RUBY SHELTER BUILDERS AND REALTY DEVELOPMENT CORPORATION, PETITIONER, VS. HON. PABLO C. FORMARAN III, PRESIDING JUDGE OF REGIONAL TRIAL COURT BRANCH 21, NAGA CITY, AS PAIRING JU…

Ruby Shelter Builders and Realty Development versus Formaran

The Case

This is a petition for review on certiorari brought by Ruby Shelter Builders and Realty Development Corporation against the Presiding Judge of a branch of the Regional Trial Court of Naga City, arising from a dispute over court docket fees. The petitioner had filed a complaint for declaration of nullity of deeds of sale and damages, and paid docket fees on the theory that its action was incapable of pecuniary estimation. The trial court, later affirmed by the Court of Appeals, held that the action was a real action and that the fees must be computed under the schedule for actions involving real property. The case matters because it fixes the rule on how docket fees are assessed in an action for annulment of deeds of sale over land, and it reminds every litigant that the payment of the prescribed docket fee is what vests a trial court with jurisdiction.

Procedural History

The petitioner filed its complaint before the Regional Trial Court of Naga City, which was docketed as a civil case for declaration of nullity of deeds of sale and damages. Upon filing, the petitioner paid docket and other legal fees as assessed by the Office of the Clerk of Court, which initially treated the case as an action incapable of pecuniary estimation. The respondent Romeo Tan then filed an Omnibus Motion insisting that the case involved real property and that the fees should be computed under the schedule for property. The trial court issued an Order granting the motion and directing the petitioner to pay additional filing fees, and later denied the petitioner's motion for partial reconsideration. The petitioner then filed a petition for certiorari with the Court of Appeals, which affirmed the trial court's orders. Without seeking reconsideration, the petitioner elevated the matter to the Supreme Court by petition for review on certiorari.

Facts

The petitioner obtained a loan from Romeo Tan and Roberto Obiedo, secured by real estate mortgages over five parcels of land in Naga City, all registered in the petitioner's name. When the petitioner could not pay, the parties executed a Memorandum of Agreement granting the petitioner until the end of December 2005 to settle its indebtedness, condoning a large amount of accrued interest, and requiring the petitioner to execute, by way of dacion en pago, deeds of absolute sale over the same parcels of land. The petitioner retained the right to redeem the properties within the agreed period.

The petitioner failed to pay within the period. The respondents then presented the deeds of absolute sale before the Register of Deeds and secured new titles over the five parcels in their own names. The petitioner filed a complaint for declaration of nullity of the deeds of sale and damages, with a prayer for injunctive relief, alleging among others that the deeds were executed merely as security and constituted a pactum commissorium, and that the acknowledgments before the notary were falsified.

Upon filing the complaint, the petitioner paid docket fees as assessed by the Clerk of Court, which treated the action as incapable of pecuniary estimation. The respondent Tan moved for a recomputation, and the trial court ruled that the action involved real property and that the fees should be computed under the schedule for property. The Clerk of Court later computed the additional amount still due from the petitioner.

Issues

• Whether or not the action for declaration of nullity of deeds of sale and damages is a real action involving real property, such that docket fees must be computed under the schedule for property rather than as an action incapable of pecuniary estimation.
• Whether or not the trial court acted with grave abuse of discretion in ordering the petitioner to pay additional docket fees.

Applicable Provisions

Section 7 of Rule 141 of the Rules of Court, as amended, provides in its opening paragraph on clerks of Regional Trial Courts:

For filing an action or a permissive or compulsory counterclaim, cross-claim, or money claim against an estate not based on judgment, or for filing a third-party, fourth-party, etc. complaint, or a complaint-in-intervention, if the total sum claimed, inclusive of interests, penalties, surcharges, damages of whatever kind, and attorney's fees, litigation expenses and costs and/or in cases involving property, the fair market value of the real property in litigation stated in the current tax declaration or current zonal valuation of the Bureau of Internal Revenue, whichever is higher, or if there is none, the stated value of the property in litigation or the value of the personal property in litigation as alleged by the claimant, is:

This is the schedule applied by the trial court and the Court of Appeals in assessing the additional fees against the petitioner.

The same Section further provides:

If the action involves both a money claim and relief pertaining to property, then the fees will be charged on both the amounts claimed and value of property based on the formula prescribed in this paragraph a.

This provision governs the petitioner's complaint, which sought both the annulment of the deeds over the land and an award of damages.

Ruling

On the first issue, the Court held that the petitioner's complaint involved not only the annulment of the deeds of sale but also the recovery of the real properties described in those documents. The objective was to cancel the deeds and ultimately to recover possession of the parcels of land. It was therefore a real action, and the additional docket fees had to be assessed under the schedule for property, not under the schedule for actions incapable of pecuniary estimation.

On the second issue, the Court held that the trial court committed no grave abuse of discretion. Grave abuse of discretion means a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction, and mere abuse of discretion is not enough. The trial court acted properly and in accordance with law when it ordered the recomputation and gave the petitioner time to pay the additional fees.

The Court also recalled the settled rule on jurisdiction, quoting its earlier pronouncement:

The court acquires jurisdiction over any case only upon the payment of the prescribed docket fee.

Consistent with the liberal tenor of its earlier guidelines, the Court noted that the trial court, instead of dismissing the complaint outright, allowed the petitioner time to pay the additional docket fees.

Doctrine

An action for declaration of nullity of deeds of sale over real property, coupled with a prayer to recover the properties and a claim for damages, is a real action. Its docket fees must be computed under the schedule for cases involving property, based on the fair market value stated in the current tax declaration or the current zonal valuation of the Bureau of Internal Revenue, whichever is higher. Where the action involves both a money claim and relief pertaining to property, fees are charged on both the amounts claimed and the value of the property. Finally, the payment of the prescribed docket fee is mandatory and jurisdictional, for the court acquires jurisdiction over a case only upon such payment.

Disposition

The Supreme Court denied the petition and affirmed the Decision of the Court of Appeals, which had upheld the trial court's orders requiring the petitioner to pay the additional docket fees computed under the schedule for property.

Remember This

Memorize this line: the court acquires jurisdiction over any case only upon the payment of the prescribed docket fee, and an annulment of deeds of sale over land is a real action assessed on the property's value. Examiners use this case to test the real action versus incapable of pecuniary estimation distinction and the jurisdictional character of docket fees.