J.A.B. Bulao & Associates

CASE 2011-0137: BIENVENIDO CASTILLO VS. REPUBLIC OF THE PHILIPPINES (G.R. NO. 182980, 22 JUNE 2011, CARPIO, J.) SUBJECT: RECONSTITUION OF TITLE.

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DOCTRINES/SUBJECTS:

We cannot simply dismiss these defects as “technical.” Liberal construction of the Rules of Court does not apply to land registration cases.²⁹ Indeed, to further underscore the mandatory character of these jurisdictional requirements, the Rules of Court do not apply to land registration cases.³⁰ In all cases where the authority of the courts to proceed is conferred by a statute, and when the manner of obtaining jurisdiction is prescribed by a statute, the mode of proceeding is mandatory, and must be strictly complied with, or the proceeding will be utterly void.³¹ When the trial court lacks jurisdiction to take cognizance of a case, it lacks authority over the whole case and all its aspects.³² All the proceedings before the trial court, including its order granting the petition for reconstitution, are void for lack of jurisdiction.³³

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SECOND DIVISION

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D E C I S I O N

CARPIO, J.:

The Case

Petitioner Bienvenido Castillo (Bienvenido) filed the present petition for review on certiorari¹ of the Decision² dated 23 October 2007 as well as the Resolution³ dated 7 May 2008 of the Court of Appeals (appellate court) in CA-G.R. CV No. 81916. The appellate court reversed the Decision⁴ dated 3 October 2003 of Branch 22, Regional Trial Court of Malolos, Bulacan (trial court) in P-111-2002. The trial court ordered the reconstitution of the original copy of Transfer Certificate of Title (TCT) No. T-16755 as well as the issuance of another owner’s duplicate copy, in the name of the registered owner and in the same terms and conditions as the original, in lieu of the lost original copy.

The Facts

Bienvenido filed on 7 March 2002 a Petition for Reconstitution and Issuance of Second Owner’s Copy of Transfer Certificate of Title No. T-16755. The petition reads as follows:

1. That petitioner is of legal age, Filipino, widower and with residence and postal address at Poblacion, Pulilan, Bulacan;

2. That petitioner is the registered owner of a parcel of land situated at Paltao, Pulilan, Bulacan covered by Transfer Certificate of Title No. T-16755, a zerox [sic] copy of which is hereto attached as Annex “A”;

3. That the zerox [sic] copy of technical description and subdivision plan of the parcel of land with an area of 50,199 [square meters] (Lot 6-A) are hereto attached as Annexes “B” and “C”;

4. That the original copy of the said certificate of title on file with the Register of Deeds of Bulacan was lost and/or destroyed during the fire on March 7, 1987 in the Office of the Register of Deeds of Bulacan, certification from the said office is hereto attached as Annex “D”;

5. That, the owner’s copy of the said certificate of title was likewise lost and all efforts to locate the same proved futile and in vain, copy of the the [sic] “Affidavit of Loss” is hereto attached as Annex “E”;

6. That no co-owner’s copy of duplicate of the same certificate has been issued;

7. The names and addresses of the boundary owners of said lot are the following:

a. West – Jorge Peralta

b. North – Lorenzo Calderon

c. South – Lorenzo Calderon

d. East – Melvin & Marlon Reyes

with postal address at Poblacion, Pulilan, Bulacan;

8. That said property has been declared for taxation purposes under Tax Declaration No. 97-19001-00019, zerox [sic] copy of which is hereto attached as Annex “F”;

9. That the real estate tax for the current year has been paid per official receipt no. 0287074, zerox [sic] copy of which is hereto attached as Annex “G”;

10. That said property is free from all liens and encumbrances;

11. That there exist no deeds or instruments affecting the said property which has been presented for and pending registration with the Register of Deeds of Bulacan;

WHEREFORE, it is most respectfully prayed of this Honorable Court that after due notice and hearing judgment be rendered:

1. Declaring the Original Owner’s Duplicate Certificate of Title No. T-16755 that was lost as null and void;

2. Ordering the Register of Deeds of Bulacan to issue second owner’s duplicate copy of the said certificate of title upon payment of proper fees.⁵

The trial court furnished the Land Registration Authority (LRA) with a duplicate copy of Bienvenido’s petition and its Annexes, with a note stating that “No Tracing Cloth of Plan [sic] and Blue print of plan attached.”⁶ As requested by the LRA in its letter dated 17 April 2002,⁷ the trial court ordered Bienvenido to submit within 15 days from receipt of the order (a) the original of the technical description of the parcel of land covered by the lost/destroyed certificate of title, certified by the authorized officer of the Land Management Bureau/Land Registration Authority and two duplicate copies thereof, and (b) the sepia film plan of the subject parcel of land prepared by a duly licensed Geodetic Engineer, who shall certify thereon that its preparation was made on the basis of a certified technical description, and two blue print copies thereof.⁸ Bienvenido complied with the order.⁹

The trial court, in an order dated 7 August 2002, ordered Bienvenido to supply the names and addresses of the occupants of the subject property.¹⁰ Bienvenido manifested that there is no actual occupant in the subject property.¹¹

On 4 October 2002, the trial court issued an order which found Bienvenido’s petition sufficient in form and substance and set the same for hearing.¹²

Copies of the 4 October 2002 order were posted on three bulletin boards: at the Bulacan Provincial Capitol Building, at the PulilanMunicipalBuilding, and at the Bulacan Regional Trial Court.¹³ The 4 October 2002 order was also published twice in the Official Gazette: on 13 January 2003 (Volume 99, Number 2, Pages 237 to 238), and on 20 January 2003 (Volume 99, Number 3, Pages 414 to 415).¹⁴ After two cancellations,¹⁵ a hearing was conducted on 12 March 2003.

During the hearing, the following were marked in evidence for jurisdictional requirements:

Exhibit “A” – Order of the Court dated 4 October 2002

Exhibit “A-1” – Second page of the Order of the Court dated 4 October 2002

Exhibit “A-2” – Third page of the Order of the Court dated 4 October 2002

Exhibit “A-3” – Registry return receipt of notice to the Office of the Solicitor General

Exhibit “A-4” – Registry return receipt of notice to the Land Registration Authority

Exhibit “A-5” – Registry return receipt of notice to the Register of Deeds

Exhibit “A-6” – Registry return receipt of notice to the Public Prosecutor

Exhibit “A-7” – Registry return receipt of notice to boundary owner Jorge Peralta

Exhibit “A-8” – Registry return receipt of notice to boundary owner Lorenzo Calderon

Exhibit “A-9” – Registry return receipt of notice to boundary owners Melvin and Marlon Reyes

Exhibit “B” – Certificate of Posting

Exhibit “C” – Certificate of Publication from the Director of the National Printing Office

Exhibit “D” – Official Gazette, Volume 99, Number 2, 13 January 2003

Exhibit “D-1” – Page 237, Publication of the trial court’s Order dated 4 October 2002

Exhibit “D-2” – Page 238, Publication of the trial court’s Order dated 4 October 2002

Exhibit “E” – Official Gazette, Volume 99, Number 3, 20 January 2003

Exhibit “E-1” – Page 414, Publication of the trial court’s Order dated 4 October 2002

Exhibit “E-2” – Page 415, Publication of the trial court’s Order dated 4 October 2002¹⁶

Fernando Castillo (Fernando), Bienvenido’s son and attorney-in-fact, testified on his father’s behalf. During the course of his testimony, Fernando identified the following:

Exhibit “F” – Photocopy of TCT No. T-16755

Exhibit “G” – Blueprint of the subject property

Exhibit “H” – Technical description of the property

Exhibit “I” – Affidavit of Loss executed by Bienvenido Castillo

Exhibit “I-1” – Entry of the Affidavit of Loss in the book of the Register of Deeds

Exhibit “J” – Certification issued by the Office of the Register of Deeds, Malolos, Bulacan that TCT No. T-16755 was burned in a fire on 7 March 1987

Exhibit “K” – Tax declaration

Exhibit “L” – 2002 Real Estate Tax Receipt

Upon presentation of the photocopy of TCT No. T-16755, Fernando stated that the title was issued in the names of his parents, Bienvenido Castillo and Felisa Cruz (Felisa), and that his mother died in 1982. Fernando did not mention any sibling. Fernando further testified that on 6 February 2002, Bienvenido executed an Affidavit of Loss which stated that he misplaced the owner’s copy of the certificate of title sometime in April 1993 and that all efforts to locate the same proved futile. The title is free from all liens and encumbrances, and there are no other persons claiming interest over the land.¹⁷

The LRA submitted a Report dated 25 July 2003, portions of which the trial court quoted in its Decision. The LRA stated that:

(2) The plan and technical description of Lot 6-A of the subdivision plan Psd-37482 were verified correct by this Authority to represent the aforesaid lot and the same have been approved under (LRA) PR-03-00321-R pursuant to the provisions of Section 12 of Republic Act No. 26.

WHEREFORE, the foregoing information anent the lot in question is respectfully submitted for consideration in the resolution of the instant petition, and if the Honorable Court, after notice and hearing, finds justification pursuant to Section 15 of Republic Act No. 26 to grant the same, the plan and technical description having been approved, may be used as basis for the inscription of the technical description on the reconstituted certificate. Provided, however, that in case the petition is granted, the reconstituted title should be made subject to such encumbrances as may be subsisting; and provided further, that no certificate of title covering the same parcel of land exists in the office of the Register of Deeds concerned.¹⁸

The Trial Court’s Ruling

On 3 October 2003, the trial court promulgated its Decision in favor of Bienvenido. The trial court found valid justifications to grant Bienvenido’s petition as the same is in order and meritorious.

The dispositive portion reads:

WHEREFORE, the Register of Deeds for the province of Bulacan is hereby ordered, upon payment of the prescribed fees, to reconstitute the original copy of Original Certificate of Title No. 16755 and to issue another owner’s duplicate copy thereof, in the name of the registered owner and in the same terms and conditions as the original thereof, pursuant to the provisions of R.A. No. 26, as amended by P.D. No. 1529, in lieu of the lost original copy. The new original copy shall in all respects be accorded the same validity and legal effect as the lost original copy for all intents and purposes. Provided, that no certificate of title covering the same parcel of land exists in the office of the Register of Deeds concerned.

SO ORDERED.¹⁹

The Office of the Solicitor General (OSG) filed its Notice of Appeal on 18 November 2003. The OSG stated that it was grave error for the trial court to order reconstitution despite absence of any prayer seeking such relief in the petition and on the basis of a mere photocopy of TCT No. T-16755. Counsel for Bienvenido filed a motion for early resolution on 25 January 2006.

The Appellate Court’s Ruling

On 23 October 2007, the appellate court rendered its Decision which reversed the 3 October 2003 Decision of the trial court. Bienvenido’s counsel withdrew from the case on 11 October 2007 and was substituted by Mondragon and Montoya Law Offices.

The appellate court ruled that even if Bienvenido failed to specifically include a prayer for the reconstitution of TCT No. T-16755, the petition is captioned as “In re: Petition for Reconstitution and Issuance of Second Owner’s Copy of Transfer Certificate of Title No. T-16755, Bienvenido Castillo, Petitioner.” The prayer for “such other reliefs and remedies just and proper under the premises” is broad and comprehensive enough to justify the extension of a remedy different from that prayed for.

However, the appellate court still ruled that the trial court erred in ordering the reconstitution of the original copy of TCT No. T-16755 and the issuance of another owner’s duplicate copy thereof in the name of the registered owner. Section 3 of Republic Act No. 26 specified the order of sources from which transfer certificates of title may be reconstituted, and Bienvenido failed to comply with the order. Moreover, the documentary evidences presented before the trial court were insufficient to support reconstitution. The loss of the original copy on file with the Registry of Deeds of Bulacan may be credible, but Bienvenido failed to adequately explain the circumstances which led to the loss of the owner’s copy. The tax declaration presented is not a conclusive evidence of ownership, but merely indicates possession. The plan and technical description of the property are merely additional documents that must accompany the petition for the LRA’s verification and approval.

The dispositive portion of the appellate court’s Decision reads:

WHEREFORE, the instant appeal is GRANTED. The assailed Decision dated October 3, 2003 of Branch 22, RTC of Malolos, Bulacan in P-111-2002 is hereby SET ASIDE and a new judgment is entered dismissing the Petition therein.

SO ORDERED.²⁰

On 3 December 2007, Bienvenido’s counsel filed a Motion for Reconsideration and/or for New Trial.²¹ The motion asserted that Bienvenido presented sufficient documents to warrant reconstitution of TCT No. T-16755. Aside from the photocopy of TCT No. T-16755, Fernando presented the plan and technical description approved by the LRA. Moreover, to support the Motion for New Trial, Fernando went through Bienvenido’s papers and found the Deed of Absolute Sale²² from the original owner, Elpidio Valencia, to spouses Bienvenido and Felisa. Fernando also found the cancellation of mortgage²³ of the property covered by TCT No. T-16755 issued by the Development Bank of the Philippines. Fernando also submitted a copy of the Extra-Judicial Partition²⁴ by and among the heirs of his mother. The property covered by TCT No. T-16755 was partitioned among Bienvenido, Fernando, and Fernando’s siblings Emma Castillo Bajet (Emma) and Elpidio Castillo (Elpidio).

In Fernando’s affidavit attached to the Motion for Reconsideration and/or for New Trial, Fernando stated, but without presenting any proof, that Bienvenido passed away at the age of 91 on 14 February 2006.

The Republic, through the OSG, opposed the Motion for Reconsideration and/or for New Trial. Bienvenido’s petition failed to satisfy Section 3(f) of R.A. No. 26. The Affidavit of Loss is hearsay because Bienvenido failed to affirm it in court. Therefore, the loss of the owner’s duplicate copy of TCT No. T-16755 is not established. The plan and technical description approved by the LRA are not independent sources of reconstitution and are mere supporting documents. The documents submitted in support of the Motion for New Trial are not newly discovered, but could have been discovered earlier by exercise of due diligence.

In its Resolution²⁵ dated 7 May 2008, the appellate court denied the Motion for Reconsideration and/or for New Trial.

Issues

The following were assigned as errors of the appellate court:

I. The Honorable Court of Appeals erred in holding that the documentary evidence presented by petitioner in the lower court are insufficient to support the reconstitution prayed for.

II. The Honorable Court of Appeals erred in finding that petitioner failed to establish the circumstances which led to the loss of his duplicate owner’s copy of TCT No. T-16755.

III. The Honorable Court of Appeals erred in finding that there is no merit in the motion for new trial filed by petitioner.²⁶

The Court’s Ruling

The petition must fail. There can be no reconstitution as the trial court never acquired jurisdiction over the present case.

Process of Reconstitution of

Transfer Certificates of Title under R.A. No. 26

Section 3 of R.A. No. 26 enumerates the sources from which transfer certificates of title shall be reconstituted. Section 3 reads:

Sec. 3. Transfer certificates of title shall be reconstituted from such of the sources hereunder enumerated as may be available, in the following order:

(a) The owner’s duplicate of the certificate of title;

(b) The co-owner’s, mortgagee’s, or lessee’s duplicate of the certificate of title;

(c) A certified copy of the certificate of title, previously issued by the register of deeds or by a legal custodian thereof;

(d) The deed of transfer or other document, on file in the registry of deeds, containing the description of the property, or an authenticated copy thereof, showing that its original had been registered, and pursuant to which the lost or destroyed transfer certificate of title was issued;

(e) A document, on file in the registry of deeds, by which the property, the description of which is given in said document, is mortgaged, leased, or encumbered, or an authenticated copy of said document showing that its original had been registered; and

(f) Any other document which, in the judgment of the court, is sufficient and proper basis for reconstituting the lost or destroyed certificate of title.

Bienvenido already admitted that he cannot comply with Section 3(a) to 3(e), and that 3(f) is his last recourse. Bienvenido, through Fernando’s testimony, presented a photocopy of TCT No. T-16755 before the trial court. The owner’s original duplicate copy was lost, while the original title on file with the Register of Deeds of Malolos, Bulacan was burned in a fire on 7 March 1987. The property was neither mortgaged nor leased at the time of Bienvenido’s loss of the owner’s original duplicate copy.

Section 12 of R.A. No. 26 describes the requirements for a petition for reconstitution. Section 12 reads:

Sec. 12. Petitions for reconstitution from sources enumerated in Sections 2(c), 2(d), 2(e), 2(f), 3(c), 3(d), and/or 3(f) of this Act, shall be filed with the proper Court of First Instance, by the registered owner, his assigns, or any person having an interest in the property. The petition shall state or contain, among other things, the following: (a) that the owner’s duplicate of the certificate of title had been lost or destroyed; (b) that no co-owner’s, mortgagee’s, or lessee’s duplicate had been issued, or, if any had been issued, the same had been lost or destroyed; (c) the location and boundaries of the property; (d) the nature and description of the building or improvements, if any, which do not belong to the owner of the land, and the names and addresses of the owners of such buildings or improvements; (e) the names and addresses of the occupants or persons in possession of the property, of the owners of the adjoining properties and of all persons who may have any interest in the property; (f) a detailed description of the encumbrances, if any, affecting the property; and (g) a statement that no deeds or other instruments affecting the property have been presented for registration, or if there be any, the registration thereof has not been accomplished, as yet. All the documents, or authenticated copies thereof, to be introduced in evidence in support to the petition for reconstitution shall be attached thereto and filed with the same: Provided, That in case the reconstitution is to be made exclusively from sources enumerated in Section 2(f) or 3(f) of this Act, the petition shall be further accompanied with a plan and technical description of the property duly approved by the Chief of the General Land Registration office (now Commission of Land Registration) or with a certified copy of the description taken from a prior certificate of title covering the same property.

We compared the requirements of Section 12 to the allegations in Bienvenido’s petition. Bienvenido’s petition complied with items (a), (b), (f) and (g): in paragraph 5 of the petition, he alleged the loss of his copy of TCT No. T-16755; paragraph 6 declared that no co-owner’s copy of the duplicate title has been issued; paragraph 10 stated that the property covered by the lost TCT is free from liens and encumbrances; and paragraph 11 stated that there are no deeds or instruments presented for or pending registration with the Register of Deeds. There was substantial compliance as to item (c): the location of the property is mentioned in paragraph 2; while the boundaries of the property, although not specified in the petition, refer to an annex attached to the petition. The petition did not mention anything pertaining to item (d). There was a failure to fully comply with item (e). By Fernando’s admission, there exist two other co-owners of the property covered by TCT No. T-16755. Fernando’s siblings Emma and Elpidio were not mentioned anywhere in the petition.

Section 13 of R.A. No. 26 prescribes the requirements for a notice of hearing of the petition:

Sec. 13. The court shall cause a notice of the petition, filed under the preceding section, to be published, at the expense of the petitioner, twice in successive issues of the Official Gazette, and to be posted on the main entrance of the provincial building and of the municipal building of the municipality or city in which the land is situated, at least thirty days prior to the date of hearing. The court shall likewise cause a copy of the notice to be sent, by registered mail or otherwise, at the expense of the petitioner, to every person named therein whose address is known, at least thirty days prior to the date of the hearing. Said notice shall state, among other things, the number of the lost or destroyed certificate of title, if known, the name of the registered owner, the names of the occupants or persons in possession of the property, the owners of the adjoining properties and all other interested parties, the location area and boundaries of the property, and the date on which all persons having any interest therein must appear and file their claim or objections to the petition. The petitioner shall, at the hearing, submit proof of the publication, posting and service of the notice as directed by the court.

The trial court’s 4 October 2002 Order was indeed posted in the places mentioned in Section 13, and published twice in successive issues of the Official Gazette: Volume 99, Number 2 dated 13 January 2003 and Volume 99, Number 3 dated 20 January 2003. The last issue was released by the National Printing Office on 21 January 2003.²⁷ The notice, however, did not state Felisa as a registered co-owner. Neither did the notice identify Fernando’s siblings Emma and Elpidio as interested parties.

The non-compliance with the requirements prescribed in Sections 12 and 13 of R.A. No. 26 is fatal. Hence, the trial court did not acquire jurisdiction over the petition for reconstitution. We cannot stress enough that our jurisprudence is replete with rulings regarding the mandatory character of the requirements of R.A. No. 26. As early as 1982, we ruled:

Republic Act No. 26 entitled “An act providing a special procedure for the reconstitution of Torrens Certificates of Title lost or destroyed” approved on September 25, 1946 confers jurisdiction or authority to the Court of First Instance to hear and decide petitions for judicial reconstitution. The Act specifically provides the special requirements and mode of procedure that must be followed before the court can properly act, assume and acquire jurisdiction or authority over the petition and grant the reconstitution prayed for. These requirements and procedure are mandatory. The Petition for Reconstitution must allege certain specific jurisdictional facts; the notice of hearing must be published in the Official Gazette and posted in particular places and the same sent or notified to specified persons. Sections 12 and 13 of the Act provide specifically the mandatory requirements and procedure to be followed.²⁸

We cannot simply dismiss these defects as “technical.” Liberal construction of the Rules of Court does not apply to land registration cases.²⁹ Indeed, to further underscore the mandatory character of these jurisdictional requirements, the Rules of Court do not apply to land registration cases.³⁰ In all cases where the authority of the courts to proceed is conferred by a statute, and when the manner of obtaining jurisdiction is prescribed by a statute, the mode of proceeding is mandatory, and must be strictly complied with, or the proceeding will be utterly void.³¹ When the trial court lacks jurisdiction to take cognizance of a case, it lacks authority over the whole case and all its aspects.³² All the proceedings before the trial court, including its order granting the petition for reconstitution, are void for lack of jurisdiction.³³

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 23 October 2007 and the Resolution dated 7 May 2008 of the Court of Appeals in CA-G.R. CV No. 81916.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

ROBERTO A. ABAD JOSE C. MENDOZA

Associate Justice Associate Justice

MARIA LOURDES P.A. SERENO

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO

Associate Justice

Chairperson

CERTIFICATION

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

RENATO C. CORONA

Chief Justice

* Designated additional member per Special Order No. 1006 dated 10 June 2011.

** Designated additional member per Raffle dated 15 June 2011.

1 Under Rule 45 of the Rules of Court. Rollo, pp. 9-32.

2 Rollo, pp. 34-38. Penned by Justice Estela M. Perlas-Bernabe with Justices Portia Aliño- Hormachuelos and Lucas P. Bersamin, concurring.

3Id. at 44-45.

4Id. at 40-42.

5 Records, pp. 3-5.

6Id. at 15.

7Id. at 16.

8Id. at 18.

9Id. at 19-27.

10Id. at 28.

11Id. at 32.

12Id. at 34-36.

13Id. at 39.

14Id. at 41-42.

15Id. at 46-48.

16 TSN, 12 March 2003, p. 2.

17Id. at 3-15.

18 Records, p. 69.

19 Rollo, p. 42.

20 Rollo, p. 38.

21 CA rollo, pp. 111-119.

22Id. at 124-125.

23Id. at 126.

24Id. at 127-130.

25Id. at 158-159.

26 Rollo, pp. 16-17.

27 Records, p. 41. Certified by Director IV Melanio S. Torio.

28 Tahanan Development Corp. v. Court of Appeals, 203 Phil. 652, 681 (1982).

29 Section 6, Rule 1 of the 1997 Rules of Civil Procedure.

30 Section 4, Rule 1 of the 1997 Rules of Civil Procedure.

31 Caltex Filipino Managers & Supervisors Ass’n. v. CIR, 131 Phil. 1022, 1030 (1968).

32 Register of Deeds of Malabon v. RTC, Malabon, MM, Br. 170, G.R. No. 88623, 5 February 1990, 181 SCRA 788, citing Pinza v. Aldovino, 134 Phil. 217 (1968).

33 Allama v. Republic, G.R. No. 88226, 26 February 1992, 206 SCRA 600.

CASE 2011-0136: HOME GUARANTY CORPORATION VS. R-II BUILDERS INC. and NATIONAL HOUSING AUTHORITY (G.R. NO. 192649, 22 JUNE 2011, PEREZ, J.) SUBJECTS: COLLABORATING COUNSEL NOT ENTITLED TO COPIES OF NOTICES; FILING FEES; HOW TO DETERMINE WHETHER AN ACTION FOR NULLIFICATION OF A CONTRACT IS INCAPABLE OF PECUNIARY ESTIMATION. (BRIEF TITLE: HOME GUARNTEE VS. R-II BUILDERS).

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SUBJECTS/DOCTRINES:

SUBJECT: IS A COLLABORATING COUNSEL ENTITLED TO SERVICE OF COURT PROCESSES?

NO. ONLY THE LEAD COUNSEL IS ENTITLED.

WHEREFORE, the Court resolves to:

(a)      NOTE the Entry of Appearance of Atty. Lope E. Feble of Tuquero Exconde  Manalang Feble Law Offices as collaborating counsel for respondent R-II Builders, Inc.; and DENY counsel’s prayer to be furnished with all pleadings notices and other court processes at Unit 2704-A, West Tower, Philippine Stock Exchange Centre, Exchange Road, Ortigas Center Pasig, since only the lead counsel is entitled to service of court processes;

. . . . . .

SUBJECT: IS THERE AN EXCEPTION TO THE MANCHESTER DOCTRINE WHICH RULED THAT PAYMENT OF DOCKET FEES IS BOTH MANDATORY AND JURISDICTIONAL?

YES, WHEN THERE IS NO INTENTION TO DEFRAUD THE GOVERNMENT.

Having consistently sought the transfer of possession and control of the properties comprising the Asset Pool over and above the nullification of the Deed of Conveyance in favor of HGC, it follows R-II Builders should have paid the correct and appropriate docket fees, computed according to the assessed value thereof.  This much was directed in the 19 May 2008 Order issued by Branch 22 of the Manila RTC which determined that the case is a real action and admitted the Amended and Supplemental Complaint R-II Builders subsequently filed in the case.^[1][11]  In obvious evasion of said directive to pay the correct docket fees, however, R-II Builders withdrew its Amended and Supplemental Complaint and, in lieu thereof, filed its Second Amended Complaint which, while deleting its causes of action for accounting and conveyance of title to and/or possession of the entire Asset Pool, nevertheless prayed for its appointment as Receiver of the properties comprising the same.  In the landmark case of Manchester Development Corporation v. Court of Appeals,^[2][12] this Court ruled that jurisdiction over any case is acquired only upon the payment of the prescribed docket fee which is both mandatory and jurisdictional.  Although it is true that the Manchester Rule does not apply despite insufficient filing fees when there is no intent to defraud the government,^[3][13] R-II Builders’ evident bad faith should clearly foreclose the relaxation of said rule.

SUBJECT: HOW DO YOU DETERMINE WHETHER AN ACTION TO NULLIFY A CONTRACT IS INCAPABLE OF PECUNIARY ESTIMATION?

FIRST, DETERMINE THE NATURE OF THE PRINCIPAL ACTION. IF THE PRINCIPAL ACTION IS TO RECOVER PROPERTY, THEN IT IS NOT INCAPABLE OF PECUNIARY ESTIMATION.

In De Leon v. Court of Appeals,^[4][8] this Court had, of course, ruled that a case for rescission or annulment of contract is not susceptible of pecuniary estimation although it may eventually result in the recovery of real property.  Taking into consideration the allegations and the nature of the relief sought in the complaint in the subsequent case of Serrano v. Delica,^[5][9] however, this Court determined the existence of a real action and ordered the payment of the appropriate docket fees for a complaint for cancellation of sale which prayed for both permanent and preliminary injunction aimed at the restoration of possession of the land in litigation is a real action.  In discounting the apparent conflict in said rulings, the Court went on to rule as follows in Ruby Shelter Builders and Realty Development Corporation v. Hon. Pablo C, Formaran,^[6][10] to wit:

The Court x x x 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. There appeared to be no transfer of title or possession to the adverse party x x x.  (Underscoring Supplied)

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SPECIAL FIRST DIVISION

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RESOLUT I O N

PEREZ, J.:

Before the Court are: (a) the Entry of Appearance filed by Atty. Lope E. Feble of the Toquero Exconde Manalang Feble Law Offices as collaborating counsel for respondent R-II Builders, Inc. (R-II Builders), with prayer to be furnished all pleadings, notices and other court processes at its given address; and (b) the motion filed by R-II Builders, seeking the reconsideration of Court’s decision dated 9 March 2011 on the following grounds:^[7][1]

I

THE HONORABLE COURT ERRED IN RULING THAT RTC MANILA, BRANCH 22, HAD NO JURISDICTION OVER THE PRESENT CASE SINCE RTC-MANILA, BRANCH 24, TO WHICH THE INSTANT CASE WAS INITIALLY RAFFLED HAD NO AUTHORITY TO HEAR THE CASE BEING A SPECIAL COMMERCIAL COURT.

II.

THE HONORABLE COURT ERRED IN RULING THAT THE CORRECT DOCKET FEES WERE NOT PAID.

          In urging the reversal of the Court’s decision, R-II Builders argues that it filed its complaint with the Manila RTC which is undoubtedly vested with jurisdiction over actions where the subject matter is incapable of pecuniary estimation; that through no fault of its own, said complaint was raffled to Branch 24, the designated Special Commercial Court (SCC) tasked to hear intra-corporate controversies; that despite the determination subsequently made by Branch 24 of the Manila RTC that the case did not involve an intra-corporate dispute, the Manila RTC did not lose jurisdiction over the same and its Executive Judge correctly directed its re-raffling to Branch 22 of the same Court; that the re-raffle and/or amendment of pleadings do not affect a court’s jurisdiction which, once acquired, continues until the case is finally terminated; that since its original Complaint, Amended and Supplemental Complaint and Second Amended Complaint all primarily sought the nullification of the Deed of Assignment and Conveyance (DAC) transferring the Asset Pool in favor of petitioner Home Guaranty Corporation (HGC), the subject matter of the case is clearly one which is incapable of pecuniary estimation; and, that the court erred in holding that the case was a real action and that it evaded the payment of the correct docket fees computed on the basis of the assessed value of the realties in the Asset Pool.

          R-II Builders’ motion is bereft of merit.

          The record shows that, with the raffle of R-II Builders’ complaint before Branch 24 of the Manila RTC and said court’s grant of the application for temporary restraining order incorporated therein, HGC sought a preliminary hearing of its affirmative defenses which included, among other grounds, lack of jurisdiction and improper venue.  It appears that, at said preliminary hearing, it was established that R-II Builders’ complaint did not involve an intra-corporate dispute and that, even if it is, venue was improperly laid since none of the parties maintained its principal office in Manila.  While it is true, therefore, that R-II Builders had no hand in the raffling of the case, it cannot be gainsaid that Branch 24 of the RTC Manila had no jurisdiction over the case.  Rather than ordering the dismissal of the complaint, however, said court issued the 2 January 2008 order erroneously ordering the re-raffle of the case.  In Atwel v. Concepcion Progressive Association, Inc.^[8][2] and Reyes v. Hon. Regional Trial Court of Makati, Branch 142^[9][3] which involved SCCs trying and/or deciding cases which were found to be civil in nature, this Court significantly ordered the dismissal of the complaint for lack of jurisdiction instead of simply directing the re-raffle of the case to another branch.

Even then, the question of the Manila RTC’s jurisdiction over the case is tied up with R-II Builder’s payment of the correct docket fees which should be paid in full upon the filing of the pleading or other application which initiates an action or proceeding.^[10][4]  While it is, consequently, true that jurisdiction, once acquired, cannot be easily ousted,^[11][5] it is equally settled that a court acquires jurisdiction over a case only upon the payment of the prescribed filing and docket fees.^[12][6]  Already implicit from the filing of the complaint in the City of Manila where the realties comprising the Asset Pool are located, the fact that the case is a real action is evident from the allegations of R-II Builders’ original Complaint, Amended and Supplemental Complaint and Second Amended Complaint which not only sought the nullification of the DAC in favor of HGC but, more importantly, prayed for the transfer of possession of and/or control of the properties in the Asset Pool.  Its current protestations to the contrary notwithstanding, no less than R-II Builders – in its opposition to HGC’s motion to dismiss – admitted that the case is a real action as it affects title to or possession of real property or an interest therein.^[13][7]  Having only paid docket fees corresponding to an action where the subject matter is incapable of pecuniary estimation, R-II Builders cannot expediently claim that jurisdiction over the case had already attached.  

In De Leon v. Court of Appeals,^[14][8] this Court had, of course, ruled that a case for rescission or annulment of contract is not susceptible of pecuniary estimation although it may eventually result in the recovery of real property.  Taking into consideration the allegations and the nature of the relief sought in the complaint in the subsequent case of Serrano v. Delica,^[15][9] however, this Court determined the existence of a real action and ordered the payment of the appropriate docket fees for a complaint for cancellation of sale which prayed for both permanent and preliminary injunction aimed at the restoration of possession of the land in litigation is a real action.  In discounting the apparent conflict in said rulings, the Court went on to rule as follows in Ruby Shelter Builders and Realty Development Corporation v. Hon. Pablo C, Formaran,^[16][10] to wit:

The Court x x x 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. There appeared to be no transfer of title or possession to the adverse party x x x.  (Underscoring Supplied)

Having consistently sought the transfer of possession and control of the properties comprising the Asset Pool over and above the nullification of the Deed of Conveyance in favor of HGC, it follows R-II Builders should have paid the correct and appropriate docket fees, computed according to the assessed value thereof.  This much was directed in the 19 May 2008 Order issued by Branch 22 of the Manila RTC which determined that the case is a real action and admitted the Amended and Supplemental Complaint R-II Builders subsequently filed in the case.^[17][11]  In obvious evasion of said directive to pay the correct docket fees, however, R-II Builders withdrew its Amended and Supplemental Complaint and, in lieu thereof, filed its Second Amended Complaint which, while deleting its causes of action for accounting and conveyance of title to and/or possession of the entire Asset Pool, nevertheless prayed for its appointment as Receiver of the properties comprising the same.  In the landmark case of Manchester Development Corporation v. Court of Appeals,^[18][12] this Court ruled that jurisdiction over any case is acquired only upon the payment of the prescribed docket fee which is both mandatory and jurisdictional.  Although it is true that the Manchester Rule does not apply despite insufficient filing fees when there is no intent to defraud the government,^[19][13] R-II Builders’ evident bad faith should clearly foreclose the relaxation of said rule.

In addition to the jurisdictional and pragmatic aspects underlying the payment of the correct docket fees which have already been discussed in the decision sought to be reconsidered, it finally bears emphasizing that the Asset Pool is comprised of government properties utilized by HGC as part of its sinking fund, in pursuit of its mandate as statutory guarantor of government housing programs.  With the adverse consequences that could result from the transfer of possession and control of the Asset Pool, it is imperative that R-II Builders should be made to pay the docket and filing fees corresponding to the assessed value of the properties comprising the same.

WHEREFORE, the Court resolves to:

(a)      NOTE the Entry of Appearance of Atty. Lope E. Feble of Tuquero Exconde  Manalang Feble Law Offices as collaborating counsel for respondent R-II Builders, Inc.; and DENY counsel’s prayer to be furnished with all pleadings notices and other court processes at Unit 2704-A, West Tower, Philippine Stock Exchange Centre, Exchange Road, Ortigas Center Pasig, since only the lead counsel is entitled to service of court processes;

(b)     DENY with FINALITY R-II Builders, Inc.’s Motion for Reconsideration of the Decision dated 9 March 2011 for lack of merit, the basic issues having been already passed upon and there being no substantial argument to warrant a modification of the same.  No further pleadings or motions shall be entertained herein.

Let an Entry of Judgment in this case be made in due course.

SO ORDERED.

WE CONCUR:

RENATO C. CORONA

Chief Justice

Chairperson

PRESBITERO J. VELASCO, JR.       TERESITA J. LEONARDO-DE CASTRO

Associate Justice                                           Associate Justice

       DIOSDADO M. PERALTA

    Associate Justice

CERTIFICATION

          Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                                           RENATO C. CORONA

                                                                        Chief Justice