G.R. No. 212349 - Spouses Domasian vs. Demdam

On October 30, 1995, petitioners spouses Sergio and Nenita Domasian obtained a loan of ₱75,000.00 from respondent Manuel T. Demdam at an agreed interest rate of eight percent (8%) per month, payable on or before June 30, 1996.
Petitioners failed to pay the principal and accrued interest despite several demands.

On August 1, 2001, respondent filed a complaint for collection of sum of money before the RTC of Pasay City, claiming ₱75,000.00 principal and ₱414,000.00 interest (Civil Case No. 01-1227). An amended complaint on August 9, 2001 dropped a co-defendant.
Summons issued August 15, 2001 could not be personally served as petitioners had moved to Naga City. Petitioners did not answer, respondent moved for default, and on January 23, 2002 the RTC declared them in default and admitted respondent’s evidence ex parte.
On January 14, 2003, the RTC rendered judgment by default ordering petitioners to pay principal, interest, moral and exemplary damages, attorney’s fees, and costs.

Unaware of the January 23, 2002 and January 14, 2003 orders, petitioners filed a Petition for Relief from Judgment on June 6, 2006, arguing lack of proper summons and lack of RTC jurisdiction (principal amount ₱75,000.00 within MeTC jurisdiction).
RTC hearings ensued; petitioners filed a Motion to Dismiss for lack of jurisdiction. On September 30, 2008, RTC granted relief, set aside the default judgment for lack of jurisdiction, and dismissed the complaint. Reconsideration was denied March 2, 2009.

Respondent appealed to the CA, raising errors on the petition for relief, motion to dismiss, and RTC’s jurisdictional finding.
On August 31, 2012, the CA granted the appeal, holding that the amended complaint prayed for ₱489,000.00 (principal plus accrued interest) which is a primary and inseparable component of the cause of action, thus within RTC jurisdiction. The CA reinstated the January 14, 2003 default judgment. Reconsideration was denied April 22, 2014.

On June 20, 2014, petitioners filed a Petition for Review on Certiorari, contending:

The CA wrongly entertained a Notice of Appeal raising only questions of law;
The CA erred in finding jurisdiction over a claim whose principal is ₱75,000.00;
Interest should be excluded in determining jurisdictional amount.

Respondent filed Comment; petitioners filed Reply. The SC resolved the petition in November 2021.

Whether the CA improperly took cognizance of respondent’s appeal by Notice of Appeal raising only questions of law.
Whether the RTC had jurisdiction over respondent’s claim by including accrued interest in the jurisdictional amount.
Whether “interest” under BP 129, § 19(8) excludes monetary interest or only compensatory interest.