ROBERT RHYZ CHUA, PETITIONER, VS. AMA RURAL BANK OF MANDALUYONG, INC. AND THE REGIONAL TRIAL COURT OF PASAY CITY, BRANCH 108, RESPONDENTS.

Chua versus AMA Rural Bank of Mandaluyong

The Case

This is a petition for review brought by Robert Rhyz Chua against AMA Rural Bank of Mandaluyong, Incorporated, questioning the decision of the Regional Trial Court of Pasay City, Branch 108, which affirmed the decision of the Metropolitan Trial Court of Pasay City, Branch 48, ordering him to pay the bank the unpaid monthly amortizations on a car he had mortgaged, plus interest, attorney's fees, and liquidated damages. The case matters because it is a compact review of two procedural pillars every litigator must command: how jurisdiction over the subject matter is determined from the allegations of the complaint and the amount of the demand, and how a corporation validly authorizes the person who signs its certification against forum shopping.

Procedural History

The bank filed a complaint for recovery of possession with a writ of replevin and damages before the Metropolitan Trial Court of Pasay City, Branch 48. Chua filed an answer but failed to appear at the pre-trial conference despite notice, while his co-defendant Edwin Franco filed no answer at all. The writ of replevin was not served. The Metropolitan Trial Court rendered judgment in favor of the bank, ordering Chua to pay the sum representing the unpaid amortizations plus legal interest, attorney's fees, liquidated damages, and the cost of suit.

Chua appealed to the Regional Trial Court of Pasay City, Branch 108, which affirmed the trial court's decision in its entirety. The Regional Trial Court held that the defendants were estopped from questioning jurisdiction after voluntarily filing pleadings and appearing in several hearings, and that there was sufficient compliance with the rule on certification against forum shopping. Chua then filed a petition for review under Rule 42 of the Rules of Court before the Supreme Court, which is how the case reached the Court.

Facts

On August 16, 2005, Robert Rhyz Chua and Edwin Franco executed and delivered to AMA Rural Bank of Mandaluyong, Incorporated a promissory note in the sum of 350,952 pesos, payable in 24 installments with a monthly amortization of 14,623 pesos, inclusive of interest. To secure payment, they executed a deed of chattel mortgage over a 2002 Nissan Exalta car, registered with the Land Transportation Office.

Chua and Franco failed to comply with the terms of the promissory note with chattel mortgage by not paying the monthly amortizations for ten consecutive months, from July 2006 to March 2007. The bank sent a demand letter dated February 23, 2007, demanding payment of 221,216 pesos and 15 centavos as of that date, or the surrender of the collateral within five days from receipt. The demand rested on the stipulation that failure to pay any accrued installment when due would make the entire balance immediately due and demandable.

On July 5, 2007, the bank filed its complaint for recovery of possession with writ of replevin and damages, praying for seizure of the vehicle or, failing that, judgment for 251,068 pesos and 96 centavos inclusive of interest and late payment charges, plus attorney's fees, liquidated damages, bonding fees, and costs. The writ of replevin was not served. The Metropolitan Trial Court ruled for the bank, the Regional Trial Court affirmed, and Chua elevated the matter to the Supreme Court.

Issues

• Whether or not the complaint should have been dismissed for lack of jurisdiction over the subject matter of the case.
• Whether or not the complaint should have been dismissed for failure of the respondent to comply with Section 5, Rule 7 of the Rules of Court on non-forum shopping.

Applicable Provisions

Section 33 of Batas Pambansa Blg. 129, the Judiciary Reorganization Act of 1980, provides:

Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Cities. – Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise: (1) Exclusive original jurisdiction over civil actions and probate proceedings, testate and intestate, including the grant of provisional remedies in proper cases, where the value of the personal property, estate, or amount of the demand does not exceed One hundred thousand pesos (P100,000.00) or, in Metro Manila where such personal property, estate or amount of the demand does not exceed Two hundred thousand pesos (P200,000.00), exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses and costs, the amount of which must be specifically alleged: Provided, That interest, damages of whatever kind, attorney's fees, litigation expenses, and costs shall be included in the determination of the filing fees: Provided further, That where there are several claims or causes of action between the same or different parties embodied in the same complaint, the amount of the demand shall be the totality of the claims in all the causes of action, irrespective of whether the causes of action arose out of the same or different transactions.

This provision fixes the jurisdictional threshold that the Court measures against the amount of the demand in the complaint.

Section 5 of Republic Act 7691, which took effect on April 15, 1994, provides:

Section 5. After five (5) years from the effectivity of this Act, the jurisdictional amounts mentioned in Section 19 (3), (4), and (8); and Section 33(1) of Batas Pambansa Blg. 129 as amended by this Act, shall be adjusted to Two hundred thousand pesos (P200,000.00). Five (5) years thereafter, such jurisdictional amounts shall be adjusted further to Three hundred thousand pesos (P300,000.00): Provided, however, That in the case of Metro Manila, the abovementioned jurisdictional amounts shall be adjusted after five (5) years from the effectivity of this Act to Four hundred thousand pesos (P400,000.00).

This provision raised the jurisdictional ceiling in Metro Manila to 400,000 pesos, which is the figure the Court applies to the bank's demand.

Ruling

On the first issue, the Court held that the Metropolitan Trial Court did acquire jurisdiction over the subject matter, because the amount of the demand falls within its jurisdiction. The amount demanded was 251,068 pesos and 96 centavos, which does not exceed 400,000 pesos, the adjusted jurisdictional amount for Metro Manila. The Court rejected Chua's reliance on the fair market value of the motor vehicle, which the complaint stated did not exceed 473,000 pesos, as an attempt to manufacture a ground to oppose jurisdiction. The Court reiterated the hornbook principle that jurisdiction over the subject matter is conferred by law and determined by the allegations in the complaint, and that once vested by those allegations, jurisdiction remains vested irrespective of whether the plaintiff is entitled to recover upon all or some of the claims asserted.

On the second issue, the Court affirmed the Regional Trial Court's ruling that there was sufficient compliance with Section 5, Rule 7 of the Rules of Court. The authority to sign the certification against forum shopping was given to Erick Joseph Lingan, the bank's collection manager, as evidenced by a secretary's certificate dated December 11, 2006, attached to the complaint. He was among the persons specifically authorized to cause or initiate the filing of the proper complaint and other pleadings and to represent the corporation in those cases. The Court added that litigation is not a game of technicalities, and that technical rules of procedure should be used to promote, not frustrate, justice.

Doctrine

First, jurisdiction over the subject matter is conferred by law and determined by the allegations in the complaint, which comprise a concise statement of the ultimate facts constituting the plaintiff's cause of action. The nature of the action and the court that has jurisdiction over it are determined from those allegations and the character of the relief sought, irrespective of whether the plaintiff is ultimately entitled to recover. Once vested by the allegations, jurisdiction remains vested.

Second, under Section 33 of Batas Pambansa Blg. 129 as adjusted by Section 5 of Republic Act 7691, the Metropolitan Trial Courts in Metro Manila have exclusive original jurisdiction over civil actions where the amount of the demand does not exceed 400,000 pesos, exclusive of interest, damages, attorney's fees, litigation expenses, and costs, which must be specifically alleged.

Third, a corporation may authorize an officer or employee to sign the verification and certification against forum shopping, and the determination of the sufficiency of that authority is done on a case to case basis, the rationale being that the signatory must be in a position to verify the truthfulness and correctness of the allegations. A secretary's certificate evidencing that authority is sufficient compliance with Section 5, Rule 7 of the Rules of Court.

Disposition

The Supreme Court dismissed the petition for lack of merit and affirmed the decision of the Regional Trial Court dated November 10, 2010, leaving Chua liable to the bank for the amounts awarded.

Remember This

Memorize this line: jurisdiction is determined by the allegations of the complaint and the amount of the demand, not by the value of the collateral or the ultimate outcome of the case. Examiners use this case to test the jurisdictional thresholds of the Metropolitan Trial Courts in Metro Manila and the sufficiency of a corporate officer's authority to sign the certification against forum shopping.