Case Summary (G.R. No. 174414)
Facts of the Case and RTC Proceedings
Petitioner filed a complaint on May 30, 2003, alleging that respondent obtained a loan of P40,000.00 with a 15% interest rate per month. Respondent issued a postdated Capitol Bank check as security, which was dishonored upon demand. Despite receipt of summons, respondent failed to file an answer and was declared in default. Consequently, petitioner presented evidence ex parte, and the RTC rendered a decision on May 4, 2004, awarding petitioner the principal amount, interest, and attorney’s fees.
Petition for Relief from Judgment and Its Dismissal
Respondent filed a Petition for Relief from Judgment on May 28, 2004, alleging lack of effective summons service since the summons was received by an unauthorized person. However, upon failure of respondent’s counsel to appear at scheduled hearings, the RTC dismissed the petition for lack of interest. Respondent filed a motion for reconsideration which was granted on November 18, 2005, reinstating the petition and allowing respondent to present the merits of her position.
RTC’s Order Granting Petition for Relief — Ground of Lack of Jurisdiction
On June 20, 2006, the RTC granted respondent’s Petition for Relief from Judgment and set aside its previous decision on the ground of lack of jurisdiction, holding that the principal amount of P40,000.00 fell within the jurisdiction of the Municipal Trial Court (MTC). The RTC denied petitioner’s motion for reconsideration of this order on August 2, 2006, prompting petitioner’s appeal to the Supreme Court.
Issues Presented to the Supreme Court
Two principal issues were raised: (1) whether the RTC had jurisdiction over the case considering petitioner’s demand of P238,000.00 despite the principal loan amount being P40,000.00; and (2) whether respondent’s Petition for Relief from Judgment was proper during the period for filing a motion for reconsideration and appeal.
Jurisdiction as a Question of Law and Jurisdictional Amount
Jurisdiction is a question of law decided by the allegations in the complaint and the nature of the cause of action. Petitioner’s complaint demanded payment totaling P238,000.00, inclusive of principal, interest for 32 months, attorney’s fees, and damages. Since this amount exceeds the jurisdictional threshold of P100,000.00 for the RTC under Republic Act No. 7691, the RTC had jurisdiction over the case. The actual amount ultimately proven or awarded does not affect jurisdiction.
Jurisdiction Determined by Cause of Action and Allegations in the Complaint
The nature of the cause of action—which arises from breach of a loan agreement including principal and interest—and the relief sought as stated in the complaint establish RTC jurisdiction. Jurisdiction, once properly invoked based on the complaint’s allegations, remains valid despite variations in the amounts subsequently proved or awarded.
Inappropriateness of the Petition for Relief from Judgment
A Petition for Relief under Rule 38 is an equitable remedy available only against final and executory judgments. Respondent’s petition was premature as it was filed before the 15-day period to file a motion for reconsideration or appeal expired, rendering the petition improper. Therefore, the RTC erred in granting relief under Rule 38.
Requirements for Relief from Judgment Under Rule 38
Relief under Rule 38 requires that judgment was obtained through fraud, accident, mistake of fact (not law), or excusable negligence. Respondent alleged non-service of summons as “fraud or mistake,” but the sheriff’s certificate of service showed summons was served to Mrs. Alicia Dela Torre at respondent’s residence, who acknowledged receipt. This establishes prima facie proof of service. Judicial errors or erroneous rulings do not constitute “mistake” under Rule 38 and may only be corrected by appeal.
Negligence Must Be Excusable and Attributable to the Party
Excusable negligence excludes negligence of counsel binding on the client. Respondent failed to act promptly by not utilizing proper remedies available after default and did not disown her counsel’s conduct. Allowing relief based on counsel’s neglect would undermine finality and certainty in judicial proceedings.
Availability of Other Legal Remedies to Respondent
After default, respondent could have filed: (a) a motion to set as
...continue readingCase Syllabus (G.R. No. 174414)
Facts of the Case
- On 26 August 1998, respondent Ma. Lita A. Montalban obtained a loan of P40,000.00 from petitioner Elmer F. Gomez, agreeing voluntarily to pay 15% interest per month.
- Respondent issued Capitol Bank Check No. 0215632, postdated 26 October 1998, for P46,000.00 as security covering principal and interest for one month.
- When the check became due, respondent failed to pay despite repeated demands; the check was dishonored due to "Account Closed."
- Petitioner engaged legal counsel and sent a demand letter on 4 July 2002; as of that date, the loan obligation had accrued to P238,000.00, reflecting interest over 32 months.
- Petitioner filed a complaint on 30 May 2003 with the Regional Trial Court (RTC) of Davao City (Civil Case No. 29,717-03), praying for payment of P238,000.00, attorney's fees at 25%, damages, and costs.
- Summons was served on a Mrs. Alicia dela Torre, who was not authorized to accept summons on respondent’s behalf.
- Respondent failed to file an Answer; she was declared in default; petitioner presented evidence ex parte.
- RTC rendered a Decision on 4 May 2004 in favor of petitioner ordering respondent to pay principal, interest at 24% per annum, and attorney’s fees.
- Respondent filed a Petition for Relief from Judgment on 28 May 2004 alleging lack of proper summons service and that the RTC lacked jurisdiction since the principal loan amount was only P40,000.00.
- Respondent’s Petition initially dismissed for failure to appear; later reinstated by RTC upon motion for reconsideration.
- On 20 June 2006, RTC granted respondent’s Petition for Relief from Judgment and set aside the May 2004 Decision for lack of jurisdiction.
- Petitioner’s motion for reconsideration was denied on 2 August 2006, prompting the filing of the present Petition for Review on Certiorari before the Supreme Court.
Issues Presented
- Whether the Regional Trial Court had jurisdiction over the case where the principal obligation was P40,000.00 but the total amount claimed including interest was P238,000.00.
- Whether respondent’s Petition for Relief from Judgment was proper when filed during the period allowed for filing a motion for reconsideration and appeal.
Jurisdiction: Legal Principles and Application
- Jurisdiction refers to the court’s power to hear and decide a case and is a question of law.
- Jurisdiction is determined by the cause of action and relief sought as alleged in the complaint, not by the amount eventually awarded or proven at trial.
- Petitioner’s cause of action is based on a loan agreement involving principal and accrued interest, with a demand of P238,000.00 including principal and interest.
- Interest is an inseparable and determinable part of the cause of action; hence it must be factored in determining jurisdiction.
- Based on the amount of P238,000.00 claimed, the RTC jurisdictional threshold is met, as it exceeds the jurisdictional limit of the Municipal Trial Court.
- The RTC, therefore, had jurisdiction to entertain, try, and decide petitioner’s complaint notwithstanding the final award amount being less than the original demand.
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