G.R. No.

192649 June 22, 2011

HOME GUARANTY CORPORATION, Petitioner,

vs.
R-II BUILDERS INC. and NATIONAL HOUSING
AUTHORITY, Respondents.

RESOLUTION

PEREZ, J.:

Before the Court are: (a) the Entry of Appearance filed by Atty. Lope E.
Feble of the Toquero Exconde Manalang Feble Law Offices as
collaborating counsel for respondent R-II Builders, Inc. (R-II Builders), with
prayer to be furnished all pleadings, notices and other court processes at
its given address; and (b) the motion filed by R-II Builders, seeking the
reconsideration of Court's decision dated 9 March 2011 on the following
grounds:1

THE HONORABLE COURT ERRED IN RULING THAT RTC

MANILA, BRANCH 22, HAD NO JURISDICTION OVER THE
PRESENT CASE SINCE RTC-MANILA, BRANCH 24, TO WHICH
THE INSTANT CASE WAS INITIALLY RAFFLED HAD NO
AUTHORITY TO HEAR THE CASE BEING A SPECIAL
COMMERCIAL COURT.

II.

THE HONORABLE COURT ERRED IN RULING THAT THE

CORRECT DOCKET FEES WERE NOT PAID.

In urging the reversal of the Court's decision, R-II Builders argues that it
filed its complaint with the Manila RTC which is undoubtedly vested with
jurisdiction over actions where the subject matter is incapable of pecuniary
estimation; that through no fault of its own, said complaint was raffled to
Branch 24, the designated Special Commercial Court (SCC) tasked to hear
intra-corporate controversies; that despite the determination subsequently
made by Branch 24 of the Manila RTC that the case did not involve an
intra-corporate dispute, the Manila RTC did not lose jurisdiction over the
same and its Executive Judge correctly directed its re-raffling to Branch 22
of the same Court; that the re-raffle and/or amendment of pleadings do not
affect a court's jurisdiction which, once acquired, continues until the case is
finally terminated; that since its original Complaint, Amended and
Supplemental Complaint and Second Amended Complaint all primarily
sought the nullification of the Deed of Assignment and Conveyance (DAC)
transferring the Asset Pool in favor of petitioner Home Guaranty
Corporation (HGC), the subject matter of the case is clearly one which is
incapable of pecuniary estimation; and, that the court erred in holding that
the case was a real action and that it evaded the payment of the correct
docket fees computed on the basis of the assessed value of the realties in
the Asset Pool.

R-II Builders' motion is bereft of merit.

The record shows that, with the raffle of R-II Builders’ complaint before
Branch 24 of the Manila RTC and said court’s grant of the application for
temporary restraining order incorporated therein, HGC sought a preliminary
hearing of its affirmative defenses which included, among other grounds,
lack of jurisdiction and improper venue. It appears that, at said preliminary
hearing, it was established that R-II Builders’ complaint did not involve an
intra-corporate dispute and that, even if it is, venue was improperly laid
since none of the parties maintained its principal office in Manila. While it is
true, therefore, that R-II Builders had no hand in the raffling of the case, it
cannot be gainsaid that Branch 24 of the RTC Manila had no jurisdiction
over the case. Rather than ordering the dismissal of the complaint,
however, said court issued the 2 January 2008 order erroneously ordering
the re-raffle of the case. In Atwel v. Concepcion Progressive Association,
Inc.2 and Reyes v. Hon. Regional Trial Court of Makati, Branch 1423which
involved SCCs trying and/or deciding cases which were found to be civil in
nature, this Court significantly ordered the dismissal of the complaint for
lack of jurisdiction instead of simply directing the re-raffle of the case to
another branch.

Even then, the question of the Manila RTC's jurisdiction over the case is
tied up with R-II Builder's payment of the correct docket fees which should
be paid in full upon the filing of the pleading or other application which
initiates an action or proceeding.4 While it is, consequently, true that
jurisdiction, once acquired, cannot be easily ousted,5 it is equally settled
that a court acquires jurisdiction over a case only upon the payment of the
prescribed filing and docket fees.6 Already implicit from the filing of the
complaint in the City of Manila where the realties comprising the Asset Pool
are located, the fact that the case is a real action is evident from the
allegations of R-II Builders’ original Complaint, Amended and Supplemental
Complaint and Second Amended Complaint which not only sought the
nullification of the DAC in favor of HGC but, more importantly, prayed for
the transfer of possession of and/or control of the properties in the Asset
Pool. Its current protestations to the contrary notwithstanding, no less than
R-II Builders – in its opposition to HGC’s motion to dismiss – admitted that
the case is a real action as it affects title to or possession of real property or
an interest therein.7 Having only paid docket fees corresponding to an
action where the subject matter is incapable of pecuniary estimation, R-II
Builders cannot expediently claim that jurisdiction over the case had
already attached.

In De Leon v. Court of Appeals,8 this Court had, of course, ruled that a case
for rescission or annulment of contract is not susceptible of pecuniary
estimation although it may eventually result in the recovery of real property.
Taking into consideration the allegations and the nature of the relief sought
in the complaint in the subsequent case of Serrano v. Delica,9 however, this
Court determined the existence of a real action and ordered the payment of
the appropriate docket fees for a complaint for cancellation of sale which
prayed for both permanent and preliminary injunction aimed at the
restoration of possession of the land in litigation is a real action. In
discounting the apparent conflict in said rulings, the Court went on to rule
as follows in Ruby Shelter Builders and Realty Development Corporation v.
Hon. Pablo C, Formaran,10 to wit:

The Court x x x does not perceive a contradiction between Serrano and

the Spouses De Leon. The Court calls attention to the following statement
in Spouses De Leon: "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."
Necessarily, the determination must be done on a case-to-case basis,
depending on the facts and circumstances of each. What petitioner
conveniently ignores is that in Spouses De Leon, the action therein that
private respondents instituted before the RTC was "solely for annulment or
rescission" of the contract of sale over a real property. There appeared to
be no transfer of title or possession to the adverse party x x x.
(Underscoring Supplied) 1avvphi1

Having consistently sought the transfer of possession and control of the

properties comprising the Asset Pool over and above the nullification of the
Deed of Conveyance in favor of HGC, it follows R-II Builders should have
paid the correct and appropriate docket fees, computed according to the
assessed value thereof. This much was directed in the 19 May 2008 Order
issued by Branch 22 of the Manila RTC which determined that the case is a
real action and admitted the Amended and Supplemental Complaint R-II
Builders subsequently filed in the case.11 In obvious evasion of said
directive to pay the correct docket fees, however, R-II Builders withdrew its
Amended and Supplemental Complaint and, in lieu thereof, filed its Second
Amended Complaint which, while deleting its causes of action for
accounting and conveyance of title to and/or possession of the entire Asset
Pool, nevertheless prayed for its appointment as Receiver of the properties
comprising the same. In the landmark case of Manchester Development
Corporation v. Court of Appeals,12 this Court ruled that jurisdiction over any
case is acquired only upon the payment of the prescribed docket fee which
is both mandatory and jurisdictional. Although it is true that the Manchester
Rule does not apply despite insufficient filing fees when there is no intent to
defraud the government,13R-II Builders’ evident bad faith should clearly
foreclose the relaxation of said rule.

In addition to the jurisdictional and pragmatic aspects underlying the

payment of the correct docket fees which have already been discussed in
the decision sought to be reconsidered, it finally bears emphasizing that the
Asset Pool is comprised of government properties utilized by HGC as part
of its sinking fund, in pursuit of its mandate as statutory guarantor of
government housing programs. With the adverse consequences that could
result from the transfer of possession and control of the Asset Pool, it is
imperative that R-II Builders should be made to pay the docket and filing
fees corresponding to the assessed value of the properties comprising the
same.

WHEREFORE, the Court resolves to:

(a) NOTE the Entry of Appearance of Atty. Lope E. Feble of Tuquero

Exconde Manalang Feble Law Offices as collaborating counsel for
 respondent R-II Builders, Inc.; and DENY counsel’s prayer to be
furnished with all pleadings notices and other court processes at Unit
2704-A, West Tower, Philippine Stock Exchange Centre, Exchange
Road, Ortigas Center Pasig, since only the lead counsel is entitled to
service of court processes;

(b) DENY with FINALITY R-II Builders, Inc.’s Motion for

Reconsideration of the Decision dated 9 March 2011 for lack of merit,
the basic issues having been already passed upon and there being
no substantial argument to warrant a modification of the same. No
further pleadings or motions shall be entertained herein.

Let an Entry of Judgment in this case be made in due course.

G.R. No. 202836, June 19, 2018

FIRST SARMIENTO PROPERTY HOLDINGS, INC., Petitioner, v. PHILIPPINE

BANK OF COMMUNICATIONS, Respondent.

DECISION
 LEONEN, J.:

To determine the nature of an action, whether or not its subject matter is capable
or incapable of pecuniary estimation, the nature of the principal action or relief
sought must be ascertained. If the principal relief is for the recovery of a sum of
money or real property, then the action is capable of pecuniary estimation.
However, if the principal relief sought is not for the recovery of sum of money or
real property, even if a claim over a sum of money or real property results as a
consequence of the principal relief, the action is incapable of pecuniary estimation.

This resolves the Petition for Review1 filed by First Sarmiento Property Holdings,
Inc. (First Sarmiento) assailing the April 3, 2012 Decision2 and July 25, 2012
Order3 of Branch 11, Regional Trial Court, Malolos City, Bulacan in Civil Case No.
04-M-2012.

The facts as established by the parties are as follows:

On June 19, 2002,4 First Sarmiento obtained from Philippine Bank of

Communications (PBCOM) a P40,000,000.00 loan, which was secured by a real
estate mortgage5 over 1,076 parcels of land.6

On March 15, 2003,7 the loan agreement was amended8 with the increase of the
loan amount to P51,200,000.00. On September 15, 2003, the loan agreement was
further amended9 when the loan amount was increased to P100,000,000.00.

On January 2, 2006,10 PBCOM filed a Petition for Extrajudicial Foreclosure of Real

Estate Mortgage.11 It claimed in its Petition that it sent First Sarmiento several
demand letters, yet First Sarmiento still failed to pay the principal amount and
accrued interest on the loan. This prompted PBCOM to resort to extrajudicial
foreclosure of the mortgaged properties, a recourse granted to it under the loan
agreement.12

On December 27, 2011, First Sarmiento attempted to file a Complaint for

annulment of real estate mortgage with the Regional Trial Court. However, the
Clerk of Court refused to accept the Complaint in the absence of the mortgaged
properties' tax declarations, which would be used to assess the docket fees.13

On December 29, 2011, Executive Judge Renato C. Francisco (Judge Francisco),

First Vice-Executive Judge Ma. Theresa A. Mendoza Arcega, Second Vice-Executive
Judge Ma. Belen R. Liban, and Third Vice-Executive Judge Basilio R. Gabo, Jr. of the
Regional Trial Court of City of Malolos, Bulacan, granted First Sarmiento's Urgent
Motion to Consider the Value of Subject Matter of the Complaint as Not Capable of
Pecuniary Estimation, and ruled that First Sarmiento's action for annulment of real
estate mortgage was incapable of pecuniary estimation.14

Also on December 29, 2011, the mortgaged properties were auctioned and sold to
PBCOM as the highest bidder.15
On January 2, 2012, First Sarmiento filed a Complaint for annulment of real estate
mortgage and its amendments, with prayer for the issuance of temporary
restraining order and preliminary injunction.16 It paid a filing fee of P5,545.00.17

First Sarmiento claimed in its Complaint that it never received the loan proceeds of
P100,000,000.00 from PBCOM, yet the latter still sought the extrajudicial
foreclosure of real estate mortgage. It prayed for the issuance of a temporary
restraining order and preliminary injunction to enjoin the Ex-Officio Sheriff from
proceeding with the foreclosure of the real estate mortgage or registering the
certificate of sale in PBCOM's favor with the Registry of Deeds of Bulacan.18

That same day, Judge Francisco issued an ex-parte temporary restraining order for
72 hours, enjoining the registration of the certificate of sale with the Registry of
Deeds of Bulacan.19

On January 4, 2012, the Regional Trial Court directed the parties to observe the
status quo ante.20

On January 24, 2012, the Clerk of Court and Ex-Officio Sheriff of Malolos City,
Bulacan issued a certificate of sale to PBCOM.21

In its Opposition (Re: Application for Issuance of Temporary Restraining

Order),22 PBCOM asserted that the Regional Trial Court failed to acquire jurisdiction
over First Sarmiento's Complaint because the action for annulment of mortgage
was a real action; thus, the filing fees filed should have been based on the fair
market value of the mortgaged properties.23

PBCOM also pointed out that the Regional Trial Court's directive to maintain the
status quo order beyond 72 hours constituted an indefinite extension of the
temporary restraining order, a clear contravention of the rules.24

On April 3, 2012, Branch 11, Regional Trial Court,25 Malolos City, Bulacan dismissed
the Complaint for lack of jurisdiction:

Following the High Court's ruling in the case of Home Guaranty Corporation v. R. II
Builders, Inc. and National Housing Authority, G.R. No. 192549, March 9, 2011,
cited by the bank in its Rejoinder, which appears to be the latest jurisprudence on
the matter to the effect that an action for annulment or rescission of contract does
not operate to efface the true objective and nature of the action which is to recover
real property, this Court hereby RESOLVES TO DISMISS the instant case for lack of
jurisdiction, plaintiff having failed to pay the appropriate filing fees.

Accordingly, the instant case is hereby DISMISSED.

SO ORDERED.26
On July 25, 2012, the Regional Trial Court27 denied First Sarmiento's motion for
reconsideration.28
On August 17, 2012, First Sarmiento sought direct recourse to this Court with its
Petition for Review29under Rule 45. It insists that its Complaint for the annulment of
real estate mortgage was incapable of pecuniary estimation.30 It points out that the
Executive Judge and Vice-Executive Judges of the Regional Trial Court likewise
acknowledged that its action was incapable of pecuniary estimation.31

Petitioner highlights that the Supreme Court En Banc in Lu v. Lu Ym held "that an

action for declaration of nullity of issuance of shares or an action questioning the
legality of a conveyance is one not capable of pecuniary estimation."32 Furthermore,
petitioner maintains that the Supreme Court En Banc in Bunayog v. Tunas also
established that a complaint questioning the validity of a mortgage is an action
incapable of pecuniary estimation.33

It emphasizes that Home Guaranty Corporation v. R-II Builders, which the Regional
Trial Court relied on to dismiss its complaint for lack of jurisdiction, was rendered
by a division of the Supreme Court; hence, it cannot modify or reverse a doctrine or
principle of law laid down by the Supreme Court En Banc.34

On September 19, 2012,35 this Court directed respondent PBCOM to comment on

the petition.

In its Comment,36 respondent contends that petitioner's action to annul the real
estate mortgage and enjoin the foreclosure proceedings did not hide the true
objective of the action, which is to restore petitioner's ownership of the foreclosed
properties.37

Respondent maintains that this Court has already settled that "a complaint for
cancellation of sale which prayed for both permanent and preliminary injunction
aimed at the restoration of possession of the land in litigation is a real action."38

It likewise stresses that since petitioner's primary objective in filing its Complaint
was to prevent the scheduled foreclosure proceedings over the mortgaged
properties and the conveyance of their ownership to the highest bidder, the case
was a real action.39

Finally, it denies that Home Guaranty Corporation modified and reversed Lu v. Lu

Ym because the factual and legal milieus of these two (2) cases were different.40

On November 26, 2012,41 this Court required petitioner to file a reply to the
comment.

On February 1, 2013, petitioner filed its Reply42 where it denies that its Complaint
was for the annulment of the foreclosure sale, because when it filed its Complaint,
the foreclosure sale had not yet happened.43

It proclaims that its Complaint sought the removal of the lien on the mortgaged
properties and was not intended to recover ownership or possession since it was
still the registered owner with possession of the mortgaged properties when it filed
its Complaint.44

On February 27, 2013,45 this Court noted petitioner's reply and directed the parties
to submit their respective memoranda.

On May 30, 2013, the parties filed their respective memoranda.46

In its Memorandum,47 petitioner continues to insist that it did not receive the loan
proceeds from PBCOM which is why it filed its Complaint for annulment of real
estate mortgage in response to the latter's Petition for Extrajudicial Foreclosure of
Real Estate Mortgage.48

Petitioner reiterates that its Complaint for annulment of real estate mortgage was
an action incapable of pecuniary estimation because it merely sought to remove the
lien on its properties, not the recovery or reconveyance of the mortgaged
properties.49

It states that it never expressly or impliedly sought the conveyance of the

mortgaged properties because it was still the registered owner of the mortgaged
properties when its Complaint was first presented for filing with the Clerk of
Court.50

On the other hand, respondent in its Memorandum51 restates its stand that
petitioner's Complaint involved a real action; hence, the estimated value of the
mortgaged properties should have been alleged and used as the basis for the
computation of the docket fees.52

Respondent claims that the allegations in petitioner's Complaint reveal the latter's
real intention to assert its title and recover the real properties sold at the public
auction.53

The only issue for this Court's resolution is whether or not the Regional Trial Court
obtained jurisdiction over First Sarmiento Corporation, Inc.'s Complaint for
annulment of real estate mortgage.

Rule 45 of the Rules of Court allows for a direct recourse to this Court by appeal
from a judgment, final order, or resolution of the Regional Trial Court. Rule 45,
Section 1 provides:
Section 1. Filing of petition with Supreme Court. — A party desiring to appeal by
certiorari from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by
law, may file with the Supreme Court a verified petition for review on certiorari. The
petition shall raise only questions of law which must be distinctly set forth.
Rule 41, Section 2(c) likewise provides:
Section 2. Modes of appeal. —
....

(c) Appeal by certiorari. — In all cases where only questions of law are raised or
involved, the appeal shall be to the Supreme Court by petition for review on
certiorari in accordance with Rule 45.
Thus, there is no question that a petitioner may file a verified petition for review
directly with this Court if only questions of law are at issue; however, if both
questions of law and of facts are present, the correct remedy is to file a petition for
review with the Court of Appeals.54

Doña Adela Export International v. Trade and Investment Development

Corp.55 differentiated between a question of law and a question of fact as follows:
We stress that a direct recourse to this Court from the decisions, final resolutions
and orders of the RTC may be taken where only questions of law are raised or
involved. There is a question of law when the doubt or difference arises as to what
the law is on a certain state of facts, which does not call for an examination of the
probative value of the evidence presented by the parties-litigants. On the other
hand, there is a question of fact when the doubt or controversy arises as to the
truth or falsity of the alleged facts. Simply put, when there is no dispute as to fact,
the question of whether the conclusion drawn therefrom is correct or not, is a
question of law.56 (Citation omitted)
In the case at bar, the underlying question for this Court's resolution pertains to
jurisdiction, or to be more precise, whether the Regional Trial Court attained
jurisdiction over petitioner's Complaint with the amount of docket fees paid.

Considering that the issue of jurisdiction is a pure question of law,57 petitioner did
not err in filing its appeal directly with this Court pursuant to law and prevailing
jurisprudence.

II

Petitioner contends that its Complaint for annulment of real estate mortgage has a
subject incapable of pecuniary estimation because it was not intended to recover
ownership or possession of the mortgaged properties sold to respondent during the
auction sale.58 It insists that it had ownership and possession of the mortgaged
properties when it filed its Complaint; hence, it never expressly or impliedly sought
recovery of their ownership or possession.59

The petition is meritorious.

Jurisdiction is "the power and authority of a court to hear, try and decide a
case"60 brought before it for resolution.

Courts exercise the powers conferred on them with binding effect if they acquire
jurisdiction over: "(a) the cause of action or the subject matter of the case; (b) the
thing or the res; (c) the parties; and (d) the remedy."61

Jurisdiction over the thing or the res is a court's authority over the object subject of
litigation.62 The court obtains jurisdiction or actual custody over the object through
the seizure of the object under legal process or the institution of legal proceedings
which recognize the power and authority of the court.63

Jurisdiction over the parties is the court's power to render judgment that are
binding on the parties. The courts acquire jurisdiction over the plaintiffs when they
file their initiatory pleading, while the defendants come under the court's
jurisdiction upon the valid service of summons or their voluntary appearance in
court.64

Jurisdiction over the cause of action or subject matter of the case is the court's
authority to hear and determine cases within a general class where the proceedings
in question belong. This power is conferred by law and cannot be acquired through
stipulation, agreement between the parties,65 or implied waiver due to the silence
of a party.66

Jurisdiction is conferred by the Constitution, with Congress given the plenary

power, for cases not enumerated in Article VIII, Section 567 of the Constitution, to
define, prescribe, and apportion the jurisdiction of various courts.68

Batas Pambansa Blg. 129, or the Judiciary Reorganization Act of 1980 as amended
by Republic Act No. 7691, provided for the jurisdictional division between the first
and second level courts by considering the complexity of the cases and the
experience needed of the judges assigned to hear the cases.

In criminal cases, first level courts are granted exclusive original jurisdiction to hear
complaints on violations of city or municipal ordinances69 and offenses punishable
with imprisonment not exceeding six (6) years.70 In contrast, second level courts,
with more experienced judges sitting at the helm, are granted exclusive original
jurisdiction to preside over all other criminal cases not within the exclusive
jurisdiction of any other court, tribunal, or body.71

The same holds true for civil actions and probate proceedings, where first level
courts have the power to hear cases where the value of personal property, estate,
or amount of the demand does not exceed P100,000.00 or P200,000.00 if in Metro
Manila.72 First level courts also possess the authority to hear civil actions involving
title to, possession of, or any interest in real property where the value does not
exceed P20,000.00 or P50,000.00 if the real property is situated in Metro
Manila.73 Second level courts then assume jurisdiction when the values involved
exceed the threshold amounts reserved for first level courts74 or when the subject
of litigation is incapable of pecuniary estimation.75

First level courts were also conferred with the power to hear the relatively
uncomplicated cases of forcible entry and unlawful detainer,76 while second level
courts are authorized to hear all actions in admiralty and maritime
jurisdiction77 with claims above a certain threshold amount. Second level courts are
likewise authorized to hear all cases involving the contract of marriage and marital
relations,78 in recognition of the expertise and probity required in deciding issues
which traverse the marital sphere.

Section 19(1) of Batas Pambansa Blg. 129, as amended, provides Regional Trial
Courts with exclusive, original jurisdiction over "all civil actions in which the subject
of the litigation is incapable of pecuniary estimation."

Lapitan v. Scandia79 instructed that to determine whether the subject matter of an

action is incapable of pecuniary estimation, the nature of the principal action or
remedy sought must first be established. This finds support in this Court's repeated
pronouncement that jurisdiction over the subject matter is determined by
examining the material allegations of the complaint and the relief sought.80Heirs of
Dela Cruz v. Heirs of Cruz81 stated, thus:
It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial officer or
government agency, over the nature and subject matter of a petition or complaint
is determined by the material allegations therein and the character of the relief
prayed for, irrespective of whether the petitioner or complainant is entitled to any
or all such reliefs.82
However, Lapitan stressed that where the money claim is only a consequence of the
remedy sought, the action is said to be one incapable of pecuniary estimation:
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. If it is primarily for the recovery of a sum of money, the
claim is considered capable of pecuniary estimation, and whether jurisdiction is in
the municipal courts or in the courts of first instance would depend on the amount
of the claim. However, where the basic issue is something other than the right to
recover a sum of money, or where the money claim is purely incidental to, or a
consequence of, the principal relief sought like in suits to have the defendant
perform his part of the contract (specific performance) and in actions for support,
or for annulment of a judgment or to foreclose a mortgage, this Court has
considered such actions as cases where the subject of the litigation may not be
estimated in terms of money, and are cognizable exclusively by courts of first
instance. The rationale of the rule is plainly that the second class cases, besides the
determination of damages, demand an inquiry into other factors which the law has
deemed to be more within the competence of courts of first instance, which were
the lowest courts of record at the time that the first organic laws of the Judiciary
were enacted allocating jurisdiction (Act 136 of the Philippine Commission of June
11, 1901).83 (Citation omitted)
Heirs of Sebe v. Heirs of Sevilla84 likewise stressed that if the primary cause of
action is based on a claim of ownership or a claim of legal right to control, possess,
dispose, or enjoy such property, the action is a real action involving title to real
property.85

A careful reading of petitioner's Complaint convinces this Court that petitioner never
prayed for the reconveyance of the properties foreclosed during the auction sale, or
that it ever asserted its ownership or possession over them. Rather, it assailed the
validity of the loan contract with real estate mortgage that it entered into with
respondent because it supposedly never received the proceeds of the
P100,000,000.00 loan agreement.86 This is evident in its Complaint, which read:
GROUNDS FOR THE APPLICATION OF PRELIMINARY INJUNCTION AND TEMPORARY
RESTRAINING ORDER

7. Defendant PBCOM knows fully well that plaintiff did not receive from it the loan it
(PBCOM) alleged to have granted in its favor.

8. Despite this, defendant PBCOM has filed with the Ex-Officio Sheriff of Bulacan, a
petition for extra judicial foreclosure of real estate mortgage, bent on foreclosing
the real estate properties of plaintiff, photocopy of the petition is hereto attached as
Annex "F".

9. The auction sale of the properties is set on December 29, 2011.

10. Defendant PBCOM, well knowing the facts narrated above and willfully
disregarding the property rights of plaintiff, wrongfully filed an extra judicial
foreclosure of real estate mortgage and pursuant to said petition, the Ex-Officio
Sheriff now does offer for sale, the real estate properties of the plaintiff as set forth
in its (PBCOM) said petition.

11. Unless defendants PBCOM and Ex-Officio Sheriff are restrained by this
Honorable Court, they will infringe the property rights of the plaintiff in the manner
herein before related.87
Far East Bank and Trust Company v. Shemberg Marketing Corporation88 stated that
an action for cancellation of mortgage has a subject that is incapable of pecuniary
estimation:
Here, the primary reliefs prayed for by respondents in Civil Case No. MAN-4045 is
the cancellation of the real estate and chattel mortgages for want of consideration.
In Bumayog v. Tumas, this Court ruled that where the issue involves the validity of
a mortgage, the action is one incapable of pecuniary estimation. In the more recent
case of Russell v. Vestil, this Court, citing Bumayog, held that an action questioning
the validity of a mortgage is one incapable of pecuniary estimation. Petitioner has
not shown adequate reasons for this Court to revisit Bumayog and Russell. Hence,
petitioner's contention [cannot] be sustained. Since respondents paid the docket
fees, as computed by the clerk of court, consequently, the trial court acquired
jurisdiction over Civil Case No. MAN-4045.89
It is not disputed that even if the Complaint were filed a few days after the
mortgaged properties were foreclosed and sold at auction to respondent as the
highest bidder, the certificate of sale was only issued to respondent after the
Complaint was filed.

Section 6 of Act No. 3135,90 as amended, provides that a property sold through an
extrajudicial sale may be redeemed "at any time within the term of one year from
and after the date of the sale":
Section 6. In all cases in which an extrajudicial sale is made under the special
power hereinbefore referred to, the debtor, his successors in interest or any judicial
creditor or judgment creditor of said debtor, or any person having a lien on the
property subsequent to the mortgage or deed of trust under which the property is
sold, may redeem the same at any time within the term of one year from and after
the date of the sale; and such redemption shall be governed by the provisions of
sections four hundred and sixty-four to four hundred and sixty-six, inclusive, of the
Code of Civil Procedure, in so far as these are not inconsistent with the provisions
of this Act.
Mahinay v. Dura Tire & Rubber Industries Inc.91 clarified that "[t]he date of the sale'
referred to in Section 6 is the date the certificate of sale is registered with the
Register of Deeds. This is because the sale of registered land does not 'take effect
as a conveyance, or bind the land' until it is registered."92

The registration of the certificate of sale issued by the sheriff after an extrajudicial
sale is a mandatory requirement; thus, if the certificate of sale is not registered
with the Registry of Deeds, the property sold at auction is not conveyed to the new
owner and the period of redemption does not begin to run.93

In the case at bar, the Ex-Officio Sheriff of the City of Malolos, Bulacan was
restrained from registering the certificate of sale with the Registry of Deeds of
Bulacan and the certificate of sale was only issued to respondent after the
Complaint for annulment of real estate mortgage was filed. Therefore, even if the
properties had already been foreclosed when the Complaint was filed, their
ownership and possession remained with petitioner since the certificate of sale was
not registered with the Registry of Deeds. This supports petitioner's claim that it
never asked for the reconveyance of or asserted its ownership over the mortgaged
properties when it filed its Complaint since it still enjoyed ownership and possession
over them.

Considering that petitioner paid the docket fees as computed by the clerk of court,
upon the direction of the Executive Judge, this Court is convinced that the Regional
Trial Court acquired jurisdiction over the Complaint for annulment of real estate
mortgage.

Furthermore, even if it is assumed that the instant case were a real action and the
correct docket fees were not paid by petitioner, the case should not have been
dismissed; instead, the payment of additional docket fees should have been made a
lien on the judgment award. The records attest that in filing its complaint,
petitioner readily paid the docket fees assessed by the clerk of court; hence, there
was no evidence of bad faith or intention to defraud the government that would
have rightfully merited the dismissal of the Complaint.94

III

Although not raised in the Petition, this Court nonetheless deems it proper to pass
upon the legality of the Regional Trial Court January 4, 2012 Order, which directed
the parties to observe the status quo ante,95 effectively extending indefinitely its
72-hour ex-parte temporary restraining order issued on January 2, 2012.96
Rule 58, Section 5 of the Rules of Court provides the instances when a temporary
restraining order may be issued:
Section 5. Preliminary injunction not granted without notice; exception. — No
preliminary injunction shall be granted without hearing and prior notice to the party
or person sought to be enjoined. If it shall appear from facts shown by affidavits or
by the verified application that great or irreparable injury would result to the
applicant before the matter can be heard on notice, the court to which the
application for preliminary injunction was made, may issue a temporary restraining
order to be effective only for a period of twenty (20) days from service on the party
or person sought to be enjoined, except as herein provided. Within the said twenty-
day period, the court must order said party or person to show cause, at a specified
time and place, why the injunction should not be granted, determine within the
same period whether or not the preliminary injunction shall be granted, and
accordingly issue the corresponding order.

However, and subject to the provisions of the preceding sections, if the matter is of
extreme urgency and the applicant will suffer grave injustice and irreparable injury,
the executive judge of a multiple-sala court or the presiding judge of a single-sala
court may issue ex-parte a temporary restraining order effective for only seventy-
two (72) hours from issuance but he shall immediately comply with the provisions
of the next preceding section as to service of summons and the documents to be
served therewith. Thereafter, within the aforesaid seventy-two (72) hours, the
judge before whom the case is pending shall conduct a summary hearing to
determine whether the temporary restraining order shall be extended until the
application for preliminary injunction can be heard. In no case shall the total period
of effectivity of the temporary restraining order exceed twenty (20) days, including
the original seventy-two hours provided herein.

In the event that the application for preliminary injunction is denied or not resolved
within the said period, the temporary restraining order is deemed automatically
vacated. The effectivity of a temporary restraining order is not extendible without
need of any judicial declaration to that effect and no court shall have authority to
extend or renew the same on the same ground for which it was issued.

However, if issued by the Court of Appeals or a member thereof, the temporary

restraining order shall be effective for sixty (60) days from service on the party or
person sought to be enjoined. A restraining order issued by the Supreme Court or a
member thereof shall be effective until further orders.
It is clear that a temporary restraining order may be issued by a trial court in only
two (2) instances: first, when great or irreparable injury would result to the
applicant even before the application for writ of preliminary injunction can be
heard; and second, if the matter is of extreme urgency and the applicant will suffer
grave injustice and irreparable injury. The executive judge of a multi-sala court or
the presiding judge of a single-sala court may issue a 72-hour temporary
restraining order.

In both instances, the temporary restraining order may be issued ex parte.

However, in the first instance, the temporary restraining order has an effectivity of
only 20 days to be counted from service to the party sought to be enjoined.
Likewise, within those 20 days, the court shall order the enjoined party to show
why the injunction should not be granted and shall then determine whether or not
the injunction should be granted.

In the second instance, when there is extreme urgency and the applicant will suffer
grave injustice and irreparable injury, the court shall issue a temporary restraining
order effective for only 72 hours upon issuance. Within those 72 hours, the court
shall conduct a summary hearing to determine if the temporary restraining order
shall be extended until the application for writ of preliminary injunction can be
heard. However, in no case shall the extension exceed 20 days.

If the application for preliminary injunction is denied or not resolved within the
given periods, the temporary restraining order is automatically vacated and the
court has no authority to extend or renew it on the same ground of its original
issuance.

Despite the clear wording of the rules, the Regional Trial Court issued a status quo
ante order dated January 4, 2012, indefinitely extending the temporary restraining
order on the registration of the certificate of sale with the Registry of Deeds.

Petitioner applied for a writ of preliminary injunction, yet the Regional Trial Court
did not conduct any hearing for that purpose and merely directed the parties to
observe the status quo ante.

Miriam College Foundation, Inc v. Court of Appeals97 explained the difference

between preliminary injunction and a restraining order as follows:
Preliminary injunction is an order granted at any stage of an action or proceeding
prior to the judgment or final order, requiring a party or a court, agency or a
person to perform to refrain from performing a particular act or acts. As an
extraordinary remedy, injunction is calculated to preserve or maintain the status
quo of things and is generally availed of to prevent actual or threatened acts, until
the merits of the case can be heard. A preliminary injunction persists until it is
dissolved or until the termination of the action without the court issuing a final
injunction.

The basic purpose of restraining order, on the other hand, is to preserve the status
quo until the hearing of the application for preliminary injunction. Under the former
A§5, Rule 58 of the Rules of Court, as amended by A§5, Batas Pambansa Blg. 224,
a judge (or justice) may issue a temporary restraining order with a limited life of
twenty days from date of issue. If before the expiration of the 20-day period the
application for preliminary injunction is denied, the temporary order would thereby
be deemed automatically vacated. If no action is taken by the judge on the
application for preliminary injunction within the said 20 days, the temporary
restraining order would automatically expire on the 20th day by the sheer force of
law, no judicial declaration to that effect being necessary. In the instant case, no
such preliminary injunction was issued; hence, the TRO earlier issued automatically
expired under the aforesaid provision of the Rules of Court.98 (Citations omitted)
A temporary restraining order cannot be extended indefinitely to take the place of a
writ of preliminary injunction, since a temporary restraining order is intended only
to have a limited lifespan and is deemed automatically vacated upon the expiration
of 72 hours or 20 days, as the case may be. As such, the temporary restraining
order has long expired and, in the absence of a preliminary injunction, there was
nothing to stop the sheriff from registering the certificate of sale with the Registry
of Deeds.

This Court has repeatedly expounded on the nature of a temporary restraining

order99 and a preliminary injunction.100 Yet lower courts consistently interchange
these ancillary remedies and disregard the sunset clause101 inherent in a temporary
restraining order by erroneously extending it indefinitely. Such ignorance or
defiance of basic remedial measures is a gross disservice to the public, who look
towards the court for legal guidance and legal remedy. More importantly, this
cavalier attitude towards these injunctive reliefs might even be construed as a
deliberate effort to look the other way to favor a party, which will then sully the
image of the entire judiciary. Henceforth, this Court will demand stricter compliance
with the rules from the members of the bench as regards their issuances of these
injunctive reliefs.

IV

Finally, there is a need to reassess the place of Home Guaranty v. R-II Builders102 in
our jurisprudence.

In Home Guaranty, R-II Builders, Inc. (R-II Builders) filed a Complaint for the
rescission of the Deed of Assignment and Conveyance it entered into with Home
Guaranty Corporation and National Housing Authority. The Complaint was initially
determined to have a subject that is incapable of pecuniary estimation and the
docket fees were assessed and paid accordingly.103

R-II Builders later filed a motion to admit its Amended and Supplemental
Complaint, which deleted its earlier prayer for the resolution of its Deed of
Assignment and Conveyance, and prayed for the conveyance of title to and/or
possession of the entire Asset Pool. The Regional Trial Court ruled that the
Amended and Supplemental Complaint involved a real action and directed R-II
Builders to pay the correct docket fees.104

Instead of paying the additional docket fees, R-II Builders withdrew its Amended
and Supplemental Complaint and instead filed a motion to admit its Second
Amended Complaint, which revived the prayer in its original Complaint to resolve
the Deed of Assignment and Conveyance and deleted the causes of action for
conveyance of title to and/or possession of the entire Asset Pool in its Amended and
Supplemental Complaint.105 The Regional Trial Court granted the motion to admit
the Second Amended Complaint, ratiocinating that the docket fees to the original
Complaint had been paid; that the Second Amended Complaint was not intended to
delay the proceedings; and that the Second Amended Complaint was consistent
with R-II Builders' previous pleadings.106
The Court of Appeals upheld the ruling of the Regional Trial Court and reiterated
that the case involved a subject that was incapable of pecuniary
estimation.107 However, Home Guaranty reversed the Court of Appeals Decision,
ruling that the Complaint and the Amended and Supplemental Complaint both
involved prayers for the conveyance and/or transfer of possession of the Asset Pool,
causes of action which were undoubtedly real actions. Thus, the correct docket fees
had not yet been paid:108
Although an action for resolution and/or the nullification of a contract, like an action
for specific performance, fall squarely into the category of actions where the subject
matter is considered incapable of pecuniary estimation, we find that the causes of
action for resolution and/or nullification of the [Deed of Assignment and
Conveyance] was erroneously isolated by the [Court of Appeals] from the other
causes of action alleged in R-II Builders' original complaint and Amended and
Supplemental Complaint which prayed for the conveyance and/or transfer of
possession of the Asset Pool. In Gochan v. Gochan, this Court held that an action
for specific performance would still be considered a real action where it seeks the
conveyance or transfer of real property, or ultimately, the execution of deeds of
conveyance of real property.

....

Granted that R-II Builders is not claiming ownership of the Asset Pool because its
continuing stake is, in the first place, limited only to the residual value thereof, the
conveyance and/or transfer of possession of the same properties sought in the
original complaint and Amended and Supplemental Complaint both presuppose a
real action for which appropriate docket fees computed on the basis of the assessed
or estimated value of said properties should have been assessed and paid. . .
.109 (Citations omitted)
Home Guaranty stated that to determine whether an action is capable or incapable
of pecuniary estimation, the nature of the principal action or remedy prayed for
must first be determined.110Nonetheless, in citing Ruby Shelter Builders v.
Formaran, Home Guaranty looked beyond R-II Builder's principal action for
annulment or rescission of contract to purportedly unmask its true objective and
nature of its action, which was to recover real property.111

In a dissenting opinion in the Home Guaranty112 June 22, 2011 Resolution that
dismissed R-II Builders' motion for reconsideration, Associate Justice Presbitero
Velasco, Jr. stressed that one must first look at the principal action of the case to
determine if it is capable or incapable of pecuniary estimation:
Whether or not the case is a real action, and whether or not the proper docket fees
were paid, one must look to the main cause of action of the case. In all instances,
in the original Complaint, the Amended and Supplemental Complaint and the
Amended Complaint, it was all for the resolution or rescission of the [Deed of
Assignment and Conveyance], with the prayer for the provisional remedy of
injunction and the appointment of a trustee and subsequently a receiver. In the
Second Amended Complaint, the return of the remaining assets of the asset pool, if
any, to respondent R-II Builders would only be the result of the resolution or
rescission of the [Deed of Assignment and Conveyance].

Even if real property in the Asset Pool may change hands as a result of the case in
the trial court, the fact alone that real property is involved does not make that
property the basis of computing the docket fees. De Leon v. Court of Appeals has
already settled the matter. That case, citing Bautista v, Lim, held that a case for
rescission or annulment of contract is not susceptible of pecuniary estimation. On
the other hand, in the Decision We rendered on July 25, 2005 in Serrano v. Delica,
We ruled that the action for cancellation of contracts of sale and the titles is a real
action. Similarly, on February 10, 2009, We ruled in Ruby Shelter Builders and
Realty Development Corporation v. Formaran III (Ruby Shelter) that an action for
nullification of a Memorandum of Agreement which required the lot owner to issue
deeds of sale and cancellation of the. Deeds of Sale is a real action.113 (Citations
omitted)
Whatever confusion there might have been regarding the nature of actions for
nullity of contracts or legality of conveyances, which would also involve recovery of
sum of money or real property, was directly addressed by Lu v. Lu
Ym.114Lu underscored that "where the basic issue is something other than the right
to recover a sum of money, the money claim being only incidental to or merely a
consequence of, the principal relief sought, the action is incapable of pecuniary
estimation."115

This finds support in numerous decisions where this Court proclaimed that the test
to determine whether an action is capable or incapable of pecuniary estimation is to
ascertain the nature of the principal action or relief sought. Thus, if the principal
relief sought is the recovery of a sum of money or real property, then the action is
capable of pecuniary estimation. However, if the principal relief sought is not for the
recovery of money or real property and the money claim is only a consequence of
the principal relief, then the action is incapable of pecuniary estimation.116

Considering that the principal remedy sought by R-II Builders was the resolution of
the Deed of Assignment and Conveyance, the action was incapable of pecuniary
estimation and Home Guaranty erred in treating it as a real action simply because
the principal action was accompanied by a prayer for conveyance of real property.

It is clear that subject matter jurisdiction cannot be dependent on the supposed

ultimate motive or true objective of the complaint because this will require the
judge to speculate on the defenses of the plaintiff beyond the material allegations
contained in the complaint. Likewise, in attempting to pinpoint the true objective of
the complaint at the initial stages of trial, the judge might end up dictating the
result outside of the evidence still to be presented during the trial, opening up the
judge to charges of partiality and even impropriety. Furthermore, the judge is not
aware of the evidence to be presented by either party when the complaint is filed;
thus, there is no reliable basis that can be used to infer the true objective of the
complaint. It is imperative then that the competing claims as basis of subject
matter jurisdiction be textually based, finding its basis in the body of the complaint
and the relief sought without reference to extraneous facts not alleged or evidence
still to be presented.
Nonetheless, if subject matter jurisdiction is assailed during the course of the trial
and evidence is presented to prove the defense's allegation of lack of jurisdiction,
this will lead to an anomaly where the defense's evidence, instead of the complaint,
will effectively determine the remedy and cause of action.

In the case at bar, petitioner contends that its complaint prayed for the annulment
of the real estate mortgage it entered into with respondent and not for the recovery
or reconveyance of the mortgaged properties because it was still the registered
owner when it filed its complaint. The evidence on record supports petitioner's
claim; hence, there was no reason for the dismissal of its Complaint for lack of
jurisdiction.

Home Guaranty likewise erred in dismissing the action because of non-payment of

the correct filing fees. Fedman Development Corporation v. Agcaoili117 reiterated
that where the assessed docket fees have been paid and the assessment turns out
to be insufficient, the court still acquires jurisdiction over the case, subject to
payment of the deficiency assessment.118 The only exception is when the deficiency
in docket fees is accompanied with bad faith and an intention to defraud the
government.119 It is not disputed that R-II Builders paid the assessed docket fees
when it filed its Complaint, negating bad faith or intent on its part to defraud the
government.

In light of the foregoing, this Court reaffirms that the nature of an action is
determined by the principal relief sought in the complaint, irrespective of the other
causes of actions that may also crop up as a consequence of the principal relief
prayed for. The contrary rule espoused in Home Guaranty is thereby set aside.

WHEREFORE, this Court resolves to GRANT the Petition. The assailed April 3,
2012 Decision and July 25, 2012 Order of Branch 11, Regional Trial Court, City of
Malolos, Bulacan in Civil Case No. 04-M-2012 are REVERSED and SET ASIDE.

The case is ordered REMANDED to Branch 11, Regional Trial Court, City of Malolos,
Bulacan for continued trial on First Sarmiento Property Holdings, Inc.'s Complaint
for annulment of real estate mortgage and its amendments.

SO ORDERED.