G.R. No. L-2521 : March 22, 1906
RAFAEL MOLINA Y SALVADOR, plaintiff-appellee, vs. ANTONIO DE LA RIVA, defendant-appellant.

FACTS:
Plaintiff Rafael Molina y Salvador filed an action in the Court of First Instance of Manila to recover the first installment of a debt amounting to 33,659 pesos and 3 cents (Mexican currency) from defendant Antonio de la Riva. The debt arose from a contract dated July 27, 1903, for the sale of a business. The defendant demurred, contesting the court’s jurisdiction, arguing that both parties were residents of Catanduanes and that the contract designated the town of Bato in Catanduanes as the exclusive venue for any judicial action. The trial court overruled the demurrer. The defendant refused to answer, and judgment was rendered in favor of the plaintiff. The defendant appealed, assigning four errors.

ISSUE:
1. Whether the Court of First Instance of Manila had jurisdiction over the action.
2. Whether the trial court erred in fixing the debt in Philippine currency without hearing evidence on the exchange rate.
3. Whether the trial court erred in awarding a sum greater than that specifically demanded in the complaint.
4. Whether the contract was null and void for lack of the internal revenue stamp required under Act No. 1045.

RULING:
1. On Jurisdiction: The Court held that the Court of First Instance of Manila had jurisdiction. The complaint alleged both parties were Manila residents, an allegation deemed admitted due to the defendant’s failure to answer. Jurisdiction in personal actions is determined by the residence of the parties at the time of filing, not by a prior residence or a contractual stipulation. Parties cannot by agreement deprive a court of the jurisdiction conferred upon it by law (the Code of Civil Procedure). The venue stipulation in the contract was therefore ineffective to oust the Manila court’s jurisdiction.

2. On Currency Conversion: The Court found no error. The complaint alleged a specific equivalent in Philippine currency (28,049 pesos and 19 centavos), which was deemed admitted by the defendant’s failure to deny it. Proof of the exchange rate under Act No. 1045 is only required when the parties disagree.

3. On the Amount Awarded: The Court sustained this assignment of error. Since the defendant failed to answer, the plaintiff could not recover more than the amount specifically demanded in the complaint (28,049 pesos and 19 centavos). The trial court’s award of 30,052 pesos and 70 centavos was in excess of this demand and therefore erroneous.

4. On the Validity of the Contract: The Court held the contract was not void. Act No. 1045’s stamp tax and nullity penalty (Sections 9 & 10) applied only to contracts payable in local currency and made on or after October 1, 1904. The contract in question was executed on July 27, 1903, and was thus not subject to the stamp requirement.

DISPOSITIVE PORTION:
The judgment of the lower court was AFFIRMED WITH MODIFICATION. The plaintiff is entitled to recover only 28,049 pesos and 19 centavos, Philippine currency, with interest at 5% per annum from July 27, 1903. No costs were awarded for the appeal. The case was remanded to the trial court for proper action.