GR No.
138822, January 22, 2001 Doctrine:
Evangeline Alday v. FGU Insurance Corporation
Gonzaga-Reyes, J.
Facts:
FGU Insurance Corporation (FGU) filed a complaint for with the Regional Trial Court (RTC) of Makati
against Evangeline Alday (Alday) amounting to P114,650.76. Alday filed her Answer by way of
counterclaim and asserted that it is FGU who owes them P104,893.45 in direct commissions, profit
commissions, and bonuses from July 1, 1986 to December 7, 1986 and for premium reserves amounting
to P500,000. She also prayed for attorney’s fees, litigation expenses, moral damages and exemplary
damages for the allegedly unfounded actions filed by FGU. FGU then moved to strike out Alday’s answer
and to declare her in default for filing the answer out of time. The motion was denied. FGU again moved
to dismiss Alday’s counterclaim by contending that the trial court never acquired jurisdiction over the
same because of non-payment of docket fees. Alday also in response, asked the trial court to declare her
counterclaim as exempt from payment of docket fees since it is compulsory and that FGU be declared in
default for failing to answer such counterclaim.
The trial court ruled in favor of FGU by dismissing Alday’s counterclaim and consequently denied Alday’s
motion. It found Alday’s counterclaim to be merely permissive and that failure to pay the docket fees
prevented the court from acquiring jurisdiction over the same. Alday moved for reconsideration but was
denied. The Court of Appeals (CA) sustained the trial court, and her motion for reconsideration was
denied. Hence this petition.
Issue:
WON the counterclaim is compulsory or permissive
Held:
No. A Compulsory Counterclaim is one which, xxx, arises out of or is connected with the transaction or
occurence constituting the subject matter of the opposing party’s claim and does not require for its
adjudication the presence of third parties of whom the court cannot acquire jurisdiction.
The Supreme Court cited Valencia v. Court of Appeals and Quintanilla v. Court of Appeals which
determines whether a counterclaim is permissive or compulsory. It found that the counterclaim
is merely permissive with regard her claim for commissions, bonuses and premium reserves. The
evidence required to prove Alday’s claims differs from that needed to establish FGU’s demands for the
recovery of cash accountabilities from Alday, such as cash advances and costs of premiums. However,
Alday’s claims for damages are COMPULSORY. There is no need to pay docket fees for her compulsory
counterclaim but in order for the trial court to acquire jurisdiction over her permissive counterclaim, she
is bound to pay the prescribed docket fees, citing Sun Insurance Office Ltd v Hon. Maximiano Asuncion as
reiterated in Suson v Court of Appeals, where although the payment of the prescribed docket fees is a
jurisdictional requirement, its non-payment does not result in the automatic dismissal of the case
provided the docket fees are paid withing the applicable prescriptive or reglementary period. The court
should have instead given Alday a reasonable time, but in no case beyond the applicable prescriptive or
reglementary period, to pay the filing fees for her permissive counterclaim.
Judgement: The decision of the Court of Appeals is MODIFIED. The compulsory counterclaim for
damages is REINSTATED and ordered the RTC of Makati to require petitioner to pay docket fees for her
permissive counterclaim.
Estoppel. Estoppel by laches arises from the negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either has abandoned or declined to
assert it. In the case at bar, respondent cannot be considered estopped from assailing the trial court’s
jurisdiction over the petitioner’s counterclaim since this issue was raised by respondent with the trial
court itself – the body where the action is pending – even before the presentation of any evidence by the
parties and definitely, way before the judgement could be rendered by the trial court.
Estoppel, exception. Although the lack of jurisdiction of a court may be raised at any stage of the action,
a party may be estopped from raising such questions if he has actively taken part in the very proceedings
which he questions, belatingly objecting to the court’s jurisdiction in the event that the judgement or
order subsequently rendered is adverse to him. In this case, respondent actively took part in the
proceedings before the Court of Appeals by filing its appellee’s brief with the same. Its participation,
when taken together with its failure to object to the appellate court’s jurisdiction during the entire
duration of the proceedings before such court, demonstrates a willingness to abide by the resolution of
the case by such tribunal and accordingly, respondent is now most decidedly estopped from objecting to
the court of Appeals’ assumption of jurisdiction over the petitioner’s appeal.
Compulsory Counterclaim. The basic issue for resolution in this case is whether or not the counterclaim
of petitioner is compulsory or permissive in nature. A compulsory counterclaim is one which, being
cognizable by the regular courts of justice, arises out of or is connected with the transaction or
occurrence constituting the subject matter of the opposing party’s claim and does not require for its
adjudication the presence of third parties of whom the court cannot acquire jurisdiction. In Valencia v.
Court of Appeals, this Court capsulized the criteria or tests that may be used in determining whether a
counterclaim is compulsory or permissive, summarized as follows:
1. Are the issues of fact and law raised by the claim and counterclaim largely the same?
2. Would res judicata bar a subsequent suit on defendant’s claim absent the compulsory counterclaim
rule?
3. Will substantially the same evidence support or refute plaintiff’s claim as well s defendant’s
counterclaim?
4. Is there any logical relation between the claim and the counterclaim?
Another test, applied in the more recent case of Quintanilla v. Court of Appeals, is the “compelling test of
compulsoriness” which requires “a logical relationship between the claim and counterclaim, that is,
where conducting separate trials of the respective claims of the parties would entail a substantial
duplication of effort and time by the parties and the court.”
As contained in her answer, petitioner’s counterclaims are as follows:
(20) That defendant incorporates and repleads by reference all the foregoing allegations as may be
material to her Counterclaim against FGU.
(21) That FGU is liable to pay the following just, valid and legitimate claims of defendant:
(a) the sum of at least P104,893.45 plus maximum interest thereon representing, among others, direct
commissions, profit commissions and contingent bonuses legally due to defendant; and
(b) the minimum amount of P500,000.00 plus the maximum allowable interest representing defendant’s
accumulated premium reserve for 1985 and previous years,
which FGU has unjustifiably failed to remit to defendant despite repeated demands in gross violation of
their Special Agent’s Contract and in contravention of the principle of law that “every person must, in the
exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.”
(22) That as a result of the filing of this patently baseless, malicious and unjustified Complaint, and FGU’s
unlawful, illegal and vindictive termination of their Special Agent’s Contract, defendant was
unnecessarily dragged into this litigation and to defense [sic] her side and assert her rights and claims
against FGU, she was compelled to hire the services of counsel with whom she agreed to pay the amount
of P30,000.00 as and for attorney’s fees and stands to incur litigation expenses in the amount estimated
to at least P20,000.00 and for which FGU should be assessed and made liable to pay defendant.
(23) That considering further the malicious and unwarranted action of defendant in filing this grossly
unfounded action, defendant has suffered and continues to suffer from serious anxiety, mental anguish,
fright and humiliation. In addition to this, defendant’s name, good reputation and business standing in
the insurance business as well as in the community have been besmirched and for which FGU should be
adjudged and made liable to pay moral damages to defendant in the amount of P300,000.00 as
minimum.
(24) That in order to discourage the filing of groundless and malicious suits like FGU’s Complaint, and by
way of serving [as] an example for the public good, FGU should be penalized and assessed exemplary
damages in the sum of P100,000.00 or such amount as the Honorable Court may deem warranted under
the circumstances.
Tested against the abovementioned standards, petitioner’s counterclaim for commissions, bonuses, and
accumulated premium reserves is merely permissive. The evidence required to prove petitioner’s claims
differs from that needed to establish respondent’s demands for the recovery of cash accountabilities
from petitioner, such as cash advances and costs of premiums. The recovery of respondent’s claims is
not contingent or dependent upon establishing petitioner’s counterclaim, such that conducting separate
trials will not result in the substantial duplication of the time and effort of the court and the parties. One
would search the records in vain for a logical connection between the parties’ claims. This conclusion is
further reinforced by petitioner’s own admissions since she declared in her answer that respondent’s
cause of action, unlike her own, was not based upon the Special Agent’s Contract.However, petitioner’s
claims for damages, allegedly suffered as a result of the filing by respondent of its complaint, are
compulsory.
Non-payment does not result in the automatic dismissal of the case provided the docket fees are paid
within the applicable prescriptive or reglementary period. There is no need for need for petitioner to
pay docket fees for her compulsory counterclaim.25 On the other hand, in order for the trial court to
acquire jurisdiction over her permissive counterclaim, petitioner is bound to pay the prescribed
docket fees.26 The rule on the payment of filing fees has been laid down by the Court in the case of Sun
Insurance Office, Ltd. V. Hon. Maximiano Asuncion27-
1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the
prescribed docket fee, that vests a trial court with jurisdiction over the subject-matter or nature of the
action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the
court may allow payment of the fee within a reasonable time but in no case beyond the applicable
prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which
shall not be considered filed until and unless the filing fee prescribed therefor is paid. The court may
allow payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive
or reglementary period.
3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and
payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the
pleading, or if specified the same has been left for determination by the court, the additional filing fee
therefor shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his
duly authorized deputy to enforce said lien and assess and collect the additional fee.
The above mentioned ruling in Sun Insurance has been reiterated in the recent case of Susan v. Court of
Appeals. In Suson, the Court explained that although the payment of the prescribed docket fees is a
jurisdictional requirement, its non-payment does not result in the automatic dismissal of the case
provided the docket fees are paid within the applicable prescriptive or reglementary period. Coming now
to the case at bar, it has not been alleged by respondent and there is nothing in the records to show that
petitioner has attempted to evade the payment of the proper docket fees for her permissive
counterclaim. As a matter of fact, after respondent filed its motion to dismiss petitioner’s counterclaim
based on her failure to pay docket fees, petitioner immediately filed a motion with the trial court, asking
it to declare her counterclaim as compulsory in nature and therefore exempt from docket fees and, in
addition, to declare that respondent was in default for its failure to answer her counterclaim. However,
the trial court dismissed petitioner’s counterclaim. Pursuant to this Court’s ruling in Sun Insurance, the
trial court should have instead given petitioner a reasonable time, but in no case beyond the applicable
prescriptive or reglementary period, to pay the filing fees for her permissive counterclaim.
Answer. No need to file an answer until payment of docket fees Petitioner asserts that the trial court
should have declared respondent in default for having failed to answer her counterclaim. Insofar as the
permissive counterclaim of petitioner is concerned, there is obviously no need to file an answer until
petitioner has paid the prescribed docket fees for only then shall the court acquire jurisdiction over such
claim. Meanwhile, the compulsory counterclaim of petitioner for damages based on the filing by
respondent of an allegedly unfounded and malicious suit need not be answered since it is inseparable
from the claims of respondent. If respondent were to answer the compulsory counterclaim of petitioner,
it would merely result in the former pleading the same facts raised in its complaint.
Korea Technologies Co., Ltd. Vs. Hon. Albert A. Lerma, et al. , G.R. No. 143581. January 7, 2008

FACTS: Petitioner KOGIES and respondent PGSMC executed a Contract whereby KOGIES would set up an
LPG Cylinder Manufacturing Plant for respondent. Respondent unilaterally cancelled the contract on the
ground that petitioner had altered the quantity and lowered the quality of the machineries and
equipment it delivered. Petitioner opposed informing the latter that PGSMC could not unilaterally
rescind their contract nor dismantle and transfer the machineries and equipment on mere imagined
violations by petitioner. Petitioner then filed a Complaint for Specific Performance against respondent
before the RTC. Respondent filed its Answer with Compulsory Counterclaim asserting that it had the full
right to dismantle and transfer the machineries and equipment because it had paid for them in full as
stipulated in the contract. KOGIES filed a motion to dismiss respondent’s counterclaims arguing that
when PGSMC filed the counterclaims, it should have paid docket fees and filed a certificate of non-forum
shopping, and that its failure to do so was a fatal defect. The RTC dismissed the petitioner’s motion to
dismiss respondent’s counterclaims as these counterclaims fell within the requisites of compulsory
counterclaims.

ISSUE: WON payment of docket fees and certificate of non-forum shopping were required in the
respondent’s Answer with counterclaim?

HELD: NO. The counterclaims of PGSMC were incorporated in its Answer with Compulsory Counterclaim
in accordance with Section 8 of Rule 11, 1997 Revised Rules of Civil Procedure, the rule that was effective
at the time the Answer with Counterclaim was filed. Sec. 8 on existing counterclaim or cross-claim states,
“A compulsory counterclaim or a cross-claim that a defending party has at the time he files his answer
shall be contained therein.” As to the failure to submit a certificate of forum shopping, PGSMC’s Answer
is not an initiatory pleading which requires a certification against forum shopping under Sec. 524 of Rule
7, 1997 Revised Rules of Civil Procedure. It is a responsive pleading, hence, the courts a quo did not
commit reversible error in denying KOGIES’ motion to dismiss PGSMC’s compulsory counterclaims. At the
time PGSMC filed its Answer incorporating its counterclaims against KOGIES, it was not liable to pay filing
fees for said counterclaims being compulsory in nature. We stress, however, that effective August 16,
2004 under Sec. 7, Rule 141, as amended by A.M. No. 04-2-04-SC, docket fees are now required to be
paid in compulsory counterclaim or cross-claims.
UPDATE: Overturned by Mercado vs CA.
LEONIDES MERCADO, G.R. No. 169576
represented by his heirs:
RACQUEL D. MERCADO, Present:
JIMMY D. MERCADO,
HENRY D. MERCADO, PUNO, C.J., Chairperson,
LOURICAR D. MERCADO CARPIO,
and VIRGILIO D. MERCADO, CORONA,
Petitioners, AZCUNA and
LEONARDO-DE CASTRO, JJ.
-versus-
COURT OF APPEALS and
SAN MIGUEL CORPORATION,
Respondents.
Promulgated:
October 17, 2008
CORONA, J.:
Leonides Mercado had been distributing respondent San Miguel Corporations (SMCs) beer products in
Quiapo, Manila since 1967. In 1991, SMC extended to him a P7.5 million credit line allowing him to
withdraw goods on credit. To secure his purchases, Mercado assigned three China Banking Corporation
(CBC) certificates of deposit amounting to P5 million[1] to SMC and executed a continuing hold-out
agreement stating:
Any demand made by [SMC] on [CBC], claiming default on my/our part shall be
conclusive on [CBC] and shall serve as absolute authority for [CBC] to encash the
[CBC certificates of deposit] in accordance with the third paragraph of this Hold-Out
Agreement, whether or not I/we have in fact defaulted on any of my/our obligations
with [SMC], it being understood that the issue of whether or not there was factual
default must be threshed out solely between me/us and [SMC]
He also submitted three surety bonds from Eastern Assurance and Surety Corporation (EASCO)
totaling P2.6 million.[2]
On February 10, 1992, SMC notified CBC that Mercado failed to pay for the items he withdrew on credit.
Consequently, citing the continuing hold-out agreement, it asked CBC to release the proceeds of the
assigned certificates of deposit. CBC approved SMBs request and informed Mercado.
On March 2, 1992, Mercado filed an action to annul the continuing hold-out agreement and deed of
assignment in the Regional Trial Court (RTC) of Manila, Branch 55.[3] He claimed that the continuing hold-
out agreement allowed forfeiture without the benefit of foreclosure. It was therefore void pursuant to
Article 2088 of the Civil Code.[4] Moreover, Mercado argued that he had already settled his recent
purchases on credit but SMC erroneously applied the said payments to his old accounts not covered by
the continuing hold-out agreement (i.e., purchases made prior to the extension of the credit line).
On March 18, 1992, SMC filed its answer with counterclaim against Mercado. It contended that Mercado
delivered only two CBC certificates of deposit amounting to P4.5 million[5] and asserted that the execution
of the continuing hold-out agreement and deed of assignment was a recognized business
practice. Furthermore, because Mercado admitted his outstanding liabilities, SMC sought payment of the
lees products he withdrew (or purchased on credit) worth P7,468,153.75.[6]
On April 23, 1992, SMC filed a third-party complaint against EASCO.[7] It sought to collect the proceeds of
the surety bonds submitted by Mercado.
On September 14, 1994, Mercado filed an urgent manifestation and motion seeking the dismissal of the
complaint. He claimed that he was no longer interested in annulling the continuing hold-out agreement
and deed of assignment. The RTC, however, denied the motion.[8] Instead, it set the case for pre-trial.
Thereafter, trial ensued.
During trial, Mercado acknowledged the accuracy of SMCs computation of his outstanding liability as of
August 15, 1991. Thus, the RTC dismissed the complaint and ordered Mercado and EASCO (to the extent
of P2.6 million or the value of its bonds) to jointly and severally pay SMC the amount of P7,468,153.75.[9]
Aggrieved, Mercado and EASCO appealed to the Court of Appeals (CA)[10] insisting that Mercado did not
default in the payment of his obligations to SMC.
On December 14, 2004, the CA affirmed the RTC decision in toto.[11] Mercado and EASCO both moved for
reconsideration but their respective motions were denied.[12]
On October 28, 2005, EASCO filed a petition for review on certiorari in this Court[13] but eventually agreed
to settle its liability with SMC.[14] The petition was terminated on September 19, 2007.[15]
Meanwhile, Mercado passed away and was substituted by his heirs, petitioners Racquel D. Mercado,
Jimmy D. Mercado, Henry D. Mercado, Louricar D. Mercado and Virgilio D. Mercado.
Petitioners subsequently filed this petition asserting that the CA erred in affirming the RTC
decision in toto. The said decision (insofar as it ordered Mercado to pay SMC P7,468,153.75) was void.
SMCs counterclaim was permissive in nature. Inasmuch as SMC did not pay docket fees, the RTC never
acquired jurisdiction over the counterclaim.
We deny the petition.
A counterclaim (or a claim which a defending party may have against any party)[16] may be
compulsory[17] or permissive. A counterclaim that (1) arises out of (or is necessarily connected with) the
transaction or occurrence that is the subject matter of the opposing partys claim; (2) falls within the
jurisdiction of the court and (3) does not require for its adjudication the presence of third parties over
whom the court cannot acquire jurisdiction, is compulsory.[18] Otherwise, a counterclaim is merely
permissive.
When Mercado sought to annul the continuing hold-out agreement and deed of assignment
(which he executed as security for his credit purchases), he in effect sought to be freed from them. While
he admitted having outstanding obligations, he nevertheless asserted that those were not covered by the
assailed accessory contracts. For its part, aside from invoking the validity of the said agreements, SMC
therefore sought to collect the payment for the value of goods Mercado purchased on credit. Thus,
Mercados complaint and SMCs counterclaim both touched the issues of whether the continuing hold-out
agreement and deed of assignment were valid and whether Mercado had outstanding liabilities to SMC.
The same evidence would essentially support or refute Mercados claim and SMCs counterclaim.
Based on the foregoing, had these issues been tried separately, the efforts of the RTC and the
parties would have had to be duplicated. Clearly, SMCs counterclaim, being logically related to Mercados
claim, was compulsory in nature.[19] Consequently, the payment of docket fees was not necessary for the
RTC to acquire jurisdiction over the subject matter.
WHEREFORE, the petition is hereby DENIED.
 PROTON PILIPINAS CORPORATION et al. v. BANQUE NATIONALE DE PARIS Ruby Shelter v. Formaran
-payment of the correct filing fees would not automatically divest the court of jurisdiction but only
after failure to pay the filing fees even after reasonable time to do so
460 SCRA 260 (2005), THIRD DIVISION
-in this case, case was worded so that it was only for declaration of nullity of the deeds of sale, but the
case involved the recovery of real estate - so basis of the docket fees should have been the fair market
Petitioner Proton Pilipinas Corporation (Proton) availed credit facilities of value of the property and not the fixed fee for actions incapable of pecuniary estimation
respondent Banque Nationale De Paris (BNP). In order to assure payment, co-petitioners Automotive
Corporation, Asea One Corporation and Autocorp Group executed a corporate guarantee.

Proton failed to comply with his obligation to BNP. Thereafter, BNP demanded the payment of Proton‘s
obligation to its co-petitioners pursuant to corporate guarantee. But the same remained unheeded. BNP
then filed a complaint with the Regional Trial Court (RTC) against Proton et al. The clerk of court assessed
the docket fee. Proton et al. filed a Motion to Dismiss on the ground that the court
cannot exercisejurisdiction over the case because BNP did not properly pay the docket fees. The RTC
denied the motion to dismiss. On appeal, the Court of Appeals denied the motion of Proton et al. Hence
this present petition.

ISSUE:

Whether or not the court does not acquire jurisdiction when there is an improper payment of docket fees

HELD:

The Court rules that it is not simply the filing of the complaint or appropriate initiatory pleading, but the
payment of the prescribed docket fee that vests a trial court with jurisdiction over the subject-matter or
nature of the action. Where the filing of the initiatory pleading is not accompanied by payment of the
docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond
the applicable prescriptive or reglementary period. It also stated that where the trial
court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the
prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if
specified the same has been left for determination by the court, the additional filing fee therefore shall
constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his
duly authorized deputy to enforce said lien and assess and collect the additional fee.

In the case at bar, BNP merely relied on the assessment made by the clerk of court which turned out to be
incorrect. Under the circumstances, the clerk of court has the responsibility of reassessing what
respondent must pay within the prescriptive period, failing which the complaint merits dismissal.
ST. LOUIS UNIVERSITY, INC., petitioner,
vs.
EVANGELINE C. COBARRUBIAS, respondent.
[G.R. No. 187104. August 03, 2010]
FACTS:
Respondent is an associate professor of the petitioner and an active member of the union of faculty and
employees. The Collective Bargaining Agreements contained the following provision that for teaching
employees in college who fail the yearly evaluation, who are retained for three (3) cumulative years in five
(5) years, shall be on forced leave for one (1) regular semester during which period all benefits due them
shall be suspended. Petitioner placed respondent on forced leave for failing to achieve the required rating
points. Respondent sought recourse from the CBA’s grievance machinery, but to no avail. Respondent filed
a case with DOLE but circulation and mediation again failed. The parties submitted the issues between
them for voluntary arbitration before Voluntary Arbitrator (VA). Respondent argued that the CA already
resolved the forced leave issue in a prior case between the parties, ruling that the forced leave for teachers
who fail their evaluation for three (3) times within a five-year period should be coterminous with the CBA
in force during the same five-year period. Petitioner argued that said CA decision is not yet final. The VA
dismissed the complaint. Respondent filed with the CA a petition for review under Rule 43 of the Rules of
Court but failed to pay the filing fees and to attach the material portion of the records. Motion for
reconsideration was filed, complying with the procedural lapses, and CA reinstated the petition.
no appeal has been filed. Here, the docket fees were paid late, and without payment of the full docket
fees, Cobarrubias’ appeal was not perfected within the reglementary period.
There are, however, there are recognized exceptions to their strict observance, such as: (1) most
persuasive and weighty reasons; (2) to relieve a litigant from an injustice not commensurate with his failure
to comply with the prescribed procedure; (3) good faith of the defaulting party by immediately paying
within a reasonable time from the time of the default; (4) the existence of special or compelling
circumstances; (5) the merits of the case; (6) a cause not entirely attributable to the fault or negligence of
the party favored by the suspension of the rules; (7) a lack of any showing that the review sought is merely
frivolous and dilatory; (8) the other party will not be unjustly prejudiced thereby; (9) fraud, accident,
mistake or excusable negligence without the appellant’s fault; (10) peculiar, legal and equitable
circumstances attendant to each case; (11) in the name of substantial justice and fair play; (12) importance
of the issues involved; and (13) exercise of sound discretion by the judge, guided by all the attendant
circumstances. Thus, there should be an effort, on the part of the party invoking liberality, to advance a
reasonable or meritorious explanation for his/her failure to comply with the rules.

ISSUES:
Remedial Law
(1) Whether or not the Court of Appeals erred in reinstating respondent’s petition despite her failure to
appeal (docket) fee within the reglementary period.

RULINGS:
Remedial Law
(1) Yes. The CA erred in its ruling. Appeal is not a natural right but a mere statutory privilege, thus, appeal
must be made strictly in accordance with the provision set by law. Rule 43 of the Rules of Court provides
that appeals from the judgment of the VA shall be taken to the CA, by filing a petition for review within
fifteen (15) days from the receipt of the notice of judgment. Furthermore, upon the filing of the petition,
the petitioner shall pay to the CA clerk of court the docketing and other lawful fees; non-compliance with
the procedural requirements shall be a sufficient ground for the petition’s dismissal. Thus, payment in
full of docket fees within the prescribed period is not only mandatory, but also jurisdictional. It is an
essential requirement, without which, the decision appealed from would become final and executory as if
 Gipa vs Southern Luzon Institute fee is an indispensable step for the perfection of an appeal. In both original and appellate cases, the court
G.R. No.177425 June 18, 2014 acquires jurisdiction over the case only upon the payment of the prescribed docket fees.
Suffice it to say that “[c]oncomitant to the liberal interpretation of the rules of procedure should be an
Facts: On February 26, 1996, respondent Southern Luzon Institute (SLI), an educational institution in Bulan, effort on the part of the party invoking liberality to adequately explain his failure to abide by the rules.”
Sorsogon, filed a Complaint for Recovery of Ownership and Possession with Damages against petitioners Those who seek exemption from the application of the rule have the burden of proving the existence of
Alonzo Gipa, Imelda Marollano, Juanito Ludovice, Demar Bitangcor, Virgilio Gojit, Felipe Montalban and exceptionally meritorious reason warranting such departure. Petitioners‘ failure to advance any
four others namely, Arturo Rogacion, Virgilio Gracela, Rosemarie Alvarez and Rosita Montalban (Rosita). explanation as to why they failed to pay the correct docket fees or to complete payment of the same within
During trial, defendant Rosita executed a Special Power of Attorney in favor of her sister Daisy M. Placer the period allowed by the CA is thus fatal to their cause. Hence, a departure from the rule on the payment
(Placer) authorizing the latter to represent her in the case and to sign any and all papers in relation thereto. of the appeal fee is unwarranted. Neither do the cases cited by petitioners help because they are not in
Finding SLI to have proven its ownership of the property by preponderance of evidence, the RTC rendered point. Unlike in this case, the CA in Camposagrado no longer required the petitioners therein to complete
a Decision in its favor on January 5, 2005. the payment of the appeal fee by remitting the ₱5.00 deficiency but just dismissed the appeal outright.
Petitioners and their co-defendants filed a Notice of Appeal which was granted by the RTC in its Order of Moreover, a justifiable reason for the insufficient payment was tendered by petitioners in the said case,
January 27, 2005. The CA, however, dismissed the appeal in its Resolution of August 26, 2005 since it was i.e., that they relied on the assessment made by the collection officer of the court and honestly believed
not shown that the appellate court docket fees and other lawful fees were paid. Petitioners and their co- that the amount collected from them was that which is mandated by the Rules.
defendants promptly filed a Motion for Reconsideration to which they attached a Certification from the
RTC that they paid the appeal fee in the amount of₱3,000.00 under Official Receipt No. 18091130 dated
January 25, 2005. In view of this, the CA granted the said motion and consequently reinstated the appeal
through a Resolution dated November 2, 2005. Subsequently, however, the CA further required
petitioners and their codefendants, through a Minute Resolution dated March 1, 2006, to remit within ten
days from notice the amount of ₱30.00 for legal research fund, which apparently was not included in the
₱3,000.00 appeal fee previously paid by them. Copy of the said resolution was received on March 13,2006
by petitioners‘ counsel, Atty. Jose G. Gojar of the Public Attorney‘s Office. Despite the lapse of nine months
from their counsel‘s receipt of the said resolution, petitioners and their co-defendants, however, failed to
comply with the CA‘s directive. Hence, the said court dismissed the appeal through its Resolution of
December 20, 2006. Petitioners and their co-defendants filed a Motion for Reconsideration invoking the
principle of liberality in the application of technical rules considering that they have paid the substantial
amount of ₱3,000.00 for docket and other legal fees and fell short only by the meager amount of ₱30.00.
As compliance, they attached to the said motion a postal money order in the sum of ₱30.00 payable to the
Clerk of Court of the CA. The CA, however, was not swayed, hence, the denial of the Motion for
Reconsideration in its Resolution of March 30, 2007.

Issue: Whether or not the CA erred in dismissing the appeal for the nonpayment of the ₱30.00.

Held: No. Payment of the full amount of appellate court docket and lawful fees is mandatory and
jurisdictional; Relaxation of the rule on payment of appeal fee is unwarranted in this case.
Section 4, Rule 41 of the Rules of Court provides:
Sec. 4. Appellate court docket and other lawful fees. – Within the period for taking an appeal, the appellant
shall pay to the clerk of court which rendered the judgment or final order appealed from, the full amount
of the appellate court docket and other lawful fees. Proof of payment of said fees shall be transmitted to
the appellate court together with the original record or the record on appeal.
In Far Corporation v. Magdaluyo, as with other subsequent cases of the same ruling, the Court explained
that the procedural requirement under Section 4 of Rule 41 is not merely directory, as the payment of the
docket and other legal fees within the prescribed period is both mandatory and jurisdictional. It bears
stressing that an appeal is not a right, but a mere statutory privilege. An ordinary appeal from a decision
or final order of the RTC to the CA must be made within 15 days from notice. And within this period, the
full amount of the appellate court docket and other lawful fees must be paid to the clerk of the court which
rendered the judgment or final order appealed from. The requirement of paying the full amount of the
appellate docket fees within the prescribed period is not a mere technicality of law or procedure. The
payment of docket fees within the prescribed period is mandatory for the perfection of an appeal. Without
such payment, the appeal is not perfected. The appellate court does not acquire jurisdiction over the
subject matter of the action and the Decision sought to be appealed from becomes final and executory.
Further, under Section 1 (c), Rule 50, an appeal may be dismissed by the CA, on its own motion or on that
of the appellee, on the ground of the non-payment of the docket and other lawful fees within the
reglementary period as provided under Section 4 of Rule 41. The payment of the full amount of the docket