1. PADERANGA v Judge Dimalanes B.

Buissan

FACTS

Petitioner JORGE C. PADERANGA and private respondent ELUMBA INDUSTRIES COMPANY,

represented by its General Manager JOSE J. ELUMBA, entered into an oral contract of lease for the use
of a commercial space within a building owned by petition in Ozamiz City. The lease was for an
indefinite period although the rent of P150.00 per month was paid on a month-to-month basis.

On 4 April 1977, PADERANGA subdivided the leased premises into two (2) by constructing a partition
wall in between. He then took possession of the other half, which repossession was said to have been
undertaken with the acquiescence of the local manager of ELUMBA, although private respondent
maintains that this is not the case.

On 18 July 1977, EIC instituted an action for damages which, at the same time, prayed for the fixing of
the period of lease at five (5) years, before the then court of First Instance of Zamboanga del Norte based
in Dipolog City. Petitioner, a resident of Ozamiz City, moved for its dismissal contending that the action
was a real action which should have been filed with the Court of First Instance of Misamis Occidental
stationed in Ozamiz City where the property in question was situated.

Respondent Judge Dimalanes B. Buissan denied the Motion to Dismiss and held that the case merely
involved the enforcement of the contract of lease, and while affecting a portion of real property, there was
no question of ownership raised. Hence, venue was properly laid.

In his motion for reconsideration, he contended that while the action did not involve a question of
ownership, it was nevertheless seeking recovery of possession; thus, it was a real action which,
consequently, must be filed in Ozamiz City.7

Respondent judge denied reconsideration. While admitting that the case did pray for recovery of
possession, he nonetheless ruled that this matter was not the main issue at hand; neither was the question
of ownership raised. Not satisfied, petitioner instituted the present recourse.

PADERANGA argues that inasmuch as ELUMBA seeks to recover possession of the portion surrendered
to him by the local manager of private respondent, as well as to fix the period of lease at five (5) years,
Dipolog City could not be the proper venue of the action. it being a real action, venue is laid in the court
having jurisdiction over the territory in which the property lies.

ELUMBA counters that the present action is chiefly for damages arising from an alleged breach in the
lease contract; hence, the issue of recovery of possession is merely incidental. ELUMBA further argues
that the action is one in personam and not in rem. Therefore, venue may be laid in the place where
plaintiff or defendant resides at the option of plaintiff.

ISSUE

Whether the case was filed in the proper venue.

Held
Yes. While the instant action is for damages arising from alleged breach of the lease contract, it likewise
prays for the fixing of the period of lease at five (5) years. If found meritorious, private respondent will be
entitled to remain not only as lessee for another five (5) years but also to the recovery of the portion
earlier taken from him as well. This is because the leased premises under the original contract was the
whole commercial space itself and not just the subdivided portion thereof. Indeed, where the ultimate
purpose of an action involves title to or seeks recovery of possession, partition or condemnation of, or
foreclosure of mortgage on, real property, such an action must be deemed a real action and must perforce
be commenced and tried in the province where the property or any part thereof lies.

In Hernandez v. Rural Bank of Lucena, Inc., we held thus —

In a personal action, the plaintiff seeks the recovery of personal property, the
enforcement of a contract or the recovery of damages. In a real action, the plaintiff seeks
the recovery of real property, or, as indicated in section 2(a) of Rule 4, a real action is an
action affecting title to real property or for the recovery of possession, or for partition or
condemnation of, or foreclosure of a mortgage on, real property.

An action in personam is an action against a person on the basis of his personal liability,
while an action in rem is an action against the thing itself, instead of against the person.
Hence, a real action may at the same time be an action in personam and not necessarily
an action in rem.

Consequently, the distinction between an action in personam and an action in rem for purposes of

determining venue is irrelevant. Instead, it is imperative to find out if the action filed is a personal action
or real action. After all, personal actions may be instituted in the Regional Trial Court (then Court of First
Instance) where the defendant or any of the defendants resides or may be found, or where the plaintiff or
any of the plaintiffs resides, at the election of the plaintiff. On the other hand, real actions should be
brought before the Regional Trial Court having jurisdiction over the territory in which the subject
property or part thereof lies. 

2. UNGRIA V CA

FACTS

Plaintiff Rosario Dideles Vda. de Castor (Rosario), and 5 others filed with the RTC of General Santos
City a Complaint for ownership, possession and damages, and alternative causes of action either to
declare two documents covering a land amounting to 12,780.00 as patent nullities, and/or for recovery of
Rosario's conjugal share with damages or redemption of the subject land against petitioner Ceferina de
Ungria and others.

The documents they sought to annul are

(1) the Deed of Transfer of Rights and Interest including Improvements thereon allegedly executed by
Fernando, Husband of Rosario, in favor of Eugenio de Ungria, Ceferina Ungria’s father; and
(2) the Affidavit of Relinquishment executed by Eugenio in favor of Ceferina Ungria.

According to Rosario,et al, the signature of her husband Fernando in the Deed of transfer of Rights and
Interest in favor of Ceferina’s father Eugenio is forged. And since that document is void, the subsequent
transfer to Ceferina is also void.

Ceferina filed a Motion to Dismiss (Ex-Abundante Ad Cautelam) on 6 grounds. One of them is that the
court has no jurisdiction over the case for failure of plaintiffs to pay the filing fee in full.

Rosario et al filed their Opposition thereto.

The RTC issued an Order denying the motion to dismiss and declaring that ½ of the property in question
belongs Rosario.

Ceferina filed a Motion for Reconsideration, which the RTC denied.

Petitioner filed an Omnibus Motion asking the RTC to resolve the issues, inter alia, on whether or not the
complaint should be dismissed or expunged from the records pursuant to Supreme Court (SC) Circular
No. 7. Petitioner alleged that SC Circular No. 7 issued on March 24, 1998 requires
that all complaints must specify the amount of damages sought not only in
the body of the pleadings but also in the prayer to be accepted and
admitted for filing, something that was not done. Thus, the corresponding
docket fee was not paid. In effect, jurisdiction did not vest.

On March 8, 2000, the RTC resolved the Omnibus Motion in an Order that read in this wise:
On the omnibus motion regarding filing fees, the plaintiffs asserted in its motion that they are charging
defendant actual and compensatory damages such as are proved during the hearing of this case. So also
are attorney's fees and moral damages, all to be proved during the hearing of this case. Since there was no
hearing yet, they are not in a possession (sic) to
determine how much is to be charged. At any rate, if after hearing the Clerk of Court determine that the
filing fees is still insufficient, considering the total amount of the claim, the Clerk of Court should
determine and, thereafter, if any amount is found due, he must require the private respondent to pay the
same x x x.

Ceferina’s motion for reconsideration was denied yet again.

Petitioner filed with the CA a petition for certiorari and prohibition with prayer for the issuance of a
temporary restraining order and/or writ of preliminary injunction. Petitioner sought the nullification
orders issued by the RTC for having been issued with grave abuse of discretion amounting to lack or
excess of jurisdiction. Respondents filed their Comment thereto.
In a Decision dated May 26, 2004, the CA dismissed the petition. The CA found that SC Circular No. 7
would not apply where the amount of damages or value of the property was immaterial; that the Circular
could be applied only in cases where the amount claimed or the value of the personal property was
determinative of the court's jurisdiction.

The CA found that respondents had paid the corresponding docket fees upon the filing of the complaint,
thus, the RTC had acquired jurisdiction over the case despite the failure to state the amount of damages
claimed in the body of the complaint or in the prayer thereof.

Petitioner filed a Motion for Reconsideration, which the CA denied in a Resolution dated September 17,
2004.
.
Hence, this petition for review on certiorari where petitioner raises the following assignment of errors:

ISSUE
Whether or not RTC has jurisdiction

HELD

Yes. It would appear that the first cause of action involves the issue of recovery of possession and interest
of the parties over the subject land which is a real action. The assessed value of the subject land was
P12,780.00 based on Tax Declaration No. 15272.

Since it is a real action with an assessed value of less than P20,000.00, the case would fall under the
jurisdiction of the MTC as provided under the above-quoted Section 33 (3) of BP 129, as amended.
Notably, however, Rosario in the same Complaint filed alternative causes of action assailing the validity
of the Deed of Transfer of Rights and Interest executed by Fernando in favor of petitioner's father.
Respondents also sought for the reconveyance to respondent Rosario of the undivided one-half portion of
the subject land as conjugal owner thereof in case the Deed of Transfer of Rights and Interest will be
upheld as valid; and/or for redemption of the subject land.

Clearly, this is a case of joinder of causes of action which comprehends more than the issue of possession
of, or any interest in the real property under contention, but includes an action to annul contracts and
reconveyance which are incapable of pecuniary estimation and, thus, properly within the jurisdiction of
the RTC.

In Singson v. Isabela Sawmill, we held that:

In determining whether an action is one the subject matter of which is not capable of pecuniary estimation
this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy
sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary
estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would
depend on the amount of the claim.
However, where the basic issue is something other than the right to recover a sum of money, where the
money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has
considered such actions as cases where the subject of the litigation may not be estimated in terms of
money, and are cognizable exclusively by courts of first instance (now
Regional Trial Courts). Thus, respondents correctly filed their Complaint with the RTC.
Furthermore, since we find that the case involved the annulment of contract which is not susceptible of
pecuniary estimation, thus, falling within the jurisdiction of the RTC, the docket fees should not be based
on the assessed value of the subject land as claimed by petitioner in their memorandum, but should be
based on Section 7(b)(1) of Rule 141. A perusal of the entries in the Legal Fees Form attached to the
records would reflect that the amount of P400.00 was paid to the Clerk of Court, together with the other
fees, as assessed by the Clerk of Court.

Thus, upon respondents' proof of payment of the assessed fees, the RTC has properly acquired
jurisdiction over the complaint.

ISSUE
Whether or not the proper filling fee in accordance with SC circular 7 was paid to vest jurisdiction to
RTC

HELD

Yes, the proper filing fee is paid and RTC acquired jurisdiction.

In Sun Insurance Office, Ltd. v. Asuncion,[30] we laid down the following

guidelines in the payment of docket fees, 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.
Subsequently, in Heirs of Bertuldo Hinog v. Melicor,[31] we said:
Furthermore, the fact that private respondents prayed for payment of
damages "in amounts justified by the evidence" does not call for the dismissal
of the complaint for violation of SC Circular No. 7, dated March 24, 1988
which required that all complaints must specify the amount of damages
sought not only in the body of the pleadings but also in the prayer in order to
be accepted and admitted for filing. Sun Insurance effectively modified SC
Circular No. 7 by providing that filing fees for damages and awards that
cannot be estimated constitute liens on the awards finally granted by the
trial court.

x x x judgment awards which were left for determination by the court or as

may be proven during trial would still be subject to additional filing fees
which shall constitute a lien on the judgment. It would then be the
responsibility of the Clerk of Court of the trial court or his duly authorized
deputy to enforce said lien and assess and collect the
additional fees.

A reading of the allegations in the complaint would show that the amount
of the rental due can only be determined after a final judgment, since there
is a need to show supporting evidence when the petitioner and the other
defendants started to possess the subject land. Thus, we find no reversible
error committed by the CA when it ruled that there was no grave abuse of
discretion committed by the RTC in issuing its Order dated March 30, 2000,
where the RTC stated that "since there was no hearing yet, respondents are
not in a position to determine how much is to be charged and that after
hearing, the Clerk of Court determines that the filing fee is still insufficient,
the same shall be considered as lien on the judgment that may be entered."

NOTE

1. The first complaint filed by respondents in the RTC was for ownership, possession and damages,
and alternative causes of action either to declare two documents as patent nullities and/or for
recovery of conjugal share on the subject land with damages or redemption of the subject land.
Respondents prayed that they be declared as absolute and lawful owners of the subject land and to
order petitioner and the other defendants to vacate the premises and restore respondents to its
possession and enjoyment therefore.
 2. On their second cause of action, they prayed that the Deed of Transfer of Rights and Interest
Including Improvements Thereon be declared as a forgery, purely simulated and without any
consideration; hence, inexistent, void ab initio and/or a patent nullity, as well as the Affidavit of
Relinquishment which was the direct result of the Deed of Transfer. Respondents also prayed in
the alternative that if the Deed be finally upheld as valid, to order petitioner to reconvey to
respondent Rosario the undivided one-half portion of the subject land as conjugal owner thereof
and to account and reimburse her of its usufruct; and/or to allow them to redeem the subject land.

RELEVANT STATUTE PROVISION

1. Section 1 of RA 7691, amending BP Blg. 129, provides that the RTC shall exercise exclusive
original jurisdiction on the following actions:

Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary
Reorganization Act of 1980," is hereby amended to read as follows: Sec. 19. Jurisdiction in civil
cases. - Regional Trial Courts shall exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of the litigation is incapabl e of pecuniary
estimation;
(2) In all civil actions which involve the title to, or possession of, real property, or any
interest therein, where the assessed value of the property involved exceeds Twenty
Thousand Pesos (P20,000.00) or for civil actions in Metro Manila, where such value
exceeds Fifty Thousand Pesos (P50,000.00), except actions for forcible entry into and
unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon
the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts; x x x

2. Section 3 of RA No. 7691 expanded the exclusive original jurisdiction of the first level courts,
thus: Section 3. Section 33 of the same law (BP Blg. 129) is hereby amended to read as follow
s:

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in Civil Cases. - Metropolitan Trial Courts, Municipal Trial
Courts, and

Municipal Circuit Trial Courts shall exercise:

xxxx

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession
of, real property, or any interest therein where the assessed value of the property or
interest therein does not exceed Twenty Thousand Pesos (P20,000.00) or, in civil actions
in Metro Manila, where such assessed value does not exceed Fifty Thousand Pesos
(P50,000.00) exclusive of interest, damages of whatever kind, attorney's fees, litigation
expenses and costs: Provided, That in cases of land not declared for taxation purposes,
the value of such property shall be determined by the assessed value of the adjacent lots.

3. Section 7(b)(1) of Rule 141 of the Rules of Court provides:

SEC. 7. Clerks of Regional Trial Courts. - (a) For filing an action or a permissive counter-
claim or money claim against an estate not based on judgment, or for filing with leave of court a
third-party, fourth-party, etc. complaint, or a complaint-in-intervention, and for all clerical services in
 the same, if the total-sum claimed, exclusive of interest, or the stated value of the property in
litigation, is:
xxxx
(b) For filing:
1. Actions where the value of the subject matter cannot be estimated ........ P400.00
2. x x x

In a real action, the assessed value of the property, or if there is none, the estimated value
thereof shall be alleged by the claimant and shall be the basis in computing the fees.

3. PADILLA V MAGDUA

FACTS
Juanita Padilla (Juanita), the mother of petitioners, owned a piece of land located in San Roque, Tanauan,
Leyte. After Juanita's death on 23 March 1989, petitioners, as legal heirs of Juanita, sought to have the
land partitioned. Petitioners sent word to their eldest brother Ricardo Bahia (Ricardo) regarding their
plans for the partition of the land. In a letter dated 5 June 1998 written by Ricardo addressed to them,
petitioners were surprised to find out that Ricardo had declared the land for himself, prejudicing their
rights as co-heirs. It was then discovered that Juanita had allegedly executed a notarized Affidavit of
Transfer of Real Property (Affidavit) in favor of Ricardo on 4 June 1966 making him the sole owner of
the land. The records do not show that the land was registered under the Torrens system.

On 26 October 2001, petitioners filed an action with the RTC of Tacloban City, Branch 34, for recovery
of ownership, possession, partition and damages. Petitioners sought to declare void the sale of the land by
Ricardo's daughters, Josephine Bahia and Virginia Bahia-Abas, to respondent Dominador Magdua
(Dominador). The sale was made during the lifetime of Ricardo.

Petitioners alleged that Ricardo, through misrepresentation, had the land transferred in his name without
the consent and knowledge of his co-heirs. Petitioners also stated that prior to 1966, Ricardo had a house
constructed on the land. However, when Ricardo and his wife Zosima separated, Ricardo left for
Inasuyan, Kawayan, Biliran and the house was leased to third parties. Petitioners further alleged that the
signature of Juanita in the Affidavit is highly questionable because on 15 May 1978 Juanita executed a
written instrument stating that she would be leaving behind to her children the land which she had
inherited from her parents.

Dominador filed a motion to dismiss on the ground of lack of jurisdiction since the assessed value of the
land was within the jurisdiction of the Municipal Trial Court of Tanauan, Leyte.

In an Order dated 20 February 2006, the RTC dismissed the case for lack of jurisdiction.
The RTC explained that the assessed value of the land in the amount of P590.00 was less than the amount
cognizable by the RTC to acquire jurisdiction over the case.

Petitioners filed a motion for reconsideration. Petitioners argued that the action was not merely for
recovery of ownership and possession, partition and damages but also for annulment of deed of sale.
Since actions to annul contracts are actions beyond pecuniary estimation, the case was well within the
jurisdiction of the RTC.
Dominador filed another motion to dismiss on the ground of prescription.

In an Order dated 8 September 2006, the RTC reconsidered its previous stand and took cognizance of the
case.

Nonetheless, the RTC denied the motion for reconsideration and dismissed the case on the ground of
prescription pursuant to Section 1, Rule 9 of the Rules of Court.

Petitioners filed another motion for reconsideration which the RTC denied in an Order dated 13 February
2007 since petitioners raised no new issue.

Hence, this petition.

ISSUE

Whether or not the RTC was correct in taking cognizance of the case.

HELD

Yes, we hold that the RTC did not err in taking cognizance of the case.

In the present case, the records show that the assessed value of the land was P590.00 according to the
Declaration of Property as of 23 March 2000 filed with the RTC. Based on the value alone, being way
below P20,000.00, the MTC has jurisdiction over the case. However, petitioners argued that the action
was not merely for recovery of ownership and possession, partition and damages but also for annulment
of deed of sale. Since annulment of contracts are actions incapable of pecuniary estimation, the RTC has
jurisdiction over the case.

Petitioners are correct. In Singson v. Isabela Sawmill, we held that:

In determining whether an action is one the subject matter of which is not capable of pecuniary estimation
this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy
sought. If it is primarily for the recovery of a sum of money,
the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal
courts or in the courts of first instance would depend on the amount of the claim. However, where the
basic issue is something other than the right to recover a sum of money, where the money claim is purely
incidental to, or a consequence of, the principal relief sought, this Court has considered such actions as
cases where the subject of the litigation may not be estimated in terms of money, and are cognizable by
courts of first instance (now Regional Trial Courts).

When petitioners filed the action with the RTC they sought to recover ownership and possession of the
land by questioning (1) the due execution and authenticity of the Affidavit executed by Juanita in favor of
Ricardo which caused Ricardo to be the sole owner of the land to the exclusion of petitioners who also
claim to be legal heirs and entitled to the land, and (2) the validity of the deed of sale executed between
Ricardo's daughters and Dominador.

Since the principal action sought here is something other than the recovery of a sum of money, the action
is incapable of pecuniary estimation and thus cognizable by the RTC.
Well-entrenched is the rule that jurisdiction over the subject matter of a case is conferred by law and is
determined by the allegations in the complaint and the character of the relief sought, irrespective of
whether the party is entitled to all or some of the claims asserted.

RELEVANT STATUE RPOVISSION

Under Section 1 of Republic Act No. 7691 (RA 7691),[14] amending Batas Pambansa Blg. 129, the RTC
shall exercise exclusive jurisdiction on the following actions:

Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act
of 1980", is hereby amended to read as follows:

"Sec. 19. Jurisdiction in civil cases. - Regional Trial Courts shall exercise exclusive original jurisdiction. "
(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;
"(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein,
where the assessed value of the property involved exceeds Twenty Thousand Pesos (P20,000.00) or, for
civil actions in Metro Manila, where such value exceeds Fifty Thousand Pesos (P50,000.00) except
actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which
is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts; x xx

On the other hand, Section 3 of RA 7691 expanded the jurisdiction of the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts over all civil actions which involve title to or
possession of real property, or any interest, outside Metro Manila where the assessed value does not
exceed Twenty thousand pesos (P20,000.00). The provision states:
Section 3. Section 33 of the same law is hereby amended to read as follows:

"Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts in Civil Cases. - Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Trial Circuit
Trial Courts shall exercise:
xxx
"(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real
property, or any interest therein where the assessed value of the property or interest therein does not
exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed
value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind,
attorney's fees, litigation expenses and costs: Provided, That in cases of land not declared for taxation
purposes, the value of such property shall be determined by the assessed value of the adjacent lots."

OTHER ISSUES

At the outset, only questions of law may be raised in a petition for review on certiorari under Rule 45 of
the Rules of Court. The factual findings of the lower courts are final and conclusive and may not be
reviewed on appeal except under any of the following circumstances:
(1) the conclusion is grounded on speculations, surmises or conjectures;
(2) the inference is manifestly mistaken, absurd or impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension of facts;
(5) the findings of fact are conflicting;
(6) there is no citation of specific evidence on which the factual findings are based;
(7) the finding of absence of facts is contradicted by the presence of evidence on record;
(8) the findings of the Court of Appeals are contrary to those of the trial court;
(9) the Court of Appeals manifestly overlooked certain relevant and undisputed facts that, if properly
considered, would justify a different conclusion;
(10) the findings of the Court of Appeals are beyond the issues of the case; and
(11) such findings are contrary to the admissions of both parties.

We find that the conclusion of the RTC in dismissing the case on the ground of prescription based solely
on the Affidavit executed by Juanita in favor of Ricardo, the alleged seller of the property from whom
Dominador asserts his ownership, is speculative. Thus, a review of the case is necessary.

Here, the RTC granted the motion to dismiss filed by Dominador based on Section 1, Rule 9 of the Rules
of Court which states:

Section 1. Defenses and objections not pleaded. - Defenses and objections not pleaded either in a motion
to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the
evidence on record that the court has no jurisdiction over the subject matter, that there is another action
pending between the same parties for the same cause, or that the action is barred by a prior judgment or
by statute of limitations, the court shall dismiss the case. (Emphasis supplied)

The RTC explained that prescription had already set in since the Affidavit was executed on 31 May 1966
and petitioners filed the present case only on 26 October 2001, a lapse of more than 30 years. No action
could be taken against the deed of sale made in favor of Dominador without assailing the Affidavit, and
the action to question the Affidavit had already prescribed.

After a perusal of the records, we find that the RTC incorrectly relied on the Affidavit alone in order to
dismiss the case without considering petitioners' evidence.
4. De Leon V. CA

FACTS

On August 8, 1991, ELAYDAs filed in the Regional Trial Court of Quezon City a complaint for
annulment or rescission of a contract of sale two (2) parcels of land against DE LEONs, praying for the
following reliefs:

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.

Other reliefs and remedies as are just and equitable in the premises are also prayed for.

Upon the filing of the complaint, the clerk of court required private respondents to pay docket and legal
fees in the total amount of P610.00, broken down as follows:

P450.00 - Docket fee for the Judicial Development Fund under Official Receipt No. 1877773
150.00 - Docket fee for the General Fund under Official Receipt No. 6834215
10.00 - for the Legal Research Fund under Official Receipt No. 6834450.

On September 26, 1991, DE LEONs moved for the dismissal of the complaint on the ground that the trial
court did not acquire jurisdiction over the case by reason of private respondents’ nonpayment of the
correct amount of docket fees. Petitioners contended that in addition to the fees already paid based on the
claim for P100,000.00 for attorney’s fees, private respondents should have paid docket fees in the amount
of P21,640.00, based on the alleged value of the two (2) parcels of land subject matter of the contract of
sale sought to be annulled.
On September 30, 1991, ELAYDAs filed opposition to the motion to dismiss, arguing that outright
dismissal of their complaint was not warranted on the basis of the alleged nonpayment of the correct
amount of docket fees, considering that the amount paid by them was that assessed by the clerk of court.

On October 9, 1991, DE LEONs filed a reply.

ELAYDAs filed, on October 17, 1991, a rejoinder.

DE LEONs argue that an action for annulment or rescission of a contract of sale of real property is a real
action and, therefore, the amount of the docket fees to be paid by private respondent should be based
either on the assessed value of the property, subject matter of the action, or its estimated value as alleged
in the complaint, pursuant to the last paragraph of §7(b) of Rule 141, as amended by the Resolution of the
Court dated September 12, 1990. Since private respondents alleged that the land, in which they claimed
an interest as heirs, had been sold for P4,378,000.00 to petitioners, this amount should be considered the
estimated value of the land for the purpose of determining the docket fees.

On the other hand, ELAYDAs counter that an action for annulment or rescission of a contract of sale of
real property is incapable of pecuniary estimation and, so, the docket fees should be the fixed amount of
P400.00 in Rule 141, §7(b)(1).

On October 21, 1991, the trial court DE LEONs’ motion to dismiss but required ELAYDAs to pay the
amount of docket fees based on the estimated value of the parcels of land in litigation as stated in the
complaint.

ELAYDAs filed a motion for reconsideration but their motion was denied by the trial court.

ELAYDAs brought the matter to the Court of Appeals which, on February 26, 1992, rendered a decision
annulling the orders of the trial court. The appellate court held that an action for rescission or annulment
of contract is not susceptible of pecuniary estimation and, therefore, the docket fees should not be based
on the value of the real property, subject matter of the contract sought to be annulled or rescinded.

DE LEONs moved for reconsideration, but their motion was denied in a resolution dated March 25, 1992
of the appellate court.

Hence, this petition for review on certiorari.

ISSUE
Whether or not RTC acquired jurisdiction

HELD
Yes. Although eventually the result may be the recovery of land, it is the nature of the action as one for
rescission of contract which is controlling.

The Court of Appeals correctly declared that that since the action of ELAYDAs against DE LEONs is
solely for annulment or rescission which is not susceptible of pecuniary estimation, the action should not
be confused and equated with the “value of the property” subject of the transaction; that by the very
nature of the case, the allegations, and specific prayer in the complaint, sans any prayer for recovery of
money and/or value of the transaction, or for actual or compensatory damages, the assessment and
collection of the legal fees should not be intertwined with the merits of the case and/or what may be its
end result; and that to sustain DE LEONs’ position on what the respondent court may decide after all,
then the assessment should be deferred and finally assessed only after the court had finally decided the
case, which cannot be done because the rules require that filing fees should be based on what is alleged
and prayed for in the face of the complaint and paid upon the filing of the complaint.

In support of their argument, they cite the cases of Lapitan v. Scandia, Inc.[7] and Bautista
v. Lim.[8] In Lapitan this Court, in an opinion by Justice J.B.L. Reyes, held:

A review of the jurisprudence of this Court indicates that in determining whether an action is one the
subject matter of which is not capable of pecuniary estimation, this Court has adopted the criterion of
first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of
a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in
the municipal courts or in the courts of first instance would depend on the amount of the claim.

However, where the basic issue is something other than the right to recover a sum of money, or where the
money claim is purely incidental to, or a consequence of, the principal relief sought, like in suits to have
the defendant perform his part of the contract (specific performance) and in actions for support, or for
annulment of a judgment or to foreclose a mortgage, this Court has considered such actions as cases
where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively
by courts of first instance. The rationale of the rule is plainly that the second class cases, besides the
determination of damages, demand an inquiry into other factors which the law has deemed to be more
within the competence of courts of first instance, which were the lowest courts of record at the time that
the first organic laws of the Judiciary were enacted allocating jurisdiction (Act 136 of the Philippine
Commission of June 11, 1901).

Actions for specific performance of contracts have been expressly pronounced to be exclusively
cognizable by courts of first instance: De Jesus vs. Judge Garcia, L-26816, February 28, 1967;
Manufacturer’s Distributors, Inc. vs. Yu Siu Liong, L-21285, April 29, 1966. And no cogent reason
appears, and none is here advanced by the parties, why an action for rescission (or resolution) should be
differently treated, a “rescission” being a counterpart, so to speak, of “specific performance”. In both
cases, the court would certainly have to undertake an investigation into facts that would justify one act or
the other. No award for damages may be had in an action for rescission without first conducting an
inquiry into matters which would
justify the setting aside of a contract, in the same manner that courts of first instance would have to make
findings of fact and law in actions not capable of pecuniary estimation expressly held to be so by this
Court, arising from issues like those raised in Arroz v. Alojado, et al., L-22153, March 31, 1967 (the
legality or illegality of the conveyance sought for and the determination of the validity of the money
deposit made); De Ursua v. Pelayo, L-13285, April
18, 1950 (validity of a judgment); Bunayog v. Tunas, L-12707, December 23, 1959 (validity of a
mortgage); Baito v. Sarmiento, L-13105, August 25, 1960 (the relations of the parties, the right to
support created by the relation, etc., in actions for support); De Rivera, et al. v. Halili, L-15159,
September 30, 1963 (the validity or nullity of documents upon which claims are predicated). Issues of the
same nature may be raised by a party against whom an action for rescission has been brought, or by the
plaintiff himself. It is, therefore, difficult to see why a prayer for damages in an action for rescission
should be taken as the basis for concluding such action as one capable of pecuniary estimation ¾ a
prayer which must be included in the main action if plaintiff is to be compensated for what he may have
suffered as a result of the breach committed by defendant, and not later on precluded from recovering
damages by the rule against splitting a cause of action and discouraging multiplicity of suits.

Conformably with this discussion of actions “where the value of the case cannot be estimated,” the Court
in Bautista v. Lim, held that an action for rescission of contract is one which cannot be estimated and
therefore the docket fee for its filing should be the flat amount of P200.00 as then fixed in the former Rule
141, §5(10). Said this Court:

We hold that Judge Dalisay did not err in considering Civil Case No. V-144 as basically one for
rescission or annulment of contract which is not susceptible of pecuniary estimation (1 Moran’s
Comments on the Rules of Court, 1970 Ed, p. 55; Lapitan vs. Scandia, Inc., L-24668, July 31, 1968, 24
SCRA 479, 481-483).
Consequently, the fee for docketing it is P200, an amount already paid by plaintiff, now respondent
Matilda Lim. (She should pay also the two pesos legal research fund fee, if she has not paid it, as
required in Section 4 of Republic Act No. 3870, the charter of the U.P. Law Center).

RELEVANT STATUTE

Rule 141 of the Rules of Court provides:

SEC. 7. Clerks of Regional Trial Courts. –
(a) For filing an action or a permissive counter-claim or money claim against an estate not based on
judgment, or for filing with leave of court a third-party, fourth-party, etc. complaint, or a complaint in
intervention, and for all clerical services in the same, if the total-sum claimed, exclusive of interest, or the
stated value of
the property in litigation, is:
1. Not more than P20,000.00 .............P120.00
2. More than P20,000.00 but less than P40,000.00 ......................... 150.00
3. P40,000.00 or more but less than P60,000.00 ......................... 200.00
4. P60,000.00 or more but less than P80,000.00 ... ...................... 250.00
5. P80,000.00 or more but less than P100,000.00 ........................... 400.00
6. P100,000.00 or more but less than P150,000.00 ........................... 600.00
7. For each P1,000.00 in excess of P150,000.00 ............................. 5.00

(b) For filing:

1. Actions where the value of the subject matter cannot be estimated ............. P400.00
2. Special civil actions except judicial foreclosure of mortgage which shall be
governed by paragraph (a) above .... 400.00
3. All other actions not involving property........................... 400.00

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. (emphasis added)