GR L 24668; (July, 1968) (Digest)
G.R. No. L-24668 July 31, 1968
ANDRES LAPITAN, plaintiff-appellant, vs. SCANDIA, INC., and GENERAL ENGINEERING CO., defendants-appellees.
FACTS
Plaintiff-appellant Andres Lapitan purchased a diesel engine from defendant-appellee Scandia, Inc., through its sub-dealer, defendant-appellee General Engineering Co. The engine malfunctioned due to alleged faulty parts. Lapitan filed a complaint in the Court of First Instance of Cebu seeking (1) rescission of the contract of sale, (2) reimbursement of the purchase price, (3) recovery of actual damages and attorney’s fees, and (4) recovery of moral and exemplary damages. The defendants moved to dismiss the complaint on the ground that the total amount claimed (P8,735.00) was within the exclusive jurisdiction of the municipal court, as provided by Republic Act 3828. The Court of First Instance granted the motion and dismissed the action for lack of jurisdiction, invoking the precedent in Cruz vs. Tan.
ISSUE
Whether an action for rescission of a contract and damages is capable of pecuniary estimation, thereby falling within the jurisdiction of the municipal court based on the amount claimed, or is not capable of pecuniary estimation, thereby falling within the exclusive jurisdiction of the Court of First Instance.
RULING
The Supreme Court ruled that the subject matter of an action for rescission of a contract is not capable of pecuniary estimation and is therefore within the exclusive original jurisdiction of the Court of First Instance. The Court established the criterion that if the principal action or remedy sought is primarily for the recovery of a sum of money, the claim is capable of pecuniary estimation. However, if the basic issue is something other than the right to recover money, or where the money claim is merely incidental to the principal relief sought, the action is not capable of pecuniary estimation. An action for rescission demands an inquiry into factual and legal issues to justify the setting aside of the contract, which is analogous to actions for specific performance expressly held to be within the exclusive jurisdiction of courts of first instance. The prayer for damages in such an action is a necessary consequence of the main action for rescission and does not convert it into a money claim for jurisdictional purposes. The order of dismissal was reversed and the case was remanded to the Court of First Instance for further proceedings.