Spouses De Leon vs. Court of Appeals

An action for annulment or rescission of a contract of sale of real property is not capable of pecuniary estimation; its docket fee is the flat rate under Rule 141, §7(b)(1), not a fee computed from the property’s assessed or estimated value.

Glicerio Ma. Elayda II, Federico Elayda, and Danilo Elayda claimed an interest, as heirs, in two parcels of land that Spouses Rosalina S. De Leon and Alejandro L. De Leon had acquired. The dispute concerns the docket-fee treatment of the heirs’ complaint to annul or rescind that sale under Rule 141, §7 of the Rules of Court, which sets a flat fee for actions whose subject matter cannot be estimated and a graduated fee for claims or property with a stated value.

On August 8, 1991, private respondents Glicerio Ma. Elayda II, Federico Elayda, and Danilo Elayda filed a complaint in the Regional Trial Court of Quezon City against petitioners Spouses Rosalina S. De Leon and Alejandro L. De Leon over two parcels of land. The complaint sought annulment or rescission of a Contract of Conditional Sale (Supplementary Agreement) for violating their rights under Article 886 of the Civil Code and/or the contract’s terms, a declaration that the Deed of Absolute Sale was void ab initio for being absolutely simulated, and an award of P100,000.00 in attorney’s fees. They also prayed for other just and equitable reliefs.

Upon filing, the clerk of court required private respondents to pay docket and legal fees totaling P610.00, broken down into P450.00 for the Judicial Development Fund under Official Receipt No. 1877773, P150.00 for the General Fund under Official Receipt No. 6834215, and P10.00 for the Legal Research Fund under Official Receipt No. 6834450.

On September 26, 1991, petitioners moved to dismiss the complaint on the ground that the trial court did not acquire jurisdiction because private respondents had not paid the correct docket fees. Petitioners contended that, in addition to the fees already paid based on the P100,000.00 attorney’s-fees claim, private respondents should have paid P21,640.00 based on the alleged value of the two parcels of land subject of the contract of sale sought to be annulled. Private respondents opposed the motion on September 30, 1991, arguing that outright dismissal was not warranted because the amount they paid was the amount assessed by the clerk of court. Petitioners filed a reply on October 9, 1991, and private respondents filed a rejoinder on October 17, 1991.

On October 21, 1991, the trial court denied the motion to dismiss but required private respondents to pay docket fees based on the estimated value of the parcels of land in litigation as stated in the complaint. Private respondents moved for reconsideration, but the trial court denied the motion.

• Real Action and Docket Fees: Petitioners argued that an action for annulment or rescission of a contract of sale of real property is a real action, so the docket fees should be based on the assessed value of the property or its estimated value as alleged in the complaint under the last paragraph of Rule 141, §7. Since private respondents alleged that the land had been sold for P4,378,000.00, that amount should be the estimated value for docket-fee purposes.
• Nonpayment of Correct Docket Fees: Petitioners maintained that private respondents should have paid P21,640.00 in docket fees based on the alleged value of the two parcels, in addition to the fees paid based on the P100,000.00 attorney’s-fees claim, and that the trial court did not acquire jurisdiction because of the nonpayment.

• Incapable of Pecuniary Estimation: Private respondents countered that an action for annulment or rescission of a contract of sale of real property is incapable of pecuniary estimation, so the docket fee should be the fixed P400.00 under Rule 141, §7(b)(1). They cited Lapitan vs. Scandia, Inc. and Bautista vs. Lim.
• Assessment by Clerk: Private respondents argued that outright dismissal was not warranted because the amount they paid was the amount assessed by the clerk of court.

• Docket Fees — Pecuniary Estimation: Whether an action for annulment or rescission of a contract of sale of real property is capable of pecuniary estimation for purposes of computing docket fees, such that the fee should be based on the property’s assessed or estimated value.

• Docket Fees — Pecuniary Estimation: No. An action for annulment or rescission of a contract of sale of real property is not capable of pecuniary estimation; the docket fee is the flat rate under Rule 141, §7(b)(1), not a fee based on the property’s value.

• Docket Fees — Pecuniary Estimation: Rule 141, §7(a) fixes graduated docket fees based on the total sum claimed or the stated value of the property in litigation, while §7(b)(1) fixes a flat P400.00 fee for actions where the value of the subject matter cannot be estimated. The last paragraph of §7 requires a real action to allege the assessed value of the property, or its estimated value if there is no assessed value, as the basis for computing fees. The SC adopted the criterion in Lapitan vs. Scandia, Inc.: first ascertain the nature of the principal action or remedy sought. If the action is primarily for recovery of a sum of money, it is capable of pecuniary estimation; if the basic issue is something other than the right to recover money, or the money claim is purely incidental to or a consequence of the principal relief, the action is not capable of pecuniary estimation. Actions for specific performance, support, annulment of a judgment, and foreclosure of mortgage fall in the latter class. Rescission is the counterpart of specific performance; the court must investigate facts that would justify setting aside the contract, and a prayer for damages is incidental because it must be included in the main action to avoid splitting the cause of action. Bautista vs. Lim applied this rule to hold that an action for rescission is not susceptible of pecuniary estimation and pays the flat docket fee. Although the eventual result may be recovery of land, the nature of the action as one for rescission controls. The complaint here sought only annulment or rescission, with no prayer for recovery of money or the value of the transaction and no actual or compensatory damages; the assessment of fees should not be intertwined with the merits or the end result, and filing fees are based on what is alleged and prayed for in the complaint and paid upon filing.

• Pecuniary estimation test — In determining whether an action’s subject matter is incapable of pecuniary estimation, the SC first ascertains the nature of the principal action or remedy sought. If it is primarily for recovery of a sum of money, the claim is capable of pecuniary estimation; if the basic issue is something other than the right to recover money, or the money claim is merely incidental to or a consequence of the principal relief, the action is not capable of pecuniary estimation. The SC applied this to hold that annulment or rescission of a contract of sale is not capable of pecuniary estimation.
• Rescission as counterpart of specific performance — An action for rescission or annulment of a contract is treated like an action for specific performance for purposes of pecuniary estimation; the court must inquire into facts justifying rescission, and any damages are incidental. Thus the docket fee is the flat rate, even if the eventual result may be recovery of land.
• Filing fees based on allegations and prayer — Docket fees are assessed on what is alleged and prayed for in the complaint and paid upon filing; they are not deferred until the merits are decided or the end result is known. The SC applied this because the complaint sought only annulment/rescission and no money recovery or property value.
• Real action valuation rule not controlling — In a real action, the assessed or estimated value of the property is the basis for docket fees, but an action for rescission of a sale is not treated as a real action for docket-fee purposes; its nature as rescission controls.

• "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." — The SC adopted this criterion from Lapitan vs. Scandia, Inc. to classify the rescission action.
• "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 counterpart, so to speak, of "specific performance"." — The SC used this to treat rescission like specific performance, an action not capable of pecuniary estimation.
• "Thus, 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." — This is the ratio: the eventual recovery of land does not make the action capable of pecuniary estimation for docket fees.

• Lapitan vs. Scandia, Inc., 24 SCRA 479 (1968) — Controlling precedent; the SC adopted its criterion for determining whether an action is incapable of pecuniary estimation and applied it to rescission.
• Bautista vs. Lim, 88 SCRA 479 (1979) — Followed; held that an action for rescission of contract is not susceptible of pecuniary estimation and pays the flat docket fee.

• Rule 141, §7(b)(1), Rules of Court — Fixes a flat P400.00 docket fee for actions where the value of the subject matter cannot be estimated; applied because the action for annulment/rescission is incapable of pecuniary estimation.
• Rule 141, §7(a), Rules of Court — Fixes graduated docket fees based on the total sum claimed or the stated value of the property in litigation; not applied because the complaint did not seek recovery of money or the property’s value and the principal action was rescission.
• Rule 141, §7, last paragraph, Rules of Court — Requires a real action to allege the assessed value of the property, or its estimated value if none, as the basis for computing fees; not applied because the nature of the action as rescission controls over the eventual recovery of land.