An action, although ostensibly for the annulment of deeds of sale, is considered a real action if its ultimate objective is the recovery of title to or possession of real property, and the docket fees must be computed based on the fair market value of the property as stated in Section 7(a) of Rule 141 of the Rules of Court, as amended.

Petitioner Ruby Shelter Builders and Realty Development Corporation obtained a loan of P95,700,620.00 from respondents Romeo Y. Tan and Roberto L. Obiedo, secured by real estate mortgages over five parcels of land. Upon petitioner's inability to pay, a Memorandum of Agreement (MOA) was executed, granting an extension and providing for the execution of Deeds of Absolute Sale by way of dacion en pago for the mortgaged properties if the debt remained unpaid by December 31, 2005. The MOA also included redemption prices for the properties.

• Petitioner obtained a loan of P95,700,620.00 from respondents Tan and Obiedo, secured by real estate mortgages over five parcels of land.
• A Memorandum of Agreement (MOA) dated March 17, 2005, extended the payment period to December 31, 2005, condoned certain interests, and required petitioner to execute Deeds of Absolute Sale by way of dacion en pago for the mortgaged properties, to be dated January 2, 2006.
• The MOA stipulated redemption prices and included a P10,000,000.00 liquidated damages clause if petitioner contested the MOA or the Deeds.
• Pursuant to the MOA, petitioner executed separate Deeds of Absolute Sale, which were notarized by respondent Atty. Reyes on January 3, 2006.
• Petitioner failed to pay by December 31, 2005. Respondents Tan and Obiedo presented the Deeds of Absolute Sale to the Register of Deeds on March 8, 2006, and secured TCTs in their names.
• On March 16, 2006, petitioner filed a complaint for declaration of nullity of deeds of sales and damages, alleging the Deeds were merely security, constituted pactum commissorium, and the acknowledgments were falsified.
• Petitioner claimed respondents forcibly took possession of the properties on January 18, 2006, and started demolishing improvements, causing P300,000.00 in actual damages.
• Petitioner paid P13,644.25 in docket fees, assessed by the Clerk of Court as an action incapable of pecuniary estimation under Section 7(b)(1), Rule 141.
• The RTC Clerk of Court later computed additional docket fees of P720,392.60 based on Section 7(a) of Rule 141.

• The primary cause of action is the annulment of the Deeds of Absolute Sale, which is an action incapable of pecuniary estimation, thus docket fees should be computed under Section 7(b)(1) of Rule 141 of the Rules of Court.
• The RTC erred in applying Section 7(a), Rule 141, as the complaint did not primarily seek the recovery of real property but the nullification of contracts.
• The Court of Appeals committed reversible error in affirming the RTC orders, which are contrary to the pronouncement in Spouses De Leon v. Court of Appeals that an action for annulment or rescission of a contract of sale of real property is incapable of pecuniary estimation.
• Requiring payment of the reassessed docket fees would cause grave injustice and irreparable damage due to the prohibitive amount.

• The action involved real properties, and the docket fees should be computed in accordance with Section 7(a) of Rule 141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC.
• Since petitioner did not pay the appropriate docket fees, the RTC did not acquire jurisdiction over the case.
• The Deeds of Absolute Sale were not merely securities but consideration for the payment of petitioner's total indebtedness and condonation of interest, with an opportunity for petitioner to redeem the properties, which it failed to do.
• The demolition of structures was an exercise of dominion as owners of the properties.
• The petitioner's complaint, despite its caption, ultimately sought the recovery of the real properties identified in the deeds of sale.

• Whether the action filed by petitioner for "declaration of nullity of deeds of sales and damages" is a real action or an action incapable of pecuniary estimation for the purpose of determining the correct docket fees.
• Whether the RTC and the Court of Appeals erred in requiring petitioner to pay additional docket fees computed based on Section 7(a) of Rule 141 of the Rules of Court, as amended.

• The Supreme Court denied the petition and affirmed the Court of Appeals' decision.
• The Court held that the true nature of petitioner's action is the recovery of title to and possession of real property, making it a real action.
• Although the complaint was styled as one for annulment of deeds, the allegations and reliefs sought revealed that the ultimate goal was to recover the five parcels of land from respondents Tan and Obiedo, who had already secured TCTs in their names and taken possession.
• The Court emphasized that the nature of an action is determined by the allegations in the body of the pleading and the reliefs sought, and in this case, significant facts beyond the complaint (transfer of titles and possession to respondents) were considered.
• An action for annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective of recovering said real property.
• Therefore, the docket fees must be computed in accordance with Section 7(a) of Rule 141 of the Rules of Court, as amended, based on the fair market value of the real property in litigation.

• Nature of Action Determined by Allegations and Reliefs Sought — The nature of an action is determined by the allegations in the body of the pleading or complaint itself, rather than by its title or heading. The Court, in this case, also considered significant facts and circumstances beyond the complaint that were disclosed during preliminary proceedings to ascertain the true nature of the action.
• Real Action — A real action is one in which the plaintiff seeks the recovery of real property, or an action affecting title to or recovery of possession of real property. The Court found that petitioner's action, despite being for annulment of deeds, was ultimately a real action because it involved the recovery of title and possession of the five parcels of land.
• Payment of Docket Fees is Jurisdictional — The court acquires jurisdiction over any case only upon the payment of the prescribed docket fee. This principle was reiterated, although the RTC, consistent with Sun Insurance, allowed petitioner time to pay the deficiency.
• Rule 141, Section 7(a) and 7(b), Rules of Court (as amended by A.M. No. 04-2-04-SC) — Section 7(a) provides for docket fees in actions involving real property based on its fair market value (tax declaration or zonal valuation, whichever is higher), while Section 7(b) provides for fixed fees for actions where the value of the subject matter cannot be estimated. The Court applied Section 7(a) as the action was deemed a real action.
• Pactum Commissorium — This is a stipulation enabling the mortgagee to appropriate the mortgaged property upon failure of the mortgagor to pay the debt. Petitioner alleged the MOA and Deeds of Sale constituted pactum commissorium, an issue related to the validity of the transfer of property.

• "A prayer for annulment or rescission of contract does not operate to efface the true objectives and nature of the action which is to recover real property."
• "An action for the annulment or rescission of a sale of real property is a real action. Its prime objective is to recover said real property."
• "While it is true that petitioner does not directly seek the recovery of title or possession of the property in question, his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building which, under the law, is considered immovable property, the recovery of which is petitioner's primary objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective and nature of the case, which is to recover said real property. It is a real action."
• "In sum, the Court finds that the true nature of the action instituted by petitioner against respondents is the recovery of title to and possession of real property. It is a real action necessarily involving real property, the docket fees for which must be computed in accordance with Section 7(1), Rule 141 of the Rules of Court, as amended."

• Manchester Development Corporation v. Court of Appeals — Cited for the principle that the court acquires jurisdiction over any case only upon the payment of the prescribed docket fee, making payment mandatory and jurisdictional.
• Sun Insurance Office, Ltd. (SIOL) v. Asuncion — Cited for the guidelines on payment of docket fees, allowing payment within a reasonable time if the initial payment is insufficient, but not beyond the prescriptive or reglementary period. The RTC followed this by granting petitioner time to pay the additional fees.
• Gochan v. Gochan — Referenced for the ruling that an action denominated as "specific performance and damages" was actually a real action because the relief sought was the conveyance of real property, and docket fees should be based on the property's assessed value.
• Siapno v. Manalo — Similar to Gochan, the Court disregarded the title of a petition for "Mandamus with Revocation of Title and Damages" and found it to be a real action for recovery of realty, requiring docket fees based on property value.
• Serrano v. Delica — Cited as a case most similar to the one at bar, where a complaint for cancellation of titles and deeds, and recovery of possession was deemed a real action, and dismissal was proper for failure to allege property value and pay correct docket fees.
• Spouses De Leon v. Court of Appeals — Distinguished by the Court. Petitioner relied on this case for the proposition that an action for annulment of a contract of sale of real property is incapable of pecuniary estimation. The Supreme Court clarified that in Spouses De Leon, the action was "solely for annulment or rescission" and there appeared to be no transfer of title or possession, unlike the present case where title and possession had already transferred to respondents.

• Rule 141, Section 7(a) of the Rules of Court (as amended by A.M. No. 04-2-04-SC) — This section provides the basis for computing docket fees for actions involving real property, which is the fair market value stated in the current tax declaration or current zonal valuation, whichever is higher, or the stated value if none. This was the provision applied by the RTC, CA, and affirmed by the SC.
• Rule 141, Section 7(b)(1) of the Rules of Court — This section prescribes fixed docket fees for actions where the value of the subject matter cannot be estimated. Petitioner argued this should apply, but the Court disagreed.
• Rule 4, Section 1 of the Rules of Court — Defines a real action as an action affecting title to or recovery of possession of real property. This definition was central to classifying petitioner's complaint.
• Article 476, Civil Code of the Philippines — Mentioned by the RTC in its order denying reconsideration, in comparison to an action for quieting of title, to support its reasoning that even actions like quieting of title (classified as beyond pecuniary estimation under Rule 141, Sec 7(b)2 prior to its reclassification to be governed by paragraph (a)) require fees based on property value.
• Article 447, Civil Code of the Philippines — Referenced by the RTC alongside Art. 476 in the context of quieting of title.