G.R. No. 27872 - National Exchange Co., Inc. vs. Dexter

On August 26, 1998, respondent Ma. Lita A. Montalban obtained a loan from petitioner Elmer F. Gomez amounting to P40,000.00 with a voluntary agreement to pay 15% interest per month.
As security, respondent issued Capitol Bank Check No. 0215632 postdated October 26, 1998, for P46,000.00 covering principal and one month interest.
Respondent failed to pay upon due date despite repeated demands; the check was dishonored due to “Account Closed.”

On May 30, 2003, petitioner filed a Complaint for sum of money, damages, and attorney’s fees before the RTC of Davao City (Civil Case No. 29,717-03), claiming a total amount of P238,000.00 (principal plus accrued interest) plus 25% attorney’s fees and costs of suit.
Summons was served through Mrs. Alicia dela Torre, not authorized by respondent; respondent failed to answer and was declared in default.
Petitioner presented ex parte evidence; on May 4, 2004, RTC rendered decision in favor of petitioner ordering respondent to pay P40,000.00 principal, P57,600.00 interest (24% per annum), and P15,000.00 attorney’s fees.

On May 28, 2004, respondent filed a Petition for Relief from Judgment alleging ineffective service since summons was served on an unauthorized person; she claimed fraud, accident, mistake, or excusable negligence.
Respondent argued RTC lacked jurisdiction because the principal amount (P40,000.00) fell within Municipal Trial Court’s jurisdiction.
Petition was initially dismissed due to respondent’s counsel’s failure to appear at the hearing.
On November 18, 2005, RTC granted motion for reconsideration to allow hearing on the merits of the Petition for Relief.
On June 20, 2006, RTC granted the Petition for Relief from Judgment, set aside its May 4, 2004 Decision citing lack of jurisdiction, and dismissed the civil case without prejudice to refiling in proper court (Municipal Trial Court).
Petitioner’s Motion for Reconsideration was denied on August 2, 2006.

Petitioner filed a petition before the Supreme Court seeking to reverse: (a) the June 20, 2006 RTC Order granting Petition for Relief from Judgment and dismissing the case for lack of jurisdiction; and (b) the August 2, 2006 Order denying the Motion for Reconsideration.
Issues raised include:

Whether the RTC has jurisdiction over the case when principal is P40,000 but demand is P238,000 (principal plus interest).
Whether respondent’s filing of Petition for Relief from Judgment during the period to file motion for reconsideration and appeal was proper.

Jurisdiction of the RTC over a case involving a loan with principal amount of P40,000.00 but a total demand (including interest and attorney’s fees) of P238,000.00.
Propriety of Respondent’s filing and the RTC’s grant of Petition for Relief from Judgment during the period for filing motion for reconsideration or appeal.