Title
Government Service Insurance System vs. Heirs of Caballero
Case
G.R. No. 158090
Decision Date
Oct 4, 2010
Fernando defaulted on a GSIS mortgage, leading to foreclosure. GSIS sold the property to CMTC; Fernando contested the sale. SC ruled GSIS's counterclaim for unpaid rentals was permissive, requiring docket fees, and voided the trial court's judgment due to lack of jurisdiction.
government service insurance system
heirs of caballero
residential lot

Case Summary (G.R. No. 158090)

Factual Background

Fernando F. Caballero was the registered owner of Lot No. 3355, Ts-268, TCT No. T-16035, an 800-square-meter residential lot in Mlang, Cotabato, on which he built a two-story residential/commercial building. On March 7, 1968, Fernando and his wife executed a promissory note for P20,000 and a real estate mortgage in favor of GSIS. Fernando defaulted. The mortgage was foreclosed on January 20, 1973, and the property was sold at public auction on March 26, 1973, with GSIS the sole bidder at P36,283.00. Fernando failed to redeem. GSIS executed an Affidavit of Consolidation of Ownership on September 5, 1975, resulting in cancellation of TCT No. T-16035 and issuance of TCT No. T-45874 in GSIS’s name.

Post-Consolidation Negotiations and Subsequent Sale

On November 26, 1975, GSIS notified Fernando of consolidation and requested payment of monthly rental because Fernando continued to occupy the property. Fernando sought to repurchase the property by partial payments, but negotiations produced no agreement. GSIS scheduled a public bidding for January 16, 1989. On the scheduled date, Jocelyn Caballero bid P350,000.00 while Carmelita Mercantile Trading Corporation (CMTC) bid P450,000.00. CMTC was the highest bidder and was awarded the property. GSIS Board of Trustees issued Resolution No. 199 on May 16, 1989 confirming the award to CMTC. A Deed of Absolute Sale was executed on July 27, 1989, and TCT No. T-76183 was issued in CMTC’s name.

Complaint Filed in the RTC

Fernando, through his daughter and attorney-in-fact Jocelyn Caballero, filed a complaint in the RTC of Kabacan, Cotabato against CMTC, GSIS and its responsible officers, and the Register of Deeds of Kidapawan. He sought declarations voiding Resolution No. 199, the Deed of Absolute Sale, and TCT No. 76183 ab initio; he prayed that his P350,000.00 bid be declared the winning bid and that GSIS be ordered to execute a Deed of Sale in his favor. He also sought moral and exemplary damages, attorney’s fees, and litigation expenses. He alleged irregularities in the bidding and in CMTC’s qualifications and authority, GSIS’s wrongful allowance of CMTC’s participation, GSIS’s disregard of his asserted prior right to repurchase, and the Register of Deeds’ issuance of title without required supporting papers.

Answer and Counterclaim

GSIS filed an Answer with Affirmative Defenses and a Counterclaim. GSIS alleged that Fernando had lost his right of redemption and had failed to repurchase, prompting disposition of the property by public bidding as mandated by law; GSIS denied any prior right to buy back. GSIS maintained that CMTC’s corporate papers were in order. In its counterclaim, GSIS alleged Fernando owed P130,365.81 for back rentals including interest from January 1973 to February 1987, and an additional P249,800.00, excluding interest, representing rentals that Fernando allegedly collected from CMTC from January 1973 to February 1988 and did not turn over to GSIS.

Trial Court Proceedings and Ruling

After trial, the RTC rendered judgment on September 27, 1994 in favor of GSIS and dismissed Fernando’s complaint. The RTC granted GSIS’s counterclaim and ordered Fernando to pay GSIS the amount of P249,800.00 as rentals collected from CMTC. Fernando’s motion for reconsideration was denied by the RTC on March 27, 1995. Fernando appealed to the Court of Appeals.

Court of Appeals Decision

The Court of Appeals, in a Decision dated December 17, 2002, affirmed the RTC judgment with a modification. The CA deleted the portion of the RTC judgment ordering Fernando to pay GSIS P249,800.00. The CA denied GSIS’s motion for reconsideration in a Resolution dated April 29, 2003. GSIS then filed the present petition for review under Rule 45 before the Supreme Court.

Prior Petition and Res judicata Concern

Respondents had earlier filed a petition for review in G.R. No. 156609 contesting related matters. The Supreme Court denied that petition in a Resolution dated April 23, 2003 for failure to show reversible error, a decision that became final and executory on June 9, 2003. The Court observed that respondents’ attempts to re-litigate claims resolved in G.R. No. 156609 were not allowable in the present proceeding.

Issues Presented to the Supreme Court

GSIS assigned two principal errors: first, that the CA erred in holding GSIS’s claim for P249,800.00 in rentals was a permissive counterclaim requiring payment of docket fees before the trial court could acquire jurisdiction; and second, that the CA erred in finding GSIS’s documentary evidence for the P249,800.00 claim lacked proper identification.

Parties’ Contentions on the Counterclaim and Fees

GSIS contended that its counterclaim was compulsory and thus no docket fees were required; alternatively, it invoked exemption from payment of fees under Section 39, Republic Act No. 8291. GSIS relied on prior rulings, including Sun Insurance Office, Ltd. v. Judge Asuncion and Ayala Corporation v. Madayag, to argue that the trial court could adjudicate and secure additional filing fees by lien where appropriate. Respondents maintained the counterclaim was permissive and that GSIS’s failure to pay docket fees deprived the RTC of jurisdiction over that claim. Respondents also reiterated substantive objections to CMTC’s capacity to acquire the property, but the Court declined to entertain those matters anew because of the earlier denial in G.R. No. 156609.

Legal Standard on Compulsory Versus Permissive Counterclaims

The Court cited the four-part test to determine whether a counterclaim is compulsory: whether (a) the issues of fact and law are largely the same; (b) res judicata would bar a subsequent suit on the defendant’s claims; (c) substantially the same evidence would support or refute both the plaintiff’s claim and the defendant’s counterclaim; and (d) there is a logical relation between the claim and the counterclaim. A positive answer to all four questions indicates a compulsory counterclaim.

Supreme Court’s Analysis and Conclusion on the Counterclaim

Applying the foregoing test, the Court agreed with the Court of Appeals that GSIS’s claim for recovery of rentals from CMTC was permissive. The evidence necessary to annul or confirm the bid award, the Deed of Absolute Sale, and TCT No. 76183 differed materially from the evidence necessary to establish GSIS’s claim to rent payments that allegedly accrued after GSIS’s consolidation of ownership. The legal issues were distinct. Because GSIS treated the claim as compulsory and did not pay the prescribed docket fees for a permissive counterclaim, the RTC never acquired jurisdiction over that counterclaim.

Jurisdictional Consequence of Nonpayment of Docket Fees

The Court reaffirmed the principle that a trial court’s judgment on a matter over which it lacked jurisdiction is a total nullity. Accordingly, the RTC judgment insofar as it ordered Fernando to pay GSIS P249,800.00 was null and void. The absence of juris

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