6.
Frias vs Alcayde the court need not acquire jurisdiction over the
GR No. 194262 / Feb. 28, 2018
TIJAM, J.:
"Due process dictates that jurisdiction over the
person of a defendant can only be acquired by
the courts after a strict compliance with the
rules on the proper service of summons."
FACTS:
Bobie Rose D.V. Frias, as lessor and
respondent Rolando Alcayde, as lessee, entered
into a Contract of Lease involving a residential
house and lot. Respondent refused to perform
any of his contractual obligations, which had
accumulated for 24 months in rental
arrearages, which prompted petitioner to file a
Complaint for Unlawful Detainer. The process
server tried to personally serve the summons to
respondent but to no avail. Through
substituted service, summons was served upon
respondent's caretaker.
The MeTC rendered a decision in favor of the
petitioner and ordered respondent to vacate
the subject property.
Respondent averred that the decision of the
MeTC does not bind him since the court did
not acquire jurisdiction over his person. A copy
of the petition for annulment of judgment was
allegedly served to the petitioner.
On September 7, 2007, the RTC issued an
Order containing therein the manifestation of
respondent that he is withdrawing his
application for a TRO and is now pursuing the
main case for annulment of judgment.
Respondent filed an Ex-Parte Motion to
declare petitioner in default, on the ground that
despite her receipt of the summons, she has yet
to file any pleading.
Petitioner through her representative, Ms.
Fujita filed a Preliminary submission to
Dismiss Petition-Special Appearance raising
jurisdictional issues on the ground of lack of
jurisdiction over her person. She contended
that the defect in the service of summons either
personally or through substituted service is
apparent since it did not indicate the
impossibility of personal service and efforts
exerted by Sheriff Tolentino to locate the
petitioner.
ISSUE:
Whether or not the petition for annulment of
judgment is not an action in personam, thus,
person of the petitioner.
HELD:
It is crucial to underscore the necessity of
determining first whether the action subject of
this appeal is in personam, in rem, or quasi in
rem because the rules on service of summons
under Rule 14 apply according to the nature of
the action.
In actions in personam, the judgment is for or
against a person directly. Jurisdiction over the
parties is required in actions in personam
because they seek to impose personal
responsibility or liability upon a person. "In a
proceeding in rem or quasi in rem, jurisdiction
over the person of the defendant is not a
prerequisite to confer jurisdiction on the court,
provided that the latter has jurisdiction over
the res. Jurisdiction over the res is acquired
either (a) by the seizure of the property under
legal process, whereby it is brought into actual
custody of the law; or (b) as a result of the
institution of legal proceedings, in which the
power of the court is recognized and made
effective."
Here, respondent filed a petition to annul the
MeTC's July 26, 2006 Decision, which ordered
him to vacate the premises of the subject
property and to pay the petitioner the accrued
rentals thereon, in violation of the parties' lease
contract.
Annulment of judgment, as provided for in
Rule 47, is based only on the grounds of
extrinsic fraud and lack of jurisdiction.
Jurisprudence, however, recognizes lack, of
due process as an additional ground to annul a
judgment. It is a recourse that presupposes the
filing of a separate and original action for the
purpose of annulling or avoiding a decision in
another case. Annulment is a remedy in law
independent of the case where the judgment
sought to be annulled is rendered. It is unlike a
motion for reconsideration, appeal or even a
petition for relief from judgment, because
annulment is not a continuation or progression
of the same case, as in fact the case it seeks to
annul is already final and executory. Rather, it
is an extraordinary remedy that is equitable in
character and is permitted only in exceptional
cases.
Annulment of judgment involves the exercise
of original jurisdiction, as expressly conferred
on the CA by Batas Pambansa Bilang (BP Blg.)
129, Section 9(2). It also implies power by a
superior court over a subordinate one, as
provided for in Rule 47, wherein the appellate
court may annul a decision of the regional trial
court, or the latter court may annul a decision
of the municipal or metropolitan trial court.
For purposes of summons, this Court holds
that the nature of a petition for annulment of
judgment is in personam, on the basis of the
following reasons: First, a petition for
annulment of judgment is an original action,
which is separate, distinct and independent of
the case where the judgment sought to be
annulled is rendered. It is not a continuation or
progression of the same case. Thus, regardless
of the nature of the original action in the
decision sought to be annulled, be it in
personam, in rem or quasi in rem, the
respondent should be duly notified of the
petition seeking to annul the court's decision
over which the respondent has a direct or
indirect interest.
Second, a petition for annulment of judgment
and the court's subsequent decision thereon
will affect the parties alone. It will not be
enforceable against the whole world. Any
judgment therein will eventually bind only the
parties properly impleaded.
Pursuant to Section 7, Rule 47 [71] a judgment
of annulment shall set aside the questioned
judgment or final order or resolution and
render the same null and void.
In this case, had the RTC granted the
respondent's petition, the MeTC's July 26 2006
judgment would have been declared a nullity.
This would have resulted to the following
consequences: as to the respondent, he would
no longer be required to pay the rentals and
vacate the subject property; and, as to the
petitioner, she would be deprived of her right
to demand the rentals and to legally eject the
respondent. Clearly, through the RTC's
judgment on the petition, only the parties'
interests, i.e., rights and obligation, would have
been affected. Thus, a petition for annulment of
judgment is one in personam. It is neither an
action in rem nor an action quasi in rem.
Assuming arguendo, that a petition for
annulment of judgment is either an action in
rem or quasi in rem, still the observance of due
process for purposes of service of summons
cannot be deliberately ignored. For courts, as
guardians of constitutional rights cannot be
expected to deny persons their due process
rights while at the same time be considered as
acting within their jurisdiction. Regardless of
the type of action - whether it is in personam,
in rem or quasi in rem — the proper service of
summons is imperative.
7. Amoguis vs. Ballado
G.R. No. 189626 | August 20, 2018
Justice Leonen
Jurisdiction over the subject matter of a
complaint is conferred by law. It cannot be lost
through waiver or estoppel. It can be raised at
any time in the proceedings, whether during
trial or on appeal.
FACTS:
On November 24, 1969, spouses Francisco
Ballado and Concepcion Ballado entered into
two contracts to sell with owner and developer
St. Joseph Realty, Ltd. to buy on installment
parcels of land, designated as Lot Nos. 1 and 2.
The Ballado Spouses amortized until 1979
when CrisantoPinili, St. Joseph Realty’s
collector, refused to receive their payments
because of a small house they had erected
therein in violation of the rules of the
subdivision. Francisco informed St. Joseph
Realty that the small house had already been
taken down, but Pinili still did not come to
collect.
On February 17, 1987, the Ballado Spouses
discovered that St. Joseph Realty rescinded
their contracts. Meanwhile, St. Joseph Realty
sold Lot Nos. 1 and 2 to Epifanio
Amoguis,father of Gregorio Amoguis and Tito
Amoguis (collectively, the Amoguis
Brothers).After making payments, the Amoguis
Brothers then occupied the lots.Francisco
confronted the Amoguis Brothers when he saw
that the barbed fences, which he had installed
around the lots, were taken down. Epifanio told
him that he bought the lots from St. Joseph
Realty.
The Ballado Spouses filed a Complaint for
damages, injunction with writ of preliminary
injunction, mandatory injunction, cancellation
and annulment of titles, and attorney’s fees. St.
Joseph Realty filed its Answer. It was its
affirmative defense that the Regional Trial
Court had no jurisdiction to hear the case, and
that jurisdiction was properly vested in the
Human Settlements Regulatory Commission.
The Regional Trial Court ruled in favor of the
Ballado Spouses, and against St. Joseph Realty
and the Amoguis Brothers. The Court of
Appeals rendered its Decision, affirming the
Regional Trial Court. Though not raised, the
Court of Appeals discussed at the outset the
issue of jurisdiction. The Court of Appeals
ruled that since neither St. Joseph Realty nor
the Amoguis Brothers raised the issue of
jurisdiction before the Regional Trial Court,
they must be considered estopped from raising
it on appeal.
ISSUE:
Whether or not the Regional Trial Court’s lack
of jurisdiction was lost by waiver or estoppel
RULING:
Yes. Petitioners are already estopped from
questioning the jurisdiction of the Regional
Trial Court. Laches had already set in.
Presidential Decree No. 957 instituted the
National Housing Authority as the
administrative body with exclusive jurisdiction
to regulate the trade and business of
subdivision and condominium developments.
Presidential Decree No. 1344 was later on
enacted to add to the National Housing
Authority’s jurisdiction. Section 1 of
Presidential Decree No. 1344 gave authority to
the National Housing Authority to hear and
decide cases: …C. Cases involving specific
performance of contractual and statutory
obligations filed by buyers of subdivision lot or
condominium unit against the owner,
developer, dealer, broker or salesman.
Presidential Decree No. 957 was approved on
July 12, 1976, 11 years before the Ballado
Spouses filed their complaint. This means that
the law mandating the jurisdiction of the
National Housing Authority, which later on
became the House and Land Use Regulatory
Board, had long been in effect when petitioners
filed their Answer and participated in trial
court proceedings. It behooved them to raise
the issue of jurisdiction then, especially since
St. Joseph Realty, their co-respondent, raised it
in its Answer albeit superficially and without
any discussion.
The Ballado Spouses’ rights and interests lie
not just as buyers of any property, but buyers
of subdivision lots from a subdivision
developer. From the circumstances between St.
Joseph Realty and the Ballado Spouses, there is
no doubt that the then National Housing
Authority had jurisdiction to determine the
parties’ obligations under the contracts to sell
and the damages that may have arisen from
their breach. The Ballado Spouses’ Complaint
should have been filed before it.
However, this Court has discussed with great
nuance the legal principle enunciated in Tijam
vs Sibonghanoy. In estoppel by laches, a
claimant has a right that he or she could
otherwise exercise if not for his or her delay in
asserting it. This delay in the exercise of the
right unjustly misleads the court and the
opposing party of its waiver. Thus, to claim it
belatedly given the specific circumstances of
the case would be unjust.
In summary, Tijam applies to a party claiming
lack of subject matter jurisdiction when:
 there was a statutory right in favor of the
claimant;
 the statutory right was not invoked;
 an unreasonable length of time lapsed
before the claimant raised the issue of
jurisdiction;
 the claimant actively participated in the
case and sought affirmative relief from
the court without jurisdiction;
 the claimant knew or had constructive
knowledge of which forum possesses
subject matter jurisdiction; and
 irreparable damage will be caused to the
other party who relied on the forum and
the claimant’s implicit waiver.
Tijam applies in this case. The allegations,
determinative of subject matter jurisdiction,
were apparent on the face of the Complaint.
The law that determines jurisdiction of the
National Housing Authority had been in place
for more than a decade when the Complaint
was filed. St. Joseph Realty raised lack of
jurisdiction in its Answer. Petitioners sought
affirmative relief from the Regional Trial Court
and actively participated in all stages of the
proceedings. Therefore, there was no valid
reason for petitioners to raise the issue of
jurisdiction only now before this Court.
 8. Tijam vs. Sibonghanoy
G.R. No. L-2150
Facts:
In June of 1948, the Judiciary Act of 1948 was
passed. Exactly a month after its passage, or in
July 1948, the Sps Tijam commenced a civil
case in the CFI Cebu against the Sps.
Sibonghanoy to recover a debt worth P1908.
Thereafter, on the basis of the prayer in the
complaint, a writ of attachment was issued by
the court against properties of the defendants.
However, the same was soon dissolved upon
the filing of a counter-bond by defendants and
the Manila Surety and Fidelity Co., Inc.
The CFI ruled in favor of the Sps. Tijam and
issued a writ of execution against the
defendants and Manila Surety, respectively.
Manila Surety objected to the lack of demand
and sought affirmative relief by requesting that
its liability be lifted. The writ was initially
denied, but after proper demand, it was
eventually granted.
Manila Surety moved to quash due to lack of
required summary hearing but such was denied
n 1962, or 14 years later, Manila Surety
appealed in the CA. CA affirmed CFI decision.
The following year, Manila Surety then filed a
motion to dismiss on the ground that the CFI
Cebu did not acquire jurisdiction over the case
as RA 296 placed actions where the demand
does not exceed P2000 (without interest) in
the inferior courts, not the CFI.
Issue: Whether the CFI Cebu acquired
jurisdiction over the case in light of RA 296
Ruling:
The SC ruled in the affirmative. Although RA
296 had already removed actions for recovery
where the demand is lower than P2000 from
the jurisdiction of the CFI, the issue was never
raised until an adverse decision 15 years later,
thus allowing for jurisdiction through
estoppel/laches.
According to the Supreme Court, the facts and
circumstances necessitates the application of
estoppel and laches because:
1. The jurisdictional issue was only raised after
an adverse decision was reached in the CA.
2. They filed affirmative relief in the RTC and
CA, especially when it sought to be relieved of
liability.
The Court accorded jurisdiction by estoppel,
emphasizing the principle of laches.
Laches is failure or neglect, for an
unreasonable and unexplained length of time,
to do that which, by exercising due diligence,
could or should have been done earlier; it is
negligence or omission to assert a right within
a reasonable time, warranting a presumption
that the party entitled to assert it either has
abandoned it or declined to assert it.
Summary of Principles:
1. Laches as an exception to the rule that
jurisdiction over the subject-matter may be
raised at any stage of the proceedings
The rule is that jurisdiction over the subject
matter is conferred upon the courts exclusively
by law, and as the lack of it affects the very
authority of the court to take cognizance of the
case, the objection may be raised at any stage
of the proceedings.
However, considering the facts and
circumstances of the present case, a party may
be barred by laches from invoking this plea for
the first time on appeal for the purpose of
annulling everything done in the case with the
active participation of said party invoking the
plea.
2. Estoppel
A party may be estopped or barred from raising
a question in different ways and for different
reasons. Thus we speak of:
a. estoppel in pais,
b. estoppel by deed or by record, and
c. estoppel by laches.
3. Nature of Laches
Laches, in a general sense, is failure or neglect,
for an unreasonable and unexplained length of
time, to do that which, by exercising due
diligence, could or should have been done
earlier; it is negligence or omission to assert a
right within a reasonable time, warranting a
presumption that the party entitled to assert it
either has abandoned it or declined to assert it.
4. Basis of Laches.
The doctrine of laches or of “stale demands” is
based upon grounds of public policy which
requires, for the peace of society, the
discouragement of stale claims and, unlike the
statute of limitations, is not a mere question of
time but is principally a question of the
inequity or unfairness of permitting a right or
claim to be enforced or asserted.
5. A party cannot invoke the court’s
jurisdiction and then deny it to escape a
penalty.
It is not right for a party who has affirmed and
invoked the jurisdiction of a court in a
particular matter to secure an affirmative relief,
to afterwards deny that same jurisdiction to
escape penalty.
Upon this same principle is what we said in the
three cases mentioned in the resolution of the
Court of Appeals of May 20, 1963, supra, to the
effect that we frown upon the “undesirable
practice” of a party submitting his case for
decision and then accepting the judgment, only
if favorable, and attacking it for lack of
jurisdiction, when adverse.
6. Separate judgment is not necessary to hold
surety liable on the bond.
There is no need for a separate action or
judgment against the surety in order to hold it
liable on the bond. A bond filed for discharge of
attachment is, per Section 12 of Rule 59 “to
secure the payment to the plaintiff of any
judgment he may recover in the action,” and
stands “in place of the property so released.”
Hence, after the judgment for the plaintiff has
become executory and the execution is
“returned unsatisfied” (Sec. 17, Rule 59), as in
this case, the liability of the bond automatically
attaches and, in failure of the surety to satisfy
the judgment against the defendant despite
demand therefor, writ of execution may issue
against the surety to enforce the obligation of
the bond.
9. Velasquez vs Lisondra Land Inc.
[G.R. No. 231290, August 27, 2020]
Facts:
In 1998, petitioner Perfecto Velasquez, Jr. and
respondent company Lisondra Land
Incorporated entered into a joint venture
agreement to develop a 7,200-square meter
parcel of land into a memorial park. However,
due to numerous issues surrounding the
project, including Lisondra Land’s failing to
acquire an HLURB on time, failing to provide
insurance coverage and to pay its share in the
realty taxes, and receiving kickbacks from
contractors and agents, Perfecto filed a
complaint for breach of contract before the
Regional Trial Court (RTC);
RTC: Lisondra claimed that RTC had no
jurisdiction, as the violations involved real
estate trade and business practices which are
within the HLURB exclusive authority;
Lisondra later appeals to CA via special civil
action for certiorari under Rule 65
CA: Appeal granted. RTC committed grave
abuse of discretion, as complaint is regarding
unsound real estate business practices, which
fall under HLURB jurisdiction (Section 1, PD
1344); Petitioner files new complaint at
HLURB for unsound real estate business
practices vs respondent
HLURB: Lisondra LaZe parties, and orders
respondent to pay fines, damages and
attorney's fees. Respondent appeals to HLURB
BoC, alleging that HLURB lacks jurisdiction
since dispute is between joint venture partners
and is an intra-corporate controversy, thus
jurisdiction falls under RTC
HLURB BoC: Dismissed prior ruling due to
lack of jurisdiction… *BUT* reverses ruling
again after petitioner motions for
reconsideration; Lisandro appeals case to
Office of the President
OP: Affirms HLURB ruling; Lisandro files
petition for review with CA, alleging that that
HLURB has no jurisdiction over the subject
matter of the case.
CA: Sets aside OP decision. Petitioner’s
complaint dismissed on grounds that HLURB
authority is limited only to cases filed by the
buyers or owners of subdivision lots and
condominium units.
In his current petition before the SC, Perfecto
argued that Lisandro Land is now estopped
from assailing the HLURB's jurisdiction. It is
not allowed to make a complete mockery of the
judicial system resulting in two conflicting
appellate court Decisions.
Issue:
Whether or not respondent is estopped from
assailing HLURB for lack of jurisdiction.
Held:
Yes. CA ruling reversed, OP ruling reinstated
with modification.
In People v. Casiano: The operation of the
principle of estoppel on the question of
jurisdiction seemingly depends upon whether
the lower court actually had jurisdiction or not.
If it had no jurisdiction, but the case was tried
and decided upon the theory that it had
jurisdiction, the parties are not barred, on
appeal, from assailing such jurisdiction, for the
same "must exist as a matter of law, and may
not be conferred by consent of the parties or by
estoppel". However, if the lower court had
jurisdiction, and the case was heard and
decided upon a given theory, such, for instance,
as that the court had no jurisdiction, the party
who induced it to adopt such theory will not be
permitted, on appeal, to assume an
inconsistent position - that the lower court had
jurisdiction. Here, the principle of estoppel
applies. The rule that jurisdiction is conferred
by law, and does not depend upon the will of
the duties, has no bearing thereon.
In the current case, Perfecto originally filed his
complaint before the RTC which, has
jurisdiction over the controversy between the
parties. Lisondra Land claimed that the case is
within the HLURB's exclusive authority. It
maintained this theory before the CA which
eventually ordered the dismissal of the
complaint. Perfecto relied on the final decision
of the appellate court and refiled the action
against Lisondra Land with the HLURB.
Lisondra Land actively participated in the
proceedings before the HLURB. After receiving
an adverse decision, Lisondra Land questioned
the jurisdiction of the HLURB and claimed that
the RTC has the authority to hear the case. This
is where estoppel operates and bars Lisondra
Land from assailing the HLURB's jurisdiction.
The Court cannot countenance Lisondra Land's
act of adopting inconsistent postures - first, by
attacking the jurisdiction of the trial court and,
subsequently, the authority of the HLURB.
Otherwise, the consequence is revolting as
Lisondra Land would be allowed to make a
complete mockery of the judicial system.
Roldan vs. Barrios
G.R. No. 214803 | April 23, 2018
Justice Peralta
FACTS:
Petitioner Alona G. Roldan filed an action for
foreclosure of real estate mortgage against
respondents spouses Clarence I. Barrios and
Anna Lee T. Barrios and respondent Romel D.
Matorres. The RTC, however, dismissed the
complaint.
According to the RTC, it appearing from the
complaint that the assessed value of the
property mortgaged is only P13,380.00 and the
instant case being a real action, the assessed
value of the property determines the
jurisdiction. The assessed value of the property
involved being below P20,000.00, it is the first
level court that has jurisdiction over the cases.
The MR by petitioner was also denied.
Petitioner filed the instant petition for
certiorari alleging grave abuse of discretion
committed by the RTC when it ordered the
dismissal of her foreclosure case without
prejudice and denying her motion for
reconsideration. She argues that foreclosure of
mortgage is an action incapable of pecuniary
estimation which is within the exclusive
jurisdiction of the RTC.
ISSUE:
Whether or not the RTC committed grave
abuse of discretion in dismissing the
foreclosure cases filed with it on the ground of
lack of jurisdiction.
RULING:
No. The RTC dismissed the foreclosure cases
finding that being a real action and the
assessed value of the mortgaged property is
only P13,380.00, it is the first level court which
has jurisdiction over the case and not the RTC.
The allegations and reliefs sought in
petitioner’s action for foreclosure of mortgage
showed that the loan obtained by respondents
spouses Barrios from petitioner fell due and
they failed to pay such loan which was secured
by a mortgage on the property of the
respondents spouses; and prayed that in case
of default of payment of such mortgage
indebtedness to the court, the property be
ordered sold to answer for the obligation under
the mortgage contract and the accumulated
interest.
It is worthy to mention that the essence of a
contract of mortgage indebtedness is that a
property has been identified or set apart from
the mass of the property of the debtor-
mortgagor as security for the payment of
money or the fulfillment of an obligation to
answer the amount of indebtedness, in case of
default in payment. Foreclosure is but a
necessary consequence of non-payment of the
mortgage indebtedness. In a real estate
mortgage when the principal obligation is not
paid when due, the mortgagee has the right to
foreclose the mortgage and to have the
property seized and sold with the view of
applying the proceeds to the payment of the
obligation. Therefore, the foreclosure suit is a
real action so far as it is against property, and
seeks the judicial recognition of a property
debt, and an order for the sale of the res.
As foreclosure of mortgage is a real action, it is
the assessed value of the property which
determines the court’s jurisdiction.
Considering that the assessed value of the
mortgaged property is only P13,380.00, the
RTC correctly found that the action falls within
the jurisdiction of the first level court.
Petitioner cites Russell v. Vestil to show that
action for foreclosure of mortgage is an action
incapable of pecuniary estimation and,
therefore, within the jurisdiction of the RTC.
We are not persuaded. In the Russell case, we
held:
In Singsong vs. Isabela Sawmill, we had the
occasion to rule that:
[I]n determining whether an action is one the
subject matter of which is not capable of
pecuniary estimation, this Court has adopted
the criterion of first ascertaining the nature of
the principal action or remedy sought. If it is
primarily for the recovery of a sum of money,
the claim is considered capable of pecuniary
estimation, and whether jurisdiction is in the
municipal courts or in the courts of first
instance would depend on the amount of the
claim.
However, where the basic issue is something
other than the right to recover a sum of money,
where the money claim is purely incidental to,
or a consequence of, the principal relief sought,
this Court has considered such actions as cases
where the subject of the litigation may not be
estimated in terms of money, and are
cognizable exclusively by courts of first
instance (now Regional Trial Courts).
Examples of actions incapable of pecuniary
estimation are those for specific performance,
support, or foreclosure of mortgage or
annulment of judgment; also actions
questioning the validity of a mortgage,
annulling a deed of sale or conveyance and to
recover the price paid and for rescission, which
is a counterpart of specific performance.
While actions under Sec. 33(3) of B.P. 129 are
also incapable of pecuniary estimation, the law
specifically mandates that they are cognizable
by the MTC, METC, or MCTC where the
assessed value of the real property involved
does exceed P20,000.00 in Metro Manila, or
P50,000.00, if located elsewhere. If the value
exceeds P20,000.00 or P50,000.00 as the case
may be, it is the Regional Trial Courts which
have jurisdiction under Sec. 19(2). X XX
Clearly, the last paragraph clarified that while
civil actions which involve title to, or
possession of, real property, or any interest
therein, are also incapable of pecuniary
estimation as it is not for recovery of money,
the court’s jurisdiction will be determined by
the assessed value of the property involved.
Sps. DOMASIAN VS. MANUEL T. DEMDAM
[ G.R. No. 212349. November 17, 2021 ]
GAERLAN, J.:
On October 30, 1995, the petitioners obtained a
loan from Manuel T. Demdam in the amount of
P75,000.00. In their loan agreement, the
petitioners and the respondent agreed at an
interest rate of 8% per month, and that the
loan shall be paid on or before June 30, 1996.
However, when the loan became due and
demandable, the petitioners failed to pay the
principal amount and its accrued interest,
despite several demands.
On August 1, 2001, the respondent filed a
complaint for collection of sum of money
against the petitioners, in the principal amount
of P75,000.00 and its accrued interest in the
amount of P414,000.00 before the RTC.
On August 15, 2001, the RTC issued summons
on petitioners. The Process Server failed to
personally serve the same because the
petitioners were no longer residing at
Novaliches, but have been staying in Naga City
for almost two years.
Because the petitioners failed to file an answer
to respondent's amended complaint, the
respondent filed a Motion to Declare
Defendants in Default dated November 8,
2001. Sometime in the second week of
November 2001, petitioner Sergio was
informed of the case filed by the respondent.
Respondent was the husband of petitioner
Sergio's eldest sister. Petitioner Sergio went to
the respondent's house to inquire about the
case and to settle it amicably. During their
conversation, the respondent told his brother-
in-law to attend the hearing of the case
scheduled on November 16, 2001, and
afterwards, they would talk about the amicable
settlement that petitioner Sergio was
proposing.
As agreed, petitioner Sergio attended the
hearing on November 16, 2001. Nevertheless,
the RTC granted respondent's Motion to
Declare Defendants in Default in its Order
dated January 23, 2002.
After due evaluation of the evidence presented
by the respondent, the RTC rendered its Order
dated January 14, 2003, ruling in favor of the
respondent, and ordering the petitioners to pay
the total amount of the loan and its accrued
interest, moral damages, exemplary damages,
attorney's fees, and costs of the suit.
Notably, the petitioners did not receive a copy
of the RTC's Order dated January 23, 2002,
which declared them in default. Neither did
they receive a copy of the RTC's Order dated
January 14, 2003, the judgment by default in
favor of the respondent. Thus, on June 6, 2006,
the petitioners filed their Petition for Relief
from Judgment before the RTC.
On November 14, 2006, the respondent filed
his Answer, where he argued that the Petition
for Relief from Judgment should be dismissed
because it had no merit, and the allegations
therein were false. Thereafter, on November
30, 2006, the petitioners filed their Reply,
where they emphasized that the rules on
service of summons and substituted service
were not complied with, as the Process Server
failed to serve to them the summons and a copy
of respondent's amended complaint. The RTC
then set the hearing for the Petition for Relief
from Judgment on June 10, 2008.
On June 6, 2008, the petitioners filed a
Motion to Dismiss, where they alleged
that the RTC had no jurisdiction over the
case, since the principal amount being
claimed by the respondent is only
P75,000.00, an amount falling within
the jurisdiction of the Metropolitan Trial
Court (MeTC).
RTC granted the petitioners' petition for relief,
through a "Motion to Dismiss" filed by
petitioners-defendants for lack of jurisdiction.
CA ruled in favor of respondent's appeal. The
CA ruled that in the amended complaint, the
respondent prayed for the total amount of
P489,000.00, already inclusive of the
interest on the loan which had accrued from
1996. Furthermore, the CA emphasized that
such amount of interest is included in the
determination of which court has jurisdiction
over the case. Since the interest on the loan is a
primary and inseparable component of the
cause of action, not merely incidental thereto,
and already determinable at the time of filing
of the Amended Complaint, it must be included
in the determination of which court has the
jurisdiction over Demdam's case.
Issue:
Whether or not the CA erred in its finding that
interest is included in the determination of
jurisdictional amount
Held:
Invariably, to determine whether the RTC has
jurisdiction over respondent's claim, the
pertinent provisions of BP 129 must be
examined. Section 19 thereof provides:
Section 19. Jurisdiction in civil cases. —
Regional Trial Courts shall exercise exclusive
original jurisdiction:
xxxx
(8) In all other cases in which the demand,
exclusive of interest, damages of whatever
kind, attorney's fees, litigation expenses, and
costs or the value of the property in
controversy exceeds One hundred thousand
pesos (100,000.00) or, in such other
abovementioned items exceeds Two hundred
thousand pesos (200,000.00).
Meanwhile, Section 5 of R.A. No. 7691, which
became effective on April 15, 1994, reads:
Section 5. After 5 years from the effectivity of
this Act, the Jurisdictional amounts mentioned
in Sec. 19(3), (4), and (8); and Sec. 33(1) of
Batas Pambansa Blg. 129 as amended by this
Act, shall be adjusted to Two hundred
thousand pesos (P200,000.00). 5 years
thereafter, such jurisdictional amounts shall be
adjusted further to Three hundred thousand
pesos (P300,000.00): Provided, however, That
in the case of Metro Manila, the
abovementioned jurisdictional amounts shall
be adjusted after 5 years from the effectivity of
this Act to Four hundred thousand pesos
(P400,000.00).
Applying these provisions, it is clear that at the
time respondent's Complaint was instituted in
2001, the RTC has jurisdiction for all claims
exceeding P200,000.00.
Notably, the petitioners, in insisting that the
RTC has no jurisdiction, harp on the phrase
"exclusive of interest" found in the above-
quoted provision of BP 129. According to the
petitioners, the accrued interest, in the amount
of P414,000.00, should not have been included
in determining the jurisdictional amount.
Considering that the principal amount of the
loan is only P75,000.00, the petitioners assert
that the MeTC has jurisdiction over the
respondent's claim, and that the RTC correctly
dismissed respondent's amended complaint
when it granted petitioners' Petition for Relief
from Judgment.
This Court does not agree.
A plain reading of Section 19(8) of BP 129
shows an enumeration of fees or amounts
which should not be included in determining
the jurisdictional amount. Apart from interests,
BP 129 lists (1) damages; (2) attorney's fees;
and (3) costs of suit, as excluded from
computing the jurisdictional amount. These
three items are excluded because, as long as the
main cause of action is not one for damages,
attorney's fees, and costs of suit are merely
incidental and ancillary to any claim or cause of
action that may be filed. Otherwise stated,
without a valid claim or cause of action - a
breach of contract for instance - a plaintiff
cannot claim for damages, attorney's fees, or
costs of suit.
Therefore, it is in this context that the term
"interest" as found in BP 129 should be viewed,
in accordance with the principle of ejusdem
generis, which was explained in Benguet State
University v. Commission on Audit, in this
wise:
Under the principle of ejusdem generis, where
a statute describes things of a particular class
or kind accompanied by words of a generic
character, the generic word will usually be
limited to things of a similar nature with those
particularly enumerated, unless there be
something in the context of the statute which
would repel such inference. x x x.
At this juncture, it must be emphasized that
there are generally two types of interest: first,
monetary interest, and second, compensatory
interest. As succinctly explained in Odiamar v.
Valencia:
At the outset, the Court notes that there are two
(2) types of interest, namely, monetary interest
and compensatory interest. Monetary interest
is the compensation fixed by the parties for the
use or forbearance of money. On the other
hand, compensatory interest is that imposed by
law or by the courts as penalty or indemnity for
damages. In other words, the right to recover
interest arises only either by virtue of a
contract (monetary interest) or as damages for
the delay or failure to pay the principal loan on
which the interest is demanded (compensatory
interest).
With this in mind, it is clear that what the term
"interest" found in BP 129 only pertains to
compensatory interest. Compensatory interest,
which as stated above, is a form of penalty or
indemnity, and similar to damages, attorney's
fees, and costs of suit, is merely incidental and
ancillary to a plaintiffs cause of action. In stark
contrast, monetary interest is a primary and
inseparable component of a plaintiff's cause of
action, considering that it forms part of the
total amount due, regardless of any breach of
obligation.
Applying all the foregoing in the instant case, it
is beyond cavil that the amount of P414,000.00
comprises of monetary interest because the
parties agreed to the payment of compensation
for the use or forbearance of money at the rate
of eight percent (8%) per month. This means
that the amount of P414,000.00 cannot be
excluded from the computation of the
jurisdictional amount. Indeed, the CA correctly
held that the RTC had jurisdiction over the case
since the respondent's monetary claim
amounted to P489,000.00, which undeniably
falls within the jurisdiction of the RTC.