Spouses Trayvilla vs. Sejas

An action denominated as one for specific performance but which additionally prays for reconveyance and cancellation of title is in substance a real action, and where the amended complaint fails to allege the fair market value of the property as stated in the current tax declaration or BIR zonal valuation, the stated value of the property as alleged by the claimant — here, the purchase price in the handwritten document sued upon — serves as the basis for computing docket fees and determining jurisdiction; where that stated value falls below the RTC's jurisdictional threshold, the RTC never acquired jurisdiction over the case.

Petitioners Spouses Claudio and Carmencita Trayvilla claimed to have purchased a 434-square meter parcel of land in Tukuran, Zamboanga del Sur from respondent Bernardo Sejas in 1982 by virtue of a private handwritten document, after which they took possession and constructed a house thereon. Sejas was the registered owner of the property under TCT No. T-8,337. Sejas later reasserted ownership over the land and subsequently sold the same property to respondent Juvy Paglinawan, who caused the cancellation of Sejas's title and the issuance of a new one — TCT No. T-46,627 — in her name. The dispute thus centers on competing claims of ownership over the same parcel of land, with petitioners seeking to compel execution of a final deed of sale and to have Paglinawan's title canceled and the property reconveyed to them.

In 2005, Spouses Claudio and Carmencita Trayvilla filed before the RTC of Pagadian City a complaint for specific performance and damages against Bernardo Sejas, alleging that Sejas, the registered owner of a 434-square meter parcel of land in Tukuran, Zamboanga del Sur covered by TCT No. T-8,337, had sold the property to them in 1982 through a private handwritten document. Petitioners claimed that after the sale they took possession of the land, constructed a house thereon, and continued to reside there. They further alleged that Sejas later reasserted ownership over the property, constituting fraud and deceit, and that they had caused the annotation of an adverse claim. They prayed that Sejas be ordered to execute a final deed of sale and transfer the property to them, and that they be awarded attorney's fees.

Petitioners subsequently filed an amended complaint, this time for specific performance, reconveyance, and damages, impleading Juvy Paglinawan as an additional defendant. They alleged that Sejas had sold the same property to Paglinawan, who then caused the cancellation of TCT No. T-8,337 and the issuance of a new title — TCT No. T-46,627 — in her name. They prayed that Sejas execute a final deed of sale in their favor, that Paglinawan's title be canceled and the property reconveyed to them, and that they be awarded moral damages in addition to the attorney's fees previously sought. However, the additional docket fees for the moral damages and the additional causes of action were not paid.

Respondents moved to dismiss the case, citing lack of jurisdiction over the subject matter and prescription. They argued that the case was in reality a real action requiring the value of the property to be alleged for proper computation of filing fees, and that the ten-year period to sue upon the handwritten contract had already lapsed. The RTC denied the motion in its September 3, 2007 Order and again denied the motion for reconsideration in its February 21, 2008 Order, holding that the case was one for specific performance and thus incapable of pecuniary estimation. Respondents then filed a Petition for Certiorari before the Court of Appeals, which granted the petition, nullified the RTC orders, and dismissed the amended complaint on the ground that the RTC never acquired jurisdiction due to non-payment of the correct docket fees. The handwritten document sued upon and the pleadings indicated that the property was purchased by petitioners for P6,000.00.

• Nature of the Action: Petitioners contended that the principal action remained one for specific performance and that the reconveyance prayed for was merely incidental thereto, so the case should be classified as incapable of pecuniary estimation.
• Continuity of Jurisdiction: Petitioners maintained that since the RTC had acquired jurisdiction upon the filing of the original complaint, it did not lose jurisdiction by virtue of the filing of the amended complaint, and that their failure to pay additional docket fees did not result in loss of jurisdiction — rather, the amended complaint should simply not be admitted and the original complaint should remain.
• Liberal Construction: Petitioners argued that instead of dismissing the case, the amended complaint should have been disregarded or they should have been ordered to pay the deficiency in docket fees within a reasonable time, citing the rule that courts may allow a reasonable time for payment of prescribed fees and that the defect is cured upon such payment.
• Good Faith: Petitioners asserted that the rules of procedure should be liberally applied, as there was no intention to evade payment of additional docket fees, evidenced by their payment of the original filing fees when the case was instituted.

• Real Action: Respondents argued that the CA was correct in ruling that the case should be dismissed, because while the complaint was styled as one for specific performance, the relief prayed for included reconveyance, which is a real action requiring the assessed value of the property to be alleged for proper computation of docket fees.
• Prayer for Denial: Respondents prayed for the denial of the petition, with double costs against petitioners.

• Classification of the Action: Whether the amended complaint, though denominated as one for specific performance, is in substance a real action affecting title to real property.
• Jurisdiction and Docket Fees: Whether the RTC acquired jurisdiction over the case given the non-payment of the correct docket fees and the absence of an allegation of the fair market value of the property in the amended complaint.
• Effect of Amendment on Jurisdiction: Whether the filing of the amended complaint divested the trial court of jurisdiction that had initially attached by virtue of the original complaint.

• Classification of the Action: Yes. The amended complaint is a real action because petitioners' ultimate objective was to secure ownership and title to the subject property, as evidenced by their prayer for reconveyance and cancellation of Paglinawan's TCT No. T-46,627, in addition to the prayer for execution of a deed of sale.

• Jurisdiction and Docket Fees: No. The RTC did not acquire jurisdiction. Since no fair market value was alleged in the amended complaint, the stated value of the property — P6,000.00 as reflected in the handwritten document and restated in the amended complaint — served as the basis for determining jurisdiction and docket fees. That amount fell below the RTC's jurisdictional threshold of P20,000.00 for real actions outside Metro Manila under Section 19 of BP 129.

• Effect of Amendment on Jurisdiction: The issue was rendered moot by the holding that the RTC never had jurisdiction over the case in the first instance, as the stated value of the property was below the RTC's jurisdictional threshold even under the original complaint's allegations.

• Classification of the Action: The nature of an action is not determined by the caption or denomination of the complaint but by the allegations therein and the reliefs prayed for. While the amended complaint was styled as one for "specific performance and damages," petitioners were not merely seeking execution of a deed of sale; they were also asking the court to cancel Paglinawan's TCT No. T-46,627 and to have the property reconveyed to them. Their ultimate purpose was to secure their claimed ownership and title to the subject land. Under Section 1, Rule 4 of the 1997 Rules of Civil Procedure, a real action is one affecting title to or possession of real property, or an interest therein. Because petitioners' cause of action sprang from their right as purchaser of the land and their prayer directly sought recovery of title, the suit was a real action. This conclusion was supported by Gochan vs. Gochan, Huguete vs. Embudo, and Siapno vs. Manalo, where the Court similarly looked past the complaint's denomination to its substance.

• Jurisdiction and Docket Fees: Pursuant to Section 7, Rule 141 of the Rules of Court as amended by A.M. No. 04-2-04-SC, in cases involving real property, the fair market value of the property as stated in the current tax declaration or current BIR zonal valuation, whichever is higher, shall be the basis for computing docket fees; if there is none, the stated value of the property as alleged by the claimant shall be used. The CA found that petitioners never alleged the fair market value in the amended complaint and concluded that jurisdiction could not be determined. The Supreme Court corrected this: the handwritten document sued upon and the pleadings indicated that the property was purchased for P6,000.00, and this amount should serve as the stated value in the absence of a tax declaration or zonal valuation. Under Section 19 of BP 129, the RTC has exclusive original jurisdiction over real actions only where the assessed value of the property exceeds P20,000.00 (outside Metro Manila). Under Section 33 of BP 129, first-level courts have jurisdiction where the assessed value does not exceed P20,000.00. Since the stated value was only P6,000.00, the RTC lacked jurisdiction. The rule that jurisdiction is acquired only upon payment of the prescribed docket fees is mandatory and jurisdictional; the RTC's continued cognizance of the case constituted grave abuse of discretion.

• Effect of Amendment on Jurisdiction: Given the Court's finding that the RTC never had jurisdiction over the case — because the stated value of the property was below the RTC's jurisdictional threshold — the question of whether the amended complaint divested the RTC of jurisdiction initially acquired through the original complaint became academic. The RTC's error was not in losing jurisdiction through amendment but in never having had it at all.

• Nature of Action Determined by Allegations and Reliefs, Not Caption — The character of an action is determined not by the denomination or caption of the complaint but by the allegations therein and the reliefs prayed for. Where the ultimate objective of the plaintiffs is to obtain title to real property, the action is a real action, regardless of whether it is styled as one for specific performance. Applied in this case to reclassify the amended complaint as a real action despite its denomination as one for specific performance and damages.

• Jurisdiction Conferred by Law and Acquired Upon Payment of Docket Fees — A court's jurisdiction over the subject matter is determined by the relevant allegations in the complaint, the law in effect when the action is filed, and the character of the relief sought. Jurisdiction is acquired only upon payment of the prescribed filing and docket fees, which is both mandatory and jurisdictional. Applied here to hold that the RTC never acquired jurisdiction because the correct docket fees were not paid and the stated value of the property fell below the RTC's jurisdictional threshold.

• Stated Value as Basis for Docket Fees in Absence of Tax Declaration or Zonal Valuation — Under Section 7, Rule 141 as amended by A.M. No. 04-2-04-SC, where the fair market value of real property as stated in the current tax declaration or BIR zonal valuation is not alleged, the stated value of the property as alleged by the claimant serves as the basis for computing docket fees and determining jurisdiction. Applied here to use the P6,000.00 purchase price from the handwritten document as the stated value.

• "The nature of an action is not determined by what is stated in the caption of the complaint but by the allegations of the complaint and the reliefs prayed for. Where the ultimate objective of the plaintiffs, like petitioners herein, is to obtain title to real property, it should be filed in the proper court having jurisdiction over the assessed value of the property subject thereof." — This passage, quoted from Huguete vs. Embudo, articulates the controlling principle for classifying actions as real or personal, and was applied to reclassify petitioners' amended complaint as a real action.

• "Since the value of the subject property as stated in the Amended Complaint is just P6,000.00, then the RTC did not have jurisdiction over petitioners' case in the first instance; it should have dismissed Civil Case No. 4633-2K5." — This is the ratio decidendi of the Supreme Court's ruling, correcting the CA's conclusion that jurisdiction could not be determined by supplying the stated value from the handwritten document sued upon.

• "A court acquires jurisdiction over a case only upon the payment of the prescribed filing and docket fees." — This restates the fundamental jurisdictional rule governing the payment of docket fees, which the Court applied to find that the RTC's cognizance of the case was tainted with grave abuse of discretion.

• Gochan vs. Gochan, 423 Phil. 491 (2001) — Followed. The Court held that a complaint denominated as one for "specific performance and damages" was actually a real action where the relief sought was conveyance or transfer of real property. Since the value of the real properties was not alleged, the RTC did not acquire jurisdiction for non-payment of correct docket fees. The present case bears direct similarity.

• Huguete vs. Embudo, 453 Phil. 170 (2003) — Followed. The Court ruled that the nature of an action is determined by the allegations and reliefs prayed for, not the caption; where the ultimate objective is to obtain title to real property, the action is a real action. This principle was applied to reclassify petitioners' amended complaint.

• Siapno vs. Manalo, 505 Phil. 430 (2005) — Followed. The Court disregarded the title/denomination of an amended petition as one for mandamus and adjudged it a real action, with filing fees computed based on the assessed value of the subject property. Applied as additional support for the principle that the substance of the pleading controls over its form.

• Home Guaranty Corporation vs. R-II Builders, Inc., 660 Phil. 517 (2011) — Cited by petitioners for the proposition that failure to pay additional docket fees does not result in loss of jurisdiction; the amended complaint is simply not admitted and the original complaint remains. The Court did not sustain this argument in light of its finding that the RTC never had jurisdiction.

• Tacay vs. Regional Trial Court of Tagum, Davao del Norte, 259 Phil. 927 (1989) — Cited by petitioners for the rule that courts may allow a reasonable time for payment of prescribed fees and that the defect is cured upon payment. The Court did not apply this rule, as the jurisdictional defect was not curable — the RTC lacked jurisdiction over the subject matter entirely.

• Surviving Heirs of Alfredo R. Bautista vs. Lindo, G.R. No. 208232, March 10, 2014, 718 SCRA 321 — Cited in the footnotes in connection with the jurisdiction of first-level courts under Section 33 of BP 129.

• Section 1, Rule 4, 1997 Rules of Civil Procedure — Defines a real action as one affecting title to or possession of real property, or an interest therein, and prescribes venue. Applied to classify petitioners' amended complaint as a real action.

• Section 7, Rule 141, Rules of Court, as amended by A.M. No. 04-2-04-SC and Supreme Court Amended Administrative Circular No. 35-2004 — Prescribes the basis for computing docket fees in cases involving real property: the fair market value as stated in the current tax declaration or current BIR zonal valuation, whichever is higher, or if there is none, the stated value of the property as alleged by the claimant. Applied to use the P6,000.00 purchase price as the stated value for determining jurisdiction and docket fees.

• Section 19, BP 129 (Judiciary Reorganization Act of 1980), as amended by R.A. No. 7691 — Confers on RTCs exclusive original jurisdiction over civil actions involving title to or possession of real property where the assessed value exceeds P20,000.00 (outside Metro Manila) or P50,000.00 (Metro Manila). Applied to determine that the RTC lacked jurisdiction since the stated value of P6,000.00 fell below the threshold.

• Section 33, BP 129, as amended by R.A. No. 7691 — Confers on first-level courts exclusive original jurisdiction over civil actions involving title to or possession of real property where the assessed value does not exceed P20,000.00 (outside Metro Manila) or P50,000.00 (Metro Manila). Applied to show that jurisdiction over petitioners' case properly belonged to the first-level court, not the RTC.

Antonio T. Carpio (Chairperson), Arturo D. Brion, Jose Catral Mendoza, and Marvic M.V.F. Leonen concurred with the decision.