G.R. No. 205068 - Heirs of Dragon vs. The Manila Banking Corp.

Between 1976 and 1982, Renato P. Dragon obtained four promissory notes from The Manila Banking Corporation—Nos. 20669, 20670, 7426 and 10973—with an aggregate principal of ₱6,945,642.00.
Each note stipulated an interest rate, penalty interest on default, attorneys’ fees, and maturity dates ranging from 1976 to 1983.

In 1987, Bangko Sentral ng Pilipinas placed Manila Banking under receivership, and the receiver sent Dragon several extrajudicial demand letters, the last dated August 12, 1998.
Attached to the final letter was a Statement of Account as of July 31, 1998, computing Dragon’s total indebtedness at ₱44,038,995.00 (principal plus accrued interest, penalties and attorneys’ fees).

On January 7, 1999, Manila Banking filed a Complaint for collection of sum of money in the RTC, praying for ₱6,945,642.00 plus interests, penalties and attorneys’ fees computed up to actual payment.
In his Answer with Compulsory Counterclaim (January 31, 2000), Dragon asserted partial payment and novation by Kalilid Wood Industries Corporation in 1984—allegedly confirmed by an April 22, 1991 RTC decision in Civil Case No. 46961—and pleaded prescription for failure to demand within ten years; he also sought ₱2,000,000.00 moral damages.

The RTC (September 26, 2007) rendered judgment for Manila Banking, ordering Dragon to pay ₱6,945,642.00 plus interest from August 12, 1998, 5% attorneys’ fees and costs, and declined to enforce the ~₱48 million Statement of Account for lack of supporting evidence.
The RTC (April 3, 2008) denied both parties’ motions for reconsideration and, relying on Sun Insurance Office v. Asuncion, declined to resolve the docket fee issue.
The Court of Appeals (June 27, 2012) affirmed, holding that Dragon waived novation and prescription by not timely pleading them and that only the principal and stipulated charges could be awarded.
The CA (December 5, 2012) denied reconsideration and ruled that deficient docket fees do not automatically divest jurisdiction, permitting payment of the difference or a lien on the judgment.

After Dragon’s death (October 22, 2012), his heirs moved for substitution—granted February 18, 2013—and filed a Rule 45 Petition for Review (February 21, 2013), challenging the CA decision and contending the RTC lacked jurisdiction due to underpayment of docket fees (paid on ₱6,945,642.00 instead of the true ₱44,038,995.00).
Petitioners argued Sun Insurance is inapplicable, Tacay v. RTC controls, the 1991 RTC decision effected novation of the promissory notes, and the cause of action had prescribed.
Manila Banking commented (June 10, 2013) that the petition raised factual issues (novel to Rule 45), defenses were waived, correct filing fees were paid on principal, and Sun Insurance applies; petitioners replied (October 29, 2013) focusing on questions of law.
The Supreme Court (March 3, 2014) gave due course to the petition, directed memoranda on (a) Rule 45 reviewability and (b) jurisdiction despite underpayment; memoranda were filed in May 2014.

Whether the Petition improperly raises questions of fact—existence of novation and prescription—unreviewable under Rule 45.
Whether novation and prescription are factual issues requiring evidence and hence beyond the scope of certiorari.

Whether the RTC acquired jurisdiction over Manila Banking’s claim despite its insufficient payment of docket fees based solely on the principal amount, omitting interests, penalties and attorneys’ fees.
Whether Manila Banking’s omission of the aggregate amount in its complaint’s prayer constituted an intent to evade correct filing fees and thus deprived the court of jurisdiction.