G.R. No. 165025; August 31, 2011
Fedman Development Corporation, Petitioner, vs. Federico Agcaoili, Respondent.

FACTS

Petitioner Fedman Development Corporation (FDC) owned and developed the Fedman Suites Building (FSB). Respondent Federico Agcaoili acquired rights to Unit 411 from Interchem Laboratories, Inc., assuming payment obligations to FDC. In December 1983, the centralized air-conditioning on FSB’s fourth floor broke down. Agcaoili demanded repairs from the condominium corporation (FSCC) but received no response, leading him to suspend payment of his condominium dues and monthly amortizations. On August 30, 1984, FDC cancelled the contract to sell and cut off the unit’s electricity. Agcaoili sued for injunction and damages, resulting in a compromise agreement approved by the RTC on August 26, 1985, wherein Agcaoili paid arrears and FDC reinstated the contract and allowed temporary air-conditioners.
On April 22, 1986, FDC again disconnected the electricity. Agcaoili moved for execution of the 1985 decision and was temporarily allowed to obtain electricity from other units. On March 6, 1987, Agcaoili filed a new complaint for damages against FDC and FSCC in the RTC, alleging unjust deprivation of the unit’s use, violation of the compromise agreement, and seeking actual, moral, and exemplary damages and attorney’s fees. He also challenged the legality of increased interest rates and claimed FDC and FSCC were the same entity.
FDC, in its answer, contended it was separate from FSCC, that Agcaoili had failed to pay his obligations justifying the cancellation and disconnection, and that the complaint was barred by res judicata due to the 1985 compromise. FDC also filed a compulsory counterclaim for moral and exemplary damages and attorney’s fees. FSCC similarly justified the disconnection due to non-payment of dues.
The RTC ruled in favor of Agcaoili on August 28, 1998, declaring the increased rates illegal, ordering reinstatement of the contract and restoration of services, and awarding damages. The CA affirmed this decision on August 20, 2004. FDC appealed to the Supreme Court, raising issues regarding jurisdiction due to alleged non-payment of correct docket fees, the HLURB’s exclusive jurisdiction, and the merits of the RTC and CA rulings.

ISSUE

1. Whether the RTC acquired jurisdiction over the case despite the plaintiff not specifying the exact amounts for moral damages, exemplary damages, and attorney’s fees in the complaint, which affects the calculation of the docket fee.
2. Whether the RTC had jurisdiction over the subject matter or if it pertained exclusively to the Housing and Land Use Regulatory Board (HLURB).
3. Whether the RTC and CA erred in their substantive rulings that: (a) Agcaoili had the right to suspend payment; (b) FDC had no right to cancel the contract; and (c) FDC and FSCC were one entity solidarily liable for damages.

RULING

1. On Jurisdiction over the Case (Docket Fees): The Supreme Court ruled that the RTC validly acquired jurisdiction. The non-payment of the prescribed filing fee at the time of filing fails to vest jurisdiction. However, where the plaintiff pays the amount assessed by the clerk of court, and such payment is later found deficient, the court still acquires jurisdiction, subject to the plaintiff paying the deficiency. Agcaoili paid the docket fees as assessed based on the actual damages specified (P21,626.60). The unspecified amounts for moral and exemplary damages and attorney’s fees were considered as not being claimed for purposes of determining the filing fee, following the ruling in Sun Insurance Office, Ltd. v. Asuncion. Any deficiency could be considered a lien on the judgment award. Therefore, the challenge on this ground failed.
2. On Jurisdiction over the Subject Matter (HLURB): The Court held that the RTC had jurisdiction. The action was primarily for damages arising from alleged breaches and tortious acts (unjust disconnection of electricity), not a suit specifically for specific performance of a contract to sell or a intra-corporate dispute within the exclusive jurisdiction of the HLURB at the time the complaint was filed in 1987.
3. On the Substantive Merits: The Supreme Court found no merit in FDC’s appeals on the substantive issues and affirmed the lower courts’ findings:
* Right to Suspend Payment: The RTC and CA correctly held that Agcaoili was justified in suspending his payments due to FDC’s and FSCC’s failure to maintain essential services (air-conditioning), which constituted a breach of their reciprocal obligations.
* Improper Cancellation of Contract: The cancellation of the contract to sell by FDC was improper as it was done despite Agcaoili’s valid reason for suspending payments and without proper application of payments made, amounting to a violation of the compromise agreement.
* Solidary Liability of FDC and FSCC: The evidence supported the finding that FDC and FSCC were not acting as separate entities. FDC controlled FSCC, and their actions (like disconnecting utilities) were intertwined in dealing with Agcaoili, making them solidarily liable for the damages awarded.
The petition was denied for lack of merit. The decision of the Court of Appeals was affirmed.