G.R. No. 138896 June 20, 2000 BARANGAY SAN ROQUE, TALISAY, CEBU, petitioner, vs.

Heirs of FRANCISCO PASTOR namely: EUGENIO SYLIANCO, TEODORO SYLIANCO, TEODORO SYLIANCO, ISABEL SYLIANCO, EUGENIA S. ONG, LAWRENCE SYLIANCO, LAWSON SYLIANCO, LAWINA S. NOTARIO, LEONARDO SYLIANCO JR. and LAWFORD SYLIANCO, respondents. PANGANIBAN, J.: An expropriation suit is incapable of pecuniary estimation. Accordingly, it falls within the jurisdiction of the regional trial courts, regardless of the value of the subject property. The Case Before us is a Petition for Review on Certiorari assailing the March 29, 1999 Order1 of the Regional Trial Court (RTC) of Cebu City (Branch 58) in Civil Case No. CEB-21978, in which it dismissed a Complaint for eminent domain. It ruled as follows: Premises considered, the motion to dismiss is hereby granted on the ground that this Court has no jurisdiction over the case. Accordingly, the Orders dated February 19, 1999 and February 26, 1999, as well as the Writ of Possession issued by virtue of the latter Order are hereby recalled for being without force and effect.2Petitioner also challenges the May 14, 1999 Order of the RTC denying reconsideration. The Facts Petitioner filed before the Municipal Trial Court (MTC) of Talisay, Cebu (Branch 1)3 a Complaint to expropriate a property of the respondents. In an Order dated April 8, 1997, the MTC dismissed the Complaint on the ground of lack of jurisdiction. It reasoned that "[e]minent domain is an exercise of the power to take private property for public use after payment of just compensation. In an action for eminent domain, therefore, the principal cause of action is the exercise of such power or right. The fact that the action also

involves real property is merely incidental. An action for eminent domain is therefore within the exclusive original jurisdiction of the Regional Trial Court and not with this Court."4 Assailed RTC Ruling The RTC also dismissed the Complaint when filed before it, holding that an action for eminent domain affected title to real property; hence, the value of the property to be expropriated would determine whether the case should be filed before the MTC or the RTC. Concluding that the action should have been filed before the MTC since the value of the subject property was less than P20,000, the RTC ratiocinated in this wise: The instant action is for eminent domain. It appears from the current Tax Declaration of the land involved that its assessed value is only One Thousand Seven Hundred Forty Pesos (P1,740.00). Pursuant to Section 3, paragraph (3), of Republic Act No. 7691, all civil actions involving title to, or possession of, real property with an assessed value of less than P20,000.00 are within the exclusive original jurisdiction of the Municipal Trial Courts. In the case at bar, it is within the exclusive original jurisdiction of the Municipal Trial Court of Talisay, Cebu, where the property involved is located. The instant action for eminent domain or condemnation of real property is a real action affecting title to or possession of real property, hence, it is the assessed value of the property involved which determines the jurisdiction of the court. That the right of eminent domain or condemnation of real, property is included in a real action affecting title to or possession of real property, is pronounced by retired Justice Jose Y. Feria, thus, "Real actions are those affecting title to or possession of real property. These include partition or condemnation of, or foreclosures of mortgage on, real property. . . ."5 Aggrieved, petitioner appealed directly to this Court, raising a pure question of law.6 In a Resolution dated July 28, 1999, the Court denied the Petition for Review "for being posted out of time on July 2, 1999, the due date being June 2, 1999, as the motion for extension of time to file petition was denied in the resolution of July 14,

1999."7 In a subsequent Resolution dated October 6, 1999, the Court reinstated the Petition.8 Issue In its Memorandum, petitioner submits this sole issue for the consideration of this Court: Which court, MTC or RTC, has jurisdiction over cases for eminent domain or expropriation where the assessed value of the subject property is below Twenty Thousand (P20,000.00) Pesos?9 This Court's Ruling The Petition is meritorious. Main Issue: Jurisdiction over an Expropriation Suit In support of its appeal, petitioner cites Section 19 (1) of BP 129, which provides that RTCs shall exercise exclusive original jurisdiction over "all civil actions in which the subject of the litigation is incapable of pecuniary estimation; . . . . ." It argues that the present action involves the exercise of the right to eminent domain, and that such right is incapable of pecuniary estimation. Respondents, on the other hand, contend that the Complaint for Eminent Domain affects the title to or possession of real property. Thus, they argue that the case should have been brought before the MTC, pursuant to BP 129 as amended by Section 3 (3) of RA 7691. This law provides that MTCs shall have exclusive original jurisdiction over all civil actions that involve title to or possession of real property, the assessed value of which does not exceed twenty thousand pesos or, in civil actions in Metro Manila, fifty thousand pesos exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses and costs. We agree with the petitioner that an expropriation suit is incapable of pecuniary estimation. The test to determine whether it is so was laid down by the Court in this wise:

A review of the jurisprudence of this Court indicates that in determining whether an action is one the subject matter of which is not capable of pecuniary estimation, this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, or where the money claim is purely incidental to, or a consequence of, the principal relief sought, like in suits to have the defendant perform his part of the contract (specific performance) and in actions for support, or for annulment of a judgment or to foreclose a mortgage, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance. The rationale of the rule is plainly that the second class cases, besides the determination of damages, demand an inquiry into other factors which the law has deemed to be more within the competence of courts of first instance, which were the lowest courts of record at the time that the first organic laws of the Judiciary were enacted allocating jurisdiction (Act 136 of the Philippine Commission of June 11, 1901). 10 In the present case, an expropriation suit does not involve the recovery of a sum of money. Rather, it deals with the exercise by the government of its authority and right to take private property for public use. 11 In National Power Corporation v. Jocson, 12 the Court ruled that expropriation proceedings have two phases: The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of dismissal of the action, "of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint." An order of dismissal, if this be ordained, would be a final one, of course, since it finally disposes of the action and leaves nothing more to be done by the Court on the merits. So, too, would an order of condemnation be a final one, for thereafter as the Rules expressly state, in the

proceedings before the Trial Court, "no objection to the exercise of the right of condemnation (or the propriety thereof) shall be filed or heard." The second phase of the eminent domain action is concerned with the determination by the court of "the just compensation for the property sought to be taken." This is done by the Court with the assistance of not more than three (3) commissioners. The order fixing the just compensation on the basis of the evidence before, and findings of, the commissioners would be final, too. It would finally dispose of the second stage of the suit, and leave nothing more to be done by the Court regarding the issue. . . . It should be stressed that the primary consideration in an expropriation suit is whether the government or any of its instrumentalities has complied with the requisites for the taking of private property. Hence, the courts determine the authority of the government entity, the necessity of the expropriation, and the observance of due process. 1 In the main, the subject of an expropriation suit is the government's exercise of eminent domain, a matter that is incapable of pecuniary estimation. True, the value of the property to be expropriated is estimated in monetary terms, for the court is duty-bound to determine the just compensation for it. This, however, is merely incidental to the expropriation suit. Indeed, that amount is determined only after the court is satisfied with the propriety of the expropriation. Verily, the Court held in Republic of the Philippines v. Zurbano that "condemnation proceedings are within the jurisdiction of Courts of First Instance," 14 the forerunners of the regional trial courts. The said case was decided during the effectivity of the Judiciary Act of 1948 which, like BP 129 in respect to RTCs, provided that courts of first instance had original jurisdiction over "all civil actions in which the subject of the litigation is not capable of pecuniary estimation." 15 The 1997 amendments to the Rules of Court were not intended to change these jurisprudential precedents. We are not persuaded by respondents' argument that the present action involves the title to or possession of a parcel of land. They cite

the observation of retired Justice Jose Y. Feria, an eminent authority in remedial law, that condemnation or expropriation proceedings are examples of real actions that affect the title to or possession of a parcel of land. 16 Their reliance is misplaced. Justice Feria sought merely to distinguish between real and personal actions. His discussion on this point pertained to the nature of actions, not to the jurisdiction of courts. In fact, in his pre-bar lectures, he emphasizes that jurisdiction over eminent domain cases is still within the RTCs under the 1997 Rules. To emphasize, the question in the present suit is whether the government may expropriate private property under the given set of circumstances. The government does not dispute respondents' title to or possession of the same. Indeed, it is not a question of who has a better title or right, for the government does not even claim that it has a title to the property. It merely asserts its inherent sovereign power to "appropriate and control individual property for the public benefit, as the public necessity, convenience or welfare may demand." 17 WHEREFORE, the Petition is hereby GRANTED and the assailed Orders SET ASIDE. The Regional Trial Court is directed to HEAR the case. No costs.1wphi1.nt SO ORDERED.

G.R. No. L-36098 January 21, 1983 ORTIGAS & COMPANY, LIMITED PARTNERSHIP, petitioner, vs. JUDGE JOSE B. HERRERA, respondent. PER CURIAM: G.R. No. L-36098 (Ortigas & Company, Limited Partnership vs. Judge Jose B. Herrera, City Court of Manila, Branch II, and Emiliano Samson). On August 14, 1969, petitioner and private respondent entered into an agreement thereby for and in consideration of P55,430.00, the former agreed to sell to the latter a parcel of land with a special condition that should private respondent as purchaser complete the construction including the painting of his residential house on said lot within two (2) years from August 14, 1969, petitioner, as owner, has agreed to refund to private respondent the amount of P10.00 per square meter. When the aforesaid special condition was fulfilled, private respondent, on May 17, 1971 accordingly notified in writing the petitioner of the same and requested for his refund amounting to P4,820.00. Upon failure of petitioner to pay his obligation, private respondent on May 6, 1972 filed a complaint for sum of money and damages with the City Court of Manila, Branch II, against petitioner docketed as Civil Case No. 211673. A motion to dismiss was filed by petitioner on grounds of lack of jurisdiction, failure of the complaint to state a cause of action and improper avenue. City Court Judge Jose B. Herrera in his order dated June 27, 1972 held in abeyance the resolution on the motion until after the trial of the case on the merits. A reconsideration of the said order having been denied, petitioner on October 12, 1972 filed with the Court of First Instance of Manila Branch XXVII, a special civil action for certiorari and prohibition with preliminary injunction docketed as Civil Case No. 88510. A motion to dismiss was filed by private respondent, and on November 17, 1972, the petition was dismissed on the ground that the claim of private respondent in his complaint, being less than P10,000.00, is within the exclusive jurisdiction of the city court.

Petitioner thus filed the present petition and argues among others that: (a) as determined from the allegations of the complaint, the action is for specific performance of contract; and (b) actions in which the subject of litigation is not capable of pecuniary estimation such as complaints for specific performance of contract are exclusively cognizable by the Court of First Instance. Hence, the decisive question to be resolved in this present petition is whether or not the City Court of Manila, Branch II, has jurisdiction over the complaint. The action involved in this case is one for specific performance and not for a sum of money and wherefore incapable of pecuniary estimation because what private respondent seeks is the performance of petitioner's obligation under a written contract to make a refund but under certain specific conditions still to be proven or established. In a case for the recovery of a sum of money, as the collection of a debt, the claim is considered capable of pecuniary estimation (Lapitan vs. Scandia Inc., 24 SCRA 479) because the obligation to pay the debt is not conditioned upon any specific fact or matter. But when a party to a contract has agreed to refund to the other party a sum of money upon compliance by the latter of certain conditions and only upon compliance therewith may what is legally due him under the written contract be demanded, the action is one not capable of pecuniary estimation. The payment of a sum of money is only incidental which can only be ordered after a determination of certain acts the performance of which being the more basic issue to be inquired into. Although private respondent's complaint in the court a quo is designated as one for a sum of money and damages, an analysis of all the factual allegations of the complaint patently shows that what private respondent seeks is the performance of petitioner's obligation under the written contract to make the refund of the rate of P10.00 per square meter or in the total amount of P4,820.00, but only after proof of having himself fulfilled the conditions that will give rise to petitioner's obligation, a matter clearly incapable of pecuniary estimation. In view of the foregoing, the Court RESOLVED to reverse the order appealed from and the complaint filed with the City Court of Manila, Branch II, docketed as Civil Case No. 211673 is hereby ordered dismissed for lack of jurisdiction.

G.R. No. L-27343 February 28, 1979 MANUEL G. SINGSONG, JOSE BELZUNCE, AGUSTIN E. TONSAY, JOSE L. ESPINOS, BACOLOD SOUTHERN LUMBER YARD, and OPPEN, ESTEBAN, INC., plaintiffsappellees, vs. ISABELA SAWMILL, MARGARITA G. SALDAJENO and her husband CECILIO SALDAJENO LEON GARIBAY, TIMOTEO TUBUNGBANUA, and THE PROVINCIAL SHERIFF OF NEGROS OCCIDENTAL, defendants, MARGARITA G. SALDAJENO and her husband CECILIO SALDAJENO, defendants-appellants. FERNANDEZ, J.: This is an appeal to the Court of Appeals from the judgment of the Court of First Instance of Negros Occidental in Civil Cage No. 5343, entitled "Manuel G. Singson, et all vs. Isabela Sawmill, et al.,", the dispositive portion of which reads: IN VIEW OF THE FOREGOING CONSIDERATIONS, it is hereby held. (1) that the contract, Appendix "F", of the Partial Stipulation of Facts, Exh. "A", has not created a chattel mortgage lien on the machineries and other chattels mentioned therein, all of which are property of the defendant partnership "Isabela Sawmill", (2) that the plaintiffs, as creditors of the defendant partnership, have a preferred right over the assets of the said partnership and over the proceeds of their sale at public auction, superior to the right of the defendant Margarita G. Saldajeno, as creditor of the partners Leon Garibay and Timoteo Tubungbanua; (3) that the defendant Isabela Sawmill' is indebted to the plaintiff Oppen, Esteban, Inc. in the amount of P1,288.89, with legal interest thereon from the filing of the complaint on June 5, 1959; (4) that the same defendant is indebted to the plaintiff Manuel G. Singsong in the total amount of P5,723.50, with interest thereon at the rate of 1 % per month from May 6, 1959, (the date of the statements of account, Exhs. "L" and "M"), and 25% of the total indebtedness at the time of payment, for attorneys' fees, both interest and attorneys fees being stipulated in Exhs. "I" to "17", inclusive; (5) that the same defendant is indebted to the plaintiff Agustin E. Tonsay in the amount of P933.73, with legal interest thereon from the filing of the complaint on June 5, 1959; (6) that the same defendant is indebted to the plaintiff Jose L. Espinos in the

amount of P1,579.44, with legal interest thereon from the filing of the complaint on June 5, 1959; (7) that the same defendant is indebted to the plaintiff Bacolod Southern Lumber Yard in the amount of Pl,048.78, with legal interest thereon from the filing of the complaint on June 5, 1959; (8) that the same defendant is indebted to the plaintiff Jose Belzunce in the amount of P2,052.10, with legal interest thereon from the filing of the complaint on June 5. 1959; (9) that the defendant Margarita G. Saldajeno, having purchased at public auction the assets of the defendant partnership over which the plaintiffs have a preferred right, and having sold said assets for P 45,000.00, is bound to pay to each of the plaintiffs the respective amounts for which the defendant partnership is held indebted to, them, as above indicated and she is hereby ordered to pay the said amounts, plus attorneys fees equivalent to 25% of the judgment in favor of the plaintiff Manuel G. Singson, as stipulated in Exhs. "I" "to I-17", inclusive, and 20% of the respective judgments in favor of the other plaintiffs, pursuant to. Art. 2208, pars. (5) and (11), of the Civil Code of the Philippines; (10) The defendants Leon Garibay and Timoteo Tibungbanua are hereby ordered to pay to the plaintiffs the respective amounts adjudged in their favor in the event that said plaintiffs cannot recover them from the defendant Margarita G. Saldajeno and the surety on the bond that she has filed for the lifting of the injunction ordered by this court upon the commencement of this case. The cross-claim cf the defendant Margarita G. Saldajeno against the defendants Leon Garibay arid Timoteo Tubungbanua is hereby discussed Margarita G. Saldajeno shall pay the costs. SO ORDERED. 1 In a resolution promulgated on February 3, 1967, the Court of Appeals certified the records of this case to the Supreme Court "considering that the resolution of this appeal involves purely questions or question of law over which this Court has no jurisdiction ... 2 On June 5. 1959, Manuel G. Singsong, Jose Belzunce, Agustin E. Tonsay, Jose L. Espinos, Bacolod Southern Lumber Yard, and Oppen, Esteban, Inc. filed in the Court of first Instance of Negros Occidental, Branch I, against "Isabela Sawmill", Margarita G. Saldajeno and her husband Cecilio Saldajeno, Leon Garibay,

Timoteo Tubungbanua and the Provincial Sheriff of Negros Occidental a complaint the prayer of which reads: WHEREFORE, the plaintiffs respectfully pray: (1) That a writ of preliminary injunction be issued restraining the defendant Provincial Sheriff of Negros Occidental from proceeding with the sales at public auction that he advertised in two notices issued by him on May 18, 1959 in connection with Civil Case No. 5223 of this Honorable Court, until further orders of this Court; and to make said injunction permanent after hearing on the merits: (2) That after hearing, the defendant partnership be ordered; to pay to the plaintiff Manuel G. Singson the sum of P3,723.50 plus 1% monthly interest thereon and 25% attorney's fees, and costs; to pay to the plaintiff JoseBelzunce the sum of P2,052.10, plus 6% annual interest thereon and 25% for attorney's fees, and costs;to pay to the plaintiff Agustin E. Tonsay the sum of P993.73 plus 6% annual interest thereon and 25% attorney's fees, and costs; to pay to the plaintiff Bacolod Southern Lumber Yard the sum of P1,048.78, plus 6% annual interest thereon and 25% attorney's fees, and costs; and to pay to the plaintiff Oppen, Esteban, Inc. the sum of P1,350.89, plus 6% annual interest thereon and 25% attorney's fees and costs: (3) That the so-called Chattel Mortgage executed by the defendant Leon Garibay and Timoteo Tubungbanua in favor of the defendant Margarita G. Saldajeno on May 26, 1958 be declared null and void being in fraud of creditors of the defendant partnership and without valuable consideration insofar as the said defendant is concerned: (4) That the Honorable Court order the sale of public auction of the assets of the defendnat partnership in case the latter fails to pay the judgment that the plaintiffs may recover in the action, with instructions that the proceeds of the sale b e applied in payment of said judgment before any part of saod proceeds is paid to the defendant Margarita G. Saldajeno; (5) That the defendant Leon Garibay, Timoteo Tubungbanua, and Margarita G. Saldajeno be declared jointly liable to the plaintifs for whatever deficiency may remain unpaid after the proceeds of the sale of the assets of the defendnt partnership are supplied in payment of the judgment that said plaintiffs may recover in this action; (6) The plaintiffs further pray for all other remedies to which the Honorable Court will find them entitled to, with costs to the defendants.

Bacolod City, June 4, 1959. 3 The action was docketed as Civil Case No. 5343 of said court. In their amended answer, the defendants Margarita G. Saldajeno and her husband, Cecilio Saldajeno, alleged the following special and affirmative defenses: xxx xxx xxx 2. That the defendant Isabela Sawmill has been dissolved by virtue of an action entitled "In the matter of: Dissolution of Isabela Sawmill as partnership, etc. Margarita G. Saldajeno et al. vs. Isabela Sawmill, et al., Civil Case No. 4787, Court of First Instance of Negros Occidental; 3. That as a result of the said dissolution and the decision of the Court of First Instance of Negros Occidental in the aforesaid case, the other defendants herein Messrs. Leon Garibay and Timoteo Tubungbanua became the successors-in-interest to the said defunct partnership and have bound themselves to answere for any and all obligations of the defunct partnership to its creditors and third persons; 4. That to secure the performance of the obligations of the other defendants Leon Garibay and Timoteo Tubungbanua to the answering defendant herein, the former have constituted a chattel mortgage over the properties mentioned in the annexes to that instrument entitled "Assignment of Rights with Chattel Mortgage" entered into on May 26, 1968 and duly registered in the Register of Deeds of Negros Occidental on the same date: 5. That all the plaintiffs herein, with the exceptionof the plaintiff Oppen, Esteban, Inc. are creditors of Messrs. Leon Garibay and Timoteo Tubungbanua and not of the defunct Isabela Sawmill and as such they have no cause of action against answering defendant herein and the defendant Isabela Sawmill; 6. That all the plaintiffs herein, except for the plaintiff Oppen, Esteban, Inc. granted cash advances, gasoline, crude oil, motor oil, grease, rice and nipa to the defendants Leon Garibay and Timoteo Tubungbanua with the knowledge and notice that the Isabela Sawmill as a former partnership of defendants Margarita G. Isabela Sawmill as a former partnership of defendants Margarita G. Saldajeno, Leon Garibay and Timoteo Tubungbanua, has already been dissolved; 7. That this Honorable Court has no jurisdictionover the claims of the plaintiffs Oppen, Esteban, Inc., Agustin R. Tonsay, Jose L. Espinos, and the Bacolod Southern Lumber Yard, it appearing that the amounts sought to be recovered by them in this action is less than

P2,000.00 each, exclusive of interests; 8. That in so far as the claims of these alleged creditors plaintiffs are concerned, there is a misjoinder of parties because this is not a class suit, and therefore this Honorable Court cannot take jurisdictionof the claims for payment; 9. That the claims of plaintiffs-creditors, except Oppen, Esteban, Inc. go beyond the limit mentioned inthe statute of frauds, Art. 1403 of the Civil Code, and are therefor unenforceable, even assuming that there were such credits and claims; 10. That this Honorable Court has no jurisdiction in this case for it is well settled in law and in jurisprudence that a court of first instance has no power or jurisdiction to annul judgments or decrees of a coordinate court because other function devolves upon the proper appellate court; (Lacuna, et al. vs. Ofilada, et al., G.R. No. L-13548, September 30, 1959; Cabigao vs. del Rosario, 44 Phil. 182; PNB vs. Javellana, 49 O.G. No. 1, p.124), as it appears from the complaint in this case to annul the decision of this same court, but of another branch (Branch II, Judge Querubin presiding). 4 Said defendants interposed a cross-claim against the defendsants Leon Garibay and Timoteo Tubungbanua praying "that in the event that judgment be rendered ordering defendant cross claimant to pay to the plaintiffs the amount claimed in the latter's complaint, that the cross claimant whatever amount is paid by the latter to the plaintiff in accordance to the said judgment. ... 5 After trial, judgment was rendered in favor of the plaintiffs and against the defendants. The defendants, Margarita G. Saldajeno and her husband Cecilio Saldajeno, appealed to the Court of Appeals assigning the following errors: I THE COURT A QUO ERRED IN ASSUMING JURISDICTION OVER THE CASE. II THE COURT A QUO ERRED IN HOLDING THAT THE ISSUE WITH REFERENCE TO THE WITHDRAWAL OF DEFENDANTAPPELLANT MARGARITA G. SALDAJENO FROM THE PARTNERSHIP "SABELA SAWMILL" WAS WHETHER OR NOT SUCH WITHDRAWAL CAUSED THE "COMPLETE DISAPPEARANCE" OR "EXTINCTION" OF SAID PARTNERSHIP. III THE COURT A QUO ERRED IN OT HOLDING THAT THE WITHDRAWAL OF DEFENDANT-APPELLANT MARGARITA G. SALDAJENO AS A PARTNER THEREIN DISSOLVED THE PARTNERSHIP "ISABELA SAWMILL" (FORMED ON JAN. 30,

1951 AMONG LEON GARIBAY, TIMOTEO TUBUNGBANUA AND SAID MARGARITA G. SALDAJENO). IV THE COURT A QUO ERRED IN ISSUING THE WRIT OF PRELIMINARY INJUNCTION. V THE COURT A QUO ERRED IN HOLDING THAT THE CHATTEL MORTGAGE DATED MAY 26, 1958, WHICH CONSTITUTED THE JUDGMENT IN CIVIL CASE NO. 4797 AND WHICH WAS FORECLOSED IN CIVIL CASE NO. 5223 (BOTH OF THE COURT OF FIRST INSTANCE OF NEGROS OCCIDENTAL) WAS NULL AND VOID. VI THE COURT A QUO ERRED IN HOLDING THAT THE CHATTLES ACQUIRED BY DEFENDANT-APPELLANT MARGARITA G. SALDAJENO IN THE FORECLOSURE SALE IN CIVIL CASE NO. 5223 CONSTITUTED 'ALL THE ASSETS OF THE DEFENDNAT PARTNERSHIP. VII THE COURT A QUO ERRED IN HOLDING THAT DEFENDANT-APPELLANT MARGARITA G. SALDAJENO BECAME PRIMARILY LIABLE TO THE PLAINTFFSAPPELLEES FOR HAVING ACQUIRED THE MORTGAGED CHATTLES IN THE FORECLOSURE SALE CONDUCTED IN CONNECTION WITH CIVIL CASE NO. 5223. VIII THE COURT A QUO ERRED IN HOLDING DEFENDANTAPPELLANT MARGARITA G. SALDAJENO LIABLE FOR THE OBLIGATIONS OF MESSRS. LEON GARIBAY AND TIMOTEO TUBUNGBANUA, INCURRED BY THE LATTER AS PARTNERS IN THE NEW 'ISABELA SAWMILL', AFTER THE DISSOLUTION OF THE OLD PARTNERSHIP IN WHICH SAID MARGARITA G. SALDAJENO WAS A PARTNER. IX THE COURT A QUO ERRED IN HOLDING DEFENDANTAPPELLANT MARGARITA G. SALDAJENO LIABLE TO THE PLAINTIFFS-APPELLEES FOR ATTORNEY'S FEES. X THE COURT A QUO ERRED IN NOT DISMISSING THE COMPLAINT OF THE PLAINTIFFS-APPELLEES. XI THE COURT A QUO ERRED IN DISMISSING THE CROSSCLAIM OF DEFENDANT-APPELLANT MARGARITA G. SALDAJENO AGAINST CROSS-DEFENDANTS LEON GARIBAY AND TIMOTEO TUBUNGBANUA. 6 The facts, as found by the trial court, are: At the commencement of the hearing of the case on the merits the plaintiffs and the defendant Cecilio and Margarita g. Saldajeno submittee a Partial Stipulation of Facts that was marked as Exh. "A".

Said stipulation reads as folows: 1. That on January 30, 1951 the defendants Leon Garibay, Margarita G. Saldejeno, and Timoteo Tubungbanua entered into a Contract of Partnership under the firm name "Isabela Sawmill", a copy of which is hereto attached Appendix "A". 2. That on February 3, 1956 the plaintiff Oppen, Esteban, Inc. sold a Motor Truck and two Tractors to the partnership Isabela Sawmill for the sum of P20,500.00. In order to pay the said purcahse price, the said partnership agreed to make arrangements with the International Harvester Company at Bacolod City so that the latter would sell farm machinery to Oppen, Esteban, Inc. with the understanding that the price was to be paid by the partnership. A copy of the corresponding contract of sle is attached hereto as Appendix "B". 3. That through the method of payment stipulated in the contract marked as Appendix "B" herein, the International Harvester Company has been paid a total of P19,211.11, leaving an unpaid balance of P1,288.89 as shown in the statements hereto attached as Appendices "C", "C-1", and "C-2". 4. That on April 25, 1958 Civil Case No. 4797 was filed by the spouses Cecilio Saldajeno and Margarita G. Saldajeno against the Isabela Sawmill, Leon Garibay, and Timoteo Tubungbanua, a copy of which Complaint is attached as Appendix 'D'. 5. That on April 27, 1958 the defendants LeonGaribay, Timoteo Tubungbanua and Margarita G. Saldajeno entered into a "Memorandum Agreement", a copy of which is hereto attached as Appendix 'E' in Civil Case 4797 of the Court of First Instance of Negros Occidental. 6. That on May 26, 1958 the defendants Leon Garibay, Timoteo Tubungbanua and Margarita G. Saldajeno executed a document entitled "Assignment of Rights with Chattel Mortgage", a copy of which documents and its Annexes "A" to "A-5" forming a part of the record of the above mentioned Civil Case No. 4797, which deed was referred to in the Decision of the Court ofFirst Instance of Negros Occidental in Civil Case No. 4797 dated May 29, 1958, a copy of which is hereto attached as Appendix "F" and "F-1" respectively. 7. That thereafter the defendants Leon Garibay and Timoteo Tubungbanua did not divide the assets and properties of the "Isabela Sawmill" between them, but they continued the business of said partnership under the same firm name "Isabela Sawmill". 8. That on May 18, 1959 the Provincial Sheriff of Negros Occidental published two (2) notices that he would sell at public auction on June 5, 1959 at Isabela, Negros Occidental certain trucks, tractors,

machinery, officeequipment and other things that were involved in Civil Case No. 5223 of the Court of First Instance of Negros Occidental, entitled "Margarita G. Saldajeno vs. Leon Garibay, et al." See Appendices "G" and "G-1". 9. That on October 15, 1969 the Provincial Sheriff of Negros Occidental executed a Certificate ofSale in favor of the defendant Margarita G. Saldajeno, as a result of the sale conducted by him on October 14 and 15, 1959 for the enforcement of the judgment rendered in Civil Case No. 5223 of the Court of First Instance of Negros Occidental, a certified copy of which certificte of sale is hereto attached as Appendix "H". 10. That on October 20, 1959 the defendant Margarita G. Saldajeno executed a deed of sale in favor of the Pan Oriental Lumber Company transfering to the latter for the sum of P45,000.00 the trucks, tractors, machinery, and other things that she had purchashed at a public auction referred to in the foregoing paragraph, a certified true copy of which Deed of Sale is hereto attached as Appendix "I". 11. The plaintiffs and the defendants Cecilio Saldajeno and Margarita G. Saldajeno reserve the right to present additional evidence at the hearing of this case. Forming parts of the above copied stipulation are documents that were marked as Appendices "A", "B", "C", "C-1", "C-2", "D", "E", "F", "F-1", "G", "G-1", "H", and "I". The plaintiffs and the defendants Cecilio and Margarita G. Saldajeno presented additional evidence, mostly documentary, while the crossdefendants did not present any evidence. The case hardly involves quetions of fact at all, but only questions of law. The fact that the defendnat 'Isabela Sawmill' is indebted to theplaintiff Oppen, Esteban, Inc. in the amount of P1,288.89 as the unpaid balance of an obligation of P20,500.00 contracted on February 3, 10956 is expressly admitted in paragraph 2 and 3 of the Stipulation, Exh. "A" and its Appendices "B", "C", "C-1", and "C-2". The plaintiff Agustin E. Tonssay proved by his own testimony and his Exhs. "B" to"G" that from October 6, 1958 to November 8, 1958 he advanced a total of P4,200.00 to the defendant 'Isabela Sawmill'. Agaist the said advances said defendant delivered to Tonsay P3,266.27 worth of lumber, leavng an unpaid balance of P933.73, which balance was confirmed on May 15, 1959 by the defendant Leon Garibay, as Manager of the defendant partnership.

The plaintiff Manuel G. Singsong proved by his own testimony and by his Exhs. "J" to "L" that from May 25, 1988 to January 13, 1959 he sold on credit to the defendnat "Isabela Sawmill" rice and bran, on account of which business transaction there remains an unpaid balance of P3,580.50. The same plaintiff also proved that the partnership ownes him the sum of P143.00 for nipa shingles bought from him on credit and unpaid for. The plaintiff Jose L. Espinos proved through the testimony of his witness Cayetano Palmares and his Exhs. "N" to "O-3" that he owns the "Guia Lumber Yard", that on October 11, 1958 said lumber yard advanced the sum of P2,500.00 to the defendant "Isabela Sawmill", that against the said cash advance, the defendant partnership delivered to Guia Lumber Yard P920.56 worth of lumber, leaving an outstanding balance of P1,579.44. The plaintiff Bacolod Southern Lumber Yard proved through the testimony of the witness Cayetano Palmares an its Exhs. "P" to "Q1" that on October 11, 1958 said plaintiff advanced the sum of P1,500.00 to the defendsant 'Isabela Sawmill', that against the said cash advance, the defendant partnership delivered to the said plaintiff on November 19, 1958 P377.72 worth of lumber, and P73.54 worth of lumber on January 27, 1959, leaving an outstanding balance of P1,048.78. The plaintiff Jose Balzunce proved through the testimony of Leon Garibay whom he called as his witness, and through the Exhs. "R" to "E" that from September 14, 1958 to November 27, 1958 he sold to the defedant "Isabela Sawmill" gasoline, motor fuel, and lubricating oils, and that on account of said transactions, the defendant partnersip ownes him an unpaid balance of P2,052.10. Appendix "H" of the stipulation Exh. "A" shows that on October 13 and 14, 1959 the Provincial Sheriff sold to the defendant Margrita G. Saldajeno for P38,040.00 the assets of the defendsant "Isabela Sawmill" which the defendants Leon G. Garibay and Timoteo Tubungbanua had mortgaged to her, and said purchase price was applied to the judgment that she has obtained against he said mortgagors in Civil Case No. 5223 of this Court. Appendix "I" of the same stipulation Exh. "A" shows that on October 20, 1959 the defendant Margarita G. Saldajeno sold to the PAN ORIENTAL LUMBER COMPANY for P45,000.00 part of the said properties that she had bought at public aucton one week before. xxx xxx xxx 7

It is contended by the appellants that the Court of First Instance of Negros Occidental had no jurisdiction over Civil Case No. 5343 because the plaintiffs Oppen, Esteban, Inc., Agustin R. Tonsay, Jose L. Espinos and the Bacolod Southern Lumber Yard sought to collect sums of moeny, the biggest amount of which was less than P2,000.00 and, therefore, within the jurisdiction of the municipal court. This contention is devoid of merit because all the plaintiffs also asked for the nullity of the assignment of right with chattel mortgage entered into by and between Margarita G. Saldajeno and her former partners Leon Garibay and Timoteo Tubungbanua. This cause of action is not capable of pecuniary estimation and falls under the jurisdiction of the Court of First Instnace. Where the basic issue is something more than the right to recover a sum of money and where the money claim is purely incidental to or a consequence of the principal relief sought, the action is as a case where the subject of the litigation is not capable of pecuniary estimation and is cognizable exclusively by the Court of First Instance. The jurisdiction of all courts in the Philippines, in so far as the authority thereof depends upon the nature of litigation, is defined in the amended Judiciary Act, pursuant to which courts of first instance shall have exclusive original jurisdiction over any case the subject matter of which is not capable of pecuniary estimation. An action for the annulment of a judgment and an order of a court of justice belongs to th category. 8 In determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the cliam is considered capable of pecuniary estimation, and whether jurisdiciton is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has considered such actions as cases where the subject ogf the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance. In Andres Lapitan vs. SCANDIA, Inc., et al., 9 this Court held:

Actions for specific performance of contracts have been expressly prounounced to be exclusively cognizable by courts of first instance: De Jesus vs. Judge Garcia, L-26816, February 28, 1967;Manufacturers' Distributors, Inc. vs. Yu Siu Liong, L-21285, April 29, 1966. And no cogent reason appears, and none is here advanced by the parties, why an actin for rescission (or resolution) should be differently treated, a "rescission" being a counterpart, so to speak, of "specific performance'. In both cases, the court would certainly have to undertake an investigation into facts that would justify one act of the other. No award for damages may be had in an action for resicssion without first conducting an inquiry into matters which would justify the setting aside of a contract, in the same manner that courts of first instance would have to make findings of fact and law in actions not capable of pecuniary estimnation espressly held to be so by this Court, arising from issues like those arised in Arroz v. Alojado, et al., L-22153, March 31, 1967 (the legality or illegality of the conveyance sought for and the determination of the validity of the money deposit made); De Ursua v. Pelayo, L-13285, April 18, 1950 (validity of a judgment); Bunayog v. Tunas, L-12707, December 23, 1959 (validity of a mortgage); Baito v. Sarmiento, L-13105, August 25, 1960 (the relations of the parties, the right to support created by the relation, etc., in actions for support); De Rivera, et al. v. Halili, L-15159, September 30, 1963 (the validity or nullity of documents upon which claims are predicated). Issues of the same nature may be raised by a party against whom an action for rescission has been brought, or by the plaintiff himself. It is, therefore, difficult to see why a prayer for damages in an action for rescission should be taken as the basis for concluding such action for resiccison should be taken as the basis for concluding such action as one cpable of pecuniary estimation - a prayer which must be included in the main action if plaintiff is to be compensated for what he may have suffered as a result of the breach committed by defendant, and not later on precluded from recovering damages by the rule against splitting a cause of action and discouraging multiplicitly of suits. The foregoing doctrine was reiterated in The Good Development Corporation vs. Tutaan, 10 where this Court held: On the issue of which court has jurisdiction, the case of SENO vs. Pastolante, et al., is in point. It was ruled therein that although the purposes of an action is to recover an amount plus interest which comes within the original jurisidction of the Justice of the Peace

Court, yet when said action involves the foreclosure of a chattel mortgage covering personal properties valued at more than P2,000, (now P10,000.00) the action should be instituted before the Court of First Instance. In the instanct, case, the action is to recover the amount of P1,520.00 plus interest and costs, and involves the foreclosure of a chattel mortgage of personal properties valued at P15,340.00, so that it is clearly within the competence of the respondent court to try and resolve. In the light of the foregoing recent rulings, the Court of First Instance of Negros Occidental did no err in exercising jurisidction over Civil Case No. 5343. The appellants also contend that the chattel mortgage may no longer be annulled because it had been judicially approved in Civil Case No. 4797 of the Court of First Instance of Negros Occidental and said chattel mortgage had been ordered foreclosed in Civil Case No. 5223 of the same court. On the question of whether a court may nullify a final judgment of another court of co-equal, concurrent and coordinate jusridiction, this Court originally ruled that: A court has no power to interfere with the judgments or decrees of a court of concurrent or coordinate jurisdiction having equal power to grant the relief sought by the injunction. The various branches of the Court of First Instance of Manila are in a sense coordinate courts and cannot be allowed to interfere with each others' judgments or decrees. 11 The foregoing doctrine was reiterated in a 1953 case 12 where this Court said: The rule which prohibits a Judge from intertering with the actuations of the Judge of another branch of the same court is not infringed when the Judge who modifies or annuls the order isued by the other Judge acts in the same case and belongs to the same court (Eleazar vs. Zandueta, 48 Phil. 193. But the rule is infringed when the Judge of a branch of the court issues a writ of preliminary injunction in a case to enjoint the sheriff from carrying out an order by execution issued in another case by the Judge of another branch of the same court. (Cabigao and Izquierdo vs. Del Rosario et al., 44 Phil. 182).

This ruling was maintained in 1967. In Mas vs. Dumaraog, 13 the judgment sought to be annulled was rendered by the Court of First Instance of Iloilo and the action for annullment was filed with the Court of First Instance of Antique, both courts belonging to the same Judicial District. This Court held that: The power to open, modify or vacant a judgment is not only possessed by but restricted to the court in which the judgment was rendered. The reason of this Court was: Pursuant to the policy of judicial stability, the judgment of a court of competent jurisdiction may not be interfered with by any court concurrrent jurisdiction. Again, in 1967 this Court ruled that the jurisdiction to annul a judgement of a branch of the court of First Instance belongs solely to the very same branch which rendered the judgement. 14 Two years later, the same doctrine was laid down in the Sterling Investment case. 15 In December 1971, however, this court re-examined and reversed its earlier doctrine on the matter. In Dupla v. Court of Appeals, 16 this Tribunal, speaking through Mr. Justice Villamor declared: ... the underlying philosophy expressed in the Dumara-og case, the policy of judicial stability, to the end that the judgment of a court of competent jurisdiction may not be interfered with by any court of concurrent jurisdiction may not be interfered with by any court of concurrent jurisdiciton, this Court feels that this is as good an occasion as any to re-examine the doctrine laid down ... In an action to annul the judgment of a court, the plaintiff's cause of action springs from the alleged nullity of the judgment based on one ground or another, particularly fraud, which fact affords the plaintiff a right to judicial interference in his behalf. In such a suit the cause of action is entirely different from that in the actgion which grave rise to the judgment sought to be annulled, for a direct attack against a final and executory judgment is not a incidental to, but is the main object of the proceeding. The cause of action in the two cases being distinct and separate from each other, there is no plausible reason

why the venue of the action to annul the judgment should necessarily follow the venue of the previous action ... The present doctrine which postulate that one court or one branch of a court may not annul the judgment of another court or branch, not only opens the door to a violation of Section 2 of Rule 4, (of the Rules of Court) but also limit the opportunity for the application of said rule. Our conclusion must therefore be that a court of first instance or a branch thereof has the authority and jurisdiction to take cognizance of, and to act in, suit to annul final and executory judgment or order rendered by another court of first instance or by another branch of the same court... In February 1974 this Court reiterated the ruling in the Dulap case. 17 In the light of the latest ruling of the Supreme Court, there is no doubt that one branch of the Court of First Instance of Negros Occidental can take cognizance of an action to nullify a final judgment of the other two branches of the same court. It is true that the dissolution of a partnership is caused by any partner ceasing to be associated in the carrying on of the business. 18 However, on dissolution, the partnershop is not terminated but continuous until the winding up to the business. 19 The remaining partners did not terminate the business of the partnership "Isabela Sawmill". Instead of winding up the business of the partnership, they continued the business still in the name of said partnership. It is expressly stipulated in the memorandum-agreement that the remaining partners had constituted themselves as the partnership entity, the "Isabela Sawmill". 20 There was no liquidation of the assets of the partnership. The remaining partners, Leon Garibay and Timoteo Tubungbanua, continued doing the business of the partnership in the name of "Isabela Sawmill". They used the properties of said partnership. The properties mortgaged to Margarita G. Saldajeno by the remaining partners, Leon Garibay and Timoteo Tubungbanua,

belonged to the partnership "Isabela Sawmill." The appellant, Margarita G. Saldajeno, was correctly held liable by the trial court because she purchased at public auction the properties of the partnership which were mortgaged to her. It does not appear that the withdrawal of Margarita G. Saldajeno from the partnership was published in the newspapers. The appellees and the public in general had a right to expect that whatever, credit they extended to Leon Garibay and Timoteo Tubungbanua doing the business in the name of the partnership "Isabela Sawmill" could be enforced against the proeprties of said partnership. The judicial foreclosure of the chattel mortgage executed in favor of Margarita G. Saldajeno did not relieve her from liability to the creditors of the partnership. The appellant, margrita G. Saldajeno, cannot complain. She is partly to blame for not insisting on the liquidaiton of the assets of the partnership. She even agreed to let Leon Garibay and Timoteo Tubungbanua continue doing the business of the partnership "Isabela Sawmill" by entering into the memorandum-agreement with them. Although it may be presumed that Margarita G. Saldajeno had action in good faith, the appellees aslo acted in good faith in extending credit to the partnership. Where one of two innocent persons must suffer, that person who gave occasion for the damages to be caused must bear the consequences. Had Margarita G. Saldajeno not entered into the memorandum-agreement allowing Leon Garibay and Timoteo Tubungbanua to continue doing the business of the aprtnership, the applees would not have been misled into thinking that they were still dealing with the partnership "Isabela Sawmill". Under the facts, it is of no moment that technically speaking the partnership "Isabela Sawmill" was dissolved by the withdrawal therefrom of Margarita G. Saldajeno. The partnership was not terminated and it continued doping business through the two remaining partners. The contention of the appellant that the appleees cannot bring an action to annul the chattel mortgage of the propertiesof the partnership executed by Leon Garibay and Timoteo Tubungbanua in favor of Margarita G. Saldajeno has no merit.

As a rule, a contract cannot be assailed by one who is not a party thereto. However, when a contract prejudices the rights of a third person, he may file an action to annul the contract. This Court has held that a person, who is not a party obliged principally or subsidiarily under a contract, may exercised an action for nullity of the contract if he is prejudiced in his rights with respect to one of the contracting parties, and can show detriment which would positively result to him from the contract in which he has no intervention. 21 The plaintiffs-appellees were prejudiced in their rights by the execution of the chattel mortgage over the properties of the partnership "Isabela Sawmill" in favopr of Margarita G. Saldajeno by the remaining partners, Leon Garibay and Timoteo Tubungbanua. Hence, said appelees have a right to file the action to nullify the chattel mortgage in question. The portion of the decision appealed from ordering the appellants to pay attorney's fees to the plaintiffs-appellees cannot be sustained. There is no showing that the appellants displayed a wanton disregard of the rights of the plaintiffs. Indeed, the appellants believed in good faith, albeit erroneously, that they are not liable to pay the claims. The defendants-appellants have a right to be reimbursed whatever amounts they shall pay the appellees by their co-defendants Leon Garibay and Timoteo Tubungbanua. In the memorandum-agreement, Leon Garibay and Timoteo Tubungbaun undertook to release Margarita G. Saldajeno from any obligation of "Isabela Sawmill" to third persons. 22 WHEREFORE, the decision appealed from is hereby affirmed with the elimination of the portion ordering appellants to pay attorney's fees and with the modification that the defendsants, Leon Garibay and Timoteo Tubungbanua, should reimburse the defendantsappellants, Margarita G. Saldajeno and her husband Cecilio Saldajeno, whatever they shall pay to the plaintiffs-appellees, without pronouncement as to costs. SO ORDERED.

G.R. No. L-41641 September 30, 1976 THE GOOD DEVELOPMENT CORPORATION, petitioner, vs. THE HON. EDUARDO C. TUTAAN, GUILLERMO V. DE LOS REYES AND MARCELINA MARCELO, respondents. CONCEPCION JR., J.:t.hqw Petition for certiorari to annul and set aside the order of the respondent court dismissing the petitioner's complaint in Civil Case No. Q-18426 of the Court of First Instance of Rizal. The complaint, filed on January 16, 1974, is an action to recover from the private respondents Guillermo De los Reyes and Marcelina Marcelo the sum of P1,520.00 plus interest, and the sum equivalent to 25% of the total amount due as attorney's fees and, in default of payment thereof, to order the foreclosure of the chattel mortgage executed by said private respondents covering personal properties valued at P15,340.00, located at Meycauayan, Bulacan. Gregorio Emperado and Leonarda de la Cruz were made party defendants for the reason that they were the co-makers of the promissory note executed by the private respondents to evidence the loan. 1 On October 19, 1974, the private respondents filed their answer thereto claiming that the loan sued upon is only one of five (5) loans secured by them from the petitioner wherein they were charged usurious interest; and that the balance due the petitioner is only P1,260.00 which they are willing to pay upon the petitioner's furnishing them with all the copies of the documents signed by them in connection with the loan obtained by them from the petitioner. 2 For failure to plead, defendant Gregorio Emperado was declared in default while the case against the defendant co-maker Leonarda de la Cruz was dismissed without prejudice. 3 On February 17, 1975, the private respondents filed a motion to dismiss the complaint for lack of jurisdiction for the reasons that the petitioner, in its complaint, seeks and prays for a sum of money amounting to P1,520.00 which comes under the original jurisdiction of the municipal court, and that in view of the alternative prayer for foreclosure of mortgage, the complaint should have been filed in the proper court of Bulacan where the chattels are located and where the deed of chattel mortgage is registered. 4

On April 25, 1975, the respondent court sustained the motion and dismissed the complaint without prejudice to its refiling in the proper form and in the proper court. The reason for the dismissal is that: The complaint filed by plaintiff is clearly one for collection for otherwise, if it were for foreclosure of mortgage, defendants Gregorio Emperado and Leonarda de la Cruz would not have been included as party-defendants. Their inclusion indicates the intent of plaintiff to also collect from them. The case being one for a sum of money, the cause of action must be governed by the law on jurisdiction. Assuming the validity of plaintiff's principal claim of P1,520.00, interest thereon at 12% per month from August 4, 1973, and attorney 's fees equivalent to 25% of said amount, the total thereof cannot and will not reach P10,000.00. It then becomes clear that this case must fall within the exclusive original jurisdiction of the city court. 5 On May 7, 1975, the petitioner filed a motion for the reconsideration of said order of dismissal 6 but the same was denied on June 25, 1975. 7 On July 27, 1975, the petitioner, without prior leave of court, again filed a motion for the reconsideration of the order of dismissal 8 which the respondent court denied on August 8, 1975. 9 Hence, the present recourse. On the issue of which court has jurisdiction, the case of Seno vs. Pastolante, et al., 10 is in point. It was ruled therein that although the purpose of an action is to recover an amount plus interest which comes within the original jurisdiction of the Justice of the Peace Court, yet when said action involves the foreclosure of a chattel mortgage covering personal properties valued at more than P2,000, (now P10,000.00) the action should be instituted before the Court of First Instance. In the instant case, the action is to recover the amount of P1,520.00 plus interest and costs, and involves the foreclosure of a chattel mortgage of personal properties valued at P15,340.00, so that it is clearly within the competence of the respondent court to try and resolve. WHEREFORE, the petition is granted and the orders of the respondent court dated April 25, 1975 and August 8, 1975 are hereby set aside and the respondent court directed to resume further proceedings in Civil Case No. Q-18426 of the Court of First Instance of Rizal. Costs against tile private respondents. So Ordered.

G.R. No. L-24668 July 31, 1968 ANDRES LAPITAN, plaintiff-appellant, vs. SCANDIA, INC., and GENERAL ENGINEERING CO., defendants-appellees. REYES, J.B.L., J.: Andres Lapitan has appealed directly to this Court against an order of the Court of First Instance of Cebu, dismissing, for lack of jurisdiction, his complaint for rescission and damages against appellees Scandia, Inc., of Manila and General Engineering Co. of Cebu. Lapitan's complaint in the court below averred that on April 17, 1963 he purchased from Scandia, Inc., through its sub-dealer in Cebu City, General Engineering Co., one ABC Diesel Engine, of 16 horse power, for P3,735.00, paid in cash; that he bought the engine for running a rice and corn mill at Ormoc City, Leyte; that defendants had warranted and assured him that all spare parts for said engine are kept in stock in their stores, enabling him to avoid loss due to long periods of waiting, and that defendants would replace any part of the engine that might break within twelve months after delivery. Plaintiff further charged that on June 28, 1963, the cam rocker arm of the engine broke due to faulty material and workmanship and it stopped functioning; that the sellers were unable to send a replacement until August 29, 1963; that barely six days after replacement the new part broke again due to faulty casting and poor material, so he (Lapitan) notified the sellers and demanded rescission of the contract of sale; that he sought return of the price and damages but defendants did not pay. He, therefore, prayed (1) for rescission of the contract; (2) reimbursement of the price; (3) recovery of P4,000.00 actual damages plus P1,000.00 attorney's fees; (4) recovery of such moral and exemplary damages as the court deems just and equitable; and (5) costs and other proper relief. After filing answers disclaiming liability, Scandia, Inc., moved to dismiss the complaint on the ground that the total amount claimed was only P8,735.00, and was within the exclusive jurisdiction of the municipal court, under Republic Act 3828, amending the Judiciary

Act by increasing the jurisdiction of municipal courts to civil cases involving P10,000.00 or less. After argument, the Court of First Instance of Cebu dismissed the action for lack of jurisdiction, invoking Cruz vs. Judge B. Tan, 48 O.G. 1320, 87 Phil. 527. Unable to obtain reconsideration, Lapitan appealed directly to this Court, arguing (1) that rescission was incapable of pecuniary estimation, and (2) that as he claimed moral and exemplary damages, besides the price of P3,735.00, P4,000.00 actual damages, and P1,000.00 attorneys' fees, the value of his demand exceeded the jurisdiction of the municipal court. A review of the jurisprudence of this Court indicates that in determining whether an action is one the subject matter of which is not capable of pecuniary estimation, this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, or where the money claim is purely incidental to, or a consequence of, the principal relief sought, like in suits to have the defendant perform his part of the contract (specific performance) and in actions for support, or for annulment of a judgment or to foreclose a mortgage, 1 this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance. The rationale of the rule is plainly that the second class cases, besides the determination of damages, demand an inquiry into other factors which the law has deemed to be more within the competence of courts of first instance, which were the lowest courts of record at the time that the first organic laws of the Judiciary were enacted allocating jurisdiction (Act 136 of the Philippine Commission of June 11, 1901). Actions for specific performance of contracts have been expressly pronounced to be exclusively cognizable by courts of first instance: De Jesus vs. Judge Garcia, L-26816, February 28,

1967; Manufacturers' Distributors, Inc. vs. Yu Siu Liong, L-21285, April 29, 1966. And no cogent reason appears, and none is here advanced by the parties, why an action for rescission (or resolution) should be differently treated, a rescission being a counterpart, so to speak, of "specific performance". In both cases, the court would certainly have to undertake an investigation into facts that would justify one act or the other. No award for damages may be had in an action for rescission without first conducting an inquiry into matters which would justify the setting aside of a contract, in the same manner that courts of first instance would have to make findings of fact and law in actions not capable of pecuniary estimation expressly held to be so by this Court, arising from issues like those raised in Arroz v. Alojado, et al., L-22153, March 31, 1967 (the legality or illegality of the conveyance sought for and the determination of the validity of the money deposit made); De Ursua v. Pelayo, L-13285, April 18, 1950 (validity of a judgment); Bunayog v. Tunas, L-12707, December 23, 1959 (validity of a mortgage); Baito v. Sarmiento, L13105, August 25, 1960 (the relations of the parties, the right to support created by the relation, etc., in actions for support); De Rivera, et al. v. Halili, L-15159, September 30, 1963 (the validity or nullity of documents upon which claims are predicated). Issues of the same nature may be raised by a party against whom an action for rescission has been brought, or by the plaintiff himself. It is, therefore, difficult to see why a prayer for damages in an action for rescission should be taken as the basis for concluding such action as one capable of pecuniary estimation a prayer which must be included in the main action if plaintiff is to be compensated for what he may have suffered as a result of the breach committed by defendant, and not later on precluded from recovering damages by the rule against splitting a cause of action and discouraging multiplicity of suits.2 Of course, where the money claim is prayed for as an alternative relief to specific performance, an equivalence is implied that permits the jurisdiction to be allocated by the amount of the money claim (Cruz vs. Tan, 87 Phil. 627). But no such equivalence can be deduced in the case at bar, where the money award can be considered only if the rescission is first granted. We, therefore, rule that the subject matter of actions for rescission of contracts are not capable of pecuniary estimation, and that the court

below erred in declining to entertain appellant's action for lack of jurisdiction. WHEREFORE, the appealed order of dismissal is reversed and set aside, and the case is ordered remanded to the court of origin for further proceedings conformable to this opinion. Costs against appellees.