FACTS:

Respondent Vita Kalashian filed a complaint for damages against petitioners Irene and Reynaldo Sante before the Regional Trial Court (RTC) of Baguio City. In her complaint, respondent alleged that petitioner Irene Sante uttered defamatory words against her in the presence of other people and police officers. Respondent prayed for moral damages, exemplary damages, attorney's fees, litigation expenses, and costs of suit. Petitioners filed a motion to dismiss, arguing that the Municipal Trial Court in Cities (MTCC) had jurisdiction over the case. The trial court denied the motion to dismiss, citing a previous ruling of the Supreme Court. Petitioners filed a petition for certiorari and prohibition before the Court of Appeals, claiming that the trial court abused its discretion in allowing the amendment of the complaint to increase the amount of moral damages. The Court of Appeals granted the petition, finding that the case falls under the jurisdiction of the MTCC and that the claim for exemplary damages should be excluded in determining the court's jurisdiction. However, the Court of Appeals later rendered another decision affirming the trial court's denial of petitioners' motion to dismiss and allowing respondent to amend her complaint to increase the amount of moral damages. Dissatisfied with the decisions, petitioners brought the case to the Supreme Court, raising issues regarding jurisdiction and the allowance of the amendment.

ISSUES:

1. Whether there was grave abuse of discretion amounting to lack or in excess of jurisdiction on the part of the Court of Appeals when it resolved that the Regional Trial Court (RTC) of Baguio City has jurisdiction over the case for damages amounting to P300,000.00.

2. Whether there was grave abuse of discretion on the part of the RTC Judge for allowing the complainant to amend the complaint, increasing the amount of moral damages.

RULING:

1. Yes, there was grave abuse of discretion on the part of the Court of Appeals. The Court of Appeals ruled that the RTC of Baguio City has jurisdiction over the case because the total or aggregate amount demanded in the complaint constitutes the basis of jurisdiction. However, the Court of Appeals failed to consider that the claim for exemplary damages is not a separate and distinct cause of action, but merely incidental to the claim for moral damages. Therefore, the prayer for exemplary damages should be excluded in computing the total amount of the claim. Since the claim for moral damages did not exceed the jurisdictional amount of the Municipal Trial Court in Cities (MTCC), the RTC of Baguio City does not have jurisdiction over the case.

2. No, there was no grave abuse of discretion on the part of the RTC Judge. The RTC Judge allowed the complainant to amend the complaint to increase the amount of moral damages from P300,000.00 to P1,000,000.00. The RTC Judge correctly ruled that the trial court has jurisdiction over the original complaint, and the complainant is entitled to amend her complaint as a matter of right under the Rules of Court.

PRINCIPLES:

• The total or aggregate amount demanded in the complaint constitutes the basis of jurisdiction.

• Claims for exemplary damages that are not separate and distinct causes of action, but merely incidental to other claims should be excluded in computing the total amount of the claim.