Gomez vs. Montalban

Jurisdiction over the subject matter is determined by the cause of action as alleged in the complaint, including accrued interest that is a primary and inseparable component of the claim, and cannot be made to depend on the amount ultimately substantiated during trial. A Petition for Relief from Judgment is an equitable remedy available only against a final and executory judgment and only when the aggrieved party is prevented from availing of other remedies by fraud, accident, mistake, or excusable negligence.

Petitioner Elmer F. Gomez extended a ₱40,000 loan to respondent Ma. Lita A. Montalban, secured by a postdated check and subject to a 15% monthly interest rate. Upon respondent's default, petitioner filed a complaint for sum of money, damages, and attorney's fees, demanding a total of ₱238,000, representing the principal and accrued interest. Summons was served at respondent's residence and received by a certain Mrs. Alicia dela Torre. Respondent failed to file an answer, was declared in default, and the RTC rendered judgment awarding petitioner ₱40,000 as principal, ₱57,600 as interest, and ₱15,000 as attorney's fees.

• The Loan and Default: On August 26, 1998, respondent obtained a ₱40,000 loan from petitioner with a 15% monthly interest rate. As security, she issued a postdated check for ₱46,000. The check was dishonored for being closed upon maturity, and respondent failed to pay the loan despite demands.
• The Complaint: Petitioner filed a complaint demanding ₱238,000, inclusive of principal and accrued interest for 32 months, plus 25% attorney's fees and costs.
• Service of Summons and Default: Summons was served at respondent's residence and received by Mrs. Alicia dela Torre. Respondent did not file an answer, leading to her declaration in default. Petitioner presented evidence ex parte.
• RTC Decision: On May 4, 2004, the RTC rendered judgment ordering respondent to pay ₱40,000 (principal), ₱57,600 (interest at 24% per annum), and ₱15,000 (attorney's fees).
• Petition for Relief: Respondent received the decision on May 14, 2004, and filed a Petition for Relief from Judgment on May 28, 2004, alleging invalid service of summons and lack of RTC jurisdiction over a ₱40,000 claim. The petition was initially dismissed for failure to prosecute but was subsequently reinstated and granted by the RTC, which set aside its decision for lack of jurisdiction.

• Jurisdictional Amount: Petitioner argued that the RTC has jurisdiction over the case because, while the principal amount is ₱40,000, the total demand in the complaint is ₱238,000, which falls within the RTC's jurisdictional threshold.
• Propriety of Petition for Relief: Petitioner maintained that a Petition for Relief from Judgment was improper because respondent filed it during the period to file a motion for reconsideration or appeal, rendering the judgment not yet final and executory.

• Lack of Jurisdiction: Respondent countered that the RTC lacked jurisdiction because the principal amount of the obligation was only ₱40,000, an amount falling within the jurisdiction of the Municipal Trial Court.
• Invalid Service of Summons: Respondent argued that there was no effective service of summons because it was received by an unauthorized person, constituting mistake or fraud that warranted relief from judgment.

• Jurisdiction: Whether the RTC has jurisdiction over a case for sum of money where the principal amount is ₱40,000 but the total demand, inclusive of accrued interest, is ₱238,000.
• Petition for Relief from Judgment: Whether a Petition for Relief from Judgment is the proper remedy when filed within the reglementary period for filing a motion for reconsideration or appeal.

• Jurisdiction: The RTC properly exercised jurisdiction. Jurisdiction over the subject matter is determined by the allegations in the complaint, irrespective of whether the plaintiff is ultimately entitled to recover the full amount claimed. Because accrued interest is a primary and inseparable component of the cause of action and was specifically alleged in the complaint, the jurisdictional amount is pegged at the total claim of ₱238,000, which falls within the RTC's jurisdiction.
• Petition for Relief from Judgment: The Petition for Relief from Judgment was improperly granted. Rule 38 applies only to final and executory judgments; respondent filed the petition within 14 days from receipt of the decision, well within the period to file a motion for reconsideration or appeal. Moreover, the grounds invoked did not qualify under Rule 38: "mistake" refers to mistake of fact, not of law; "fraud" must be extrinsic, preventing a fair trial; and negligence of counsel binds the client and does not constitute excusable negligence. Since respondent had other adequate remedies (motion for reconsideration, new trial, appeal, or certiorari), a Petition for Relief from Judgment was unwarranted.

• Jurisdiction determined by allegations in the complaint — The nature of an action and the court's jurisdiction over it are determined based on the allegations in the complaint and the character of the relief sought, irrespective of whether the plaintiff is entitled to recover upon all or some of the claims asserted. Jurisdiction cannot be made to depend on the amount ultimately substantiated during trial. Accrued interest that is a primary and inseparable component of the cause of action must be included in determining the jurisdictional amount.
• Petition for Relief from Judgment (Rule 38) — An equitable remedy allowed only in exceptional cases where there is no other available or adequate remedy. It is available only against a final and executory judgment. The grounds of fraud, accident, mistake, or excusable negligence must be the proximate cause that prevented the party from filing a motion for new trial or appeal. "Mistake" refers to mistake of fact, not of law; "fraud" must be extrinsic or collateral; and negligence of counsel is binding on the client and does not constitute excusable negligence.

• "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 Complaint, it must be included in the determination of which court has the jurisdiction over petitioner’s case."
• "Jurisdiction is determined by the cause of action as alleged in the complaint and not by the amount ultimately substantiated and awarded."
• "A petition for relief from judgment is an equitable remedy that is allowed only in exceptional cases where there is no other available or adequate remedy. When a party has another remedy available to him, which may be either a motion for new trial or appeal from an adverse decision of the trial court, and he was not prevented by fraud, accident, mistake or excusable negligence from filing such motion or taking such appeal, he cannot avail himself of this petition."

• Dionisio v. Puerto, 158 Phil. 671 (1974) — Followed. Held that jurisdiction cannot be made to depend on the amount ultimately substantiated in the course of the trial or affected by proof showing that the claimant is entitled to recover a sum in excess of the jurisdictional amount.
• Tuason v. Court of Appeals, G.R. No. 116607 (1996) — Followed. Defined the nature of a Petition for Relief from Judgment as an equitable remedy available only when no other remedy is adequate and the party was prevented from availing of ordinary remedies by fraud, accident, mistake, or excusable negligence.
• Lina v. Court of Appeals, G.R. No. L-63397 (1985) — Followed. Enumerated the remedies available to a party declared in default, including motion to set aside order of default, motion for new trial, petition for relief, and appeal.

• Section 1, Rule 38 of the Rules of Court — Governs Petition for Relief from Judgment. Applied to show that the remedy is only available against a final and executory judgment entered through fraud, accident, mistake, or excusable negligence, none of which were present or sufficient to justify the remedy in this case.
• Section 19(8), Batas Pambansa Blg. 129 (as amended by Republic Act No. 7691) — Defines the jurisdiction of Regional Trial Courts in civil cases where the demand exceeds ₱100,000 (outside Metro Manila) or ₱200,000 (in Metro Manila). Applied to confirm that the RTC had jurisdiction over the ₱238,000 claim.

Consuelo Ynares-Santiago, Ma. Alicia Austria-Martinez, Antonio Eduardo B. Nachura, Ruben T. Reyes.