Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 80892 September 29, 1989
ISLAMIC DA'WAH COUNCIL OF THE PHILIPPINES,
petitioner,
vs.
HONORABLE COURT OF APPEALS and THE HEIRS of
JESUS AMADO ARANETA, respondents.
Magtanggol C. Gunigundo for petitioner.
Antonio P. Barredo for respondents.
CORTES, J.:
Petitioner impugns the resolutions of the Court of
Appeals dated November 10 and December 2 and 3,
1987 which, in effect, gave due course to private
respondents' petition for annulment of judgment.
The antecedents of this case are as follows:
On February 15,1984 Freddie and Marconi Da Silva, as
mortgagors, and Islamic Da'Wah Council of the
Philippines (Council for brevity), as mortgagee, executed
a real estate mortgage over a 4,754 sq. m. parcel of land
located in Cubao, Quezon City and covered by Transfer
Certificate of Title (TCT) No. 30461 as security for the
payment of a one million peso promissory note in favor
of the mortgagee. The mortgagors were unable to pay
their obligation, hence, the Council instituted
foreclosure proceedings with the Regional Trial Court,
docketed as Civil Case No. Q-43746. On February 5, 1985
the parties submitted a compromise agreement wherein
it was stipulated that because of the Da Silvas' inability
to pay their debt to the Council, and for the additional
consideration of P 500,000.00, they jointly agree to cede,
transfer and convey to the Council the land they
mortgaged to the latter. On February 12, 1985, the
Regional Trial Court approved the compromise
agreement. Thereafter, TCT No. 328021 was issued in
the name of the Council by the Register of Deeds of
Quezon City.
Subsequent thereto, on August 8,1985, Jesus Amado
Araneta filed with the Register of Deeds a notice of lis
pendens in connection with Civil Case No. Q-47989
entitled "Islamic Da'Wah Council of the Philippines v.
Jesus Amado Araneta" for ejectment. The complaint was
converted into an action for collection of rentals with
damages but was later on withdrawn by the Council. On
August 13, 1985 Araneta also filed with the same
Register of Deeds an affidavit of adverse claim in
connection with Civil Case No. Q-43469 entitled "Marconi
Da Silva, et al. v. Jesus Amado Araneta, et al." for
recovery of possession. The notice of lis pendens and
adverse claim were annotated at the back of TCT No.
328021 by the Register of Deeds.
On October 9, 1985 the Council filed in the Regional
Trial Court of Quezon City a complaint for Quieting of
Title, Recovery of Possession and Damages with
Preliminary Mandatory Injunction against Araneta
praying, inter alia, for the cancellation of all the
annotations at the back of TCT No. 328021. The case is
docketed as Civil Case No. Q-46196.
While this case was pending, on July 6, 1987, the heirs of
Jesus Amado Araneta, private respondents herein, filed
with the Court of Appeals a petition to annul the
judgment in Civil Case No. Q-43746 for foreclosure. In
support of their petition the heirs of Araneta narrated
the following events:
(1) on December 20,1953 Jesus Amado
Araneta purchased the 4,754 sq.m. parcel
of land located in Cubao from the Spouses
Garcia and since then he and his family
have always been in possession thereof;
(2) for some reason known only to Araneta
and Fred Da Silva,an employee of the
former, title to the property was placed in
the latter's name as evidenced by TCT No.
30461 although from the time of its
issuance the owner's duplicate copy of said
TCT has always been in the possession of
Araneta,
(3) on January 31, 1963, the parties decided
to terminate the trust that had been
created over the property, thus, Da Silva
executed a deed of sale over the same
parcel of land in favor of Araneta but no
consideration was given by the latter to the
former for said sale and any recital of
consideration appearing in the deed is
purely fictitious;
(4) the Register of Deeds, however, refused
to register the deed of sale because the title
is in the name of "Fred Da Silva married to
Leocadia Da Silva" and is thus presumed
conjugal and the conjugal partnership
should first be liquidated as the wife had
already died;
(5) alleging that their copy was lost and/or
destroyed, on February 1, 1984 Freddie and
Marconi Da Silva, two of the three surviving
children of Fred Da Silva who died in 1963,
filed a petition, docketed as LRC record
Case No. Q-2772, for the issuance of a new
copy of the owner's duplicate copy of TCT
No. 30461. The petition was granted by
Judge Vera on March 24,1984:
(6) Araneta learned about this and
immediately filed a motion to re-open the
proceedings stating that he has in his
possession the ,- owner's duplicate copy of
TCT No. 30461 and explaining the reasons
for such possession;
(7) the motion was granted and on
December 7,1984 the land registration
court ordered the Da Silvas to (a) return to
the Register of the second owner's
duplicate copy of the title and (b) neither
enter into any transaction concerning said
second owner's duplicate copy nor utilize
the title for any purpose other than to
return the same to the Register of Deeds;
(8) on November 11, 1985, the Da Silvas
manifested before the land registration
court that the title to the property was
transferred to the Council based on a
compromise agreement in Civil Case No.
Q43746 for foreclosure; and
(9) on motion of the heirs of Araneta, who
substituted him upon his death in 1985,
Judge Vera consolidated Civil Cases Nos. Q-
2772 and Q-43469, both of which were
raffled to his sala, with Civil Case No. Q-
46196 but the judge hearing the latter case
would not heed the order of consolidation.
(10) and then set out their case for
annulment of judgment alleging that the
Da Silvas, with the connivance of the
Council, executed a purported promissory
note secured by a real estate mortgage the
terms and conditions of which were made
very onerous as to pave the way for the
foreclosure of the property by virtue of a
confession of judgment; and, the Council
had always known of the Araneta's claim of
ownership over the land because the
former's executive officer and secretary
general is the lawyer of the Da Silvas in the
cases they filed against the Araneta's. The
heirs of Araneta in their petition prayed,
inter alia, that (1) the judgment in Civil
Case No. Q- 43746 be annulled and set
aside and (2) a restraining order be issued
to enjoin the proceedings in Civil Case No.
Q-46196 [Petition, Annex "A"].
In a resolution dated November 10, 1987 the Court of
Appeals issued a temporary restraining order enjoining
the trial judge from hearing Civil Case No. Q-46196 until
further orders from the court. In the same resolution the
parties were ordered to appear for a pre- trial
conference. The Council filed a motion for
reconsideration of this resolution. Later on the Council
filed a Supplement to Motion for Reconsideration with
Motion to Dismiss questioning the Court of Appeals'
jurisdiction to hear the petition for annulment of a
judgment that had already been fully executed. The
Council also invoked the additional grounds of lack of
cause of action because the Aranetas are not valid
claimants of the property; lack of legal capacity to sue
because the Aranetas were not parties to the foreclosure
case; litis pendentia because of the pendency of the
quieting of title case between the same parties; and,
abandonment, waiver and unenforceability under the
Statute of Frauds [Petition, Annex "H"]. On December 2,
1987 the Court of Appeals denied the Council's motion
for reconsideration for lack of merit. In the hearing
conducted on December 3, 1987 the Council reiterated
the grounds it raised in its Supplemental Motion and
Motion to Dismiss but the same were summarily denied
by the Court of Appeals. Hence, this petition for
certiorari.
Petitioner contends the following: first, that the Court of
Appeals should not continue to hear the petition for
annulment of judgment since it is already fully executed
and the purpose for which the case for annulment was
filed will no longer be served, the parties having already
complied with the decision; second, private respondents
have no right to question the validity or legality of the
decision rendered foreclosing the mortgage since they
are foreign to the transaction of mortgage between
petitioner and Freddie and Marconi Da Silva; lastly,
petitioner claims that private respondents have another
remedy in law and that is in Civil Case No. Q-46196 for
Quieting of Title where the question of ownership may
be passed upon.
At the outset it must be clarified that the instant petition
is one for certiorari under Rule 65 of the Rules of Court.
Thus, the inquiry this Court should address itself is
limited to error of jurisdiction or grave abuse of
discretion committed by the Court, of Appeals, in
particular, whether or not respondent court acted
without jurisdiction or with grave abuse of discretion in
giving due course to the petition for annulment of
judgment. This clarification is rendered necessary
because the parties themselves, in their pleadings, have
gone beyond this issue and have discussed the merits of
the annulment of judgment case now pending decision
with the Court of Appeals.
In its Petition, the Council contends that a Regional Trial
Court has the authority and jurisdiction to annul a
judgment of another Regional Trial Court, a coordinate
or co-equal court Specifically, petitioner alleges that the
filing of a separate action for annulment of judgment is
unnecessary because the Regional Trial Court hearing
Civil Case No. Q-43469 for Quieting of Title can annul
the judgment in Civil Case No. Q-43746 for Foreclosure
rendered by another Regional Trial Court [Rollo, pp. 15-
16). In its Memorandum, however, the Council admitted
that the Court of Appeals has the exclusive jurisdiction
to annul the decision of the Regional Trial Court [Rollo,
pp. 152-1531.
Annulment of judgment is a remedy in law independent
of the case where the judgment sought to be annulled
was rendered. The judgment may be annulled on the
ground of extrinsic or collateral fraud [Canlas v. Hon-
Court of Appeals, G.R. No. 77691, August 8,19881.
Jurisdiction over actions for annulment of Regional Trial
Court judgment has been clarified by Batas Pambansa
Blg. 129 (otherwise known as The Judiciary
Reorganization Act of 1980). Prior to the enactment of
this law, different views had been entertained regarding
the issue of whether or not a branch of a Regional Trial
Court may annul a judgment of another branch of the
same court. * However, Batas Pambansa Blg. 129
introduced a new provision conferring on the Court of
Appeals exclusive original jurisdiction over actions for
annulment of judgments of Regional Trial Courts. Sec.
9(2) of Batas Pambansa Blg. 129 expressly provides that:
Sec. 9. Jurisdiction. -The Court of Appeals
shall exercise: ...
(2) Exclusive original jurisdiction over
actions for annulment of judgments of
Regional Trial Courts; Thus, it is beyond
dispute that it is only the Court of Appeals
that can take cognizance of the annulment
of judgment in Civil Case No. Q-43746
rendered by the Regional Trial Court.
The next issue raised in this petition deals with the
question of who may properly institute a petition for
annulment of judgment. It is petitioner's contention that
the remedy is available only to one who is a party to the
case where the judgment sought to be annulled is
rendered. Private respondents, on the other hand, allege
that "there are sufficient facts and circumstances
sufficient to show prima facie that [they] have a
substantial interest in the ownership of the property
which had been foreclosed without their knowledge and
consent" [Rollo, p. 90]. In fine, the question deals with
whether or not the heirs of Araneta have a cause of
action against the Council.
In Militante v. Edrosolano [G.R. No. L-27940, June 10,
1971, 39 SCRA 4731, an action for annulment of
judgment in Civil Case No. 6216 between Edrosolano and
Belosillo was filed by Militante. The petition stemmed
from a complaint instituted by Militante on September 6,
1965 against Edrosolano for damages arising from a
breach of contract of carriage. On January 18,1966
Militante obtained an order of preliminary attachment
on the property of Edrosolano. Alleging that he
purchased all of Edrosolano's TPU equipment on
February 28, 1966, Belosillo filed a third-party claim. It
appears that on February 25, 1963 Belosillo obtained a
judgment by default against Edrosolano in Civil Case No.
6216 for collection of amount of P45,000.00, the value of
the promissory note executed by the latter on February
1, 1960. After a recital of these antecedent facts,
Militante, in his petition for annulment of judgment
contended, inter alia, that (1) Civil Case No. 6216 "was
based on a fictitious cause of action because [the]
promissory note was without lawful consideration
whatsoever" [at 476]; (2) Edrosolano did not file any
answer to Belosillo's complaint and allowed the latter to
obtain a judgment by default which judgment attained
finality without the former appealing therefrom; and, (3)
while judgment in Civil Case No. 6216 was promulgated
iii 1963 it was "only on January 19, 1966 when . . .
Belosillo caused the execution thereof after [Militante]
had already instituted his civil case for damages against
... Edrosolano and an order for issuance of preliminary
attachment issued" [at 477]. The trial court however
dismissed Militante's action for annulment on finding
that it did not state a cause of action. Thereafter,
Militante filed an appeal to this Tribunal and in setting
aside the trial court's order of dismissal', the Court,
speaking through then Mr. Associate Justice Enrique
Fernando, stated that:
xxx xxx xxx
2. More specifically, the view entertained by
the lower court in its order of dismissal
that an action for annulment of judgment
can be availed of only by those principally
or secondarily bound is contrary to what
had been so clearly declared by this Court
in the leading case of Anuran v. Aquino t38
Phil. 291, decided in 1918. It was
emphatically announced therein: "There
can be no question as to the right of any
persons adversely affected by a judgement
to maintain an action to enjoin its
enforcement and to have it declared a
nullity on the ground of fraud and collusion
practiced in the very matter of obtaining
the judgment when such fraud is extrinsic
or collateral to the matters involved in the
issues raised at the trial which resulted in
such judgment. x x x." [at 3233.] Such a
principle was further fortified by an
observation made by this Court through
Justice Ozaeta in Garchitorena v. Sotelo [74
Phil. 25 (,1942)j'. These are his words: "The
collusive conduct of the parties in the
 foreclosure suit constituted an extrinsic or
collateral fraud by reason of which the
judgment rendered therein may be
annulled in this separate action [citing also
the case of Anuran]. Aside from the
Anuran-Aquino case, innumerable
authorities from other jurisdictions may be
cited 'in support of the annulment. But
were there not any precedent to guide us,
reason and justice would compel us to lay
down such doctrine for the first time." [at
481-482-, Italics supplied.]
It is therefore clear from the foregoing that a person
need not be a party to the judgment sought to be
annulled. What is essential is that he can prove his
allegation that the judgment was obtained by the use of
fraud and collusion and he would be adversely affected
thereby.
In this present case it is true that the heirs of Araneta
are not parties to the foreclosure case. Neither are they
principally nor secondarily bound by the judgment
rendered therein. However. their petition filed with the
Court of Appeals they alleged fraud and connivance
perpetuated by and between the Da Silvas and the
Council as would adversely affect them. This allegation,
if fully substantiated by preponderance of evidence,
could be the basis for the annulment of Civil Case No. Q-
43476.
Finally, the Council asserts that the remedy of
annulment of judgment applies only to final and
executory judgment and not to that which had already
been fully executed or implemented.It is the Council's
contention that as the judgment in the foreclosure case
had already been executed evidenced by the fact that
title to the property in question had been transferred in
its name the judgment can no longer be annulled. The
Council's contention is devoid of merit. In Garchitorena
u. Sotelo, supra, the Court affirmed the trial court's
annulment of the judgment on foreclosure
notwithstanding the fact that ownership of the house
and lot subject of the mortgage had passed from the
mortgagee who foreclosed the mortgage and purchased
the property at public auction to a person who bought
the same and finally to another individual in whose
name the Torrens certificate of title stood by the time
the case reached this Tribunal.
In view of the foregoing the Court finds that the Court of
Appeals neither acted without jurisdiction nor
committed grave abuse of discretion in giving due
course to the petition for annulment of judgment as
would warrant the issuance of the extraordinary writ of
certiorari in this case.
WHEREFORE, the instant petition is DISMISSED and the
orders of the Court of Appeals dated November 10 and
December 2 and 3,1987 are AFFIRMED.
SO ORDERED. SECOND DIVISION
CYNTHIA C. ALABAN, G.R. No. 156021
FRANCIS COLLADO, JOSE
P. COLLADO, JUDITH Present:
PROVIDO, CLARITA PROVIDO,
ALFREDO PROVIDO, MANUEL PUNO, J.,
PROVIDO, JR., LORNA DINA Chairman,
E. PROVIDO, SEVERO ARENGA, AUSTRIA-MARTINEZ,
JR., SERGIO ARENGA, EDUARDO CALLEJO, SR.,
ARENGA, CAROL ARENGA, RUTH TINGA, and
BABASA, NORMA HIJASTRO, CHICO-NAZARIO, JJ.
DOLORES M. FLORES, ANTONIO
MARIN, JR., JOSE MARIN, SR., and
MATHILDE MARIN, Promulgated:
Petitioners,
September 23, 2005

- versus -

COURT OF APPEALS and

FRANCISCO H. PROVIDO,
Respondents.
x-------------------------------------------------------------------x

DECISION

TINGA, J.:

This is a petition for review of the Resolutions[1] of the

Court of Appeals (CA) in CA-G.R. SP No. 69221,[2]
dismissing petitioners petition for annulment
judgment.
On 8 November 2000, respondent Francisco
Provido (respondent) filed a petition, docketed as SP
Proc. No. 00-135, for the probate of the Last Will and
Testament[3] of the late Soledad Provido Elevencionado
(decedent), who died on 26 October 2000 in Janiuay,
Iloilo.[4] Respondent alleged that he was the heir of the
decedent and the executor of her will. On 30 May 2001,
the Regional Trial Court (RTC), Branch 68, in P.D.
Monfort North, Dumangas, Iloilo, rendered its Decision,
allowing the probate of the will of the decedent and
directing the issuance of letters testamentary
respondent.[6]
More than four (4) months later, or on 4 October 2001,
herein petitioners filed a motion for the reopening of the
probate proceedings.[7] Likewise, they filed an opposition
to the allowance of the will of the decedent, as well as
the issuance of letters testamentary to respondent,[8]
claiming that they are the intestate heirs of the
decedent. Petitioners claimed that the RTC did not
acquire jurisdiction over the petition due to non-
of payment of the correct docket fees, defective
publication, and lack of notice to the other heirs.
Moreover, they alleged that the will could not have been
probated because: (1) the signature of the decedent was
forged; (2) the will was not executed in accordance with
law, that is, the witnesses failed to sign below the
attestation clause; (3) the decedent lacked testamentary
capacity to execute and publish a will; (4) the will was
executed by force and under duress and improper
pressure; (5) the decedent had no intention to make a
will at the time of affixing of her signature; and (6) she
[5]
did not know the properties to be disposed of, having
included in the will properties which no longer belonged
to to her. Petitioners prayed that the letters testamentary
issued to respondent be withdrawn and the estate of the
decedent disposed of under intestate succession.[9]
On 11 January 2002, the RTC issued an Order[10] denying
petitioners motion for being unmeritorious. Resolving
the issue of jurisdiction, the RTC held that petitioners
were deemed notified of the hearing by publication and
that the deficiency in the payment of docket fees is not a
ground for the outright dismissal of the petition. It
merely required respondent to pay the deficiency.[11]
Moreover, the RTCs Decision was already final and
executory even before petitioners filing of the motion to
reopen.[12]
Petitioners thereafter filed a petition [13]
with
application for preliminary injunction with the CA,
seeking the annulment of the RTCs Decision dated 30
May 2001 and Order dated 11 January 2002. They
claimed that after the death of the decedent, petitioners,
together with respondent, held several conferences to
discuss the matter of dividing the estate of the decedent,
with respondent agreeing to a one-sixth (1/6) portion as
his share. Petitioners allegedly drafted a compromise
agreement to implement the division of the estate.
Despite receipt of the agreement, respondent refused to
sign and return the same. Petitioners opined that
respondent feigned interest in participating in the
compromise agreement so that they would not suspect
his intention to secure the probate of the will.[14] They
claimed that they learnt of the probate proceedings only
in July of 2001, as a result of which they filed their
motion to reopen the proceedings and admit their
opposition to the probate of the will only on 4 October
2001. They argued that the RTC Decision should be
annulled and set aside on the ground of extrinsic fraud
and lack of jurisdiction on the part of the RTC.[15]
In its Resolution[16] promulgated on 28 February 2002, the
an
CA dismissed the petition. It found that there was no
showing that petitioners failed to avail of or resort to the
ordinary remedies of new trial, appeal, petition for relief
from judgment, or other appropriate remedies through
no fault of their own.[17] Moreover, the CA declared as
baseless petitioners claim that the proceedings in the
RTC was attended by extrinsic fraud. Neither was there
any showing that they availed of this ground in a motion
for new trial or petition for relief from judgment in the
RTC, the CA added.[18] Petitioners sought reconsideration
of the Resolution, but the same was denied by the CA for
lack of merit.[19]
Petitioners now come to this Court, asserting that the CA
committed grave abuse of discretion amounting to lack
of jurisdiction when it dismissed their petition for the
alleged failure to show that they have not availed of or
resorted to the remedies of new trial, appeal, petition for
relief from judgment or other remedies through no fault
of their own, and held that petitioners were not denied
their day in court during the proceedings before the
RTC.[20] In addition, they assert that this Court has yet to
decide a case involving Rule 47 of the Rules of Court
and, therefore, the instant petition should be given due
course for the guidance of the bench and bar.[21]
For his part, respondent claims that petitioners were in a
position to avail of the remedies provided in Rules 37
and 38, as they in fact did when they filed a motion for
new trial.[22] Moreover, they could have resorted to a
petition for relief from judgment since they learned of
the RTCs judgment only three and a half months after
its promulgation.[23] Respondent likewise maintains that
no extrinsic fraud exists to warrant the annulment of the
RTCs Decision, since there was no showing that they
were denied their day in court. Petitioners were not
made parties to the probate proceedings because the
decedent did not institute them as her heirs.[24] Besides,
assuming arguendo that petitioners are heirs of the
decedent, lack of notice to them is not a fatal defect
since personal notice upon the heirs is a matter of
procedural convenience and not a jurisdictional
requisite.[25] Finally, respondent charges petitioners of
forumshopping, since the latter have a pending suit
involving the same issues as those in SP No. 00-135, that
is SP No. 1181[26] filed before Branch 23, RTC of General
Santos City and subsequently pending on appeal before
the CA in CA-G.R. No.74924.[27]
It appears that one of the petitioners herein,
Dolores M. Flores (Flores), who is a niece of the decedent,
filed a petition for letters of administration with the RTC
of General Santos City, claiming that the decedent died
intestate without any issue, survived by five groups of
collateral heirs. Flores, armed with a Special Power of
Attorney from most of the other petitioners, prayed for
her appointment as administratrix of the estate of the
decedent. The RTC dismissed the petition on the ground
of lack of jurisdiction, stating that the probate court in
Janiuay, Iloilo has jurisdiction since the venue for a
petition for the settlement of the estate of a decedent is
the place where the decedent died. This is also in
accordance with the rule that the first court acquiring
jurisdiction shall continue hearing the case to the
exclusion of other courts, the RTC added.[28] On 9 January
2002, Flores filed a Notice of Appeal [29]
and on 28
January 2002, the case was ordered forwarded to the
CA.[30]

Petitioners maintain that they were not made

parties to the case in which the decision sought to be
annulled was rendered and, thus, they could not have
availed of the ordinary remedies of new trial, appeal,
petition for relief from judgment and other appropriate
remedies, contrary to the ruling of the CA. They aver
that respondents offer of a false compromise and his
failure to notify them of the probate of the will
constitute extrinsic fraud that necessitates the
annulment of the RTCs judgment. [31]

The petition is devoid of merit.

Section 37 of the Rules of Court allows an

aggrieved party to file a motion for new trial on the
ground of fraud, accident, mistake, or excusable
negligence. The same
Rule permits the filing of a motion for reconsideration
on the grounds of excessive award of damages,
insufficiency of evidence to justify the decision or final
order, or that the decision or final order is contrary to
law.[32] Both motions should be filed within the period for
taking an appeal, or fifteen (15) days from notice of the
judgment or final order.

Meanwhile, a petition for relief from judgment

under Section 3 of Rule 38 is resorted to when a
judgment or final order is entered, or any other
proceeding is thereafter taken, against a party in any
court through fraud, accident, mistake, or excusable
negligence. Said party may file a petition in the same
court and in the same case to set aside the judgment,
order or proceeding. It must be filed within sixty (60)
days after the petitioner learns of the judgment and
within six (6) months after entry thereof.[33]

A motion for new trial or reconsideration and a petition

for relief from judgment are remedies available only to
parties in the proceedings where the assailed
judgment is rendered.[34] In fact, it has been held that a
person who was never a party to the case, or even
summoned to appear therein, cannot avail of a petition
for relief from judgment.[35]
However, petitioners in this case are mistaken in
asserting that they are not or have not become parties to
the probate proceedings.
Under the Rules of Court, any executor, devisee,
or legatee named in a will, or any other person
interested in the estate may, at any time after the death
of the testator, petition the court having jurisdiction to
have the will allowed.[36] Notice of the time and place for
proving the will must be published for three (3)
consecutive weeks, in a newspaper of general circulation
in the province,[37] as well as furnished to the designated
or other known heirs, legatees, and devisees of the
testator.
[38]
Thus, it has been held that a proceeding for
the probate of a will is one in rem, such that with the
corresponding publication of the petition the court's
jurisdiction extends to all persons interested in said will
or in the settlement of the estate of the decedent.[39]
Publication is notice to the whole world that the
proceeding has for its object to bar indefinitely all who
might be minded to make an objection of any sort
against the right sought to be established. It is the
publication of such notice that brings in the whole world
as a party in the case and vests the court with
jurisdiction to hear and decide it.[40] Thus, even though
petitioners were not mentioned in the petition for
probate, they eventually became parties thereto as a
consequence of the publication of the notice of hearing.
As parties to the probate proceedings, petitioners could
have validly availed of the remedies of motion for new
trial or reconsideration and petition for relief from
judgment. In fact, petitioners filed a motion to reopen,
which is essentially a motion for new trial, with
petitioners praying for the reopening of the case and the
setting of further proceedings. However, the motion was
denied for having been filed out of time, long after the
Decision became final and executory.
Conceding that petitioners became aware of the Decision
after it had become final, they could have still filed a
petition for relief from judgment after the denial of their
motion to reopen. Petitioners claim that they learned of
the Decision only on 4 October 2001, or almost four (4)
months from the time the Decision had attained finality.
But they failed to avail of the remedy.
For failure to make use without sufficient
justification of the said remedies available to them,
petitioners could no longer resort to a petition for
annulment of judgment; otherwise, they would benefit
from their own inaction or negligence.[41]
Even casting aside the procedural requisite, the petition
for annulment of judgment must still fail for failure to
comply with the substantive requisites, as the appellate
court ruled.
An action for annulment of judgment is a remedy
in law independent of the case where the judgment
sought to be annulled was rendered.[42] The purpose of
such action is to have the final and executory judgment
set aside so that there will be a renewal of litigation. It is
resorted to in cases where the ordinary remedies of new
trial, appeal, petition for relief from judgment, or other
appropriate remedies are no longer available through no
fault of the petitioner,[43] and is based on only two
grounds: extrinsic fraud, and lack of jurisdiction or
denial of due process.[44] A person need not be a party to
the judgment sought to be annulled, and it is only
essential that he can prove his allegation that the
judgment was obtained by the use of fraud and collusion
and he would be adversely affected thereby.[45]
An action to annul a final judgment on the
ground of fraud lies only if the fraud is extrinsic or
collateral in character.[46] Fraud is regarded as extrinsic
where it prevents a party from having a trial or from
presenting his entire case to the court, or where it
operates upon matters pertaining not to the judgment
itself but to the manner in which it is procured. The
overriding consideration when extrinsic fraud is alleged
is that the fraudulent scheme of the prevailing litigant
prevented a party from having his day in court.[47]
To sustain their allegation of extrinsic fraud, petitioners
assert that as a result of respondents deliberate
Besides, assuming arguendo that petitioners are
omission or concealment of their names, ages and
entitled to be so notified, the purported infirmity is
residences as the other heirs of the decedent in his
cured by the publication of the notice. After all, personal
petition for allowance of the will, they were not notified
notice upon the heirs is a matter of procedural
of the proceedings, and thus they were denied their day
convenience and not a jurisdictional requisite.[50]
in court. In addition, they claim that respondents offer
of a false compromise even before the filing of the
The non-inclusion of petitioners names in the
petition prevented them from appearing and opposing
petition and the alleged failure to personally notify them
the petition for probate.
of the proceedings do not constitute extrinsic fraud.
Petitioners were not denied their day in court, as they
The Court is not convinced.
were not prevented from participating in the
proceedings and presenting their case before the
probate court.
According to the Rules, notice is required to be
personally given to known heirs, legatees, and devisees
One other vital point is the issue of forum-
of the testator.[48] A perusal of the will shows that
shopping against petitioners. Forum-shopping consists
respondent was instituted as the sole heir of the
of filing multiple suits in different courts, either
decedent. Petitioners, as nephews and nieces of the
simultaneously or successively, involving the same
decedent, are neither compulsory nor testate heirs[49] who
parties, to ask the courts to rule on the same or related
are entitled to be notified of the probate proceedings
causes and/or to grant the same or substantially same
under the Rules. Respondent had no legal obligation to
reliefs,[51] on the supposition that one or the other court
mention petitioners in the petition for probate, or to
would make a favorable disposition.[52] Obviously, the
personally notify them of the same.
parties in the instant case, as well as in the appealed
case before the CA, are the same. Both cases deal with
the existence and validity of the alleged will of the
decedent, with petitioners anchoring their cause on the
state of intestacy. In the probate proceedings, petitioners
position has always been that the decedent left no will
and if she did, the will does not comply with the
requisites of a valid will. Indeed, that position is the
bedrock of their present petition. Of course, respondent
maintains the contrary stance. On the other hand, in the
petition for letters of administration, petitioner Flores
prayed for her appointment as administratrix of the

estate on the theory that the decedent died intestate.
The petition was dismissed on the ground of lack of
jurisdiction, and it is this order of dismissal which is the
subject of review in CA-G.R. No. 74924. Clearly,
therefore, there is forum-shopping.
Moreover, petitioners failed to inform the Court
of the said pending case in their certification against
forum- shopping. Neither have they done so at any time
thereafter. The Court notes that even in the petition for
annulment of judgment, petitioners failed to inform the
CA of the pendency of their appeal in CA-G.R. No. 74924,
even though the notice of appeal was filed way before
the petition for annulment of judgment was instituted.
WHEREFORE, the petition is DENIED. Costs against
petitioners.
SO ORDERED.
ALABAN VS. COURT OF APPEALS G.R. No. 156021 September 23, 2005
(SpecPro 2016)
Posted on June 29, 2016
FACTS:
Petitioners maintain that they were not made parties to
the case in which the decision sought to be annulled was
rendered and, thus, they could not have availed of the
ordinary remedies of new trial, appeal, petition for relief
from judgment and other appropriate remedies, contrary
to the ruling of the CA.
ISSUE:
W/N Petitioners were made parties in the proceedings
HELD:
Petitioners in this case are mistaken in asserting that
they are not or have not become parties to the probate
proceedings.
Thus, it has been held that a proceeding for the probate
of a will is one in rem, such that with the corresponding
publication of the petition the court’s jurisdiction
extends to all persons interested in said will or in the
settlement of the estate of the decedent.
Thus, even though petitioners were not mentioned in the
petition for probate, they eventually became parties
thereto as a consequence of the publication of the notice
of hearing.
On the other hand, according to the Rules, notice is
required to be personally given to known heirs, legatees,
and devisees of the testator.
Petitioners, as nephews and nieces of the decedent, are
neither compulsory nor testate heirs who are entitled to
be notified of the probate proceedings under the Rules.
Respondent had no legal obligation to mention
petitioners in the petition for probate, or to personally
notify them of the same.
Besides, assuming arguendo that petitioners are entitled
to be so notified, the purported infirmity is cured by the
publication of the notice.
FIRST DIVISION
[ G.R. No. 212690 (Formerly UDK-15080), February 20,
2017 ]
SPOUSES ROMEO PAJARES AND IDA T. PAJARES,
PETITIONERS, V. REMARKABLE LAUNDRY AND DRY
CLEANING, REPRESENTED BY ARCHEMEDES G. SOLIS,
RESPONDENT.
D E C I S I ON
DEL CASTILLO, J.:
Breach of contract may give rise to an action for specific
performance or rescission of contract.[1] It may also be
the cause of action in a complaint for damages filed
pursuant to Art. 1170 of the Civil Code.[2] In the specific
performance and rescission of contract cases, the
subject matter is incapable of pecuniary estimation,
hence jurisdiction belongs to the Regional Trial Court
(RTC). In the case for damages, however, the court that
has jurisdiction depends upon the total amount of the
damages claimed.
Assailed in this Petition for Review on Certiorari[3] is the
December 11, 2013 Decision[4] of the Court of Appeals
(CA) in CA-G.R. CEB SP No. 07711 that set aside the
February 19, 2013 Order[5] of the RTC, Branch 17, Cebu
City dismissing Civil Case No. CEB-39025 for lack of
jurisdiction.
Factual Antecedents
On September 3, 2012, Remarkable Laundry and Dry c) Thirty Thousand Pesos (P30,000.00) as exemplary
Cleaning (respondent) filed a Complaint denominated as damages.
"Breach of Contract and Damages"[6] against spouses
Romeo and Ida Pajares (petitioners) before the RTC of d) Twenty Thousand Pesos (P20,000.00) as cost of suit.
Cebu City, which was docketed as Civil Case No. CEB-
39025 and assigned to Branch 17 of said court. e) Such other reliefs that the Honorable Court deems as
Respondent alleged that it entered into a Remarkable just and equitable.[8] (Italics in the original)
Dealer Outlet Contract[7] with petitioners whereby the
latter, acting as a dealer outlet, shall accept and receive Petitioners submitted their Answer,[9] to which
items or materials for laundry which are then picked up respondent filed its Reply.[10]
and processed by the former in its main plant or laundry
outlet; that petitioners violated Article IV (Standard During pre-trial, the issue of jurisdiction was raised, and
Required Quota & Penalties) of said contract, which the parties were required to submit their respective
required them to produce at least 200 kilos of laundry position papers.
items each week, when, on April 30, 2012, they ceased
dealer outlet operations on account of lack of personnel; Ruling of the Regional Trial Court
that respondent made written demands upon petitioners
for the payment of penalties imposed and provided for
On February 19, 2013, the RTC issued an Order
in the contract, but the latter failed to pay; and, that
dismissing Civil Case No. CEB-39025 for lack of
petitioners' violation constitutes breach of contract.
jurisdiction, stating:
Respondent thus prayed, as fol1ows:
In the instant case, the plaintiff's complaint is for the
WHEREFORE, premises considered, by reason of the
recovery of damages for the alleged breach of contract.
above-mentioned breach of the subject dealer contract
The complaint sought the award of P200,000.00 as
agreement made by the defendant, it is most
incidental and consequential damages; the amount of
respectfully prayed of the Honorable Court to order the
P30,000.00 as legal expenses; the amount of P30,000.00
said defendant to pay the following incidental and
as exemplary damages; and the amount of P20,000.00 as
consequential damages to the plaintiff., to wit:
cost of the suit, or for the total amount of P280,000.00
as damages.
a) TWO HUNDRED THOUSAND PESOS (PHP200,000.00)
plus legal interest as incidental and consequential [sic]
Under the provisions of Batas Pambansa Blg. 129 as
for violating Articles IV and XVI of the Remarkable
amended by Republic Act No. 7691, the amount of
Laundry Dealer Contract dated 08 September 2011.
demand or claim in the complaint for the Regional Trial
Courts (RTCs) to exercise exclusive original jurisdiction
b) Thirty Thousand Pesos (P30,000.00) as legal expenses. shall exceed P300,000.00; otherwise, the action shall fall
under the jurisdiction of the Municipal Trial Courts. In
this case, the total amount of demand in the complaint
is only P280,000.00, which is less than the jurisdictional
amount of the RTCs. Hence, this Court (RTC) has no
jurisdiction over the instant case.
WHEREFORE, premises considered, the instant case is
hereby DISMISSED for lack of jurisdiction.
Notify the counsels.
SO ORDERED.[11] (Emphasis in the original)
Respondent filed its Motion for Reconsideration,[12]
arguing that as Civil Case No. CEB-39025 is for breach of
contract, or one whose subject is incapable of pecuniary
estimation, jurisdiction thus falls with the RTC.
However, in an April29, 2013 Order,[13] the RTC held its
ground.
Ruling of the Court of Appeals
Respondent filed CA-G.R. CEB SP No. 07711, a Petition
for Certiorari[14] seeking to nullify the RTC's February 19,
2013 and April 29, 2013 Orders. It argued that the RTC
acted with grave abuse of discretion in dismissing Civil
Case No. CEB-39025. According to respondent, said case
is one whose subject matter is incapable of pecuniary
estimation and that the damages prayed for therein are
merely incidental thereto. Hence, Civil Case No. CEB-
39025 falls within the jurisdiction of the RTC pursuant
to Section 19 of Batas Pambansa Blg. 129, as Amended
(BP 129).
On December 11, 2013, the CA rendered the assailed
Decision setting aside the February 19, 2013 Order of
the RTC and remanding the case to the court a quo for
further proceedings. It held as follows:
In determining the jurisdiction of an action whose
subject is incapable of pecuniary estimation, the nature
of the principal action or remedy sought must first be
ascertained. If it is primarily for the recovery of a sum of
money, the claim is considered capable of pecuniary
estimation and the jurisdiction of the court depends on
the amount of the claim. But, where the primary issue is
something other than the right to recover a sum of
money, where the money claim is purely incidental to, or
a consequence of the principal relief sought, such are
actions whose subjects are incapable of pecuniary
estimation, hence cognizable by the RTCs.[15]
xxxx
Verily, what determines the nature of the action and
which court has jurisdiction over it are the allegations of
the complaint and the character of the relief sought.[16]
In our considered view, the complaint, is one incapable
of pecuniary estimation; thus, one within the RTC's
jurisdiction. x x x
xxxx
A case for breach of contract [sic] is a cause of action
either for specific performance or rescission of
contracts. An action for rescission of contract, as a
counterpart of an action for specific performance, is
incapable of pecuniary estimation, and therefore falls
under the jurisdiction of the RTC.[17]
Thus, the totality of damages principle finds no
application in the instant case since the same applies
only when damages is principally and primarily
demanded in accordance with the specification in
Administrative Circular No. 09-94 which reads: 'in cases
where the claim for damages is the main cause of
action...the amount of such claim shall be considered in
determining the jurisdiction of the court.'
Thus, the court a quo should not have dismissed the
instant case.
WHEREFORE, in view of the foregoing, the Order dated
February 19, 2013 of the Regional Trial Court, 7th
Judicial Region, Branch 17, Cebu City in Civil Case No.
CEB-39025 for Breach of Contract and Damages is
hereby REVERSED and SET ASIDE. This case is hereby
REMANDED to the RTC which is ORDERED to PROCEED
with the trial on the merits with dispatch.
SO ORDERED.[18]
Petitioners sought to reconsider, but were denied. Hence,
the present Petition.
Issue
In a June 29, 2015 Resolution,[19] this Court resolved to
give due course to the Petition, which claims that the CA
erred in declaring that the RTC had jurisdiction over
respondent's Complaint which, although denominated as
one for breach of contract, is essentially one for simple
payment of damages.
Petitioners' Arguments
In praying that the assailed CA dispositions be set aside
and that the RTC's February 19, 2013 Order dismissing
Civil Case No. CEB-39025 be reinstated, petitioners in
their Petition and Reply[20] espouse the original findings
of the RTC that Civil Case No. CEB-39025 is for the
recovery of a sum of money in the form of damages.
They asserted that in determining jurisdiction over the
subject matter, the allegations in the Complaint and the
principal relief in the prayer thereof must be considered;
that since respondent merely prayed for the payment of
damages in its Complaint and not a judgment on the
claim of breach of contract, then jurisdiction should be
determined based solely on the total amount of the
claim or demand as alleged in the prayer; that while
breach of contract may involve a claim for specific
performance or rescission, neither relief was sought in
respondent's Complaint; and, that respondent "chose to
focus his [sic] primary relief on the payment of
damages,"[21] which is "the true, actual, and principal
relief sought, and is not merely incidental to or a
consequence of the alleged breach of contract."[22]
Petitioners conclude that, applying the totality of claims
rule, respondent's Complaint should be dismissed as the
claim stated therein is below the jurisdictional amount
of the RTC.
Respondent's Arguments
Respondent, on the other hand, counters in its
Comment[23] that the CA is correct in declaring that Civil
Case No. CEB-39025 is primarily based on breach of without, however, determining whether, from the four
contract, and the damages prayed for are merely corners of the Complaint, respondent actually intended
incidental to the principal action; that the Complaint to initiate an action for specific performance or an
itself made reference to the Remarkable Dealer Outlet action for rescission of contract. Specific performance is
Contract and the breach committed by petitioners, which ''[t]he remedy of requiring exact performance of a
gave rise to a cause of action against the latter; and, that contract in the specific form in which it was made, or
with the filing of the case, the trial court was thus called according to the precise terms agreed upon. [It is t]he
upon to determine whether petitioners violated the actual accomplishment of a contract by a party bound to
dealer outlet contract, and if so, the amount of damages fulfill it."[25] Rescission of contract under Article 1191 of
that may be adjudged in respondent's favor. the Civil Code, on the other hand, is a remedy available
to the obligee when the obligor cannot comply with what
Our Ruling is incumbent upon him.[26] It is predicated on a breach of
faith by the other party who violates the reciprocity
The Court grants the Petition. The RTC was correct in between them. Rescission may also refer to a remedy
categorizing Civil Case No. CEB-39025 as an action for granted by law to the contracting parties and sometimes
damages seeking to recover an amount below its even to third persons in order to secure reparation of
jurisdictional limit. damages caused them by a valid contract, by means of
restoration of things to their condition in which they
Respondent's complaint denominated were prior to the celebration of the contract.[27]
as one for ''Breach of Contract &
Damages" is neither an action for In a line of cases, this Court held that —
specific performance nor a complaint
for rescission of contract. In determining whether an action is one the subject
matter of which is not capable of pecuniary estimation
In ruling that respondent's Complaint is incapable of this Court has adopted the criterion of first ascertaining
pecuniary estimation and that the RTC has jurisdiction, the nature of the principal action or remedy sought. If it
the CA comported itself with the following ratiocination: is primarily for the recovery of a sum of money, the
claim is considered capable of pecuniary estimation, and
A case for breach of contract [sic] is a cause of action whether jurisdiction is in the municipal trial courts or in
either for specific performance or rescission of the courts of first instance would depend on the amount
contracts. An action for rescission of contract, as a of the claim. However, where the basic issue is
counterpart of an action for specific performance, is something other than the right to recover a sum of
incapable of pecuniary estimation, and therefore falls money, where the money claim is purely incidental to, or
under the jurisdiction of the RTC.[24] a consequence of, the principal relief sought, this Court
has considered such actions as cases where the subject
of the litigation may not be estimated in terms of money, Ida T.
and are cognizable exclusively by courts of first instance Pajares,
(now Regional Trial Courts).[28]
Defendants.
To write finis to this controversy, therefore, it is
imperative that we first determine the real nature of
respondent's principal action, as well as the relief sought --------------------------------------------------------------------------------
in its Complaint, which we quote in haec verba:
COMPLAINT
REPUBLIC OF THE PHILIPPNES
REGIONAL TRIAL COURT Plaintiff, by counsels, to the Honorable Court most
BRANCH ____ respectfully states THAT:
CEBUCITY
l. Plaintiff Remarkable Laundry and Dry Cleaning
Remarkable Services, is a sole proprietorship business owned by
Laundry and Civil Case No. ____ Archemedes Solis with principal office address at
Dry Cleaning PREDECO CMPD AS-Ostechi Bldg. Banilad, Hernan Cortes
St., Mandaue City.
herein
represented 2. Defendant Ida Pajares is of legal age, Filipino, married
For: Breach of with address at Hermag Village, Basak Mandaue City
by
Contract & Damages where she can be served with summons and other
Archemedes
processes of the Honorable Court.
G. Solis,
3. On 08 SEP 2011, parties entered and signed a
Plaintiff,
Remarkable Laundry Dealer Outlet Contract for the
processing of laundry materials, plaintiff being the
owner of Remarkable Laundry and the defendant being
vs. the authorized dealer of the said business. (Attached
and marked as Annex "A" is a copy of the Remarkable
Laundry Dealer Outlet Contract.)

Spouses CAUSES OF ACTION:

Romeo
Pajares and
4. Sometime on [sic] the second (2nd) quarter of 2012,
defendant failed to follow the required standard
purchase quota mentioned in Article IV of the subject
dealership agreement.
5. Defendant through a letter dated April 24, 2012 said it
[sic] would CEASE OPERATION. It [sic] further stated that
they [sic] would just notify or advise the office when
they are [sic] ready for the business again making the
whole business endeavor totally dependent upon their
[sic] whims and caprices. (Attached and marked as
Annex "B" is a copy of letter of the defendant dated April
24, 2012.)
6. The aforementioned act of unilateral cessation of
operation by the defendant constitutes a serious breach
to [sic] the contract because it totally, whimsically and
grossly disregarded the Remarkable Laundry Dealer
Outlet Contract, which resulted to [sic] failure on its part
in obtaining the minimum purchase or delivery of 200
kilos per week for the entire duration of its cessation of
operations.
7. Under the aforementioned Dealer Contract,
specifically m Article XV of the same are classified as
BREACH BY THE OUTLETS:
'The parties agree that the happening of any of the
stipulation and events by the dealer outlet is otherwise
[sic] in default of any of its obligations or violate any of
the terms and condition under this agreement.
Any violation of the above-mentioned provisions shall
result in the immediate termination of this agreement,
without prejudice to any of the RL Main Operators rights
or remedies granted to it by law.
THE DEALER OUTLET SHALL ALSO BE LIABLE TO PAY A
FINE OF TWENTY FIVE THOUSAND PESOS, (P25,000.00)
FOR EVERY VIOLATION AND PHP 50,000 IF PRE-
TERMINATION BY THE RL MAIN OPERATOR DUE TO
BREACH OF THIS AGREEMENT.'
8. Likewise it is provided in the said contract that:
... The DEALER OUTLET must have a minimum 200 kilos
on a six-day or per week pick-up for the entire duration
of the contract to free the dealer outlet from being
charge[d] Php 200/week on falling below required
minimum kilos per week of laundry materials.
Automatic charging shall become part of the billing on
the services of the dealer outlet on cases where the
minimum requirements on required kilos are not met.[']
9. The cessation of operation by the defendant, which is
tantamount to gross infraction to [sic] the subject
contract, resulted to [sic] incidental damages amounting
to Two Hundred Thousand Pesos (PHP200,000.00).
Defendant should have opted to comply with the Pre-
termination clause in the subject contract other than its
[sic] unilateral and whimsical cessation of operations.
10. The plaintiff formally reminded the defendant of her
obligations under the subject contract through demand
letters, but to no avail. The defendant purposely ignored
the letters by [sic] the plaintiff. (Attached and marked as
Annex "C" to "C-2" are the Demand Letters dated May 2,
2012, June 2, 2012 and June 19, 2012 respectively.)
11. To reiterate, the defendant temporarily stopped its
business operation prior to the two-year contract
duration had elapsed to the prejudice of the plaintiff,
which is a clear disregard of its two-year obligation to
operate the business unless a pre-termination is called.
12. Under Article 1159 of the Civil Code of the
Philippines provides [sic]:
'Obligations arising from contracts have the force of law
between the contracting parties and should be complied
with in good faith'
13. Likewise, Article 1170 of the Civil Code of the
Philippines [provides] that:
'Those who in the performance of their obligations are
guilty of fraud, negligence, or delay, and those who in
any manner contravene the tenor thereof are liable for
damages.'
14. That the above-mentioned violations by the
defendant to the Remarkable Laundry Dealer Contract,
specifically Articles IV and XVI thereof constitute gross
breach of contract which are unlawful and malicious
under the Civil Code of the Philippines, which caused the
plaintiff to incur incidental and consequential damages
as found in the subject dealer contract in the total
amount of Two Hundred Thousand Pesos
(PHP200,000.00) and incidental legal expenses to protect
its rights in the amount of P30,000.00
PRAYER:
WHEREFORE, premises considered, by reason of the
above-mentioned breach of the subject dealer contract
agreement made by the defendant, it is most
respectfully prayed of the Honorable Court to order the
said defendant to pay the following incidental and
consequential damages to the plaintiff, to wit:
a) TWO HUNDRED THOUSAND PESOS (PHP200,000.00)
plus legal interest as incidental and consequential
[damages] for violating Articles IV and XVI of the
Remarkable Laundry Dealer Contract dated 08 SEP 2011;
b) Thirty Thousand Pesos (P30,000.00) as legal expenses;
c) Thirty Thousand Pesos (P30,000.00) as exemplary
damages;
d) Twenty Thousand Pesos (P20,000.00) as cost of suit;
e) Such other reliefs that the Honorable Court deems as
just and equitable.
August 31, 2012, Cebu City, Philippines.[29]
An analysis of the factual and material allegations in the
Complaint shows that there is nothing therein which
would support a conclusion that respondent's Complaint
is one for specific performance or rescission of contract.
It should be recalled that the principal obligation of
petitioners under the Remarkable Laundry Dealership
Contract is to act as respondent's dealer outlet.
Respondent, however, neither asked the RTC to compel
petitioners to perform such obligation as contemplated
in said contract nor sought the rescission thereof. The
Complaint's body, heading, and relief are bereft of such
allegation. In fact, neither phrase appeared on or was
used in the Complaint when, for purposes of clarity,
respondent's counsels, who are presumed to be learned
in law, could and should have used any of those phrases
to indicate the proper designation of the Complaint. To
the contrary, respondent's counsels designated the
Complaint as one for "Breach of Contract & Damages,"
which is a misnomer and inaccurate. This erroneous
notion was reiterated in respondent's Memorandum[30]
wherein it was stated that "the main action of CEB 39025
is one for a breach of contract."[31] There is no such thing
as an "action for breach of contract." Rather, "[b]reach of
contract is a cause of action,[32] but not the action or
relief itself"[33] Breach of contract may be the cause of
action in a complaint for specific performance or
rescission of contract, both of which are incapable of
pecuniary estimation and, therefore, cognizable by the
RTC. However, as will be discussed below, breach of
contract may also be the cause of action in a complaint
for damages.
A complaint
primarily
seeking to
enforce the
accessory
obligation
contained in the
penal clause is
actually an
action for
damages
capable of
pecuniary
estimation.
Neither can we sustain respondent's contention that its
Complaint is incapable of pecuniary estimation since it
primarily seeks to enforce the penal clause contained in
Article IV of the Remarkable Dealer Outlet Contract,
which reads:
Article IV: STANDARD REQUIRED QUOTA & PENALTIES
In consideration [sic] for such renewal of franchise-
dealership rights, the dealer outlet must have a
minimum 200 kilos on a six-day or per week pick-up for
the entire duration of the contract to FREE the dealer
outlet from being charge [sic] Php200/week on falling
below required minimum kilos per week of laundry
materials. Automatic charging shall become part of the
billing on the services of the dealer outlet on cases
where the minimum requirements on required kilos are
not met.
The RL Main Operator has the option to cancel,
terminate this dealership outlet contract, at its option
should [sic] in the event that there are unpaid services
equivalent to a two-week minimum required number of
kilos of laundry materials but not P8,000 worth of
collectibles, for services performed by the RL Main
Operator or its assigned Franchise Outlet, unpaid bills
on ordered and delivered support products, falling
below required monthly minimum number of kilos.
Ten [percent] (10%) interest charge per month will be
collected on all unpaid obligations but should not be
more than 45 days or an additional 10% on top of
uncollected amount shall be imposed and shall earn
additional 10% on the next succeeding months if it still
remains unpaid. However, if the cause of default is due
to issuance of a bouncing check the amount of such
check shall earn same penalty charge with additional 5%
for the first two weeks and 10% for the next two weeks
and its succeeding two weeks thereafter from the date of
dishonor until fully paid without prejudice to the filling
of appropriate cases before the courts of justice.
Violation of this provision if remained unsettled for two
months shall be considered as violation [wherein] Article
XV of this agreement shall be applied.[34]
To Our mind, petitioners' responsibility under the above
penal clause involves the payment of liquidated damages
because under Article 2226[35] of the Civil Code the
amount the parties stipulated to pay in case of breach are
liquidated damages. "It is attached to an obligation in
order to ensure performance and has a double
function:(1) to provide for liquidated damages, and (2) to
strengthen the coercive force of the obligation by the
threat of greater responsibility in the event of breach."[36]
Concomitantly, what respondent primarily seeks in its
Complaint is to recover aforesaid liquidated damages
(which it termed as "incidental and consequential
damages") premised on the alleged breach of contract
committed by the petitioners when they unilaterally
ceased business operations. Breach of contract may also
be the cause of action in a complaint for damages filed
pursuant to Article 1170 of the Civil Code. It provides:
Art. 1170. Those who in the performance of their
obligations are guilty of fraud, negligence, or delay, and
those who in any manner contravene the tenor thereof;
are liable for damages. (Emphasis supplied)
In Pacmac, Inc. v. Intermediate Appellate Court,[37] this
Court held that the party who unilaterally terminated the
exclusive distributorship contract without any legal
justification can be held liable for damages by reason of
the breach committed pursuant to Article 1170.
In sum, after juxtaposing Article IV of the Remarkable
Dealer Outlet Contract vis-à-vis the prayer sought in
respondent's Complaint, this Court is convinced that
said Complaint is one for damages. True, breach of
contract may give rise to a complaint for specific
performance or rescission of contract. In which case, the
subject matter is incapable of pecuniary estimation and,
therefore, jurisdiction is lodged with the RTC. However,
breach of contract may also be the cause of action in a
complaint for damages. Thus, it is not correct to
immediately conclude, as the CA erroneously did, that
since the cause of action is breach of contract, the case
would only either be specific performance or rescission
of contract because it may happen, as in this case, that
the complaint is one for damages.
In an action for damages, the court
which has jurisdiction is determined by
the total amount of damages claimed.
Having thus determined the nature of respondent's
principal action, the next question brought to fore is
whether it is the RTC which has jurisdiction over the
subject matter of Civil Case No. CEB-39025.
Paragraph 8, Section 19[38] of BP 129, as amended by City dismissing Civil Case No. CEB-39025 for lack of
Republic Act No. 7691,[39] provides that where the jurisdiction is REINSTATED.
amount of the demand exceeds P100,000.00, exclusive of
interest, damages of whatever kind, attorney's fees, SO ORDERED.
litigation expenses, and costs, exclusive jurisdiction is
lodged with the RTC. Otherwise, jurisdiction belongs to SPS PAJARES v. REMARKABLE LAUNDRY
the Municipal Trial Court.[40] SPOUSES ROMEO PAJARES and IDA T. PAJARES vs.
REMARKABLE LAUNDRY AND DRY CLEANING,
The above jurisdictional amount had been increased to represented by ARCHEMEDES G. SOLIS
P200,000.00 on March 20, 1999 and further raised to
G.R. No. 212690
P300,000.00 on February 22, 2004 pursuant to Section 5
February 20, 2017
of RA 7691.[41]
“Breach of contract may give rise to an action for specific
Then in Administrative Circular No. 09-94[42] this Court
performance or rescission of contract.1 It may also be the
declared that "where the claim for damages is the main
cause of action in a complaint for damages filed pursuant
cause of action, or one of the causes of action, the
to Art. 1170 of the Civil Code.2 In the specific
amount of such claim shall be considered in determining
the jurisdiction of the court." In other words, where the performance and rescission of contract cases, the subject
complaint primarily seeks to recover damages, all claims matter is incapable of pecuniary estimation; hence
for damages should be considered in determining which jurisdiction belongs to the Regional Trial Court (RTC). In
court has jurisdiction over the subject matter of the case the case for damages, however, the court that has
regardless of whether they arose from a single cause of jurisdiction depends upon the total amount of the
action or several causes of action. damages claimed.”

Since the total amount of the damages claimed by the

respondent in its Complaint filed with the RTC on
September 3, 2012 amounted only to P280,000.00, said
Facts:
court was correct in refusing to take cognizance of the
case.

WHEREFORE, the Petition is GRANTED and the
December 11, 2013 Decision and March 19, 2014
Resolution of the Court of Appeals in CA-G.R. CEB SP No.
07711 are REVERSED and SET ASIDE. The February 19,
2013 Order of the Regional Trial Court, Branch 17, Cebu
Remarkable Laundry and Dry Cleaning filed a Complaint
denominated as "Breach of Contract and Damages"
against spouses Romeo and Ida Pajares before the RTC
of Cebu City. Respondent alleged that it entered into a
Remarkable Dealer Outlet Contract with petitioners
whereby the latter, acting as a dealer outlet, shall accept
and receive items or materials for laundry which are
then picked up and processed by the former in its main
plant or laundry outlet; that petitioners violated Article
IV (Standard Required Quota & Penalties) of said
contract, which required them to produce at least 200
kilos of laundry items each week, when they ceased
dealer outlet operations on account of lack of personnel;
that respondent made written demands upon petitioners
for the payment of penalties imposed and provided for
in the contract, but the latter failed to pay; and, that
petitioners' violation constitutes breach of contract. The
RTC dismissed the case for lack of jurisdiction.
Respondent filed its Motion for Reconsideration to Court
of Appeals. And the CA rendered the assailed Decision
setting aside the Order of the RTC and remanding the
case to the court a quo for further proceedings.
Petitioners sought to reconsider, but were denied. Hence,
appealed the Petition.
Issue:
Whether or not the CA erred in declaring that the RTC
had jurisdiction over respondent's Complaint which,
although denominated as one for breach of contract, is
essentially one for simple payment of damages.
Ruling:
The Court grants the Petition. The RTC was correct in
categorizing Civil Case as an action for damages seeking
to recover an amount below its jurisdictional limit.
In ruling that respondent's Complaint is incapable of
pecuniary estimation and that the RTC has jurisdiction,
the CA comported itself with the following ratiocination:
A case for breach of contract [sic] is a cause of action
either for specific performance or rescission of
contracts. An action for rescission of contract, as a
counterpart of an action for specific performance, is
incapable of pecuniary estimation, and therefore falls
under the jurisdiction of the RTC.
Then in Administrative Circular No. 09-94 this Court
declared that "where the claim for damages is the main
cause of action, or one of the causes of action, the
amount of such claim shall be considered in determining
the jurisdiction of the court." In other words, where the
complaint primarily seeks to recover damages, all claims
for damages should be considered in determining which
court has jurisdiction over the subject matter of the case
regardless of whether they arose from a single cause of
action or several causes of action.