L & R CORPORATION, PETITIONER, VS. PRESIDING JUDGE MAXIMO M. DE LEON OF REGIONAL TRIAL COURT, BRANCH 143, MAKATI CITY AND HERMINIA GARCIA GONZALES, RESPONDENTS.
CORALES, J.:
The Antecedents
On August 2, 2011, Gonzales filed a Complaint[7] for “Accounting, Declaration of Nullity of Promissory Note, Real Estate Mortgage, Foreclosure Proceedings, Auction Sale, Certificate of Sale, Annulment of Titles, Writ of Possession and other Related Documents with Damages” against L & R praying for the following reliefs:
WHEREFORE, it is respectfully prayed that upon the filing of this Complaint, Plaintiff be placed to her properly covered by Transfer Certificate of Title No. 216643 as the same was not covered by the subject writ of possession issued by the Regional Trial Court, Branch 1478, (sic) Makati City and after proper proceedings, judgment be rendered:
(i) nullifying the foreclosure proceedings and subsequent sale of the Properties of the Plaintiff which were unlawfully undertaken by Defendant L & R Corporation and those who illegally acted on its behalf for having been done in violation of Act No. 3135 and related laws and jurisprudence;
(ii) ordering Defendants Register of Deeds of Makati City to cancel Transfer Certificate of Title Nos. 226344, 226345 and 226346 in the name of L & R Corporation and reinstate and/or revert back the same to Transfer Certificate of Title Nos. 216640, 216641 and 216642 in the name of Herminia Garcia Gonzalez married to Antonio Gonzalez;
(iii) directing Defendant L & R Corporation to render an accounting as regards the subject One Million Pesos (P1,000,000.00) loan of Spouses Gonzalez vis a vis their payments with Defendant L & R Corporation by applying the legal interest provided for by law and well-settled jurisprudence on the matter;
(iv) Ordering Defendant L & R Corporation to pay Plaintiff the amount of at least:
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Other equitable reliefs are likewise prayed for.
In the course of the proceedings, L & R filed a Motion to Dismiss[8] insisting that the RTC never acquired jurisdiction over the case due to Gonzales’ insufficient payment of docket fees. Gonzales opposed[9] the motion arguing that her case is incapable of pecuniary estimation with corresponding docket fees in the flat rate of P5,425.00 which she tendered upon computation of the Office of the Clerk of Court, RTC, Makati City.
The Ruling of the RTC
In its May 8, 2013 Order, the RTC denied L & R’s Motion to Dismiss based on the following ratiocination:
Upon consideration of the arguments stated by defendant L&R in its motion and plaintiff’s opposition thereto, the Court finds the Motion to Dismiss specious. In th case of David Lu v. Paterno LU YM, the Supreme Court cited the case of Sun Insurance Office, Ltd v. Asuncion and 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 fee 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.
WHEREFORE, in view of all the foregoing, the Motion to Dismiss is hereby DENIED. The Office of the Clerk of Court is hereby ordered to make a reassessment of the docket fees within five (5) days from receipt hereof and for Plaintiff to immediately pay thereafter the correct docket fees if necessary.
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Upon compliance of the Office of the Clerk of Court, the court a quo issued its May 17, 2013 Order requiring Gonzales to pay the computed deficiency in the filing fees amounting to P159,075.00.[10]
L & R sought the reconsideration of the May 8, 2013 Order while Gonzales filed a Manifestation and Partial Motion for Reconsideration of the May 17, 2013 Order. Both motion were denied by the RTC through its July 3, 2013 Resolution, the pertinent portions of which read as follows:
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As regards Plaintiff’s partial motion for reconsideration, the Court finds no cogent reason to overturn its previous Order dated 17 May 2013. A perusal of the entire complaint, including the prayer stated therein, shows that one of its causes of action is the nullification of foreclosure sale. Annulment of foreclosure sale is a real action, thus, the computation of the docket fees includes or based on the assessed or estimated value of the property.
The Court reiterates the long established principle laid down by the Supreme Court in the leading case of Sun Insurance Office, Ltd. v. Asuncion 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. It also bears stressing that Plaintiff only paid the docket fees as assessed by the Office of the Clerk of Court and she cannot be faulted for the alleged error committed by a government office. Moreover, the Supreme Court, consistent with the principle of liberality in the interpretation of the Rules, in the interest of substantial justice, had repeatedly refrained from dismissing the case on that ground payment of insufficient docket fee. Instead, it considered the deficiency in the payment of the docket fees as a lien on the judgment which must be remitted to the Clerk of Court of the court a quo upon the execution of the judgment.
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Unfazed, L&R interposed the instant petition for certiorari based on this issue:
Whether or not the Honorable Presiding Judge Maximo M. De Leon committed grave abuse of discretion amounting to excess of jurisdiction when he denied Petitioner’s Motion to Dismiss and Motion for Reconsideration notwithstanding clear rules and prevailing jurisprudence that non-payment of the correct and complete docket fee based on the initiatory pleading is a jurisdictional defect in the complaint that would merit its dismissal.
L & R argues that the RTC never acquired jurisdiction over the case from the very beginning because Gonzales has failed and continuously refuses to pay the prescribed fees amounting to P159,075.00. It contends that the present case does not fall squarely with Sun Insurance Office Ltd. v. Asuncion[11] because the latter presupposes that the prescribed filing fee was paid but subsequently the judgment awards a claim not specified in the initiatory pleading. According to L & R, the rules where relaxed in the Sun Insurance case due to plaintiff’s willingness to comply with the court’s order and considering the series of amended complaints which brought about the additional filing fees, but these circumstances are not attendant in this case. It also insists that the deficiency of the docket fees were not caused by any judgment award, thus, it is not among the instances enumerated in Section 2 of A.M. No. 04-2-04-SC where payment of docket fees could be considered as lien.[12] L & R further points out that the doctrine in Manchester Development Corporation v. Court of Appeals[13] and Gochan v. Gochan[14] should be applied instead.
On the other hand, Gonzales maintains that she believed in good faith that the prescribed docket fees were properly assessed by the Office of the Clerk of Court and it would be grave injustice on her part if the case be dismissed after a finding that the computed docket fees were insufficient.[15]
This Court’s Ruling
The petition is bereft of merit.
Application of Ruling in Manchester and Sun Insurance Case
Indeed, the Manchester[16] and Sun Insurance[17] cases provide a different rule in cases of insufficient payment of docket fees. The Manchester case stresses that the court acquires jurisdiction over any case only upon the payment of prescribed docket fees while the Sun Insurance case adheres to a more liberal interpretation of the rule. The application of these cases has already been clarified by the Supreme Court in a catena of cases including Metropolitan Bank and Trust Co. and Solidbank Corporation v. Perez,[18] thus:
In Manchester Development Corporation v. Court of Appeals, the Court held that a pleading which does not specify in the prayer the amount sought shall not be admitted or shall be expunged, and that a court acquires jurisdiction only upon payment of the prescribed docket fee. This rule was relaxed in Sun Insurance Office, Ltd. v. Asuncion which was echoed in the 2005 case of Heirs of Bertuldo Hinog v. Melico, the pertinent portion of the decision in the latter case reads:
Plainly, while the payment of prescribed docket fee is a jurisdictional requirement, even its non-payment at the time of filing does not automatically cause the dismissal of the case, as long as the fee is paid within the applicable prescriptive or reglementary period, more so when the party involved demonstrates a willingness to abide by the rules prescribing such payment. Thus, when insufficient filing fees were initially paid by the plaintiffs and there was no intention to defraud the government, the Manchester rule does not apply. (Emphasis and underscoring appear in the original text of the decision)
From the foregoing disquisition, it appears that the primary consideration in determining whether the case should be dismissed due to insufficient filing or docket fees is the absence or presence of bad faith and intent to defraud the government.
The ruling in Ayala Land, Inc. v. Spouses Carpo[19] is also instructive:
xxx As early as 1946, in the case of Segovia v. Barrios, we ruled that where an appellant in good faith paid less than the correct amount for the docket fee because that was the amount he was required to pay by the clerk of court, xxx it is error to dismiss his appeal because –
every citizen has the right to assume and trust that a public officer charged by law with certain duties knows his duties and performs them in accordance with law. To penalize such citizen for relying upon said officer in all good faith is repugnant to justice.
Despite the passage of time, the ruling in Segovia is still good law which courts, in the exercise of its discretion, can still apply. (Emphasis supplied)
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No Bad Faith and Intent to Defraud Government on Part of Gonzales
Contrary to the position taken by L & R, We do not find any indicium of bad faith on the part of Gonzales. She had stated the complete factual backdrop of her case, from the time her parcels of land were mortgaged to L & R up to the foreclosure of the mortgage and eventual consolidation of the titles in the name of the latter until the issuance of the writs of possession. She also alleged the present value of the subject lands which could have been the basis of the Office of the Clerk of Court in computing the correct docket fees. Despite this full disclosure, the docket fees were assessed based on the fixed or flat rate for actions incapable of pecuniary estimation as provided in Section 7 (b) of A.M. No. 04-2-04 SC[20] and the Office of the Clerk of Court required Gonzales to pay P5,425.00. Lest it be misunderstood, the determination of the nature of an action depends on the allegations in the complaint. If the action for nullification of foreclosure sale is intimately related to the recovery of possession and title, as in this case, it is considered as a real action and the docket fees thereof should be computed based on the fair market value of the involved parcels of land pursuant to the mandate of Section 7 (a) of A.M. No. 04-2-04-SC. The ruling in Ruby Shelter Builders and Realty Development Corporation v. Formaran III,[21] is enlightening:
A real action is one in which the plaintiff seeks the recovery of real property; or, as indicated in what is now Section 1, Rule 4 of the Rules of Court, a real action is an action affecting title to or recovery of possession of real property.
Section 7, Rule 141 of the Rules of Court, prior to its amendment by A.M. No. 04-2-04-SC, had a specific paragraph governing the assessment of the docket fees for real action, to wit:
In a real action, the assessed value of the property, or if there is none, the estimated value thereof shall be alleged by the claimant and shall be the basis in computing the fees.
It was in accordance with the afore-quoted provision that the Court, in Gochan v. Gochan, held that although the caption of the complaint filed by therein respondents Mercedes Gochan, et al. with the RTC was denominated as one for “specific performance and damages,” the relief sought was the conveyance or transfer of real property, or ultimately, the execution of deeds of conveyance in their favor of the real properties enumerated in the provisional memorandum of agreement. Under these circumstances, the case before the RTC was actually a real action, affecting as it did title to or possession of real property. Consequently, the basis for determining the correct docket fees shall be the assessed value of the property, or the estimated value thereof as alleged in the complaint. But since Mercedes Gochan failed to allege in their complaint the value of the real properties, the Court found that the RTC did not acquire jurisdiction over the same for non-payment of the correct docket fees.
Likewise, in Siapno v. Manalo, the Court disregarded the title/denomination of therein plaintiff Manalo’s amended petition as one for Mandamu s with Revocation of Title and Damages; and adjudged the same to be a real action, the filing fees for which should have been computed based on the assessed value of the subject property or, if there was none, the estimated value thereof. The Court expounded in Siapno that:
In his amended petition, respondent Manalo prayed that NTA’s sale of the property in dispute to Standford East Realty Corporation and the title issued to the latter on the basis thereof, be declared null and void. In a very real sense, albeit the amended petition is styled as one for “Mandamus with Revocation of Title and Damages,” it is, at bottom,a suit to recover from Standford the realty in question and to vest in respondent the ownership and possession thereof. In short, the amended petition is in reality an action in res or a real action. Our pronouncement in Fortune Motors (Phils.), Inc. vs. Court of Appeals is instructive. There, we said:
A prayer for annulment or rescission of contract does not operate to efface the true objectives and nature of the action which is to recover real property. (Inton, et al., v. Quintan, 81 Phil. 97, 1948)
An action for the annulment or rescission of a sale of real property is a real action. Its prime objective is to recover said real property. (Gavieres v. Sanchez, 94 Phil. 760, 1954)
An action to annul a real estate mortgage foreclosure sale is no different from an action to annul a private sale of real property. (Muñoz v. Llamas, 87 Phil. 737, 1950).
While it is true that petitioner does not directly seek the recovery of title or possession of the property in question, his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building which, under the law, is considered immovable property, the recovery of which is petitioner’s primary objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective and nature of the case, which is to recover said real property. It is a real action.
Unfortunately, and evidently to evade payment of the correct amount of filing fee, respondent Manalo never alleged in the body of his amended petition, much less in the prayer portion thereof, the assessed value of the subject res, or, if there is none, the estimated value thereof, to serve as basis for the receiving clerk in computing and arriving at the proper amount of filing fee due thereon, as required under Section 7 of this Court’s en banc resolution of 04 September 1990 (Re: Proposed Amendments to Rule 141 on Legal Fees). (Emphasis supplied)
In contrast with the Ruby Shelter[22] and Gochan[23] cases, there is no apparent intent to evade payment of filing fees in the case at bench. To reiterate, there was a full disclosure of the facts needed to determine the correct docket or filing fees and the assessed value of the parcels of land was expressly stated in the body of the complaint. We cannot therefore fault Gonzales if she relied on the assessment made by the Office of the Clerk of Court.
Further, it cannot be said that Gonzales is unwilling to pay the correct docket fees. It bears noting that although she initially argued that her cause of action is incapable of pecuniary estimation, she did not elevate to this Court the denial of her motion for reconsideration from the May 17, 2013 Order directing her to pay the deficiency in the filing fees amounting to P159,075.00. Instead of insisting on the nature of her action, she filed a motion to litigate as indigent party[24] and by doing so, We are convinced that she has no intent to defraud the government. It must be borne in mind that the amount of the docket and other lawful fees which the indigent was exempted from paying shall be a lien on any judgment rendered in the case favorable to the indigent, unless the court otherwise provides.[25]
All told, no grave abuse of discretion could be attributed to the RTC in denying L & R’s motion to dismiss. It properly relied on Lu v. Lu Ym[26] where the Supreme Court said that if there is a mistake in the 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 instant petition is DISMISSED and the prayer for injunctive relief is DENIED for lack of merit.
SO ORDERED.
PEDRO B. CORALES
Associate Justice
WE CONCUR:
MARIFLOR P. PUNZALAN CASTILLO
Associate Justice
AMY C. LAZARO-JAVIER
Associate Justice
CERTIFICATION
Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.
MARIFLOR P. PUNZALAN CASTILLO
Associate Justice
Chairperson, Fifteenth Division
[1] Rollo, pages 3-12.
[2] Penned by Presiding Judge Maximo M. De Leon, ibid., page 16.
[3] Ibid., pages 18-19.
[4] Ibid., pages 64-66.
[5] See Urgent Motion for Reconsideration, ibid., pages 79-84.
[6] Referred to in other parts of the records as Herminia Garcia Gonzalez.
[7] Complaint, rollo, pages 24-34.
[8] Supra, at note 4.
[9] See Opposition of Gonzales, rollo, pages 70-78.
[10] Copy of the May 17, 2013 Order was not appended to the Petition but it was mentioned in the July 3, 2013 Resolution.
[11] G.R. Nos. 79937-38. February 13, 1989.
[12] Supreme Court A.M. No. 04-2-04-SC, Section 2. Fees in Lien – Where the court in its final judgment awards a claim not alleged, or a relief different from, or more than that claimed in the pleading, the party concerned shall constitute a lien on the judgment in satisfaction of the said lien. The clerk of court shall assess and collect the corresponding fees.
[13] G.R. No. 75919. May 7, 1987.
.
G.R. No. 143089. February 27, 2003.
[14] See Comment, pages 100-110.
[15] Supra, at note 13.
[16] Supra, at note 11.
[17] G.R. No. 181842. February 5, 2010.
[18] G.R. No. 140162. November 22, 2000.
[19] Sec. 7. Clerks of Regional Trial Courts. –
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(b) For Filing
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Effective Nov. 11, 2006
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| 1. Actions where the value of | P2,000.00 | |
| the subject matter cannot be | ||
| estimated. |
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[20] G.R. No. 175914. February 10, 2009.
[21] Ibid.
[22] Supra, at note 14.
[23] See Ex-Parte Motion for Application to Litigate as Indigent Litigant, Annex “C” of Gonzales Comment, rollo, pages 132-134.
[24] See Rules of Court, Rule 3, Section 21 in relation to Rule 141, Section 19 which reads:
SEC. 19. Indigent litigants exempt from payment of legal fees. – INDIGENT LITIGANT (A) WHOSE GROSS INCOME AND THAT OF THEIR IMMEDIATE FAMILY DO NOT EXCEED AN AMOUNT DOUBLE THE MONTHLY MINIMUM WAGE OF AN EMPLOYEE AND (B) WHO DO NOT OWN REAL PROPERTY WITH A FAIR MARKET VALUE AS STATED IN THE CURRENT TAX DECLARATION OF MORE THAN THREE HUNDRED THOUSAND PESOS (P300,000.00) SHALL BE EXEMPT FROM THE PAYMENT OF LEGAL FEES.
The legal fees shall be a lien on any judgment rendered in the case favorable to the indigent unless the court otherwise provides. (Emphasis supplied)
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[25] G.R. No. 153690 and G.R. Nos. 157381 and 170889. February 15, 2011.