THIRD DIVISION

RUBY SHELTER BUILDERS AND

DEVELOPMENT CORPORATION,
Petitioner,

REALTY

G.R. No. 175914

Present:

- versusHON. PABLO C. FORMARAN III, Presiding Judge

of Regional Trial Court Branch 21, Naga City, as
Pairing Judge for Regional Trial Court Branch
22, Formerly Presided By HON. NOVELITA
VILLEGAS-LLAGUNO (Retired 01 May 2006),
ROMEO Y. TAN, ROBERTO L. OBIEDO and ATTY.
TOMAS A. REYES,
Respondents.

YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
PERALTA, JJ.

Promulgated:

February 10, 2009

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DECISION
CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of the
Decision[1] dated 22 November 2006 of the Court of Appeals in CA-G.R. SP No. 94800. The Court of Appeals, in its assailed Decision,
affirmed the Order[2]dated 24 March 2006 of the Regional Trial Court (RTC), Branch 22, of Naga City, in Civil Case No. RTC-2006-0030,
ordering petitioner Ruby Shelter Builders and Realty Development Corporation to pay additional docket/filing fees, computed based on
Section 7(a) of Rule 141 of the Rules of Court, as amended.

The present Petition arose from the following facts:

Petitioner obtained a loan[3] in the total amount of P95,700,620.00 from respondents Romeo Y. Tan (Tan) and Roberto L.
Obiedo (Obiedo), secured by real estate mortgages over five parcels of land, all located in Triangulo, Naga City, covered by Transfer
Certificates of Title (TCTs) No. 38376,[4] No. 29918,[5] No. 38374,[6] No. 39232,[7] and No. 39225,[8] issued by the Registry of Deeds for
Naga City, in the name of petitioner. When petitioner was unable to pay the loan when it became due and demandable, respondents
Tan and Obiedo agreed to an extension of the same.

In a Memorandum of Agreement[9] dated 17 March 2005, respondents Tan and Obiedo granted petitioner until 31 December
2005 to settle its indebtedness, and condoned the interests, penalties and surcharges accruing thereon from 1 October 2004 to 31
December 2005which amounted to P74,678,647.00. The Memorandum of Agreement required, in turn, that petitioner execute
simultaneously with the said Memorandum, by way of dacion en pago, Deeds of Absolute Sale in favor of respondents Tan and Obiedo,

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covering the same parcels of land subject of the mortgages. The Deeds of Absolute Sale would be uniformly dated 2 January 2006, and
state that petitioner sold to respondents Tan and Obiedo the parcels of land for the following purchase prices:
TCT No.

Purchase Price

38376
29918
38374
39232
39225

P 9,340,000.00
P 28,000,000.00
P 12,000,000.00
P 1,600,000.00
P 1,600,000.00

Petitioner could choose to pay off its indebtedness with individual or all five parcels of land; or it could redeem said properties
by paying respondents Tan and Obiedo the following prices for the same, inclusive of interest and penalties:
TCT No.

Redemption Price

38376
29918
38374
39232
39225

P 25,328,939.00
P 35,660,800.00
P 28,477,600.00
P 6,233,381.00
P 6,233,381.00

In the event that petitioner is able to redeem any of the afore-mentioned parcels of land, the Deed of Absolute Sale covering
the said property shall be nullified and have no force and effect; and respondents Tan and Obiedo shall then return the owners
duplicate of the corresponding TCT to petitioner and also execute a Deed of Discharge of Mortgage. However, if petitioner is unable to
redeem the parcels of land within the period agreed upon, respondents Tan and Obiedo could already present the Deeds of Absolute
Sale covering the same to the Office of the Register of Deeds for Naga City so respondents Tan and Obiedo could acquire TCTs to the
said properties in their names.

The Memorandum of Agreement further provided that should petitioner contest, judicially or otherwise, any act, transaction, or
event related to or necessarily connected with the said Memorandum and the Deeds of Absolute Sale involving the five parcels of land,
it would pay respondents Tan and Obiedo P10,000,000.00 as liquidated damages inclusive of costs and attorneys fees. Petitioner
would likewise pay respondents Tan and Obiedo the condoned interests, surcharges and penalties. [10] Finally, should a contest arise
from the Memorandum of Agreement, Mr. Ruben Sia (Sia), President of petitioner corporation, personally assumes, jointly and severally
with petitioner, the latters monetary obligation to respondent Tan and Obiedo.

Respondent Atty. Tomas A. Reyes (Reyes) was the Notary Public who notarized the Memorandum of Agreement dated 17 March
2005between respondent Tan and Obiedo, on one hand, and petitioner, on the other.

Pursuant to the Memorandum of Agreement, petitioner, represented by Mr. Sia, executed separate Deeds of Absolute Sale,
[11]

over the five parcels of land, in favor of respondents Tan and Obiedo. On the blank spaces provided for in the said Deeds, somebody

wrote the 3rd of January 2006 as the date of their execution. The Deeds were again notarized by respondent Atty. Reyes also on 3
January 2006.

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Without payment having been made by petitioner on 31 December 2005, respondents Tan and Obiedo presented the Deeds of
Absolute Sale dated 3 January 2006 before the Register of Deeds of Naga City on 8 March 2006, as a result of which, they were able
to secure TCTs over the five parcels of land in their names.

On 16 March 2006, petitioner filed before the RTC a Complaint[12] against respondents Tan, Obiedo, and Atty. Reyes, for
declaration of nullity of deeds of sales and damages, with prayer for the issuance of a writ of preliminary injunction and/or temporary
restraining order (TRO). The Complaint was docketed as Civil Case No. 2006-0030.

On the basis of the facts already recounted above, petitioner raised two causes of action in its Complaint.

As for the first cause of action, petitioner alleged that as early as 27 December 2005, its President already wrote a letter
informing respondents Tan and Obiedo of the intention of petitioner to pay its loan and requesting a meeting to compute the final
amount due. The parties held meetings on 3 and 4 January 2006 but they failed to arrive at a mutually acceptable computation of the
final amount of loan payable. Respondents Tan and Obiedo then refused the request of petitioner for further dialogues. Unbeknownst to
petitioner, despite the ongoing meetings, respondents Tan and Obiedo, in evident bad faith, already had the pre-executed Deeds of
Absolute Sale notarized on 3 January 2006 by respondent Atty. Reyes. Atty. Reyes, in connivance with respondents Tan and Obiedo,
falsely made it appear in the Deeds of Absolute Sale that Mr. Sia had personally acknowledged/ratified the said Deeds before Atty.
Reyes.

Asserting that the Deeds of Absolute Sale over the five parcels of land were executed merely as security for the payment of its
loan to respondents Tan and Obiedo; that the Deeds of Absolute Sale, executed in accordance with the Memorandum of Agreement,
constituted pactum commisorium and as such, were null and void; and that the acknowledgment in the Deeds of Absolute Sale were
falsified, petitioner averred:
13. That by reason of the fraudulent actions by the [herein respondents], [herein petitioner] is prejudiced and
is now in danger of being deprived, physically and legally, of the mortgaged properties without benefit of legal
processes such as the remedy of foreclosure and its attendant procedures, solemnities and remedies available to a
mortgagor, while [petitioner] is desirous and willing to pay its obligation and have the mortgaged properties released.
[13]

In support of its second cause of action, petitioner narrated in its Complaint that on 18 January 2006, respondents Tan and
Obiedo forcibly took over, with the use of armed men, possession of the five parcels of land subject of the falsified Deeds of Absolute
Sale and fenced the said properties with barbed wire. Beginning 3 March 2006, respondents Tan and Obiedo started demolishing some
of the commercial spaces standing on the parcels of land in question which were being rented out by petitioner. Respondents Tan and
Obiedo were also about to tear down a principal improvement on the properties consisting of a steel-and-concrete structure housing a
motor vehicle terminal operated by petitioner. The actions of respondents Tan and Obiedo were to the damage and prejudice of
petitioner and its tenants/lessees. Petitioner, alone, claimed to have suffered at least P300,000.00 in actual damages by reason of the
physical invasion by respondents Tan and Obiedo and their armed goons of the five parcels of land.

Ultimately, petitioners prayer in its Complaint reads:

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WHEREFORE, premises considered, it is most respectfully prayed of this Honorable Court that upon the
filing of this complaint, a 72-hour temporary restraining order be forthwith issued ex parte:
(a) Restraining [herein respondents] Tan and Obiedo, their agents, privies or representatives, from
committing act/s tending to alienate the mortgaged properties from the [herein petitioner] pending the resolution of
the case, including but not limited to the acts complained of in paragraph 14, above;
(b) Restraining the Register of Deeds of Naga City from entertaining moves by the [respondents] to have
[petitioners] certificates of title to the mortgaged properties cancelled and changed/registered in [respondents] Tans
and Obiedos names, and/or released to them;
(c) After notice and hearing, that a writ of preliminary injunction be issued imposing the same restraints
indicated in the next preceding two paragraphs of this prayer; and
(d) After trial, judgment be rendered:
1.

Making the injunction permanent;

2.
Declaring the provision in the Memorandum of Agreement requiring the [petitioner] to execute deed of
sales (sic) in favor of the [respondents Tan and Obiedo] as dacion en pago in the event of non-payment of the debt
as pactum commissorium;
3.
Annulling the Deed[s] of Sale for TCT Nos. 29918, 38374, 38376, 39225 and 39232, all dated January
3, 2006, the same being in contravention of law;
4.
Ordering the [respondents] jointly and solidarily to pay the [petitioner] actual damages of at
least P300,000.00; attorneys fees in the amount of P100,000.00 plus P1,000.00 per court attendance of counsel as
appearance fee; litigation expenses in the amount of at least P10,000.00 and exemplary damages in the amount
of P300,000.00, plus the costs.
[Petitioner] further prays for such other reliefs as may be proper, just and equitable under the premises.[14]

Upon filing its Complaint with the RTC on 16 March 2006, petitioner paid the sum of P13,644.25 for docket and other legal fees, as
assessed by the Office of the Clerk of Court. The Clerk of Court initially considered Civil Case No. 2006-0030 as an action incapable of
pecuniary estimation and computed the docket and other legal fees due thereon according to Section 7(b)(1), Rule 141 of the Rules of
Court.

Only respondent Tan filed an Answer [15] to the Complaint of petitioner. Respondent Tan did admit that meetings were held with
Mr. Sia, as the representative of petitioner, to thresh out Mr. Sias charge that the computation by respondents Tan and Obiedo of the
interests, surcharges and penalties accruing on the loan of petitioner was replete with errors and uncertainties. However, Mr. Sia failed
to back up his accusation of errors and uncertainties and to present his own final computation of the amount due. Disappointed and
exasperated, respondents Tan and Obiedo informed Mr. Sia that they had already asked respondent Atty. Reyes to come over to
notarize the Deeds of Absolute Sale.Respondent Atty. Reyes asked Mr. Sia whether it was his signature appearing above his printed
name on the Deeds of Absolute Sale, to which Mr. Sia replied yes. On 4 January 2006, Mr. Sia still failed to establish his claim of errors
and uncertainties in the computation of the total amount which petitioner must pay respondent Tan and Obiedo. Mr. Sia, instead, sought
a nine-month extension for paying the loan obligation of petitioner and the reduction of the interest rate thereon to only one percent
(1%) per month. Respondents Tan and Obiedo rejected both demands.

Respondent Tan maintained that the Deeds of Absolute Sale were not executed merely as securities for the loan of
petitioner. The Deeds of Absolute Sale over the five parcels of land were the consideration for the payment of the total indebtedness of
petitioner to respondents Tan and Obiedo, and the condonation of the 15-month interest which already accrued on the loan, while
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providing petitioner with the golden opportunity to still redeem all or even portions of the properties covered by said
Deeds. Unfortunately, petitioner failed to exercise its right to redeem any of the said properties.

Belying that they forcibly took possession of the five parcels of land, respondent Tan alleged that it was Mr. Sia who, with the
aid of armed men, on board a Sports Utility Vehicle and a truck, rammed into the personnel of respondents Tan and Obiedo causing
melee and disturbance. Moreover, by the execution of the Deeds of Absolute Sale, the properties subject thereof were, ipso jure,
delivered to respondents Tan and Obiedo. The demolition of the existing structures on the properties was nothing but an exercise of
dominion by respondents Tan and Obiedo.

Respondent Tan, thus, sought not just the dismissal of the Complaint of petitioner, but also the grant of his counterclaim. The
prayer in his Answer is faithfully reproduced below:
Wherefore, premises considered, it is most respectfully prayed that, after due hearing, judgment be
rendered dismissing the complaint, and on the counterclaim, [herein petitioner] and Ruben Sia, be ordered to
indemnify, jointly and severally [herein respondents Tan and Obiedo] the amounts of not less than P10,000,000.00 as
liquidated damages and the further sum of not less than P500,000.00 as attorneys fees. In the alternative, and should
it become necessary, it is hereby prayed that [petitioner] be ordered to pay herein [respondents Tan and Obiedo] the
entire principal loan of P95,700,620.00, plus interests, surcharges and penalties computed from March 17, 2005 until
the entire sum is fully paid, including the amount of P74,678,647.00 foregone interest covering the period from
October 1, 2004 to December 31, 2005 or for a total of fifteen (15) months, plus incidental expenses as may be
proved in court, in the event that Annexes G to L be nullified. Other relief and remedies as are just and equitable
under the premises are hereby prayed for.[16]

Thereafter, respondent Tan filed before the RTC an Omnibus Motion in which he contended that Civil Case No. 2006-0030
involved real properties, the docket fees for which should be computed in accordance with Section 7(a), not Section 7(b)(1), of Rule
141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC which took effect on 16 August 2004. Since petitioner did not pay the
appropriate docket fees for Civil Case No. 2006-0030, the RTC did not acquire jurisdiction over the said case. Hence, respondent Tan
asked the RTC to issue an order requiring petitioner to pay the correct and accurate docket fees pursuant to Section 7(a), Rule 141 of
the Rules of Court, as amended; and should petitioner fail to do so, to deny and dismiss the prayer of petitioner for the annulment of the
Deeds of Absolute Sale for having been executed in contravention of the law or of the Memorandum of Agreement as pactum
commisorium.

As required by the RTC, the parties submitted their Position Papers on the matter. On 24 March 2006, the RTC issued an
Order[17]granting respondent Tans Omnibus Motion. In holding that both petitioner and respondent Tan must pay docket fees in
accordance with Section 7(a), Rule 141 of the Rules of Court, as amended, the RTC reasoned:
It must be noted that under paragraph (b) 2. of the said Section 7, it is provided that QUIETING OF TITLE
which is an action classified as beyond pecuniary estimation shall be governed by paragraph (a). Hence, the filing fee
in an action for Declaration of Nullity of Deed which is also classified as beyond pecuniary estimation, must be
computed based on the provision of Section 7(A) herein-above, in part, quoted.
Since [herein respondent], Romeo Tan in his Answer has a counterclaim against the plaintiff, the former
must likewise pay the necessary filling (sic) fees as provided for under Section 7 (A) of Amended Administrative
Circular No. 35-2004 issued by the Supreme Court.[18]

Consequently, the RTC decreed on the matter of docket/filing fees:

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WHEREFORE, premises considered, the [herein petitioner] is hereby ordered to pay additional filing fee and
the [herein respondent], Romeo Tan is also ordered to pay docket and filing fees on his counterclaim, both computed
based on Section 7(a) of the Supreme Court Amended Administrative Circular No. 35-2004 within fifteen (15) days
from receipt of this Order to the Clerk of Court, Regional Trial Court, Naga City and for the latter to compute and to
collect the said fees accordingly.[19]

Petitioner moved[20] for the partial reconsideration of the 24 March 2006 Order of the RTC, arguing that Civil Case No. 20060030 was principally for the annulment of the Deeds of Absolute Sale and, as such, incapable of pecuniary estimation. Petitioner
submitted that the RTC erred in applying Section 7(a), Rule 141 of the Rules of Court, as amended, to petitioners first cause of action in
its Complaint in Civil Case No. 2006-0030.

In its Order[21] dated 29 March 2006, the RTC refused to reconsider its 24 March 2006 Order, based on the following
ratiocination:
Analyzing, the action herein pertains to real property, for as admitted by the [herein petitioner], the deeds of
sale in question pertain to real property x x x. The Deeds of Sale subject of the instant case have already been
transferred in the name of the [herein respondents Tan and Obiedo].
Compared with Quieting of Title, the latter action is brought when there is cloud on the title to real property or
any interest therein or to prevent a cloud from being cast upon title to the real property (Art. 476, Civil Code of the
Philippines) and the plaintiff must have legal or equitable title to or interest in the real property which is the subject
matter of the action (Art. 447, ibid.), and yet plaintiff in QUIETING OF TITLE is required to pay the fees in
accordance with paragraph (a) of Section 7 of the said Amended Administrative Circular No. 35-2004, hence, with
more reason that the [petitioner] who no longer has title to the real properties subject of the instant case must be
required to pay the required fees in accordance with Section 7(a) of the Amended Administrative Circular No. 352004 afore-mentioned.
Furthermore, while [petitioner] claims that the action for declaration of nullity of deed of sale and
memorandum of agreement is one incapable of pecuniary estimation, however, as argued by the [respondent Tan],
the issue as to how much filing and docket fees should be paid was never raised as an issue in the case of Russell
vs. Vestil, 304 SCRA 738.
xxxx
WHEREFORE, the Motion for Partial Reconsideration is hereby DENIED.[22]

In a letter dated 19 April 2006, the RTC Clerk of Court computed, upon the request of counsel for the petitioner, the additional
docket fees petitioner must pay for in Civil Case No. 2006-0030 as directed in the afore-mentioned RTC Orders. Per the computation of
the RTC Clerk of Court, after excluding the amount petitioner previously paid on 16 March 2006, petitioner must still pay the amount
of P720,392.60 as docket fees.[23]

Petitioner, however, had not yet conceded, and it filed a Petition for Certiorari with the Court of Appeals; the petition was
docketed as CA-G.R. SP No. 94800. According to petitioner, the RTC [24] acted with grave abuse of discretion, amounting to lack or
excess of jurisdiction, when it issued its Orders dated 24 March 2006 and 29 March 2006 mandating that the docket/filing fees for Civil
Case No. 2006-0030, an action for annulment of deeds of sale, be assessed under Section 7(a), Rule 141 of the Rules of Court, as
amended. If the Orders would not be revoked, corrected, or rectified, petitioner would suffer grave injustice and irreparable damage.

On 22 November 2006, the Court of Appeals promulgated its Decision wherein it held that:
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Clearly, the petitioners complaint involves not only the annulment of the deeds of sale, but also the recovery
of the real properties identified in the said documents. In other words, the objectives of the petitioner in filing the
complaint were to cancel the deeds of sale and ultimately, to recover possession of the same. It is therefore a real
action.
Consequently, the additional docket fees that must be paid cannot be assessed in accordance with Section
7(b). As a real action, Section 7(a) must be applied in the assessment and payment of the proper docket fee.
Resultantly, there is no grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
the court a quo. By grave abuse of discretion is meant capricious and whimsical exercise of judgment as is equivalent
to lack of jurisdiction, and mere abuse of discretion is not enough it must be grave. The abuse must be grave and
patent, and it must be shown that the discretion was exercised arbitrarily and despotically.
Such a situation does not exist in this particular case. The evidence is insufficient to prove that the court a
quo acted despotically in rendering the assailed orders. It acted properly and in accordance with law. Hence, error
cannot be attributed to it.[25]

Hence, the fallo of the Decision of the appellate court reads:

WHEREFORE, the petition for certiorari is DENIED. The assailed Orders of the court a quo are AFFIRMED.
[26]

Without seeking reconsideration of the foregoing Decision with the Court of Appeals, petitioner filed its Petition for Review
on Certiorari before this Court, with a lone assignment of error, to wit:
18. The herein petitioner most respectfully submits that the Court of Appeals committed a grave and serious
reversible error in affirming the assailed Orders of the Regional Trial Court which are clearly contrary to the
pronouncement of this Honorable Court in the case of Spouses De Leon v. Court of Appeals, G.R. No.
104796, March 6, 1998, not to mention the fact that if the said judgment is allowed to stand and not rectified, the
same would result in grave injustice and irreparable damage to herein petitioner in view of the prohibitive amount
assessed as a consequence of said Orders.[27]

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

In Sun Insurance Office, Ltd. (SIOL) v. Asuncion,[29] the Court laid down guidelines for the implementation of its previous
pronouncement in Manchester under particular circumstances, to wit:
1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the 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.
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In the Petition at bar, the RTC found, and the Court of Appeals affirmed, that petitioner did not pay the correct amount of
docket fees for Civil Case No. 2006-0030. According to both the trial and appellate courts, petitioner should pay docket fees in
accordance with Section 7(a), Rule 141 of the Rules of Court, as amended. Consistent with the liberal tenor of Sun Insurance, the RTC,
instead of dismissing outright petitioners Complaint in Civil Case No. 2006-0030, granted petitioner time to pay the additional docket
fees. Despite the seeming munificence of the RTC, petitioner refused to pay the additional docket fees assessed against it, believing
that it had already paid the correct amount before, pursuant to Section 7(b)(1), Rule 141 of the Rules of Court, as amended.

Relevant to the present controversy are the following provisions under Rule 141 of the Rules of Court, as amended by A.M.
No. 04-2-04-SC[30] and Supreme Court Amended Administrative Circular No. 35-2004[31]:
SEC. 7. Clerks of Regional Trial Courts.
(a) For filing an action or a permissive OR COMPULSORY counterclaim, CROSS-CLAIM, or money claim
against an estate not based on judgment, or for filing a third-party, fourth-party, etc. complaint, or a complaint-inintervention, if the total sum claimed, INCLUSIVE OF INTERESTS, PENALTIES, SURCHARGES, DAMAGES OF
WHATEVER KIND, AND ATTORNEYS FEES, LITIGATIO NEXPENSES AND COSTS and/or in cases involving
property, the FAIR MARKET value of the REAL property in litigation STATED IN THE CURRENT TAX DECLARATION
OR CURRENT ZONAL VALUATION OF THE BUREAU OF INTERNAL REVENUE, WHICHEVER IS HIGHER, OR IF
THERE IS NONE, THE STATED VALUE OF THE PROPERTY IN LITIGATION OR THE VALUE OF THE PERSONAL
PROPERTY IN LITIGATION OR THE VALUE OF THE PERSONAL PROPERTY IN LITIGATION AS ALLEGED BY
THE CLAIMANT, is:
[Table of fees omitted.]
If the action involves both a money claim and relief pertaining to property, then THE fees will be charged on
both the amounts claimed and value of property based on the formula prescribed in this paragraph a.
(b) For filing:
1. Actions where the value of the subject matter cannot be estimated
2. Special civil actions, except judicial foreclosure of mortgage, EXPROPRIATION PROCEEDINGS,
PARTITION AND QUIETING OF TITLE which will
3.

All other actions not involving property

[Table of fees omitted.]

The docket fees under Section 7(a), Rule 141, in cases involving real property depend on the fair market value of the same:
the higher the value of the real property, the higher the docket fees due. In contrast, Section 7(b)(1), Rule 141 imposes a fixed or flat
rate of docket fees on actions incapable of pecuniary estimation.

In order to resolve the issue of whether petitioner paid the correct amount of docket fees, it is necessary to determine the true
nature of its Complaint. The dictum adhered to in this jurisdiction is that the nature of an action is determined by the allegations in the
body of the pleading or Complaint itself, rather than by its title or heading. [32] However, the Court finds it necessary, in ascertaining the
true nature of Civil Case No. 2006-0030, to take into account significant facts and circumstances beyond the Complaint of petitioner,
facts and circumstances which petitioner failed to state in its Complaint but were disclosed in the preliminary proceedings before the
court a quo.

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Petitioner persistently avers that its Complaint in Civil Case No. 2006-0030 is primarily for the annulment of the Deeds of
Absolute Sale. Based on the allegations and reliefs in the Complaint alone, one would get the impression that the titles to the subject
real properties still rest with petitioner; and that the interest of respondents Tan and Obiedo in the same lies only in the Deeds of
Absolute Sale sought to be annulled.

What petitioner failed to mention in its Complaint was that respondents Tan and Obiedo already had the Memorandum of
Agreement, which clearly provided for the execution of the Deeds of Absolute Sale, registered on the TCTs over the five parcels of land,
then still in the name of petitioner. After respondents Tan and Obiedo had the Deeds of Absolute Sale notarized on 3 January 2006 and
presented the same to Register of Deeds for Naga City on 8 March 2006, they were already issued TCTs over the real properties in
question, in their own names.Respondents Tan and Obiedo have also acquired possession of the said properties, enabling them, by
petitioners own admission, to demolish the improvements thereon.

It is, thus, suspect that petitioner kept mum about the afore-mentioned facts and circumstances when they had already taken
place before it filed its Complaint before the RTC on 16 March 2006. Petitioner never expressed surprise when such facts and
circumstances were established before the RTC, nor moved to amend its Complaint accordingly. Even though the Memorandum of
Agreement was supposed to have long been registered on its TCTs over the five parcels of land, petitioner did not pray for the removal
of the same as a cloud on its title.In the same vein, although petitioner alleged that respondents Tan and Obiedo forcibly took physical
possession of the subject real properties, petitioner did not seek the restoration of such possession to itself. And despite learning that
respondents Tan and Obiedo already secured TCTs over the subject properties in their names, petitioner did not ask for the cancellation
of said titles. The only logical and reasonable explanation is that petitioner is reluctant to bring to the attention of the Court certain facts
and circumstances, keeping its Complaint safely worded, so as to institute only an action for annulment of Deeds of Absolute
Sale. Petitioner deliberately avoided raising issues on the title and possession of the real properties that may lead the Court to classify
its case as a real action.

No matter how fastidiously petitioner attempts to conceal them, the allegations and reliefs it sought in its Complaint in Civil
Case No. 2006-0030 appears to be ultimately a real action, involving as they do the recovery by petitioner of its title to and possession
of the five parcels of land from respondents Tan and Obiedo.

A real action is one in which the plaintiff seeks the recovery of real property; or, as indicated in what is now Section 1, Rule 4 of
the Rules of Court, a real action is an action affecting title to or recovery of possession of real property.[33]

Section 7, Rule 141 of the Rules of Court, prior to its amendment by A.M. No. 04-2-04-SC, had a specific paragraph governing
the assessment of the docket fees for real action, to wit:
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.

It was in accordance with the afore-quoted provision that the Court, in Gochan v. Gochan,[34] held that although the caption of
the complaint filed by therein respondents Mercedes Gochan, et al. with the RTC was denominated as one for specific performance
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and damages, the relief sought was the conveyance or transfer of real property, or ultimately, the execution of deeds of conveyance in
their favor of the real properties enumerated in the provisional memorandum of agreement. Under these circumstances, the case
before the RTC was actually a real action, affecting as it did title to or possession of real property. Consequently, the basis for
determining the correct docket fees shall be the assessed value of the property, or the estimated value thereof as alleged in the
complaint. But since Mercedes Gochan failed to allege in their complaint the value of the real properties, the Court found that the RTC
did not acquire jurisdiction over the same for non-payment of the correct docket fees.

Likewise, in Siapno v. Manalo,[35] the Court disregarded the title/denomination of therein plaintiff Manalos amended petition as
one for Mandamus with Revocation of Title and Damages; and adjudged the same to be a real action, the filing fees for which should
have been computed 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 NTAs 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 for the annulment or rescission of a sale of real property is a real action.
Its prime objective is to recover said real property. (Gavieres v. Sanchez, 94 Phil. 760, 1954)
An action to annul a real estate mortgage foreclosure sale is no different from an action to
annul a private sale of real property. (Muoz 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.
Unfortunately, and evidently to evade payment of the correct amount of filing fee, respondent Manalo never
alleged in the body of his amended petition, much less in the prayer portion thereof, the assessed value of the
subject res, or, if there is none, the estimated value thereof, to serve as basis for the receiving clerk in computing and
arriving at the proper amount of filing fee due thereon, as required under Section 7 of this Courts en banc resolution
of 04 September 1990 (Re: Proposed Amendments to Rule 141 on Legal Fees).
Even the amended petition, therefore, should have been expunged from the records.
In fine, we rule and so hold that the trial court never acquired jurisdiction over its Civil Case No. Q-95-24791.
[36]

It was in Serrano v. Delica,[37] however, that the Court dealt with a complaint that bore the most similarity to the one at
bar. Therein respondent Delica averred that undue influence, coercion, and intimidation were exerted upon him by therein petitioners
Serrano, et al. to effect transfer of his properties. Thus, Delica filed a complaint before the RTC against Serrano, et al., praying that the
special power of attorney, the affidavit, the new titles issued in the names of Serrano, et al., and the contracts of sale of the disputed
properties be cancelled; that Serrano, et al. be ordered to pay Delica, jointly and severally, actual, moral and exemplary damages in the
amount of P200,000.00, as well as attorneys fee of P200,000.00 and costs of litigation; that a TRO and a writ of preliminary injunction
10 of 57

be issued ordering Serrano, et al.to immediately restore him to his possession of the parcels of land in question; and that after trial, the
writ of injunction be made permanent.The Court dismissed Delicas complaint for the following reasons:
A careful examination of respondents complaint is that it is a real action. In Paderanga vs. Buissan, we
held that in a real action, the plaintiff seeks the recovery of real property, or, as stated in Section 2(a), Rule 4 of the
Revised Rules of Court, a real action is one affecting title to real property or for the recovery of possession of, or for
partition or condemnation of, or foreclosure of a mortgage on a real property.
Obviously, respondents complaint is a real action involving not only the recovery of real properties, but
likewise the cancellation of the titles thereto.
Considering that respondents complaint is a real action, the Rule requires that 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.
We note, however, that neither the assessed value nor the estimated value of the questioned parcels of land
were alleged by respondent in both his original and amended complaint. What he stated in his amended complaint is
that the disputed realties have a BIR zonal valuation of P1,200.00 per square meter. However, the alleged BIR zonal
valuation is not the kind of valuation required by the Rule. It is the assessed value of the realty. Having utterly failed to
comply with the requirement of the Rule that he shall allege in his complaint the assessed value of his real properties
in controversy, the correct docket fee cannot be computed. As such, his complaint should not have been accepted by
the trial court. We thus rule that it has not acquired jurisdiction over the present case for failure of herein respondent
to pay the required docket fee. On this ground alone, respondents complaint is vulnerable to dismissal.[38]

Brushing aside the significance of Serrano, petitioner argues that said decision, rendered by the Third Division of the Court,
and not by the Court en banc, cannot modify or reverse the doctrine laid down in Spouses De Leon v. Court of Appeals.[39] Petitioner
relies heavily on the declaration of this Court in Spouses De Leon that an action for annulment or rescission of a contract of sale of real
property is incapable of pecuniary estimation.

The Court, however, does not perceive a contradiction between Serrano and the Spouses De Leon. The Court calls attention
to the following statement in Spouses De Leon: 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. Necessarily, the determination must be done on a case-to-case basis, depending
on the facts and circumstances of each. What petitioner conveniently ignores is that in Spouses De Leon, the action therein that private
respondents instituted before the RTC was solely for annulment or rescission of the contract of sale over a real property. [40] There
appeared to be no transfer of title or possession to the adverse party. Their complaint simply prayed for:
1. Ordering the nullification or rescission of the Contract of Conditional Sale (Supplementary Agreement) for
having violated the rights of plaintiffs (private respondents) guaranteed to them under Article 886 of the Civil Code
and/or violation of the terms and conditions of the said contract.
2. Declaring void ab initio the Deed of Absolute Sale for being absolutely simulated; and
3. Ordering defendants (petitioners) to pay plaintiffs (private respondents) attorney's fees in the amount
of P100,000.00.[41]

As this Court has previously discussed herein, the nature of Civil Case No. 2006-0030 instituted by petitioner before the RTC
is closer to that of Serrano, rather than of Spouses De Leon, hence, calling for the application of the ruling of the Court in the former,
rather than in the latter.
It is also important to note that, with the amendments introduced by A.M. No. 04-2-04-SC, which became effective on 16
August 2004, the paragraph in Section 7, Rule 141 of the Rules of Court, pertaining specifically to the basis for computation of docket
11 of 57

fees for real actions was deleted. Instead, Section 7(1) of Rule 141, as amended, provides that in cases involving real property,
the FAIR MARKET value of the REAL property in litigation STATED IN THE CURRENT TAX DECLARATION OR CURRENT ZONAL
VALUATION OF THE BUREAU OF INTERNAL REVENUE, WHICH IS HIGHER, OR IF THERE IS NONE, THE STATED VALUE OF
THE PROPERTY IN LITIGATION x x x shall be the basis for the computation of the docket fees. Would such an amendment have an
impact on Gochan, Siapno, and Serrano? The Court rules in the negative.

A real action indisputably involves real property. The docket fees for a real action would still be determined in accordance with
the value of the real property involved therein; the only difference is in what constitutes the acceptable value. In computing the docket
fees for cases involving real properties, the courts, instead of relying on the assessed or estimated value, would now be using the fair
market value of the real properties (as stated in the Tax Declaration or the Zonal Valuation of the Bureau of Internal Revenue,
whichever is higher) or, in the absence thereof, the stated value of the same.

In sum, the Court finds that the true nature of the action instituted by petitioner against respondents is the recovery of title to
and possession of real property. It is a real action necessarily involving real property, the docket fees for which must be computed in
accordance with Section 7(1), Rule 141 of the Rules of Court, as amended. The Court of Appeals, therefore, did not commit any error in
affirming the RTC Orders requiring petitioner to pay additional docket fees for its Complaint in Civil Case No. 2006-0030.
The Court does not give much credence to the allegation of petitioner that if the judgment of the Court of Appeals is allowed to
stand and not rectified, it would result in grave injustice and irreparable injury to petitioner in view of the prohibitive amount assessed
against it. It is a sweeping assertion which lacks evidentiary support. Undeniably, before the Court can conclude that the amount of
docket fees is indeed prohibitive for a party, it would have to look into the financial capacity of said party. It baffles this Court that herein
petitioner, having the capacity to enter into multi-million transactions, now stalls at paying P720,392.60 additional docket fees so it could
champion before the courts its rights over the disputed real properties. Moreover, even though the Court exempts individuals, as
indigent or pauper litigants, from paying docket fees, it has never extended such an exemption to a corporate entity.

WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED. The Decision, dated 22 November
2006, of the Court of Appeals in CA-G.R. SP No. 94800, which affirmed the Orders dated 24 March 2006 and 29 March 2006 of the
RTC, Branch 22, of Naga City, in Civil Case No. RTC-2006-0030, ordering petitioner Ruby Shelter Builders and Realty Development
Corporation to pay additional docket/filing fees, computed based on Section 7(a), Rule 141 of the Rules of Court, as amended, is
hereby AFFIRMED. Costs against the petitioner.
SO ORDERED.

12 of 57

DO-ALL METALS INDUSTRIES, G.R. No. 176339

INC., SPS. DOMINGO LIM and
LELY KUNG LIM,
Petitioners, Present:
CARPIO, J., Chairperson,
- versus - NACHURA,
PERALTA,
BERSAMIN,* and
ABAD, JJ.
SECURITY BANK CORP.,
TITOLAIDO E. PAYONGAYONG,
EVYLENE C. SISON, PHIL.
INDUSTRIAL SECURITY Promulgated:
AGENCY CORP. and GIL SILOS,
Respondents. January 10, 2011

x --------------------------------------------------------------------------------------- x

DECISION

ABAD, J.:

This case is about the propriety of awarding damages based on claims embodied in the plaintiffs supplemental complaint filed
without prior payment of the corresponding filing fees.
The Facts and the Case
From 1996 to 1997, Dragon Lady Industries, Inc., owned by petitioner spouses Domingo Lim and Lely Kung Lim (the Lims)
took out loans from respondent Security Bank Corporation (the Bank) that totaled P92,454,776.45. Unable to pay the loans on time, the
Lims assigned some of their real properties to the Bank to secure the same, including a building and the lot on which it stands (the
property), located at M. de Leon St., Santolan, Pasig City.[1]

13 of 57

In 1998 the Bank offered to lease the property to the Lims through petitioner Do-All Metals Industries, Inc. (DMI) primarily for
business although the Lims were to use part of the property as their residence. DMI and the Bank executed a two-year lease contract
from October 1, 1998 to September 30, 2000 but the Bank retained the right to pre-terminate the lease. The contract also provided that,
should the Bank decide to sell the property, DMI shall have the right of first refusal.

On December 3, 1999, before the lease was up, the Bank gave notice to DMI that it was pre-terminating the lease on
December 31, 1999. Wanting to exercise its right of first refusal, DMI tried to negotiate with the Bank the terms of its purchase. DMI
offered to pay the Bank P8 million for the property but the latter rejected the offer, suggesting P15 million instead. DMI made a second
offer of P10 million but the Bank declined the same.

While the negotiations were on going, the Lims claimed that they continued to use the property in their business. But the Bank
posted at the place private security guards from Philippine Industrial Security Agency (PISA). The Lims also claimed that on several
occasions in 2000, the guards, on instructions of the Bank representatives Titolaido Payongayong and Evylene Sison, padlocked the
entrances to the place and barred the Lims as well as DMIs employees from entering the property. One of the guards even pointed his
gun at one employee and shots were fired. Because of this, DMI was unable to close several projects and contracts with prospective
clients. Further, the Lims alleged that they were unable to retrieve assorted furniture, equipment, and personal items left at the property.

The Lims eventually filed a complaint with the Regional Trial Court (RTC) of Pasig City for damages with prayer for the
issuance of a temporary restraining order (TRO) or preliminary injunction against the Bank and its co-defendants Payongayong,
Sison, PISA, and Gil Silos.[2] Answering the complaint, the Bank pointed out that the lease contract allowed it to sell the property at any
time provided only that it gave DMI the right of first refusal. DMI had seven days from notice to exercise its option. On September 10,
1999 the Bank gave notice to DMI that it intended to sell the property to a third party. DMI asked for an extension of its option to buy
and the Bank granted it. But the parties could not agree on a purchase price. The Bank required DMI to vacate and turnover the
property but it failed to do so. As a result, the Banks buyer backed-out of the sale. Despite what happened, the Bank and DMI
continued negotiations for the purchase of the leased premises but they came to no agreement.

The Bank denied, on the other hand, that its guards harassed DMI and the Lims. To protect its property, the Bank began
posting guards at the building even before it leased the same to DMI. Indeed, this arrangement benefited both parties. The Bank
alleged that in October of 2000, when the parties could not come to an agreement regarding the purchase of the property, DMI vacated
the same and peacefully turned over possession to the Bank.

The Bank offered no objection to the issuance of a TRO since it claimed that it never prevented DMI or its employees from
entering or leaving the building. For this reason, the RTC directed the Bank to allow DMI and the Lims to enter the building and get the
14 of 57

things they left there. The latter claimed, however, that on entering the building, they were unable to find the movable properties they
left there. In a supplemental complaint, DMI and the Lims alleged that the Bank surreptitiously took such properties, resulting in
additional actual damages to them of over P27 million.

The RTC set the pre-trial in the case for December 4, 2001. On that date, however, counsel for the Bank moved to reset the
proceeding.The court denied the motion and allowed DMI and the Lims to present their evidence ex parte. The court eventually
reconsidered its order but only after the plaintiffs had already presented their evidence and were about to rest their case. The RTC
declined to recall the plaintiffs witnesses for cross- examination but allowed the Bank to present its evidence. [3] This prompted the Bank
to seek relief from the Court of Appeals (CA) and eventually from this Court but to no avail. [4]

During its turn at the trial, the Bank got to present only defendant Payongayong, a bank officer. For repeatedly canceling the
hearings and incurring delays, the RTC declared the Bank to have forfeited its right to present additional evidence and deemed the
case submitted for decision.

On September 30, 2004 the RTC rendered a decision in favor of DMI and the Lims. It ordered the Bank to pay the
plaintiffs P27,974,564.00 as actual damages, P500,000.00 as moral damages, P500,000 as exemplary damages, and P100,000.00 as
attorneys fees. But the court absolved defendants Payongayong, Sison, Silos and PISA of any liability.

The Bank moved for reconsideration of the decision, questioning among other things the RTCs authority to grant damages
considering plaintiffs failure to pay the filing fees on their supplemental complaint. The RTC denied the motion. On appeal to the CA,
the latter found for the Bank, reversed the RTC decision, and dismissed the complaint as well as the counterclaims. [5] DMI and the Lims
filed a motion for reconsideration but the CA denied the same, hence this petition.

The Issues Presented

The issues presented in this case are:

1. Whether or not the RTC acquired jurisdiction to hear and adjudicate plaintiffs supplemental complaint against the Bank considering
their failure to pay the filing fees on the amounts of damages they claim in it;

2. Whether or not the Bank is liable for the intimidation and harassment committed against DMI and its representatives; and
15 of 57

3. Whether or not the Bank is liable to DMI and the Lims for the machineries, equipment, and other properties they allegedly
lost after they were barred from the property.

The Courts Rulings

One. On the issue of jurisdiction, respondent Bank argues that plaintiffs failure to pay the filing fees on their supplemental
complaint is fatal to their action.

But what the plaintiffs failed to pay was merely the filing fees for their Supplemental Complaint. The RTC acquired jurisdiction
over plaintiffs action from the moment they filed their original complaint accompanied by the payment of the filing fees due on the
same. The plaintiffs non-payment of the additional filing fees due on their additional claims did not divest the RTC of the jurisdiction it
already had over the case.[6]

Two. As to the claim that Banks representatives and retained guards harassed and intimidated DMIs employees and the Lims,
the RTC found ample proof of such wrongdoings and accordingly awarded damages to the plaintiffs. But the CA disagreed, discounting
the testimony of the police officers regarding their investigations of the incidents since such officers were not present when they
happened. The CA may be correct in a way but the plaintiffs presented eyewitnesses who testified out of personal knowledge. The
police officers testified merely to point out that there had been trouble at the place and their investigations yielded their findings.

The Bank belittles the testimonies of the petitioners witnesses for having been presented ex parte before the clerk of court. But
the ex parte hearing, having been properly authorized, cannot be assailed as less credible. It was the Banks fault that it was unable to
attend the hearing. It cannot profit from its lack of diligence.

Domingo Lim and some employees of DMI testified regarding the Bank guards unmitigated use of their superior strength and
firepower. Their testimonies were never refuted. Police Inspector Priscillo dela Paz testified that he responded to several complaints
regarding shooting incidents at the leased premises and on one occasion, he found Domingo Lim was locked in the building. When he
asked why Lim had been locked in, a Bank representative told him that they had instructions to prevent anyone from taking any
property out of the premises.It was only after Dela Paz talked to the Bank representative that they let Lim out.[7]

16 of 57

Payongayong, the Banks sole witness, denied charges of harassment against the Banks representatives and the guards. But
his denial came merely from reports relayed to him. They were not based on personal knowledge.

While the lease may have already lapsed, the Bank had no business harassing and intimidating the Lims and their
employees. The RTC was therefore correct in adjudging moral damages, exemplary damages, and attorneys fees against the Bank for
the acts of their representatives and building guards.

Three. As to the damages that plaintiffs claim under their supplemental complaint, their stand is that the RTC committed no
error in admitting the complaint even if they had not paid the filing fees due on it since such fees constituted a lien anyway on the
judgment award.But this after-judgment lien, which implies that payment depends on a successful execution of the judgment, applies to
cases where the filing fees were incorrectly assessed or paid or where the court has discretion to fix the amount of the award. [8] None of
these circumstances obtain in this case.

Here, the supplemental complaint specified from the beginning the actual damages that the plaintiffs sought against the
Bank. Still plaintiffs paid no filing fees on the same. And, while petitioners claim that they were willing to pay the additional fees, they
gave no reason for their omission nor offered to pay the same. They merely said that they did not yet pay the fees because the RTC
had not assessed them for it. But a supplemental complaint is like any complaint and the rule is that the filing fees due on a complaint
need to be paid upon its filing.[9]The rules do not require the court to make special assessments in cases of supplemental complaints.

To aggravate plaintiffs omission, although the Bank brought up the question of their failure to pay additional filing fees in its
motion for reconsideration, plaintiffs made no effort to make at least a late payment before the case could be submitted for decision,
assuming of course that the prescription of their action had not then set it in. Clearly, plaintiffs have no excuse for their continuous
failure to pay the fees they owed the court. Consequently, the trial court should have treated their Supplemental Complaint as not filed.

Plaintiffs of course point out that the Bank itself raised the issue of non-payment of additional filing fees only after the RTC had
rendered its decision in the case. The implication is that the Bank should be deemed to have waived its objection to such omission. But
it is not for a party to the case or even for the trial court to waive the payment of the additional filing fees due on the supplemental
complaint.Only the Supreme Court can grant exemptions to the payment of the fees due the courts and these exemptions are
embodied in its rules.

17 of 57

Besides, as correctly pointed out by the CA, plaintiffs had the burden of proving that the movable properties in question had
remained in the premises and that the bank was responsible for their loss. The only evidence offered to prove the loss was Domingo
Lims testimony and some undated and unsigned inventories. These were self-serving and uncorroborated.

WHEREFORE,

the

Court PARTIALLY GRANTS the

petition

and REINSTATES with

modification

the

decision

of

the RegionalTrial Court of Pasig City in Civil Case 68184. The Court DIRECTS respondent Security Bank Corporation to pay petitioners
DMI and spouses Domingo and Lely Kung Lim damages in the following amounts: P500,000.00 as moral damages, P500,000.00 as
exemplary damages, and P100,000.00 for attorneys fees. The Court DELETES the award of actual damages of P27,974,564.00.
SO ORDERED.
PHILIPPINE FIRST INSURANCE CO., INC. and
PARAMOUNT
GENERAL
INSURANCE
CORPORATION,
Petitioners,

G.R. No. 165147

Present:

- versus -

QUISUMBING, J., Chairperson,

CARPIO MORALES,
TINGA,
VELASCO, JR. and
BRION, JJ.

PYRAMID
LOGISTICS
AND
TRUCKING
CORPORATION (formerly PANACOR INTEGRATED
WAREHOUSING AND TRUCKING CORPORATION),
Respondent.

Promulgated:
July 9, 2008

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

CARPIO MORALES, J.:

The issue, in the main, in the present case is whether respondent, Pyramid Logistics and Trucking Corporation (Pyramid),
which filed on November 7, 2001 a complaint,[1] denominated as one for specific performance and damages, against petitioners
Philippine First Insurance Company, Inc. (Philippine First) and Paramount General Insurance Corporation (Paramount) before the
Regional Trial Court (RTC) of Makati, docketed as Civil Case No. 01-1609, paid the correct docket fee; if in the negative, whether the
complaint should be dismissed or Pyramid can still be ordered to pay the fee.
Pyramid sought to recover the proceeds of two insurance policies issued to it, Policy No. IN-002904 issued by
petitioner Paramount, and Policy No. MN-MCL-HO-00-0000007-00 issued by petitioner Philippine First. Despite demands, petitioners
allegedly failed to settle them, hence, it filed the complaint subject of the present petition.

In its complaint, Pyramid alleged that on November 8, 2000, its delivery van bearing license plate number PHL-545 which was
loaded with goods belonging to California Manufacturing Corporation (CMC) valued at PESOS NINE HUNDRED SEVEN THOUSAND
ONE HUNDRED FORTY NINE AND SEVEN/100 (P907,149.07) left the CMC Bicutan Warehouse but the van, together with the goods,
failed to reach its destination and its driver and helper were nowhere to be found, to its damage and prejudice; that it filed a criminal
complaint against the driver and the helper for qualified theft, and a claim with herein petitioners as co-insurers of the lost goods but, in
violation of petitioners undertaking under the insurance policies, they refused without just and valid reasons to compensate it for the
loss; and that as a direct consequence of petitioners failure, despite repeated demands, to comply with their respective undertakings
18 of 57

under the Insurance Policies by compensating for the value of the lost goods, it suffered damages and was constrained to engage the
services of counsel to enforce and protect its right to recover compensation under said policies, for which services it obligated itself to
pay the sum equivalent to twenty-five (25%) of any amount recovered as and for attorneys fees and legal expenses.[2]

Pyramid thus prayed

. . . that after due proceedings, judgment be rendered, ordering [herein petitioners] to comply with their
obligation under their respective Insurance Policies by paying to [it] jointly and severally, the claims arising from the
subject losses.
THAT, [herein petitioners] be adjudged jointly and severally to pay to [it], in addition to the foregoing, the
following:
1.
2.

The sum of PHP 50,000.00 plus PHP 1,500.00 for each Court session attended by counsel until
the instant [case] is finally terminated, as and for attorneys fees;
The costs of suit[;][3] (Underscoring supplied)

and for other reliefs just and equitable in the premises.[4]

Pyramid was assessed P610 docket fee, apparently on the basis of the amount of P50,000 specified in the prayer
representing attorneys fees, which it duly paid.[5]

Pyramid later filed a 1st Amended Complaint[6] containing minor changes in its body[7] but bearing the same prayer.[8] Branch
148 of the Makati RTC to which the complaint was raffled admitted the Amended Complaint.[9]

Petitioners filed a Motion to Dismiss on the ground of, inter alia, lack of jurisdiction, Pyramid not having paid the docket fees in
full, arguing thus:
xxxx
In the body of the Amended Complaint, plaintiff alleged that the goods belonging to California Manufacturing
Co., Inc. (CMC) is [sic] valued at Php907,149.07 and consequently, plaintiff incurred expenses, suffered damages
and was constrained to engage the services of counsel to enforce and protect its right to recover compensation under
the said policies and for which services, it obligated itself to pay the sum equivalent to twenty-five (25%) of any
recovery in the instant action, as and for attorneys fees and legal expenses.
On the other hand, in the prayer in the Complaint, plaintiff deliberately omitted to specify what these
damages are. x x x
xxxx
Verily, this deliberate omission by the plaintiff is clearly intended for no other purposes than to evade the
payment of the correct filing fee if not to mislead the docket clerk, in the assessment of the filing fee. In fact, the
docket clerk in the instant case charged the plaintiff a total of Php610.00only as a filing fee, which she must have
based on the amount of Php50,000.00 [attorneys fees] only.[10] (Emphasis in the original; italics and underscoring
supplied)

Petitioners cited[11] Manchester Development Corporation v. Court of Appeals[12] which held:

x x x [A]ll complaints, petitions, answers and other similar pleadings should specify the amount of
damages being prayed for not only in the body of the pleading but also in the prayer, and said damages shall be
19 of 57

considered in the assessment of the filing fees in any case. Any pleading that fails to comply with this requirement
shall not be accepted or admitted, or shall otherwise be expunged from the record. [13] (Emphasis and underscoring
supplied)

They cited too Sun Insurance Office, Ltd. v. Asuncion[14] which held that [i]t is not simply the filing of the complaint or appropriate
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.[15]

Petitioners thus concluded:

With the above cases as a backdrop, the Supreme Court, in revising the rules of pleading and practice in the
1997 Rules of Civil Procedure, added a tenth ground to a Motion to Dismiss to wit, [t]hat a condition precedent for
filing claim [sic] has not been complied with.[]
On the contrary, if plaintiff would insist that its claim against the defendants is only Php50,000.00
plus Php 1,500.00 as appearance fee per court hearing, then it follows that it is the Metropolitan Trial Court which has
jurisdiction over this case, not this Honorable Court. Such amount is way below the minimum jurisdictional amount
prescribed by the rules in order to confer jurisdiction to the Regional Trial Court.[16] (Underscoring supplied)

To the Motion to Dismiss Pyramid filed its Opposition, [17] alleging that if there was a mistake in the assessment of the docket
fees, the trial court was not precluded from acquiring jurisdiction over the complaint as it has the authority to direct the mistaken party to
complete the docket fees in the course of the proceedings . . .[18] The Opposition merited a Reply[19] from petitioners.

By Order of June 3, 2002, the trial court[20] denied the Motion to Dismiss in this wise:
xxxx
Indeed, a perusal of the Complaint reveals that while plaintiff made mention of the value of the goods, which
were lost, the prayer of plaintiff did not indicate its exact claim from the defendants. The Complaint merely prayed
defendants to comply with their obligation under their respective insurance policies by paying to plaintiff jointly and
severally, the claims arising from the subject losses and did not mention the amount of PHP907,149.07, which is the
value of the goods and which is also the subject of insurance. This resulted to the assessment and payment of docket
fees in the amount of P610 only. The Court, even without the Motion to Dismiss filed by defendant, actually noted
such omission which is actually becoming a practice for some lawyers. For whatever purpose it may be, the Court will
not dwell into it. In this instant case, this being for specific performance , it is not dismissible on that ground but
unless proper docket fees are paid, the Court can only grant what was prayed for in the Complaint.
x x x x[21] (Emphasis and underscoring supplied)

Petitioners Motion for Reconsideration[22] of the denial of their Motion to Dismiss having been denied [23] by Order of August 1,
2002, they filed their Answer with Compulsory Counterclaim ad Cautelam,[24] alleging that they intended to file a Petition for Certiorari
with the Court of Appeals.[25]

Petitioners did indeed eventually file before the Court of Appeals a Petition for Certiorari (With Preliminary Injunction and Urgent
Prayer for Restraining Order)[26] posing the following two of three queries, viz:
First. Does [Pyramids] deliberate omission to pay the required correct docket and filing fee vest the trial
court [with] jurisdiction to entertain the subject matter of the instant case?
20 of 57

Second. [Is] the instant case an action for specific performance or simply one for damages or recovery of a
sum of money?
x x x x[27]

By Decision of June 3, 2004,[28] the Court of Appeals partially granted petitioners petition for certiorari by setting aside the trial
judges assailed orders and ordering Pyramid to file the correct docket fees within a reasonable time, it holding that while the complaint
was denominated as one for specific performance, it sought to recover from petitioners Pyramids claims arising from the subject
losses. The appellate court ratiocinated:
xxxx
Indeed, it has been held that 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. To determine the docket fees, it is necessary to determine the true nature of the action by examining
the allegations of the complaint. x x x
xxxx
While the captions of the complaint and 1st amended complaint denominated the case as one for Specific
Performance and Damages, the allegations and prayer therein show that the specific performance sought by private
respondent was for petitioners to comply with their obligation under their respective Insurance Policies by paying to
plaintiff jointly and severally, the claims arising from the subject losses as well as the attorneys fees and costs
of suit. Obviously, what constitutes specific performance is the payment itself by petitioners of private respondents
claims arising from the losses it allegedly incurred. x x x[29]
xxxx
Public respondent should have ordered private respondent to pay the correct docket fees on the
basis of the allegations of the complaint.x x x
xxxx
While it has been held in Manchester Development Corporation vs. Court of Appeals x x x that any
pleading that fails to comply with this requirement of specifying the amount of damages not only in the body of the
pleading but also in the prayer shall not be accepted nor admitted, or shall otherwise be expunged from the
record, this rule was relaxed in subsequent cases, wherein payment of the correct docket fees was allowed
within a reasonable time. . .
x x x x[30] (Emphasis and underscoring supplied)
Thus the appellate court disposed:
WHEREFORE, the petition is partially granted. The Orders dated June 3, 2002 and August 1, 2002 of public
respondent are partially set aside insofar as they dispensed with the payment of the correct docket
fees. Consequently, [Pyramid] is hereby directed to pay the correct docket fees on the basis of the losses
alleged in the body of the complaint, plus the attorneys fees mentioned in the prayer , within a reasonable
time which should not go beyond the applicable prescriptive or reglementary period. In all other respects, the said
Orders are affirmed.[31] (Underscoring supplied)

Petitioners filed a Motion for Reconsideration[32] of the appellate courts decision. Pyramid filed its Comment and Opposition to
the Motion for Reconsideration,[33] arguing thus:
xxxx

21 of 57

In the present case, [Pyramid] thru its Complaint simply sought from petitioners compliance with their
contractual undertaking as insurers of the goods insured which were lost in [its] custody. Private respondent did not
specify the extent of petitioners obligation as it left the matter entirely in the judgment of the trial court to
consider. Thus, the Complaint was labeled Specific Performance which [Pyramid] submitted to the Clerk of Court for
assessment of the docket fee, after which, it paid the same based on the said assessment. There was no indication
whatsoever that [Pyramid] had refused to pay; rather, it merely argued against petitioners submissions as it
maintained the correctness of the assessment made.[34] (Underscoring supplied)

By Resolution of August 23, 2004, the Court of Appeals denied petitioners Motion for Reconsideration; [35] hence, the present
Petition for Review on Certiorari,[36] raising the issues of whether the appellate court erred:
. . . WHEN IT APPLIED IN THE INSTANT CASE THE LIBERAL RULE ENUNCIATED IN SUN INSURANCE OFFICE,
LTD. (SIOL) VS.ASUNCION, 170 SCRA 274 AND NATIONAL STEEL CORPORATION VS. COURT OF
APPEALS, 302 SCRA 523 (1999) IN RESPECT TO THE PAYMENT OF THE PRESCRIBED FILING AND DOCKET
FEES DESPITE CLEAR SHOWING OF RESPONDENTS INTENTION TO EVADE THE PAYMENT OF THE
CORRECT DOCKET FEE WHICH WARRANTS THE APPLICATION OF THE DOCTRINE LAID DOWN
IN MANCHESTER DEVELOPMENT CORPORATION VS. COURT OF APPEALS, 149 SCRA 562.
. . . WHEN IT DID NOT APPLY THE RULING OF THIS HONORABLE TRIBUNAL IN MARCOPPER MINING
CORPORATION VS. GARCIA, 143 SCRA 178, TAN VS. DIRECTOR OF FORESTRY, 125 SCRA 302,
AND CHINA ROAD AND BRIDGE CORPORATION VS. COURT OF APPEALS, 348 SCRA 401.[37] (Underscoring
supplied)

Petitioners invoke the doctrine in Manchester Development Corporation v. Court of Appeals [38] that a pleading which does not
specify in the prayer the amount sought shall not be admitted or shall otherwise be expunged, and that the court acquires jurisdiction
only upon the payment of the prescribed docket fee.[39]

Pyramid, on the other hand, insists, in its Comment on the Petition, [40] on the application of Sun Insurance Office, Ltd. (SIOL) v.
Asuncion[41] and subsequent rulings relaxing the Manchester ruling by allowing payment of the docket fee within a reasonable time, in no
case beyond the applicable prescriptive or reglementary period, where the filing of the initiatory pleading is not accompanied by the
payment of the prescribed docket fee.[42]

In Tacay v. Regional Trial Court of Tagum, Davao del Norte,[43] the Court clarified the effect of the Sun Insurance ruling on
theManchester ruling as follows:
As will be noted, the requirement in Circular No. 7 [of this Court which was issued based on
the Manchester ruling[44]] that complaints, petitions, answers, and similar pleadings should specify the amount of
damages being prayed for not only in the body of the pleading but also in the prayer, has not been altered. What has
been revised is the rule that subsequent amendment of the complaint or similar pleading will not thereby vest
jurisdiction in the Court, much less the payment of the docket fee based on the amount sought in the amended
pleading, the trial court now being authorized to allow payment of the fee within a reasonable time but in no case
beyond the applicable prescriptive period or reglementary period.Moreover, a new rule has been added, governing
the awards of claims not specified in the pleading i.e., damages arising after the filing of the complaint or similar
pleading as to which the additional filing fee therefore shall constitute a lien on the judgment.
Now, under the Rules of Court, docket or filing fees are assessed on the basis of the sum claimed, on the
one hand, or the value of the property in litigation or the value of the estate, on the other. . .
Where the action is purely for the recovery of money or damages, the docket fees are assessed on the basis
of the aggregate amount claimed, exclusive only of interests and costs. In this case, the complaint or similar pleading
should, according to Circular No. 7 of this Court, specify the amount of damages being prayed for not only in the body
of the pleading but also in the prayer, and said damages shall be considered in the assessment of filing fees in any
case.
22 of 57

Two situations may arise. One is where the complaint or similar pleading sets out a claim purely for money
and damages and there is no statement of the amounts being claimed. In this event the rule is that the pleading will
not be accepted nor admitted, or shall otherwise be expunged from the record. In other words, the complaint or
pleading may be dismissed, or the claims as to which amounts are unspecified may be expunged, although
as aforestated the Court may, on motion, permit amendment of the complaint and payment of the fees provided the
claim has not in the meantime become time-barred. The other is where the pleading does specify the amount of
every claim, but the fees paid are insufficient; and here again, the rule now is that the court may allow a reasonable
time for the payment of the prescribed fees, or the balance thereof, and upon such payment, the defect is cured and
the court may properly take cognizance of the action, unless in the meantime prescription has set in and
consequently barred the right of action.[45] (Emphasis and underscoring supplied)

Indeed, Pyramid captioned its complaint as one for specific performance and damages even if it was, as the allegations in its
body showed, seeking in the main the collection of its claims-sums of money representing losses the amount of which it, by its own
admission, knew.[46] And, indeed, it failed to specify in its prayer in the complaint the amount of its claims/damages.

When Pyramid amended its complaint, it still did not specify, in its prayer, the amount of claims/damages it was seeking. In fact
it has the audacity to inform this Court, in its Comment on the present Petition, that
x x x In the natural order of things, when a litigant is given the opportunity to spend less for a docket fee after
submitting his pleading for assessment by the Office of the Clerk of Court, he would not decline it inasmuch as to
request for a higher assessment under the circumstances [for such] is against his interest and would be
senseless. Placed under the same situation, petitioner[s] would certainly do likewise. To say otherwise would certainly
be dishonest,[47]

which comment drew petitioners to conclude as follows:

[This] only shows respondents dishonesty and lack of regard of the rules. Following this line of reasoning,
respondent would do everything if only for it to spend less for the filing fee, even to the extent of circumventing and
defying the rule on the payment of the filing fee.
In spite of the fact that the respondent was already caught in the quagmire of its own cobweb of deception, it
further justified its unethical act by ratiocinating that placed under the same situation, petitioner would certainly do
likewise, to say otherwise would certainly be dishonest. This attitude of the respondent is very alarming! Having
been caught red-handed, the honorable thing that respondent should have done is admit its own violation rather than
justify an act which it knows is a clear contravention of the rules and jurisprudence. [48] (Italics and emphasis in the
original)

Pyramids following justification for omitting to specify in the prayer of its complaint the amount of its claims/damages, viz:
xxxx
x x x While respondent knew its losses and alleged them in the body of the Complaint, it was not aware of
the extent of petitioners respective liability under the two insurance policies. The allegation of respondents losses,
albeit, without repeating them in its prayer for relief was not motivated by an intention to mislead, cheat or defraud the
Court. It just left the matter of liability arising from two separate and distinct Insurance Policies covering the same
insurable risk for the trial courts determination, hence, respondent came up with an action for specific performance[,]
[49]
(Emphasis and underscoring supplied)

fails to impress.

23 of 57

As the salient allegations of Pyramids complaint show and as priorly stated, they constitute, in the main, an action for collection
of its claims it admittedly knew.

Assuming arguendo that Pyramid has other claims the amounts of which are yet to be determined by the trial court, the rule
established in Manchester which was embodied in this Courts Circular No. 7-88 issued on March 24, 1988, as modified by the Sun
Insurance ruling, still applies. Consider this Courts pronouncement bearing on the matter in Ayala Corporation v. Madayag:[50]
xxxx
Apparently, the trial court misinterpreted paragraph 3 of the [Sun Insurance] ruling of this Court wherein it
stated that where the judgment awards a claim not specified in the pleading, or if specified, the same has been left for
the determination of the court, the additional filing fee thereforshall constitute a lien on the judgment by considering it
to mean that where in the body and prayer of the complaint there is a prayer xxx the amount of which is left to the
discretion of the Court, there is no need to specify the amount being sought, and that any award thereafter shall
constitute a lien on the judgment.
x x x While it is true that the determination of certain damages x x x is left to the sound discretion of the
court, it is the duty of the partiesclaiming such damages to specify the amount sought on the basis of which the
court may make a proper determination, and for the proper assessment of the appropriate docket
fees. The exception contemplated as to claims not specified or to claims although specified are left for determination
of the court is limited only to any damages that may arise after the filing of the complaint or similar pleading for then it
will not be possible for the claimant to specify nor speculate as to the amount thereof. (Emphasis and underscoring
supplied)

If respondent Pyramids counsel had only been forthright in drafting the complaint and taking the cudgels for his client and the
trial judge assiduous in applying Circular No. 7 vis a vis prevailing jurisprudence, the precious time of this Court, as well as of that of the
appellate court, would not have been unnecessarily sapped.

The Court at this juncture thus reminds Pyramids counsel to observe Canon 12 of the Code of Professional Ethics which
enjoins a lawyer to exert every effort and consider it his duty to assist in the speedy and efficient administration of justice, and Rule
12.04 of the same Canon which enjoins a lawyer not [to] unduly delay a case, impede the execution of a judgment or misuse court
processes. And the Court reminds too the trial judge to bear in mind that the nature of an action is determined by the allegations of the
pleadings[51] and to keep abreast of all laws and prevailing jurisprudence, consistent with the standard that magistrates must be the
embodiments of competence, integrity and independence.[52]

WHEREFORE, in light of the foregoing discussions, the petition is DENIED.

SO ORDERED.
SEPARATE
G.R. No. 202920

October 2, 2013

RICHARD CHUA, Petitioner,

vs.
THE EXECUTIVE JUDGE, METROPOLITAN TRIAL COURT, MANILA, Respondent.
DECISION
PEREZ, J.:
24 of 57

At bench is a Petition for Review on Certiorari,1 assailing the Orders2 dated 26 June 2012 and 26 July 2012 of the Executive Judge of
the Metropolitan Trial Court (MeTC), Manila, in UDK Nos. 12001457 to 96.
The facts:
On 13 January 2012, herein petitioner Richard Chua tiled before the Office of the City Prosecutor (OCP) of Manila, a complaint
charging one Letty Sy Gan of forty (40) counts of violation of Batas Pambansa Bilang (BP Blg.) 22 or the Bouncing Checks Law.3 After
conducting preliminary investigation, the OCP found probable cause and, on 22 March 2012, filed forty (40) counts of violation of BP
Blg. 22 before the MeTC.4
Consequently, the MeTC informed petitioner that he has to pay a totalof P540,668.00 as filing fees for all the forty (40) counts of
violation of BP Blg. 22.5 Finding the said amount to be beyond his means, petitioner consulted with the MeTC clerk of court to ask
whether he could pay filing fees on a per case basis instead of being required to pay the total filing fees for all the BP Blg. 22 cases all
at once.6 The MeTC clerk of court opined that petitioner could not.7 Petitioner was thus unable to pay any filing fees.
Due to non-payment of the required filing fees, the MeTC designated the forty (40) counts of violation of BP Blg. 22 as undocketed
cases under UDK Nos. 12001457 to 96. Subsequently, the OCP moved for consolidation of the said cases.8
On 18 April 2012, petitioner filed before the Executive Judge of the MeTC a motion entitled "
Urgent Motion to Allow Private Complainant to Pay Filing Fee on a Per Case Basis" (Urgent Motion).9 In it, petitioner reiterated his
request that he be allowed to pay filing fees on a per case basis instead of being required to pay the total amount of filing fees in its
entirety.
On 26 June 2012, the Executive Judge issued an Order denying petitioners Urgent Motion. In rebuffing petitioners Urgent Motion, the
Executive Judge of the MeTC ratiocinated that granting petitioners plea would constitute a deferment in the payment of filing fees that,
in turn, contravenes Section 1(b) of the Rule 111 of the Rules of Court.10
Petitioner moved for reconsideration, but to no avail.
Hence, this appeal.
OUR RULING
Prefatorily, it must be pointed out that petitioner availed of the wrong remedy in assailing the Orders dated 26 June 2012 and 26 July
2012 of the Executive Judge of the MeTC via the present petition for review on certiorari. The assailed orders are not, technically, final
orders that are appealable,11 let alone the proper subjects of an appeal by certiorari.12 The assailed orders do not, at least for the
moment, completely dispose of the B.P. 22 cases filed before the MeTC.
The correct remedy for the petitioner, in view of the unavailability of an appeal or any other remedy in the ordinary course of law, is a
certiorari petition under Rule 65 of the Rules of Court.13 But then again, the petitioner should have filed such a petition, not directly with
this Court, but before the appropriate Regional Trial Court pursuant to the principle of hierarchy of courts.14
In the weightier interest of substantial justice, however, this Court forgives such procedural lapses and treats the instant appeal as a
certiorari petition filed properly before this Court. To this Court, the grave abuse of discretion on the part of the Executive Judge was
patent on the undisputed facts of this case and is serious enough to warrant a momentary deviation from the procedural norm.
Thus, We come to the focal issue of whether the Executive Judge of the MeTC committed grave abuse of discretion, in light of the facts
and circumstances herein obtaining, in refusing petitioners request of paying filing fees on a per case basis.
We answer in the affirmative. We grant the petition.
In proposing to pay filing fees on a per case basis, petitioner was not trying to evade or deny his obligation to pay for the filing fees for
all forty (40) counts of violation of BP Blg. 22 filed before the MeTC. He, in fact, acknowledges such obligation. He, in fact, admits that
he is incapable of fulfilling such obligation in its entirety.
25 of 57

Rather, what petitioner is asking is that he at least be allowed to pursue some of the cases, the filing fees of which he is capable of
financing. Petitioner manifests that, given his current financial status, he simply cannot afford the filing fees for all the forty (40) BP Blg.
22 cases.
We see nothing wrong or illegal in granting petitioners request.
First. The Executive Judge erred when she treated the entireP540,668.00 as one indivisible obligation, when that figure was nothing but
the sum of individual filing fees due for each count of violation of BP Blg.22 filed before the MeTC. Granting petitioners request would
not constitute a deferment in the payment of filing fees, for the latter clearly intends to pay in full the filing fees of some, albeit not all, of
the cases filed.
Filing fees, when required, are assessed and become due for each initiatory pleading filed.15 In criminal actions, these pleadings refer to
the information filed in court.
In the instant case, there are a total of forty (40) counts of violation of BP Blg. 22 that was filed before the MeTC.1wphi1And each of
the forty (40) was, in fact, assessed its filing fees, individually, based on the amount of check one covers.16 Under the rules of criminal
procedure, the filing of the forty(40) counts is equivalent to the filing of forty (40) different informations, as each count represents an
independent violation of BP Blg. 22.17 Filing fees are, therefore, due for each count and may be paid for each count separately.
Second. In an effort to justify her refusal of petitioners request, the Executive Judge further argues that since all forty (40) counts of
violation of BP Blg. 22 were brought about by a single complaint filed before the OCP and are now consolidated before the court, the
payment of their tiling fees should be made for all or none at all.18
That all forty (40) counts of violation of BP Blg. 22 all emanated from a single complaint filed in the OCP is irrelevant. The fact remains
that there are still forty (40) counts of violation of BP Blg. 22 that were filed before the MeTC and, as a consequence, forty (40)
individual filing fees to be paid.
Neither would the consolidation of all forty (40) counts make any difference. Consolidation unifies criminal cases involving related
offenses only for purposes of trial.19 Consolidation does not transform the tiling fees due for each case consolidated into one indivisible
fee.
Third. Allowing petitioner to pay for the tiling fees of some of the forty ( 40) counts of violation of BP Big. 22 tiled before the MeTC, will
concededly result into the absolute non-payment of the filing fees of the rest. The fate of the cases which filing fees were not paid,
however, is already the concern of the MeTC.
WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed Orders dated 26 June 2012 and 26 July 2012 of
the Executive Judge of the Metropolitan Trial Court, Manila, in UDK Nos.12001457 to 96 are ANNULED and SET ASIDE. The
Metropolitan Trial Court, Manila, is hereby directed to accept payments of tiling fees in UDK Nos. 12001457 to 96 on a per information
basis.
No costs. SO ORDERED.
A.M. NO. 05-10-20-SC
Present:
PUNO, CJ.,
CARPIO,
CORONA,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
26 of 57

PEREZ, and
MENDOZA, JJ.
Promulgated:
March 10, 2010

IN RE: EXEMPTION OF
THE NATIONAL POWER CORPORATION
FROM PAYMENT OF FILING/ DOCKET
FEES

RESOLUTION
MENDOZA, J.:
The National Power Corporation (NPC) seeks clarification from the Court on whether or not it is exempt from the payment of filing fees,
appeal bonds and supersedeas bonds.

On December 6, 2005, the Court issued A.M. No. 05-10-20-SC, In re: Exemption of the National Power Corporation from the
Payment of Filing/Docket Fees, on the basis of Section 13, Republic Act No. 6395 (An Act Revising the Charter of the National Power
Corporation). It reads:
The Court Resolved, upon the recommendation of the Office of the Court Administrator, to DECLARE that
the National Power Corporation (NPC) is still exempt from the payment of filing fees, appeals bond, and supersedeas
bonds.

On October 27, 2009, however, the Court issued A.M. No. 05-10-20-SC stating that:

The Court Resolved, upon recommendation of the Committee on the Revision of the Rules of Court, to
DENY the request of the National Power Corporation (NPC) for exemption from the payment of filing fees pursuant to
Section 10 of Republic Act No. 6395, as amended by Section 13 of Presidential Decree No. 938. The request
appears to run counter to Section 5(5), Article VIII of the Constitution, in the rule-making power of the Supreme Court
over the rules on pleading, practice and procedure in all courts, which includes the sole power to fix the filing fees of
cases in courts.

Hence, the subject letter of NPC for clarification as to its exemption from the payment of filing fees and court fees.
Section 22 of Rule 141 reads:
27 of 57

Sec. 22. Government exempt. The Republic of the Philippines, its agencies and instrumentalities are exempt
from paying the legal fees provided in this rule. Local government units and government-owned or controlled
corporations with or without independent charters are not exempt from paying such fees. (emphasis supplied)
Section 70 of Republic Act No. 9136 (Electric Power Industry Reform Act of 2001), on privatization of NPC assets, expressly states that
the NPC shall remain as a national government-owned and controlled corporation.
Thus, NPC is not exempt from payment of filing fees.

The non-exemption of NPC is further fortified by the promulgation on February 11, 2010 of A.M. No. 08-2-01-0, In re: Petition
for Recognition of the Exemption of the Government Service Insurance System (GSIS) from Payment of Legal Fees. In said case, the
Court, citing Echegaray v. Secretary of Justice,[1] stressed that the 1987 Constitution took away the power of Congress to repeal, alter
or supplement rules concerning pleading, practice, and procedure; and that the power to promulgate these rules is no longer shared by
the Court with Congress and the Executive, thus:

Since the payment of legal fees is a vital component of the rules promulgated by this Court concerning pleading,
practice and procedure, it cannot be validly annulled, changed or modified by Congress. As one of the safeguards of
this Courts institutional independence, the power to promulgate rules of pleading, practice and procedure is now the
Courts exclusive domain. That power is no longer shared by this Court with Congress, much less the Executive.
Speaking for the Court, then Associate Justice (now Chief Justice) Reynato S. Puno traced the history of the rulemaking power of this Court and highlighted its evolution and development in Echegaray v. Secretary of Justice:
Under the 1935 Constitution, the power of this Court to promulgate rules concerning pleading,
practice and procedure was granted but it appeared to be co-existent with legislative power for it
was subject to the power of Congress to repeal, alter or supplement. Thus, its Section 13, Article
VIII provides:
Sec.13. The Supreme Court shall have the power to promulgate rules concerning
pleading, practice and procedure in all courts, and the admission to the practice
of law. Said rules shall be uniform for all courts of the same grade and shall not
diminish, increase, or modify substantive rights. The existing laws on pleading,
practice, and procedure are hereby repealed as statutes, and are declared Rules
of Court, subject to the power of the Supreme Court to alter and modify the
same. The Congress shall have the power to repeal, alter or supplement the
rules concerning pleading, practice and procedure, and the admission to the
practice of law in the Philippines.
xxxxxxxxx
[T]he 1973 Constitution reiterated the power of this Court to promulgate rules concerning
pleading, practice, and procedure in all courts, x x x which, however, may be repealed, altered or
supplemented by the Batasang Pambansa x x x. More completely, Section 5(2) [sic] 5 of its Article
X provided:
xxxxxxxxx
Sec. 5. The Supreme Court shall have the following powers.
xxxxxxxxx
(5) Promulgate rules concerning pleading, practice, and procedure in all
courts, the admission to the practice of law, and the integration of the Bar, which,
however, may be repealed, altered, or supplemented by the Batasang
28 of 57

Pambansa. Such rules shall provide a simplified and inexpensive procedure for
the speedy disposition of case, shall be uniform for all courts of the same grade,
and shall not diminish, increase, or modify substantive rights.

xxxxxxxxx
The 1987 Constitution molded an even stronger and more independent
judiciary. Among others, it enhanced the rule making power of this Court. Its Section 5(5),
Article VIII provides:
xxxxxxxxx
Section 5. The Supreme Court shall have the following powers.
xxxxxxxxx
(5) Promulgate rules concerning the protection and enforcement
of constitutional rights, pleading, practice, and procedure in all courts, the
admission to the practice of law, the Integrated Bar, and legal assistance to the
underprivileged. Such rules shall provide a simplified and inexpensive procedure
for the speedy disposition of cases, shall be uniform for all courts of the same
grade, and shall not diminish, increase, or modify substantive rights. Rules of
procedure of special courts and quasi-judicial bodies shall remain effective
unless disapproved by the Supreme Court.
The rule making power of this Court was expanded. This Court for the first time was given the power to
promulgate rules concerning the protection and enforcement of constitutional rights. The Court was also
granted for the first time the power to disapprove rules of procedure of special courts and quasi-judicial
bodies. But most importantly, the 1987 Constitution took away the power of Congress to repeal, alter,
or supplement rules concerning pleading, practice and procedure. In fine, the power to promulgate
rules of pleading, practice and procedure is no longer shared by this Court with Congress, more so with the
Executive.
The separation of powers among the three co-equal branches of our government has erected an
impregnable wall that keeps the power to promulgate rules of pleading, practice and procedure within the
sole province of this Court. The other branches trespass upon this prerogative if they enact laws or issue
orders that effectively repeal, alter or modify any of the procedural rules promulgated by this Court.Viewed
from this perspective, the claim of a legislative grant of exemption from the payment of legal fees under
Section 39 of RA 8291 necessarily fails.

With the foregoing categorical pronouncement of the Court, it is clear that NPC can no longer invoke Republic Act No. 6395
(NPC Charter), as amended by Presidential Decree No. 938, as its basis for exemption from the payment of legal fees.
WHEREFORE, it is hereby CLARIFIED that the National Power Corporation is not exempt from the payment of legal fees.
SO ORDERED.
G.R. Nos. 175277 & 175285

September 11, 2013

UNICAPITAL, INC., UNICAPITAL REALTY, INC., and JAIME J. MARTINEZ, Petitioners,

vs.
RAFAEL JOSE CONSING, JR., and THE PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF PASIG CITY, BRANCH
168, Respondents.
x-----------------------x

29 of 57

G.R. No. 192073

RAFAEL JOSE CONSING, JR., Petitioner,
vs.
HON. MARISSA MACARAIG-GUILLEN, in her capacity as the Presiding Judge of the Regional Trial Court of Makati City,
Branch 60 and UNICAPITAL, INC., Respondents.
DECISION
PERLAS-BERNABE, J.:
Before the Court are consolidated petitions for review on certiorari1 assailing separate issuances of the Court of Appeals (CA) as
follows:
(a) The petitions in G.R. Nos. 175277 and 175285 filed by Unicapital, Inc., (Unicapital), Unicapital Realty, Inc. (URI), and
Unicapital Director and Treasurer Jaime J. Martirez (Martirez)assail the CAs Joint Decision2 dated October 20, 2005 and
Resolution3 dated October 25, 2006 in CA-G.R. SP Nos. 64019and 64451 which affirmed the Resolution4 dated September
14,1999 and Order5 dated February 15, 2001 of the Regional Trial Court (RTC) of Pasig City, Branch 68 (RTC-Pasig City) in
SCA No. 1759, upholding the denial of their motion to dismiss; and
(b) The petition in G.R. No. 192073 filed by Rafael Jose Consing, Jr. (Consing, Jr.) assails the CAs Decision6dated September
30, 2009 and Resolution7 dated April 28, 2010 inCA-G.R. SP No. 101355 which affirmed the Orders dated July16, 20078 and
September 4, 20079 of the RTC of Makati City, Branch 60 (RTC-Makati City) in Civil Case No. 99-1418,upholding the denial of
his motion for consolidation.
The Facts
In 1997, Consing, Jr., an investment banker, and his mother, Cecilia Dela Cruz (Dela Cruz), obtained an P18,000,000.00 loan from
Unicapital,P12,000,000.00 of which was acquired on July 24, 1997 and the remainingP6,000,000.00 on August 1, 1997. The said loan
was secured by Promissory Notes10 and a Real Estate Mortgage11 over a 42,443 square meter-parcel of land located at Imus, Cavite,
registered in the name of Dela Cruz as per Transfer Certificate of Title (TCT) No. T-687599 (subject property).12 Prior to these
transactions, Plus Builders, Inc. (PBI), a real estate company, was already interested to develop the subject property into a residential
subdivision.13 In this regard, PBI entered into a joint venture agreement with Unicapital, through its real estate development arm, URI. In
view of the foregoing, the loan and mortgage over the subject property was later on modified into an Option to Buy Real Property14 and,
after further negotiations, Dela Cruz decided to sell the same to Unicapital and PBI. For this purpose, Dela Cruz appointed Consing, Jr.
as her attorney-in-fact.15
Eventually, Unicapital, through URI, purchased one-half of the subject property for a consideration of P21,221,500.00 (against which
Dela Cruzs outstanding loan obligations were first offset), while PBI bought the remaining half for the price of P21,047,000.00.16 In this
relation, Dela Cruz caused TCT No. T-687599 to be divided into three separate titles as follows: (a) TCT No. T-851861 for URI;17 (b)
TCT No. T-851862 for PBI;18 and (c)TCT No. T-51863 which was designated as a road lot.19 However, even before URI and PBI were
able to have the titles transferred to their names, Juanito Tan Teng (Teng) and Po Willie Yu (Yu) informed Unicapital that they are the
lawful owners of the subject property as evidenced by TCT No.T-114708;20 that they did not sell the subject property; and that Dela
Cruzs title, i.e., TCT No. T-687599, thereto was a mere forgery.21 Prompted by Teng and Yus assertions, PBI conducted further
investigations on the subject property which later revealed that Dela Cruz's title was actually of dubious origin. Based on this finding,
PBI and Unicapital sent separate demand letters22 to Dela Cruz and Consing, Jr., seeking the return of the purchase price they had paid
for the subject property.
From the above-stated incidents stemmed the present controversies as detailed hereunder.
The Proceedings Antecedent to G.R. Nos. 175277 & 175285
On May 3, 1999, Consing, Jr. filed a complaint, denominated as a Complex Action for Declaratory Relief 23 and later amended to
Complex Action for Injunctive Relief24 (Consing, Jr.s complaint) before the RTC-Pasig City against Unicapital, URI, PBI, Martirez, PBI
General Manager Mariano Martinez (Martinez), Dela Cruz and Does 1-20, docketed as SCA No. 1759. In his complaint, Consing, Jr.
claimed that the incessant demands/recovery efforts made upon him by Unicapital and PBI to return to them the purchase price they
had paid for the subject property constituted harassment and oppression which severely affected his personal and professional
30 of 57

life.25 He also averred that he was coerced to commit a violation of Batas Pambansa Blg. 2226 as Unicapital and PBI, over threats of
filing acase against him, kept on forcing him to issue a post-dated check in the amount sought to be recovered, notwithstanding their
knowledge that he had no funds for the same.27 He further alleged that Unicapital and URI required him to sign blank deeds of sale and
transfers without cancelling the old one sin violation of the laws on land registration and real estate development.28 Likewise, Consing,
Jr. added that Unicapital and PBIs representatives were" speaking of him in a manner that was inappropriate and libelous,"29 and that
some John Does "deliberately engaged in a fraudulent scheme to compromise Consing, Jr.s honor, integrity and fortune x x x
consisting of falsifying or causing to be falsified, or attempting to present as falsified certain transfers of Land Titles and Deeds for
profit,"30 classifying the foregoing as ultra vires acts which should warrant sanctions under the corporation law, Revised Securities Act
and related laws.31 Accordingly, Consing, Jr. prayed that: (a) he be declared as a mere agent of Dela Cruz, and as such, devoid of any
obligation to Unicapital, URI, and PBI for the transactions entered into concerning the subject property; (b) Unicapital, URI, and PBI be
enjoined from harassing or coercing him, and from speaking about him in a derogatory fashion; and (c) Unicapital, URI, and PBI pay
him actual and consequential damages in the amount of P2,000,000.00, moral damages of at least P1,000,000.00, exemplary
damages of P1,000,000.00, all per month, reckoned from May 1, 1999 and until the controversy is resolved, and attorney's fees and
costs of suit.32
For their part, Unicapital, URI, and Martirez (Unicapital, et al.) filed separate Motions to Dismiss33 Consing, Jr.s complaint (Unicapital, et
al.s motion to dismiss) on the ground of failure to state a cause of action, considering that: (a) no document was attached against
which Consing, Jr. supposedly derived his right and against which his rights may be as certained; (b) the demands to pay against
Consing, Jr. and for him to tender post-dated checks to cover the amount due were well within the rights of Unicapital as an unpaid
creditor, as Consing, Jr. had already admitted his dealings with them; (c) the utterances purportedly constituting libel were not set out in
the complaint; and (d) the laws supposedly violated were not properly identified. Moreover, Unicapital, et al. posited that the RTCPasigCity did not acquire jurisdiction over the case given that Consing, Jr. failed to pay the proper amount of docket fees. In the same
vein, they maintained that the RTC-Pasig City had no jurisdiction over their supposed violations of the Corporation Code and Revised
Securities Act, which, discounting its merits, should have been supposedly lodged with the Securities and Exchange Commission.
Finally, they pointed out that Consing, Jr.s complaint suffers from a defective verification and, thus, dismissible.34
Similar to Unicapital et al.s course of action, PBI and its General Manager, Martinez (Unicapital and PBI, et al.), sought the dismissal of
Consing, Jr.s complaint on the ground that it does not state a cause of action. They also denied having singled out Consing, Jr.
because their collection efforts were directed at both Consing, Jr. and Dela Cruz, which should be deemed as valid and, therefore,
should not be restrained.35
On September 14, 1999, the RTC-Pasig City issued a Resolution36 denying the above mentioned motions to dismiss, holding that
Consing, Jr.s complaint sufficiently stated a cause of action for tort and damages pursuant to Article 19 of the Civil Code. It ruled that
where there is abusive behavior, a complainant, like Consing, Jr., has the right to seek refuge from the courts. It also noted that the
elements of libel in a criminal case are not the same as those for a civil action founded on the provisions of the Civil Code, and
therefore, necessitates a different treatment. It equally refused to dismiss the action on the ground of non-payment of docket fees,
despite Consing, Jr.s escalated claims for damages therein, as jurisdiction was already vested in it upon the filing of the original
complaint. Moreover, it resolved to apply the liberal construction rule as regards the subject complaints verification and certification,
despite its improper wording, considering further that such defect was not raised at the first opportunity. Consequently, it ordered
Unicapital and PBI, et al. to file their Answer and, in addition, to submit" any Comment or Reaction within five (5) days from receipt
hereof on the allegations of Consing, Jr. in his rejoinder of September 9, 1999regarding the supposed filing of an identical case in
Makati City,"37 i.e., Civil Case No. 99-1418. Unperturbed, Unicapital and PBI, et al. moved for reconsideration therefrom which was,
however, denied by the RTC-Pasig City in an Order38 dated February 15, 2001 for lack of merit. Aggrieved, they elevated the denial of
their motions to dismiss before the CA via a petition for certiorari and prohibition,39 docketed as CA-G.R. SP Nos. 64019 and 64451.
On October 20, 2005, the CA rendered a Joint Decision40 holding that no grave abuse of discretion was committed by the RTC-Pasig
City in refusing to dismiss Consing, Jr.'s complaint.1wphi1 At the outset, it ruled that while the payment of the prescribed docket fee is
a jurisdictional requirement, its non-payment will not automatically cause the dismissal of the case. In this regard, it considered that
should there be any deficiency in the payment of such fees, the same shall constitute a lien on the judgment award.41 It also refused to
dismiss the complaint for lack of proper verification upon a finding that the copy of the amended complaint submitted to the RTC-Pasig
City was properly notarized.42 Moreover, it upheld the order of the RTC-Pasig City for Unicapital and PBI, et al. to submit their comment
due to the alleged existence of a similar case filed before the RTC-Makati City.43
Anent the substantive issues of the case, the CA concurred with the RTC-Pasig City that Consing Jr.'s complaint states a cause of
action. It found that Unicapital and PBI, et al.s purportedly abusive manner in enforcing their claims against Consing, Jr. was properly
constitutive of a cause of action as the same, if sufficiently proven, would have subjected him to "defamation of his name in business
circles, the threats and coercion against him to reimburse the purchase price, fraud and falsification and breach of fiduciary obligation."
It also found that the fact that Consing Jr.'s complaint contains "nebulous" allegations will not warrant its dismissal as any vagueness
31 of 57

therein can be clarified through a motion for a bill of particulars."44 Furthermore, it noted that Consing, Jr. does not seek to recover his
claims against any particular provision of the corporation code or the securities act but against the actions of Unicapital and PBI, et al.;
hence, Consing, Jr.s complaint was principally one for damages over which the RTC has jurisdiction, and, in turn, there lies no
misjoinder of causes of action.45
Dissatisfied, only Unicapital, et al. sought reconsideration therefrom but the same was denied by the CA in a Resolution46 dated
October 25,2006. Hence, the present petitions for review on certiorari in G.R. Nos.175277 and 175285.
The Proceedings Antecedent to G.R. No. 192073
On the other hand, on August 4, 1999, Unicapital filed a complaint47 for sum of money with damages against Consing, Jr. and Dela Cruz
before the RTC-Makati City, docketed as Civil Case No. 99-1418, seeking to recover (a) the amount of P42,195,397.16, representing
the value of their indebtedness based on the Promissory Notes (subject promissory notes) plus interests; (b) P5,000,000.00 as
exemplary damages; (c) attorney's fees; and (d) costs of suit.48
PBI also filed a complaint for damages and attachment against Consing, Jr. and Dela Cruz before the RTC of Manila, Branch 12,
docketed as Civil Case No. 99-95381, also predicated on the same set of facts as above narrated.49 In its complaint, PBI prayed that it
be allowed to recover the following: (a) P13,369,641.79, representing the total amount of installment payments made as actual
damages plus interests; (b) P200,000.00 as exemplary damages; (c) P200,000.00 as moral damages; (d) attorney's fees; and (e) costs
of suit.50 Civil Case No. 99-95381 was subsequently consolidated with SCA No. 1759 pending before the RTC-Pasig City.51
For his part, Consing, Jr. filed a Motion to Dismiss Civil Case No. 99-1418 which was, however, denied by the RTC-Makati City in an
Order52 dated November 16, 1999. Thereafter, he filed a Motion for Consolidation53 (motion for consolidation) of Civil Case No. 99-1418
with his own initiated SCA No. 1759 pending before the RTC-Pasig City.
In an Order54 dated July 16, 2007, the RTC-Makati City dismissed Consing, Jr.s motion for consolidation and, in so doing, ruled that the
cases sought to be consolidated had no identity of rights or causes of action and the reliefs sought for by Consing, Jr. from the RTCPasig City will not bar Unicapital from pursuing its money claims against him. Moreover, the RTC-Makati City noted that Consing, Jr.
filed his motion only as an after thought as it was made after the mediation proceedings between him and Unicapital failed. Consing,
Jr.'s motion for reconsideration therefrom was denied in an Order55 dated September 4, 2007. Hence, he filed a petition for certiorari
before the CA, docketed as CA-G.R. SP No. 101355, ascribing grave abuse of discretion on the part of the RTC-Makati City in refusing
to consolidate Civil Case No. 99-1418 with SCA No. 1759 in Pasig City.
On September 30, 2009, the CA rendered a Decision56 sustaining the Orders dated July 16, 2007 and September 4, 2007 of the RTCMakati City which denied Consing, Jr.s motion for consolidation. It held that consolidation is a matter of sound discretion on the part of
the trial court which could be gleaned from the use of the word "may" in Section 1, Rule38 of the Rules of Court. Considering that
preliminary steps (such as mediation) have already been undertaken by the parties in Civil Case No.99-1418 pending before the RTCMakati City, its consolidation with SCA No. 1759 pending before the RTC-Pasig City "would merely result in complications in the work of
the latter court or squander the resources or remedies already utilized in the Makati case."57 Moreover, it noted that the records of the
consolidated Pasig and Manila cases, i.e., SCA No. 1759 and Civil Case No. 99-95381, respectively, had already been elevated to the
Court, that joint proceedings have been conducted in those cases and that the pre-trial therein had been terminated as early as
October 23, 2007.Therefore, due to these reasons, the consolidation prayed for would be impracticable and would only cause a
procedural faux pas. Undaunted, Consing, Jr. filed a motion for reconsideration therefrom but was denied by the CA in a
Resolution58 dated April 28, 2010. Hence, the present petition for review on certiorari in G.R. No. 192073.
The Proceedings Before the Court
After the filing of the foregoing cases, the parties were required to file their respective comments and replies. Further, considering that
G.R. No.192073 (Makati case) involves the same parties and set of facts with those in G.R. Nos. 175277 & 175285 (Pasig case), these
cases were ordered consolidated per the Court's Resolution59 dated November 17, 2010. On March 9, 2011, the Court resolved to give
due course to the instant petitions and required the parties to submit their respective memoranda.60
The Issues Before the Court
The essential issues in these cases are as follows: (a) in G.R. Nos.175277 and 175285, whether or not the CA erred in upholding the
RTC-Pasig Citys denial of Unicapital, et al.s motion to dismiss; and (b) in G.R. No. 192073, whether or not the CA erred in upholding
the RTC-Makati Citys denial of Consing, Jr.s motion for consolidation.
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The Courts Ruling

A. Propriety of the denial of
Unicapital, et al.s motion to
dismiss and ancillary issues.
A cause of action is defined as the act or omission by which a party violates a right of another.61 It is well-settled that the existence of a
cause of action is determined by the allegations in the complaint.62 In this relation, a complaint is said to sufficiently assert a cause of
action if, admitting what appears solely on its face to be correct, the plaintiff would be entitled to the relief prayed for.63 Thus, if the
allegations furnish adequate basis by which the complaint can be maintained, then the same should not be dismissed, regardless of the
defenses that may be averred by the defendants.64 As edified in the case of Pioneer Concrete Philippines, Inc. v. Todaro,65 citing
Hongkong and Shanghai Banking Corporation, Limited. v. Catalan66 (HSBC):
The elementary test for failure to state a cause of action is whether the complaint alleges facts which if true would justify the relief
demanded. Stated otherwise, may the court render a valid judgment upon the facts alleged therein? The inquiry is into the sufficiency,
not the veracity of the material allegations. If the allegations in the complaint furnish sufficient basis on which it can be maintained, it
should not be dismissed regardless of the defense that may be presented by the defendants.67 (Emphasis supplied)
Stated otherwise, the resolution on this matter should stem from an analysis on whether or not the complaint is able to convey a cause
of action; and not that the complainant has no cause of action. Lest it be misunderstood, failure to state a cause of action is properly a
ground for a motion to dismiss under Section 1(g), Rule 1668 of the Rules of Court(Rules), while the latter is not a ground for dismissal
under the same rule.
In this case, the Court finds that Consing, Jr.s complaint in SCA No.1759 properly states a cause of action since the allegations there
insufficiently bear out a case for damages under Articles 19 and 26 of the Civil Code.
Records disclose that Consing, Jr.s complaint contains allegations which aim to demonstrate the abusive manner in which Unicapital
and PBI, et al. enforced their demands against him. Among others, the complaint states that Consing, Jr. "has constantly been
harassed and bothered by Unicapital and PBI, et al.; x x x besieged by phone calls from them; x x x has had constant meetings with
them variously, and on a continuing basis, such that he is unable to attend to his work as an investment banker."69 In the same
pleading, he also alleged that Unicapital and PBI, et al.s act of "demanding a postdated check knowing fully well that he does not have
the necessary funds to cover the same, nor is he expecting to have them is equivalent to asking him to commit a crime under unlawful
coercive force."70 Accordingly, these specific allegations, if hypothetically admitted, may result into the recovery of damages pursuant to
Article 19 of the Civil Code which states that "every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith." As explained in the HSBC case:
When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another,
a legal wrong is thereby committed for which the wrongdoer must beheld responsible. But a right, though by itself legal because it is
recognized or granted by law as such, may nevertheless become the source of some illegality. A person should be protected only when
he acts in the legitimate exercise of his right, that is, when he acts with prudence and in good faith; but not when he acts with
negligence or abuse. There is an abuse of right when it is exercised for the only purpose of prejudicing or injuring another. The exercise
of a right must be in accordance with the purpose for which it was established, and must not be excessive or unduly harsh; there must
be no intention to injure another.71 (Emphasis supplied)
Likewise, Consing, Jr.s complaint states a cause of action for damages under Article 26 of the Civil Code which provides that:
Article 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons. The
following and similar acts, though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention
and other relief:
(1) Prying into the privacy of another's residence;
(2) Meddling with or disturbing the private life or family relations of another;
(3) Intriguing to cause another to be alienated from his friends;

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(4) Vexing or humiliating another on account of his religious beliefs, lowly station in life, place of birth, physical defect, or other
personal condition.
The rationale therefor was explained in the case of Manaloto v. Veloso III,72 citing Concepcion v. CA,73 to wit:
The philosophy behind Art. 26 underscores the necessity for its inclusion in our civil law. The Code Commission stressed in no
uncertain terms that the human personality must be exalted. The sacredness of human personality is a concomitant consideration of
every plan for human amelioration. The touchstone of every system of law, of the culture and civilization of every country, is how far it
dignifies man. If the statutes insufficiently protect a person from being unjustly humiliated, in short, if human personality is not exalted then the laws are indeed defective. Thus, under this article, the rights of persons are amply protected, and damages are provided for
violations of a person's dignity, personality, privacy and peace of mind.74
To add, a violation of Article 26 of the Civil Code may also lead to the payment of moral damages under Article 2219(10)75 of the Civil
Code.
Records reveal that Consing, Jr., in his complaint, alleged that "he has come to discover that Unicapital and PBI, et al. are speaking of
him in a manner that is inappropriate and libelous; and that they have spread their virulent version of events in the business and
financial community such that he has suffered and continues to suffer injury upon his good name and reputation which, after all, is the
most sacred and valuable wealth he possesses - especially considering that he is an investment banker."76 In similar regard, the
hypothetical admission of these allegations may result into the recovery of damages pursuant to Article 26, and even Article2219(10), of
the Civil Code.
Corollary thereto, Unicapital, et al.s contention77 that the case should be dismissed on the ground that it failed to set out the actual
libelous statements complained about cannot be given credence. These incidents, as well as the specific circumstances surrounding
the manner in which Unicapital and PBI, et al. pursued their claims against Consing, Jr. may be better ventilated during trial. It is a
standing rule that issues that require the contravention of the allegations of the complaint, as well as the full ventilation, in effect, of the
main merits of the case, should not be within the province of a mere motion to dismiss,78 as in this case. Hence, as what is only
required is that the allegations furnish adequate basis by which the complaint can be maintained, the Court in view of the abovestated reasons finds that the RTC-Pasig Citys denial of Unicapital, et al.s motion to dismiss on the ground of failure to state a cause
of action was not tainted with grave abuse of discretion which would necessitate the reversal of the CAs ruling. Verily, for grave abuse
of discretion to exist, the abuse of discretion must be patent and gross so as to amount to an evasion of a positive duty or a virtual
refusal to perform a duty enjoined by law, or to act at all in contemplation of law.79 This the Court does not perceive in the case at bar.
Further, so as to obviate any confusion on the matter, the Court equally finds that the causes of action in SCA No. 1759 were not as
Unicapital, et al. claim misjoined even if Consing, Jr. averred that Unicapital and PBI, et al. violated certain provisions of the
Corporation Law and the Revised Securities Act.80
The rule is that a partys failure to observe the following conditions under Section 5, Rule 2 of the Rules results in a misjoinder of
causes of action:81
SEC. 5. Joinder of causes of action . - A party may in one pleading assert, in the alternative or otherwise, as many causes of action as
he may have against an opposing party, subject to the following conditions:
(a) The party joining the causes of action shall comply with the rules on joinder of parties;
(b) The joinder shall not include special civil actions governed by special rules;
(c) Where the causes of action are between the same parties but pertain to different venues or jurisdictions, the joinder may be
allowed in the Regional Trial Court provided one of the causes of action falls within the jurisdiction of said court and the venue
lies therein; and
(d) Where the claims in all the causes of action are principally for recovery of money the aggregate amount claimed shall be
the test of jurisdiction. (Emphasis supplied)
A careful perusal of his complaint discloses that Consing, Jr. did not seek to hold Unicapital and PBI, et al. liable for any specific
violation of the Corporation Code or the Revised Securities Act. Rather, he merely sought damages for Unicapital and PBI, et al.s
alleged acts of making him sign numerous documents and their use of the same against him. In this respect, Consing, Jr. actually
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advances an injunction and damages case82 which properly falls under the jurisdiction of the RTC-Pasig City.83 Therefore, there was no
violation of Section 5, Rule 2 of the Rules, particularly, paragraph (c) thereof. Besides, even on the assumption that there was a
misjoinder of causes of action, still, such defect should not result in the dismissal of Consing, Jr.s complaint. Section 6, Rule 2 of the
Rules explicitly states that a "misjoinder of causes of action is not a ground for dismissal of an action" and that "a misjoined cause of
action may, on motion of a party or on the initiative of the court, be severed and proceeded with separately."
Neither should Consing, Jr.s failure to pay the required docket fees lead to the dismissal of his complaint.1wphi1 It has long been
settled that while the court acquires jurisdiction over any case only upon the payment of the prescribed docket fees, its non-payment at
the time of the filing of the complaint does not automatically cause the dismissal of the complaint provided that the fees are paid within
a reasonable period.84 Consequently, Unicapital, et al.s insistence that the stringent rule on non-payment of docket fees enunciated in
the case of Manchester Development Corporation v. CA85 should be applied in this case cannot be sustained in the absence of proof
that Consing, Jr. intended to defraud the government by his failure to pay the correct amount of filing fees. As pronounced in the case of
Heirs of Bertuldo Hinog v. Hon. Melicor:86
Plainly, while the payment of the prescribed docket fee is a jurisdictional requirement, even its
non-payment at the time of filing does not automatically cause the dismissal of the case, as long as the fee is paid within the applicable
prescriptive or reglementary period, more so when the party involved demonstrates a willingness to abide by the rules prescribing such
payment.
Thus, when insufficient filing fees were initially paid by the plaintiffs and there was no intention to defraud the government, the
Manchester rule does not apply.87 (Emphasis and italics in the original)
Indeed, while the Court acknowledges Unicapital, et al.'s apprehension that Consing, Jr.'s "metered" claim for damages to the tune of
around P2,000,000.00 per month88 may balloon to a rather huge amount by the time that this case is finally disposed of, still, any
amount that may by then fall due shall be subject to assessment and any additional fees determined shall constitute as a lien against
the judgment as explicitly provided under Section 2,89Rule 141 of the Rules.
Finally, on the question of whether or not Consing, Jr.'s complaint was properly verified, suffice it to state that since the copy submitted
to the trial court was duly notarized by one Atty. Allan B. Gepty and that it was only Unicapital, et al.s copy which lacks the notarization,
then there was sufficient compliance with the requirements of the rules on pleadings.90
In fine, the Court finds no reversible error on the part of the CA in sustaining the RTC-Pasig Citys denial of Unicapital et al.s motion to
dismiss. As such, the petitions in G.R. Nos. 175277 and 175285 must be denied.
B. Propriety of the denial of
Consing, Jr.s motion for
consolidation.
The crux of G.R. No. 192073 is the propriety of the RTC-Makati Citys denial of Consing, Jr.s motion for the consolidation of the Pasig
case, i.e., SCA No. 1759, and the Makati case, i.e., Civil Case No. 99-1418.Records show that the CA upheld the RTC-Makati Citys
denial of the foregoing motion, finding that the consolidation of these cases was merely discretionary on the part of the trial court. It
added that it was "impracticable and would cause a procedural faux pas
"if it were to "allow the RTC-Pasig City to preside over the Makati case."91
The CAs ruling is proper.
It is hornbook principle that when or two or more cases involve the same parties and affect closely related subject matters, the same
must be consolidated and jointly tried, in order to serve the best interest of the parties and to settle the issues between them promptly,
thus, resulting in a speedy and inexpensive determination of cases. In addition, consolidation serves the purpose of avoiding the
possibility of conflicting decisions rendered by the courts in two or more cases, which otherwise could be disposed of in a single
suit.92 The governing rule is Section 1, Rule 31 of the Rules which provides:
SEC. 1. Consolidation. - When actions involving a common question of law or fact are pending before the court, it may order a joint
hearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated; and it may make such orders
concerning proceedings therein as may tend to avoid unnecessary costs or delay.
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In the present case, the Court observes that the subject cases, i.e., SCA No. 1759 and Civil Case No. 99-1418, although involving the
same parties and proceeding from a similar factual milieu, should remain unconsolidated since they proceed from different sources of
obligations and, hence, would not yield conflicting dispositions. SCA No. 1759 is an injunction and damages case based on the Civil
Code provisions on abuse of right and defamation, while Civil Case No. 99-1418 is a collection and damages suit based on actionable
documents, i.e., the subject promissory notes. In particular, SCA No. 1759 deals with whether or not Unicapital and BPI, et al, abused
the manner in which they demanded payment from Consing, Jr., while Civil Case No. 99-1418 deals with whether or not Unicapital may
demand payment from Consing, Jr. based on the subject promissory notes. Clearly, a resolution in one case would have no practical
effect as the core issues and reliefs sought in each case are separate and distinct from the other.
Likewise, as the CA correctly pointed out, the RTC-Makati City could not have been failured in retaining Civil Case No. 99-1418 in its
dockets since pre-trial procedures have already been undertaken therein and, thus, its consolidation with SCA No. 1759 pending before
the RTC-Pasig City would merely result in complications on the part of the latter court or squander the resources or remedies already
utilized in Civil Case No. 99-1418.93 In this light, aside from the perceived improbability of having conflicting decisions, the consolidation
of SCA No. 1759 and Civil Case No. 99-1418 would, contrary to its objective, only delay the proceedings and entail unnecessary costs.
All told, the Court finds the consolidation of SCA No. 1759 and Civil Case No. 99-1418 to be improper, impelling the affirmance of the
CAs ruling. Consequently, the petition in G.R. No. 192073 must also be denied.
WHEREFORE, the petitions in G.R. Nos. 175277, 175285 and 192073 are DENIED. Accordingly, the Court of Appeals Joint Decision
dated October 20, 2005 and Resolution dated October 25, 2006 in CA-G.R. SP Nos. 64019 and 64451 and the Decision dated
September 30, 2009 and Resolution dated April 28, 2010 in CA-G.R. No. 101355 are hereby AFFIRMED.
PROTON
PILIPINAS
CORPORATION,
AUTOMOTIVE
PHILIPPINES,
ASEA
ONE
CORPORATION and AUTOCORP,
Petitioners,

G. R. No. 151242
Present:
PANGANIBAN, J., Chairman,
SANDOVAL-GUTIERREZ,
CORONA,
CARPIO MORALES, and
GARCIA, JJ.

- versus -

BANQUE NATIONALE DE PARIS,[1]

Respondent.
Promulgated:
June 15, 2005

x------------------------------------------------x
DECISION
CARPIO MORALES, J.:

It appears that sometime in 1995, petitioner Proton Pilipinas Corporation (Proton) availed of the credit facilities of herein respondent,
Banque

Nationale

de

Paris

(BNP).

To

guarantee

the

payment

of

its

obligation,

its

co-petitioners

Automotive

Corporation Philippines (Automotive), Asea One Corporation (Asea) and Autocorp Group (Autocorp) executed a corporate
guarantee[2] to the extent of US$2,000,000.00. BNP and Proton subsequently entered into three trust receipt agreements dated June 4,
1996,[3] January 14, 1997,[4] and April 24, 1997.[5]
Under the terms of the trust receipt agreements, Proton would receive imported passenger motor vehicles and hold them in trust for
BNP. Proton would be free to sell the vehicles subject to the condition that it would deliver the proceeds of the sale to BNP, to be

36 of 57

applied to its obligations to it. In case the vehicles are not sold, Proton would return them to BNP, together with all the accompanying
documents of title.
Allegedly, Proton failed to deliver the proceeds of the sale and return the unsold motor vehicles.
Pursuant to the corporate guarantee, BNP demanded from Automotive, Asea and Autocorp the payment of the amount of
US$1,544,984.40[6]representing Protons total outstanding obligations. These guarantors refused to pay, however. Hence, BNP filed
on September 7, 1998 before the Makati Regional Trial Court (RTC) a complaint against petitioners praying that they be ordered to pay
(1) US$1,544,984.40 plus accrued interest and other related charges thereon subsequent to August 15, 1998 until fully paid and (2) an
amount equivalent to 5% of all sums due from petitioners as attorneys fees.
The Makati RTC Clerk of Court assessed the docket fees which BNP paid at P352,116.30[7] which was computed as follows:[8]
First Cause of Action
Second Cause of Action
Third Cause of Action
5% as Attorney's Fees
TOTAL ..
Conversion rate to peso
TOTAL ..

$ 844,674.07
171,120.53
529,189.80
$1,544,984.40
$ 77,249.22
$1,622,233.62
x 43_
P69,756,000.00 (roundoff)

Computation based on Rule 141:

COURT

JDF

P 69,756,000.00
- 150,000.00
69,606,000.00
x .002
139,212.00
+ 150.00
P 139,362.00

P 69.606.000.00
x .003
208,818.00
+ 450.00
P 209,268.00

LEGAL : P139,362.00
+ 209,268.00
P348,630.00 x 1% = P3,486.30
P 139,362.00
+ 209,268.00
3,486.00
P 352,116.30 Total fees paid by the plaintiff

To the complaint, the defendants-herein petitioners filed on October 12, 1998 a Motion to Dismiss [9] on the ground that BNP failed to
pay the correct docket fees to thus prevent the trial court from acquiring jurisdiction over the case. [10] As additional ground, petitioners
raised prematurity of the complaint, BNP not having priorly sent any demand letter.[11]
By Order[12] of August 3, 1999, Branch 148 of the Makati RTC denied petitioners Motion to Dismiss, viz:
Resolving the first ground relied upon by the defendant, this court believes and so hold that the docket fees
were properly paid. It is the Office of the Clerk of Court of this station that computes the correct docket fees, and it is
their duty to assess the docket fees correctly, which they did.
Even granting arguendo that the docket fees were not properly paid, the court cannot just dismiss the case.
The Court has not yet ordered (and it will not in this case) to pay the correct docket fees, thus the Motion to dismiss is
premature, aside from being without any legal basis.
37 of 57

As held in the case of National Steel Corporation vs. CA, G.R. No. 123215, February 2, 1999, the Supreme
Court said:
xxx
Although the payment of the proper docket fees is a jurisdictional requirement, the trial
court may allow the plaintiff in an action to pay the same within a reasonable time within the
expiration of applicable prescription or reglementary period. If the plaintiff fails to comply with this
requirement, the defendant should timely raise the issue of jurisdiction or else he would be
considered in estoppel. In the latter case, the balance between appropriate docket fees and the
amount actually paid by the plaintiff will be considered a lien or (sic) any award he may obtain in his
favor.
As to the second ground relied upon by the defendants, in that a review of all annexes to the complaint of
the plaintiff reveals that there is not a single formal demand letter for defendants to fulfill the terms and conditions of
the three (3) trust agreements.
In this regard, the court cannot sustain the submission of defendant. As correctly pointed out by the
plaintiff, failure to make a formal demand for the debtor to pay the plaintiff is not among the legal grounds for the
dismissal of the case. Anyway, in the appreciation of the court, this is simply evidentiary.
xxx
[13]

WHEREFORE, for lack of merit, the Motion to Dismiss interposed by the defendants is hereby DENIED.
(Underscoring supplied)

Petitioners filed a motion for reconsideration[14] of the denial of their Motion to Dismiss, but it was denied by the trial court by
Order[15] ofOctober 3, 2000.
Petitioners thereupon brought the case on certiorari and mandamus [16] to the Court of Appeals which, by Decision [17] of July 25, 2001,
denied it in this wise:
Section 7(a) of Rule 141 of the Rules of Court excludes interest accruing from the principal amount being claimed in
the pleading in the computation of the prescribed filing fees. The complaint was submitted for the computation of the
filing fee to the Office of the Clerk of Court of the Regional TrialCourt of Makati City which made an assessment that
respondent paid accordingly. What the Office of the Clerk of Court did and the ruling of the respondent Judge
find support in the decisions of the Supreme Court in Ng Soon vs. Alday and Tacay vs. RTC of Tagum, Davao del
Norte. In the latter case, the Supreme Court explicitly ruled that where the action is purely for recovery of money or
damages, the docket fees are assessed on the basis of the aggregate amount claimed, exclusive only of interests
and costs.
Assuming arguendo that the correct filing fees was not made, the rule is that the court may allow a reasonable time
for the payment of the prescribed fees, or the balance thereof, and upon such payment, the defect is cured and the
court may properly take cognizance of the action unless in the meantime prescription has set in and consequently
barred the right of action. Here respondent Judge did not make any finding, and rightly so, that the filing fee paid by
private respondent was insufficient.
On the issue of the correct dollar-peso rate of exchange, the Office of the Clerk of Court of the RTC of Makati pegged
it at P 43.21 to US$1. In the absence of any office guide of the rate of exchange which said court functionary was
duty bound to follow, the rate he applied is presumptively correct.
Respondent Judge correctly ruled that the matter of demand letter is evidentiary and does not form part of the
required allegations in a complaint. Section 1, Rule 8 of the 1997 Rules of Civil Procedure pertinently provides:
Every pleading shall contain in a methodical and logical form, a plain, concise and direct
statement of the ultimate facts on which the party pleading relies for his claim or defense, as the
case may be, omitted the statement of mere evidentiary facts.
Judging from the allegations of the complaint particularly paragraphs 6, 12, 18, and 23 where allegations of
imputed demands were made upon the defendants to fulfill their respective obligations, annexing the demand letters
for the purpose of putting up a sufficient cause of action is not required.
In fine, respondent Judge committed no grave abuse of discretion amounting to lack or excess of jurisdiction
to warrant certiorari and mandamus.[18] (Underscoring supplied)
38 of 57

Their Motion for Reconsideration[19] having been denied by the Court of Appeals,[20] petitioners filed the present petition for
review on certiorari[21] and pray for the following reliefs:
WHEREFORE, in view of all the foregoing, it is most respectfully prayed of this Honorable Court to grant the instant
petition by REVERSING and SETTING ASIDE the questioned Decision of July 25, 2001 and the Resolution of
December 18, 2001 for being contrary to law, to Administrative Circular No. 11-94 and Circular No. 7 and instead
direct the court a quo to require Private Respondent Banque to pay the correct docket fee pursuant to the correct
exchange rate of the dollar to the peso on September 7, 1998 and to quantify its claims for interests on the principal
obligations in the first, second and third causes of actions in its Complaint in Civil Case No. 98-2180.[22] (Underscoring
supplied)

Citing Administrative Circular No. 11-94,[23] petitioners argue that BNP failed to pay the correct docket fees as the said circular
provides that in the assessment thereof, interest claimed should be included. There being an underpayment of the docket fees,
petitioners conclude, the trial court did not acquire jurisdiction over the case.
Additionally, petitioners point out that the clerk of court, in converting BNPs claims from US dollars to Philippine pesos, applied the
wrong exchange rate of US $1 = P43.00, the exchange rate on September 7, 1998 when the complaint was filed having been pegged
at US $1 = P43.21. Thus, by petitioners computation, BNPs claim as of August 15, 1998 was actually P70,096,714.72,
[24]

not P69,756,045.66.

Furthermore, petitioners submit that pursuant to Supreme Court Circular No. 7, [25] the complaint should have been dismissed for failure
to specify the amount of interest in the prayer.
Circular No. 7 reads:
TO: JUDGES AND CLERKS OF COURT OF THE COURT OF TAX APPEALS, REGIONAL TRIAL COURTS,
METROPOLITAN TRIAL COURTS IN CITIES, MUNICIPAL TRIAL COURTS, MUNICIPAL CIRCUIT TRIAL
COURTS, SHARIA DISTRICT COURTS;AND THE INTEGRATED BAR OF THE PHILIPPINES
SUBJECT: ALL COMPLAINTS MUST SPECIFY AMOUNT OF DAMAGES SOUGHT NOT ONLY IN THE BODY OF
THE PLEADING, BUT ALSO IN THE PRAYER IN ORDER TO BE ACCEPTED AND ADMITTED FOR
FILING. THE AMOUNT OF DAMAGES SO SPECIFIED IN THE COMPLAINT SHALL BE THE BASIS FOR
ASSESSING THE AMOUNT OF THE FILING FEES.
In Manchester Development Corporation vs. Court of Appeals, No. L-75919, May 7, 1987, 149 SCRA 562, this Court
condemned the practice of counsel who in filing the original complaint omitted from the prayer any specification of the
amount of damages although the amount of over P78 million is alleged in the body of the complaint. This Court
observed that (T)his is clearly intended for no other purpose than to evade the payment of the correct filing fees if not
to mislead the docket clerk, in the assessment of the filing fee. This fraudulent practice was compounded when, even
as this Court had taken cognizance of the anomaly and ordered an investigation, petitioner through another counsel
filed an amended complaint, deleting all mention of the amount of damages being asked for in the body of the
complaint. xxx
For the guidance of all concerned, the WARNING given by the court in the afore-cited case is reproduced hereunder:
The Court serves warning that it will take drastic action upon a repetition of this unethical practice.
To put a stop to this irregularity, henceforth all complaints, petitions, answers and other similar
pleadings should specify the amount of damages being prayed for not only in the body of the
pleading but also in the prayer, and said damages shall be considered in the assessment of
the filing fees in any case. Any pleading that fails to comply with this requirement shall not
be accepted nor admitted, or shall otherwise be expunged from the record.
The Court acquires jurisdiction over any case only upon the payment of the prescribed docket fee. An
amendment of the complaint or similar pleading will not thereby vest jurisdiction in the Court, much
less the payment of the docket fee based on the amount sought in the amended pleading. The
39 of 57

ruling in the Magaspi case (115 SCRA 193) in so far as it is inconsistent with this pronouncement is
overturned and reversed.
Strict compliance with this Circular is hereby enjoined.
Let this be circularized to all the courts hereinabove named and to the President and Board of Governors of the
Integrated Bar of the Philippines, which is hereby directed to disseminate this Circular to all its members.
March 24, 1988.
(Sgd). CLAUDIO TEEHANKEE
Chief Justice
(Emphasis and underscoring supplied)

On the other hand, respondent maintains that it had paid the filing fee which was assessed by the clerk of court, and that there was no
violation of Supreme Court Circular No. 7 because the amount of damages was clearly specified in the prayer, to wit:
2.
On the FIRST CAUSE OF ACTION
(c) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS EIGHT HUNDRED FORTY FOUR
THOUSAND SIX HUNDRED SEVENTY FOUR AND SEVEN CENTS (US$ 844,674.07), plus accrued interests and
other related charges thereon subsequent to August 15, 1998, until fully paid; and (ii) an amount equivalent to 5% of
all sums due from said Defendant, as and for attorneys fees;
3.

On the SECOND CAUSE OF ACTION

(d) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS ONE HUNDRED TWENTY AND FIFTY THREE
CENTS (US$171,120.53), plus accrued interests and other related charges thereon subsequent to August 15, 1998 until fully
paid; and (ii) an amount equivalent to 5% of all sums due from said Defendant, as and for attorneys fees;
4.

On the THIRD CAUSE OF ACTION

(e) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS FIVE HUNDRED TWENTY NINE
THOUSAND ONE HUNDRED EIGHTY NINE AND EIGHTY CENTS (US$529,189.80), plus accrued interests and
other related charges thereon subsequent to August 15, 1998 until fully paid; and (ii) an amount equivalent to 5% or
all sums due from said Defendant, as and for attorneys fees;
5.

On ALL THE CAUSES OF ACTION

Defendants AUTOMOTIVE CORPORATION PHILIPPINES, ASEA ONE CORPORATION and AUTOCORP GROUP
to be ordered to pay Plaintiff BNP the aggregate sum of (i) US DOLLARS ONE MILLION FIVE HUNDRED FORTY
FOUR THOUSAND NINE HUNDRED EIGHTY FOUR AND FORTY CENTS (US$1,544,984.40) (First through Third
Causes of Action), plus accrued interest and other related charges thereon subsequent to August 15, 1998 until fully
paid; and (ii) an amount equivalent to 5% of all sums due from said Defendants, as and for attorneys fees.[26]
Moreover, respondent posits that the amount of US$1,544,984.40 represents not only the principal but also interest and other
related charges which had accrued as of August 15, 1998. Respondent goes even further by suggesting that in light of Tacay
v. Regional Trial Court of Tagum, Davao del Norte[27] where the Supreme Court held,
Where the action is purely for the recovery of money or damages, the docket fees are assessed on the basis of the
aggregate amount claimed, exclusive only of interests and costs.[28] (Emphasis and underscoring supplied),

it made an overpayment.
When Tacay was decided in 1989, the pertinent rule applicable was Section 5 (a) of Rule 141 which provided for the following:
SEC. 5. Clerks of Regional Trial Courts. (a) For filing an action or proceeding, or a permissive counter-claim
or cross-claim not arising out of the same transaction subject of the complaint, a third-party complaint and a
complaint in intervention and for all services in the same, if the sum claimed, exclusive of interest, of the value of
the property in litigation, or the value of the estate, is:
1. Less than P 5,000.00 . P 32.00
2. P 5,000.00 or more but less than P 10,000.00 48.00
3. P 10,000.00 or more but less than P 20,000.00 .. 64.00
40 of 57

4. P 20,000.00 or more but less than P 40,000.00 .. 80.00

5. P 40,000.00 or more but less than P 60,000.00 .. 120.00
6. P 60,000.00 or more but less than P 80,000.00 . 160.00
7. P 80,000.00 or more but less than P 150,000.00 200.00
8. And for each P 1,000.00 in excess of P 150,000.00 ..... 4.00
9. When the value of the case cannot be estimated 400.00
10. When the case does not concern property
(naturalization, adoption, legal separation, etc.) ..... 64.00
11. In forcible entry and illegal detainer cases appealed
from inferior courts . 40.00
If the case concerns real estate, the assessed value thereof shall be considered in computing the fees.
In case the value of the property or estate or the sum claim is less or more in accordance with the appraisal
of the court, the difference of fees shall be refunded or paid as the case may be.

When the complaint in this case was filed in 1998, however, as correctly pointed out by petitioners, Rule 141 had been amended by
Administrative Circular No. 11-94[29] which provides:
BY RESOLUTION OF THE COURT, DATED JUNE 28, 1994, PURSUANT TO SECTION 5 (5) OF ARTICLE VIII OF
THE CONSTITUTION, RULE 141, SECTION 7 (a) AND (d), and SECTION 8 (a) and (b) OF THE RULES OF COURT
ARE HEREBY AMENDED TO READ AS FOLLOWS:
RULE 141
LEGAL FEES
xxx
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, inclusive of interest, damages of whatever kind, attorneys fees,
litigation expenses, and costs, or the stated value of the property in litigation, is:
1. Not more than P 100,000.00 P 400.00
2. P 100,000.00, or more but not more than P 150,000.00 600.00
3. For each P 1,000.00 in excess of P 150,000.00 . 5.00
xxx
Sec. 8. Clerks of Metropolitan and Municipal Trial Courts
(a) For each civil action or proceeding, where the value of the subject matter involved, or the amount of the
demand, inclusive of interest, damages or whatever kind, attorneys fees, litigation expenses, and costs, is:
1. Not more than P 20,000.00 ...P 120.00
2. More than P 20,000.00 but not more than P 100,000.00 . 400.00
3. More than P 100,000.00 but not more than P 200,000.00 850.00
(Emphasis and underscoring supplied)

The clerk of court should thus have assessed the filing fee by taking into consideration the total sum claimed, inclusive of interest,
damages of whatever kind, attorneys fees, litigation expenses, and costs, or the stated value of the property in litigation. Respondents
and the Court of Appeals reliance then on Tacay was not in order.
Neither was, for the same reason, the Court of Appeals reliance on the 1989 case of Ng Soon v. Alday,[30] where this Court held:
The failure to state the rate of interest demanded was not fatal not only because it is the Courts which ultimately
fix the same, but also because Rule 141, Section 5(a) of the Rules of Court, itemizing the filing fees, speaks of
the sum claimed, exclusive of interest. This clearly implies that the specification of the interest rate is not
that indispensable.
41 of 57

Factually, therefore, not everything was left to guesswork as respondent Judge has opined. The sums
claimed were ascertainable, sufficient enough to allow a computation pursuant to Rule 141, section 5(a).
Furthermore, contrary to the position taken by respondent Judge, the amounts claimed need not be
initially stated with mathematical precision. The same Rule 141, section 5(a) (3rd paragraph), allows an
appraisal more or less.[31] Thus:
In case the value of the property or estate or the sum claimed is less or more in accordance with the
appraisal of the court, the difference of fee shall be refunded or paid as the case may be.
In other words, a final determination is still to be made by the Court, and the fees ultimately found to be
payable will either be additionally paid by the party concerned or refunded to him, as the case may be. The above
provision clearly allows an initial payment of the filing fees corresponding to the estimated amount of the claim
subject to adjustment as to what later may be proved.
. . . there is merit in petitioner's claim that the third paragraph of Rule 141, Section 5(a) clearly contemplates
a situation where an amount is alleged or claimed in the complaint but is less or more than what is later proved. If
what is proved is less than what was claimed, then a refund will be made; if more, additional fees will be exacted.
Otherwise stated, what is subject to adjustment is the difference in the fee and not the whole amount (Pilipinas Shell
Petroleum Corp., et als., vs. Court of Appeals, et als., G.R. No. 76119, April 10, 1989). [32] (Emphasis and underscoring
supplied)

Respecting the Court of Appeals conclusion that the clerk of court did not err when he applied the exchange rate of US $1 = P43.00 [i]n
the absence of any office guide of the rate of exchange which said court functionary was duty bound to follow,[hence,] the rate he
applied is presumptively correct, the same does not lie. The presumption of regularity of the clerk of courts application of the exchange
rate is not conclusive.[33] It is disputable.[34] As such, the presumption may be overturned by the requisite rebutting evidence. [35] In the
case at bar, petitioners have adequately proven with documentary evidence [36] that the exchange rate when the complaint was filed
on September 7, 1998 was US $1 = P43.21.
In fine, the docket fees paid by respondent were insufficient.
With respect to petitioners argument that the trial court did not acquire jurisdiction over the case in light of the insufficient docket fees,
the same does not lie.
True, in Manchester Development Corporation v. Court of Appeals,[37] this Court held that the court acquires jurisdiction over any case
only upon the payment of the prescribed docket fees,[38] hence, it concluded that the trial court did not acquire jurisdiction over the case.
It bears emphasis, however, that the ruling in Manchester was clarified in Sun Insurance Office, Ltd. (SIOL) v. Asuncion [39] when this
Court held that in the former there was clearly an effort to defraud the government in avoiding to pay the correct docket fees, whereas
in the latter the plaintiff demonstrated his willingness to abide by paying the additional fees as required.
The principle in Manchester could very well be applied in the present case. The pattern and the intent to defraud the
government of the docket fee due it is obvious not only in the filing of the original complaint but also in the filing of the
second amended complaint.
However, in Manchester, petitioner did not pay any additional docket fee until the case was decided by this Court
on May 7, 1987. Thus, inManchester, due to the fraud committed on the government, this Court held that the
court a quo did not acquire jurisdiction over the case and that the amended complaint could not have been
admitted inasmuch as the original complaint was null and void.
In the present case, a more liberal interpretation of the rules is called for considering
that, unlike Manchester, private respondent demonstrated his willingness to abide by the rules by paying the
additional docket fees as required. The promulgation of the decision inManchester must have had that sobering
influence on private respondent who thus paid the additional docket fee as ordered by the respondent court. It
triggered his change of stance by manifesting his willingness to pay such additional docket fee as may be ordered.

42 of 57

Nevertheless, petitioners contend that the docket fee that was paid is still insufficient considering the total amount of
the claim. This is a matter which the clerk of court of the lower court and/or his duly authorized docket clerk or clerk in
charge should determine and, thereafter, if any amount is found due, he must require the private respondent to pay
the same.
Thus, the Court rules as follows:
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.[40] (Emphasis and underscoring supplied)

The ruling in Sun Insurance Office was echoed in the 2005 case of Heirs of Bertuldo Hinog v. Hon. Achilles Melicor:[41]
Plainly, while the payment of the prescribed docket fee is a jurisdictional requirement, even its non-payment at the
time of filing does not automatically cause the dismissal of the case, as long as the fee is paid within the applicable
prescriptive or reglementary period, more so when the party involved demonstrates a willingness to abide by the rules
prescribing such payment. Thus, when insufficient filing fees were initially paid by the plaintiffs and there was
no intention to defraud the government, the Manchester rule does not apply. (Emphasis and underscoring
supplied; citations omitted)

In the case at bar, respondent merely relied on the assessment made by the clerk of court which turned out to be incorrect. Under the
circumstances, the clerk of court has the responsibility of reassessing what respondent must pay within the prescriptive period, failing
which the complaint merits dismissal.
Parenthetically, in the complaint, respondent prayed for accrued interest subsequent to August 15, 1998 until fully paid. The complaint
having been filed on September 7, 1998, respondents claim includes the interest from August 16, 1998 until such date of filing.
Respondent did not, however, pay the filing fee corresponding to its claim for interest from August 16, 1998 until the filing of the
complaint on September 7, 1998. As priorly discussed, this is required under Rule 141, as amended by Administrative Circular No. 1194, which was the rule applicable at the time. Thus, as the complaint currently stands, respondent cannot claim the interest from August
16, 1998 untilSeptember 7, 1998, unless respondent is allowed by motion to amend its complaint within a reasonable time and specify
the precise amount of interest petitioners owe from August 16, 1998 to September 7, 1998[42] and pay the corresponding docket fee
therefor.
With respect to the interest accruing after the filing of the complaint, the same can only be determined after a final judgment has been
handed down. Respondent cannot thus be made to pay the corresponding docket fee therefor. Pursuant, however, to Section 2, Rule
141, as amended by Administrative Circular No. 11-94, respondent should be made to pay additional fees which shall constitute a lien
in the event the trial court adjudges that it is entitled to interest accruing after the filing of the complaint.
Sec. 2. Fees as lien. Where the court in its final judgment awards a claim not alleged, or a relief different or more than
that claimed in the pleading, the party concerned shall pay the additional fees which shall constitute a lien on the
judgment in satisfaction of said lien. The clerk of court shall assess and collect the corresponding fees.

43 of 57

In Ayala Corporation v. Madayag,[43] in interpreting the third rule laid down in Sun Insurance regarding awards of claims not specified in
the pleading, this Court held that the same refers only to damages arising after the filing of the complaint or similar pleading as
to which the additional filing fee therefor shall constitute a lien on the judgment.
The amount of any claim for damages, therefore, arising on or before the filing of the complaint or any pleading
should be specified. While it is true that the determination of certain damages as exemplary or corrective damages is
left to the sound discretion of the court, it is the duty of the parties claiming such damages to specify the amount
sought on the basis of which the court may make a proper determination, and for the proper assessment of the
appropriate docket fees. The exception contemplated as to claims not specified or to claims although specified
are left for determination of the court is limited only to any damages that may arise after the filing of the
complaint or similar pleading for then it will not be possible for the claimant to specify nor speculate as to
the amount thereof.[44] (Emphasis and underscoring supplied; citation omitted)

WHEREFORE, the petition is GRANTED in part. The July 25, 2001 Decision and the December 18, 2001 Resolution of the Court
Appeals are hereby MODIFIED. The Clerk of Court of the Regional Trial Court of Makati City is ordered to reassess and determine the
docket fees that should be paid by respondent, BNP, in accordance with the Decision of this Court, and direct respondent to pay the
same within fifteen (15) days, provided the applicable prescriptive or reglementary period has not yet expired. Thereafter, the trial court
is ordered to proceed with the case with utmost dispatch.

SO ORDERED.

E: REQUEST OF A.M. No. 08-11-7-SC

NATIONAL COMMITTEE
ON LEGAL AID[1] TO EXEMPT Present:
LEGAL AID CLIENTS FROM
PAYING FILING, DOCKET PUNO, C.J.,
AND OTHER FEES. QUISUMBING,
YNARES-SANTIAGO,
CARPIO,
CORONA,
CARPIO MORALES,
CHICO-NAZARIO,
VELASCO, JR.,
44 of 57

NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO and
ABAD, JJ.
Promulgated:
August 28, 2009
x---------------------------------------------------x

RESOLUTION
CORONA, J.:

On September 23, 2008 the Misamis Oriental Chapter of the Integrated Bar of the Philippines (IBP) promulgated Resolution
No. 24, series of 2008.[2] The resolution requested the IBPs National Committee on Legal Aid [3] (NCLA) to ask for the exemption from
the payment of filing, docket and other fees of clients of the legal aid offices in the various IBP chapters. Resolution No. 24, series of
2008 provided:
RESOLUTION NO. 24, SERIES OF 2008
RESOLUTION OF THE IBPMISAMIS ORIENTAL CHAPTER FOR THE IBP NATIONAL LEGAL AID OFFICE TO
REQUEST THE COURTS AND OTHER QUASI-JUDICIAL BODIES, THE PHILIPPINE MEDIATION CENTER AND
PROSECUTORS OFFICES TO EXEMPT LEGAL AID CLIENTS FROM PAYING FILING, DOCKET AND OTHER
FEES INCIDENTAL TO THE FILING AND LITIGATION OF ACTIONS, AS ORIGINAL PROCEEDINGS OR ON
APPEAL.
WHEREAS, Section 1, Article I of the Guidelines Governing the Establishment and Operation of Legal Aid
Offices in All Chapters of the Integrated Bar of the Philippines (otherwise known as []Guideline[s] on Legal Aid[])
provides: Legal aid is not a matter of charity. It is a means for the correction of social imbalances that may often lead
to injustice, for which reason, it is a public responsibility of the Bar. The spirit of public service should therefore
unde[r]ly all legal aid offices. The same should be so administered as to give maximum possible assistance to
indigent and deserving members of the community in all cases, matters and situations in which legal aid may be
necessary to forestall injustice.
WHEREAS, Section 2 of the same provides: In order to attain the objectives of legal aid, legal aid office
should be as close as possible to those who are in need thereof the masses. Hence, every chapter of the IBP must
establish and operate an adequate legal aid office.
WHEREAS, the Legal Aid Office of the IBPMisamis Oriental Chapter has long been operational, providing
free legal services to numerous indigent clients, through the chapters members who render volunteer services in the
spirit of public service;
WHEREAS, the courts, quasi-judicial bodies, the various mediation centers and prosecutors offices are
collecting fees, be they filing, docket, motion, mediation or other fees in cases, be they original proceedings or on
appeal;
WHEREAS, IBP Legal Aid clients are qualified under the same indigency and merit tests used by the Public
Attorneys Office (PAO), and would have qualified for PAO assistance, but for reasons other than indigency, are
disqualified from availing of the services of the PAO, like the existence of a conflict of interests or conflicting
defenses, and other similar causes;
WHEREAS, PAO clients are automatically exempt from the payment of docket and other fees for cases, be
they original proceedings or on appeal, by virtue of the provisions of Section 16D of R.A. 9406 (PAO Law), without
the need for the filing of any petition or motion to declare them as pauper litigants;

45 of 57

WHEREAS, there is no similar provision in any substantive law or procedural law giving IBP Legal Aid
clients the same benefits or privileges enjoyed by PAO clients with respect to the payment of docket and other fees
before the courts, quasi-judicial bodies and prosecutors offices;
WHEREAS, the collection of docket and other fees from the IBP Legal Aid clients poses an additional strain
to their next to non-existent finances;
WHEREAS, the quarterly allowance given by the National Legal Aid Office to the IBP Misamis Oriental
Chapter is insufficient to even cover the incidental expenses of volunteer legal aid lawyers, much less answer for the
payment of docket and other fees collected by the courts, quasi-judicial bodies and prosecutors offices and
mediation fees collected by the Philippine Mediation Center;
NOW THEREFORE, on motion of the Board of Officers of the IBPMisamis Oriental Chapter, be it resolved
as it is hereby resolved, to move the IBP National Legal Aid Office to make the necessary requests or
representations with the Supreme Court, the Philippine Mediation Center, the Department of Justice and the
National Prosecution Service and other quasi-judicial agencies to effect the grant of a like exemption from the
payment of filing, docket and other fees to the IBP Legal Aid clients as that enjoyed by PAO clients, towards the end
that IBP Legal Aid clients be automatically exempted from the filing of the abovementioned fees;
RESOLVED FURTHER, that copies of this Resolution be furnished to Supreme Court Chief Justice
Honorable Reynato S. Puno, IBP National President Feliciano M. Bautista, the IBP Board of Governors, Secretary of
Justice Hon. Raul M. Gonzalez, the National Supervisor of the Philippine Mediation Center, the National Labor
Relations Commission, the Civil Service Commission and other quasi-judicial bodies and their local offices;
RESOLVED FINALLY to move the IBP Board of Governors and National Officers to make the necessary
representations with the National Legislature and its members to effect the filing of a bill before the House of
Representatives and the Senate granting exemption to IBP Legal Aid clients from the payment of docket, filing and
or other fees in cases before the courts, quasi-judicial agencies and prosecutors offices and the mediation centers.
Done this 23rd day of September 2008, Cagayan De Oro City.
Unanimously approved upon motion severally seconded.[4]

The Court noted Resolution No. 24, series of 2008 and required the IBP, through the NCLA, to comment thereon.[5]

In a comment dated December 18, 2008,[6] the IBP, through the NCLA, made the following comments:
(a) Under Section 16-D of RA[7] 9406, clients of the Public Attorneys Office (PAO) are exempt from the payment of docket and
other fees incidental to the institution of action in court and other quasi-judicial bodies. On the other hand, clients of
legal aid offices in the various IBP chapters do not enjoy the same exemption. IBPs indigent clients are advised to
litigate as pauper litigants under Section 21, Rule 3 of the Rules of Court;
(b) They are further advised to submit documentary evidence to prove compliance with the requirements under Section 21,
Rule 3 of the Rules of Court, i.e., certifications from the barangay and the Department of Social Welfare and
Development. However, not only does the process involve some expense which indigent clients could ill-afford,
clients also lack knowledge on how to go about the tedious process of obtaining these documents;
(c) Although the IBP is given an annual legal aid subsidy, the amount it receives from the government is barely enough to
cover various operating expenses;[8]
(d) While each IBP local chapter is given a quarterly allocation (from the legal aid subsidy), [9] said allocation covers neither the
incidental expenses defrayed by legal aid lawyers in handling legal aid cases nor the payment of docket and other
fees collected by the courts, quasi-judicial bodies and the prosecutors office, as well as mediation fees and
(e) Considering the aforementioned factors, a directive may be issued by the Supreme Court granting IBPs indigent clients an
exemption from the payment of docket and other fees similar to that given to PAO clients under Section 16-D of RA
9406. In this connection, the Supreme Court previously issued a circular exempting IBP clients from the payment of
transcript of stenographic notes.[10]

At the outset, we laud the Misamis Oriental Chapter of the IBP for its effort to help improve the administration of justice,
particularly, the access to justice by the poor. Its Resolution No. 24, series of 2008 in fact echoes one of the noteworthy
46 of 57

recommendations during the Forum on Increasing Access to Justice spearheaded by the Court last year. In promulgating Resolution
No. 24, the Misamis Oriental Chapter of the IBP has effectively performed its duty to participate in the development of the legal system
by initiating or supporting efforts in law reform and in the administration of justice.[11]

We now move on to determine the merits of the request.

ACCESS TO JUSTICE:
MAKING AN IDEAL A REALITY

Access to justice by all, especially by the poor, is not simply an ideal in our society. Its existence is essential in a democracy
and in the rule of law. As such, it is guaranteed by no less than the fundamental law:
Sec. 11. Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not
be denied to any person by reason of poverty.[12] (emphasis supplied)

The Court recognizes the right of access to justice as the most important pillar of legal empowerment of the marginalized
sectors of our society.[13] Among others, it has exercised its power to promulgate rules concerning the protection and enforcement of
constitutional rights[14] to open the doors of justice to the underprivileged and to allow them to step inside the courts to be heard of their
plaints. In particular, indigent litigants are permitted under Section 21, Rule 3 [15] and Section 19, Rule 141[16] of the Rules of Court to
bring suits in forma pauperis.
The IBP, pursuant to its general objectives to improve the administration of justice and enable the Bar to discharge its public
responsibility more effectively,[17] assists the Court in providing the poor access to justice. In particular, it renders free legal aid under the
supervision of the NCLA.
A NEW RULE, A NEW TOOL
FOR ACCESS TO JUSTICE

Under the IBPs Guidelines Governing the Establishment and Operation of Legal Aid Offices in All Chapters of the IBP
(Guidelines on Legal Aid), the combined means and merit tests shall be used to determine the eligibility of an applicant for legal aid:
ARTICLE VIII
TESTS
SEC. 19. Combined tests. The Chapter Legal Aid Committee or the [NCLA], as the case may be, shall pass upon
the request for legal aid by the combined application of the means test and merit test, and the consideration of other
factors adverted to in the following sections.
SEC. 20. Means test. The means test aims at determining whether the applicant has no visible means of support or
his income is otherwise insufficient to provide the financial resources necessary to engage competent private
counsel owing to the demands for subsistence of his family, considering the number of his dependents and the
conditions prevailing in the locality.
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The means test shall not be applicable to applicants who fall under the Developmental Legal Aid Program such as
Overseas Filipino Workers, fishermen, farmers, women and children and other disadvantaged groups.
SEC. 21. Merit test. The merit test seeks to ascertain whether or not the applicants cause of action or his defense is
valid and chances of establishing the same appear reasonable.
SEC. 22. Other factors. The effect of the Legal Aid Service or of the failure to render the same upon the Rule of Law,
the proper administration of justice, the public interest involved in given cases and the practice of law in the locality
shall likewise be considered.
SEC. 23. Private practice. Care shall be taken that the Legal aid is not availed of to the detriment of the private
practice of law, or taken advantage of by anyone for personal ends.
SEC. 24. Denial. Legal aid may be denied to an applicant already receiving adequate assistance from any
source other than the Integrated Bar.

The means and merit tests appear to be reasonable determinants of eligibility for coverage under the legal aid program of the
IBP. Nonetheless, they may be improved to ensure that any exemption from the payment of legal fees that may be granted to clients of
the NCLA and the legal aid offices of the various IBP chapters will really further the right of access to justice by the poor. This will
guarantee that the exemption will neither be abused nor trivialized. Towards this end, the following shall be observed by the NCLA and
the legal aid offices in IBP chapters nationwide in accepting clients and handling cases for the said clients:

A.M. No. 08-11-7-SC (IRR): Re: Rule on the Exemption From the Payment of Legal Fees of the Clients of the
National Committee on Legal Aid and of the Legal Aid Offices in the Local Chapters of the Integrated Bar of
the Philippines
Rule on the Exemption From the Payment of Legal Fees of the Clients of the National Committee on Legal
Aid (NCLA) and of the Legal Aid Offices in the Local Chapters of the Integrated Bar of the Philippines (IBP)
ARTICLE I
Purpose
Section 1. Purpose. This Rule is issued for the purpose of enforcing the right of free access to courts by the poor
guaranteed under Section 11, Article III of the Constitution. It is intended to increase the access to justice by the
poor by exempting from the payment of legal fees incidental to instituting an action in court, as an original
proceeding or on appeal, qualified indigent clients of the NCLA and of the legal aid offices in local IBP chapters
nationwide.
ARTICLE II
Definition of Terms
Section 1. Definition of important terms. For purposes of this Rule and as used herein, the following terms shall be
understood to be how they are defined under this Section:
(a) Developmental legal aid means the rendition of legal services in public interest causes involving
overseas workers, fisherfolk, farmers, laborers, indigenous cultural communities, women, children
and other disadvantaged groups and marginalized sectors;
(b) Disinterested person refers to the punong barangay having jurisdiction over the place where an
applicant for legal aid or client of the NCLA or chapter legal aid office resides;
(c) Falsity refers to any material misrepresentation of fact or any fraudulent, deceitful, false, wrong or
misleading statement in the application or affidavits submitted to support it or the affidavit of a
disinterested person required to be submitted annually under this Rule which may substantially
affect the determination of the qualifications of the applicant or the client under the means and
merit tests;
(d) Legal fees refers to the legal fees imposed under Rule 141 of the Rules of Court as a necessary
incident of instituting an action in court either as an original proceeding or on appeal. In
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particular, it includes filing or docket fees, appeal fees, fees for issuance of provisional remedies,
mediation fees, sheriffs fees, stenographers fees (that is fees for transcript of stenographic notes)
and commissioners fees;
(e) Means test refers to the set of criteria used to determine whether the applicant is one who has no
money or property sufficient and available for food, shelter and basic necessities for himself and
his family;
(f) Merit test refers to the ascertainment of whether the applicants cause of action or his defense is valid
and whether the chances of establishing the same appear reasonable and
(g) Representative refers to the person authorized to file an application for legal aid in behalf of the
applicant when the said applicant is prevented by a compelling reason from personally filing his
application. As a rule, it refers to the immediate family members of the applicant. However, it may
include any of the applicants relatives or any person or concerned citizen of sufficient discretion
who has first-hand knowledge of the personal circumstances of the applicant as well as of the
facts of the applicants case.
ARTICLE III
Coverage
Section 1. Persons qualified for exemption from payment of legal fees. Persons who shall enjoy the benefit of
exemption from the payment of legal fees incidental to instituting an action in court, as an original proceeding or on
appeal, granted under this Rule shall be limited only to clients of the NCLA and the chapter legal aid offices.
The said clients shall refer to those indigents qualified to receive free legal aid service from the NCLA and
the chapter legal aid offices. Their qualifications shall be determined based on the tests provided in this Rule.
Section 2. Persons not covered by the Rule. The following shall be disqualified from the coverage of this Rule. Nor
may they be accepted as clients by the NCLA and the chapter legal aid offices.
(a) Juridical persons; except in cases covered by developmental legal aid or public interest
causes involving juridical entities which are non-stock, non-profit organizations, non-governmental
organizations and peoples organizations whose individual members will pass the means test
provided in this Rule;
(b) Persons who do not pass the means and merit tests;
(c) Parties already represented by a counsel de parte;
(d) Owners or lessors of residential lands or buildings with respect to the filing of collection or unlawful
detainer suits against their tenants and
(e) Persons who have been clients of the NCLA or chapter legal aid office previously in a case where the
NCLA or chapter legal aid office withdrew its representation because of a falsity in the application
or in any of the affidavits supporting the said application.
Section 3. Cases not covered by the Rule. The NCLA and the chapter legal aid offices shall not handle the following:
(a) Cases where conflicting interests will be represented by the NCLA and the chapter legal aid offices and
(b) Prosecution of criminal cases in court.
ARTICLE IV
Tests of Indigency
Section 1. Tests for determining who may be clients of the NCLA and the legal aid offices in local IBP chapters. The
NCLA or the chapter legal aid committee, as the case may be, shall pass upon requests for legal aid by the
combined application of the means and merit tests and the consideration of other relevant factors provided for in the
following sections.
Section 2. Means test; exception. (a) This test shall be based on the following criteria: (i) the applicant and that of his
immediate family must have a gross monthly income that does not exceed an amount double the monthly minimum
wage of an employee in the place where the applicant resides and (ii) he does not own real property with a fair
market value as stated in the current tax declaration of more than Three Hundred Thousand (P300,000.00) Pesos.
In this connection, the applicant shall execute an affidavit of indigency (printed at the back of the application form)
stating that he and his immediate family do not earn a gross income abovementioned, nor own any real property
49 of 57

with the fair value aforementioned, supported by an affidavit of a disinterested person attesting to the truth of the
applicants affidavit. The latest income tax return and/or current tax declaration, if any, shall be attached to the
applicants affidavit.
(b) The means test shall not be applicable to applicants who fall under the developmental legal aid program such as
overseas workers, fisherfolk, farmers, laborers, indigenous cultural communities, women, children and other
disadvantaged groups.
Section 3. Merit test. A case shall be considered meritorious if an assessment of the law and evidence at hand
discloses that the legal service will be in aid of justice or in the furtherance thereof, taking into consideration the
interests of the party and those of society. A case fails this test if, after consideration of the law and evidence
presented by the applicant, it appears that it is intended merely to harass or injure the opposite party or to work
oppression or wrong.
Section 4. Other relevant factors that may be considered. The effect of legal aid or of the failure to render the same
upon the rule of law, the proper administration of justice, the public interest involved in a given case and the practice
of law in the locality shall likewise be considered.
ARTICLE V
Acceptance and Handling of Cases
Section 1. Procedure in accepting cases. The following procedure shall be observed in the acceptance of cases for
purposes of this Rule:
(a) Filing of application An application shall be made personally by the applicant, unless there is a
compelling reason which prevents him from doing so, in which case his representative may apply
for him. It shall adhere substantially to the form made for that purpose. It shall be prepared and
signed by the applicant or, in proper cases, his duly authorized representative in at least three
copies.
Applications for legal aid shall be filed with the NCLA or with the chapter legal aid committee.
The NCLA shall, as much as possible, concentrate on cases of paramount importance or national impact.
Requests received by the IBP National Office shall be referred by the NCLA to the proper chapter legal aid
committee of the locality where the cases have to be filed or are pending. The chapter president
and the chairman of the chapters legal aid committee shall be advised of such referral.
(b) Interview The applicant shall be interviewed by a member of the chapter legal aid committee or any
chapter member authorized by the chapter legal aid committee to determine the applicants
qualifications based on the means and merit tests and other relevant factors. He shall also be
required to submit copies of his latest income tax returns and/or current tax declaration, if
available, and execute an affidavit of indigency printed at the back of the application form with
the supporting affidavit of a disinterested person attesting to the truth of the applicants affidavit.
After the interview, the applicant shall be informed that he can follow up the action on his application after
five (5) working days.
(c) Action on the application The chapter legal aid committee shall pass upon every request for legal aid
and submit its recommendation to the chapter board of officers within three (3) working days after
the interview of the applicant. The basis of the recommendation shall be stated.
The chapter board of officers shall review and act on the recommendation of the chapter
legal aid committee within two (2) working days from receipt thereof; Provided, however, that in
urgent matters requiring prompt or immediate action, the chapters executive director of legal aid or
whoever performs his functions may provisionally act on the application, subject to review by the
chapter legal aid committee and, thereafter, by the chapter board of officers.
The action of the chapter board of officers on the application shall be final.
(d) Cases which may be provisionally accepted. In the following cases, the NCLA or the chapter legal aid
office, through the chapters executive director of legal aid or whoever performs his functions may
accept cases provisionally pending verification of the applicants indigency and an evaluation of the
merit of his case.
(i) Where a warrant for the arrest of the applicant has been issued;
(ii) Where a pleading has to be filed immediately to avoid adverse effects to the applicant;
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(iii) Where an appeal has to be urgently perfected or a petition for certiorari, prohibition or
mandamus filed has to be filed immediately; and
(iv) Other similar urgent cases.
(e) Assignment of control number Upon approval of the chapter board of officers of a persons application
and the applicant is found to be qualified for legal assistance, the case shall be assigned a control
number. The numbering shall be consecutive starting from January to December of every year.
The control number shall also indicate the region and the chapter handling the case.
Example:
Region[18]
Chapter
GM - Manila - 2009 - 03 - 099

Year

Month

Number

(f) Issuance of a certification After an application is approved and a control number duly assigned, the
chapter board of officers shall issue a certification that the person (that is, the successful applicant)
is a client of the NCLA or of the chapter legal aid office. The certification shall bear the control
number of the case and shall state the name of the client and the nature of the judicial action
subject of the legal aid of the NCLA or the legal aid office of a local IBP chapter.
The certification shall be issued to the successful applicant free of charge.
Section 2. Assignment of cases. After a case is given a control number, the chapter board of officers shall refer it
back to the chapter legal aid committee. The chapter legal aid committee shall assign the case to any chapter
member who is willing to handle the case.
In case no chapter member has signified an intention to handle the case voluntarily, the chapter legal aid
committee shall refer the matter to the chapter board of officers together with the names of at least three members
who, in the chapter legal aid committees discretion, may competently render legal aid on the matter. The chapter
board of officers shall appoint one chapter member from among the list of names submitted by the chapter legal aid
committee. The chapter member chosen may not refuse the appointment except on the ground of conflict of interest
or other equally compelling grounds as provided in the Code of Professional Responsibility, [19] in which case the
chapter board of officers shall appoint his replacement from among the remaining names in the list previously
submitted by the chapter legal aid committee.
The chapter legal aid committee and the chapter board of officers shall take the necessary measures to
ensure that cases are well-distributed to chapter members.
Section 3. Policies and guidelines in the acceptance and handling of cases. The following policies and guidelines
shall be observed in the acceptance and handling of cases:
(a) First come, first served Where both the complainant/plaintiff/petitioner and defendant/ respondent apply
for legal aid and both are qualified, the first to seek assistance shall be given preference.
(b) Avoidance of conflict of interest Where acceptance of a case will give rise to a conflict of interest on the
part of the chapter legal aid office, the applicant shall be duly informed and advised to seek the
services of a private counsel or another legal aid organization.
Where handling of the case will give rise to a conflict of interest on the part of the chapter member assigned
to the case, the client shall be duly informed and advised about it. The handling lawyer shall also
inform the chapter legal aid committee so that another chapter member may be assigned to
handle the case. For purposes of choosing the substitute handling lawyer, the rule in the
immediately preceding section shall be observed.
(c) Legal aid is purely gratuitous and honorary No member of the chapter or member of the staff of the
NCLA or chapter legal aid office shall directly or indirectly demand or request from an applicant or
client any compensation, gift or present for legal aid services being applied for or rendered.
(d) Same standard of conduct and equal treatment A chapter member who is tasked to handle a case
accepted by the NCLA or by the chapter legal aid office shall observe the same standard of
conduct governing his relations with paying clients. He shall treat the client of the NCLA or of the
chapter legal aid office and the said clients case in a manner that is equal and similar to his
treatment of a paying client and his case.
(e) Falsity in the application or in the affidavits Any falsity in the application or in the affidavit of indigency or
in the affidavit of a disinterested person shall be sufficient cause for the NCLA or chapter legal aid
office to withdraw or terminate the legal aid. For this purpose, the chapter board of officers shall
authorize the handling lawyer to file the proper manifestation of withdrawal of appearance of the
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chapter legal aid office in the case with a motion for the dismissal of the complaint or action of the
erring client. The court, after hearing, shall approve the withdrawal of appearance and grant the
motion, without prejudice to whatever criminal liability may have been incurred.
Violation of this policy shall disqualify the erring client from availing of the benefits of this Rule in the future.
(f) Statement in the initiatory pleading To avail of the benefits of the Rule, the initiatory pleading shall state
as an essential preliminary allegation that (i) the party initiating the action is a client of the NCLA or
of the chapter legal aid office and therefore entitled to exemption from the payment of legal fees
under this Rule and (ii) a certified true copy of the certification issued pursuant to Section 1(e), of
this Article is attached or annexed to the pleading.
Failure to make the statement shall be a ground for the dismissal of the action without prejudice to its
refiling.
The same rule shall apply in case the client, through the NCLA or chapter legal aid office, files an appeal.
(g) Attachment of certification in initiatory pleading A certified true copy of the certification issued pursuant
to Section 1(e), of this Article shall be attached as an annex to the initiatory pleading.
Failure to attach a certified true copy of the said certification shall be a ground for the
dismissal of the action without prejudice to its refiling.
The same rule shall apply in case the client, through the NCLA or chapter legal aid office, files an appeal.
(h) Signing of pleadings All complaints, petitions, answers, replies, memoranda and other important
pleadings or motions to be filed in courts shall be signed by the handling lawyer and co-signed by
the chairperson or a member of the chapter legal aid committee, or in urgent cases, by the
executive director of legal aid or whoever performs his functions.
Ordinary motions such as motions for extension of time to file a pleading or for postponement of hearing
and manifestations may be signed by the handling lawyer alone.
(i) Motions for extension of time or for postponement The filing of motions for extension of time to file a
pleading or for postponement of hearing shall be avoided as much as possible as they cause
delay to the case and prolong the proceedings.
(j) Transfer of cases Transfer of cases from one handling lawyer to another shall be affected only upon
approval of the chapter legal aid committee.
Section 4. Decision to appeal. (a) All appeals must be made on the request of the client himself. For this purpose,
the client shall be made to fill up a request to appeal.
(b) Only meritorious cases shall be appealed. If the handling lawyer, in consultation with the chapter legal
aid committee, finds that there is no merit to the appeal, the client should be immediately informed thereof in writing
and the record of the case turned over to him, under proper receipt. If the client insists on appealing the case, the
lawyer handling the case should perfect the appeal before turning over the records of the case to him.
Section 5. Protection of private practice. Utmost care shall be taken to ensure that legal aid is neither availed of to
the detriment of the private practice of law nor taken advantage of by anyone for purely personal ends.

ARTICLE VI
Withdrawal of Legal Aid and Termination of Exemption
Section 1. Withdrawal of legal aid. The NCLA or the chapter legal aid committee may, in justifiable instances as
provided in the next Section, direct the handling lawyer to withdraw representation of a clients cause upon approval
of the IBP Board of Governors (in the case of the NCLA) or of the chapter board of officers (in the case of
the chapter legal aid committee) and through a proper motion filed in Court.
Section 2. Grounds for withdrawal of legal aid. Withdrawal may be warranted in the following situations:
(a) In a case that has been provisionally accepted, where it is subsequently ascertained that the client is not
qualified for legal aid;
(b) Where the clients income or resources improve and he no longer qualifies for continued assistance
based on the means test. For this purpose, on or before January 15 every year, the client shall
submit an affidavit of a disinterested person stating that the client and his immediate family do not
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earn a gross income mentioned in Section 2, Article V, nor own any real property with the fair
market value mentioned in the same Section;
(c) When it is shown or found that the client committed a falsity in the application or in the affidavits
submitted to support the application;
(d) When the client subsequently engages a de parte counsel or is provided with a de oficio counsel;
(e) When, despite proper advice from the handling lawyer, the client cannot be refrained from doing things
which the lawyer himself ought not do under the ethics of the legal profession, particularly with
reference to their conduct towards courts, judicial officers, witnesses and litigants, or the client
insists on having control of the trial, theory of the case, or strategy in procedure which would tend
to result in incalculable harm to the interests of the client;
(f) When, despite notice from the handling lawyer, the client does not cooperate or coordinate with the
handling lawyer to the prejudice of the proper and effective rendition of legal aid such as when the
client fails to provide documents necessary to support his case or unreasonably fails to attend
hearings when his presence thereat is required; and
(g) When it becomes apparent that the representation of the clients cause will result in a representation of
conflicting interests, as where the adverse party had previously engaged the services of the NCLA
or of the chapter legal aid office and the subject matter of the litigation is directly related to the
services previously rendered to the adverse party.
Section 3. Effect of withdrawal. The court, after hearing, shall allow the NCLA or the chapter legal aid office to
withdraw if it is satisfied that the ground for such withdrawal exists.
Except when the withdrawal is based on paragraphs (b), (d) and (g) of the immediately preceding Section, the court
shall also order the dismissal of the case. Such dismissal is without prejudice to whatever criminal liability may have
been incurred if the withdrawal is based on paragraph (c) of the immediately preceding Section.
ARTICLE VII
Miscellaneous Provisions
Section 1. Lien on favorable judgment. The amount of the docket and other lawful fees which the client was
exempted from paying shall be a lien on any judgment rendered in the case favorable to the indigent, unless the
court otherwise provides.
In case, attorneys fees have been awarded to the client, the same shall belong to the NCLA or to the chapter legal
aid office that rendered the legal aid, as the case may be. It shall form part of a special fund which shall be
exclusively used to support the legal aid program of the NCLA or the chapter legal aid office. In this connection, the
chapter board of officers shall report the receipt of attorneys fees pursuant to this Section to the NCLA within ten
(10) days from receipt thereof. The NCLA shall, in turn, include the data on attorneys fees received by IBP chapters
pursuant to this Section in its liquidation report for the annual subsidy for legal aid.
Section 2. Duty of NCLA to prepare forms. The NCLA shall prepare the standard forms to be used in connection with
this Rule. In particular, the NCLA shall prepare the following standard forms: the application form, the affidavit of
indigency, the supporting affidavit of a disinterested person, the affidavit of a disinterested person required to be
submitted annually under Section 2(b), Article VI, the certification issued by the NCLA or the chapter board of
officers under Section 1(f), Article V and the request to appeal.
The said forms, except the certification, shall be in Filipino. Within sixty (60) days from receipt of the forms from the
NCLA, the chapter legal aid offices shall make translations of the said forms in the dominant dialect used in their
respective localities.
Section 3. Effect of Rule on right to bring suits in forma pauperis. Nothing in this Rule shall be considered to
preclude those persons not covered either by this Rule or by the exemption from the payment of legal fees granted
to clients of the Public Attorneys Office under Section 16-D of RA 9406 to litigate in forma pauperis under Section
21, Rule 3 and Section 19 Rule 141 of the Rules of Court.
Section 4. Compliance with Rule on Mandatory Legal Aid Service. Legal aid service rendered by a lawyer under this
Rule either as a handling lawyer or as an interviewer of applicants under Section 1(b), Article IV hereof shall be
credited for purposes of compliance with the Rule on Mandatory Legal Aid Service.
The chairperson of the chapter legal aid office shall issue the certificate similar to that issued by the Clerk of Court in
Section 5(b) of the Rule on Mandatory Legal Aid Service.
ARTICLE VIII
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Effectivity
Section 1. Effectivity. This Rule shall become effective after fifteen days following its publication in a newspaper of
general circulation.

The above rule, in conjunction with Section 21, Rule 3 and Section 19, Rule 141 of the Rules of Court, the Rule on Mandatory
Legal Aid Service and the Rule of Procedure for Small Claims Cases, shall form a solid base of rules upon which the right of access to
courts by the poor shall be implemented. With these rules, we equip the poor with the tools to effectively, efficiently and easily enforce
their rights in the judicial system.

A FINAL WORD

Equity will not suffer a wrong to be without a remedy. Ubi jus ibi remedium. Where there is a right, there must be a remedy.
The remedy must not only be effective and efficient, but also readily accessible. For a remedy that is inaccessible is no remedy at all.

The Constitution guarantees the rights of the poor to free access to the courts and to adequate legal assistance. The legal aid
service rendered by the NCLA and legal aid offices of IBP chapters nationwide addresses only the right to adequate legal assistance.
Recipients of the service of the NCLA and legal aid offices of IBP chapters may enjoy free access to courts by exempting them from the
payment of fees assessed in connection with the filing of a complaint or action in court. With these twin initiatives, the guarantee of
Section 11, Article III of Constitution is advanced and access to justice is increased by bridging a significant gap and removing a major
roadblock.

WHEREFORE, the Misamis Oriental Chapter of the Integrated Bar of the Philippines is hereby COMMENDED for helping
increase the access to justice by the poor. The request of the Misamis Oriental Chapter for the exemption from the payment of filing,
docket and other fees of the clients of the legal aid offices of the various IBP chapters is GRANTED. The Rule on the Exemption From
the Payment of Legal Fees of the Clients of the National Committee on Legal Aid (NCLA) and of the Legal Aid Offices in the Local
Chapters of the Integrated Bar of the Philippines (IBP) (which shall be assigned the docket number A.M. No. 08-11-7-SC [IRR] provided
in this resolution is hereby APPROVED. In this connection, the Clerk of Court is DIRECTED to cause the publication of the said rule in
a newspaper of general circulation within five days from the promulgation of this resolution.

The Office of the Court Administrator is hereby directed to promptly issue a circular to inform all courts in the Philippines of the
import of this resolution.

SO ORDERED.
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A. M. No. 09-6-9-SC
Present:
PUNO, CJ,
QUISUMBING*,
YNARES-SANTIAGO*,
CARPIO,
CORONA,
CARPIO MORALES,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO**, and
ABAD**, JJ.
Promulgated:
August 19, 2009

RE: QUERY OF MR. ROGER C. PRIORESCHI

RE EXEMPTION FROM LEGAL AND FILING
FEES OF THE GOOD SHEPHERD
FOUNDATION, INC.

x-----------------------------------------------------------------------------------------x
RESOLUTION
BERSAMIN, J.:

In his letter dated May 22, 2009 addressed to the Chief Justice, Mr. Roger C. Prioreschi, administrator of the Good Shepherd
Foundation, Inc., wrote:
The Good Shepherd Foundation, Inc. is very grateful for your 1rst. Indorsement to pay a nominal fee of Php
5,000.00 and the balance upon the collection action of 10 million pesos, thus giving us access to the Justice
System previously denied by an up-front excessive court fee.
The Hon. Court Administrator Jose Perez pointed out to the need of complying with OCA Circular No. 42-2005
and Rule 141 that reserves this privilege to indigent persons. While judges are appointed to interpret the law, this type
of law seems to be extremely detailed with requirements that do not leave much room for interpretations.
In addition, this law deals mainly with individual indigent and it does not include Foundations or
Associations that work with and for the most Indigent persons. As seen in our Article of Incorporation, since 1985 the
Good Shepherd Foundation, Inc. reached-out to the poorest among the poor, to the newly born and abandoned
babies, to children who never saw the smile of their mother, to old people who cannot afford a few pesos to pay for
common prescriptions, to broken families who returned to a normal life. In other words, we have been working hard
for the very Filipino people, that the Government and the society cannot reach to, or have rejected or abandoned
them.
Can the Courts grant to our Foundation who works for indigent and underprivileged people, the same
option granted to indigent people?
The two Executive Judges, that we have approached, fear accusations of favoritism or other kind of attack if
they approve something which is not clearly and specifically stated in the law or approved by your HONOR.
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Can your Honor help us once more?

Grateful for your understanding, God bless you and your undertakings.
We shall be privileged if you
the Spiritual Retreat Center in Antipolo City.

find

time

to

visit

our

orphanage

the

Home

of

Love

and

To answer the query of Mr. Prioreschi, the Courts cannot grant to foundations like the Good Shepherd Foundation, Inc. the
same exemption from payment of legal fees granted to indigent litigants even if the foundations are working for indigent and
underprivileged people.

The basis for the exemption from legal and filing fees is the free access clause, embodied in Sec. 11, Art. III of the 1987
Constitution, thus:
Sec. 11. Free access to the courts and quasi judicial bodies and adequate legal assistance shall not be denied to any
person by reason of poverty.
The importance of the right to free access to the courts and quasi judicial bodies and to adequate legal assistance cannot be
denied. A move to remove the provision on free access from the Constitution on the ground that it was already covered by the equal
protection clause was defeated by the desire to give constitutional stature to such specific protection of the poor.[1]

In implementation of the right of free access under the Constitution, the Supreme Court promulgated rules, specifically, Sec. 21, Rule
3, Rules of Court,[2] and Sec. 19, Rule 141, Rules of Court,[3] which respectively state thus:
Sec. 21. Indigent party. A party may be authorized to litigate his action, claim or defense as an indigent if the
court, upon an ex parte application and hearing, is satisfied that the party is one who has no money or property
sufficient and available for food, shelter and basic necessities for himself and his family.
Such authority shall include an exemption from payment of docket and other lawful fees, and of transcripts of
stenographic notes which the court may order to be furnished him. The amount of the docket and other lawful fees
which the indigent was exempted from paying shall be a lien on any judgment rendered in the case favorable to the
indigent, unless the court otherwise provides.
Any adverse party may contest the grant of such authority at any time before judgment is rendered by the trial
court. If the court should determine after hearing that the party declared as an indigent is in fact a person with
sufficient income or property, the proper docket and other lawful fees shall be assessed and collected by the clerk of
court. If payment is not made within the time fixed by the court, execution shall issue for the payment thereof, without
prejudice to such other sanctions as the court may impose. (22a)
Sec. 19. Indigent litigants exempt from payment of legal fees. Indigent litigants (a) whose gross income and
that of their immediate family do not exceed an amount double the monthly minimum wage of an employee and (b)
who do not own real property with a fair market value as stated in the current tax declaration of more than three
hundred thousand (P300,000.00) pesos shall be exempt from payment of legal fees.
The legal fees shall be a lien on any judgment rendered in the case favorable to the indigent litigant unless the
court otherwise provides.
To be entitled to the exemption herein provided, the litigant shall execute an affidavit that he and his immediate
family do not earn a gross income abovementioned, and they do not own any real property with the fair value
aforementioned, supported by an affidavit of a disinterested person attesting to the truth of the litigants affidavit. The
current tax declaration, if any, shall be attached to the litigants affidavit.
Any falsity in the affidavit of litigant or disinterested person shall be sufficient cause to dismiss the complaint or
action or to strike out the pleading of that party, without prejudice to whatever criminal liability may have been
incurred.

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The clear intent and precise language of the aforequoted provisions of the Rules of Court indicate that only
a natural party litigant may be regarded as an indigent litigant. The Good Shepherd Foundation, Inc., being a corporation invested by
the State with a juridical personality separate and distinct from that of its members, [4] is a juridical person. Among others, it has the
power to acquire and possess property of all kinds as well as incur obligations and bring civil or criminal actions, in conformity with the
laws and regulations of their organization.[5] As a juridical person, therefore, it cannot be accorded the exemption from legal and filing
fees granted to indigent litigants.
That the Good Shepherd Foundation, Inc. is working for indigent and underprivileged people is of no moment. Clearly, the Constitution
has explicitly premised the free access clause on a persons poverty, a condition that only a natural person can suffer.

There are other reasons that warrant the rejection of the request for exemption in favor of a juridical person. For one,
extending the exemption to a juridical person on the ground that it works for indigent and underprivileged people may be prone to
abuse (even with the imposition of rigid documentation requirements), particularly by corporations and entities bent on circumventing
the rule on payment of the fees. Also, the scrutiny of compliance with the documentation requirements may prove too time-consuming
and wasteful for the courts.

IN VIEW OF THE FOREGOING, the Good Shepherd Foundation, Inc. cannot be extended the exemption from legal and filing fees
despite its working for indigent and underprivileged people.

SO ORDERED.

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