FEDMAN DEVELOPMENT CORPORATION, PETITIONER, VS. FEDERICO AGCAOILI, RESPONDENT.

Fedman Development versus Agcaoili

The Case

This is a petition for review brought by Fedman Development Corporation against Federico Agcaoili, a lawyer and condominium unit buyer who sued the developer and the condominium corporation for damages after his electric supply was cut off. The case matters for two reasons a reviewee must hold onto. First, it is a clean statement of the rule on docket fees and jurisdiction: the payment of insufficient filing fees, honestly made, does not strip the trial court of jurisdiction. Second, it illustrates estoppel by conduct against a party who attacks jurisdiction only after losing on the merits. The Court also speaks on the Maceda Law and on the duty of a developer to its unit buyers.

Procedural History

Agcaoili filed a complaint for damages against Fedman Development and the Fedman Suite Condominium Corporation in the Regional Trial Court of Makati City, Branch 150. After trial, the Regional Trial Court rendered judgment in favor of Agcaoili, declaring the increased interest rates illegal, ordering the reinstatement of the contract to sell, the restoration of air-conditioning and electric services, and the payment of actual, moral, and exemplary damages and attorney's fees. Fedman Development appealed to the Court of Appeals, which affirmed the trial court in full. Fedman Development then came to the Supreme Court on a petition for review.

Facts

Fedman Development owned and developed the Fedman Suites Building in Makati City. In 1975, Interchem Laboratories bought Unit 411 under a contract to sell. In 1980, with the developer's consent, Interchem transferred all its rights to Agcaoili, who undertook to pay the balance in monthly installments with interest, plus condominium dues.

In December 1983, the centralized air-conditioning unit on the fourth floor broke down. Agcaoili demanded repairs, and when his letters went unheeded, he suspended his payments. Fedman Development cancelled the contract to sell and cut off his electricity. Agcaoili sued, and the parties settled. Under a compromise agreement approved by the court in 1985, Agcaoili paid his arrears, the contract was reinstated, and he was allowed to install two window-type air-conditioners.

In April 1986, Fedman Development again disconnected the electricity of Unit 411. Agcaoili moved for execution of the compromise judgment and, in March 1987, filed the present complaint for damages. He alleged that the disconnection deprived him of the use of the unit and hurt his law practice, that the increased interest was illegal, and that the developer and the condominium corporation were one and the same. Fedman Development answered, invoked res judicata, and set up a compulsory counterclaim.

Issues

• Whether or not the trial court acquired jurisdiction over the case despite the insufficiency of the docket fees paid, the complaint having failed to specify the amounts of moral and exemplary damages and attorney's fees.
• Whether or not the Housing and Land Use Regulatory Board, rather than the Regional Trial Court, had jurisdiction over the subject matter, and whether Fedman Development is barred from raising this objection.
• Whether or not Agcaoili was justified in suspending his monthly amortizations, and whether Fedman Development validly cancelled the contract to sell.
• Whether or not Fedman Development and the condominium corporation are one and the same, and solidarily liable for damages.

Applicable Provisions

Article 1308 of the Civil Code provides:

The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.

This is the basis for striking down the unilateral increase in interest, since one party cannot alter the agreed terms by itself.

Article 1171 of the Civil Code provides:

Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof are liable for damages.

This is the provision under which the developer and the condominium corporation were held liable for failing to maintain the common facilities.

Section 2, Rule 141 of the Rules of Court provides:

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 pay the additional fees which shall constitute a lien on the judgment in satisfaction of said lien. The clerk of court shall assess and collect the corresponding fees.

This is the mechanism by which any docket fee deficiency is collected as a lien on the judgment, without affecting jurisdiction.

Ruling

On the first issue, the Court held that the filing of the complaint and the payment of the prescribed docket fee are the acts that vest jurisdiction. Where the reliefs are purely for sums of money and damages, the fees are assessed on the aggregate amount claimed, so ideally the complaint must specify the sums sought. But the non-specification of damages does not divest the court of jurisdiction, provided there is no bad faith or intent to defraud the Government. Since Agcaoili paid the amount assessed by the clerk of court, bad faith was negated. The Court nevertheless directed the clerk of court to assess and collect the deficiency as a fee in lien.

On the second issue, the Court held that Fedman Development was barred by estoppel. It had submitted a compromise agreement for the trial court's approval, sought affirmative relief through its counterclaim, and invoked the Housing and Land Use Regulatory Board only more than five years after the first case began and after an unfavorable ruling. A litigant cannot submit a case for decision and then attack the judgment for lack of jurisdiction when the result displeases him.

On the third issue, the Court sustained the findings that the increased interest was unjustified for lack of proof, and that the cancellation of the contract to sell disregarded the Maceda Law, which requires, among other things, the refund of the cash surrender value equivalent to fifty percent of the total payments made. The contract to sell therefore remained valid and subsisting.

On the fourth issue, the Court held that the claim of separate personality was a question of fact that cannot be reviewed under Rule 45, and that the developer and the condominium corporation failed in their duty to maintain the air-conditioning, water, lighting, fire exit, and elevators, making them liable for damages.

Doctrine

The payment of the prescribed docket fee is what vests jurisdiction, but an insufficient payment honestly made does not divest the trial court of jurisdiction. The clerk of court has the duty to make a deficiency assessment, and the deficiency is collected as a fee in lien. A party who invokes a court's jurisdiction, seeks affirmative relief, and submits to its judgment is estopped from later denying that jurisdiction after losing. A contract binds both parties, and its compliance cannot be left to the will of one of them. A developer who fails to maintain the common facilities is liable for damages under Article 1171.

Disposition

The Supreme Court denied the petition, affirmed the Court of Appeals, and directed the clerk of court to assess and collect the additional docket fees from Agcaoili as a fee in lien.

Remember This

Memorize this line: insufficient docket fees, honestly paid on the clerk's assessment, do not divest the trial court of jurisdiction. Examiners use this case on jurisdiction over the person and subject matter, on estoppel by conduct, and on the Maceda Law's protection of installment buyers.