MRCA, Inc. vs. Court of Appeals

A complaint need not be dismissed outright for failure to specify the amounts of damages in the prayer where no fraudulent intent to evade docket fees is presumed; the plaintiff may be allowed to amend the complaint and pay the proper filing fees within a reasonable time, but in no case beyond the prescriptive or reglementary period.

MRCA, Inc. filed a complaint for damages against spouses Domingo Sebastian, Jr. and Lilia Tioseco Sebastian, and Expectacion P. Tioseco before the Regional Trial Court of Pasig, Metro Manila (Civil Case No. 55740). The prayer of the complaint did not specify the amounts of moral damages, exemplary damages, attorney's fees, and litigation expenses, leaving them "to the discretion of this Honorable Court" or "to be proven during the trial." The private respondents moved to dismiss the complaint invoking Manchester Development Corporation vs. Court of Appeals, which required that all damages claimed must be specified in the prayer to enable the clerk of court to compute the proper filing fees.

MRCA, Inc. filed a complaint for damages against spouses Domingo Sebastian, Jr. and Lilia Tioseco Sebastian, and Expectacion P. Tioseco before the Regional Trial Court of Pasig, Metro Manila, docketed as Civil Case No. 55740. The complaint was filed on March 24, 1988. In its prayer, the complaint sought recovery of moral damages, exemplary damages, attorney's fees, and litigation expenses but did not specify their amounts, instead leaving them "to the discretion of this Honorable Court" or "to be proven during the trial."

On July 15, 1988, the private respondents filed a motion to dismiss the complaint, invoking the decision in Manchester Development Corporation vs. Court of Appeals, 149 SCRA 562, which had been promulgated on May 7, 1987. That decision required that the amounts of all damages claimed be specified in the prayer of the complaint so that the clerk of court could properly compute the filing fees. The petitioner opposed the motion, but the trial court granted it in its order of August 10, 1988, dismissing the complaint for non-payment of the proper filing fees.

The Court of Appeals upheld the trial court's dismissal in its decision promulgated on January 18, 1989 in CA-G.R. No. SP 15745. The petitioner then elevated the matter to the Supreme Court via a petition for review under Rule 45, contending that the Manchester ruling should not apply because it had not yet been published in the Official Gazette when the complaint was filed, that it should not be given retroactive effect, and that there was no fraudulent intent to deprive the government of proper docket fees.

• Effectivity of Manchester ruling: Petitioner argued that since the decision in Manchester had not yet been published in the Official Gazette when its complaint was filed, the ruling therein was ineffective and should not apply.
• Retroactive application: Petitioner maintained that the Manchester ruling may not be given retroactive effect because it imposes a new penalty for non-observance, specifically the dismissal of the complaint for want of jurisdiction.
• Absence of fraudulent intent: Petitioner argued that Manchester should not apply to the present case because it had no fraudulent intent to deprive the government of the proper docketing fee, unlike the Manchester case where enormous amounts of damages were claimed in the body of the complaint but not mentioned in the prayer, to mislead the clerk of court in computing the filing fees.

• Effectivity without publication: Respondents countered that publication in the Official Gazette is not a prerequisite for the effectivity of a court ruling even if it lays down a new rule of procedure, citing Aguillon vs. Director of Lands for the doctrine that court procedure may be changed at any time and become effective at once, so long as it does not affect vested rights.

• Applicability of Manchester doctrine: Whether the Manchester ruling requiring specification of damages in the prayer should apply to a complaint filed after its promulgation but before its publication in the Official Gazette.
• Remedy for non-payment of proper filing fees: Whether the complaint should be dismissed outright for failure to specify the amounts of damages in the prayer, or whether the plaintiff may be allowed to amend the complaint and pay the proper filing fees.

• Applicability of Manchester doctrine: Yes. Publication in the Official Gazette is not a prerequisite for the effectivity of a court ruling laying down a new rule of procedure; procedural laws are retrospective in that they apply to actions pending and undetermined at the time of their promulgation.
• Remedy for non-payment of proper filing fees: No, outright dismissal is not warranted. Absent fraudulent intent to evade filing fees, the plaintiff may be allowed to amend the complaint to specify the amounts of damages and pay the proper filing fees within a reasonable time, but in no case beyond the prescriptive or reglementary period, pursuant to Sun Insurance Office, Ltd. vs. Asuncion.

• Applicability of Manchester doctrine: The argument that the Manchester ruling required publication in the Official Gazette before it could take effect was rejected. It is well established that the procedure of the court may be changed at any time and become effective at once, so long as it does not affect or change vested rights, citing Aguillon vs. Director of Lands, 17 Phil. 508. Procedural laws are retrospective in that they apply to actions pending and undetermined at the time of their passage, as held in People vs. Sumilang, 77 Phil. 765–766. The Manchester ruling had already been applied retroactively in Sun Insurance Office, Ltd. vs. Asuncion, a case pending before Manchester was promulgated. The complaint in the present case was filed on March 24, 1988, ten months after Manchester was promulgated on May 7, 1987, hence Manchester should apply.

• Remedy for non-payment of proper filing fees: While Manchester applies, it was modified in Sun Insurance Office, Ltd. vs. Asuncion, where the Court ruled that 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. Intent to cheat the government of the proper filing fees may not be presumed from the petitioner's omission to specify the amounts of damages in the body and prayer of its complaint. The petitioner might not have computed its damages yet, or probably did not have the evidence to prove them at the time it filed its complaint. In accordance with Sun Insurance, the petitioner may be allowed to amend its complaint to specify the amounts in terms of pesos and pay the requisite filing fees, provided its right of action has not yet prescribed.

• Effectivity of judicial rulings on procedure — A court ruling that lays down a new rule of procedure becomes effective upon promulgation; publication in the Official Gazette is not a prerequisite for its effectivity. Procedural laws are retrospective in that they apply to actions pending and undetermined at the time of their passage, so long as they do not affect vested rights. The Court relied on Aguillon vs. Director of Lands and People vs. Sumilang for this principle.

• Jurisdiction and payment of docket fees (Manchester-Sun Insurance doctrine) — 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. This modifies the outright dismissal rule in Manchester by providing a curative mechanism: the plaintiff may amend the complaint to specify the amounts of damages and pay the proper filing fees, absent fraudulent intent to evade such fees.

• "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 action." — This is the canonical formulation of the rule on docket fees and jurisdiction, as quoted from Sun Insurance Office, Ltd. vs. Asuncion, and is the controlling principle applied in this case.

• "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." — This passage articulates the modified Manchester rule providing a remedy short of outright dismissal, and is the ratio decidendi for allowing the petitioner to amend its complaint rather than suffering dismissal.

• "Intent to cheat the government of the proper filing fees may not be presumed from the petitioner's omission to specify in the body and prayer of its complaint the amounts of moral and exemplary damages and attorney's fees that it claims to have suffered and/or incurred in its transaction with the private respondents." — This clarifies that the absence of specified amounts in the prayer does not, by itself, establish fraudulent intent, distinguishing the case from Manchester where deliberate misrepresentation was evident.

• Manchester Development Corporation vs. Court of Appeals, 149 SCRA 562 — The foundational decision requiring that all damages claimed be specified in the prayer of the complaint to enable proper computation of filing fees. Its outright dismissal rule was modified in Sun Insurance and applied in this case with the modification.

• Sun Insurance Office, Ltd. vs. Asuncion, G.R. Nos. 79937-38, February 13, 1989 — The decision that modified Manchester by allowing payment of the proper filing fee within a reasonable time but in no case beyond the prescriptive or reglementary period. This was the controlling precedent applied to reinstate the complaint with leave to amend.

• Aguillon vs. Director of Lands, 17 Phil. 508 — Cited for the doctrine that court procedure may be changed at any time and become effective at once, so long as it does not affect vested rights, supporting the proposition that publication in the Official Gazette is not required for the effectivity of a judicial ruling on procedure.

• People vs. Sumilang, 77 Phil. 765–766 — Cited for the principle that procedural laws are retrospective in that they apply to actions pending and undetermined at the time of their passage, but cannot be invoked where a decision has already become final.

• Rule 45, Rules of Court — The petition for review was filed under Rule 45 of the Rules of Court, governing appeals by certiorari from judgments of the Court of Appeals to the Supreme Court.

Narvasa, Cruz, Gancayco, and Medialdea, JJ., concurred.