G.R. No. 212349 . November 17, 2021.
SPOUSES SERGIO D. DOMASIAN AND NENITA F. DOMASIAN, PETITIONERS, VS. MANUEL T. DEMDAM, RESPONDENT.

FACTS

On October 30, 1995, petitioners Spouses Sergio and Nenita Domasian obtained a loan of P75,000.00 from respondent Manuel T. Demdam, with an agreed interest rate of 8% per month, payable on or before June 30, 1996. The petitioners failed to pay upon demand. On August 1, 2001, the respondent filed a complaint for collection of sum of money before the Regional Trial Court (RTC) of Pasay City, claiming the principal of P75,000.00 and accrued interest of P414,000.00, totaling P489,000.00. An amended complaint was later filed, dropping a co-defendant. Summons could not be personally served as the petitioners were no longer residing at the given address. The petitioners were declared in default for failure to file an answer, and the RTC rendered a judgment by default in favor of the respondent on January 14, 2003, ordering payment of the total amount, damages, and attorney’s fees. The petitioners claimed they did not receive copies of the default order or the judgment. On June 6, 2006, they filed a Petition for Relief from Judgment. Subsequently, on June 6, 2008, they filed a Motion to Dismiss, alleging the RTC lacked jurisdiction as the principal claim of P75,000.00 fell within the jurisdiction of the Metropolitan Trial Court (MeTC). The RTC granted the petition and dismissed the complaint for lack of jurisdiction. The respondent appealed to the Court of Appeals (CA), which reversed the RTC, reinstating the judgment by default. The CA ruled that the total claim of P489,000.00, inclusive of interest, determined jurisdiction and was within the RTC’s jurisdiction. The petitioners’ motion for reconsideration was denied.

ISSUE

Whether the Court of Appeals erred in finding that the Regional Trial Court had jurisdiction over the complaint, specifically whether the accrued interest should be included in determining the jurisdictional amount.

RULING

The Supreme Court denied the petition and affirmed the CA’s ruling with modifications. The Court held that the RTC had jurisdiction because the determination of the jurisdictional amount is based on the total claim at the time of filing, which includes not only the principal debt but also the accrued interest, provided the interest is a primary and inseparable component of the cause of action and is determinable at the time of filing. In this case, the respondent’s amended complaint specifically prayed for P489,000.00, representing the principal loan of P75,000.00 and accrued interest of P414,000.00, which was determinable at the time of filing. Therefore, the total claim was within the RTC’s jurisdiction. However, the Court modified the interest rates applied. The stipulated interest rate of 8% per month was reduced for being unconscionable. The Court imposed: (a) monetary interest on the principal at 12% per annum from the date of default (June 30, 1996) until the finality of the ruling; (b) compensatory interest on the monetary interest at 12% per annum from judicial demand (August 1, 2001) to June 30, 2013, and at 6% per annum from July 1, 2013 until finality; and (c) legal interest of 6% per annum on the total sums due from finality until full payment. The awards for moral and exemplary damages were deleted.