Home Guaranty Corp., v. R-11 Builders (Supra)

HOME GUARANTY CORPORATION VS.
R-II BUILDERS AND NHA

(Payment of filing/docking fees is jurisdictional)
FACTS:
On 19 March 1993, a Joint Venture Agreement (JVA) was entered into between
respondents National Housing Authority (NHA) and R-II Builders, Inc. (R-II Builders) for the
implementation of the Smokey Mountain Development and Reclamation Project (SMDRP).
Amended and restated on 21 February 1994 and 11 August 1994, the JVA was aimed at
implementing a two-phase conversion of the Smokey Mountain Dumpsite "into a habitable
housing project inclusive of the reclamation of the area across Radial Road 10 (R-10)".
Subsequent to R-II Builders' infusion of ₱300 Million into the project, the issuance of the
SMPPCs and the termination of PNB’s services on 29 January 2001, NHA, R-II Builders and HGC
agreed on the institution of Planters Development Bank (PDB) as trustee on 29 January
2001. By 24 October 2002, however, all the Regular SMPPCs issued had reached maturity and,
unredeemed, already amounted to an aggregate face value of ₱2.513 Billion. The lack of liquid
assets with which to effect redemption of the regular SMPPCs prompted PDB to make a call on
HGC’s guaranty and to execute in the latter’s favor a Deed of Assignment and Conveyance
(DAC) of the entire Asset Pool.
On 1 September 2005, R-II Builders filed the complaint against HGC and NHA before
Branch 24 of the Manila Regional Trial Court, a Special Commercial Court (SCC).
On 26 October 2005, Branch 24 of the Manila RTC issued the writ of preliminary
injunction sought by R-II Builders which, upon the challenge thereto interposed by HGC, was
later affirmed by the CA. Having filed its answer to the complaint, in the meantime, HGC went
on to move for the conduct of a preliminary hearing on its affirmative defenses which included
such grounds as lack of jurisdiction, improper venue and the then pendency before this Court of
G.R. No. 164537, entitled Francisco Chavez vs. National Housing Authority, et al., a case which
challenged, among other matters, the validity of the JVA and its subsequent amendments. On 2
August 2007, R-II Builders, in turn, filed a motion to admit its Amended and Supplemental
Complaint which deleted the prayer for resolution of the DAC initially prayed for in its original
complaint.
Consistent with its joint order dated 2 January 2008 which held that R-II Builders’
complaint was an ordinary civil action and not an intra-corporate controversy, Branch 24 of the
Manila RTC issued a clarificatory order dated 1 February 2008 to the effect, among other
matters, that it did not have the authority to hear the case. As a consequence, the case was re-
raffled to respondent Branch 22 of the Manila RTC (respondent RTC) which subsequently issued
the 19 May 2008 order which, having determined that the case is a real action, admitted the
aforesaid Amended and Supplemental Complaint, subject to R-II Builders’ payment of the
"correct and appropriate" docket fees.
On 2 September 2008, HGC filed its opposition to the admission of R-II Builders’ Second
Amended Complaint on the ground that respondent RTC had no jurisdiction to act on the case
until payment of the correct docket fees. Claiming that R-II Builders had defied respondent
court’s order by refusing to pay the correct docket fees, HGC additionally moved for the
dismissal of the case pursuant to Section 3, Rule 17 of the 1997 Rules of Civil Procedure.
R-II Builders also filed an Urgent Ex-Parte Motion for Annotation of Lis Pendens on the
titles of the properties in the Asset Pool, on the ground that HGC had sold and/or was intending
to dispose of portions thereof, in violation of the writ of preliminary injunction issued in the
premises. Finding that jurisdiction over the case was already acquired upon payment of the
docket fees for the original complaint and that the Second Amended Complaint was neither
intended for delay nor inconsistent with R-II Builders’ previous pleadings, respondent RTC
issued its first assailed order dated 3 March 2009 which: (a) denied HGC’s motion to dismiss; (b)
granted R-II Builders’ motion to admit its Second Amended Complaint; and, (c) noted R-II
Builders’ Urgent Ex-Parte Motion for Annotation of Lis Pendens, to which the attention of the
Manila Register of Deeds was additionally called.
Undaunted, HGC filed its 22 March 2009 motion for reconsideration of the foregoing
order, arguing that:
1. the case is real action and the docket fees paid by R-II Builders were grossly
insufficient because the estimated value of properties in the Asset Pool exceeds
₱5,000,000,000.00;
2. a complaint cannot be amended to confer jurisdiction when the court had none;
3. the RTC should have simply denied the Urgent Ex-Parte Motion for Annotation of Lis
Pendens instead of rendering an advisory opinion thereon.
In addition, HGC faulted R-II Builders with forum shopping, in view of its complaint
before Branch 91 of the Quezon City RTC, involving a claim for receivables from the NHA.
On 29 September 2009, respondent RTC issued its second assailed order which (a) denied HGC’s
motion for reconsideration; (b) granted R-II Builders’ application for appointment of receiver.
HGC’s motion for reconsideration of the foregoing decision was denied for lack of merit
in the CA hence, this petition.
ISSUES:
Whether or not the CA erred when it failed to rule that the Regional Trial Court had no
jurisdiction to proceed with the case considering that the original court was without the
authority to hear the case.
Despite and equivocal order from the trial court, respondent R-II Builders failed and
refused to pay the correct and proper docket fees.
RULING:
The court find the petition with merits.
Jurisdiction is defined as the authority to hear and determine a cause or the right to act
in a case. In addition to being conferred by the Constitution and the law, the rule is settled that
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
irrespective of whether the plaintiff is entitled to all or some of the claims asserted. Consistent
with Section 1, Rule 141 of the Revised Rules of Court which provides that the prescribed fees
shall be paid in full "upon the filing of the pleading or other application which initiates an action
or proceeding", the well-entrenched rule is to the effect that a court acquires jurisdiction over a
case only upon the payment of the prescribed filing and docket fees.
The record shows that R-II Builders’ original complaint dated 23 August 2005 was
initially docketed as Civil Case No. 05-113407 before Branch 24 of the Manila, a designated
Special Commercial Court. With HGC’s filing of a motion for a preliminary hearing on the
affirmative defenses asserted in its answer and R-II Builders’ filing of its Amended and
Supplemental Complaint dated 31 July 2007, said court issued an order dated 2 January 2008
ordering the re-raffle of the case upon the finding that the same is not an intra-corporate
dispute. In a clarificatory order dated 1 February 2008, the same court significantly took
cognizance of its lack of jurisdiction over the case in the following wise:
1. At the outset, it must be stated that this Court is a designated Special Commercial
Court tasked to try and hear, among others, intra-corporate controversies to the
exclusion of ordinary civil cases.
2. When the case was initially assigned to this Court, it was classified as an intra-
corporate case. However, in the ensuing proceedings relative to the affirmative
defenses raised by defendants, even the plaintiff conceded that the case is not an
intra-corporate controversy or even if it is, this Court is without authority to hear the
same as the parties are all housed in Quezon City.
We find that, having squarely raised the matter in its Rule 65 petition for certiorari and
prohibition HGC correctly faults the CA for not finding that Branch 24 of the Manila RTC had no
authority to order the transfer of the case to respondent RTC. Being outside the jurisdiction of
Special Commercial Courts, the rule is settled that cases which are civil in nature, like the one
commenced by R-II Builders, should be threshed out in a regular court. With its acknowledged
lack of jurisdiction over the case, Branch 24 of the Manila RTC should have ordered the
dismissal of the complaint, since a court without subject matter jurisdiction cannot transfer the
case to another court. Instead, it should have simply ordered the dismissal of the complaint,
considering that the affirmative defenses for which HGC sought hearing included its lack of
jurisdiction over the case.
WHEREFORE, premises considered, the assailed Decision dated 21 January 2010 is

REVERSED and SET ASIDE. In lieu thereof, another is entered NULLIFYING the regular court’s,
RTC Branch 22’s Orders dated 3 March 2009 and 29 September 2009 as well as the SCC’s, RTC
Branch 24’s Order dated 26 October 2005 which was rendered void by the SCC’s subsequent
declaration of absence of authority over the case. The complaint of R-II Builders docketed as
Civil Case No. 05-113407 first before Br. 24 and thereafter before Br. 22 both of the RTC of
Manila is hereby DISMISSED.

Home Guaranty Corp., v. R-11 Builders (Supra)

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HOME GUARANTY CORPORATION VS.

R-II BUILDERS AND NHA

The court find the petition with merits.

WHEREFORE, premises considered, the assailed Decision dated 21 January 2010 is

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