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GOVERNMENT SERVICE INSURANCE SYSTEM v. HEIRS OF FERNANDO F. CABALLERO

FACTS:

Respondent Fernando Caballero obtained a loan from petitioner Government Service Insurance System (GSIS) and mortgaged his residential lot in Cotabato as security. When Fernando defaulted on the loan, GSIS foreclosed the mortgage and sold the property at a public auction, with GSIS being the only bidder. GSIS then obtained a new title in its name through an Affidavit of Consolidation of Ownership. Despite negotiations for the repurchase of the property, no agreement was reached between Fernando and GSIS. GSIS subsequently scheduled the property for public bidding and awarded it to Carmelita Mercantile Trading Corporation (CMTC). GSIS executed a Deed of Absolute Sale transferring the property to CMTC. Fernando filed a complaint to nullify the GSIS Board resolution, the Deed of Absolute Sale, and the new title in favor of CMTC, and seeking the execution of a deed of sale in his favor. The Regional Trial Court ruled in favor of GSIS and dismissed the complaint, which was affirmed by the Court of Appeals. GSIS filed a petition for review before the Supreme Court. During the proceedings, Fernando passed away and his surviving heirs filed a motion for substitution as respondents.

ISSUES:

  1. Whether GSIS's counterclaim is a compulsory or permissive counterclaim.

  2. Whether GSIS's counterclaim requires payment of docket fees.

  3. Whether or not the exemption from the payment of legal fees granted by Congress to the Government Service Insurance System (GSIS) is valid.

  4. Whether or not the trial court acquired jurisdiction over petitioner's counterclaim.

RULING:

  1. GSIS's counterclaim for the recovery of rentals collected from CMTC is a permissive counterclaim. The issues raised by the claim and the counterclaim are not largely the same, and there is no logical relation between the claim and the counterclaim. The evidence needed to establish the nullity or validity of the bid award, deed of absolute sale, and TCT is different from the evidence required to establish GSIS's claim for the recovery of rentals.

  2. As GSIS's counterclaim is permissive, the trial court acquires jurisdiction only upon payment of the prescribed docket fees. Since GSIS failed to pay the docket fees, the trial court did not acquire jurisdiction over its counterclaim. Therefore, the judgment rendered by the trial court ordering Fernando to pay GSIS the rentals collected from CMTC is considered null and void.

  3. The claim of a legislative grant of exemption from the payment of legal fees under Section 39 of RA 8291 fails because the power to promulgate rules of pleading, practice, and procedure is within the sole province of the Supreme Court. Any exemption from the payment of legal fees granted by Congress to government-owned or controlled corporations and local government units will impair the Court's fiscal autonomy and erode its independence.

  4. The trial court did not acquire jurisdiction over petitioner's counterclaim due to non-payment of the required docket fees.

PRINCIPLES:

  • The tests to determine whether a counterclaim is compulsory or permissive are: (a) Are the issues of fact and law raised by the claim and counterclaim largely the same? (b) Would res judicata bar a subsequent suit on the defendant's claims, absent the compulsory counterclaim rule? (c) Will substantially the same evidence support or refute plaintiff's claim as well as the defendant's counterclaim? (d) Is there any logical relation between the claim and counterclaim?

  • A permissive counterclaim requires payment of the prescribed docket fees for the trial court to acquire jurisdiction.

  • A decision rendered without jurisdiction is a total nullity and may be struck down at any time, even on appeal.

  • The exemption of GSIS from "all taxes, assessments, fees, charges or duties of all kinds" does not extend to payment of legal fees because the power to promulgate rules of pleading, practice, and procedure is within the sole authority of the Supreme Court.

  • The power to promulgate rules of pleading, practice, and procedure is within the sole province of the Supreme Court.

  • Any exemption from the payment of legal fees granted by Congress to government-owned or controlled corporations and local government units impairs the Court's fiscal autonomy and erodes its independence.

  • The trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee. Additional filing fees are required for claims not specified in the pleading.

  • The exception to the requirement of specifying the amount of damages is limited to damages that may arise after the filing of the complaint or similar pleading.