CASE DIGEST : SPOUSES SERGIO D. DOMASIAN AND NENITA F. DOMASIAN VS. MANUEL T. DEMDAM G.R. No. 212349 GAERLAN

FACTS : The Supreme Court is asked to review the Court of Appeals’ (CA) August 31, 2012 Decision and April 22, 2014 Resolution in CA-G.R. CV No. 93727, involving spouses Sergio and Nenita Domasian (petitioners) and Manuel T. Demdam (respondent). The dispute arose from a P75,000 loan obtained by the petitioners in 1995, with 8% monthly interest due by June 30, 1996, which remained unpaid. The respondent filed a collection suit in 2001 before the RTC of Pasay City for P75,000 principal plus P414,000 accrued interest. Summons were not personally served as petitioners had moved to Naga City, and they did not receive the RTC’s default declaration or the 2003 judgment awarding the total amount, damages, and attorney’s fees. In 2006, the petitioners sought relief from judgment, arguing defective service and lack of jurisdiction, claiming the principal loan amount fell under the MeTC’s jurisdiction. The RTC granted their petition in 2008, setting aside the 2003 order for lack of jurisdiction. The respondent appealed to the CA, which in 2012 reinstated the 2003 RTC judgment, ruling that the total amount claimed, P489,000 (principal plus interest), was determinative of jurisdiction, not the principal alone, and thus the RTC had proper jurisdiction. The petitioners’ motion for reconsideration was denied in 2014. In their Supreme Court petition, the petitioners challenged the CA’s jurisdictional ruling, contending that the appeal raised only questions of law, that interest should not be included in determining jurisdiction, and that the RTC lacked jurisdiction over the claim, while the respondent maintained that the debt remained unpaid and the CA correctly ruled the RTC had jurisdiction over the full P489,000 claim.

ISSUE : WON CA erred in not finding that the respondent's appeal by Notice of Appeal is the wrong mode of appeal as the three issues raised therein are all questions of law

HELD : The Supreme Court denies the petition filed by spouses Sergio and Nenita Domasian, affirming the Court of Appeals’ August 31, 2012 Decision and April 22, 2014 Resolution, as well as the RTC’s January 14, 2003 Order, with modifications. While the Court agreed that the CA erred in taking cognizance of the respondent’s appeal—since it raised purely questions of law, which under Section 2, Rule 41 of the Rules of Court should have been dismissed—it upheld the CA’s ruling that the RTC had jurisdiction over the respondent’s claim. The total claim of P489,000, comprising the P75,000 principal and P414,000 monetary interest agreed upon by the parties, exceeds the jurisdictional threshold of P200,000 under BP 129 and R.A. 7691; the interest forms a primary and inseparable component of the obligation and cannot be excluded from jurisdictional computation. However, the Court found the agreed 8% monthly interest unconscionable and reduced it to the legal rate of 12% per annum, to run from the date of extrajudicial demand on June 30, 1996. Interest on the principal accrues legal interest at 12% per annum from judicial demand on August 1, 2001 until June 30, 2013, then at 6% per annum thereafter. The Court also removed the award of moral and exemplary damages, finding no fraud or bad faith on the part of the petitioners. All other aspects of the RTC and CA rulings remain valid.