HOME GUARANTY CORPORATION

Vs.
R-II BUILDERS INC., and NATIONAL HOUSING AUTHORITY
G.R. No. 192649 March 9, 2011
Amendment is not allowed where the court has no jurisdiction over the original complaint
and the purpose of the amendment is to confer jurisdiction upon the court. Hence, with
jurisdiction over the case yet to properly attach, CA erred in upholding respondent RTCs
admission of respondents R-II Builders Second Amended Complaint despite non-payment of
the docket fees for its original complaint and Amended and Supplemental Complaint as well
as the clear intent to evade payment thereof

Facts:
March 19, 1993, a Joint Venture Agreement (JVA) was entered into between
respondents NHA and R-II Builders for the implementation of the Smokey Mountain
Development and Reclamation Project (SMDRP) which was amended and restated after 11
months. 11 August 1994, JVA was aimed at implementing a 2-phase conversion of the
Smokey Mountain Dumpsite into a habitable housing project inclusive of the reclamation of
the area across Radial Road 10 (R-10) R-II Builders, as developer, was entitled to own 79
hectares of reclaimed land and the 2.3 hectare commercial area at the Smokey Mountain.
NHA, as landowner/implementing agency, was entitled to own the 2,992 temporary housing
units agreed to be built in the premises, the cleared and fenced incinerator site consisting of
5 hectares, 3,520 units of permanent housing to be awarded to qualified on site residents,
the industrial area consisting of 3.2 hectares and the open spaces, roads and facilities within
the Smokey Mountain Area.
September 26, 1994, NHA and R-II Builders, alongside petitioner Housing Guaranty
Corporation (HGC) as guarantor and the PNB as trustee, entered into an Asset Pool
Formation Trust Agreement which provided the mechanics for the implementation of the
project. January 29, 2001, subsequent to R-II Builders' infusion of P300M into the project, the
issuance of the SMPPCs and the termination of PNBs services, NHA, R-II Builders and HGC
agreed on the institution of Planters Development Bank (PDB) as trustee. October 24, 2002,
all the Regular SMPPCs issued had reached maturity and, unredeemed, already amounted to
an aggregate face value of P2.513 Billion. The lack of liquid assets with which to effect
redemption of the regular SMPPCs prompted PDB to make a call on HGCs guaranty and to
execute in the latters favor a Deed of Assignment and Conveyance (DAC) of the entire Asset
Pool.
RTC issued the writ of preliminary injunction sought by R-II Builders. In the meantime,
HGC, having filed its answer to the complaint, went on before the SC to move for the
conduct of a preliminary hearing on its affirmative defenses which included such grounds as
lack of jurisdiction, improper venue and the then pendency entitled Francisco Chavez vs.
National Housing Authority, et al., a case which challenged, among other matters, the
validity of the JVA and its subsequent amendments. R-II Builders filed a motion to admit its
Amended and Supplemental Complaint which deleted the prayer for resolution of the DAC
initially prayed for in its original complaint. Manila RTC Branch 24 issued a clarificatory order
holding that R-II Builders complaint was an ordinary civil action and not an intra-corporate
controversy and that it did not have the authority to hear the case.

Undaunted, HGC filed its MFR of the foregoing order, arguing that: (a) the case is real
action and the docket fees paid by R-II Builders were grossly insufficient because the
estimated value of properties in the Asset Pool exceeds P5B; (b) a complaint cannot be
amended to confer jurisdiction when the court had none; (c) the RTC should have simply
denied the Urgent Ex-Parte Motion for Annotation of Lis Pendens instead of rendering an
advisory opinion thereon. R-II Builders opposed the foregoing motion and on the theory that
the Asset Pool was still in danger of dissipation, filed an urgent motion to resolve its
application for the appointment of a receiver and submitted its nominees for said position.
Respondent RTC issued its second assailed order which (a) denied HGCs motion for
reconsideration; (b) granted R-II Builders application for appointment of receiver and, for
said purpose: appointed Atty. Danilo Concepcion as Receiver and, directed R-II Builders to
post a bond in the sum of P10M.
HGC filed Rule 65 petition for certiorari and prohibition imputing grave abuse of
discretion against the RTC for not dismissing the case and for granting R-II Builders
application for receivership. Petition denied and HGCs MFR was denied for lack of merit.
Hence, this petition.
Issues
1. WON RTC a quo had jurisdiction to proceed with the case. (NO jurisdiction)
2. (TOPICAL) WON the admitting of R-II Builders Second Amended
Complaint is proper. (NO)
Ruling : 1. A court acquires jurisdiction over a case only upon the payment of the
prescribed filing and docket fees. R-II Builders original complaint was initially docketed
before RTC Manila Br. 24, a designated Special Commercial Court. With HGCs filing of a
motion for a preliminary hearing on the affirmative defenses asserted in its answer and R-II
Builders filing of its Amended and Supplemental Complaint, said court issued an order
ordering the re-raffle of the case upon the finding that the same is not an intra-corporate
dispute. With its acknowledged lack of jurisdiction over the case, RTC Manila Br. 24 should
have ordered the dismissal of the complaint, since a court without subject matter jurisdiction
cannot transfer the case to another court.
At the time of its surrender of jurisdiction, Br. 24 had already acted on the case and
had in fact issued the writ of preliminary injunction sought by herein respondent R-II
Builders. At that point, there was absolutely no reason which could justify a re-raffle of the
case considering that the order that was supposed to have caused the re-raffle was not an
inhibition of the judge but a declaration of absence of jurisdiction. A re-raffle which causes a
transfer of the case involves courts with the same subject matter jurisdiction; it cannot
involve courts which have different jurisdictions exclusive of the other. More apt in this case,
a re-raffle of a case cannot cure a jurisdictional defect.
The jurisdictionally flawed transfer of the case from Branch 24, the SCC to Branch 22,
the regular court, is topped by another jurisdictional defect which is the non-payment of the
correct docket fees. 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.
For failure of R-II Builders to pay the correct docket fees for its original complaint or,
for that matter, its Amended and Supplemental Complaint as directed in respondent RTC's

19 May 2008 order, it stands to reason that jurisdiction over the case had yet to properly
attach.
2. Although the policy in this jurisdiction is to the effect that amendments to pleadings are
favored and liberally allowed in the interest of justice, amendment is not allowed where the
court has no jurisdiction over the original complaint and the purpose of the amendment is to
confer jurisdiction upon the court. Hence, with jurisdiction over the case yet to properly
attach, CA erred in upholding respondent RTCs admission of R-II Builders Second Amended
Complaint despite non-payment of the docket fees for its original complaint and Amended
and Supplemental Complaint as well as the clear intent to evade payment thereof.
In view of respondent RTCs non-acquisition of jurisdiction over the case, it clearly
had no authority to grant the receivership sought by R-II Builders. It needs pointing out
though that the prayer for receivership clearly indicates that the R-II Builders sought the
transfer of possession of property consisting of the assets of the JVA from HGC to the
formers named Receiver. As already noted, said transfer of possession was sought by
respondent R-II Builders since the very start, overtly at the first two attempts, covertly in the
last, the successive amendments betraying the deft maneuverings to evade payment of the
correct docket fees.
CA decision REVERSED and SET ASIDE. RTC Branch 22s & 24s Orders
are NULLIFIED. The complaint of R-II Builders first before Br. 24 and thereafter before Br. 22
both of the RTC Manila is DISMISSED.