Molina v. De la Riva
REITERATIONFacts
The Antecedents: Plaintiff Rafael Molina y Salvador transferred his abaca and coprax business, along with all its property and rights, to defendant Antonio de la Riva for a sum of 134,636 pesos and 12 cents, payable in Mexican currency or its local equivalent. Defendant paid an initial sum and promised to pay the balance in three equal installments with interest. This action was brought to recover the first installment due. Procedural History: The defendant demurred to the complaint, alleging lack of jurisdiction. The Court of First Instance overruled the demurrer. The defendant failed to answer, and judgment was rendered in favor of the plaintiff. The defendant appealed. The Appeal: The appellant raised four assignments of error, primarily arguing that the court lacked jurisdiction due to the parties' alleged residence in Catanduanes and a stipulation in the contract designating Bato, Catanduanes, as the place for judicial and extrajudicial acts. He also contended that the court erred in fixing the recovery amount in Philippine currency without evidence of exchange rates, in granting an option for payment currency, in awarding a sum larger than prayed for, and in considering the contract valid despite the absence of internal-revenue stamps.
Issue(s)
Whether the Court of First Instance of the City of Manila had jurisdiction over the subject matter of the action. Whether the court erred in fixing the sum to be recovered in Philippine currency without hearing evidence as to the relative value of Mexican and Philippine currency. Whether the court erred in rendering judgment for a sum larger than that sought to be recovered in the complaint. Whether the contract was null and void for not bearing the internal-revenue stamp required by Act No. 1045.
Ruling
The judgment of the Court of First Instance is affirmed, with the modification that the plaintiff shall only be entitled to recover the sum of 28,049 pesos and 19 centavos, Philippine currency, with accrued interest thereon at the rate of 5 per cent per annum from July 27, 1903, until fully paid.
Ratio Decidendi
On Issue 1: The Supreme Court held that the Court of First Instance of Manila properly exercised jurisdiction. The complaint alleged that both plaintiff and defendant were residents of Manila at the time of filing, and this allegation was deemed admitted because the defendant did not deny it, having merely demurred. Under Section 377 of the Code of Civil Procedure, a personal action for debt may be brought in the CFI of the province where either the plaintiff or the defendant resides. Consequently, with both parties residing in Manila, the CFI of that city had jurisdiction. The contractual stipulation designating Bato, Catanduanes, as the place for judicial acts could not deprive the Manila court of its jurisdiction, as jurisdiction is conferred by law and not by the will of the parties. Articles 1255 and 1278 of the Civil Code, which speak of the right to contract, are inapplicable to the subject of court jurisdiction, which is governed by the Law of Procedure. The power to establish and fix court jurisdiction belongs solely to the legislative branch; thus, any agreement purporting to submit to the exclusive jurisdiction of a specific court to the exclusion of one legally vested with jurisdiction is null and void. On Issue 2: The Court ruled that it was not erroneous for the lower court to fix the recoverable amount in Philippine currency without hearing evidence on the exchange rate. The plaintiff's complaint explicitly alleged that the Mexican currency amount converted to Philippine currency was 28,049 pesos and 19 centavos, and this allegation was not denied by the defendant, therefore it was deemed admitted. Section 3 of Act No. 1045, which requires proof of relative currency value, applies only when there is a disagreement between the parties on this point. Furthermore, the contract itself allowed payment in "Mexican currency or its equivalent in local currency," granting the defendant an option. In an alternative obligation, the debtor typically has the right to choose the method of meeting the obligation unless the creditor has expressly reserved that right, as per Article 1132 of the Civil Code. Granting this option did not prejudice the defendant's essential rights; rather, it was a favor. Thus, any alleged violation of Act No. 1045 in this regard, even if true, did not warrant reversal under Section 503 of the Code of Civil Procedure, which states that no judgment shall be reversed for error that has not prejudiced the substantial rights of the excepting party. On Issue 3: The Supreme Court found that the trial court indeed erred in rendering judgment for a sum greater than that demanded in the complaint. The plaintiff's demand in the complaint was for 28,049 pesos and 19 centavos, Philippine currency. However, the trial court ordered the defendant to pay 30,052 pesos and 70 centavos. Section 126 of the Code of Civil Procedure explicitly mandates that "The relief granted to the plaintiff, if there be no answer, can not exceed that which he shall have demanded in his complaint." Since the defendant failed to answer, the plaintiff was limited to the amount specifically prayed for. Consequently, the judgment of the lower court required modification in this respect to align with the plaintiff's demand. On Issue 4: The Court held that the contract was not null and void for lacking an internal-revenue stamp. Sections 9 and 10 of Act No. 1045, which prescribe the stamp tax and the penalty of nullity for unstamped contracts, refer to documents that should be stamped "in accordance with the provisions of this act." These specific provisions are found in Sections 6 and 7 of the same Act. Section 6 clearly states that only contracts payable in local currency "drawn or made upon or subsequent to October first, nineteen hundred and four" are subject to the stamp tax. The contract in question was executed on July 27, 1903, which is prior to October 1, 1904. Therefore, the stamp tax requirement and the penalty of nullity under Act No. 1045 were not applicable to this particular contract, and the trial court committed no error in upholding its validity despite the absence of a revenue stamp.
Main Doctrine
The Court held that the jurisdiction of a court is vested by law and cannot be divested by mere stipulation of the parties, even if such stipulation purports to submit to the exclusive jurisdiction of another court. Additionally, the Court clarified that Act No. 1045, concerning internal revenue stamps, only applies to contracts executed on or after October 1, 1904, and thus, a contract executed prior to this date is not subject to the stamp tax and the penalty of nullity for its absence.