G.R. No. L-7045 - Gutierrez vs. Ruiz

On or about September 14, 1950, Laureano Jose Ruiz instituted civil case No. 13038 before the Municipal Court of Manila against Benigno C. Gutierrez.
In his complaint, Ruiz sought the following relief:

Payment of P2,000 (the full amount of a promissory note) with legal interest accruing from March 1, 1950, even if a suspensive condition was not met;
Payment of an additional P700 as consequential damages;
Such other relief as the court might deem just and equitable.

On October 20, 1950, Judge Guillermo Cabrera of the Municipal Court rendered judgment by default after Gutierrez failed to show up despite being duly notified.
The decision ordered Gutierrez to pay:

Gutierrez appealed the decision on the ground that the amount involved exceeded the jurisdiction of the Municipal Court.
The Court of First Instance of Manila, in civil case No. 12719, upheld the decision of the Municipal Court by declaring it “final and executory.”

Following the appeal, Ruiz petitioned for a writ of execution which was enforced by the Sheriff of Manila against several properties of Gutierrez.
On April 6, 1951, Gutierrez commenced civil case No. 13614 in the Court of First Instance against Ruiz, Judge Cabrera, and the Sheriff of Manila.
A writ of preliminary injunction was issued on April 10, 1951, enjoining the defendants from executing the Municipal Court’s decision.
In his amended complaint filed on April 14, 1951, Gutierrez argued:

That the decision of the Municipal Court (Civil Case No. 13038) was null and void due to lack of jurisdiction since the claim exceeded the P2,000 limit;
That he was entitled to damages amounting to P5,000 against Ruiz and Judge Cabrera, jointly and severally;
That the Sheriff should be liable for P10,000 plus P100 per day from April 10, 1951, for refusing to obey the writ of preliminary injunction.

The Municipal Court exceeded its jurisdiction by adjudicating a case with a monetary claim (P2,700, exclusive of interest and costs) above the P2,000 threshold;
The decision in Civil Case No. 13038 was procured without proper jurisdiction.

The Court of First Instance dismissed the proceedings in Civil Case No. 13614, ordering the cause to be set aside (sobresimiento) with costs charged against Gutierrez.

Gutierrez appealed the decision of Judge Encarnacion (Civil Case No. 13614) seeking review of the dismissal and the jurisdictional basis of the original Municipal Court decision.
Two primary questions emerged:

Whether the Municipal Court had jurisdiction over Civil Case No. 13038 given that the amount in controversy (P2,700) exceeded its prescribed jurisdictional limit.
Whether the prior appeal and decision in Civil Case No. 12719, which upheld the Municipal Court decision as final and executory, barred the present case under the principle of res judicata.

Did the Municipal Court of Manila have jurisdiction to decide Civil Case No. 13038 given that the principal claim, exclusive of damages, interest, and costs, exceeded the two thousand peso limit set by law?

Does the fact that the Court of First Instance in Civil Case No. 12719 declared the Municipal Court decision “final and executory” preclude determination of its legality regarding jurisdiction in the present case?
Is the principle of res judicata applicable in barring the re-litigation of the issue on the jurisdiction and validity of the Municipal Court’s decision?