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Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 192649               March 9, 2011

HOME GUARANTY CORPORATION, Petitioner,
vs.
R-II BUILDERS INC., and NATIONAL HOUSING AUTHORITY, Respondents.

D E C I S I O N

PEREZ, J.:

Primarily assailed in this petition for review filed pursuant to Rule 45 of the 1997 Rules of Civil Procedure, is the Decision dated 21 January 2010 rendered by the Former Fifteenth Division of the Court of Appeals (CA) in CA-G.R. SP No. 111153,¹ the dispositive portion of which states as follows:

WHEREFORE, the petition for certiorari and prohibition is hereby DENIED.

The assailed Orders, dated March 3, 2009 and September 29, 2009, of the Regional Trial Court of Manila, Branch 22 are hereby AFFIRMED.

Consequently, the injunction earlier issued on December 4, 2009, restraining the proceedings in Civil Case No. 05-113407, is hereby DISSOLVED.²

The Facts

On 19 March 1993, a Joint Venture Agreement (JVA) was entered into between respondents National Housing Authority (NHA) and R-II Builders, Inc. (R-II Builders) for the implementation of the Smokey Mountain Development and Reclamation Project (SMDRP). Amended and restated on 21 February 1994³ and 11 August 1994,⁴ the JVA was aimed at implementing a two-phase conversion of the Smokey Mountain Dumpsite "into a habitable housing project inclusive of the reclamation of the area across Radial Road 10 (R-10)".⁵ By the terms of the JVA, R-II Builders, as developer, was entitled to own 79 hectares of reclaimed land and the 2.3 hectare commercial area at the Smokey Mountain. As landowner/implementing agency, NHA, on the other hand, was entitled to own the 2,992 temporary housing units agreed to be built in the premises, the cleared and fenced incinerator site consisting of 5 hectares, 3,520 units of permanent housing to be awarded to qualified on site residents, the industrial area consisting of 3.2 hectares and the open spaces, roads and facilities within the Smokey Mountain Area.⁶

On 26 September 1994, NHA and R-II Builders, alongside petitioner Housing Guaranty Corporation (HGC) as guarantor and the Philippine National Bank (PNB) as trustee, entered into an Asset Pool Formation Trust Agreement which provided the mechanics for the implementation of the project.⁷ To back the project, an Asset Pool was created composed of the following assets: (a) the 21.2 hectare Smokey Mountain Site in Tondo, Manila; (b) the 79-hectare Manila Bay foreshore property in the name of the NHA; (c) the Smokey Mountain Project Participation Certificates (SMPPCs) to be issued, or their money proceeds; (d) disposable assets due to R-II Builders and/or its proceeds as defined in the JVA; (e) the resulting values inputted by R-II Builders for pre-implementation activities and some start-up works amounting to ₱300,000,000.00; (f) the 2,992 temporary housing facilities/units to be constructed by R-II Builders; and, (g) all pertinent documents and records of the project.⁸

On the same date, the parties likewise executed a Contract of Guaranty whereby HGC, upon the call made by PNB and conditions therein specified, undertook to redeem the regular SMPPCs upon maturity and to pay the simple interest thereon to the extent of 8.5% per annum.⁹ The foregoing agreements led to the securitization of the project through the issuance of 5,216 SMPPCs upon the Asset Pool, with a par value of 1 Million each, classified and to be redeemed by the trustee or, in case of call on its guaranty, by HGC, in the following order of priority:

a) Regular SMPPCs worth ₱2.519 Billion, issued for value to the general public at specified interests and maturity dates. These were to be redeemed by the PNB which was obliged to exhaust all liquid assets of the Asset Pool before calling on the HGC guarantee;

b) Special SMPPCs worth ₱1.403 Billion, issued exclusively to the NHA for conveyance of the Smokey Mountain Site and Manila Bay foreshore property to the Asset Pool, redeemable upon turnover of the developed project; and

c) Subordinated SMPPCs worth ₱1.294 Billion, issued exclusively to R-II Builders for its rights and interests in the JVA, redeemable with the turnover of all residual values, assets and properties remaining in the Asset Pool after both the Regular and Special SMPPCs are redeemed and all the obligations of the Asset Pool are settled.¹⁰

Subsequent to R-II Builders' infusion of ₱300 Million into the project, the issuance of the SMPPCs and the termination of PNB’s services on 29 January 2001, NHA, R-II Builders and HGC agreed on the institution of Planters Development Bank (PDB) as trustee on 29 January 2001.¹¹ By 24 October 2002, however, all the Regular SMPPCs issued had reached maturity and, unredeemed, already amounted to an aggregate face value of ₱2.513 Billion. The lack of liquid assets with which to effect redemption of the regular SMPPCs prompted PDB to make a call on HGC’s guaranty and to execute in the latter’s favor a Deed of Assignment and Conveyance (DAC) of the entire Asset Pool, consisting of: (a) 105 parcels of land comprising the Smokey Mountain Site and the Reclamation Area, with a total area of 539,471.47 square meters, and all the buildings and improvements thereon; (b) shares of stock of Harbour Centre Port Terminal, Inc. (HCPTI); and, (c) other documents.¹²

On 1 September 2005, R-II Builders filed the complaint against HGC and NHA which was docketed as Civil Case No. 05-113407 before Branch 24 of the Manila Regional Trial Court, a Special Commercial Court (SCC). Contending that HGC’s failure to redeem the outstanding regular SMPPCs despite obtaining possession of the Asset Pool ballooned the stipulated interests and materially prejudiced its stake on the residual values of the Asset Pool, R-II Builders alleged, among other matters, that the DAC should be rescinded since PDB exceeded its authority in executing the same prior to HGC’s redemption and payment of the guaranteed SMPPCs; that while the estimated value of Asset Pool amounted to ₱5,919,716,618.62 as of 30 June 2005, its total liabilities was estimated at ₱2,796,019,890.41; and, that with the cessation of PDB’s functions as a trustee and HGC’s intention to use the Asset Pool to settle its obligations to the Social Security System (SSS), it was best qualified to be appointed as new trustee in the event of the resolution of the DAC. Assessed docket fees corresponding to an action incapable of pecuniary estimation, the complaint sought the grant of the following reliefs: (a) a temporary restraining order/preliminary and permanent injunction, enjoining disposition/s of the properties in the Asset Pool; (b) the resolution or, in the alternative, the nullification of the DAC; (c) R-II Builders' appointment as trustee pursuant to Rule 98 of the Rules of Court; (d) HGC’s rendition of an accounting of the assets and the conveyance thereof in favor of R-II Builders; and, (e) ₱500,000.00 in attorney’s fees.¹³

On 26 October 2005, Branch 24 of the Manila RTC issued the writ of preliminary injunction sought by R-II Builders which, upon the challenge thereto interposed by HGC, was later affirmed by the CA in the 17 December 2007 decision rendered in CA-G.R. SP No. 98953.¹⁴ Having filed its answer to the complaint, in the meantime, HGC went on to move for the conduct of a preliminary hearing on its affirmative defenses which included such grounds as lack of jurisdiction, improper venue and the then pendency before this Court of G.R. No. 164537, entitled Francisco Chavez vs. National Housing Authority, et al., a case which challenged, among other matters, the validity of the JVA and its subsequent amendments.¹⁵ On 2 August 2007, R-II Builders, in turn, filed a motion to admit¹⁶ its Amended and Supplemental Complaint which deleted the prayer for resolution of the DAC initially prayed for in its original complaint. In lieu thereof, said pleading introduced causes of action for conveyance of title to and/or possession of the entire Asset Pool, for NHA to pay the Asset Pool the sum of ₱1,803,729,757.88 representing the cost of the changes and additional works on the project and for an increased indemnity for attorney’s fees in the sum of ₱2,000,000.00.¹⁷

Consistent with its joint order dated 2 January 2008 which held that R-II Builders’ complaint was an ordinary civil action and not an intra-corporate controversy,¹⁸ Branch 24 of the Manila RTC issued a clarificatory order dated 1 February 2008 to the effect, among other matters, that it did not have the authority to hear the case.¹⁹ As a consequence, the case was re-raffled to respondent Branch 22 of the Manila RTC (respondent RTC) which subsequently issued the 19 May 2008 order which, having determined that the case is a real action, admitted the aforesaid Amended and Supplemental Complaint, subject to R-II Builders’ payment of the "correct and appropriate" docket fees.²⁰ On 15 August 2008, however, R-II Builders filed a motion to admit it Second Amended Complaint, on the ground that its previous Amended and Supplemental Complaint had not yet been admitted in view of the non-payment of the correct docket fees therefor.²¹ Said Second Amended Complaint notably resurrected R-II Builders’ cause of action for resolution of the DAC, deleted its causes of action for accounting and conveyance of title to and/or possession of the entire Asset Pool, reduced the claim for attorney’s fees to ₱500,000.00, sought its appointment as Receiver pursuant to Rule 59 of the Rules of Court and, after an inventory in said capacity, prayed for approval of the liquidation and distribution of the Asset Pool in accordance with the parties’ agreements.²²

On 2 September 2008, HGC filed its opposition to the admission of R-II Builders’ Second Amended Complaint on the ground that respondent RTC had no jurisdiction to act on the case until payment of the correct docket fees and that said pleading was intended for delay and introduced a new theory inconsistent with the original complaint and the Amended and Supplemental Complaint. Claiming that R-II Builders had defied respondent court’s 19 May 2008 order by refusing to pay the correct docket fees, HGC additionally moved for the dismissal of the case pursuant to Section 3, Rule 17 of the 1997 Rules of Civil Procedure.²³ On 24 November 2008, R-II Builders also filed an Urgent Ex-Parte Motion for Annotation of Lis Pendens on the titles of the properties in the Asset Pool, on the ground that HGC had sold and/or was intending to dispose of portions thereof, in violation of the writ of preliminary injunction issued in the premises.²⁴ Finding that jurisdiction over the case was already acquired upon payment of the docket fees for the original complaint and that the Second Amended Complaint was neither intended for delay nor inconsistent with R-II Builders’ previous pleadings, respondent RTC issued its first assailed order dated 3 March 2009 which: (a) denied HGC’s motion to dismiss; (b) granted R-II Builders’ motion to admit its Second Amended Complaint; and, (c) noted R-II Builders’ Urgent Ex-Parte Motion for Annotation of Lis Pendens, to which the attention of the Manila Register of Deeds was additionally called.²⁵

Undaunted, HGC filed its 22 March 2009 motion for reconsideration of the foregoing order, arguing that: (a) the case is real action and the docket fees paid by R-II Builders were grossly insufficient because the estimated value of properties in the Asset Pool exceeds ₱5,000,000,000.00; (b) a complaint cannot be amended to confer jurisdiction when the court had none; (c) the RTC should have simply denied the Urgent Ex-Parte Motion for Annotation of Lis Pendens instead of rendering an advisory opinion thereon. In addition, HGC faulted R-II Builders with forum shopping, in view of its 10 September 2008 filing of the complaint docketed as Civil Case No. 08-63416 before Branch 91 of the Quezon City RTC, involving a claim for receivables from the NHA.²⁶ In turn, R-II Builders opposed the foregoing motion²⁷ and, on the theory that the Asset Pool was still in danger of dissipation, filed an urgent motion to resolve its application for the appointment of a receiver and submitted its nominees for said position.²⁸

On 29 September 2009, respondent RTC issued its second assailed order which (a) denied HGC’s motion for reconsideration; (b) granted R-II Builders’ application for appointment of receiver and, for said purpose: [i] appointed Atty. Danilo Concepcion as Receiver and, [ii] directed R-II Builders to post a bond in the sum of ₱10,000,000.00.²⁹ Imputing grave abuse of discretion against the RTC for not dismissing the case and for granting R-II Builders’ application for receivership, HGC filed the Rule 65 petition for certiorari and prohibition docketed as CA-G.R. SP No. 111153 before the CA³⁰ which, thru its Former Special Fifteenth Division, rendered the herein assailed 21 January 2010 decision,³¹ upon the following findings and conclusions:

a) Irrespective of whether it is real or one incapable of pecuniary estimation, the action commenced by R-II Builders indubitably falls squarely within the jurisdiction of respondent RTC;

b) From the allegations of R-II Builders’ original complaint and amended complaint the character of the relief primarily sought, i.e., the declaration of nullity of the DAC, the action before respondent RTC is one where the subject matter is incapable of pecuniary estimation;

c) R-II Builders need not pay any deficiency in the docket fees considering its withdrawal of its Amended and Supplemental Complaint;

d) A receiver may be appointed without formal hearing, particularly when it is within the interest of both parties and does not result in the delay of any government infrastructure projects or economic development efforts;

e) Respondent RTC’s act of calling the attention of the Manila Registrar of Deeds to R-II Builders’ Urgent Ex-Parte Motion for Annotation of Lis Pendens is well-within its residual power to act on matters before it; and

f) The withdrawal of R-II Builders’ Amended and Supplemental Complaint discounted the forum shopping imputed against it by HGC.³²

HGC’s motion for reconsideration of the foregoing decision³³ was denied for lack of merit in the CA’s resolution dated 21 June 2010, hence, this petition.

The Issues

HGC urges the affirmative of the following issues in urging the grant of its petition, to wit:

"Did the Honorable Court of
Appeals Seriously Err When It
Failed to Rule That:

I. The Regional Trial Court a quo had no jurisdiction to proceed with the case considering that:

(1) the original court was without authority to hear the case and;

(2) despite an unequivocal order from the trial court a quo, Private Respondent (R-II Builders) failed and refused to pay the correct and proper docket fees, whether it be for a real or personal action, based on the values of the properties or claims subject of the complaints.

II. Since the Honorable Court of Appeals had characterized the case as a personal action, the action before the Regional Trial Court a quo should have been dismissed for improper venue.

III. The order appointing a receiver was made with grave abuse of discretion as amounting to lack of jurisdiction for having been issued under the following circumstances:

(1) It was made without a hearing and without any evidence of its necessity;

(2) It was unduly harsh and totally unnecessary in view of other available remedies, especially considering that Petitioner HGC is conclusively presumed to be solvent;

(3) It effectively prevented the performance of HGC’s functions in recovering upon its guaranty exposure and was in contravention of Presidential Decree Nos. 385 and 1818, Republic Act No. 8927 and Supreme Court Circular Nos. 2-91, 13-93, 68-94 and Administrative Circular No. 11-00."³⁴

Acting on HGC’s motion for resolution of its application for a temporary restraining order and/or preliminary injunction,³⁵ the Court issued the resolution dated 23 August 2010, enjoining the enforcement of respondent RTC’s assailed orders.³⁶

The Court’s Ruling

We find the petition impressed with merit.

Jurisdiction is defined as the authority to hear and determine a cause or the right to act in a case.³⁷ In addition to being conferred by the Constitution and the law,³⁸ the rule is settled that a court’s jurisdiction over the subject matter is determined by the relevant allegations in the complaint,³⁹ the law in effect when the action is filed,⁴⁰ and the character of the relief sought irrespective of whether the plaintiff is entitled to all or some of the claims asserted.⁴¹ Consistent with Section 1, Rule 141 of the Revised Rules of Court which provides that the prescribed fees shall be paid in full "upon the filing of the pleading or other application which initiates an action or proceeding", the well-entrenched rule is to the effect that a court acquires jurisdiction over a case only upon the payment of the prescribed filing and docket fees.⁴²

The record shows that R-II Builders’ original complaint dated 23 August 2005 was initially docketed as Civil Case No. 05-113407 before Branch 24 of the Manila, a designated Special Commercial Court.⁴³ With HGC’s filing of a motion for a preliminary hearing on the affirmative defenses asserted in its answer⁴⁴ and R-II Builders’ filing of its Amended and Supplemental Complaint dated 31 July 2007,⁴⁵ said court issued an order dated 2 January 2008 ordering the re-raffle of the case upon the finding that the same is not an intra-corporate dispute.⁴⁶ In a clarificatory order dated 1 February 2008,⁴⁷ the same court significantly took cognizance of its lack of jurisdiction over the case in the following wise:

At the outset, it must be stated that this Court is a designated Special Commercial Court tasked to try and hear, among others, intra-corporate controversies to the exclusion of ordinary civil cases.

When the case was initially assigned to this Court, it was classified as an intra-corporate case. However, in the ensuing proceedings relative to the affirmative defences raised by defendants, even the plaintiff conceded that the case is not an intra-corporate controversy or even if it is, this Court is without authority to hear the same as the parties are all housed in Quezon City.

Thus, the more prudent course to take was for this Court to declare that it does not have the authority to hear the complaint it being an ordinary civil action. As to whether it is personal or civil, this Court would rather leave the resolution of the same to Branch 22 of this Court. (Italics supplied).

We find that, having squarely raised the matter in its Rule 65 petition for certiorari and prohibition docketed as CA-G.R. SP No. 111153,⁴⁸ HGC correctly faults the CA for not finding that Branch 24 of the Manila RTC had no authority to order the transfer of the case to respondent RTC.⁴⁹ Being outside the jurisdiction of Special Commercial Courts, the rule is settled that cases which are civil in nature, like the one commenced by R-II Builders, should be threshed out in a regular court.⁵⁰ With its acknowledged lack of jurisdiction over the case, Branch 24 of the Manila RTC should have ordered the dismissal of the complaint, since a court without subject matter jurisdiction cannot transfer the case to another court.⁵¹ Instead, it should have simply ordered the dismissal of the complaint, considering that the affirmative defenses for which HGC sought hearing included its lack of jurisdiction over the case.

Calleja v. Panday,⁵² while on facts the other way around, i.e., a branch of the RTC exercising jurisdiction over a subject matter within the Special Commercial Court’s authority, dealt squarely with the issue:

Whether a branch of the Regional Trial Court which has no jurisdiction to try and decide a case has authority to remand the same to another co-equal Court in order to cure the defects on venue and jurisdiction.

Calleja ruled on the issue, thus:

Such being the case, RTC Br. 58 did not have the requisite authority or power to order the transfer of the case to another branch of the Regional Trial Court. The only action that RTC-Br. 58 could take on the matter was to dismiss the petition for lack of jurisdiction.

Certainly, the pronouncement of Br. 24, the Special Commercial Court, in its Joint Order of 2 January 2008 that the case is not an intracorporate controversy, amplified in its Order of 1 February 2008 that it "does not have the authority to hear the complaint it being an ordinary civil action" is incompatible with the directive for the re-raffle of the case and to "leave the resolution of the same to Branch 22 of this Court." Such a directive is an exercise of authority over the case, which authority it had in the same breath declared it did not have. What compounds the jurisdictional error is the fact that at the time of its surrender of jurisdiction, Br. 24 had already acted on the case and had in fact, on 26 October 2005, issued the writ of preliminary injunction sought by herein respondent R-II Builders. At that point, there was absolutely no reason which could justify a re-raffle of the case considering that the order that was supposed to have caused the re-raffle was not an inhibition of the judge but a declaration of absence of jurisdiction. So faulty was the order of re-raffle that it left the impression that its previously issued preliminary injunction remained effective since the case from which it issued was not dismissed but merely transferred to another court. A re-raffle which causes a transfer of the case involves courts with the same subject matter jurisdiction; it cannot involve courts which have different jurisdictions exclusive of the other. More apt in this case, a re-raffle of a case cannot cure a jurisdictional defect.

Prescinding from the foregoing considerations, and to show that the proceedings below was error upon error, we find that the CA also gravely erred in not ruling that respondent RTC’s (Branch 22, the regular court) jurisdiction over the case was curtailed by R-II Builders’ failure to pay the correct docket fees. In other words, the jurisdictionally flawed transfer of the case from Branch 24, the SCC to Branch 22, the regular court, is topped by another jurisdictional defect which is the non-payment of the correct docket fees. In its order dated 19 May 2008 which admitted R-II Builders’ Amended and Supplemental Complaint, respondent RTC distinctly ruled that the case was a real action and ordered the re-computation and payment of the correct docket fees.⁵³ In patent circumvention of said order, however, R-II Builders filed its 14 August 2008 motion to admit its Second Amended Complaint which effectively deleted its causes of action for accounting and conveyance of title to and/or possession of the entire Asset Pool and, in addition to reducing the claim for attorney’s fees and seeking its appointment as a receiver, reinstated its cause of action for resolution of the DAC.⁵⁴ Acting on said motion as well as the opposition and motion to dismiss interposed by HGC,⁵⁵ respondent RTC ruled as follows in its assailed 3 March 2009 order,⁵⁶ to wit:

1. The docket fees of the original complaint has been paid, thus, the Court already acquired jurisdiction over the instant case. The admission of the Amended and Supplemental Complaint, is subject to the payment of docket fees pursuant to the Order of this Court dated May 18, 2008. The non-payment of the docket fees stated in the Order dated May 18, 2008 will result only in the non-admission of the Amended and Supplemental Complaint, which means that the Original Complaint remains. However, since the Amended and Supplemental Complaint is being withdrawn and in lieu thereof a new Amended Complaint is sought to be admitted, there is no more need to pay the docket fees as provided for in the said Order.

2. It is settled that once jurisdiction is acquired and vested in a Court, said Court maintains its jurisdiction until judgment is had (Aruego, Jr., et al. vs. CA). Such acquired jurisdiction is not lost by the amendment of a pleading that raises additional/new cause(s) of action. The jurisdiction of a Court is not even lost even if the additional docket fees are required by reason of the amendment.

Indeed, the Supreme Court held in PNOC vs. Court of Appeals (G.R. No. 107518, October 8, 1998) that:

"Its failure to pay the docket fee corresponding to its increased claim for damages under the amended complaint should not be considered as having curtailed the lower court’s jurisdiction. Pursuant to the ruling in Sun Insurance Office, Ltd. (SIOL) v. Asuncion, the unpaid docket fees should be considered as a lien on the judgment even though private respondent specified the amount of ₱600,000.00 as its claim for damages in its amended complaint.

Thus, even on the assumption that additional docket fees are required as a consequence of any amended complaint, its non-payment will not result in the court’s loss of jurisdiction over the case.⁵⁷

Distinctly, the principal reference remained to be the "original complaint," in which R-II Builders itself submitted that the case "is a real action as it affects title and possession of real property or interest therein." It was precisely this submission which was the basis of the conclusion of the SCC court, Br. 24 that the case is not an intra-corporate controversy and therefore is outside its authority.

We see from the assailed Order that the regular court accepted the case on the reason that "the docket fees of the original complaint has been paid," so that, furthermore, the Amended and Supplemental Complaint may be admitted "subject to the payment of docket fees." When the required fees were not paid, the court considered it as resulting in the non-admission of the Amended and Supplemental Complaint such that "the original complaint remains." That remaining original complaint can then be amended by "a new Amended Complaint" which is no longer subject to the conditions attached to the unadmitted Amended and Supplemental Complaint.

The Order of 3 March 2009, with its logic and reason, is wholly unacceptable.

In upholding the foregoing order as well as its affirmance in respondent RTC’s 29 September 2009 order,⁵⁸ the CA ruled that the case – being one primarily instituted for the resolution/nullification of the DAC – involved an action incapable of pecuniary estimation. While it is true, however, that R-II Builder's continuing stake in the Asset Pool is "with respect only to its residual value after payment of all the regular SMPPCs holders and the Asset Pool creditors",⁵⁹ the CA failed to take into account the fact that R-II Builders’ original complaint and Amended and Supplemental Complaint both interposed causes of action for conveyance and/or recovery of possession of the entire Asset Pool. Indeed, in connection with its second cause of action for appointment as trustee in its original complaint,⁶⁰ R-II Builders distinctly sought the conveyance of the entire Asset Pool⁶¹ which it consistently estimated to be valued at ₱5,919,716,618.62 as of 30 June 2005.⁶² In its opposition to HGC’s motion to dismiss, R-II Builders even admitted that the case is a real action as it affects title to or possession of real property or an interest therein.⁶³ With R-II Builders' incorporation of a cause of action for conveyance of title to and/or possession of the entire Asset Pool in its Amended and Supplemental Complaint,⁶⁴ on the other hand, no less than respondent RTC, in its 19 May 2008 order, directed the assessment and payment of docket fees corresponding to a real action.

Admittedly, this Court has repeatedly laid down the test in ascertaining whether the subject matter of an action is incapable of pecuniary estimation by determining the nature of the principal action or remedy sought. While a claim is, on the one hand, considered capable of pecuniary estimation if the action is primarily for recovery of a sum of money, the action is considered incapable of pecuniary estimation where the basic issue is something other than the right to recover a sum of money, the money claim being only incidental to or merely a consequence of, the principal relief sought.⁶⁵ To our mind, the application of foregoing test does not, however, preclude the further classification of actions into personal actions and real action, for which appropriate docket fees are prescribed. In contrast to personal actions where the plaintiff seeks the recovery of personal property, the enforcement of a contract, or the recovery of damages, real actions are those which affect title to or possession of real property, or interest therein.⁶⁶ While personal actions should be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff,⁶⁷ the venue for real actions is the court of the place where the real property is located.⁶⁸

Although an action for resolution and/or the nullification of a contract, like an action for specific performance, fall squarely into the category of actions where the subject matter is considered incapable of pecuniary estimation,⁶⁹ we find that the causes of action for resolution and/or nullification of the DAC was erroneously isolated by the CA from the other causes of action alleged in R-II Builders' original complaint and Amended and Supplemental Complaint which prayed for the conveyance and/or transfer of possession of the Asset Pool. In Gochan v. Gochan,⁷⁰ this Court held that an action for specific performance would still be considered a real action where it seeks the conveyance or transfer of real property, or ultimately, the execution of deeds of conveyance of real property. More to the point is the case of Ruby Shelter Builders and Realty Development Corporation v. Hon. Pablo C. Formaran III⁷¹ where, despite the annulment of contracts sought in the complaint, this Court upheld the directive to pay additional docket fees corresponding to a real action in the following wise, to wit:

x x x [I]n Siapno v. Manalo, the Court disregarded the title/denomination of therein plaintiff Manalo's 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 based on the assessed value of the subject property or, if there was none, the estimated value thereof. The Court expounded in Siapno that:

In his amended petition, respondent Manalo prayed that NTA's sale of the property in dispute to Standford East Realty Corporation and the title issued to the latter on the basis thereof, be declared null and void. In a very real sense, albeit the amended petition is styled as one for "Mandamus with Revocation of Title and Damages", it is, at bottom, a suit to recover from Standford the realty in question and to vest in respondent the ownership and possession thereof. In short, the amended petition is in reality an action in res or a real action. Our pronouncement in Fortune Motors (Phils.), Inc. vs. Court of Appeals is instructive. There, we said:

A prayer for annulment or rescission of contract does not operate to efface the true objectives and nature of the action which is to recover real property. (Inton, et al., v. Quintan, 81 Phil. 97, 1948)

An action to annul a real estate mortgage foreclosure sale is no different from an action to annul a private sale of real property. (Muñoz v. Llamas, 87 Phil. 737, 1950).

While it is true that petitioner does not directly seek the recovery of title or possession of the property in question, his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building which, under the law, is considered immovable property, the recovery of which is petitioner's primary objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective and nature of the case, which is to recover said real property. It is a real action.⁷²

Granted that R-II Builders is not claiming ownership of the Asset Pool because its continuing stake is, in the first place, limited only to the residual value thereof, the conveyance and/or transfer of possession of the same properties sought in the original complaint and Amended and Supplemental Complaint both presuppose a real action for which appropriate docket fees computed on the basis of the assessed or estimated value of said properties should have been assessed and paid. In support of its original complaint’s second cause of action for appointment as trustee and conveyance of the properties in the Asset Pool, R-II Builders distinctly alleged as follows:

5.12. As the Court-appointed Trustee, R-II Builders shall have and exercise the same powers, rights and duties as if [it] had been originally appointed, having the principal duty of redeeming and buying back the Regular SMPPC’s and thereafter liquidating the Asset Pool, which are also the end goals of the Agreement.

5.12.1. R-II Builders, as the Trustee, shall have the power and right to invest, transfer, convey or assign any of the assets of the Asset Pool, whether funds, receivables, real or personal property, in exchange for shares of stocks, bonds, securities, real or personal properties of any kind, class or nature, provided that any such investment, transfer, conveyance or assignment shall not impair the value of the Asset Pool.

5.12.2. R-II Builders, as the Trustee, shall have the power and right to sell, change, assign or otherwise dispose of any stocks, bonds, securities, real or personal properties or other assets constituting the Asset Pool.

5.12. 3. R-II Builders, as the Trustee, shall have the power and right to enter into lease agreements as lessor or any other related contract for the benefit of the Asset Pool; and

5.12.4. It is understood that the aforecited powers and rights of R-II Builders as the court-appointed Trustee, are non-exclusive; and is deemed to include all the rights and powers necessary and incidental to achieve the goals and objectives of the Agreement.⁷³

From the foregoing allegations in its original complaint, it cannot be gainsaid that R-II Builders was unquestionably seeking possession and control of the properties in the Asset Pool which predominantly consisted of real properties. Having admitted that "the case is a real action as it affects title to or possession of real property or (an) interest therein",⁷⁴ R-II Builders emphasized the real nature of its action by seeking the grant of the following main reliefs in the Amended and Supplemental Complaint it subsequently filed, to wit:

5. After trial on the merits, render judgment:

(i) Declaring the annulment of the Deed of Assignment and conveyance executed by PDB in favor of HGC; or in the alternative, declaring the nullity of the said instrument;

(ii) Appointing R-II Builders as the Trustee of the Asset Pool Properties, with powers and responsibilities including but not limited to those stated in 5.12.1, 5.12.2, 5.12.3 and 5.12.4 herein and those spelled out in the Re-Stated Smokey Mountain Asset Pool Formation Trust Agreement;

(iii) Ordering HGC to render an accounting of all properties of the Asset Pool transferred thereto under the Deed of Assignment and Conveyance and thereafter convey title to and/or possession of the entire Asset Pool to R-II Builders as the Trustee thereof which assets consist of, but is not limited to the following:

(a) 105 parcels of land comprising the Smokey Mountain Site, and, the Reclamation Area, consisting of the 539,471.47 square meters, and all the buildings and improvements thereon, with their corresponding certificates of title;

(b) shares of stock of Harbour Center Port Terminal, Inc. which are presently registered in the books of the said company in the name of PDB for the account of the Smokey Mountain Asset Pool; and

(c) other documents as listed in Annex E of the Contract of Guaranty.

(iv) Ordering NHA to pay the Asset Pool the amount of Php1,803,729,757.88 including the direct and indirect cost thereon as may be found by this Honorable Court to be due thereon;

(v) Making the injunction permanent;

(vi) Ordering HGC and the NHA to pay Attorney’s fees in the amount of ₱2,000,000 and the costs of suit.⁷⁵

For failure of R-II Builders to pay the correct docket fees for its original complaint or, for that matter, its Amended and Supplemental Complaint as directed in respondent RTC's 19 May 2008 order, it stands to reason that jurisdiction over the case had yet to properly attach. Applying the rule that "a case is deemed filed only upon payment of the docket fee regardless of the actual date of filing in court" in the landmark case of Manchester Development Corporation v. Court of Appeals,⁷⁶ this Court ruled that jurisdiction over any case is acquired only upon the payment of the prescribed docket fee which is both mandatory and jurisdictional. To temper said ruling, the Court subsequently issued the following guidelines in Sun Insurance Office, Ltd. v. Hon. Maximiano Asuncion,⁷⁷ viz.:

1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the subject matter or nature of the action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period.

2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not be considered filed until and unless the filing fee prescribed therefor is paid. The court may also allow payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive or reglementary period.

3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for determination by the court, the additional filing fee therefor shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee.

True to the foregoing guidelines, respondent RTC admitted R-II Builder’s Amended and Supplemental Complaint and directed the assessment and payment of the appropriate docket fees in the order dated 19 May 2008. Rather than complying with said directive, however, R-II Builders manifested its intent to evade payment of the correct docket fees by withdrawing its Amended and Supplemental Complaint and, in lieu thereof, filed its Second Amended Complaint which deleted its cause of action for accounting and conveyance of title to and/or possession of the entire Asset Pool, reduced its claim for attorney’s fees, sought its appointment as Receiver and prayed for the liquidation and distribution of the Asset Pool.⁷⁸ In upholding the admission of said Second Amended Complaint in respondent RTC’s assailed 3 March 2009 Order, however, the CA clearly lost sight of the fact that a real action was ensconced in R-II Builders’ original complaint and that the proper docket fees had yet to be paid in the premises. Despite the latter’s withdrawal of its Amended and Supplemental Complaint, it cannot, therefore, be gainsaid that respondent RTC had yet to acquire jurisdiction over the case for non-payment of the correct docket fees.

In the 15 February 2011 Resolution issued in the case of David Lu v. Paterno Lu Ym, Sr.,⁷⁹ this Court, sitting En Banc, had occasion to rule that an action for declaration of nullity of share issue, receivership and corporate dissolution is one where the value of the subject matter is incapable of pecuniary estimation. Subsequent to the trial court's rendition of a decision on the merits declared to be immediately executory and the CA's denial of their application for a writ of preliminary injunction and/or temporary restraining order to enjoin enforcement of said decision, the defendants questioned the sufficiency of the docket fees paid a quo which supposedly failed take into consideration the value of the shares as well as the real properties involved for which the plaintiff additionally caused notices of lis pendens to be annotated. Finding that defendants were already estopped in questioning the jurisdiction of the trial court on the ground of non-payment of the correct docket fees, the Court discounted intent to defraud the government on the part of the plaintiff who can, at any rate, be required to pay the deficiency which may be considered a lien on the judgment that may be rendered, without automatic loss of the jurisdiction already acquired, in the first instance, by the trial court.1avvphi1

The factual and legal milieus of the case at bench could not, however, be more different. While R-II Builders styled its original complaint and Amended and Supplemental Complaint as one primarily for the resolution and/or declaration of the DAC, it simultaneously and unmistakably prayed for the conveyance, possession and control of the Asset Pool. Alongside the fact that HGC has consistently questioned the sufficiency of the docket fees paid by R-II Builders, estoppel cannot be said to have set in since, the lapse of more than five years from the commencement of the complaint notwithstanding, it appears that the case has yet to be tried on the merits. Having admitted that its original complaint partook the nature of a real action and having been directed to pay the correct docket fees for its Amended and Supplemental Complaint, R-II Builders is, furthermore, clearly chargeable with knowledge of the insufficiency of the docket fees it paid. Unmistakably manifesting its intent to evade payment of the correct docket fees, moreover, R-II Builders withdrew its Amended and Supplemental Complaint after its admission and, in lieu thereof, filed its’ Second Amended Complaint on the ground that said earlier pleading cannot be considered admitted in view of its non-payment of the docket and other fees it was directed to pay. In so doing, however, R-II Builders conveniently overlooked the fact that the very same argument could very well apply to its original complaint for which – given its admitted nature as a real action - the correct docket fees have also yet to be paid.

The importance of filing fees cannot be over-emphasized for they are intended to take care of court expenses in the handling of cases in terms of costs of supplies, use of equipment, salaries and fringe benefits of personnel, and others, computed as to man-hours used in the handling of each case. The payment of said fees, therefore, cannot be made dependent on the result of the action taken without entailing tremendous losses to the government and to the judiciary in particular.⁸⁰ For non-payment of the correct docket fees which, for real actions, should be computed on the basis of the assessed value of the property, or if there is none, the estimated value thereof as alleged by the claimant,⁸¹ respondent RTC should have denied admission of R-II Builders’ Second Amended Complaint and ordered the dismissal of the case. Although a catena of decisions rendered by this Court eschewed the application of the doctrine laid down in the Manchester case,⁸² said decisions had been consistently premised on the willingness of the party to pay the correct docket fees and/or absence of intention to evade payment of the correct docket fees. This cannot be said of R-II Builders which not only failed to pay the correct docket fees for its original complaint and Amended and Supplemental Complaint but also clearly evaded payment of the same by filing its Second Amended Complaint.

By itself, the propriety of admitting R-II Builders’ Second Amended Complaint is also cast in dubious light when viewed through the prism of the general prohibition against amendments intended to confer jurisdiction where none has been acquired yet. Although the policy in this jurisdiction is to the effect that amendments to pleadings are favored and liberally allowed in the interest of justice, amendment is not allowed where the court has no jurisdiction over the original complaint and the purpose of the amendment is to confer jurisdiction upon the court.⁸³ Hence, with jurisdiction over the case yet to properly attach, HGC correctly fault the CA for upholding respondent RTC’s admission of R-II Builders’ Second Amended Complaint despite non-payment of the docket fees for its original complaint and Amended and Supplemental Complaint as well as the clear intent to evade payment thereof.

With the determination of the jurisdictional necessity of the dismissal of the complaint of R-II Builders docketed as Civil Case No. 05-113407, first before Br. 24 and later before Br. 22 both of the RTC of Manila, we no longer find any reason to go into a discussion of the remaining issues HGC proffers for resolution. In view, particularly, of its non-acquisition of jurisdiction over the case, respondent RTC clearly had no authority to grant the receivership sought by R-II Builders. It needs pointing out though that the prayer for receivership clearly indicates that the R-II Builders sought the transfer of possession of property consisting of the assets of the JVA from HGC to the former’s named Receiver. As already noted, said transfer of possession was sought by respondent R-II Builders since the very start, overtly at the first two attempts, covertly in the last, the successive amendments betraying the deft maneuverings to evade payment of the correct docket fees.

WHEREFORE, premises considered, the assailed Decision dated 21 January 2010 is REVERSED and SET ASIDE. In lieu thereof, another is entered NULLIFYING the regular court’s, RTC Branch 22’s Orders dated 3 March 2009 and 29 September 2009 as well as the SCC’s, RTC Branch 24’s Order dated 26 October 2005 which was rendered void by the SCC’s subsequent declaration of absence of authority over the case. The complaint of R-II Builders docketed as Civil Case No. 05-113407 first before Br. 24 and thereafter before Br. 22 both of the RTC of Manila is hereby DISMISSED.

SO ORDERED.

JOSE PORTUGAL PEREZ
Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

PRESBITERO J. VELASCO, JR. Associate Justice

TERESITA J. LEONARDO-DE CASTRO Associate Justice

MARIANO C. DEL CASTILLO
Associate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA
Chief Justice

Footnotes

¹ Rollo, pp. 139-165.

² Id. at 165.

³ Id. at 1063-1077.

⁴ Id. at 1078-1087.

⁵ Id. at 1063.

⁶ Id. at 1068-1069.

⁷ Id. at 1088.

⁸ Id. at 19-20 and 1094.

⁹ Id. at 1112-1117.

¹⁰ Id. at 20-22, 354, 142-143 and 505.

¹¹ Id. at 22 and 356.

¹² Id. at 1118-1119.

¹³ Id. at 348-376.

¹⁴ Id. at 24 and 146.

¹⁵ Id. at 1416-1423.

¹⁶ Id. at 440-445.

¹⁷ Id. at 446-489.

¹⁸ Id. at 435-437.

¹⁹ Id. at 438-439.

²⁰ Id. at 490-495.

²¹ Id. at 496-500.

²² Id. at 496-538.

²³ Id. at 539-549.

²⁴ Id. at 585-590.

²⁵ Id. at 325-332.

²⁶ Id. at 613-656.

²⁷ Id. at 775-793.

²⁸ Id. at 823-827.

²⁹ Id. at 333-347.

³⁰ Id. at 178-313.

³¹ Id. at 139-165.

³² Id. at 154-165.

³³ Id. at 1375-1415.

³⁴ Id. at 40-41.

³⁵ Id. at 1451-1484.

³⁶ Id. at 1485-1488.

³⁷ Union Bank of the Philippines v. Securities and Exchange Commission, G.R. No. 165382, 17 August 2006, 499 SCRA 253, 263.

³⁸ Proton Pilipinas Corporation v. Republic, G.R. No. 165027, 16 October 2006, 504 SCRA 528, 540.

³⁹ General Milling Corporation v. Uytengsu III, G.R. No. 160514, 30 June 2006, 494 SCRA 241, 245.

⁴⁰ Bokingo v. Court of Appeals, G.R. No. 161739, 4 May 2006, 489 SCRA 521, 530.

⁴¹ AC Enterprises, Inc. v. Frabelle Properties Corporation, G.R. No. 166744, 2 November 2006, 506 SCRA 625, 654-655.

⁴² Lacson v. Reyes, G.R. No. 86250, 26 February 1990, 182 SCRA 729, 733.

⁴³ Rollo, pp. 348-377.

⁴⁴ Id. at 1416-1423.

⁴⁵ Id. at 446-487.

⁴⁶ Id. at 435-437.

⁴⁷ Id. at 438-439.

⁴⁸ Id. at 211-217.

⁴⁹ Id. at 41-47.

⁵⁰ Atwell v. Concepcion Progressive Association, Inc., G.R. No. 169370, 14 April 2008, 551 SCRA 272, 281.

⁵¹ Igot v. Court of Appeals, G.R. No. 150794, 17 August 2004, 436 SCRA 668, 676.

⁵² G.R. No. 168696, 28 February 2006, 483 SCRA 680, 693.

⁵³ Rollo, pp. 490-495.

⁵⁴ Id. at 496-538.

⁵⁵ Id. at 539-549.

⁵⁶ Id. at 325-332.

⁵⁷ Id. at 327-328.

⁵⁸ Id. at 333-347.

⁵⁹ Id. at 157-158.

⁶⁰ Id. at 364-371.

⁶¹ Id. at 376.

⁶² Id. at 357-358.

⁶³ Id. at 436.

⁶⁴ Id. at 460-463.

⁶⁵ Radio Communications of the Philippines, Inc. v. Court of Appeals, 435 Phil. 62, 66 (2002).

⁶⁶ Marcos-Araneta v. Court of Appeals, G.R. No. 154096, 22 August 2008, 563 SCRA 41, 62-63.

⁶⁷ Davao Light and Power Co, Inc. v. Court of Appeals, 415 Phil. 630-631 (2001).

⁶⁸ Infante v. Aran Builders, Inc., G.R. No. 156596, 24 August 2007, 531 SCRA 123, 129-130.

⁶⁹ Russel v. Hon. Augustine A. Vestil, 364 Phil. 392, 400 (1999).

⁷⁰ 423 Phil. 491, 501 (2001).

⁷¹ G.R. No. 175914, 10 February 2009, 578 SCRA 283.

⁷² Id. at 302-303.

⁷³ Rollo, pp. 369-370.

⁷⁴ Id. at 436.

⁷⁵ Id. at 485-486.

⁷⁶ 233 Phil. 579, 584 (1987).

⁷⁷ G.R. Nos. 79937-38, 13 February 1989, 170 SCRA 274, 285.

⁷⁸ Rollo, pp. 501-538.

⁷⁹ En Banc Resolution, G.R. Nos. 153690 and 157381.

⁸⁰ Suson v. Court of Appeals, 343 Phil. 820, 825 (1997) citing Pilipinas Shell Petroleum Corp. v. Court of Appeals, 171 SCRA 674.

⁸¹ Serrano v. Delica, 503 Phil. 73, 77 (2005).

⁸² Negros Oriental Planters Association, Inc. v. Presiding Judge of RTC-Negros Occidental, Br. 52, Bacolod City, G.R. No. 179878, 24 December 2008, 575 SCRA 575, 587 ; Spouses Go v. Tong, 462 Phil. 256 (2003); Soriano v. Court of Appeals, 416 Phil. 226 (2001); Yambao v. Court of Appeals, 399 Phil. 712 (2000); Mactan Cebu International Airport Authority v. Mangubat, 371 Phil. 393, (1999) ; Ng Soon v. Hon. Alday, 258 Phil. 848 (1989).

⁸³ Tirona v. Hon. Alejo, 419 Phil. 285, 300 (2001).

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