Republic of the Philippines
SUPREME COURT
Manila
SPECIAL THIRD DIVISION
G.R. No. 153690 August 4, 2009
DAVID LU, Petitioner,
vs.
PATERNO LU YM, SR., PATERNO LU YM, JR., VICTOR LU YM, ET. AL. & LUYM DEVELOPMENT CORP., Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 157381
PATERNO LU YM, SR., PATERNO LU YM, JR., VICTOR LU YM, JOHN LU YM, KELLY LU YM, and LUDO & LUYM DEVELOPMENT CORP., Petitioners,
vs.
DAVID LU, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 170889
JOHN LU YM and LUDO & LUYM DEVELOPMENT CORPORATION, Petitioner,
vs.
THE HON. COURT OF APPEALS OF CEBU CITY (former Twentieth Division), DAVID LU, ROSA GO, SILVANO LUDO & CL CORPORATION, Respondents.
R E S O L U T I O N
NACHURA, J.:
For resolution is the Motion for Reconsideration1 filed by petitioners John Lu Ym and Ludo & LuYm Development Corporation (movants), praying that we reconsider our Decision2 dated August 26, 2008, where we disposed of the three consolidated cases in this wise:
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.3
In support of their motion, the movants advance the following arguments:
1. Private respondents are guilty of fraud in avoiding payment of the correct docket fees by not listing the real properties in their Complaint and Amended Complaint despite their admission that the real properties are the subject matter of the case and by their act of annotating notices of lis pendens on the properties of Ludo Dev.
2. The present action is not an intra-corporate controversy and therefore the RTC, being a special commercial court, has no jurisdiction over the subject matter of the case.
3. The RTC has no jurisdiction to order the dissolution of the Corporation.
However, should this Honorable Court decide that the foregoing grounds are not sufficient justification to warrant a dismissal of SRC-021 CEB, petitioners ask that the Status Quo Order of this Court be maintained during the appeal of the case or that a Writ of Injunction be issued to stop the immediate implementation of the March 1, 2004 decision based on the following grounds:
a) The March 1, 2004 decision of the RTC was null and void for denying petitioners’ right to due process.
b) The Management Committee organized by the RTC in the March 1, 2004 decision was unlawfully constituted.
c) Supervening event has made the management committee functus oficio.4
To resolve the motion judiciously, it is necessary to restate, albeit briefly, the factual and procedural antecedents that gave rise to these consolidated petitions.
On August 14, 2000, David Lu, Rosa Go, Silvano Ludo and CL Corporation filed with the Regional Trial Court (RTC) of Cebu City a complaint against Paterno Lu Ym, Sr., Paterno Lu Ym, Jr., Victor Lu Ym, John Lu Ym, Kelly Lu Ym, and Ludo & Luym Development Corporation (LLDC) for Declaration of Nullity of Share Issue, Receivership and Dissolution. The case was docketed as Civil Case No. CEB-25502. The plaintiffs, shareholders of LLDC, claimed that the Lu Ym father and sons, as members of the Board of Directors, caused the issuance to the latter of 600,000 of the corporation’s unsubscribed and unissued shares for less than their actual value. They then prayed for the dissolution of the corporation and the appointment of a receiver during the pendency of the action.
The defendants therein moved to dismiss the complaint for non-compliance with the requirement of certification of non-forum shopping, and for failure of the plaintiffs to exert efforts towards a compromise. The trial court denied the motion and placed LLDC under receivership.
Defendants Lu Ym father and sons elevated the matter to the Court of Appeals through a petition for certiorari, docketed as CA-G.R. SP No. 64154. However, the same was dismissed for insufficient signatures on the verification and certification of non-forum shopping. Subsequently, they re-filed a petition, which was docketed as CA-G.R. SP No. 64523. On December 20, 2001, the CA granted the petition and ordered the dismissal of the complaint. Aggrieved, David Lu (David), et al., came to this Court via G.R. No. 153690.
Meanwhile, the Presiding Judge of Branch 6 of the RTC of Cebu City, where the case was initially raffled, inhibited himself on motion of the Lu Ym father and sons. The case was re-raffled to Branch 11. The Presiding Judge of the latter branch directed the parties to amend their respective pleadings in order to conform to the requirements of Republic Act No. 8799, and the case was re-docketed as SRC Case No. 021-CEB.
The Lu Ym father and sons then filed with the trial court a motion to lift the order of receivership over LLDC. Before the matter could be heard, David instituted a petition for certiorari and prohibition before the CA on the issue of the motion to lift order of receivership, docketed as CA-G.R. SP No. 73383. On February 27, 2003, the CA granted the petition and ruled that the proceedings on the receivership could not proceed without the parties amending their pleadings. The Lu Ym father and sons thus filed a petition for review with this Court (G.R. No. 157381).
In the meantime, the Presiding Judge of Branch 11 also inhibited himself, and the case was transferred to Branch 12. On March 31, 2003, the plaintiffs therein filed a Motion to Admit Complaint to Conform to the Interim Rules Governing Intra-Corporate Controversies, which was admitted by the trial court.
On January 23, 2004, the Lu Ym father and sons inquired from the Clerk of Court as to the amount of docket fees paid by David, et al. John Lu Ym further inquired from the Office of the Court Administrator (OCA) on the correctness of the amount paid by David, et al. The OCA informed John Lu Ym that a query on the matter of docket fees should be addressed to the trial court and not to the OCA.
On March 1, 2004, the RTC decided the case on the merits. It annulled the issuance of LLDC’s 600,000 shares of stock to the Lu Ym father and sons. It also ordered the dissolution of LLDC and the liquidation of its assets, and created a management committee to take over LLDC. The Lu Ym father and sons appealed to the CA, where the case was docketed as CA-G.R. CV No. 81163.
In view of the executory nature of the decision of the trial court, as mandated in the Interim Rules of Procedure for Intra-Corporate Controversies,5 the Lu Ym father and sons moved for the issuance of a writ of preliminary injunction which, however, was denied by the CA. They filed a motion for reconsideration, wherein they further questioned the sufficiency of the docket fees paid by David, et al. in the RTC. On December 8, 2005, the CA denied the motion for reconsideration and stated that the matter should be raised in the appellants’ brief to be threshed out in the appeal. Hence, the Lu Ym father and sons filed with this Court a special civil action for certiorari and prohibition (G.R. No. 170889).
On August 26, 2008, this Court rendered judgment as aforesaid. Lu Ym father and sons filed the instant Motion for Reconsideration. We required David, et al., to submit their Comment thereto. With our directive complied with, we now resolve the Motion for Reconsideration.
In our August 26, 2008 Decision, we declared that the subject matter of the complaint filed by David, et al., was one incapable of pecuniary estimation. Movants beg us to reconsider this position, pointing out that the case filed below by David, et al., had for its objective the nullification of the issuance of 600,000 shares of stock of LLDC. The complaint itself contained the allegation that the "real value of these shares, based on underlying real estate values, was One Billion Eighty Seven Million Fifty Five Thousand One Hundred Five Pesos (₱1,087,055,105)."6
Upon deeper reflection, we find that the movants’ 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 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:
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:
x x x x7
We have earlier held that a court acquires jurisdiction over a case only upon the payment of the prescribed fees.8 Hence, without payment of the correct docket fees, the trial court did not acquire jurisdiction over the action filed by David, et al.
We also stated in our Decision that the earlier rule in Manchester Development Corporation v. Court of Appeals9 has been relaxed. Subsequent decisions now uniformly hold that when insufficient filing fees are initially paid by the plaintiffs and there is no intention to defraud the government, the Manchester rule does not apply.10
Addressing this point, movants argue that David, et al., were guilty of fraud in that, while they did not mention any real property in their complaint, they were able to obtain the annotation of notices of lis pendens on various real properties of LLDC by alleging in their motion to conduct special raffle that there was an "imminent danger" that "properties subject matter of this case" might be disposed of. Moreover, David, et al., prayed for, among others, the liquidation and distribution of the assets of the corporation, so that they may receive their share therein. Among the assets of the corporation are real properties. Hence, the case was, in actuality, a real action that had for its objective the recovery of real property.
Fraud is a "generic term embracing all multifarious means which human ingenuity can devise and which are resorted to by one individual to secure an advantage over another by false suggestions or by suppression of truth, and includes all surprise, trick, cunning, dissembling and any unfair way by which another is cheated."11 Since fraud is a state of mind, its presence can only be determined by examining the attendant circumstances.12
It is true, as we held in our Decision, that David, et al., merely relied on the assessment made by the Clerk of Court and cannot be faulted for their payment of insufficient docket fees. However, movants now point out that when David Lu moved for the annotation of notices of lis pendens on real properties owned by LLDC, they in effect acknowledged that the case they filed was a real action.
A notice of lis pendens is governed by Rule 13, Section 14 of the Rules of Court, which states:
Sec. 14. Notice of lis pendens. – In an action affecting the title or the right of possession of real property, the plaintiff and the defendant, when affirmative relief is claimed in his answer, may record in the office of the registry of deeds of the province in which the property is situated a notice of the pendency of the action. Said notice shall contain the names of the parties and the object of the action or defense, and a description of the property in that province affected thereby. Only from the time of filing such notice for record shall a purchaser, or encumbrancer of the property affected thereby, be deemed to have constructive notice of the pendency of the action, and only of its pendency against the parties designated by their real names.
The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court, after proper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the party who caused it to be recorded.13
A notice of lis pendens is an announcement to the whole world that a particular real property is in litigation, serving as a warning that one who acquires interest over said property does so at his own risk, or that he gambles on the result of the litigation over the said property. The filing of a notice of lis pendens charges all strangers with notice of the particular litigation referred to therein and, therefore, any right they may thereafter acquire over the property is subject to the eventuality of the suit. Such announcement is founded upon public policy and necessity, the purpose of which is to keep the properties in litigation within the power of the court until the litigation is terminated and to prevent the defeat of the judgment or decree by subsequent alienation.14
As a general rule, the only instances in which a notice of lis pendens may be availed of are as follows: (a) an action to recover possession of real estate; (b) an action for partition; and (c) any other court proceedings that directly affect the title to the land or the building thereon or the use or the occupation thereof. Additionally, this Court has held that resorting to lis pendens is not necessarily confined to cases that involve title to or possession of real property. This annotation also applies to suits seeking to establish a right to, or an equitable estate or interest in, a specific real property; or to enforce a lien, a charge or an encumbrance against it.15
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.
Anent the issue of estoppel, we earlier ruled that the movants are barred from questioning the jurisdiction of the trial court because of their participation in the proceedings therein. In passing upon this issue, we take heed from the pronouncement of this Court in the recent case Vargas v. Caminas:16
The Court finds that Tijam is not applicable in the present case. The general rule is that lack of jurisdiction of a court may be raised at any stage of the proceedings. In Calimlim v. Ramirez, the Court stated that Tijam is an exception to the general rule because of the presence of laches:
A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that the jurisdiction of a court over the subject matter of the action is a matter of law and may not be conferred by consent or agreement of the parties. The lack of jurisdiction of a court may be raised at any stage of the proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which stemmed principally from the ruling in the cited case of [Tijam]. It is to be regretted, however, that the holding in said case had been applied to situations which were obviously not contemplated therein. The exceptional circumstance involved in [Tijam] which justified the departure from the accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling in [Tijam] not as the exception, but rather the general rule, virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by waiver or by estoppel.
In Tijam, the lack of jurisdiction was raised for the first time in a motion to dismiss filed almost fifteen (15) years after the questioned ruling had been rendered. Hence, the Court ruled that the issue of jurisdiction may no longer be raised for being barred by laches.lawph!1
The circumstances of the present case are different from Tijam. Spouses Vargas raised the issue of jurisdiction before the trial court rendered its decision. They continued to raise the issue in their appeal before the Court of Appeals and this Court. Hence, it cannot be said that laches has set in. The exception in Tijam finds no application in this case and the general rule must apply, that the question of jurisdiction of a court may be raised at any stage of the proceedings. Spouses Vargas are therefore not estopped from questioning the jurisdiction of the trial court.17
The exhortations of this Court in the above-cited case have constrained us to look more closely into the nature of the participation of the movants in the proceedings, to determine whether the exceptional principle of estoppel may be applied against them. The records show that the very first pleading filed by the Lu Ym father and sons before the court a quo was a motion to dismiss, albeit anchored on the ground of insufficiency of the certificate of non-forum shopping and failure of the plaintiffs to exert efforts towards a compromise. When the trial court denied this, they went up to the CA on certiorari, where they were sustained and the appellate court ordered the dismissal of the complaint below.
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, et 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 raised this point again in the CA when they appealed the trial court’s 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 to the OCA – they should not be deemed to have waived their right to assail the jurisdiction of the trial court.
The matter of lack of jurisdiction of the trial court is one that may be raised at any stage of the proceedings. More importantly, this Court may pass upon this issue motu proprio.
Hence, notwithstanding that the petition in G.R. No. 170889 is a special civil action for certiorari and prohibition assailing an interlocutory resolution of the CA, we have the power to order the dismissal of the complaint filed in the court of origin and render all incidents herein moot and academic.
With the foregoing findings, there is no more need to discuss the other arguments raised in the Motion for Reconsideration.
In summary, the trial court did not acquire jurisdiction over the case for failure of David, et.al. to pay the correct docket fees. Consequently, all interlocutory matters pending before this Court, specifically the incidents subject of these three consolidated petitions, must be denied for being moot and academic. With the dismissal of the main action, the ancillary motions have no more leg to stand on.
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.
ANTONIO EDUARDO B. NACHURA
Associate Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
CONCHITA CARPIO MORALES*
Associate Justice |
MINITA V. CHICO-NAZARIO
Associate Justice |
ARTURO D. BRION**
Associate Justice
A T T E S T A T I O N
I attest that the conclusions in the above Resolution were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Special Third Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
Footnotes
* Designated member per Raffle dated July 30, 2008.
** Designated member per Raffle dated March 4, 2009.
1 Rollo (G.R. No. 153690), pp. 1052-1108.
2 Id. at 990-1014.
3 Id. at 1012-1013.
4 Id. at 1102-1103.
5 A.M. No. 01-2-04-SC, Sec. 4. Executory nature of decisions and orders. – All decisions and orders issued under these Rules shall immediately be executory. No appeal or petition taken therefrom shall stay the enforcement or implementation of the decision or order, unless restrained by an appellate court. Interlocutory orders shall not be subject to appeal.
6 Rollo (G.R. No. 153690), p. 97.
7 Rules of Court, Rule 141, Section 7, as amended by A.M. No. 00-2-01-SC (March 1, 2000).
8 Far East Bank and Trust Company v. Shemberg Marketing Corporation, G.R. No. 163878, December 12, 2006, 510 SCRA 685, 700.
9 No. L-75919, May 7, 1987, 149 SCRA 562.
10 Intercontinental Broadcasting Corporation (IBC-13) v. Alonzo-Legasto, G.R. No. 169108, April 18, 2006, 487 SCRA 339; Heirs of Bertuldo Hinog v. Hon. Achilles Melicor, G.R. No. 140954, April 12, 2005, 455 SCRA 460, 475; Sun Insurance Office, Ltd. (SIOL) v. Asuncion, G.R. Nos. 79937-38, February 13, 1989, 170 SCRA 274, 285.
11 Yap-Sumndad v. Harrigan, 430 Phil. 612 (2002).
12 Commissioner of Customs v. Court of Tax Appeals, et al., G.R. Nos. 171516-17, February 13, 2009.
13 Rules of Court, Rule 13, Section 14.
14 Cunanan v. Jumping Jap Trading Corp., G.R. No. 173834, April 24, 2009.
15 Atlantic Erectors, Inc. v. Herbal Cove Realty Corp., G.R. No. 148568, March 20, 2003, 399 SCRA 409.
16 G.R. Nos. 137869 & 137940, June 12, 2008, 554 SCRA 305.
17 Id., citations omitted.
The Lawphil Project - Arellano Law Foundation
DISSENTING OPINION
CARPIO MORALES, J.:
I respectfully take exception to the grant by the ponente of the Motion for Reconsideration of Paterno Lu Ym, Sr.’s son, John Luym, and Ludo and Luym Development Corporation (LLDC) of the ponente’s Decision of August 26, 2008 in light of the following:
The three consolidated cases stemmed from the complaint for "Declaration of Nullity of Share Issue, Receivership and Dissolution" filed on August 14, 2000 by David Lu, et al. (David, et al.) against Paterno Lu Ym, Sr. and sons (Lu Ym father and sons) and LLDC.
By Decision of March 1, 2004, the trial court 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 said Decision is presently pending with the appellate court in CA-G.R. CV No. 81163.
Meantime, several incidents arising from the complaint reached the Court through these three petitions, which the Court resolved in favor of David, et al. by Decision of August 26, 2008, the dispositive portion of which reads:
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.1 (Emphasis and underscoring in the original)
In G.R. No. 153690 wherein David, et al., assail the appellate court’s 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 found the same to be moot by the admission by the trial court of David, et al.’s Amended Complaint filed by them pursuant to the trial court’s order to conform to the requirements of the Interim Rules of Procedure Governing Intra-Corporate Controversies. Since the amended pleading supersedes the pleading that it amends, the original complaint was deemed withdrawn from the records. The Court noted that both parties admitted the mootness of the issue and that the trial court already rendered a decision on the merits in said 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 challenge the appellate court’s 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 resolved that the propriety of such injunction was mooted by the amendment of the complaint and by the trial court’s 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, there is thus nothing more to enjoin.
G.R. No. 170889 involves the denial of Lu Ym father and sons’ application for a writ of preliminary injunction by the appellate court that is handling CA-G.R. CV No. 81163. In dismissing the petition, the Court found no merit on their claim of lack of jurisdiction for David, et al.’s non-payment of the correct docket fees. The Court utilized a three-tiered approach in slaying the argument of Lu Ym father and sons:
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.2 (Italics in the original; emphasis and underscoring supplied)
In a turnaround, the present ponencia reconsiders its position on the matter of docket fees, viz.,:
In summary, the trial court did not acquire jurisdiction over the case for failure of David, et.al. to pay the correct docket fees. Consequently, all interlocutory matters pending before this Court, specifically the incidents subject of these three consolidated petitions, must be denied for being moot and academic. With the dismissal of the main action, the ancillary motions have no more leg to stand on.
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 orders challenged in these consolidated petitions are DENIED for being moot and academic.
SO ORDERED.3 (Emphasis in the original)
I. The Value of the Subject Matter Cannot be Estimated
On movants’ 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 ₱1,087,055,105, the ponencia states:
Upon deeper reflection, we find that the movants’ 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 themselves in their complaint. Accordingly, the docket fees should have been computed based on this amount. This is clear from x x x Rule 141, Section 7, which was in effect at the time the complaint was filed[.]4 (Underscoring supplied)
The ponencia states that the value of the 600,000 shares of stock, which were the properties in litigation, should be the basis for the computation of the filing fees. It must be noted, 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 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 ponencia also states that "to the extent of the damage or injury they allegedly have suffered from this sale," the action "can be characterized as one capable of pecuniary estimation." The ponente, however, does not 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. in relation 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 were theirs to begin with.
The action instituted by David, et al. was one for declaration of nullity of the issuance thereof. 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 done in breach of director’s fiduciary’s duty to stockholders, in violation of the minority stockholders’ rights, and with unjust enrichment.
As judiciously discussed in the Court’s 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.5 (Italics in the original, emphasis and underscoring supplied)
Among the actions the Court has recognized as being incapable of pecuniary estimation include legality of conveyances. In a case involving an 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.6 (Emphasis and underscoring supplied)
It is thus respectfully maintained that the correct docket fees were paid.
II. Estoppel Has Set In
As to the issue of estoppel, the present ponencia cites Vargas v. Caminas7 on the non-applicability of the Tijam doctrine where the issue of jurisdiction was, in fact, raised before the trial court rendered its decision. The ponencia continues:
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 court’s 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.8 (Underscoring supplied)
Lu Ym father and sons did not raise the issue before the trial court. The narration of facts shows that they inquired from the Clerk of Court on the amount of paid docket fees on January 23, 2004. Lu Ym father and sons, thereafter, still "speculat[ed] on the fortune of litigation."9 Thirty-seven days later, the trial court rendered its decision, which happened to be adverse to Lu Ym father and sons.
Meanwhile, they 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 mention it. Finally, it was only in their Motion for Reconsideration of the denial of their application for injunctive writ that they raised such issue before the appellate court.10
Their 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 their act of having raised the jurisdictional question prior to the rendition of the trial court’s decision.
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.11 (Italics in the original; emphasis and underscoring in the original)
It is thus respectfully maintained that assuming arguendo that the docket fees were insufficiently paid, the doctrine of estoppel already applies. The inequity resulting from the abrogation of the whole proceedings at this late stage when the decision subsequently rendered was adverse to them is precisely the evil being avoided by the equitable principle of estoppel.
III. No Intent to Defraud the Government
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.12
The ponencia finds that the 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 deduces:
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 and 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.13
All findings of fraud should begin the exposition with the presumption of good faith. The question is not whether there was good faith on the part of David, et al., but whether there was bad faith on his part.
In the present case, 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 corporation’s 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 ponencia, 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 gleaned from the series of amendments on the provisions on filing fees, that even prompted this Court to make a clarification.
When the present Complaint was filed on August 14, 2000 or five days after the effectivity of the Securities Regulation Code or Republic Act No. 8799,14 then Section 7 of Rule 141 was the applicable provision, without restricting the reference to paragraphs (a) and (b) 1 & 3 or paragraph (a) alone. It reads:
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:
x x x x
(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 |
.......... x x x |
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 x15 (Emphasis supplied)
Subsequently, the Court, by Resolution of September 4, 2001 in A. M. No. 00-8-10-SC,16 clarified the matter of legal fees to be collected in cases formerly cognizable by the Securities and Exchange Commission (SEC) following their transfer to the Regional Trial Court (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-SC17 (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 omitted from
the reference. Said paragraph18 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 was filed today, one could safely find refuge in the express phraseology of Section 21 (k) of Rule 141 that paragraph (a) alone applies.
In this 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 was 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 Court’s earlier position that "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" is respectfully submitted to be maintained.
I, therefore, vote to DENY the Motion for Reconsideration for lack of merit.
CONCHITA CARPIO MORALES
Associate Justice
Footnotes
1 G.R. No. 153690, August 26, 2008, 563 SCRA 255, 280-281.
2 Id. at 274.
3 Ponencia, pp. 11-12.
4 Ponencia, p. 6.
5 Supra note 1 at 275-276.
6 De Leon v. CA, 350 Phil. 535, 540-542 (1998).
7 G.R. Nos. 137869 & 137940, June 12, 2008, 554 SCRAS 303.
8 Ponencia, p. 11.
9 Supra note 1 at 277.
10 Supra note 3. In the August 26, 2008 Decision, the Court applied the doctrine of estoppel "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."
11 Rivera v. del Rosario, 464 Phil. 783, 797 (2004).
12 Ibid.
13 Ponencia, p. 9.
14 The statute was issued on July 19, 2000 and took effect on August 9, 2000, pursuant to its Sec. 78; vide International Broadcasting Corporation v. Jalandoon, G.R. No. 148152, November 18, 2005, 475 SCRA 446.
15 Vide A.M. No. 00-2-01-SC (March 1. 2000).
16 Effective October 1, 2001.
17 The amendments took effect on August 16, 2004.
18 Sub-paragraphs (1) and (3) remain unchanged except for the increase in the amounts of fees.
The Lawphil Project - Arellano Law Foundation
