Republic of the Philippines payment of a one million peso promissory note in favor

SUPREME COURT of the mortgagee. The mortgagors were unable to pay

Manila their obligation, hence, the Council instituted
foreclosure proceedings with the Regional Trial Court,
THIRD DIVISION docketed as Civil Case No. Q-43746. On February 5, 1985
the parties submitted a compromise agreement wherein
G.R. No. 80892 September 29, 1989 it was stipulated that because of the Da Silvas' inability
to pay their debt to the Council, and for the additional
ISLAMIC DA'WAH COUNCIL OF THE PHILIPPINES, consideration of P 500,000.00, they jointly agree to cede,
petitioner, transfer and convey to the Council the land they
vs. mortgaged to the latter. On February 12, 1985, the
HONORABLE COURT OF APPEALS and THE HEIRS of Regional Trial Court approved the compromise
JESUS AMADO ARANETA, respondents. agreement. Thereafter, TCT No. 328021 was issued in
the name of the Council by the Register of Deeds of
Magtanggol C. Gunigundo for petitioner. Quezon City.

Antonio P. Barredo for respondents. 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
CORTES, J.:
converted into an action for collection of rentals with
damages but was later on withdrawn by the Council. On
Petitioner impugns the resolutions of the Court of
August 13, 1985 Araneta also filed with the same
Appeals dated November 10 and December 2 and 3,
Register of Deeds an affidavit of adverse claim in
1987 which, in effect, gave due course to private
connection with Civil Case No. Q-43469 entitled "Marconi
respondents' petition for annulment of judgment.
Da Silva, et al. v. Jesus Amado Araneta, et al." for
recovery of possession. The notice of lis pendens and
The antecedents of this case are as follows: adverse claim were annotated at the back of TCT No.
328021 by the Register of Deeds.
On February 15,1984 Freddie and Marconi Da Silva, as
mortgagors, and Islamic Da'Wah Council of the On October 9, 1985 the Council filed in the Regional
Philippines (Council for brevity), as mortgagee, executed Trial Court of Quezon City a complaint for Quieting of
a real estate mortgage over a 4,754 sq. m. parcel of land Title, Recovery of Possession and Damages with
located in Cubao, Quezon City and covered by Transfer Preliminary Mandatory Injunction against Araneta
Certificate of Title (TCT) No. 30461 as security for the
praying, inter alia, for the cancellation of all the (4) the Register of Deeds, however, refused
annotations at the back of TCT No. 328021. The case is to register the deed of sale because the title
docketed as Civil Case No. Q-46196. is in the name of "Fred Da Silva married to
Leocadia Da Silva" and is thus presumed
While this case was pending, on July 6, 1987, the heirs of conjugal and the conjugal partnership
Jesus Amado Araneta, private respondents herein, filed should first be liquidated as the wife had
with the Court of Appeals a petition to annul the already died;
judgment in Civil Case No. Q-43746 for foreclosure. In
support of their petition the heirs of Araneta narrated (5) alleging that their copy was lost and/or
the following events: destroyed, on February 1, 1984 Freddie and
Marconi Da Silva, two of the three surviving
(1) on December 20,1953 Jesus Amado children of Fred Da Silva who died in 1963,
Araneta purchased the 4,754 sq.m. parcel filed a petition, docketed as LRC record
of land located in Cubao from the Spouses Case No. Q-2772, for the issuance of a new
Garcia and since then he and his family copy of the owner's duplicate copy of TCT
have always been in possession thereof; No. 30461. The petition was granted by
Judge Vera on March 24,1984:
(2) for some reason known only to Araneta
and Fred Da Silva,an employee of the (6) Araneta learned about this and
former, title to the property was placed in immediately filed a motion to re-open the
the latter's name as evidenced by TCT No. proceedings stating that he has in his
30461 although from the time of its possession the ,- owner's duplicate copy of
issuance the owner's duplicate copy of said TCT No. 30461 and explaining the reasons
TCT has always been in the possession of for such possession;
Araneta,
(7) the motion was granted and on
(3) on January 31, 1963, the parties decided December 7,1984 the land registration
to terminate the trust that had been court ordered the Da Silvas to (a) return to
created over the property, thus, Da Silva the Register of the second owner's
executed a deed of sale over the same duplicate copy of the title and (b) neither
parcel of land in favor of Araneta but no enter into any transaction concerning said
consideration was given by the latter to the second owner's duplicate copy nor utilize
former for said sale and any recital of the title for any purpose other than to
consideration appearing in the deed is return the same to the Register of Deeds;
purely fictitious;
(8) on November 11, 1985, the Da Silvas In a resolution dated November 10, 1987 the Court of
manifested before the land registration Appeals issued a temporary restraining order enjoining
court that the title to the property was the trial judge from hearing Civil Case No. Q-46196 until
transferred to the Council based on a further orders from the court. In the same resolution the
compromise agreement in Civil Case No. parties were ordered to appear for a pre- trial
Q43746 for foreclosure; and conference. The Council filed a motion for
reconsideration of this resolution. Later on the Council
(9) on motion of the heirs of Araneta, who filed a Supplement to Motion for Reconsideration with
substituted him upon his death in 1985, Motion to Dismiss questioning the Court of Appeals'
Judge Vera consolidated Civil Cases Nos. Q- jurisdiction to hear the petition for annulment of a
2772 and Q-43469, both of which were judgment that had already been fully executed. The
raffled to his sala, with Civil Case No. Q- Council also invoked the additional grounds of lack of
46196 but the judge hearing the latter case cause of action because the Aranetas are not valid
would not heed the order of consolidation. claimants of the property; lack of legal capacity to sue
because the Aranetas were not parties to the foreclosure
(10) and then set out their case for case; litis pendentia because of the pendency of the
annulment of judgment alleging that the quieting of title case between the same parties; and,
Da Silvas, with the connivance of the abandonment, waiver and unenforceability under the
Council, executed a purported promissory Statute of Frauds [Petition, Annex "H"]. On December 2,
note secured by a real estate mortgage the 1987 the Court of Appeals denied the Council's motion
terms and conditions of which were made for reconsideration for lack of merit. In the hearing
very onerous as to pave the way for the conducted on December 3, 1987 the Council reiterated
foreclosure of the property by virtue of a the grounds it raised in its Supplemental Motion and
confession of judgment; and, the Council Motion to Dismiss but the same were summarily denied
had always known of the Araneta's claim of by the Court of Appeals. Hence, this petition for
ownership over the land because the certiorari.
former's executive officer and secretary
general is the lawyer of the Da Silvas in the Petitioner contends the following: first, that the Court of
cases they filed against the Araneta's. The Appeals should not continue to hear the petition for
heirs of Araneta in their petition prayed, annulment of judgment since it is already fully executed
inter alia, that (1) the judgment in Civil and the purpose for which the case for annulment was
Case No. Q- 43746 be annulled and set filed will no longer be served, the parties having already
aside and (2) a restraining order be issued complied with the decision; second, private respondents
to enjoin the proceedings in Civil Case No. have no right to question the validity or legality of the
Q-46196 [Petition, Annex "A"]. decision rendered foreclosing the mortgage since they
are foreign to the transaction of mortgage between
petitioner and Freddie and Marconi Da Silva; lastly, Annulment of judgment is a remedy in law independent
petitioner claims that private respondents have another of the case where the judgment sought to be annulled
remedy in law and that is in Civil Case No. Q-46196 for was rendered. The judgment may be annulled on the
Quieting of Title where the question of ownership may ground of extrinsic or collateral fraud [Canlas v. Hon-
be passed upon. Court of Appeals, G.R. No. 77691, August 8,19881.
Jurisdiction over actions for annulment of Regional Trial
At the outset it must be clarified that the instant petition Court judgment has been clarified by Batas Pambansa
is one for certiorari under Rule 65 of the Rules of Court. Blg. 129 (otherwise known as The Judiciary
Thus, the inquiry this Court should address itself is Reorganization Act of 1980). Prior to the enactment of
limited to error of jurisdiction or grave abuse of this law, different views had been entertained regarding
discretion committed by the Court, of Appeals, in the issue of whether or not a branch of a Regional Trial
particular, whether or not respondent court acted Court may annul a judgment of another branch of the
without jurisdiction or with grave abuse of discretion in same court. * However, Batas Pambansa Blg. 129
giving due course to the petition for annulment of introduced a new provision conferring on the Court of
judgment. This clarification is rendered necessary Appeals exclusive original jurisdiction over actions for
because the parties themselves, in their pleadings, have annulment of judgments of Regional Trial Courts. Sec.
gone beyond this issue and have discussed the merits of 9(2) of Batas Pambansa Blg. 129 expressly provides that:
the annulment of judgment case now pending decision
with the Court of Appeals. Sec. 9. Jurisdiction. -The Court of Appeals
shall exercise: ...
In its Petition, the Council contends that a Regional Trial
Court has the authority and jurisdiction to annul a (2) Exclusive original jurisdiction over
judgment of another Regional Trial Court, a coordinate actions for annulment of judgments of
or co-equal court Specifically, petitioner alleges that the Regional Trial Courts; Thus, it is beyond
filing of a separate action for annulment of judgment is dispute that it is only the Court of Appeals
unnecessary because the Regional Trial Court hearing that can take cognizance of the annulment
Civil Case No. Q-43469 for Quieting of Title can annul of judgment in Civil Case No. Q-43746
the judgment in Civil Case No. Q-43746 for Foreclosure rendered by the Regional Trial Court.
rendered by another Regional Trial Court [Rollo, pp. 15-
16). In its Memorandum, however, the Council admitted The next issue raised in this petition deals with the
that the Court of Appeals has the exclusive jurisdiction question of who may properly institute a petition for
to annul the decision of the Regional Trial Court [Rollo, annulment of judgment. It is petitioner's contention that
pp. 152-1531. 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 ... Edrosolano and an order for issuance of preliminary
sufficient to show prima facie that [they] have a attachment issued" [at 477]. The trial court however
substantial interest in the ownership of the property dismissed Militante's action for annulment on finding
which had been foreclosed without their knowledge and that it did not state a cause of action. Thereafter,
consent" [Rollo, p. 90]. In fine, the question deals with Militante filed an appeal to this Tribunal and in setting
whether or not the heirs of Araneta have a cause of aside the trial court's order of dismissal', the Court,
action against the Council. speaking through then Mr. Associate Justice Enrique
Fernando, stated that:
In Militante v. Edrosolano [G.R. No. L-27940, June 10,
1971, 39 SCRA 4731, an action for annulment of xxx xxx xxx
judgment in Civil Case No. 6216 between Edrosolano and
Belosillo was filed by Militante. The petition stemmed 2. More specifically, the view entertained by
from a complaint instituted by Militante on September 6, the lower court in its order of dismissal
1965 against Edrosolano for damages arising from a that an action for annulment of judgment
breach of contract of carriage. On January 18,1966 can be availed of only by those principally
Militante obtained an order of preliminary attachment or secondarily bound is contrary to what
on the property of Edrosolano. Alleging that he had been so clearly declared by this Court
purchased all of Edrosolano's TPU equipment on in the leading case of Anuran v. Aquino t38
February 28, 1966, Belosillo filed a third-party claim. It Phil. 291, decided in 1918. It was
appears that on February 25, 1963 Belosillo obtained a emphatically announced therein: "There
judgment by default against Edrosolano in Civil Case No. can be no question as to the right of any
6216 for collection of amount of P45,000.00, the value of persons adversely affected by a judgement
the promissory note executed by the latter on February to maintain an action to enjoin its
1, 1960. After a recital of these antecedent facts, enforcement and to have it declared a
Militante, in his petition for annulment of judgment nullity on the ground of fraud and collusion
contended, inter alia, that (1) Civil Case No. 6216 "was practiced in the very matter of obtaining
based on a fictitious cause of action because [the] the judgment when such fraud is extrinsic
promissory note was without lawful consideration or collateral to the matters involved in the
whatsoever" [at 476]; (2) Edrosolano did not file any issues raised at the trial which resulted in
answer to Belosillo's complaint and allowed the latter to such judgment. x x x." [at 3233.] Such a
obtain a judgment by default which judgment attained principle was further fortified by an
finality without the former appealing therefrom; and, (3) observation made by this Court through
while judgment in Civil Case No. 6216 was promulgated Justice Ozaeta in Garchitorena v. Sotelo [74
iii 1963 it was "only on January 19, 1966 when . . . Phil. 25 (,1942)j'. These are his words: "The
Belosillo caused the execution thereof after [Militante] collusive conduct of the parties in the
had already instituted his civil case for damages against
 foreclosure suit constituted an extrinsic or contention that as the judgment in the foreclosure case
collateral fraud by reason of which the had already been executed evidenced by the fact that
judgment rendered therein may be title to the property in question had been transferred in
annulled in this separate action [citing also its name the judgment can no longer be annulled. The
the case of Anuran]. Aside from the Council's contention is devoid of merit. In Garchitorena
Anuran-Aquino case, innumerable u. Sotelo, supra, the Court affirmed the trial court's
authorities from other jurisdictions may be annulment of the judgment on foreclosure
cited 'in support of the annulment. But notwithstanding the fact that ownership of the house
were there not any precedent to guide us, and lot subject of the mortgage had passed from the
reason and justice would compel us to lay mortgagee who foreclosed the mortgage and purchased
down such doctrine for the first time." [at the property at public auction to a person who bought
481-482-, Italics supplied.] the same and finally to another individual in whose
name the Torrens certificate of title stood by the time
It is therefore clear from the foregoing that a person the case reached this Tribunal.
need not be a party to the judgment sought to be
annulled. What is essential is that he can prove his In view of the foregoing the Court finds that the Court of
allegation that the judgment was obtained by the use of Appeals neither acted without jurisdiction nor
fraud and collusion and he would be adversely affected committed grave abuse of discretion in giving due
thereby. course to the petition for annulment of judgment as
would warrant the issuance of the extraordinary writ of
In this present case it is true that the heirs of Araneta certiorari in this case.
are not parties to the foreclosure case. Neither are they
principally nor secondarily bound by the judgment WHEREFORE, the instant petition is DISMISSED and the
rendered therein. However. their petition filed with the orders of the Court of Appeals dated November 10 and
Court of Appeals they alleged fraud and connivance December 2 and 3,1987 are AFFIRMED.
perpetuated by and between the Da Silvas and the
Council as would adversely affect them. This allegation, SO ORDERED. SECOND DIVISION
if fully substantiated by preponderance of evidence, CYNTHIA C. ALABAN, G.R. No. 156021
could be the basis for the annulment of Civil Case No. Q- FRANCIS COLLADO, JOSE
43476. P. COLLADO, JUDITH Present:
PROVIDO, CLARITA PROVIDO,
Finally, the Council asserts that the remedy of ALFREDO PROVIDO, MANUEL PUNO, J.,
annulment of judgment applies only to final and PROVIDO, JR., LORNA DINA Chairman,
executory judgment and not to that which had already E. PROVIDO, SEVERO ARENGA, AUSTRIA-MARTINEZ,
been fully executed or implemented.It is the Council's 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] acquire jurisdiction over the petition due to non-
dismissing petitioners petition for annulment of payment of the correct docket fees, defective
judgment. publication, and lack of notice to the other heirs.
Moreover, they alleged that the will could not have been
On 8 November 2000, respondent Francisco probated because: (1) the signature of the decedent was
Provido (respondent) filed a petition, docketed as SP forged; (2) the will was not executed in accordance with
Proc. No. 00-135, for the probate of the Last Will and law, that is, the witnesses failed to sign below the
Testament[3] of the late Soledad Provido Elevencionado attestation clause; (3) the decedent lacked testamentary
(decedent), who died on 26 October 2000 in Janiuay, capacity to execute and publish a will; (4) the will was
Iloilo.[4] Respondent alleged that he was the heir of the executed by force and under duress and improper
decedent and the executor of her will. On 30 May 2001, pressure; (5) the decedent had no intention to make a
the Regional Trial Court (RTC), Branch 68, in P.D. will at the time of affixing of her signature; and (6) she
Monfort North, Dumangas, Iloilo, rendered its Decision, [5]
did not know the properties to be disposed of, having
allowing the probate of the will of the decedent and included in the will properties which no longer belonged
directing the issuance of letters testamentary to to her. Petitioners prayed that the letters testamentary
respondent.[6] issued to respondent be withdrawn and the estate of the
decedent disposed of under intestate succession.[9]
More than four (4) months later, or on 4 October 2001,
herein petitioners filed a motion for the reopening of the On 11 January 2002, the RTC issued an Order[10] denying
probate proceedings.[7] Likewise, they filed an opposition petitioners motion for being unmeritorious. Resolving
to the allowance of the will of the decedent, as well as the issue of jurisdiction, the RTC held that petitioners
the issuance of letters testamentary to respondent,[8] were deemed notified of the hearing by publication and
claiming that they are the intestate heirs of the that the deficiency in the payment of docket fees is not a
decedent. Petitioners claimed that the RTC did not ground for the outright dismissal of the petition. It
merely required respondent to pay the deficiency.[11] 2001. They argued that the RTC Decision should be
Moreover, the RTCs Decision was already final and annulled and set aside on the ground of extrinsic fraud
executory even before petitioners filing of the motion to and lack of jurisdiction on the part of the RTC.[15]
reopen.[12]
In its Resolution[16] promulgated on 28 February 2002, the
Petitioners thereafter filed a petition [13]
with an
CA dismissed the petition. It found that there was no
application for preliminary injunction with the CA,
showing that petitioners failed to avail of or resort to the
seeking the annulment of the RTCs Decision dated 30
ordinary remedies of new trial, appeal, petition for relief
May 2001 and Order dated 11 January 2002. They
from judgment, or other appropriate remedies through
claimed that after the death of the decedent, petitioners,
no fault of their own.[17] Moreover, the CA declared as
together with respondent, held several conferences to
baseless petitioners claim that the proceedings in the
discuss the matter of dividing the estate of the decedent,
RTC was attended by extrinsic fraud. Neither was there
with respondent agreeing to a one-sixth (1/6) portion as
any showing that they availed of this ground in a motion
his share. Petitioners allegedly drafted a compromise
for new trial or petition for relief from judgment in the
agreement to implement the division of the estate.
RTC, the CA added.[18] Petitioners sought reconsideration
Despite receipt of the agreement, respondent refused to
of the Resolution, but the same was denied by the CA for
sign and return the same. Petitioners opined that
lack of merit.[19]
respondent feigned interest in participating in the
compromise agreement so that they would not suspect Petitioners now come to this Court, asserting that the CA
his intention to secure the probate of the will.[14] They committed grave abuse of discretion amounting to lack
claimed that they learnt of the probate proceedings only of jurisdiction when it dismissed their petition for the
in July of 2001, as a result of which they filed their alleged failure to show that they have not availed of or
motion to reopen the proceedings and admit their resorted to the remedies of new trial, appeal, petition for
opposition to the probate of the will only on 4 October relief from judgment or other remedies through no fault
of their own, and held that petitioners were not denied forumshopping, since the latter have a pending suit
their day in court during the proceedings before the involving the same issues as those in SP No. 00-135, that
RTC.[20] In addition, they assert that this Court has yet to is SP No. 1181[26] filed before Branch 23, RTC of General
decide a case involving Rule 47 of the Rules of Court Santos City and subsequently pending on appeal before
and, therefore, the instant petition should be given due the CA in CA-G.R. No.74924.[27]
course for the guidance of the bench and bar.[21]
It appears that one of the petitioners herein,
For his part, respondent claims that petitioners were in a Dolores M. Flores (Flores), who is a niece of the decedent,
position to avail of the remedies provided in Rules 37 filed a petition for letters of administration with the RTC
and 38, as they in fact did when they filed a motion for of General Santos City, claiming that the decedent died
new trial.[22] Moreover, they could have resorted to a intestate without any issue, survived by five groups of
petition for relief from judgment since they learned of collateral heirs. Flores, armed with a Special Power of
the RTCs judgment only three and a half months after Attorney from most of the other petitioners, prayed for
its promulgation.[23] Respondent likewise maintains that her appointment as administratrix of the estate of the
no extrinsic fraud exists to warrant the annulment of the decedent. The RTC dismissed the petition on the ground
RTCs Decision, since there was no showing that they of lack of jurisdiction, stating that the probate court in
were denied their day in court. Petitioners were not Janiuay, Iloilo has jurisdiction since the venue for a
made parties to the probate proceedings because the petition for the settlement of the estate of a decedent is
decedent did not institute them as her heirs.[24] Besides, the place where the decedent died. This is also in
assuming arguendo that petitioners are heirs of the accordance with the rule that the first court acquiring
decedent, lack of notice to them is not a fatal defect jurisdiction shall continue hearing the case to the
since personal notice upon the heirs is a matter of exclusion of other courts, the RTC added.[28] On 9 January
procedural convenience and not a jurisdictional 2002, Flores filed a Notice of Appeal [29]
and on 28
requisite.[25] Finally, respondent charges petitioners of
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 Publication is notice to the whole world that the
person who was never a party to the case, or even proceeding has for its object to bar indefinitely all who
summoned to appear therein, cannot avail of a petition might be minded to make an objection of any sort
for relief from judgment.[35] against the right sought to be established. It is the
publication of such notice that brings in the whole world
However, petitioners in this case are mistaken in as a party in the case and vests the court with
asserting that they are not or have not become parties to jurisdiction to hear and decide it.[40] Thus, even though
the probate proceedings. petitioners were not mentioned in the petition for
probate, they eventually became parties thereto as a
Under the Rules of Court, any executor, devisee, consequence of the publication of the notice of hearing.
or legatee named in a will, or any other person
interested in the estate may, at any time after the death As parties to the probate proceedings, petitioners could
of the testator, petition the court having jurisdiction to have validly availed of the remedies of motion for new
have the will allowed.[36] Notice of the time and place for trial or reconsideration and petition for relief from
proving the will must be published for three (3) judgment. In fact, petitioners filed a motion to reopen,
consecutive weeks, in a newspaper of general circulation which is essentially a motion for new trial, with
in the province,[37] as well as furnished to the designated petitioners praying for the reopening of the case and the
or other known heirs, legatees, and devisees of the setting of further proceedings. However, the motion was
testator.
[38]
Thus, it has been held that a proceeding for denied for having been filed out of time, long after the
the probate of a will is one in rem, such that with the Decision became final and executory.
corresponding publication of the petition the court's Conceding that petitioners became aware of the Decision
jurisdiction extends to all persons interested in said will after it had become final, they could have still filed a
or in the settlement of the estate of the decedent.[39] petition for relief from judgment after the denial of their
motion to reopen. Petitioners claim that they learned of resorted to in cases where the ordinary remedies of new
the Decision only on 4 October 2001, or almost four (4) trial, appeal, petition for relief from judgment, or other
months from the time the Decision had attained finality. appropriate remedies are no longer available through no
But they failed to avail of the remedy. fault of the petitioner,[43] and is based on only two
grounds: extrinsic fraud, and lack of jurisdiction or
For failure to make use without sufficient denial of due process.[44] A person need not be a party to
justification of the said remedies available to them, the judgment sought to be annulled, and it is only
petitioners could no longer resort to a petition for essential that he can prove his allegation that the
annulment of judgment; otherwise, they would benefit judgment was obtained by the use of fraud and collusion
from their own inaction or negligence.[41] 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
Even casting aside the procedural requisite, the petition collateral in character.[46] Fraud is regarded as extrinsic
for annulment of judgment must still fail for failure to where it prevents a party from having a trial or from
comply with the substantive requisites, as the appellate presenting his entire case to the court, or where it
court ruled. operates upon matters pertaining not to the judgment
itself but to the manner in which it is procured. The
An action for annulment of judgment is a remedy overriding consideration when extrinsic fraud is alleged
in law independent of the case where the judgment is that the fraudulent scheme of the prevailing litigant
sought to be annulled was rendered.[42] The purpose of prevented a party from having his day in court.[47]
such action is to have the final and executory judgment
set aside so that there will be a renewal of litigation. It is
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
 ALABAN VS. COURT OF APPEALS G.R. No. 156021 September 23, 2005
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 (SpecPro 2016)
Posted on June 29, 2016
subject of review in CA-G.R. No. 74924. Clearly,
therefore, there is forum-shopping. FACTS:
Petitioners maintain that they were not made parties to
the case in which the decision sought to be annulled was
Moreover, petitioners failed to inform the Court rendered and, thus, they could not have availed of the
ordinary remedies of new trial, appeal, petition for relief
of the said pending case in their certification against from judgment and other appropriate remedies, contrary
forum- shopping. Neither have they done so at any time to the ruling of the CA.

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,
ISSUE:
even though the notice of appeal was filed way before W/N Petitioners were made parties in the proceedings
the petition for annulment of judgment was instituted.

WHEREFORE, the petition is DENIED. Costs against

petitioners. HELD:
Petitioners in this case are mistaken in asserting that
they are not or have not become parties to the probate
SO ORDERED.
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 FIRST DIVISION
settlement of the estate of the decedent.
Thus, even though petitioners were not mentioned in the [ G.R. No. 212690 (Formerly UDK-15080), February 20,
petition for probate, they eventually became parties 2017 ]
thereto as a consequence of the publication of the notice
of hearing. SPOUSES ROMEO PAJARES AND IDA T. PAJARES,
PETITIONERS, V. REMARKABLE LAUNDRY AND DRY
CLEANING, REPRESENTED BY ARCHEMEDES G. SOLIS,
On the other hand, according to the Rules, notice is
required to be personally given to known heirs, legatees, RESPONDENT.
and devisees of the testator.
D E C I S I ON

Petitioners, as nephews and nieces of the decedent, are DEL CASTILLO, J.:
neither compulsory nor testate heirs who are entitled to
be notified of the probate proceedings under the Rules. Breach of contract may give rise to an action for specific
Respondent had no legal obligation to mention
performance or rescission of contract.[1] It may also be
petitioners in the petition for probate, or to personally
notify them of the same. 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
Besides, assuming arguendo that petitioners are entitled subject matter is incapable of pecuniary estimation,
to be so notified, the purported infirmity is cured by the
hence jurisdiction belongs to the Regional Trial Court
publication of the notice.
(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 On December 11, 2013, the CA rendered the assailed
this case, the total amount of demand in the complaint Decision setting aside the February 19, 2013 Order of
is only P280,000.00, which is less than the jurisdictional the RTC and remanding the case to the court a quo for
amount of the RTCs. Hence, this Court (RTC) has no further proceedings. It held as follows:
jurisdiction over the instant case.
In determining the jurisdiction of an action whose
WHEREFORE, premises considered, the instant case is subject is incapable of pecuniary estimation, the nature
hereby DISMISSED for lack of jurisdiction. of the principal action or remedy sought must first be
ascertained. If it is primarily for the recovery of a sum of
Notify the counsels. money, the claim is considered capable of pecuniary
estimation and the jurisdiction of the court depends on
SO ORDERED.[11] (Emphasis in the original) the amount of the claim. But, where the primary issue is
something other than the right to recover a sum of
Respondent filed its Motion for Reconsideration,[12] money, where the money claim is purely incidental to, or
arguing that as Civil Case No. CEB-39025 is for breach of a consequence of the principal relief sought, such are
contract, or one whose subject is incapable of pecuniary actions whose subjects are incapable of pecuniary
estimation, jurisdiction thus falls with the RTC. estimation, hence cognizable by the RTCs.[15]
However, in an April29, 2013 Order,[13] the RTC held its
ground. xxxx

Ruling of the Court of Appeals Verily, what determines the nature of the action and
which court has jurisdiction over it are the allegations of
Respondent filed CA-G.R. CEB SP No. 07711, a Petition the complaint and the character of the relief sought.[16]
for Certiorari[14] seeking to nullify the RTC's February 19,
2013 and April 29, 2013 Orders. It argued that the RTC In our considered view, the complaint, is one incapable
acted with grave abuse of discretion in dismissing Civil of pecuniary estimation; thus, one within the RTC's
Case No. CEB-39025. According to respondent, said case jurisdiction. x x x
is one whose subject matter is incapable of pecuniary
estimation and that the damages prayed for therein are xxxx
merely incidental thereto. Hence, Civil Case No. CEB-
39025 falls within the jurisdiction of the RTC pursuant A case for breach of contract [sic] is a cause of action
to Section 19 of Batas Pambansa Blg. 129, as Amended either for specific performance or rescission of
(BP 129). contracts. An action for rescission of contract, as a
counterpart of an action for specific performance, is
incapable of pecuniary estimation, and therefore falls one for breach of contract, is essentially one for simple
under the jurisdiction of the RTC.[17] payment of damages.

Thus, the totality of damages principle finds no Petitioners' Arguments

application in the instant case since the same applies
only when damages is principally and primarily In praying that the assailed CA dispositions be set aside
demanded in accordance with the specification in and that the RTC's February 19, 2013 Order dismissing
Administrative Circular No. 09-94 which reads: 'in cases Civil Case No. CEB-39025 be reinstated, petitioners in
where the claim for damages is the main cause of their Petition and Reply[20] espouse the original findings
action...the amount of such claim shall be considered in of the RTC that Civil Case No. CEB-39025 is for the
determining the jurisdiction of the court.' recovery of a sum of money in the form of damages.
They asserted that in determining jurisdiction over the
Thus, the court a quo should not have dismissed the subject matter, the allegations in the Complaint and the
instant case. principal relief in the prayer thereof must be considered;
that since respondent merely prayed for the payment of
WHEREFORE, in view of the foregoing, the Order dated damages in its Complaint and not a judgment on the
February 19, 2013 of the Regional Trial Court, 7th claim of breach of contract, then jurisdiction should be
Judicial Region, Branch 17, Cebu City in Civil Case No. determined based solely on the total amount of the
CEB-39025 for Breach of Contract and Damages is claim or demand as alleged in the prayer; that while
hereby REVERSED and SET ASIDE. This case is hereby breach of contract may involve a claim for specific
REMANDED to the RTC which is ORDERED to PROCEED performance or rescission, neither relief was sought in
with the trial on the merits with dispatch. respondent's Complaint; and, that respondent "chose to
focus his [sic] primary relief on the payment of
SO ORDERED.[18] damages,"[21] which is "the true, actual, and principal
relief sought, and is not merely incidental to or a
Petitioners sought to reconsider, but were denied. Hence, consequence of the alleged breach of contract."[22]
the present Petition. Petitioners conclude that, applying the totality of claims
rule, respondent's Complaint should be dismissed as the
Issue claim stated therein is below the jurisdictional amount
of the RTC.
In a June 29, 2015 Resolution,[19] this Court resolved to
give due course to the Petition, which claims that the CA Respondent's Arguments
erred in declaring that the RTC had jurisdiction over
respondent's Complaint which, although denominated as 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, without prejudice to any of the RL Main Operators rights
defendant failed to follow the required standard or remedies granted to it by law.
purchase quota mentioned in Article IV of the subject
dealership agreement. THE DEALER OUTLET SHALL ALSO BE LIABLE TO PAY A
FINE OF TWENTY FIVE THOUSAND PESOS, (P25,000.00)
5. Defendant through a letter dated April 24, 2012 said it FOR EVERY VIOLATION AND PHP 50,000 IF PRE-
[sic] would CEASE OPERATION. It [sic] further stated that TERMINATION BY THE RL MAIN OPERATOR DUE TO
they [sic] would just notify or advise the office when BREACH OF THIS AGREEMENT.'
they are [sic] ready for the business again making the
whole business endeavor totally dependent upon their 8. Likewise it is provided in the said contract that:
[sic] whims and caprices. (Attached and marked as
Annex "B" is a copy of letter of the defendant dated April ... The DEALER OUTLET must have a minimum 200 kilos
24, 2012.) on a six-day or per week pick-up for the entire duration
of the contract to free the dealer outlet from being
6. The aforementioned act of unilateral cessation of charge[d] Php 200/week on falling below required
operation by the defendant constitutes a serious breach minimum kilos per week of laundry materials.
to [sic] the contract because it totally, whimsically and Automatic charging shall become part of the billing on
grossly disregarded the Remarkable Laundry Dealer the services of the dealer outlet on cases where the
Outlet Contract, which resulted to [sic] failure on its part minimum requirements on required kilos are not met.[']
in obtaining the minimum purchase or delivery of 200
kilos per week for the entire duration of its cessation of 9. The cessation of operation by the defendant, which is
operations. tantamount to gross infraction to [sic] the subject
contract, resulted to [sic] incidental damages amounting
7. Under the aforementioned Dealer Contract, to Two Hundred Thousand Pesos (PHP200,000.00).
specifically m Article XV of the same are classified as Defendant should have opted to comply with the Pre-
BREACH BY THE OUTLETS: termination clause in the subject contract other than its
[sic] unilateral and whimsical cessation of operations.
'The parties agree that the happening of any of the
stipulation and events by the dealer outlet is otherwise 10. The plaintiff formally reminded the defendant of her
[sic] in default of any of its obligations or violate any of obligations under the subject contract through demand
the terms and condition under this agreement. letters, but to no avail. The defendant purposely ignored
the letters by [sic] the plaintiff. (Attached and marked as
Any violation of the above-mentioned provisions shall Annex "C" to "C-2" are the Demand Letters dated May 2,
result in the immediate termination of this agreement, 2012, June 2, 2012 and June 19, 2012 respectively.)
11. To reiterate, the defendant temporarily stopped its WHEREFORE, premises considered, by reason of the
business operation prior to the two-year contract above-mentioned breach of the subject dealer contract
duration had elapsed to the prejudice of the plaintiff, agreement made by the defendant, it is most
which is a clear disregard of its two-year obligation to respectfully prayed of the Honorable Court to order the
operate the business unless a pre-termination is called. said defendant to pay the following incidental and
consequential damages to the plaintiff, to wit:
12. Under Article 1159 of the Civil Code of the
Philippines provides [sic]: a) TWO HUNDRED THOUSAND PESOS (PHP200,000.00)
plus legal interest as incidental and consequential
'Obligations arising from contracts have the force of law [damages] for violating Articles IV and XVI of the
between the contracting parties and should be complied Remarkable Laundry Dealer Contract dated 08 SEP 2011;
with in good faith'
b) Thirty Thousand Pesos (P30,000.00) as legal expenses;
13. Likewise, Article 1170 of the Civil Code of the
Philippines [provides] that: c) Thirty Thousand Pesos (P30,000.00) as exemplary
damages;
'Those who in the performance of their obligations are
guilty of fraud, negligence, or delay, and those who in d) Twenty Thousand Pesos (P20,000.00) as cost of suit;
any manner contravene the tenor thereof are liable for
damages.' e) Such other reliefs that the Honorable Court deems as
just and equitable.
14. That the above-mentioned violations by the
defendant to the Remarkable Laundry Dealer Contract, August 31, 2012, Cebu City, Philippines.[29]
specifically Articles IV and XVI thereof constitute gross
breach of contract which are unlawful and malicious An analysis of the factual and material allegations in the
under the Civil Code of the Philippines, which caused the Complaint shows that there is nothing therein which
plaintiff to incur incidental and consequential damages would support a conclusion that respondent's Complaint
as found in the subject dealer contract in the total is one for specific performance or rescission of contract.
amount of Two Hundred Thousand Pesos It should be recalled that the principal obligation of
(PHP200,000.00) and incidental legal expenses to protect petitioners under the Remarkable Laundry Dealership
its rights in the amount of P30,000.00 Contract is to act as respondent's dealer outlet.
Respondent, however, neither asked the RTC to compel
PRAYER: 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 estimation.
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 Neither can we sustain respondent's contention that its
to indicate the proper designation of the Complaint. To Complaint is incapable of pecuniary estimation since it
the contrary, respondent's counsels designated the primarily seeks to enforce the penal clause contained in
Complaint as one for "Breach of Contract & Damages," Article IV of the Remarkable Dealer Outlet Contract,
which is a misnomer and inaccurate. This erroneous which reads:
notion was reiterated in respondent's Memorandum[30]
wherein it was stated that "the main action of CEB 39025 Article IV: STANDARD REQUIRED QUOTA & PENALTIES
is one for a breach of contract."[31] There is no such thing
as an "action for breach of contract." Rather, "[b]reach of In consideration [sic] for such renewal of franchise-
contract is a cause of action,[32] but not the action or dealership rights, the dealer outlet must have a
relief itself"[33] Breach of contract may be the cause of minimum 200 kilos on a six-day or per week pick-up for
action in a complaint for specific performance or the entire duration of the contract to FREE the dealer
rescission of contract, both of which are incapable of outlet from being charge [sic] Php200/week on falling
pecuniary estimation and, therefore, cognizable by the below required minimum kilos per week of laundry
RTC. However, as will be discussed below, breach of materials. Automatic charging shall become part of the
contract may also be the cause of action in a complaint billing on the services of the dealer outlet on cases
for damages. where the minimum requirements on required kilos are
not met.
A complaint
primarily The RL Main Operator has the option to cancel,
seeking to terminate this dealership outlet contract, at its option
enforce the should [sic] in the event that there are unpaid services
equivalent to a two-week minimum required number of
accessory
kilos of laundry materials but not P8,000 worth of
obligation collectibles, for services performed by the RL Main
contained in the Operator or its assigned Franchise Outlet, unpaid bills
penal clause is on ordered and delivered support products, falling
actually an below required monthly minimum number of kilos.
action for
damages Ten [percent] (10%) interest charge per month will be
capable of collected on all unpaid obligations but should not be
more than 45 days or an additional 10% on top of
pecuniary
uncollected amount shall be imposed and shall earn those who in any manner contravene the tenor thereof;
additional 10% on the next succeeding months if it still are liable for damages. (Emphasis supplied)
remains unpaid. However, if the cause of default is due
to issuance of a bouncing check the amount of such In Pacmac, Inc. v. Intermediate Appellate Court,[37] this
check shall earn same penalty charge with additional 5% Court held that the party who unilaterally terminated the
for the first two weeks and 10% for the next two weeks exclusive distributorship contract without any legal
and its succeeding two weeks thereafter from the date of justification can be held liable for damages by reason of
dishonor until fully paid without prejudice to the filling the breach committed pursuant to Article 1170.
of appropriate cases before the courts of justice.
Violation of this provision if remained unsettled for two In sum, after juxtaposing Article IV of the Remarkable
months shall be considered as violation [wherein] Article Dealer Outlet Contract vis-à-vis the prayer sought in
XV of this agreement shall be applied.[34] respondent's Complaint, this Court is convinced that
said Complaint is one for damages. True, breach of
To Our mind, petitioners' responsibility under the above contract may give rise to a complaint for specific
penal clause involves the payment of liquidated damages performance or rescission of contract. In which case, the
because under Article 2226[35] of the Civil Code the subject matter is incapable of pecuniary estimation and,
amount the parties stipulated to pay in case of breach are therefore, jurisdiction is lodged with the RTC. However,
liquidated damages. "It is attached to an obligation in breach of contract may also be the cause of action in a
order to ensure performance and has a double complaint for damages. Thus, it is not correct to
function:(1) to provide for liquidated damages, and (2) to immediately conclude, as the CA erroneously did, that
strengthen the coercive force of the obligation by the since the cause of action is breach of contract, the case
threat of greater responsibility in the event of breach."[36] would only either be specific performance or rescission
of contract because it may happen, as in this case, that
Concomitantly, what respondent primarily seeks in its the complaint is one for damages.
Complaint is to recover aforesaid liquidated damages
(which it termed as "incidental and consequential In an action for damages, the court
damages") premised on the alleged breach of contract which has jurisdiction is determined by
committed by the petitioners when they unilaterally the total amount of damages claimed.
ceased business operations. Breach of contract may also
be the cause of action in a complaint for damages filed Having thus determined the nature of respondent's
pursuant to Article 1170 of the Civil Code. It provides: principal action, the next question brought to fore is
whether it is the RTC which has jurisdiction over the
Art. 1170. Those who in the performance of their subject matter of Civil Case No. CEB-39025.
obligations are guilty of fraud, negligence, or delay, and
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 Remarkable Laundry and Dry Cleaning filed a Complaint
December 11, 2013 Decision and March 19, 2014 denominated as "Breach of Contract and Damages"
Resolution of the Court of Appeals in CA-G.R. CEB SP No. against spouses Romeo and Ida Pajares before the RTC
07711 are REVERSED and SET ASIDE. The February 19, of Cebu City. Respondent alleged that it entered into a
2013 Order of the Regional Trial Court, Branch 17, Cebu 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 Ruling:
plant or laundry outlet; that petitioners violated Article
IV (Standard Required Quota & Penalties) of said
contract, which required them to produce at least 200 The Court grants the Petition. The RTC was correct in
kilos of laundry items each week, when they ceased categorizing Civil Case as an action for damages seeking
dealer outlet operations on account of lack of personnel; to recover an amount below its jurisdictional limit.
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 In ruling that respondent's Complaint is incapable of
RTC dismissed the case for lack of jurisdiction. 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
Respondent filed its Motion for Reconsideration to Court contracts. An action for rescission of contract, as a
of Appeals. And the CA rendered the assailed Decision counterpart of an action for specific performance, is
setting aside the Order of the RTC and remanding the incapable of pecuniary estimation, and therefore falls
case to the court a quo for further proceedings. under the jurisdiction of the RTC.
Petitioners sought to reconsider, but were denied. Hence,
appealed the Petition.
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
Issue: the jurisdiction of the court." In other words, where the
complaint primarily seeks to recover damages, all claims
Whether or not the CA erred in declaring that the RTC for damages should be considered in determining which
had jurisdiction over respondent's Complaint which, court has jurisdiction over the subject matter of the case
although denominated as one for breach of contract, is regardless of whether they arose from a single cause of
essentially one for simple payment of damages. action or several causes of action.