Chua vs. Spouses Go

A trial court acquires jurisdiction upon the plaintiff's payment of the docket fees assessed by the clerk of court, even if the amount later proves deficient; however, the complaint may properly be dismissed where the plaintiff fails to pay the deficiency assessment within the reasonable period fixed by the court and fails to manifest willingness to pay, the negligence of counsel in failing to inform the client of the payment order binding upon the latter.

Petitioner Benson Chua and respondent Philip L. Go are cousins. Sometime in 1991, petitioner decided to purchase two parcels of land but, owing to a shaky marriage, requested that title to the properties be placed in Philip's name in trust for him. When petitioner eventually demanded transfer of the titles, Philip and his wife, Diana G. Go, refused. The dispute thus centers on whether the properties were held in trust for petitioner and whether petitioner's complaint for Declaration of Trust and Reconveyance was properly dismissed for non-payment of deficiency docket fees.

Petitioner Benson Chua and respondent Philip L. Go are cousins. Sometime in 1991, petitioner decided to buy two parcels of land but, because his marriage was shaky, he requested that the titles to the properties be placed in Philip's name in trust for him. When petitioner eventually demanded the transfer of the titles, Philip and his wife, Diana G. Go, refused. On July 12, 2007, petitioner filed a Complaint for Declaration of Trust and Reconveyance against respondents before the RTC of Lapu-Lapu City, Branch 27, docketed as Civil Case No. 6837-L.

Respondents interposed affirmative defenses and counterclaims in their Verified Answer, praying for a preliminary hearing as if a motion to dismiss had been filed under Section 6(1), Rule 17 of the Revised Rules of Court. After respondents presented their evidence, the RTC dismissed petitioner's complaint for utter lack of merit and confirmed the titles in respondents' name. Petitioner appealed to the CA, which reversed the dismissal on July 30, 2010 and remanded the case for further proceedings.

On remand, respondents raised issues regarding petitioner's payment of docket fees. The OCC issued a certification on August 9, 2012 stating that petitioner had paid ₱111,157.60. A second certification dated September 20, 2012 stated ₱202,993.00, which the Clerk of Court, Atty. Rey Ciriaco Ponce, explained was a re-assessment reflecting the correct zonal valuation of ₱650.00 per square meter rather than the ₱345.00 per square meter initially used. The deficiency was computed at ₱91,735.40. Respondents filed an Urgent Ex-Parte Motion on November 26, 2012 praying that the re-assessment be rejected and that petitioner be ordered to pay ₱346,470.40 based on a zonal value of ₱1,125.00 per square meter. On December 7, 2012, the trial court, in the presence of petitioner's counsel Atty. Manuel Zosa III, issued an order in open court directing petitioner to pay the deficiency of ₱91,735.40 within ten days from receipt, ruling that respondents' proposed valuation had no basis and that Atty. Ponce's assessment must prevail.

The trial court furnished petitioner with copies of the order at his two addresses appearing on the records, but both were returned unserved with the notation "RTS (Return to Sender)-moved." Petitioner failed to pay the deficiency. On February 21, 2013, the RTC dismissed the case. Petitioner filed a Motion for Reconsideration on March 20, 2013, arguing that the ten-day period never began to run because his counsel never received a copy of the order, and that the deficiency amount was incorrect because the two lots were in different locations requiring different zonal valuations. The RTC denied the motion on July 1, 2013, sustaining the validity of service upon petitioner and the OCC's computation. Petitioner appealed to the CA, which denied the appeal on April 3, 2018. Petitioner paid the deficiency to the OCC only on May 7, 2018, after receiving the adverse CA decision. His Motion for Reconsideration before the CA was denied on December 6, 2018.

• Willingness to Pay: Petitioner claimed he consistently manifested willingness to pay the correct deficiency in docket fees and had already paid the deficiency during the pendency of his appeal before the CA, arguing he never defrauded the Court but merely relied on the clerk of court's initial assessment.
• Applicable Jurisprudence: Petitioner argued that the CA should have applied Heirs of Reinoso, Sr. vs. Court of Appeals, wherein the Court allowed payment of the deficiency within a reasonable time instead of dismissing the case.
• Non-Receipt of Order: Petitioner maintained that the ten-day period to pay the deficiency never started to run because his counsel, Atty. Zosa, never received a copy of the Order dated December 7, 2012, and that service upon petitioner was invalid because he was represented by counsel.
• Incorrect Computation: Petitioner claimed the amount of ₱91,735.40 was incorrect because Atty. Ponce based the computation on a single zonal value of ₱650.00 per square meter despite the two lots being in different locations, necessitating a re-computation based on the correct zonal values of each lot.

• Misplaced Reliance: Respondents countered that petitioner's reliance on Heirs of Reinoso, Sr. was misplaced because the factual milieu of that case differs, particularly in that the issue of incomplete payment of docket fees was never raised in the trial court there.
• Late Payment: Respondents argued that petitioner's payment of the full amount of docket fees was already too late, having been made only when the case was on appeal and after the CA had rendered an unfavorable judgment.
• No Willingness to Pay: Respondents highlighted that petitioner did not demonstrate willingness to abide by the rules by paying the required additional docket fees when required.
• Service Valid: Respondents maintained that petitioner must not be allowed to hide behind the excuse that no written and signed copy of the Order dated December 7, 2012 was sent to his counsel.

• Jurisdiction: Whether the RTC acquired jurisdiction over the case notwithstanding the deficiency in the payment of docket fees.
• Propriety of Dismissal: Whether the CA erred in affirming the RTC's dismissal even if petitioner paid the deficiency in docket fees while the case was pending before the CA.
• Validity of Service and Counsel Negligence: Whether the CA erred in affirming the RTC's order even if neither petitioner nor his counsel received a copy of the order directing petitioner to pay the deficiency in docket fees.

• Jurisdiction: Yes. The RTC acquired jurisdiction upon petitioner's payment of ₱111,157.60 as initially assessed by the OCC, notwithstanding the subsequent finding of deficiency. Under Ramones vs. Spouses Guimoc, where the plaintiff pays the amount assessed by the clerk of court and the amount turns out deficient, jurisdiction attaches subject to payment of the deficiency.
• Propriety of Dismissal: No. The CA did not err in affirming the dismissal. Petitioner failed to pay the deficiency within the ten-day period, never manifested willingness to pay in any pleading, and paid only after receiving an adverse CA decision. The liberal doctrine in Sun Insurance does not apply where willingness to pay is wanting.
• Validity of Service and Counsel Negligence: No. The CA did not err. Counsel was personally notified of the order in open court, and the negligence of counsel binds the client. The exception for gross negligence depriving a client of due process was not present.

• Jurisdiction: Manchester Development Corporation vs. Court of Appeals established that the court acquires jurisdiction only upon payment of the prescribed docket fee. This was modified in Sun Insurance Office, Ltd. vs. Asuncion, which allowed payment within a reasonable time but in no case beyond the applicable prescriptive or reglementary period. Rivera vs. Del Rosario further clarified that where the amount paid is insufficient, the clerk of court has the responsibility of making a deficiency assessment, and the party will be required to pay the deficiency, but jurisdiction is not automatically lost. Ramones vs. Spouses Guimoc synthesized the rule: where the plaintiff has paid the amount assessed by the clerk of court and the amount turns out deficient, the trial court still acquires jurisdiction, subject to payment of the deficiency, because to penalize the party for the clerk's omission is not fair if the party acted in good faith. Applying these principles, the Court found that petitioner had paid ₱111,157.60 based on the OCC's initial assessment; thus, the RTC's jurisdiction had already attached, and the CA erred in ruling that jurisdiction never properly attached.

• Propriety of Dismissal: Emnace vs. Court of Appeals reiterated that the liberal application of the rule allows the plaintiff to pay the proper docket fees within a reasonable time before the expiration of the applicable prescriptive or reglementary period, and that failure to comply warrants dismissal upon motion. Here, respondents timely raised the docket-fee issue and prayed for dismissal in case of non-payment. The RTC did not dismiss outright but followed Sun Insurance by asking the OCC for clarification and re-computation, then granting petitioner time to pay the deficiency. Despite this liberality, petitioner failed to pay. United Overseas Bank vs. Ros explained that the liberal doctrine applies where the party does not deliberately intend to defraud the court and manifests willingness to pay additional fees when required. However, the Court found petitioner's willingness wanting: nowhere in his pleadings before the RTC or the CA did he manifest intention to pay the assessed deficiency. He paid only on May 7, 2018, after receiving the adverse CA decision. Petitioner's reliance on Heirs of Reinoso, Sr. was rejected because: (1) that case was filed before Manchester was decided, whereas the instant case was filed after; (2) the deficiency issue was never raised before the RTC in Heirs of Reinoso, Sr., whereas here it was consistently litigated from the trial court onward; and (3) there was outright dismissal in Heirs of Reinoso, Sr., whereas here the RTC gave petitioner multiple chances before dismissing. The RTC thus did not whimsically or capriciously dismiss the case.

• Validity of Service and Counsel Negligence: Under Rule 13, Section 2 of the Rules of Court, if a party has appeared by counsel, service shall be made upon counsel unless service upon the party himself is ordered by the court. The RTC specifically directed that copies of the Order dated December 7, 2012 be furnished to petitioner, and the order itself stated that Atty. Zosa was notified in open court. Atty. Zosa attended the hearing and was personally informed of the directive, yet petitioner offered no explanation why counsel failed to relay the order. It is well-settled that the negligence of counsel binds the client, the exception being where gross negligence deprives the client of due process—a circumstance not present here. Petitioner's omission to even allege his counsel's negligence suggested an attempt to conceal Atty. Zosa's failure to timely notify him. Additionally, it was petitioner who, without justifiable reason, failed to notify the trial court of his change of address, causing the copies sent to his recorded addresses to be returned unserved.

• Manchester Doctrine on Docket Fees as Jurisdictional — The court acquires jurisdiction over any case only upon the payment of the prescribed docket fee. Payment of docket fees is mandatory and jurisdictional. In this case, the doctrine was acknowledged but found not to bar the RTC's acquisition of jurisdiction because petitioner had paid the amount initially assessed.

• Sun Insurance Liberal Doctrine — Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, or the payment is insufficient, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period. The trial court should determine the proper docket fee and direct payment within a reasonable time; failure to comply warrants dismissal. The Court applied this doctrine to affirm the RTC's procedure of not dismissing outright but giving petitioner time to pay, while ultimately sustaining the dismissal for failure to comply.

• Jurisdiction Attaches Upon Payment of Assessed Amount Despite Deficiency (Rivera/Ramones) — Where the plaintiff has paid the amount of filing fees assessed by the clerk of court, and the amount paid turns out to be deficient, the trial court still acquires jurisdiction over the case, subject to the payment by the plaintiff of the deficiency assessment. The rationale is that to penalize the party for the omission of the clerk of court is not fair if the party has acted in good faith. The Court applied this to hold that the RTC acquired jurisdiction when petitioner paid ₱111,157.60.

• Willingness to Pay as Requisite for Liberal Treatment (United Overseas Bank) — Where the party does not deliberately intend to defraud the court in payment of docket fees, and manifests willingness to abide by the rules by paying additional docket fees when required by the court, the liberal doctrine in Sun Insurance applies. The Court found this requisite absent because petitioner never manifested willingness to pay in any pleading and paid only after an adverse judgment.

• Negligence of Counsel Binds the Client — The negligence of a lawyer binds the client, the exception being where gross negligence of the lawyer deprives the client of due process of law. The Court applied this doctrine to hold that Atty. Zosa's failure to inform petitioner of the RTC's order in open court binds petitioner, and the exception was not present.

• "Yet, where the plaintiff has paid the amount of filing fees assessed by the clerk of court, and the amount paid turns out to be deficient, the trial court still acquires jurisdiction over the case, subject to the payment by the plaintiff of the deficiency assessment. The reason is that to penalize the party for the omission of the clerk of court is not fair if the party has acted in good faith." — Quoted from Ramones vs. Spouses Guimoc, this passage articulates the rule reconciling the strict Manchester doctrine with equitable considerations, and was the basis for the Court's holding that the RTC acquired jurisdiction despite the deficiency.

• "[W]here the party does not deliberately intend to defraud the court in payment of docket fees, and manifests its willingness to abide by the rules by paying additional docket fees when required by the court, the liberal doctrine enunciated in Sun Insurance, and not the strict regulations set in Manchester, will apply." — Quoted from United Overseas Bank vs. Ros, this formulation defines the conditions for invoking the liberal doctrine and was central to the Court's finding that petitioner was not entitled to liberal treatment.

• "WHEREFORE, plaintiff is hereby directed to pay the deficiency of the legal fees in the amount of P91,735.40 pesos within ten (10) days from the receipt of this order. x x x x Atty. Zosa is notified of this order in open court. Furnish copy of this order to Atty. Ala. SO ORDERED." — The dispositive portion of the RTC's Order dated December 7, 2012, reproduced verbatim to show that counsel was notified in open court, which the Court relied upon in holding that counsel's negligence in not informing petitioner binds the client.

• Manchester Development Corporation vs. Court of Appeals, 233 Phil. 579 (1987) — Controlling precedent establishing that payment of docket fees is jurisdictional. Acknowledged but distinguished in application, as the Court found jurisdiction had attached upon payment of the assessed amount.

• Sun Insurance Office, Ltd. vs. Asuncion, 252 Phil. 280 (1989) — Followed. Modified the Manchester rule by allowing payment of docket fees within a reasonable time. The Court applied its framework to uphold the RTC's procedure of giving petitioner time to pay before dismissing.

• Rivera vs. Del Rosario, 464 Phil. 783 (2004) — Followed. Clarified that jurisdiction is not automatically lost when the amount paid is insufficient, and the clerk of court has the responsibility to make a deficiency assessment.

• Ramones vs. Spouses Guimoc, G.R. No. 226645, August 13, 2018 — Followed. Synthesized the rule that jurisdiction attaches upon payment of the assessed amount even if deficient, and the plaintiff is liable only for the deficiency. This was the principal basis for the Court's ruling that the RTC acquired jurisdiction.

• Emnace vs. Court of Appeals, 422 Phil. 10 (2001) — Followed. Reiterated the framework for liberal application: the trial court should determine the proper fee and direct payment within a reasonable time, and failure to comply warrants dismissal.

• United Overseas Bank vs. Ros, 556 Phil. 178 (2007) — Followed. Defined the conditions for applying the liberal doctrine—absence of intent to defraud and manifestation of willingness to pay. The Court found petitioner failed to satisfy these conditions.

• Heirs of Reinoso, Sr. vs. Court of Appeals, 669 Phil. 272 (2011) — Distinguished. Petitioner relied on this case, but the Court found it inapplicable due to differences in factual milieu: the case there was filed before Manchester, the deficiency issue was never raised before the RTC, and there was outright dismissal.

• Baclaran Marketing Corp. vs. Nieva, 809 Phil. 92 (2017) — Cited for the doctrine that the negligence of counsel binds the client.

• Heirs of Dragon vs. The Manila Banking Corp., G.R. No. 205068, March 6, 2019 — Cited for the proposition that full payment of filing fees at the time of filing remains the general rule and that exceptions granting liberality are strictly construed against the filing party.

• Rule 13, Section 2, Rules of Court — Provides that if any party has appeared by counsel, service upon him shall be made upon his counsel or one of them, unless service upon the party himself is ordered by the court. Applied to sustain the RTC's direct service upon petitioner, since the court specifically ordered it, and to hold that counsel's failure to inform petitioner of the order binds the client.

• Rule 17, Section 6(1), Revised Rules of Court — Governs the hearing of affirmative defenses as if a motion to dismiss were filed. Respondents invoked this provision in their Verified Answer to seek a preliminary hearing of their defenses.

• Rule 45, Rules of Court — Governs Petition for Review on Certiorari before the Supreme Court. Petitioner invoked this rule to seek reversal of the CA Decision and Resolution.

Leonen (Chairperson), Hernando, Zalameda, and J. Lopez, JJ., concurred.