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G.R. No. 175914

THIRDDIVISION

RUBYSHELTERBUILDERSAND

G.R.No.175914

Present:

YNARESSANTIAGO,J.,
Chairperson,
AUSTRIAMARTINEZ,
CHICONAZARIO,
NACHURA,and
PERALTA,JJ.

Promulgated:

REALTY
DEVELOPMENT
CORPORATION,
Petitioner,

versus

HON. PABLO C. FORMARAN III,

Presiding Judge of Regional Trial
Court Branch 21, Naga City, as
Pairing Judge for Regional Trial
CourtBranch22,FormerlyPresided
By HON. NOVELITA VILLEGAS
LLAGUNO (Retired 01 May 2006),

ROMEO Y. TAN, ROBERTO L.

OBIEDO and ATTY. TOMAS A.

REYES,
February10,2009
Respondents.
xx

DECISION

CHICONAZARIO,J.:

BeforethisCourtisaPetitionforReviewonCertiorariunderRule45oftheRulesofCourtseeking
[1]
thereversaloftheDecision dated22November2006oftheCourtofAppealsinCAG.R.SPNo.
[2]
94800.TheCourtofAppeals,initsassailedDecision,affirmedtheOrder dated24March2006
of the Regional Trial Court (RTC), Branch 22, of Naga City, in Civil Case No. RTC20060030,
ordering petitioner Ruby Shelter Builders and Realty Development Corporation to pay additional
docket/filingfees,computedbasedonSection7(a)ofRule141oftheRulesofCourt,asamended.

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ThepresentPetitionarosefromthefollowingfacts:

[3]
Petitionerobtainedaloan inthetotalamountofP95,700,620.00fromrespondentsRomeo
Y.Tan(Tan)andRobertoL.Obiedo(Obiedo),securedbyrealestatemortgagesoverfiveparcelsof
land, all located in Triangulo, Naga City, covered by Transfer Certificates of Title (TCTs) No.
[4]
[5]
[6]
[7]
[8]
38376, No.29918, No.38374, No.39232, andNo.39225, issuedbytheRegistryof
DeedsforNagaCity,inthenameofpetitioner.Whenpetitionerwasunabletopaytheloanwhenit
becamedueanddemandable,respondentsTanandObiedoagreedtoanextensionofthesame.

[9]
In a Memorandum of Agreement dated 17 March 2005, respondents Tan and Obiedo
granted petitioner until 31 December 2005 to settle its indebtedness, and condoned the interests,
penalties and surcharges accruing thereon from 1 October 2004 to 31 December 2005 which
amounted to P74,678,647.00. The Memorandum of Agreement required, in turn, that petitioner
executesimultaneouslywiththesaidMemorandum,bywayofdacionenpago,DeedsofAbsolute
Sale in favor of respondents Tan and Obiedo, covering the same parcels of land subject of the
mortgages. The Deeds of Absolute Sale would be uniformly dated 2 January 2006, and state that
petitionersoldtorespondentsTanandObiedotheparcelsoflandforthefollowingpurchaseprices:

TCTNo.

38376
29918
38374
39232
39225

PurchasePrice

P9,340,000.00
P28,000,000.00
P12,000,000.00
P1,600,000.00
P1,600,000.00

Petitionercouldchoosetopayoffitsindebtednesswithindividualorallfiveparcelsofland
oritcouldredeemsaidpropertiesbypayingrespondentsTanandObiedothefollowingpricesfor
thesame,inclusiveofinterestandpenalties:

TCTNo.

38376
29918
38374
39232
39225

RedemptionPrice

P25,328,939.00
P35,660,800.00
P28,477,600.00
P6,233,381.00
P6,233,381.00

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Intheeventthatpetitionerisabletoredeemanyoftheaforementionedparcelsofland,the
DeedofAbsoluteSalecoveringthesaidpropertyshallbenullifiedandhavenoforceandeffectand
respondents Tan and Obiedo shall then return the owners duplicate of the corresponding TCT to
petitioner and also execute a Deed of Discharge of Mortgage. However, if petitioner is unable to
redeem the parcels of land within the period agreed upon, respondents Tan and Obiedo could
alreadypresenttheDeedsofAbsoluteSalecoveringthesametotheOfficeoftheRegisterofDeeds
for Naga City so respondents Tan and Obiedo could acquire TCTs to the said properties in their
names.

TheMemorandumofAgreementfurtherprovidedthatshouldpetitionercontest,judiciallyor
otherwise, any act, transaction, or event related to or necessarily connected with the said
Memorandum and the Deeds of Absolute Sale involving the five parcels of land, it would pay
respondentsTanandObiedoP10,000,000.00asliquidateddamagesinclusiveofcostsandattorneys
fees.PetitionerwouldlikewisepayrespondentsTanandObiedothecondonedinterests,surcharges
[10]
andpenalties.
Finally,shouldacontestarisefromtheMemorandumofAgreement,Mr.Ruben
Sia (Sia), President of petitioner corporation, personally assumes, jointly and severally with
petitioner,thelattersmonetaryobligationtorespondentTanandObiedo.

RespondentAtty.TomasA.Reyes(Reyes)wastheNotaryPublicwhonotarizedtheMemorandum
of Agreement dated 17 March 2005 between respondent Tan and Obiedo, on one hand, and
petitioner,ontheother.

Pursuant to the Memorandum of Agreement, petitioner, represented by Mr. Sia, executed

[11]
separateDeedsofAbsoluteSale,
overthefiveparcelsofland,infavorofrespondentsTanand
Obiedo. On the blank spaces provided for in the said Deeds, somebody wrote the 3rd of January
2006asthedateoftheirexecution.TheDeedswereagainnotarizedbyrespondentAtty.Reyesalso
on3January2006.

Withoutpaymenthavingbeenmadebypetitioneron31December2005,respondentsTanand
ObiedopresentedtheDeedsofAbsoluteSaledated3January2006beforetheRegisterofDeedsof
Naga City on 8 March 2006, as a result of which, they were able to secure TCTs over the five
parcelsoflandintheirnames.

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[12]
On16March2006,petitionerfiledbeforetheRTCaComplaint
againstrespondentsTan,
Obiedo,andAtty.Reyes,fordeclarationofnullityofdeedsofsalesanddamages,withprayerfor
the issuance of a writ of preliminary injunction and/or temporary restraining order (TRO). The
ComplaintwasdocketedasCivilCaseNo.20060030.

Onthebasisofthefactsalreadyrecountedabove,petitionerraisedtwocausesofactioninits
Complaint.

As for the first cause of action, petitioner alleged that as early as 27 December 2005, its
PresidentalreadywrotealetterinformingrespondentsTanandObiedooftheintentionofpetitioner
topayitsloanandrequestingameetingtocomputethefinalamountdue.Thepartiesheldmeetings
on3and4January2006buttheyfailedtoarriveatamutuallyacceptablecomputationofthefinal
amount of loan payable. Respondents Tan and Obiedo then refused the request of petitioner for
further dialogues. Unbeknownst to petitioner, despite the ongoing meetings, respondents Tan and
Obiedo,inevidentbadfaith,alreadyhadthepreexecutedDeedsofAbsoluteSalenotarizedon3
January 2006 by respondent Atty. Reyes. Atty. Reyes, in connivance with respondents Tan and
Obiedo, falsely made it appear in the Deeds of Absolute Sale that Mr. Sia had personally
acknowledged/ratifiedthesaidDeedsbeforeAtty.Reyes.

AssertingthattheDeedsofAbsoluteSaleoverthefiveparcelsoflandwereexecutedmerely
assecurityforthepaymentofitsloantorespondentsTanandObiedothattheDeedsofAbsolute
Sale, executed in accordance with the Memorandum of Agreement, constituted pactum
commisorium and as such, were null and void and that the acknowledgment in the Deeds of
AbsoluteSalewerefalsified,petitioneraverred:

13.Thatbyreasonofthefraudulentactionsbythe[hereinrespondents],[hereinpetitioner]is
prejudicedandisnowindangerofbeingdeprived,physicallyandlegally,ofthemortgagedproperties
without benefit of legal processes such as the remedy of foreclosure and its attendant procedures,
solemnitiesandremediesavailabletoamortgagor,while[petitioner]isdesirousandwillingtopayits
[13]
obligationandhavethemortgagedpropertiesreleased.

In support of its second cause of action, petitioner narrated in its Complaint that on 18
January 2006, respondents Tan and Obiedo forcibly took over, with the use of armed men,
possessionofthefiveparcelsoflandsubjectofthefalsifiedDeedsofAbsoluteSaleandfencedthe
said properties with barbed wire. Beginning 3 March 2006, respondents Tan and Obiedo started
demolishingsomeofthecommercialspacesstandingontheparcelsoflandinquestionwhichwere
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beingrentedoutbypetitioner.RespondentsTanandObiedowerealsoabouttoteardownaprincipal
improvementonthepropertiesconsistingofasteelandconcretestructurehousingamotorvehicle
terminaloperatedbypetitioner.TheactionsofrespondentsTanandObiedoweretothedamageand
prejudice of petitioner and its tenants/lessees. Petitioner, alone, claimed to have suffered at least
P300,000.00inactualdamagesbyreasonofthephysicalinvasionbyrespondentsTanandObiedo
andtheirarmedgoonsofthefiveparcelsofland.

Ultimately,petitionersprayerinitsComplaintreads:

WHEREFORE,premisesconsidered,itismostrespectfullyprayedofthisHonorableCourt
that upon the filing of this complaint, a 72hour temporary restraining order be forthwith issued ex
parte:

(a)Restraining[hereinrespondents]TanandObiedo,theiragents,priviesorrepresentatives,
from committing act/s tending to alienate the mortgaged properties from the [herein petitioner]
pendingtheresolutionofthecase,includingbutnotlimitedtotheactscomplainedofinparagraph14,
above

(b) Restraining the Register of Deeds of Naga City from entertaining moves by the
[respondents] to have [petitioners] certificates of title to the mortgaged properties cancelled and
changed/registeredin[respondents]TansandObiedosnames,and/orreleasedtothem

(c)Afternoticeandhearing,thatawritofpreliminaryinjunctionbeissuedimposingthesame
restraintsindicatedinthenextprecedingtwoparagraphsofthisprayerand

(d)Aftertrial,judgmentberendered:

1.Makingtheinjunctionpermanent

2. DeclaringtheprovisionintheMemorandumofAgreementrequiringthe[petitioner]to
execute deed of sales (sic) in favor of the [respondents Tan and Obiedo] as dacion en pago in the
eventofnonpaymentofthedebtaspactumcommissorium

3. AnnullingtheDeed[s]ofSaleforTCTNos.29918,38374,38376,39225and39232,all
datedJanuary3,2006,thesamebeingincontraventionoflaw

4. Orderingthe[respondents]jointlyandsolidarilytopaythe[petitioner]actualdamagesof
atleastP300,000.00attorneysfeesintheamountofP100,000.00plusP1,000.00percourtattendance
ofcounselasappearancefeelitigationexpensesintheamountofatleastP10,000.00andexemplary
damagesintheamountofP300,000.00,plusthecosts.

[Petitioner]furtherpraysforsuchotherreliefsasmaybeproper,justandequitableunderthe
[14]
premises.

UponfilingitsComplaintwiththeRTCon16March2006,petitionerpaidthesumofP13,644.25
fordocketandotherlegalfees,asassessedbytheOfficeoftheClerkofCourt.TheClerkofCourt
initially considered Civil Case No. 20060030 as an action incapable of pecuniary estimation and
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computedthedocketandotherlegalfeesduethereonaccordingtoSection7(b)(1),Rule141ofthe
RulesofCourt.

[15]
OnlyrespondentTanfiledanAnswer
totheComplaintofpetitioner.RespondentTandid
admitthatmeetingswereheldwithMr.Sia,astherepresentativeofpetitioner,tothreshoutMr.Sias
charge that the computation by respondents Tan and Obiedo of the interests, surcharges and
penaltiesaccruingontheloanofpetitionerwasrepletewitherrorsanduncertainties.However,Mr.
Sia failed to back up his accusation of errors and uncertainties and to present his own final
computation of the amount due. Disappointed and exasperated, respondents Tan and Obiedo
informedMr.SiathattheyhadalreadyaskedrespondentAtty.Reyestocomeovertonotarizethe
Deeds of Absolute Sale. Respondent Atty. Reyes asked Mr. Sia whether it was his signature
appearingabovehisprintednameontheDeedsofAbsoluteSale,towhichMr.Siarepliedyes.On4
January2006,Mr.Siastillfailedtoestablishhisclaimoferrorsanduncertaintiesinthecomputation
ofthetotalamountwhichpetitionermustpayrespondentTanandObiedo.Mr.Sia,instead,soughta
ninemonthextensionforpayingtheloanobligationofpetitionerandthereductionoftheinterest
rate thereon to only one percent (1%) per month. Respondents Tan and Obiedo rejected both
demands.

Respondent Tan maintained that the Deeds of Absolute Sale were not executed merely as
securitiesfortheloanofpetitioner.TheDeedsofAbsoluteSaleoverthefiveparcelsoflandwere
the consideration for the payment of the total indebtedness of petitioner to respondents Tan and
Obiedo, and the condonation of the 15month interest which already accrued on the loan, while
providingpetitionerwiththegoldenopportunitytostillredeemallorevenportionsoftheproperties
coveredbysaidDeeds.Unfortunately,petitionerfailedtoexerciseitsrighttoredeemanyofthesaid
properties.

Belyingthattheyforciblytookpossessionofthefiveparcelsofland,respondentTanalleged
thatitwasMr.Siawho,withtheaidofarmedmen,onboardaSportsUtilityVehicleandatruck,
rammed into the personnel of respondents Tan and Obiedo causing melee and disturbance.
Moreover,bytheexecutionoftheDeedsofAbsoluteSale,thepropertiessubjectthereofwere,ipso
jure, delivered to respondents Tan and Obiedo. The demolition of the existing structures on the
propertieswasnothingbutanexerciseofdominionbyrespondentsTanandObiedo.

RespondentTan,thus,soughtnotjustthedismissaloftheComplaintofpetitioner,butalsothe
grantofhiscounterclaim.TheprayerinhisAnswerisfaithfullyreproducedbelow:
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Wherefore, premises considered, it is most respectfully prayed that, after due hearing,
judgment be rendered dismissing the complaint, and on the counterclaim, [herein petitioner] and
Ruben Sia, be ordered to indemnify, jointly and severally [herein respondents Tan and Obiedo] the
amountsofnotlessthanP10,000,000.00asliquidateddamagesandthefurthersumofnotlessthan
P500,000.00asattorneysfees.Inthealternative,andshoulditbecomenecessary,itisherebyprayed
that [petitioner] be ordered to pay herein [respondents Tan and Obiedo] the entire principal loan of
P95,700,620.00, plus interests, surcharges and penalties computed from March 17, 2005 until the
entiresumisfullypaid,includingtheamountofP74,678,647.00foregoneinterestcoveringtheperiod
from October 1, 2004 to December 31, 2005 or for a total of fifteen (15) months, plus incidental
expensesasmaybeprovedincourt,intheeventthatAnnexesGtoLbenullified.Otherreliefand
[16]
remediesasarejustandequitableunderthepremisesareherebyprayedfor.

Thereafter,respondentTanfiledbeforetheRTCanOmnibusMotioninwhichhecontended
that Civil Case No. 20060030 involved real properties, the docket fees for which should be
computedinaccordancewithSection7(a),notSection7(b)(1),ofRule141oftheRulesofCourt,as
amendedbyA.M.No.04204SCwhichtookeffecton16August2004.Since petitioner did not
paytheappropriatedocketfeesforCivilCaseNo.20060030,theRTCdidnotacquirejurisdiction
overthesaidcase.Hence, respondent Tan asked the RTC to issue an order requiring petitioner to
paythecorrectandaccuratedocketfeespursuanttoSection7(a),Rule141oftheRulesofCourt,as
amended and should petitioner fail to do so, to deny and dismiss the prayer of petitioner for the
annulmentoftheDeedsofAbsoluteSaleforhavingbeenexecutedincontraventionofthelaworof
theMemorandumofAgreementaspactumcommisorium.

As required by the RTC, the parties submitted their Position Papers on the matter. On 24
[17]
March2006,theRTCissuedanOrder
granting respondent Tans Omnibus Motion. In holding
thatbothpetitionerandrespondentTanmustpaydocketfeesinaccordancewithSection7(a),Rule
141oftheRulesofCourt,asamended,theRTCreasoned:

It must be noted that under paragraph (b) 2. of the said Section 7, it is provided that
QUIETING OF TITLE which is an action classified as beyond pecuniary estimation shall be
governedbyparagraph(a).Hence,thefilingfeeinanactionforDeclarationofNullityofDeedwhich
isalsoclassifiedasbeyondpecuniaryestimation,mustbecomputedbasedontheprovisionofSection
7(A)hereinabove,inpart,quoted.

Since[hereinrespondent],RomeoTaninhisAnswerhasacounterclaimagainsttheplaintiff,
theformermustlikewisepaythenecessaryfilling(sic)feesasprovidedforunderSection7(A)of
[18]
AmendedAdministrativeCircularNo.352004issuedbytheSupremeCourt.

Consequently,theRTCdecreedonthematterofdocket/filingfees:

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WHEREFORE, premises considered, the [herein petitioner] is hereby ordered to pay

additionalfilingfeeandthe[hereinrespondent],RomeoTanisalsoorderedtopaydocketandfiling
fees on his counterclaim, both computed based on Section 7(a) of the Supreme Court Amended
AdministrativeCircularNo.352004withinfifteen(15)daysfromreceiptofthisOrdertotheClerk
of Court, RegionalTrial Court, Naga City and for the latter to compute and to collect the said fees
[19]
accordingly.

[20]
Petitionermoved
forthepartialreconsiderationofthe24March2006OrderoftheRTC,
arguingthatCivilCaseNo.20060030wasprincipallyfortheannulmentoftheDeedsofAbsolute
Sale and, as such, incapable of pecuniary estimation. Petitioner submitted that the RTC erred in
applying Section 7(a), Rule 141 of the Rules of Court, as amended, to petitioners first cause of
actioninitsComplaintinCivilCaseNo.20060030.

[21]
In its Order
dated 29 March 2006, the RTC refused to reconsider its 24 March 2006
Order,basedonthefollowingratiocination:

Analyzing, the action herein pertains to real property, for as admitted by the [herein
petitioner],thedeedsofsaleinquestionpertaintorealpropertyxxx.TheDeedsofSalesubjectof
theinstantcasehavealreadybeentransferredinthenameofthe[hereinrespondentsTanandObiedo].

ComparedwithQuietingofTitle,thelatteractionisbroughtwhenthereiscloudonthetitleto
real property or any interest therein or to prevent a cloud from being cast upon title to the real
property(Art.476,CivilCodeofthePhilippines)andtheplaintiffmusthavelegalorequitabletitleto
or interest in the real property which is the subject matter of the action (Art. 447, ibid.), and yet
plaintiff in QUIETING OF TITLE is required to pay the fees in accordance with paragraph (a) of
Section7ofthesaidAmendedAdministrativeCircularNo.352004,hence,withmorereasonthatthe
[petitioner]whonolongerhastitletotherealpropertiessubjectoftheinstantcasemustberequiredto
paytherequiredfeesinaccordancewithSection7(a)oftheAmendedAdministrativeCircularNo.
352004aforementioned.

Furthermore,while[petitioner]claimsthattheactionfordeclarationofnullityofdeedofsale
andmemorandumofagreementisoneincapableofpecuniaryestimation,however,asarguedbythe
[respondentTan],theissueastohowmuchfilinganddocketfeesshouldbepaidwasneverraisedas
anissueinthecaseofRussellvs.Vestil,304SCRA738.

xxxx

[22]
WHEREFORE,theMotionforPartialReconsiderationisherebyDENIED.

In a letter dated 19 April 2006, the RTC Clerk of Court computed, upon the request of
counselforthepetitioner,theadditionaldocketfeespetitionermustpayforinCivilCaseNo.2006
0030 as directed in the aforementioned RTC Orders. Per the computation of the RTC Clerk of

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Court,afterexcludingtheamountpetitionerpreviouslypaidon16March2006,petitionermuststill
[23]
paytheamountofP720,392.60asdocketfees.

Petitioner,however,hadnotyetconceded,anditfiledaPetitionforCertiorariwiththeCourt
of Appeals the petition was docketed as CAG.R. SP No. 94800. According to petitioner, the
[24]
RTC
actedwithgraveabuseofdiscretion,amountingtolackorexcessofjurisdiction,whenit
issueditsOrdersdated24March2006and29March2006mandatingthatthedocket/filingfeesfor
CivilCaseNo.20060030,anactionforannulmentofdeedsofsale,beassessedunderSection7(a),
Rule 141 of the Rules of Court, as amended. If the Orders would not be revoked, corrected, or
rectified,petitionerwouldsuffergraveinjusticeandirreparabledamage.

On22November2006,theCourtofAppealspromulgateditsDecisionwhereinitheldthat:

Clearly, the petitioners complaint involves not only the annulment of the deeds of sale, but
alsotherecoveryoftherealpropertiesidentifiedinthesaiddocuments.Inotherwords,theobjectives
of the petitioner in filing the complaint were to cancel the deeds of sale and ultimately, to recover
possessionofthesame.Itisthereforearealaction.

Consequently,theadditionaldocketfeesthatmustbepaidcannotbeassessedinaccordance
withSection7(b).Asarealaction,Section7(a)mustbeappliedintheassessmentandpaymentofthe
properdocketfee.

Resultantly,thereisnograveabuseofdiscretionamountingtolackorexcessofjurisdictionon
thepartofthecourtaquo.Bygraveabuseofdiscretionismeantcapriciousandwhimsicalexerciseof
judgmentasisequivalenttolackofjurisdiction,andmereabuseofdiscretionisnotenoughitmustbe
grave.The abuse must be grave and patent, and it must be shown that the discretion was exercised
arbitrarilyanddespotically.

Suchasituationdoesnotexistinthisparticularcase.Theevidenceisinsufficienttoprovethat
thecourtaquoacteddespoticallyinrenderingtheassailedorders.Itactedproperlyandinaccordance
[25]
withlaw.Hence,errorcannotbeattributedtoit.

Hence,thefallooftheDecisionoftheappellatecourtreads:

WHEREFORE,thepetitionforcertiorariisDENIED.TheassailedOrdersofthecourtaquo
[26]
areAFFIRMED.

Without seeking reconsideration of the foregoing Decision with the Court of Appeals,
petitioner filed its Petition for Review on Certiorari before this Court, with a lone assignment of
error,towit:

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18. The herein petitioner most respectfully submits that the Court of Appeals committed a
graveandseriousreversibleerrorinaffirmingtheassailedOrdersoftheRegionalTrialCourtwhich
areclearly contrary to the pronouncement of this Honorable Court in the case of Spouses De
Leonv.CourtofAppeals,G.R.No.104796,March6,1998,nottomentionthefactthatifthesaid
judgmentisallowedtostandandnotrectified,thesamewouldresultingraveinjusticeandirreparable
damage to herein petitioner in view of the prohibitive amount assessed as a consequence of said
[27]
Orders.

[28]
In Manchester Development Corporation v. Court of Appeals,
the Court explicitly
pronounced that [t]he court acquires jurisdiction over any case only upon the payment of the
prescribed docket fee. Hence, the payment of docket fees is not only mandatory, but also
jurisdictional.

[29]
InSunInsuranceOffice,Ltd.(SIOL)v.Asuncion,
theCourtlaiddownguidelinesforthe
implementation of its previous pronouncement in Manchester under particular circumstances, to
wit:

1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the
paymentoftheprescribeddocketfee,thatvestsatrialcourtwithjurisdictionoverthesubjectmatter
ornatureoftheaction.Wherethefilingoftheinitiatorypleadingisnotaccompaniedbypaymentof
thedocketfee,thecourtmayallowpaymentofthefeewithinareasonabletimebutinnocasebeyond
theapplicableprescriptiveorreglementaryperiod.

2.Thesameruleappliestopermissivecounterclaims,thirdpartyclaimsandsimilarpleadings,
whichshallnotbeconsideredfileduntilandunlessthefilingfeeprescribedthereforispaid.Thecourt
mayalsoallowpaymentofsaidfeewithinareasonabletimebutalsoinnocasebeyonditsapplicable
prescriptiveorreglementaryperiod.

3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate
pleadingandpaymentoftheprescribedfilingfeebut,subsequently,thejudgmentawardsaclaimnot
specified in the pleading, or if specified the same has been left for determination by the court, the
additionalfilingfeethereforshallconstitutealienonthejudgment.Itshallbetheresponsibilityofthe
ClerkofCourtorhisdulyauthorizeddeputytoenforcesaidlienandassessandcollecttheadditional
fee.

InthePetitionatbar,theRTCfound,andtheCourtofAppealsaffirmed,thatpetitionerdid
notpaythecorrectamountofdocketfeesforCivilCaseNo.20060030.Accordingtoboththetrial
andappellatecourts,petitionershouldpaydocketfeesinaccordancewithSection7(a),Rule141of
theRulesofCourt,asamended.ConsistentwiththeliberaltenorofSunInsurance,theRTC,instead
ofdismissingoutrightpetitionersComplaintinCivilCaseNo.20060030,grantedpetitionertimeto
paytheadditionaldocketfees.DespitetheseemingmunificenceoftheRTC,petitionerrefusedto
pay the additional docket fees assessed against it, believing that it had already paid the correct
amountbefore,pursuanttoSection7(b)(1),Rule141oftheRulesofCourt,asamended.
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RelevanttothepresentcontroversyarethefollowingprovisionsunderRule141oftheRules
[30]
of Court, as amended by A.M. No. 04204SC
and Supreme Court Amended Administrative
[31]
CircularNo.352004
:

SEC.7.ClerksofRegionalTrialCourts.

(a)ForfilinganactionorapermissiveORCOMPULSORYcounterclaim,CROSSCLAIM,
ormoneyclaimagainstanestatenotbasedonjudgment,orforfilingathirdparty,fourthparty,etc.
complaint, or a complaintinintervention, if the total sum claimed, INCLUSIVE OF INTERESTS,
PENALTIES, SURCHARGES, DAMAGES OF WHATEVER KIND, AND ATTORNEYS FEES,
LITIGATIO NEXPENSES 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
CURRENTZONALVALUATIONOFTHEBUREAUOFINTERNALREVENUE,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 OR THE
VALUEOFTHEPERSONALPROPERTYINLITIGATIONASALLEGEDBYTHECLAIMANT,
is:

[Tableoffeesomitted.]

Iftheactioninvolvesbothamoneyclaimandreliefpertainingtoproperty,thenTHEfeeswill
bechargedonboththeamountsclaimedandvalueofpropertybasedontheformulaprescribedinthis
paragrapha.

(b)Forfiling:

1.Actionswherethevalueofthesubjectmattercannotbeestimated

2. Special civil actions, except judicial foreclosure of mortgage, EXPROPRIATION

PROCEEDINGS,PARTITIONANDQUIETINGOFTITLEwhichwill

3.Allotheractionsnotinvolvingproperty

[Tableoffeesomitted.]

ThedocketfeesunderSection7(a),Rule141,incasesinvolvingrealpropertydependonthe
fairmarketvalueofthesame:thehigherthevalueoftherealproperty,thehigherthedocketfees
due. In contrast, Section 7(b)(1), Rule 141 imposes a fixed or flat rate of docket fees on actions
incapableofpecuniaryestimation.

Inordertoresolvetheissueofwhetherpetitionerpaidthecorrectamountofdocketfees,itis
necessarytodeterminethetruenatureofitsComplaint.Thedictumadheredtointhisjurisdictionis
thatthenatureofanactionisdeterminedbytheallegationsinthebodyofthepleadingorComplaint
[32]
itself,ratherthanbyitstitleorheading.
However,theCourtfindsitnecessary,inascertaining
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thetruenatureofCivilCaseNo.20060030,totakeintoaccountsignificantfactsandcircumstances
beyond the Complaint of petitioner, facts and circumstances which petitioner failed to state in its
Complaintbutweredisclosedinthepreliminaryproceedingsbeforethecourtaquo.

PetitionerpersistentlyaversthatitsComplaintinCivilCaseNo.20060030isprimarilyfor
theannulmentoftheDeedsofAbsoluteSale.BasedontheallegationsandreliefsintheComplaint
alone, one would get the impression that the titles to the subject real properties still rest with
petitionerandthattheinterestofrespondentsTanandObiedointhesameliesonlyintheDeedsof
AbsoluteSalesoughttobeannulled.

What petitioner failed to mention in its Complaint was that respondents Tan and Obiedo
alreadyhadtheMemorandumofAgreement,whichclearlyprovidedfortheexecutionoftheDeeds
of Absolute Sale, registered on the TCTs over the five parcels of land, then still in the name of
petitioner.AfterrespondentsTanandObiedohadtheDeedsofAbsoluteSalenotarizedon3January
2006 and presented the same to Register of Deeds for Naga City on 8 March 2006, they were
alreadyissuedTCTsovertherealpropertiesinquestion,intheirownnames.RespondentsTanand
Obiedo have also acquired possession of the said properties, enabling them, by petitioners own
admission,todemolishtheimprovementsthereon.

It is, thus, suspect that petitioner kept mum about the aforementioned facts and
circumstanceswhentheyhadalreadytakenplacebeforeitfileditsComplaintbeforetheRTCon16
March 2006. Petitioner never expressed surprise when such facts and circumstances were
established before the RTC, nor moved to amend its Complaint accordingly. Even though the
MemorandumofAgreementwassupposedtohavelongbeenregisteredonitsTCTsoverthefive
parcelsofland,petitionerdidnotprayfortheremovalofthesameasacloudonitstitle.Inthesame
vein,althoughpetitionerallegedthatrespondentsTanandObiedoforciblytookphysicalpossession
ofthesubjectrealproperties,petitionerdidnotseektherestorationofsuchpossessiontoitself.And
despitelearningthatrespondentsTanandObiedoalreadysecuredTCTsoverthesubjectproperties
in their names, petitioner did not ask for the cancellation of said titles. The only logical and
reasonable explanation is that petitioner is reluctant to bring to the attention of the Court certain
factsandcircumstances,keepingitsComplaintsafelyworded,soastoinstituteonlyanactionfor
annulmentofDeedsofAbsoluteSale.Petitionerdeliberatelyavoidedraisingissuesonthetitleand
possessionoftherealpropertiesthatmayleadtheCourttoclassifyitscaseasarealaction.

Nomatterhowfastidiouslypetitionerattemptstoconcealthem,theallegationsandreliefsit
sought in its Complaint in Civil Case No. 20060030 appears to be ultimately a real action,
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involvingastheydotherecoverybypetitionerofitstitletoandpossessionofthefiveparcelsof
landfromrespondentsTanandObiedo.

Arealactionisoneinwhichtheplaintiffseekstherecoveryofrealpropertyor,asindicated
inwhatisnowSection1,Rule4oftheRulesofCourt,arealactionisanactionaffectingtitletoor
recoveryofpossessionofrealproperty.

[33]

Section7,Rule141oftheRulesofCourt,priortoitsamendmentbyA.M.No.04204SC,
hadaspecificparagraphgoverningtheassessmentofthedocketfeesforrealaction,towit:

In a real action, the assessed value of the property, or if there is none, the estimated value
thereofshallbeallegedbytheclaimantandshallbethebasisincomputingthefees.

[34]
ItwasinaccordancewiththeaforequotedprovisionthattheCourt,inGochanv.Gochan,
heldthatalthoughthecaptionofthecomplaintfiledbythereinrespondentsMercedesGochan,etal.
withtheRTCwasdenominatedasoneforspecificperformanceanddamages,thereliefsoughtwas
theconveyanceortransferofrealproperty,orultimately,theexecutionofdeedsofconveyancein
theirfavoroftherealpropertiesenumeratedintheprovisionalmemorandumofagreement. Under
thesecircumstances,thecasebeforetheRTCwasactuallyarealaction,affectingasitdidtitletoor
possessionofrealproperty.Consequently,thebasisfordeterminingthecorrectdocketfeesshallbe
the assessed value of the property, or the estimated value thereof as alleged in the complaint.But
sinceMercedesGochanfailedtoallegeintheircomplaintthevalueoftherealproperties,theCourt
foundthattheRTCdidnotacquirejurisdictionoverthesamefornonpaymentofthecorrectdocket
fees.

[35]
Likewise, in Siapno v. Manalo,
the Court disregarded the title/denomination of therein
plaintiff Manalos amended petition as one for Mandamus with Revocation of Title and Damages
and adjudged the same to be a real action, the filing fees for which should have been computed
basedontheassessedvalueofthesubjectpropertyor,iftherewasnone,theestimatedvaluethereof.
TheCourtexpoundedinSiapnothat:

Inhisamendedpetition,respondentManaloprayedthatNTAssaleofthepropertyindispute
toStandfordEastRealtyCorporationandthetitleissuedtothelatteronthebasisthereof,bedeclared
nullandvoid.Inaveryrealsense,albeittheamendedpetitionisstyledasoneforMandamuswith
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
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petitionisinrealityanactioninresorarealaction.OurpronouncementinFortuneMotors(Phils.),
Inc.vs.CourtofAppealsisinstructive.There,wesaid:
Aprayerforannulmentorrescissionofcontractdoesnotoperatetoefface
the true objectives and nature of the action which is to recover real property.
(Inton,etal.,v.Quintan,81Phil.97,1948)

Anactionfortheannulmentorrescissionofasaleofrealpropertyisareal
action.Itsprimeobjectiveistorecoversaidrealproperty.(Gavieresv.Sanchez,94
Phil.760,1954)

Anactiontoannularealestatemortgageforeclosuresaleisnodifferentfrom
anactiontoannulaprivatesaleofrealproperty.(Muozv.Llamas,87Phil.737,1950).

Whileitistruethatpetitionerdoesnotdirectlyseektherecoveryoftitleor
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
buildingwhich,underthelaw,isconsideredimmovableproperty,therecoveryof
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
recoversaidrealproperty.Itisarealaction.
Unfortunately,andevidentlytoevadepaymentofthecorrectamountoffilingfee,respondent
Manaloneverallegedinthebodyofhisamendedpetition,muchlessintheprayerportionthereof,the
assessedvalueofthesubjectres,or,ifthereisnone,theestimatedvaluethereof,toserveasbasisfor
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
AmendmentstoRule141onLegalFees).

Eventheamendedpetition,therefore,shouldhavebeenexpungedfromtherecords.

In fine, we rule and so hold that the trial court never acquired
[36]
jurisdictionoveritsCivilCaseNo.Q9524791.

[37]
ItwasinSerranov.Delica,
however,thattheCourtdealtwithacomplaintthatborethe
mostsimilaritytotheoneatbar.ThereinrespondentDelicaaverredthatundueinfluence,coercion,
andintimidationwereexerteduponhimbythereinpetitionersSerrano,etal.toeffecttransferofhis
properties.Thus, Delica filed a complaint before the RTC against Serrano, et al., praying that the
specialpowerofattorney,theaffidavit,thenewtitlesissuedinthenamesofSerrano,etal.,andthe
contracts of sale of the disputed properties be cancelled that Serrano, et al. be ordered to pay
Delica,jointlyandseverally,actual,moralandexemplarydamagesintheamountofP200,000.00,
aswellasattorneysfeeofP200,000.00andcostsoflitigationthataTROandawritofpreliminary
injunction be issued ordering Serrano, et al. to immediately restore him to his possession of the
parcelsoflandinquestionandthataftertrial,thewritofinjunctionbemadepermanent.TheCourt
dismissedDelicascomplaintforthefollowingreasons:
Acarefulexaminationofrespondentscomplaintisthatitisarealaction.In Paderangavs.
Buissan,weheldthatinarealaction,theplaintiffseekstherecoveryofrealproperty,or,asstatedin
Section2(a),Rule4oftheRevisedRulesofCourt,arealactionisoneaffectingtitletorealproperty
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orfortherecoveryofpossessionof,orforpartitionorcondemnationof,orforeclosureofamortgage
onarealproperty.

Obviously, respondents complaint is a real action involving not only the recovery of real
properties,butlikewisethecancellationofthetitlesthereto.

Considering that respondents complaint is a real action, the Rule requires that the assessed
valueoftheproperty,orifthereisnone,theestimatedvaluethereofshallbeallegedbytheclaimant
andshallbethebasisincomputingthefees.

We note, however, that neither the assessed value nor the estimated value of the questioned
parcels of land were alleged by respondent in both his original and amended complaint. What he
statedinhisamendedcomplaintisthatthedisputedrealtieshaveaBIRzonalvaluationofP1,200.00
persquaremeter.However,theallegedBIRzonalvaluationisnotthekindofvaluationrequiredby
theRule.Itistheassessedvalueoftherealty.Havingutterlyfailedtocomplywiththerequirementof
theRulethatheshallallegeinhiscomplainttheassessedvalueofhisrealpropertiesincontroversy,
thecorrectdocketfeecannotbecomputed.Assuch,hiscomplaintshouldnothavebeenacceptedby
the trial court. We thus rule that it has not acquired jurisdiction over the present case for failure of
herein respondent to pay the required docket fee. On this ground alone, respondents complaint is
[38]
vulnerabletodismissal.

BrushingasidethesignificanceofSerrano,petitionerarguesthatsaiddecision,renderedby
theThirdDivisionoftheCourt,andnotbytheCourtenbanc,cannotmodifyorreversethedoctrine
[39]
laiddowninSpousesDeLeonv.CourtofAppeals.
Petitionerreliesheavilyonthedeclarationof
thisCourtinSpousesDeLeonthatanactionforannulmentorrescissionofacontractofsaleofreal
propertyisincapableofpecuniaryestimation.

TheCourt,however,doesnotperceiveacontradictionbetweenSerranoandtheSpouses De
Leon. The Court calls attention to the following statement in Spouses De Leon: A review of the
jurisprudenceofthisCourtindicatesthatindeterminingwhetheranactionisonethesubjectmatter
of which is not capable of pecuniary estimation, this Court has adopted the criterion of first
ascertainingthenatureoftheprincipalactionorremedysought.Necessarily,thedeterminationmust
bedoneonacasetocasebasis,dependingonthefactsandcircumstancesofeach.Whatpetitioner
conveniently ignores is that in Spouses De Leon, the action therein that private respondents
institutedbeforetheRTCwassolelyforannulmentorrescissionofthecontractofsaleoverareal
[40]
property.
There appeared to be no transfer of title or possession to the adverse party. Their
complaintsimplyprayedfor:

1.OrderingthenullificationorrescissionoftheContractofConditionalSale(Supplementary
Agreement)forhavingviolatedtherightsofplaintiffs(privaterespondents)guaranteedtothemunder
Article886oftheCivilCodeand/orviolationofthetermsandconditionsofthesaidcontract.

2.DeclaringvoidabinitiotheDeedofAbsoluteSaleforbeingabsolutelysimulatedand
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3. Ordering defendants (petitioners) to pay plaintiffs (private respondents) attorney's fees in

[41]
theamountofP100,000.00.

As this Court has previously discussed herein, the nature of Civil Case No. 20060030
institutedbypetitionerbeforetheRTCisclosertothatofSerrano,ratherthanofSpousesDeLeon,
hence,callingfortheapplicationoftherulingoftheCourtintheformer,ratherthaninthelatter.
Itisalsoimportanttonotethat,withtheamendmentsintroducedbyA.M.No.04204SC,
whichbecameeffectiveon16August2004,theparagraphinSection7,Rule141oftheRulesof
Court, pertaining specifically to the basis for computation of docket fees for real actions was
deleted. Instead, Section 7(1) of Rule 141, as amended, provides that in cases involving real
property, the FAIR MARKET value of the REAL property in litigation STATED IN THE
CURRENTTAXDECLARATIONORCURRENTZONALVALUATIONOFTHEBUREAUOF
INTERNALREVENUE,WHICHISHIGHER,ORIFTHEREISNONE,THESTATEDVALUE
OFTHEPROPERTYINLITIGATIONxxxshallbethebasisforthecomputationofthedocket
fees.WouldsuchanamendmenthaveanimpactonGochan,Siapno,andSerrano?TheCourtrules
inthenegative.

Arealactionindisputablyinvolvesrealproperty.Thedocketfeesforarealactionwouldstill
bedeterminedinaccordancewiththevalueoftherealpropertyinvolvedthereintheonlydifference
is in what constitutes the acceptable value. In computing the docket fees for cases involving real
properties,thecourts,insteadofrelyingontheassessedorestimatedvalue,wouldnowbeusingthe
fairmarketvalueoftherealproperties(asstatedintheTaxDeclarationortheZonalValuationof
theBureauofInternalRevenue,whicheverishigher)or,intheabsencethereof,thestatedvalueof
thesame.

In sum, the Court finds that the true nature of the action instituted by petitioner against
respondentsistherecoveryoftitletoandpossessionofrealproperty.Itisarealactionnecessarily
involving real property, the docket fees for which must be computed in accordance with Section
7(1),Rule141oftheRulesofCourt,asamended.TheCourtofAppeals,therefore,didnotcommit
any error in affirming the RTC Orders requiring petitioner to pay additional docket fees for its
ComplaintinCivilCaseNo.20060030.
TheCourtdoesnotgivemuchcredencetotheallegationofpetitionerthatifthejudgmentof
the Court of Appeals is allowed to stand and not rectified, it would result in grave injustice and
irreparableinjurytopetitionerinviewoftheprohibitiveamountassessedagainstit.Itisasweeping
assertion which lacks evidentiary support. Undeniably, before the Court can conclude that the
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amount of docket fees is indeed prohibitive for a party, it would have to look into the financial
capacityofsaidparty.It baffles this Court that herein petitioner, having the capacity to enter into
multimillion transactions, now stalls at paying P720,392.60 additional docket fees so it could
championbeforethecourtsitsrightsoverthedisputedrealproperties.Moreover, even though the
Court exempts individuals, as indigent or pauper litigants, from paying docket fees, it has never
extendedsuchanexemptiontoacorporateentity.

WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED.
TheDecision,dated22November2006,oftheCourtofAppealsinCAG.R.SPNo.94800,which
affirmedtheOrdersdated24March2006and29March2006oftheRTC,Branch22,ofNagaCity,
in Civil Case No. RTC20060030, ordering petitioner Ruby Shelter Builders and Realty
Development Corporation to pay additional docket/filing fees, computed based on Section 7(a),
Rule141oftheRulesofCourt,asamended,isherebyAFFIRMED.Costsagainstthepetitioner.

SOORDERED.

MINITAV.CHICONAZARIO
AssociateJustice

WECONCUR:

CONSUELOYNARESSANTIAGO
AssociateJustice
Chairperson

MA.ALICIAAUSTRIAMARTINEZANTONIOEDUARDOB.NACHURA
AssociateJusticeAssociateJustice

DIOSDADOM.PERALTA
AssociateJustice

ATTESTATION
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IattestthattheconclusionsintheaboveDecisionwerereachedinconsultationbeforethecasewas
assignedtothewriteroftheopinionoftheCourtsDivision.

CONSUELOYNARESSANTIAGO
AssociateJustice
Chairperson,ThirdDivision

CERTIFICATION

PursuanttoSection13,ArticleVIIIoftheConstitution,andtheDivisionChairpersonsAttestation,
itisherebycertifiedthattheconclusionsintheaboveDecisionwerereachedinconsultationbefore
thecasewasassignedtothewriteroftheopinionoftheCourtsDivision.

REYNATOS.PUNO
ChiefJustice
[1]
PennedbyAssociateJusticeMarianoC.delCastillowithAssociateJusticesConradoM.Vasquez,Jr.andRamonR.Garcia,concurring
rollo,pp.109120.
[2]
PennedbyJudgeNovelitaVillegasLlagunoid.at7479.
[3]
Recordsdonotdiscloseotherdetailsregardingthesaidloan,i.e.,whenitwasobtained,ifitwasreducedtowriting,andwhenitexactly
becamedueanddemandable.
[4]
Withanareaof4,343squaremeters.
[5]
Withanareaof17,183squaremeters.
[6]
Withanareaof8,203squaremeters.
[7]
Withanareaof1,043squaremeters.
[8]
Withanareaof616squaremeters.
[9]
Rollo,pp.3942.
[10]
According to paragraph 7 of the Memorandum of Agreement, the condoned interests, surcharges and penalties amounted to
P55,167,000.00(asstatedinparagraph2hereof)butparagraph2ofthesaidMemorandumcomputedtheinterests,penaltiesand
surcharges from 1 October 2004 to 31 December 2005 condoned or writtenoff by respondents Tan and Obiedo to be
P74,678,647.00.
[11]
Rollo,pp.4352.
[12]
Id.at5362.
[13]
Id.at58.
[14]
Id.at6062.
[15]
Id.at6571.
[16]
Id.at6970.
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[17]
Id.at7479.
[18]
Id.at75.
[19]
Id.at78.
[20]
Id.at8084.
[21]
PennedbyJudgeNovelitaVillegasLlagunoid.at8588.
[22]
Id.at8688.
[23]
Id.at89.
[24]
JudgePabloC.Fomaran,PresidingJudgeofRTCBranch21,NagaCity,wasnamedasarespondentinCAG.R.SPNo.94800inhis
capacityasthePairingJudgeforRTCBranch22,NagaCity,whichwasformerlypresidedbyJudgeNovelitaVillegasLlaguno,
whoretiredon1May2006.
[25]
Rollo,pp.118119.
[26]
Id.
[27]
Id.at27.
[28]
G.R.No.L75919,7May1987,149SCRA562,569.
[29]
G.R.Nos.7993738,13February1989,170SCRA274,285.
[30]
Re:ProposedRevisionofRule141,RevisedRulesofCourt
[31]
Guidelines in the Allocation of Legal Fees Collected Under Rule 141 of the Rules of Court, as Amended, between the Special
AllowancefortheJudiciaryFundandtheJudiciaryDevelopmentFund.
[32]
Gochanv.Gochan,423Phil.491,501(2001).
[33]
Id.Serranov.Delica,G.R.No.136325,29July2005,465SCRA82,88.
[34]
Gochanv.Gochan,id.
[35]
G.R.No.132260,30August2005,468SCRA330.
[36]
Id.at340.
[37]
Supranote33.
[38]
Rollo,pp.8889.
[39]
350Phil.535(1998).
[40]
Id.at541543.
[41]
Id.at537.

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