of the present
petition which is an action upon an injury to the right of private respondent, is four
years and the scheme of payment of the docket fees in the amount of P252,503.50
given by public respondent called for an implementation thereof within one year, as in
fact private respondent manifested in his Rejoinder that he had fully paid the said
amount on December 12, 2000, then the assailed Orders of November 17, 1999 and
April 11, 2000 cannot be said to have been issued with grave abuse of
discretion. (Citations omitted)
[40]

To be sure, for certiorari to lie against respondent judge, the abuse of

discretion committed must be grave, as when power is exercised arbitrarily or
despotically by reason of passion or personal hostility; and such exercise
must be so patent and gross as to amount to an evasion of positive duty, or to
a virtual refusal to perform it or to act in contemplation of law. These [41]

conditions are absolutely wanting in the present case.

Final Issue:
Inhibition and Suspension of Proceedings

Finally, petitioners ascribe grave abuse of discretion to respondent judge

for not inhibiting himself from this case and for not suspending the
proceedings in the RTC pending the resolution of the Petition
for Certiorari before the appellate court.
We need not belabor these questions, because they were never raised
before the CA. It is well-settled that parties are not permitted to raise before
this Court issues that were not taken up below. [42]
 WHEREFORE, the Petition is hereby DENIED, and the assailed Decision
and Resolution AFFIRMED. Costs against petitioners.
SO ORDERED.
PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES, HILDA B.
NARCISO, SR. MARIANI DIMARANAN, SFIC, and JOEL C.
LAMANGAN in their behalf and on behalf of the Class Plaintiffs
in Class Action No. MDL 840, United States District Court of
Hawaii, petitioners, vs. HON. SANTIAGO JAVIER RANADA, in his
capacity as Presiding Judge of Branch 137, Regional Trial Court,
Makati City, and the ESTATE OF FERDINAND E. MARCOS,
through its court appointed legal representatives in Class Action
MDL 840, United States District Court of Hawaii, namely: Imelda
R. Marcos and Ferdinand Marcos, Jr., respondents.

DECISION
TINGA, J.:

Our martial law experience bore strange unwanted fruits, and we have yet
to finish weeding out its bitter crop. While the restoration of freedom and the
fundamental structures and processes of democracy have been much lauded,
according to a significant number, the changes, however, have not sufficiently
healed the colossal damage wrought under the oppressive conditions of the
martial law period. The cries of justice for the tortured, the murdered, and
the desaparecidos arouse outrage and sympathy in the hearts of the fair-
minded, yet the dispensation of the appropriate relief due them cannot be
extended through the same caprice or whim that characterized the ill-wind of
martial rule. The damage done was not merely personal but institutional, and
the proper rebuke to the iniquitous past has to involve the award of
reparations due within the confines of the restored rule of law.
The petitioners in this case are prominent victims of human rights
violations who, deprived of the opportunity to directly confront the man who
[1]

once held absolute rule over this country, have chosen to do battle instead
with the earthly representative, his estate. The clash has been for now
interrupted by a trial court ruling, seemingly comported to legal logic, that
required the petitioners to pay a whopping filing fee of over Four Hundred
Seventy-Two Million Pesos (P472,000,000.00) in order that they be able to
enforce a judgment awarded them by a foreign court. There is an
understandable temptation to cast the struggle within the simplistic confines of
a morality tale, and to employ short-cuts to arrive at what might seem the
desirable solution. But easy, reflexive resort to the equity principle all too often
leads to a result that may be morally correct, but legally wrong.
Nonetheless, the application of the legal principles involved in this case
will comfort those who maintain that our substantive and procedural laws, for
all their perceived ambiguity and susceptibility to myriad interpretations, are
inherently fair and just. The relief sought by the petitioners is expressly
mandated by our laws and conforms to established legal principles. The
granting of this petition for certiorari is warranted in order to correct the legally
infirm and unabashedly unjust ruling of the respondent judge.
The essential facts bear little elaboration. On 9 May 1991, a complaint was
filed with the United States District Court (US District Court), District of Hawaii,
against the Estate of former Philippine President Ferdinand E. Marcos
(Marcos Estate). The action was brought forth by ten Filipino citizens who [2]

each alleged having suffered human rights abuses such as arbitrary

detention, torture and rape in the hands of police or military forces during the
Marcos regime. The Alien Tort Act was invoked as basis for the US District
[3]

Courts jurisdiction over the complaint, as it involved a suit by aliens for tortious
violations of international law. These plaintiffs brought the action on their own
[4]

behalf and on behalf of a class of similarly situated individuals, particularly

consisting of all current civilian citizens of the Philippines, their heirs and
beneficiaries, who between 1972 and 1987 were tortured, summarily executed
or had disappeared while in the custody of military or paramilitary groups.
Plaintiffs alleged that the class consisted of approximately ten thousand
(10,000) members; hence, joinder of all these persons was impracticable.
The institution of a class action suit was warranted under Rule 23(a) and
(b)(1)(B) of the US Federal Rules of Civil Procedure, the provisions of which
were invoked by the plaintiffs. Subsequently, the US District Court certified the
case as a class action and created three (3) sub-classes of torture, summary
execution and disappearance victims. Trial ensued, and subsequently a jury
[5]

rendered a verdict and an award of compensatory and exemplary damages in

favor of the plaintiff class. Then, on 3 February 1995, the US District Court,
presided by Judge Manuel L. Real, rendered a Final Judgment (Final
Judgment) awarding the plaintiff class a total of One Billion Nine Hundred
Sixty Four Million Five Thousand Eight Hundred Fifty Nine Dollars and Ninety
Cents ($1,964,005,859.90). The Final Judgment was eventually affirmed by
the US Court of Appeals for the Ninth Circuit, in a decision rendered on 17
December 1996. [6]

On 20 May 1997, the present petitioners filed Complaint with the Regional
Trial Court, City of Makati (Makati RTC) for the enforcement of the Final
Judgment. They alleged that they are members of the plaintiff class in whose
favor the US District Court awarded damages. They argued that since the
[7]

Marcos Estate failed to file a petition for certiorari with the US Supreme Court
after the Ninth Circuit Court of Appeals had affirmed the Final Judgment, the
decision of the US District Court had become final and executory, and hence
should be recognized and enforced in the Philippines, pursuant to Section 50,
Rule 39 of the Rules of Court then in force.[8]

On 5 February 1998, the Marcos Estate filed a motion to dismiss, raising,

among others, the non-payment of the correct filing fees. It alleged that
petitioners had only paid Four Hundred Ten Pesos (P410.00) as docket and
filing fees, notwithstanding the fact that they sought to enforce a monetary
amount of damages in the amount of over Two and a Quarter Billion US
Dollars (US$2.25 Billion). The Marcos Estate cited Supreme Court Circular
No. 7, pertaining to the proper computation and payment of docket fees. In
response, the petitioners claimed that an action for the enforcement of a
foreign judgment is not capable of pecuniary estimation; hence, a filing fee of
only Four Hundred Ten Pesos (P410.00) was proper, pursuant to Section 7(c)
of Rule 141.[9]

On 9 September 1998, respondent Judge Santiago Javier Ranada of the [10]

Makati RTC issued the subject Order dismissing the complaint without
prejudice. Respondent judge opined that contrary to the petitioners
submission, the subject matter of the complaint was indeed capable of
pecuniary estimation, as it involved a judgment rendered by a foreign court
ordering the payment of definite sums of money, allowing for easy
determination of the value of the foreign judgment. On that score, Section 7(a)
of Rule 141 of the Rules of Civil Procedure would find application, and the
RTC estimated the proper amount of filing fees was approximately Four
Hundred Seventy Two Million Pesos, which obviously had not been paid.
Not surprisingly, petitioners filed a Motion for Reconsideration, which
Judge Ranada denied in an Order dated 28 July 1999. From this denial,
petitioners filed a Petition for Certiorariunder Rule 65 assailing the twin orders
of respondent judge. They prayed for the annulment of the questioned
[11]

orders, and an order directing the reinstatement of Civil Case No. 97-1052
and the conduct of appropriate proceedings thereon.
Petitioners submit that their action is incapable of pecuniary estimation as
the subject matter of the suit is the enforcement of a foreign judgment, and not
an action for the collection of a sum of money or recovery of damages. They
also point out that to require the class plaintiffs to pay Four Hundred Seventy
Two Million Pesos (P472,000,000.00) in filing fees would negate and render
inutile the liberal construction ordained by the Rules of Court, as required by
Section 6, Rule 1 of the Rules of Civil Procedure, particularly the inexpensive
disposition of every action.
Petitioners invoke Section 11, Article III of the Bill of Rights of the
Constitution, which provides that Free access to the courts and quasi-judicial
bodies and adequate legal assistance shall not be denied to any person by
reason of poverty, a mandate which is essentially defeated by the required
exorbitant filing fee. The adjudicated amount of the filing fee, as arrived at by
the RTC, was characterized as indisputably unfair, inequitable, and unjust.
The Commission on Human Rights (CHR) was permitted to intervene in
this case. It urged that the petition be granted and a judgment rendered,
[12]

ordering the enforcement and execution of the District Court judgment in

accordance with Section 48, Rule 39 of the 1997 Rules of Civil Procedure. For
the CHR, the Makati RTC erred in interpreting the action for the execution of a
foreign judgment as a new case, in violation of the principle that once a case
has been decided between the same parties in one country on the same issue
with finality, it can no longer be relitigated again in another country. The CHR
[13]

likewise invokes the principle of comity, and of vested rights.

The Courts disposition on the issue of filing fees will prove a useful
jurisprudential guidepost for courts confronted with actions enforcing foreign
judgments, particularly those lodged against an estate. There is no basis for
the issuance a limited pro hac vice ruling based on the special circumstances
of the petitioners as victims of martial law, or on the emotionally-charged
allegation of human rights abuses.
An examination of Rule 141 of the Rules of Court readily evinces that the
respondent judge ignored the clear letter of the law when he concluded that
the filing fee be computed based on the total sum claimed or the stated value
of the property in litigation.
In dismissing the complaint, the respondent judge relied on Section 7(a),
Rule 141 as basis for the computation of the filing fee of over P472 Million.
The provision states:

SEC. 7. Clerk of Regional Trial Court.-

(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, fourth-party, etc., complaint, or a complaint in intervention, and for
all clerical services in the same time, if the total sum claimed, exclusive of
interest, or the started value of the property in litigation, is:
1. Less than P 100,00.00 P 500.00
2. P 100,000.00 or more - P 800.00
but less than P 150,000.00
3. P 150,000.00 or more but - P 1,000.00
less than P 200,000.00
4. P 200,000.00 or more but
less than P 250,000.00 - P 1,500.00
5. P 250,000.00 or more but
less than P 300,00.00 - P 1,750.00
6. P 300,000.00 or more but
not more than P 400,000.00 - P 2,000.00
7. P 350,000.00 or more but not
more than P400,000.00 - P 2,250.00
8. For each P 1,000.00 in excess of
P 400,000.00 - P 10.00

...

(Emphasis supplied)

Obviously, the above-quoted provision covers, on one hand, ordinary

actions, permissive counterclaims, third-party, etc. complaints and complaints-
in-interventions, and on the other, money claims against estates which are not
based on judgment. Thus, the relevant question for purposes of the present
petition is whether the action filed with the lower court is a money claim
against an estate not based on judgment.
Petitioners complaint may have been lodged against an estate, but it is
clearly based on a judgment, the Final Judgment of the US District Court. The
provision does not make any distinction between a local judgment and a
foreign judgment, and where the law does not distinguish, we shall not
distinguish.
A reading of Section 7 in its entirety reveals several instances wherein the
filing fee is computed on the basis of the amount of the relief sought, or on the
value of the property in litigation. The filing fee for requests for extrajudicial
foreclosure of mortgage is based on the amount of indebtedness or the
mortgagees claim. In special proceedings involving properties such as for
[14]

the allowance of wills, the filing fee is again based on the value of the
property. The aforecited rules evidently have no application to petitioners
[15]

complaint.
 Petitioners rely on Section 7(b), particularly the proviso on actions where
the value of the subject matter cannot be estimated. The provision reads in
full:

SEC. 7. Clerk of Regional Trial Court.-

(b) For filing

1. Actions where the value

of the subject matter
cannot be estimated --- P 600.00

2. Special civil actions except

judicial foreclosure which
shall be governed by
paragraph (a) above --- P 600.00

3. All other actions not

involving property --- P 600.00

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

It is worth noting that the provision also provides that in real actions, the
assessed value or estimated value of the property shall be alleged by the
claimant and shall be the basis in computing the fees. Yet again, this provision
does not apply in the case at bar. A real action is one where the plaintiff seeks
the recovery of real property or an action affecting title to or recovery of
possession of real property. Neither the complaint nor the award of damages
[16]

adjudicated by the US District Court involves any real property of the Marcos
Estate.
Thus, respondent judge was in clear and serious error when he concluded
that the filing fees should be computed on the basis of the schematic table of
Section 7(a), as the action involved pertains to a claim against an estate
based on judgment. What provision, if any, then should apply in determining
the filing fees for an action to enforce a foreign judgment?
To resolve this question, a proper understanding is required on the nature
and effects of a foreign judgment in this jurisdiction.
The rules of comity, utility and convenience of nations have established a
usage among civilized states by which final judgments of foreign courts of
competent jurisdiction are reciprocally respected and rendered efficacious
under certain conditions that may vary in different countries. This principle
[17]

was prominently affirmed in the leading American case of Hilton v.

Guyot and expressly recognized in our jurisprudence beginning
[18]

with Ingenholl v. Walter E. Olsen & Co. The conditions required by the
[19]

Philippines for recognition and enforcement of a foreign judgment were

originally contained in Section 311 of the Code of Civil Procedure, which was
taken from the California Code of Civil Procedure which, in turn, was derived
from the California Act of March 11, 1872. Remarkably, the procedural rule
[20]

now outlined in Section 48, Rule 39 of the Rules of Civil Procedure has
remained unchanged down to the last word in nearly a century. Section 48
states:

SEC. 48. Effect of foreign judgments. The effect of a judgment of a tribunal of a

foreign country, having jurisdiction to pronounce the judgment is as follows:

(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the
title to the thing;

(b) In case of a judgment against a person, the judgment is presumptive evidence of a

right as between the parties and their successors in interest by a subsequent title;

In either case, the judgment or final order may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or
fact.

There is an evident distinction between a foreign judgment in an action in

rem and one in personam. For an action in rem, the foreign judgment is
deemed conclusive upon the title to the thing, while in an
action in personam, the foreign judgment is presumptive, and not conclusive,
of a right as between the parties and their successors in interest by a
subsequent title. However, in both cases, the foreign judgment is susceptible
[21]

to impeachment in our local courts on the grounds of want of jurisdiction or

notice to the party, collusion, fraud, or clear mistake of law or fact. Thus,
[22] [23] [24]

the party aggrieved by the foreign judgment is entitled to defend against the
enforcement of such decision in the local forum. It is essential that there
should be an opportunity to challenge the foreign judgment, in order for the
court in this jurisdiction to properly determine its efficacy.[25]

It is clear then that it is usually necessary for an action to be filed in order

to enforce a foreign judgment , even if such judgment has conclusive effect
[26]

as in the case of in rem actions, if only for the purpose of allowing the losing
party an opportunity to challenge the foreign judgment, and in order for the
court to properly determine its efficacy. Consequently, the party attacking a
[27]

foreign judgment has the burden of overcoming the presumption of its

validity.
[28]

The rules are silent as to what initiatory procedure must be undertaken in

order to enforce a foreign judgment in the Philippines. But there is no question
that the filing of a civil complaint is an appropriate measure for such purpose.
A civil action is one by which a party sues another for the enforcement or
protection of a right, and clearly an action to enforce a foreign judgment is in
[29]

essence a vindication of a right prescinding either from a conclusive judgment

upon title or the presumptive evidence of a right. Absent perhaps a statutory
[30]

grant of jurisdiction to a quasi-judicial body, the claim for enforcement of

judgment must be brought before the regular courts. [31]

There are distinctions, nuanced but discernible, between the cause of

action arising from the enforcement of a foreign judgment, and that arising
from the facts or allegations that occasioned the foreign judgment. They may
pertain to the same set of facts, but there is an essential difference in the
right-duty correlatives that are sought to be vindicated. For example, in a
complaint for damages against a tortfeasor, the cause of action emanates
from the violation of the right of the complainant through the act or omission of
the respondent. On the other hand, in a complaint for the enforcement of a
foreign judgment awarding damages from the same tortfeasor, for the
violation of the same right through the same manner of action, the cause of
action derives not from the tortious act but from the foreign judgment itself.
More importantly, the matters for proof are different. Using the above
example, the complainant will have to establish before the court the tortious
act or omission committed by the tortfeasor, who in turn is allowed to rebut
these factual allegations or prove extenuating circumstances. Extensive
litigation is thus conducted on the facts, and from there the right to and
amount of damages are assessed. On the other hand, in an action to enforce
a foreign judgment, the matter left for proof is the foreign judgment itself, and
not the facts from which it prescinds.
As stated in Section 48, Rule 39, the actionable issues are generally
restricted to a review of jurisdiction of the foreign court, the service of personal
notice, collusion, fraud, or mistake of fact or law. The limitations on review is
in consonance with a strong and pervasive policy in all legal systems to limit
repetitive litigation on claims and issues. Otherwise known as the policy of
[32]

preclusion, it seeks to protect party expectations resulting from previous

litigation, to safeguard against the harassment of defendants, to insure that
the task of courts not be increased by never-ending litigation of the same
disputes, and in a larger sense to promote what Lord Coke in the Ferrers
Case of 1599 stated to be the goal of all law: rest and quietness. If every [33]

judgment of a foreign court were reviewable on the merits, the plaintiff would
be forced back on his/her original cause of action, rendering immaterial the
previously concluded litigation. [34]

Petitioners appreciate this distinction, and rely upon it to support the

proposition that the subject matter of the complaintthe enforcement of a
foreign judgmentis incapable of pecuniary estimation. Admittedly the
proposition, as it applies in this case, is counter-intuitive, and thus deserves
strict scrutiny. For in all practical intents and purposes, the matter at hand is
capable of pecuniary estimation, down to the last cent. In the
assailed Order, the respondent judge pounced upon this point without
equivocation:

The Rules use the term where the value of the subject matter cannot be estimated. The
subject matter of the present case is the judgment rendered by the foreign court
ordering defendant to pay plaintiffs definite sums of money, as and for compensatory
damages. The Court finds that the value of the foreign judgment can be estimated;
indeed, it can even be easily determined. The Court is not minded to distinguish
between the enforcement of a judgment and the amount of said judgment, and
separate the two, for purposes of determining the correct filing fees. Similarly, a
plaintiff suing on promissory note for P1 million cannot be allowed to pay only P400
filing fees (sic), on the reasoning that the subject matter of his suit is not the P1
million, but the enforcement of the promissory note, and that the value of such
enforcement cannot be estimated. [35]

The jurisprudential standard in gauging whether the subject matter of an

action is capable of pecuniary estimation is well-entrenched. The Marcos
Estate cites Singsong v. Isabela Sawmill and Raymundo v. Court of Appeals,
which ruled:

[I]n determining whether an action is one the subject matter of which is not capable of
pecuniary estimation this Court has adopted the criterion of first ascertaining the
nature of the principal action or remedy sought. If it is primarily for the recovery of a
sum of money, the claim is considered capable of pecuniary estimation, and whether
jurisdiction is in the municipal courts or in the courts of first instance would depend
on the amount of the claim. However, where the basic issue is something other than
the right to recover a sum of money, where the money claim is purely incidental to, or
a consequence of, the principal relief sought, this Court has considered such actions as
cases where the subject of the litigation may not be estimated in terms of money, and
are cognizable exclusively by courts of first instance (now Regional Trial Courts).

On the other hand, petitioners cite the ponencia of Justice JBL Reyes
in Lapitan v. Scandia, from
[36]
which the rule
in Singsong and Raymundo actually derives, but which incorporates this
additional nuance omitted in the latter cases:

xxx However, where the basic issue is something other than the right to recover a sum
of money, where the money claim is purely incidental to, or a consequence of, the
principal relief sought, like in suits to have the defendant perform his part of the
contract (specific performance) and in actions for support, or for annulment of
judgment or to foreclose a mortgage, this Court has considered such actions as
cases where the subject of the litigation may not be estimated in terms of money, and
are cognizable exclusively by courts of first instance. [37]

Petitioners go on to add that among the actions the Court has recognized
as being incapable of pecuniary estimation include legality of conveyances
and money deposits, validity of a mortgage, the right to support, validity of
[38] [39] [40]

documents, rescission of contracts, specific performance, and validity or

[41] [42] [43]

annulment of judgments. It is urged that an action for enforcement of a

[44]

foreign judgment belongs to the same class.

This is an intriguing argument, but ultimately it is self-evident that while the
subject matter of the action is undoubtedly the enforcement of a foreign
judgment, the effect of a providential award would be the adjudication of a
sum of money. Perhaps in theory, such an action is primarily for the
enforcement of the foreign judgment, but there is a certain obtuseness to that
sort of argument since there is no denying that the enforcement of the foreign
judgment will necessarily result in the award of a definite sum of money.
But before we insist upon this conclusion past beyond the point of
reckoning, we must examine its possible ramifications. Petitioners raise the
point that a declaration that an action for enforcement of foreign judgment
may be capable of pecuniary estimation might lead to an instance wherein a
first level court such as the Municipal Trial Court would have jurisdiction to
enforce a foreign judgment. But under the statute defining the jurisdiction of
first level courts, B.P. 129, such courts are not vested with jurisdiction over
actions for the enforcement of foreign judgments.

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in civil cases. Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts shall exercise:
 (1) Exclusive original jurisdiction over civil actions and probate proceedings, testate
and intestate, including the grant of provisional remedies in proper cases, where the
value of the personal property, estate, or amount of the demand does not exceed One
hundred thousand pesos (P100,000.00) or, in Metro Manila where such personal
property, estate, or amount of the demand does not exceed Two hundred thousand
pesos (P200,000.00) exclusive of interest damages of whatever kind, attorney's fees,
litigation expenses, and costs, the amount of which must be specifically alleged:
Provided, That where there are several claims or causes of action between the same
or different parties, embodied in the same complaint, the amount of the demand shall
be the totality of the claims in all the causes of action, irrespective of whether the
causes of action arose out of the same or different transactions;
(2) Exclusive original jurisdiction over cases of forcible entry and unlawful
detainer: Provided, That when, in such cases, the defendant raises the question of
ownership in his pleadings and the question of possession cannot be resolved without
deciding the issue of ownership, the issue of ownership shall be resolved only to
determine the issue of possession.
(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession
of, real property, or any interest therein where the assessed value of the property or
interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil
actions in Metro Manila, where such assessed value does not exceed Fifty thousand
pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorney's fees,
litigation expenses and costs: Provided, That value of such property shall be
determined by the assessed value of the adjacent lots.[45]

Section 33 of B.P. 129 refers to instances wherein the cause of action or

subject matter pertains to an assertion of rights and interests over property or
a sum of money. But as earlier pointed out, the subject matter of an action to
enforce a foreign judgment is the foreign judgment itself, and the cause of
action arising from the adjudication of such judgment.
An examination of Section 19(6), B.P. 129 reveals that the instant
complaint for enforcement of a foreign judgment, even if capable of pecuniary
estimation, would fall under the jurisdiction of the Regional Trial Courts, thus
negating the fears of the petitioners. Indeed, an examination of the provision
indicates that it can be relied upon as jurisdictional basis with respect to
actions for enforcement of foreign judgments, provided that no other court or
office is vested jurisdiction over such complaint:

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

xxx

(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or
body exercising jurisdiction or any court, tribunal, person or body exercising judicial
or quasi-judicial functions.
 Thus, we are comfortable in asserting the obvious, that the complaint to
enforce the US District Court judgment is one capable of pecuniary
estimation. But at the same time, it is also an action based on judgment
against an estate, thus placing it beyond the ambit of Section 7(a) of Rule
141. What provision then governs the proper computation of the filing fees
over the instant complaint? For this case and other similarly situated
instances, we find that it is covered by Section 7(b)(3), involving as it does,
other actions not involving property.
Notably, the amount paid as docket fees by the petitioners on the premise
that it was an action incapable of pecuniary estimation corresponds to the
same amount required for other actions not involving property. The petitioners
thus paid the correct amount of filing fees, and it was a grave abuse of
discretion for respondent judge to have applied instead a clearly inapplicable
rule and dismissed the complaint.
There is another consideration of supreme relevance in this case, one
which should disabuse the notion that the doctrine affirmed in this decision is
grounded solely on the letter of the procedural rule. We earlier adverted to the
the internationally recognized policy of preclusion, as well as the principles of
[46]

comity, utility and convenience of nations as the basis for the evolution of the
[47]

rule calling for the recognition and enforcement of foreign judgments. The US
Supreme Court in Hilton v. Guyot relied heavily on the concept of comity, as
[48]

especially derived from the landmark treatise of Justice Story in his

Commentaries on the Conflict of Laws of 1834. Yet the notion of comity has
[49]

since been criticized as one of dim contours or suffering from a number of

[50]

fallacies. Other conceptual bases for the recognition of foreign judgments

[51]

have evolved such as the vested rights theory or the modern doctrine of
obligation. [52]

There have been attempts to codify through treaties or multilateral

agreements the standards for the recognition and enforcement of foreign
judgments, but these have not borne fruition. The members of the European
Common Market accede to the Judgments Convention, signed in 1978, which
eliminates as to participating countries all of such obstacles to recognition
such as reciprocity and rvision au fond. The most ambitious of these
[53]

attempts is the Convention on the Recognition and Enforcement of Foreign

Judgments in Civil and Commercial Matters, prepared in 1966 by the Hague
Conference of International Law. While it has not received the ratifications
[54]

needed to have it take effect, it is recognized as representing current

[55]

scholarly thought on the topic. Neither the Philippines nor the United States
[56]

are signatories to the Convention.

 Yet even if there is no unanimity as to the applicable theory behind the
recognition and enforcement of foreign judgments or a universal treaty
rendering it obligatory force, there is consensus that the viability of such
recognition and enforcement is essential. Steiner and Vagts note:

. . . The notion of unconnected bodies of national law on private international law,

each following a quite separate path, is not one conducive to the growth of a
transnational community encouraging travel and commerce among its members.
There is a contemporary resurgence of writing stressing the identity or similarity of
the values that systems of public and private international law seek to further a
community interest in common, or at least reasonable, rules on these matters in
national legal systems. And such generic principles as reciprocity play an important
role in both fields.
[57]

Salonga, whose treatise on private international law is of worldwide

renown, points out:

Whatever be the theory as to the basis for recognizing foreign judgments, there can be
little dispute that the end is to protect the reasonable expectations and demands of the
parties. Where the parties have submitted a matter for adjudication in the court of one
state, and proceedings there are not tainted with irregularity, they may fairly be
expected to submit, within the state or elsewhere, to the enforcement of the judgment
issued by the court.[58]

There is also consensus as to the requisites for recognition of a foreign

judgment and the defenses against the enforcement thereof. As earlier
discussed, the exceptions enumerated in Section 48, Rule 39 have remain
unchanged since the time they were adapted in this jurisdiction from long
standing American rules. The requisites and exceptions as delineated under
Section 48 are but a restatement of generally accepted principles of
international law. Section 98 of The Restatement, Second, Conflict of Laws,
states that a valid judgment rendered in a foreign nation after a fair trial in a
contested proceeding will be recognized in the United States, and on its face,
the term valid brings into play requirements such notions as valid jurisdiction
over the subject matter and parties. Similarly, the notion that fraud or
[59]

collusion may preclude the enforcement of a foreign judgment finds

affirmation with foreign jurisprudence and commentators, as well as the
[60]

doctrine that the foreign judgment must not constitute a clear mistake of law or
fact. And finally, it has been recognized that public policy as a defense to the
[61]

recognition of judgments serves as an umbrella for a variety of concerns in

international practice which may lead to a denial of recognition. [62]
 The viability of the public policy defense against the enforcement of a
foreign judgment has been recognized in this jurisdiction. This defense
[63]

allows for the application of local standards in reviewing the foreign judgment,
especially when such judgment creates only a presumptive right, as it does in
cases wherein the judgment is against a person. The defense is also
[64]

recognized within the international sphere, as many civil law nations adhere to
a broad public policy exception which may result in a denial of recognition
when the foreign court, in the light of the choice-of-law rules of the recognizing
court, applied the wrong law to the case. The public policy defense can
[65]

safeguard against possible abuses to the easy resort to offshore litigation if it

can be demonstrated that the original claim is noxious to our constitutional
values.
There is no obligatory rule derived from treaties or conventions that
requires the Philippines to recognize foreign judgments, or allow a procedure
for the enforcement thereof. However, generally accepted principles of
international law, by virtue of the incorporation clause of the Constitution, form
part of the laws of the land even if they do not derive from treaty
obligations. The classical formulation in international law sees those
[66]

customary rules accepted as binding result from the combination two

elements: the established, widespread, and consistent practice on the part of
States; and a psychological element known as the opinion juris sive
necessitates (opinion as to law or necessity). Implicit in the latter element is a
belief that the practice in question is rendered obligatory by the existence of a
rule of law requiring it.
[67]

While the definite conceptual parameters of the recognition and

enforcement of foreign judgments have not been authoritatively established,
the Court can assert with certainty that such an undertaking is among those
generally accepted principles of international law. As earlier demonstrated,
[68]

there is a widespread practice among states accepting in principle the need

for such recognition and enforcement, albeit subject to limitations of varying
degrees. The fact that there is no binding universal treaty governing the
practice is not indicative of a widespread rejection of the principle, but only a
disagreement as to the imposable specific rules governing the procedure for
recognition and enforcement.
Aside from the widespread practice, it is indubitable that the procedure for
recognition and enforcement is embodied in the rules of law, whether statutory
or jurisprudential, adopted in various foreign jurisdictions. In the Philippines,
this is evidenced primarily by Section 48, Rule 39 of the Rules of Court which
has existed in its current form since the early 1900s. Certainly, the Philippine
legal system has long ago accepted into its jurisprudence and procedural
rules the viability of an action for enforcement of foreign judgment, as well as
the requisites for such valid enforcement, as derived from internationally
accepted doctrines. Again, there may be distinctions as to the rules adopted
by each particular state, but they all prescind from the premise that there is a
[69]

rule of law obliging states to allow for, however generally, the recognition and
enforcement of a foreign judgment. The bare principle, to our mind, has
attained the status of opinio juris in international practice.
This is a significant proposition, as it acknowledges that the procedure and
requisites outlined in Section 48, Rule 39 derive their efficacy not merely from
the procedural rule, but by virtue of the incorporation clause of the
Constitution. Rules of procedure are promulgated by the Supreme
Court, and could very well be abrogated or revised by the high court itself.
[70]

Yet the Supreme Court is obliged, as are all State components, to obey the
laws of the land, including generally accepted principles of international law
which form part thereof, such as those ensuring the qualified recognition and
enforcement of foreign judgments. [71]

Thus, relative to the enforcement of foreign judgments in the Philippines, it

emerges that there is a general right recognized within our body of laws, and
affirmed by the Constitution, to seek recognition and enforcement of foreign
judgments, as well as a right to defend against such enforcement on the
grounds of want of jurisdiction, want of notice to the party, collusion, fraud, or
clear mistake of law or fact.
The preclusion of an action for enforcement of a foreign judgment in this
country merely due to an exhorbitant assessment of docket fees is alien to
generally accepted practices and principles in international law. Indeed, there
are grave concerns in conditioning the amount of the filing fee on the
pecuniary award or the value of the property subject of the foreign decision.
Such pecuniary award will almost certainly be in foreign denomination,
computed in accordance with the applicable laws and standards of the
forum. The vagaries of inflation, as well as the relative low-income capacity
[72]

of the Filipino, to date may very well translate into an award virtually
unenforceable in this country, despite its integral validity, if the docket fees for
the enforcement thereof were predicated on the amount of the award sought
to be enforced. The theory adopted by respondent judge and the Marcos
Estate may even lead to absurdities, such as if applied to an award involving
real property situated in places such as the United States or Scandinavia
where real property values are inexorably high. We cannot very well require
that the filing fee be computed based on the value of the foreign property as
determined by the standards of the country where it is located.
 As crafted, Rule 141 of the Rules of Civil Procedure avoids
unreasonableness, as it recognizes that the subject matter of an action for
enforcement of a foreign judgment is the foreign judgment itself, and not the
right-duty correlatives that resulted in the foreign judgment. In this particular
circumstance, given that the complaint is lodged against an estate and is
based on the US District Courts Final Judgment, this foreign judgment may,
for purposes of classification under the governing procedural rule, be deemed
as subsumed under Section 7(b)(3) of Rule 141, i.e., within the class of all
other actions not involving property. Thus, only the blanket filing fee of
minimal amount is required.
Finally, petitioners also invoke Section 11, Article III of the Constitution,
which states that [F]ree access to the courts and quasi-judicial bodies and
adequate legal assistance shall not be denied to any person by reason of
poverty. Since the provision is among the guarantees ensured by the Bill of
Rights, it certainly gives rise to a demandable right. However, now is not the
occasion to elaborate on the parameters of this constitutional right. Given our
preceding discussion, it is not necessary to utilize this provision in order to
grant the relief sought by the petitioners. It is axiomatic that the
constitutionality of an act will not be resolved by the courts if the controversy
can be settled on other grounds or unless the resolution thereof is
[73]

indispensable for the determination of the case. [74]

One more word. It bears noting that Section 48, Rule 39 acknowledges
that the Final Judgment is not conclusive yet, but presumptive evidence of a
right of the petitioners against the Marcos Estate. Moreover, the Marcos
Estate is not precluded to present evidence, if any, of want of jurisdiction,
want of notice to the party, collusion, fraud, or clear mistake of law or fact.
This ruling, decisive as it is on the question of filing fees and no other, does
not render verdict on the enforceability of the Final Judgment before the
courts under the jurisdiction of the Philippines, or for that matter any other
issue which may legitimately be presented before the trial court. Such issues
are to be litigated before the trial court, but within the confines of the matters
for proof as laid down in Section 48, Rule 39. On the other hand, the speedy
resolution of this claim by the trial court is encouraged, and contumacious
delay of the decision on the merits will not be brooked by this Court.
WHEREFORE, the petition is GRANTED. The assailed orders are
NULLIFIED and SET ASIDE, and a new order REINSTATING Civil Case No.
97-1052 is hereby issued. No costs.
SO ORDERED.
ALAN JOSEPH A. SHEKER, G.R. No. 157912

Petitioner,

Present:

YNARES-SANTIAGO, J.,

- versus - Chairperson,

AUSTRIA-MARTINEZ,

CHICO-NAZARIO,

NACHURA, and

ESTATE OF ALICE O. SHEKER, REYES, JJ.

VICTORIA S. MEDINA-

Administratrix, Promulgated:

Respondent. December 13, 2007

x------------------------------------------------x

DECISION

AUSTRIA-MARTINEZ, J.:
This resolves the Petition for Review on Certiorari seeking the reversal of the
Order[1] of the Regional Trial Court of Iligan City, Branch 6 (RTC) dated January 15,
2003 and its Omnibus Order dated April 9, 2003.

The undisputed facts are as follows.

The RTC admitted to probate the holographic will of Alice O. Sheker and
thereafter issued an order for all the creditors to file their respective claims
against the estate. In compliance therewith, petitioner filed on October 7, 2002 a
contingent claim for agent's commission due him amounting to
approximately P206,250.00 in the event of the sale of certain parcels of land
belonging to the estate, and the amount of P275,000.00, as reimbursement for
expenses incurred and/or to be incurred by petitioner in the course of negotiating
the sale of said realties.

The executrix of the Estate of Alice O. Sheker (respondent) moved for the
dismissal of said money claim against the estate on the grounds that (1) the
requisite docket fee, as prescribed in Section 7(a), Rule 141 of the Rules of Court,
had not been paid; (2) petitioner failed to attach a certification against non-forum
shopping; and (3) petitioner failed to attach a written explanation why the money
claim was not filed and served personally.

On January 15, 2003, the RTC issued the assailed Order dismissing without
prejudice the money claim based on the grounds advanced by
respondent. Petitioner's motion for reconsideration was denied per Omnibus
Order dated April 9, 2003.
Petitioner then filed the present petition for review on certiorari, raising the
following questions:

(a) must a contingent claim filed in the probate proceeding contain a

certification against non-forum shopping, failing which such claim
should be dismissed?

(b) must a contingent claim filed against an estate in a probate

proceeding be dismissed for failing to pay the docket fees at the time of
its filing thereat?

(c) must a contingent claim filed in a probate proceeding be dismissed

because of its failure to contain a written explanation on the service
and filing by registered mail?[2]

Petitioner maintains that the RTC erred in strictly applying to a

probate proceeding the rules requiring a certification of non-forum shopping, a
written explanation for non-personal filing, and the payment of docket fees upon
filing of the claim. He insists that Section 2, Rule 72 of the Rules of Court provides
that rules in ordinary actions are applicable to special proceedings only in
a suppletory manner.

The Court gave due course to the petition for review on certiorari although
directly filed with this Court, pursuant to Section 2(c), Rule 41 of the Rules of
Court.[3]

The petition is imbued with merit.

However, it must be emphasized that petitioner's contention that rules in
ordinary actions are only supplementary to rules in special proceedings is not
entirely correct.

Section 2, Rule 72, Part II of the same Rules of Court provides:

Sec. 2. Applicability of rules of Civil Actions. - In the absence of

special provisions, the rules provided for in ordinary actions shall be, as

far as practicable, applicable in special proceedings.

Stated differently, special provisions under Part II of the Rules of Court

govern special proceedings; but in the absence of special provisions, the rules
provided for in Part I of the Rules governing ordinary civil actions shall be
applicable to special proceedings, as far as practicable.

The word practicable is defined as: possible to practice or perform; capable

of being put into practice, done or accomplished.[4] This means that in the absence
of special provisions, rules in ordinary actions may be applied in special
proceedings as much as possible and where doing so would not pose an obstacle
to said proceedings. Nowhere in the Rules of Court does it categorically say that
rules in ordinary actions are inapplicable or merely suppletory to special
proceedings. Provisions of the Rules of Court requiring a certification of non-
forum shopping for complaints and initiatory pleadings, a written explanation for
non-personal service and filing, and the payment of filing fees for money claims
against an estate would not in any way obstruct probate proceedings, thus, they
are applicable to special proceedings such as the settlement of the estate of a
deceased person as in the present case.

Thus, the principal question in the present case is: did the RTC err in
dismissing petitioner's contingent money claim against respondent estate for
failure of petitioner to attach to his motion a certification against non-forum
shopping?
 The Court rules in the affirmative.

The certification of non-forum shopping is required only for complaints

and other initiatory pleadings. The RTC erred in ruling that a contingent money
claim against the estate of a decedent is an initiatory pleading. In the present
case, the whole probate proceeding was initiated upon the filing of the petition
for allowance of the decedent's will. Under Sections 1 and 5, Rule 86 of the Rules
of Court, after granting letters of testamentary or of administration, all persons
having money claims against the decedent are mandated to file or notify the
court and the estate administrator of their respective money claims; otherwise,
they would be barred, subject to certain exceptions.[5]

Such being the case, a money claim against an estate is more akin to a motion for
creditors' claims to be recognized and taken into consideration in the proper
disposition of the properties of the estate. In Arquiza v. Court of Appeals,[6] the
Court explained thus:

x x x The office of a motion is not to initiate new litigation, but to bring

a material but incidental matter arising in the progress of the case in

which the motion is filed. A motion is not an independent right or

remedy, but is confined to incidental matters in the progress of a cause.

It relates to some question that is collateral to the main object of the

action and is connected with and dependent upon the principal

remedy.[7] (Emphasis supplied)

A money claim is only an incidental matter in the main action for the settlement
of the decedent's estate; more so if the claim is contingent since the claimant
cannot even institute a separate action for a mere contingent
claim. Hence, herein petitioner's contingent money claim, not being an initiatory
pleading, does not require a certification against non-forum shopping.

On the issue of filing fees, the Court ruled in Pascual v. Court of Appeals,[8] that
the trial court has jurisdiction to act on a money claim (attorney's fees) against an
estate for services rendered by a lawyer to the administratrix to assist her in
fulfilling her duties to the estate even without payment of separate docket fees
because the filing fees shall constitute a lien on the judgment pursuant to Section
2, Rule 141 of the Rules of Court, or the trial court may order the payment of such
filing fees within a reasonable time.[9]After all, the trial court had already assumed
jurisdiction over the action for settlement of the estate. Clearly, therefore, non-
payment of filing fees for a money claim against the estate is not one of the
grounds for dismissing a money claim against the estate.

With regard to the requirement of a written explanation, Maceda v. De

Guzman Vda. de Macatangay[10] is squarely in point. Therein, the Court held thus:

In Solar Team Entertainment, Inc. v. Ricafort, this Court, passing upon

Section 11 of Rule 13 of the Rules of Court, held that a court has the

discretion to consider a pleading or paper as not filed if said rule is not

complied with.

Personal service and filing are preferred for obvious reasons. Plainly, such should

expedite action or resolution on a pleading, motion or other paper; and conversely,

minimize, if not eliminate, delays likely to be incurred if service or filing is done by mail,

considering the inefficiency of the postal service. Likewise, personal service will do

away with the practice of some lawyers who, wanting to appear clever, resort to the

following less than ethical practices: (1) serving or filing pleadings by mail to catch

opposing counsel off-guard, thus leaving the latter with little or no time to prepare, for
instance, responsive pleadings or an opposition; or (2) upon receiving notice from the

post office that the registered mail containing the pleading of or other paper from the

adverse party may be claimed, unduly procrastinating before claiming the parcel, or,

worse, not claiming it at all, thereby causing undue delay in the disposition of such

pleading or other papers.

If only to underscore the mandatory nature of this innovation to our set of adjective

rules requiring personal service whenever practicable, Section 11 of Rule 13 then gives

the court the discretion to consider a pleading or paper as not filed if the other modes

of service or filing were not resorted to and no written explanation was made as to

why personal service was not done in the first place.The exercise of discretion must,

necessarily consider the practicability of personal service, for Section 11 itself begins

with the clause whenever practicable.

We thus take this opportunity to clarify that under Section 11, Rule 13 of the 1997 Rules
of Civil Procedure, personal service and filing is the general rule, and resort to other
modes of service and filing, the exception. Henceforth, whenever personal service or
filing is practicable, in the light of the circumstances of time, place and person, personal
service or filing is mandatory. Only when personal service or filing is not practicable
may resort to other modes be had, which must then be accompanied by a written
explanation as to why personal service or filing was not practicable to begin with. In
adjudging the plausibility of an explanation, a court shall likewise consider the
importance of the subject matter of the case or the issues involved therein, and the prima
facie merit of the pleading sought to be expunged for violation of Section 11. (Emphasis
and italics supplied)

In Musa v. Amor, this Court, on noting the impracticality of personal

service, exercised its discretion and liberally applied Section 11 of Rule
13:

As [Section 11, Rule 13 of the Rules of Court] requires, service and filing
of pleadings must be done personally whenever practicable. The court
notes that in the present case, personal service would not be
practicable. Considering the distance between the Court of Appeals
and Donsol, Sorsogon where the petition was posted, clearly, service
 by registered mail [sic] would have entailed considerable time, effort
and expense. A written explanation why service was not done
personally might have been superfluous. In any case, as the rule is so
worded with the use of may, signifying permissiveness, a violation
thereof gives the court discretion whether or not to consider the
paper as not filed. While it is true that procedural rules are
necessary to secure an orderly and speedy administration of
justice, rigid application of Section 11, Rule 13 may be relaxed in this
case in the interest of substantial justice. (Emphasis and italics supplied)

In the case at bar, the address of respondents counsel is Lopez, Quezon,

while petitioner Sonias counsels is Lucena City. Lopez, Quezon is 83
kilometers away from Lucena City. Such distance makes personal
service impracticable. As in Musa v. Amor, a written explanation why
service was not done personally might have been superfluous.

As this Court held in Tan v. Court of Appeals, liberal construction of a

rule of procedure has been allowed where, among other
cases, the injustice to the adverse party is not commensurate with the
degree of his thoughtlessness in not complying with the procedure
prescribed.[11] (Emphasis supplied)

In the present case, petitioner holds office in Salcedo Village, Makati City, while
counsel for respondent and the RTC which rendered the assailed orders are both
in Iligan City.The lower court should have taken judicial notice of the great
distance between said cities and realized that it is indeed not practicable to serve
and file the money claim personally. Thus, following Medina v. Court of
Appeals,[12] the failure of petitioner to submit a written explanation why service
has not been done personally, may be considered as superfluous and the RTC
should have exercised its discretion under Section 11, Rule 13, not to dismiss the
money claim of petitioner, in the interest of substantial justice.

The ruling spirit of the probate law is the speedy settlement of estates of
deceased persons for the benefit of creditors and those entitled to residue by way
of inheritance or legacy after the debts and expenses of administration have been
paid.[13] The ultimate purpose for the rule on money claims was further explained
in Union Bank of the Phil. v. Santibaez,[14] thus:
 The filing of a money claim against the decedents estate in the probate

court is mandatory. As we held in the vintage case of Py Eng Chong v.

Herrera:

x x x This requirement is for the purpose of protecting the estate of the deceased by

informing the executor or administrator of the claims against it, thus enabling him to

examine each claim and to determine whether it is a proper one which should be

allowed. The plain and obvious design of the rule is the speedy settlement of the affairs

of the deceased and the early delivery of the property to the distributees, legatees, or

heirs. The law strictly requires the prompt presentation and disposition of the claims

against the decedent's estate in order to settle the affairs of the estate as soon as

possible, pay off its debts and distribute the residue.[15] (Emphasis supplied)

The RTC should have relaxed and liberally construed the procedural rule on the
requirement of a written explanation for non-personal service, again in the
interest of substantial justice.

WHEREFORE, the petition is GRANTED. The Orders of the Regional Trial

Court of Iligan City, Branch 6 dated January 15, 2003 and April 9, 2003,
respectively,
are REVERSED and SET ASIDE. The Regional Trial Court of Iligan City,
Branch 6, is hereby DIRECTED to give due course and take appropriate action on
petitioner's money claim in accordance with Rule 82 of the Rules of Court.
No pronouncement as to costs.

SO ORDERED.
 EN BANC

DAVID LU, G.R. No. 153690

Petitioner,
Present:

CORONA, C.J.,
CARPIO,
- versus - CARPIO MORALES,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PATERNO LU YM, SR., PERALTA,
PATERNO LU YM, JR., BERSAMIN,
VICTOR LU YM, JOHN LU DEL CASTILLO,
YM, KELLY LU YM, and ABAD,
LUDO & LUYM VILLARAMA, JR.,
DEVELOPMENT PEREZ,
CORPORATION, MENDOZA, and
Respondents. SERENO, JJ.
x ------------------------------- x

PATERNO LU YM, SR., G.R. No. 157381

PATERNO LU YM, JR.,
VICTOR LU YM, JOHN LU
YM, KELLY LU YM, and
LUDO & LUYM
DEVELOPMENT
CORPORATION,
Petitioners,

- versus -
Promulgated:
DAVID LU,
Respondent. February 15, 2011
x ------------------------------- x
 JOHN LU YM and LUDO & G.R. No. 170889
LUYM DEVELOPMENT
CORPORATION,
Petitioners,

- versus -

THE HONORABLE COURT

OF APPEALS
OF CEBU CITY(FORMER
TWENTIETH DIVISION),
DAVID LU, ROSA GO,
SILVANO LUDO & CL
CORPORATION,
Respondents.
x-----------------------------------------------------------------------------------x

RESOLUTION

CARPIO MORALES, J.:

By Decision of August 26, 2008, the Court[1] unanimously disposed of the three
present petitions as follows:

WHEREFORE, premises considered, the petitions in G.R. Nos. 153690

and 157381 are DENIED for being moot and academic; while the
petition in G.R. No. 170889 is DISMISSED for lack of
merit. Consequently, the Status Quo Order dated January 23, 2006 is
hereby LIFTED.

The Court of Appeals is DIRECTED to proceed with CA-G.R. CV No.

81163 and to resolve the same with dispatch.

SO ORDERED[,][2]
which Decision was, on motion for reconsideration, the Court voting 4-
1,[3] reversed by Resolution of August 4, 2009, the dispositive portion of which
reads:

WHEREFORE, in view of the foregoing, the Motion for

Reconsideration filed by John Lu Ym and Ludo & LuYm Development
Corporation is GRANTED. The Decision of this Court dated August 26,
2008 is RECONSIDERED and SET ASIDE. The Complaint in SRC
Case No. 021-CEB, now on appeal with the Court of Appeals in CA-
G.R. CV No. 81163, is DISMISSED.

All interlocutory matters challenged in these consolidated petitions are

DENIED for being moot and academic.

SO ORDERED.[4]

David Lus Motion for Reconsideration and Motion to Refer Resolution to the
Court En Banc was denied by minute Resolution of September 23, 2009.
Following his receipt on October 19, 2009 of the minute Resolution, David Lu
personally filed on October 30, 2009 a Second Motion for Reconsideration and
Motion to Refer Resolution to the Court En Banc. On even date, he filed through
registered mail an Amended Second Motion for Reconsideration and Motion to
Refer Resolution to the Court En Banc. And on November 3, 2009, he filed a
Motion for Leave to File [a] Motion for Clarification[, and the] Second Motion for
Reconsideration and Motion to Refer Resolution to the Court En Banc. He later
also filed a Supplement to Second Motion for Reconsideration with Motion to
Dismiss dated January 6, 2010.

John Lu Ym and Ludo & Luym Development Corporation (LLDC), meanwhile,

filed with leave a Motion[5] for the Issuance of an Entry of Judgment of February 2,
2010, which merited an Opposition from David Lu.

In compliance with the Courts Resolution of January 11, 2010, Kelly Lu Ym,
Victor Lu Ym and Paterno Lu Ym, Jr. filed a Comment/Opposition of March 20,
2010, while John Lu Ym and LLDC filed a Consolidated Comment of March 25,
2010, a Supplement thereto of April 20, 2010, and a Manifestation of May 24,
2010.

The present cases were later referred to the Court en banc by Resolution
of October 20, 2010.

Brief Statement of the Antecedents

The three consolidated cases stemmed from the complaint for Declaration of
Nullity of Share Issue, Receivership and Dissolution filed on August 14, 2000
before the Regional Trial Court (RTC) of Cebu City by David Lu, et al. against
Paterno Lu Ym, Sr. and sons (Lu Ym father and sons) and LLDC.

By Decision of March 1, 2004, Branch 12 of the RTC ruled in favor of David et

al. by annulling the issuance of the shares of stock subscribed and paid by Lu Ym
father and sons at less than par value, and ordering the dissolution and asset
liquidation of LLDC. The appeal of the trial courts Decision remains pending with
the appellate court in CA-G.R. CV No. 81163.

Several incidents arising from the complaint reached the Court through the present
three petitions.

In G.R. No. 153690 wherein David, et al. assailed the appellate courts resolutions
dismissing their complaint for its incomplete signatory in the certificate of non-
forum shopping and consequently annulling the placing of the subject corporation
under receivership pendente lite, the Court, by Decision of August 26, 2008, found
the issue to have been mooted by the admission by the trial court of David et al.s
Amended Complaint, filed by them pursuant to the trial courts order to conform to
the requirements of the Interim Rules of Procedure Governing Intra-Corporate
Controversies.

Since an amended pleading supersedes the pleading that it amends, the

original complaint of David, et al. was deemed withdrawn from the records.
 The Court noted in G.R. No. 153690 that both parties admitted the
mootness of the issue and that the trial court had already rendered a decision on the
merits of the case. It added that the Amended Complaint stands since Lu Ym father
and sons availed of an improper mode (via an Urgent Motion filed with this Court)
to assail the admission of the Amended Complaint.

In G.R. No. 157381 wherein Lu Ym father and sons challenged the appellate
courts resolution restraining the trial court from proceeding with their motion to lift
the receivership order which was filed during the pendency of G.R. No. 153690,
the Court, by Decision of August 26, 2008 resolved that the issue was mooted by
the amendment of the complaint and by the trial courts decision on the merits. The
motion having been filed ancillary to the main action, which main action was
already decided on the merits by the trial court, the Court held that there was
nothing more to enjoin.

G.R. No. 170889 involved the denial by the appellate court of Lu Ym father and
sons application in CA-G.R. CV No. 81163 for a writ of preliminary injunction. By
August 26, 2008 Decision, the Court dismissed the petition after finding no merit
on their argument which they raised for the first time in their motion for
reconsideration before the appellate court of lack of jurisdiction for non-payment
of the correct RTC docket fees.

As reflected early on, the Court, in a turnaround, by Resolution of August 4, 2009,

reconsidered its position on the matter of docket fees. It ruled that the trial court
did not acquire jurisdiction over the case for David Lu, et al.s failure to pay the
correct docket fees, hence, all interlocutory matters and incidents subject of the
present petitions must consequently be denied.

Taking Cognizance of the Present Incidents

The Internal Rules of the Supreme Court (IRSC) states that the Court en banc shall
act on the following matters and cases:

(a) cases in which the constitutionality or validity of any treaty,

international or executive agreement, law, executive order, presidential
decree, proclamation, order, instruction, ordinance, or regulation is in
question;

(b) criminal cases in which the appealed decision imposes the death
penalty or reclusion perpetua;

(c) cases raising novel questions of law;

(d) cases affecting ambassadors, other public ministers, and consuls;

(e) cases involving decisions, resolutions, and orders of the Civil Service
Commission, the Commission on Elections, and the Commission on
Audit;

(f) cases where the penalty recommended or imposed is the dismissal of

a judge, the disbarment of a lawyer, the suspension of any of them for a
period of more than one year, or a fine exceeding forty thousand pesos;

(g) cases covered by the preceding paragraph and involving the

reinstatement in the judiciary of a dismissed judge, the reinstatement of a
lawyer in the roll of attorneys, or the lifting of a judges suspension or a
lawyers suspension from the practice of law;

(h) cases involving the discipline of a Member of the Court, or a

Presiding Justice, or any Associate Justice of the collegial appellate
court;

(i) cases where a doctrine or principle laid down by the Court en banc or
by a Division my be modified or reversed;

(j) cases involving conflicting decisions of two or more divisions;

(k) cases where three votes in a Division cannot be obtained;

 (l) Division cases where the subject matter has a huge financial impact
on businesses or affects the welfare of a community;

(m) Subject to Section 11 (b) of this rule, other division cases that, in the
opinion of at least three Members of the Division who are voting and
present, are appropriate for transfer to the Court en banc;

(n) cases that the Court en banc deems of sufficient importance to merit
its attention; and

(o) all matters involving policy decisions in the administrative

supervision of all courts and their personnel.[6] (underscoring supplied)

The enumeration is an amalgamation of SC Circular No. 2-89 (February 7, 1989),

as amended by En Banc Resolution of November 18, 1993, and the amplifications
introduced by Resolution of January 18, 2000 in A.M. No. 99-12-08-SC with
respect to administrative cases and matters.

The present cases fall under at least three types of cases for consideration by
the Court En Banc. At least three members of the Courts Second Division (to
which the present cases were transferred,[7] they being assigned to a Member
thereof) found, by Resolution of October 20, 2010, that the cases were appropriate
for referral-transfer to the Court En Banc which subsequently accepted[8] the
referral in view of the sufficiently important reason to resolve all doubts on the
validity of the challenged resolutions as they appear to modify or reverse
doctrines or principles of law.

In Firestone Ceramics v. Court of Appeals,[9] the Court treated the

consolidated cases as En Banc cases and set the therein petitioners motion for oral
argument, after finding that the cases were of sufficient importance to merit the
Court En Bancs attention. It ruled that the Courts action is a legitimate and valid
exercise of its residual power.[10]

In Limketkai Sons Milling, Inc. v. Court of Appeals, the Court

conceded that it is not infallible. Should any error of judgment be
perceived, it does not blindly adhere to such error, and the parties
 adversely affected thereby are not precluded from seeking relief
therefrom, by way of a motion for reconsideration. In this jurisdiction,
rectification of an error, more than anything else, is of paramount
importance.
xxxx

It bears stressing that where, as in the present case, the Court En

Banc entertains a case for its resolution and disposition, it does so
without implying that the Division of origin is incapable of rendering
objective and fair justice. The action of the Court simply means that the
nature of the cases calls for en banc attention and consideration. Neither
can it be concluded that the Court has taken undue advantage of sheer
voting strength. It was merely guided by the well-studied finding and
sustainable opinion of the majority of its actual membership that, indeed,
subject cases are of sufficient importance meriting the action and
decision of the whole Court. It is, of course, beyond cavil that all the
members of this highest Court of the land are always embued with the
noblest of intentions in interpreting and applying the germane provisions
of law, jurisprudence, rules and Resolutions of the Court to the end that
public interest be duly safeguarded and rule of law be observed.[11]

It is argued that the assailed Resolutions in the present cases have already
become final,[12] since a second motion for reconsideration is prohibited except for
extraordinarily persuasive reasons and only upon express leave first
obtained;[13] and that once a judgment attains finality, it thereby becomes
immutable and unalterable, however unjust the result of error may appear.

The contention, however, misses an important point. The doctrine

of immutability of decisions applies only to final and executory decisions. Since
the present cases may involve a modification or reversal of a Court-ordained
doctrine or principle, the judgment rendered by the Special Third Division may be
considered unconstitutional, hence, it can never become final. It finds mooring in
the deliberations of the framers of the Constitution:

On proposed Section 3(4), Commissioner Natividad asked what

the effect would be of a decision that violates the proviso that no
doctrine or principle of law laid down by the court in a decision
rendered en banc or in division may be modified or reversed except by
 the court en banc. The answer given was that such a decision would be
invalid. Following up, Father Bernas asked whether the decision, if not
challenged, could become final and binding at least on the
parties. Romulo answered that, since such a decision would be in
excess of jurisdiction, the decision on the case could be reopened
anytime.[14] (emphasis and underscoring supplied)

A decision rendered by a Division of this Court in violation of this

constitutional provision would be in excess of jurisdiction and, therefore,
invalid.[15] Any entry of judgment may thus be said to be inefficacious[16] since the
decision is void for being unconstitutional.

While it is true that the Court en banc exercises no appellate jurisdiction

over its Divisions, Justice Minerva Gonzaga-Reyes opined in Firestone and
concededly recognized that [t]he only constraint is that any doctrine or principle of
law laid down by the Court, either rendered en banc or in division, may be
overturned or reversed only by the Court sitting en banc.[17]

That a judgment must become final at some definite point at the risk of
occasional error cannot be appreciated in a case that embroils not only a general
allegation of occasional error but also a serious accusation of a violation of the
Constitution, viz., that doctrines or principles of law were modified or reversed by
the Courts Special Third Division August 4, 2009 Resolution.

The law allows a determination at first impression that a doctrine or

principle laid down by the court en banc or in division may be modified or
reversed in a case which would warrant a referral to the Court En Banc. The use of
the word may instead of shall connotes probability, not certainty, of modification
or reversal of a doctrine, as may be deemed by the Court. Ultimately, it is the
entire Court which shall decide on the acceptance of the referral and, if so, to
reconcile any seeming conflict, to reverse or modify an earlier decision, and to
declare the Courts doctrine.[18]

The Court has the power and prerogative to suspend its own rules and to
exempt a case from their operation if and when justice requires it,[19] as in the
present circumstance where movant filed a motion for leave after the prompt
submission of a second motion for reconsideration but, nonetheless, still within 15
days from receipt of the last assailed resolution.

Well-entrenched doctrines or principles of law that went astray need to be steered

back to their proper course. Specifically, as David Lu correctly points out, it is
necessary to reconcile and declare the legal doctrines regarding actions that are
incapable of pecuniary estimation, application of estoppel by laches in raising an
objection of lack of jurisdiction, and whether bad faith can be deduced from the
erroneous annotation of lis pendens.

Upon a considered, thorough reexamination, the Court grants David Lus

Motion for Reconsideration. The assailed Resolutions of August 4,
2009 and September 23, 2009, which turn turtle settled doctrines, must be
overturned. The Court thus reinstates the August 26, 2008 Decision wherein a
three-tiered approach was utilized to analyze the issue on docket fees:

In the instant case, however, we cannot grant the dismissal prayed

for because of the following reasons: First, the case instituted before the
RTC is one incapable of pecuniary estimation. Hence, the correct
docket fees were paid. Second, John and LLDC are estopped from
questioning the jurisdiction of the trial court because of their active
participation in the proceedings below, and because the issue of payment
of insufficient docket fees had been belatedly raised before the Court of
Appeals, i.e., only in their motion for reconsideration. Lastly, assuming
that the docket fees paid were truly inadequate, the mistake was
committed by the Clerk of Court who assessed the same and not
imputable to David; and as to the deficiency, if any, the same may
instead be considered a lien on the judgment that may thereafter be
rendered.[20] (italics in the original; emphasis and underscoring supplied)

The Value of the Subject Matter Cannot be Estimated

On the claim that the complaint had for its objective the nullification of the
issuance of 600,000 shares of stock of LLDC, the real value of which based on
underlying real estate values, as alleged in the complaint, stands at P1,087,055,105,
the Courts assailed August 4, 2009 Resolution found:

Upon deeper reflection, we find that the movants [Lu Ym father & sons]
claim has merit. The 600,000 shares of stock were, indeed, properties in
litigation. They were the subject matter of the complaint, and the relief
prayed for entailed the nullification of the transfer thereof and their return
to LLDC. David, et al., are minority shareholders of the corporation who
claim to have been prejudiced by the sale of the shares of stock to the Lu
Ym father and sons. Thus, to the extent of the damage or injury they
allegedly have suffered from this sale of the shares of stock, the action
they filed can be characterized as one capable of pecuniary
estimation. The shares of stock have a definite value, which was
declared by plaintiffs [David Lu, et al.] themselves in their
complaint. Accordingly, the docket fees should have been computed
based on this amount. This is clear from the following version of Rule
141, Section 7, which was in effect at the time the complaint was
filed[.][21] (emphasis and underscoring supplied)

The said Resolution added that the value of the 600,000 shares of stock, which are
the properties in litigation, should be the basis for the computation of the filing
fees. It bears noting, however, that David, et al. are not claiming to own these
shares. They do not claim to be the owners thereof entitled to be the transferees of
the shares of stock. The mention of the real value of the shares of stock, over
which David, et al. do not, it bears emphasis, interpose a claim of right to
recovery, is merely narrative or descriptive in order to emphasize the inequitable
price at which the transfer was effected.

The assailed August 4, 2009 Resolution also stated that to the extent of the damage
or injury [David, et al.] allegedly have suffered from this sale, the action can be
characterized as one capable of pecuniary estimation. The Resolution does not,
however, explore the value of the extent of the damage or injury. Could it be
the pro rata decrease (e.g., from 20% to 15%) of the percentage shareholding of
David, et al. vis--vis to the whole?

Whatever property, real or personal, that would be distributed to the stockholders

would be a mere consequence of the main action. In the end, in the event LLDC is
dissolved, David, et al. would not be getting the value of the 600,000 shares, but
only the value of their minority number of shares, which are theirs to begin with.

The complaint filed by David, et al. is one for declaration of nullity of share
issuance. The main relief prayed for both in the original complaint and the
amended complaint is the same, that is, to declare null and void the issuance of
600,000 unsubscribed and unissued shares to Lu Ym father and sons, et al. for a
price of 1/18 of their real value, for being inequitable, having been done in breach
of directors fiduciarys duty to stockholders, in violation of the minority
stockholders rights, and with unjust enrichment.

As judiciously discussed in the Courts August 26, 2008 Decision, the test in
determining whether the subject matter of an action is incapable of pecuniary
estimation is by ascertaining the nature of the principal action or remedy sought. It
explained:

x x x To be sure, the annulment of the shares, the dissolution of the

corporation and the appointment of receivers/management committee are
actions which do not consist in the recovery of a sum of money. If, in
the end, a sum of money or real property would be recovered, it would
simply be the consequence of such principal action. Therefore, the case
before the RTC was incapable of pecuniary estimation.[22] (italics in the
original, emphasis and underscoring supplied)

Actions which the Court has recognized as being incapable of pecuniary estimation
include legality of conveyances. In a case involving annulment of contract, the
Court found it to be one which cannot be estimated:

Petitioners argue that an action for annulment or rescission of a contract

of sale of real property is a real action and, therefore, the amount of the
docket fees to be paid by private respondent should be based either on
the assessed value of the property, subject matter of the action, or its
estimated value as alleged in the complaint, pursuant to the last
paragraph of 7(b) of Rule 141, as amended by the Resolution of the
Court dated September 12, 1990. Since private respondents alleged that
the land, in which they claimed an interest as heirs, had been sold for
P4,378,000.00 to petitioners, this amount should be considered the
estimated value of the land for the purpose of determining the docket
fees.

On the other hand, private respondents counter that an action for

annulment or rescission of a contract of sale of real property is incapable
of pecuniary estimation and, so, the docket fees should be the fixed
amount of P400.00 in Rule 141, 7(b)(1). In support of their argument,
they cite the cases of Lapitan v. Scandia, Inc. and Bautista v.
Lim. In Lapitan this Court, in an opinion by Justice J.B.L. Reyes, held:

A review of the jurisprudence of this Court indicates that in

determining whether an action is one the subject matter of
which is not capable of pecuniary estimation, this Court has
adopted the criterion of first ascertaining the nature of the
principal action or remedy sought. If it is primarily for the
recovery of a sum of money, the claim is considered capable of
pecuniary estimation, and whether jurisdiction is in the
municipal courts or in the courts of first instance would depend
on the amount of the claim. However, where the basic issue is
something other than the right to recover a sum of money,
or where the money claim is purely incidental to, or a
consequence of, the principal relief sought, like in suits to
have the defendant perform his part of the contract (specific
performance) and in actions for support, or for annulment of a
judgment or to foreclose a mortgage, this Court has considered
such actions as cases where the subject of the litigation may
not be estimated in terms of money, and are cognizable
exclusively by courts of first instance. The rationale of the
rule is plainly that the second class cases, besides the
determination of damages, demand an inquiry into other
factors which the law has deemed to be more within the
competence of courts of first instance, which were the lowest
courts of record at the time that the first organic laws of the
Judiciary were enacted allocating jurisdiction (Act 136 of the
Philippine Commission of June 11, 1901).

Actions for specific performance of contracts have been

expressly pronounced to be exclusively cognizable by courts
of first instance: De Jesus vs. Judge Garcia, L-
26816, February 28, 1967; Manufacturer's Distributors, Inc.
vs. Yu Siu Liong, L-21285, April 29, 1966. And no cogent
 reason appears, and none is here advanced by the parties,
why an action for rescission (or resolution) should be
differently treated, a "rescission" being a counterpart, so
to speak, of "specific performance". In both cases, the
court would certainly have to undertake an investigation
into facts that would justify one act or the other. No award
for damages may be had in an action for rescission without
first conducting an inquiry into matters which would
justify the setting aside of a contract, in the same manner
that courts of first instance would have to make findings of
fact and law in actions not capable of pecuniary estimation
expressly held to be so by this Court, arising from issues like
those raised in Arroz v. Alojado, et al., L-22153, March 31,
1967 (the legality or illegality of the conveyance sought for
and the determination of the validity of the money deposit
made); De Ursua v. Pelayo, L-13285, April 18, 1950 (validity
of a judgment); Bunayog v. Tunas, L-12707, December 23,
1959 (validity of a mortgage); Baito v. Sarmiento, L-13105,
August 25, 1960 (the relations of the parties, the right to
support created by the relation, etc., in actions for support), De
Rivera, et al. v. Halili, L-15159, September 30, 1963 (the
validity or nullity of documents upon which claims are
predicated).Issues of the same nature may be raised by a party
against whom an action for rescission has been brought, or by
the plaintiff himself. It is, therefore, difficult to see why a
prayer for damages in an action for rescission should be taken
as the basis for concluding such action as one capable of
pecuniary estimation a prayer which must be included in the
main action if plaintiff is to be compensated for what he may
have suffered as a result of the breach committed by
defendant, and not later on precluded from recovering
damages by the rule against splitting a cause of action and
discouraging multiplicity of suits.[23] (emphasis and
underscoring supplied)

IN FINE, the Court holds that David Lu, et al.s complaint is one incapable of
pecuniary estimation, hence, the correct docket fees were paid. The Court thus
proceeds to tackle the arguments on estoppel and lien, mindful that the succeeding
discussions rest merely on a contrary assumption, viz., that there was deficient
payment.

Estoppel Has Set In

Assuming arguendo that the docket fees were insufficiently paid, the doctrine of
estoppel already applies.

The assailed August 4, 2009 Resolution cited Vargas v. Caminas[24] on the non-
applicability of the Tijam doctrine where the issue of jurisdiction was, in fact,
raised before the trial court rendered its decision. Thus the Resolution explained:

Next, the Lu Ym father and sons filed a motion for the lifting of the
receivership order, which the trial court had issued in the interim. David,
et al., brought the matter up to the CA even before the trial court could
resolve the motion. Thereafter, David, at al., filed their Motion to Admit
Complaint to Conform to the Interim Rules Governing Intra-Corporate
Controversies. It was at this point that the Lu Ym father and sons raised
the question of the amount of filing fees paid. They also raised this point
again in the CA when they appealed the trial courts decision in the case
below.

We find that, in the circumstances, the Lu Ym father and sons are not
estopped from challenging the jurisdiction of the trial court. They raised
the insufficiency of the docket fees before the trial court rendered
judgment and continuously maintained their position even on appeal to
the CA. Although the manner of challenge was erroneous they should
have addressed this issue directly to the trial court instead of the OCA
they should not be deemed to have waived their right to assail the
jurisdiction of the trial court.[25] (emphasis and underscoring supplied)

Lu Ym father and sons did not raise the issue before the trial court. The narration
of facts in the Courts original decision shows that Lu Ym father and sons merely
inquired from the Clerk of Court on the amount of paid docket fees on January 23,
2004. They thereafter still speculat[ed] on the fortune of litigation.[26] Thirty-seven
days later or on March 1, 2004 the trial court rendered its decision adverse to them.
Meanwhile, Lu Ym father and sons attempted to verify the matter of docket fees
from the Office of the Court Administrator (OCA). In their Application for the
issuance a writ of preliminary injunction filed with the Court of Appeals, they still
failed to question the amount of docket fees paid by David Lu, et al. It was only in
their Motion for Reconsideration of the denial by the appellate court of their
application for injunctive writ that they raised such issue.

Lu Ym father and sons further inquiry from the OCA cannot redeem them. A mere
inquiry from an improper office at that, could not, by any stretch, be
considered as an act of having raised the jurisdictional question prior to the
rendition of the trial courts decision. In one case, it was held:

Here it is beyond dispute that respondents paid the full amount of docket
fees as assessed by the Clerk of Court of the Regional Trial Court of
Malolos, Bulacan, Branch 17, where they filed the complaint. If
petitioners believed that the assessment was incorrect, they should have
questioned it before the trial court. Instead, petitioners belatedly question
the alleged underpayment of docket fees through this
petition, attempting to support their position with the opinion and
certification of the Clerk of Court of another judicial
region. Needless to state, such certification has no bearing on the
instant case.[27] (italics in the original; emphasis and underscoring in the
original)

The inequity resulting from the abrogation of the whole proceedings at this
late stage when the decision subsequently rendered was adverse to the father and
sons is precisely the evil being avoided by the equitable principle of estoppel.

No Intent to Defraud the Government

Assuming arguendo that the docket fees paid were insufficient, there is no proof of
bad faith to warrant a dismissal of the complaint, hence, the following doctrine
applies:
 x x x In Sun Insurance Office, Ltd., (SIOL) v. Asuncion, this Court
ruled that the filing of the complaint or appropriate initiatory pleading
and the payment of the prescribed docket fee vest a trial court with
jurisdiction over the subject matter or nature of the action. If the amount
of docket fees paid is insufficient considering the amount of the claim,
the clerk of court of the lower court involved or his duly authorized
deputy has the responsibility of making a deficiency assessment. The
party filing the case will be required to pay the deficiency, but
jurisdiction is not automatically lost.[28] (underscoring supplied)

The assailed Resolution of August 4, 2009 held, however, that the above-quoted
doctrine does not apply since there was intent to defraud the government, citing
one attendant circumstance the annotation of notices of lis pendens on real
properties owned by LLDC. It deduced:

From the foregoing, it is clear that a notice of lis pendens is availed of

mainly in real actions. Hence, when David, et al., sought the annotation
of notices of lis pendens on the titles of LLDC, they acknowledged that
the complaint they had filed affected a title to or a right to possession of
real properties. At the very least, they must have been fully aware that the
docket fees would be based on the value of the realties involved. Their
silence or inaction to point this out to the Clerk of Court who computed
their docket fees, therefore, becomes highly suspect, and thus, sufficient
for this Court to conclude that they have crossed beyond the threshold of
good faith and into the area of fraud. Clearly, there was an effort to
defraud the government in avoiding to pay the correct docket fees.
Consequently, the trial court did not acquire jurisdiction over the case.[29]

All findings of fraud should begin the exposition with the presumption of good
faith. The inquiry is not whether there was good faith on the part of David, et al.,
but whether there was bad faith on their part.

The erroneous annotation of a notice of lis pendens does not negate good faith. The
overzealousness of a party in protecting pendente lite his perceived interest,
inchoate or otherwise, in the corporations properties from depletion or dissipation,
should not be lightly equated to bad faith.
That notices of lis pendens were erroneously annotated on the titles does not have
the effect of changing the nature of the action. The aggrieved party is not left
without a remedy, for they can move to cancel the annotations. The assailed
August 4, 2009 Resolution, however, deemed such act as an acknowledgement that
the case they filed was a real action, concerning as it indirectly does the corporate
realties, the titles of which were allegedly annotated. This conclusion does not help
much in ascertaining the filing fees because the value of these real properties and
the value of the 600,000 shares of stock are different.

Further, good faith can be gathered from the series of amendments on the
provisions on filing fees, that the Court was even prompted to make a clarification.

When David Lu, et al. filed the Complaint on August 14, 2000 or five days after
the effectivity of the Securities Regulation Code or Republic Act No. 8799, [30] the
then Section 7 of Rule 141 was the applicable provision, without any restricted
reference to paragraphs (a) and (b) 1 & 3 or paragraph (a) alone. Said section then
provided:

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, fourth-party, etc. complaint, or a complaint in
intervention, and for all clerical services in the same, if the total
sum claimed, exclusive of interest, or the stated value of the
property in litigation, is:
xxxx
(b) For filing:
1. Actions where the value of the subject
matter cannot be estimated ... x x x

2. Special civil actions except judicial

foreclosure of mortgage which shall be
governed by paragraph (a) above ..... x x x

3. All other actions not involving property .xxx

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

x x x x[31] (emphasis supplied)

The Court, by Resolution of September 4, 2001 in A. M. No. 00-8-10-

SC,[32] clarified the matter of legal fees to be collected in cases formerly cognizable
by the Securities and Exchange Commission following their transfer to the RTC.

Clarification has been sought on the legal fees to be collected and the
period of appeal applicable in cases formerly cognizable by the
Securities and Exchange Commission. It appears that the Interim Rules
of Procedure on Corporate Rehabilitation and the Interim Rules of
Procedure for Intra-Corporate Controversies do not provide the basis for
the assessment of filing fees and the period of appeal in cases transferred
from the Securities and Exchange Commission to particular Regional
Trial Courts.

The nature of the above mentioned cases should first be ascertained.

Section 3(a), Rule 1 of the 1997 Rules of Civil Procedure defines civil
action as one by which a party sues another for the enforcement or
protection of a right, or the prevention or redress of a wrong. It further
states that a civil action may either be ordinary or special, both being
governed by the rules for ordinary civil actions subject to the special
rules prescribed for special civil actions. Section 3(c) of the same Rule,
defines a special proceeding as a remedy by which a party seeks to
establish a status, a right, or a particular fact.
Applying these definitions, the cases covered by the Interim Rules for
Intra-Corporate Controversies should be considered as ordinary
civil actions. These cases either seek the recovery of
damages/property or specific performance of an act against a party
for the violation or protection of a right. These cases are:

(1) Devices or schemes employed by, or any act of, the

board of directors, business associates, officers or
partners, amounting to fraud or misrepresentation which
may be detrimental to the interest of the public and/or of
the stockholders, partners, or members of any
corporation, partnership, or association;
 (2) Controversies arising out of intra-corporate, partnership,
or association relations, between and among
stockholders, members or associates; and between, any
or all of them and the corporation, partnership, or
association of which they are stockholders, members or
associates, respectively;
(3) Controversies in the election or appointment of
directors, trustees, officers, or managers of corporations,
partnerships, or associations;
(4) Derivative suits; and
(5) Inspection of corporate books.

On the other hand, a petition for rehabilitation, the procedure for which
is provided in the Interim Rules of Procedure on Corporate Recovery,
should be considered as a special proceeding. It is one that seeks to
establish the status of a party or a particular fact. As provided in section
1, Rule 4 of the Interim Rules on Corporate Recovery, the status or fact
sought to be established is the inability of the corporate debtor to pay its
debts when they fall due so that a rehabilitation plan, containing the
formula for the successful recovery of the corporation, may be approved
in the end. It does not seek a relief from an injury caused by another
party.

Section 7 of Rule 141 (Legal Fees) of the Revised Rules of Court lays
the amount of filing fees to be assessed for actions or proceedings filed
with the Regional Trial Court. Section 7(a) and (b) apply to ordinary
civil actions while 7(d) and (g) apply to special proceedings.

In fine, the basis for computing the filing fees in intra-corporate

cases shall be section 7(a) and (b) l & 3 of Rule 141. For petitions for
rehabilitation, section 7(d) shall be applied. (emphasis and underscoring
supplied)

The new Section 21(k) of Rule 141 of the Rules of Court, as amended by A.M. No.
04-2-04-SC[33] (July 20, 2004), expressly provides that [f]or petitions for
insolvency or other cases involving intra-corporate controversies, the fees
prescribed under Section 7(a) shall apply. Notatu dignum is that paragraph (b) 1
& 3 of Section 7 thereof was omittedfrom the reference. Said paragraph[34] refers
to docket fees for filing [a]ctions where the value of the subject matter cannot be
estimated and all other actions not involving property.

By referring the computation of such docket fees to paragraph (a) only, it denotes
that an intra-corporate controversy always involves a property in litigation, the
value of which is always the basis for computing the applicable filing fees. The
latest amendments seem to imply that there can be no case of intra-corporate
controversy where the value of the subject matter cannot be estimated. Even one
for a mere inspection of corporate books.

If the complaint were filed today, one could safely find refuge in the express
phraseology of Section 21 (k) of Rule 141 that paragraph (a) alone applies.

In the present case, however, the original Complaint was filed on August 14, 2000
during which time Section 7, without qualification, was the applicable
provision. Even the Amended Complaint was filed on March 31, 2003 during
which time the applicable rule expressed that paragraphs (a) and (b) l & 3 shall be
the basis for computing the filing fees in intra-corporate cases, recognizing that
there could be an intra-corporate controversy where the value of the subject matter
cannot be estimated, such as an action for inspection of corporate books. The
immediate illustration shows that no mistake can even be attributed to the RTC
clerk of court in the assessment of the docket fees.

Finally, assuming there was deficiency in paying the docket fees and assuming
further that there was a mistake in computation, the deficiency may be considered
a lien on the judgment that may be rendered, there being no established intent to
defraud the government.

WHEREFORE, the assailed Resolutions of August 4, 2009 and September 23,

2009 are REVERSED and SET ASIDE. The Courts Decision of August 26, 2008
is REINSTATED.

The Court of Appeals is DIRECTED to resume the proceedings and resolve the
remaining issues with utmost dispatch in CA-G.R. CV No. 81163.
SO ORDERED.