A C RITICAL ANALYSIS OF THF.

PRINCIPLE INVOLVING CASES

“INCAPABLE OF PECUNIARY ESTIMATION"
fm/ue Ouar At Hrmra (nt.f

INTRODUCTION

The issue ofjurisdtction is a perennial problem in Remedial Law. One dilTtutll aroa is in distinguishing
cases that are capable of pecuniary estimation from those that are not. In view of the ever changing and
growing jurisdiction of the Municipal Trial Courts over cases which, heretofore fall under the original and
exclusive jurisdiction of the Regional Trial Courts.* 1 lire usual lest employed in determining whether eases
are “capable or incapable of pecuniary estimation" • on the basis of the natute of the question involved in the
action - is an antiquated concept that lias long lost its vitality and should yield to rise later and more simple test
based on the subject of the action.

I. Determination of Jurisdiction

A basic principle in remedial law is that jurisdiction is conferred by law. The nature of the action
(which is determined by tlie allegations of the complaint vis-£-vi\ tlsc law existing law at the time of the filing
of the complaint) determines whether or not a particular action falls w ithin the jurisdiction of rhe court where
the action is filed.

The allocation of jurisdiction to prcscnt-day courts in the Philippines was first drawn under Act No.
I *6 entitled “AN ACT PROVIDING FOR THF ORGANIZATION OF COURTS IN THF PHII IPPINF
ISLANDS’4, viz:

See. 55. Jurisdiction of Courts of First Instance. - The jurisdiction of Courts of

First Instuncc shall be of two kinds:

I Original: and

(Vwudinnr. Coitmunw on Review of Ike Rule* of Court. Supreme Court. Cfeunwiv. IX|MRimM ol Remedial Law, Mill JX.
Supreme Court, Farmrt /Vim, Insldutcol Civil I aw. I« ITnlon Cnivcrstly ifTl'i
(inpinnlly. Mumc«ul Inil Courts were known at Justice of (be tVaee coum and Reawwiil trail Cornu were known a> Courts
or l inl Instance
1 Lnoaed June I I.IWI to lake cfloil on June lb. ISOI Ike manliest purpose and object ol Act No, IJ6 w *. in repine tie old

mdirial vysacm. together with in tncidenlt tni trodihosM drawn from Spanish sources, with a new iy*lcm modeled in all in essential
ehMw*cri>lie» n»» lire judicial system or ibe U.S Any Ineidmi or die limner system which conltirts with the essential pniKipto.
and nettled ska. trines on otu.li ite res kvwtcan rests, was beta! In Ik uhrcigiicil try tlie law organising the new system I Alma vs
Johnson. 21 Phil. .UHMIblM
Ad No. I Vi WKvtrpUoevl by tlie Judiciary Art ol I •Ms, which wi turn out rvplwnl by tin- Judw'usry Rciupmi/Xiun Art of I WO
caherxsisc known av ItMjs Paiuahoiou 12b, aed funhcs amended by KepuNn Act No. ?fi‘JI < winch cwupmkd ibe juntibciuw nr Ibe
Municipal Trial (ourtvl nnd by Republic Acl No. 1102 (which expanded ibe jurisdiction of the Cc«rt ol Appeals.

JOURNAL 11
 lonyvi&Vrf rv,»w.in J:/rrw.rf«w"

2. Appellate

See. 56. Its original jurisdiction. -Courts of First Instance shall have original
prediction:

1. In all civil actions in which the subject ofhtigations is not capable of pecuniary
estimation:

2. In all civil actions which involve the title to or possession of real property, or any
intcrcsi therein, or the legality of any tax. impost, or assessment, except actions of
forcible entry into, and dctuincr of Linds or but Idings. original jurisdiction of which is
by this Act conferred upon couits of Justice of the Peace:

3. In all cures in which the demand, exclusive of interest, or the value of the property in
controversy, amounts to one hundred dollars or more:

4. In all actions in admiralty and maritime jurisdiction, irrespective of value of the property
in controv ersy or the anvount of the denmnd;

5. In all matters of probate, both of testate and intestate estates, appointments of

guardians, trustees and receivers, and in all actions for annulment of marriage, and in
all such special cases and proceedings as are not otherwise prov ided for.

6. In all criminal cases in which a penalty of more than six months imprisonment or a
fine exceeding one hundred dollars nvay he imposed;

7. Saul couns and their judges, or any of them, shall have power to issue writs of
injunction, mandamus, ccrtioran. prohibitum, quo warranto, and habeas corpus in
their respective provinces and districts, in the manner prov ided in the Code of Civil
Procedure.

Courts of F its! Instance shall have appellate jurisdiction over all cases arising injustices and
other inferior courts in their respective prov inces *

Upon the Oliver hand, the law also provides:

A Justice of live Peace shall have original jurisdiction for the Inal of all misdemeanors
atvd offenses arising within the municipality of which he is a justice, in all cases where the

• Stc. 57 of Act. IM . Public lorn Annnlmolby One vara. Wl. I..pigc Mt

34 JOURNAL I* Aw tU
 "la/vftMi tf IViimmn

sentence might not by law exceed six months' imprisonment or a tine of one hundred dot lots;
and for the trial of all civil actions properly triable within his municipality and over which
jurisdiction has not herein been given to the Court of Finn Instance, m all cases in which the
demand, exclusive of interest, or the value of the property in controversy, amounts to less
thun three hundred dollars. A Justice of the Pence shall also have jurisdiction over actions for
forcible entry into, und detainer of real estate, irrespective of the amount in controversy.

The jurisdiction of a Justice ofthc Peace in civil actions triable within his municipality,
in eases in which die demand, exclusive of interest, or the value of die property in controversy,
amounts to one hundred dollars or more, but to less than three hundred dollars, shall he
concurrent with that ofthcC'ourt of First Instance: Provided, That the jurisdiction ofa
Justice of the Peace shall not extend to civil actions in which the subject litigation is not
capable of pecuniary estimation, or to those which involve the title to or possession of real
estate or an interest therein, or the legality of any tax. impost, or assessment, or to actions in
admiralty, or maritime jurisdiction, or to nutters ofprohatc. the appointment of guardians,
trustees, and rcccivcre. or actions for the annulment of maniages; but the proviso shall not
apply to actions of forcible entry into and detainer of lands ofbuildings. onginal jurisdiction of
which is hereby conferred upon courts ofjustiecs ofthc peace.* (underscoring supplied)

II. Consequence of Classification

The consequences of classifying a ease as incapable of pecuniary estimation would be the following:

1. The docket fee would he a Hat rate and not on the basis of the value of the property. Hie
Supreme Court held that the determination of whether or not a ease is capable of pecuniary estimation is
necessary ft* purposes of determining the tiling fee. Determination of the nature of the action is essential in
the assessment ofthc filing lee. Where the action involves real property and a related claim for damages, the
legal fees shall he assessed on the basis of both (a) the value of the property and (b) the total amount of
related damages sought *

2. Jurisdiction would be in the Regional Trial Court regardless ofthc value of the property:

3. Venue, in the absence of any law or stipulation, would be in the residence of the proper
plaintiiVor the proper defendant at the election ofthc plaintiff and not where the property is situated:

4. The law on prescription of persona) and not real actions shall govern.

■ See. ft* of Aci I )6. Public I awe Annotated by (iucvjrra. Vol. I. pipe 309
NMiniikl Steel I O<I<<HMKIII vl. Court (it Appeals. I.R Ski 12X21 Vlclmuis 2. I•**•». I luntee v» ( mill ol Appculi, OR No
126)14. November 23,2061

JOURNAL <y Ar H* <V A PMf/nmt 35

 1*r.yMtto «f fV.mw.in Eamilm"

Determining ihc nuturc of an action as incapable of pecuniary estimation is crucial to any action.

III. What Arc the Cases Incapable of Pecuniary Estimation?

Otherwise stated, how docs one determine whether a ease is incapable of pecuniary estimation and
therefore falls under the original exclusive jurisdiction of lltc Regional Trial Court (formerly the Court ofPfatt
Instance)?

A reading of decisions ofthc Supreme Court indicates that initially it is the THE NATURE OF THE
QUESTION TO BE RESOLVED that is determinative of the nature of the questions raised and
consequently, the corresponding nature of the action.

I. In determining whether or not the action is one the subject matter of which is not capable of
pecuniary estimation and. therefore falls under the onginal and exclusive jurisdiction ofthc Regional Trial
Court or an action for damages in which ease jurisdiction should be detennined by the amount ofthc claim,
the Supreme Court first adopted the criterion laid down in the I 96X seminal ease of Lapilan vs Scandia '
Ihc Supreme Court held that if the action is primarily tor the recovery of a sum of money, it is capable of
peruniaty estimation Where the basic issue is something other than the right to recover u sum of money or.
is purely incidental to or u> connyucnce oftlie principal relief sought like specific performance, action for
support or lor annulment of contract, it is not capable of pecuniary estimation.1

2 In Radio Communications of the Philippines, Inc vs Court ol'A/ipcals,' the Supreme

Court, in holding that the case is incapable of pecuniary estimation, staled llial the court has to scnitimic the
facts and the applicable laws in order to determine w hether there was indeed a v iolation ofa lease agreement
licit would justify the aw aid of rentals and damages.

3. In referring to matters beyond the competence ofthc Courts of the Justice of the Peace
under Act No. 136. Justice JB1. Reyes, the ponente m Lapilan vs. Scandia. referred to those cases that
would involve "an investigation into facts that would justify ink act or the other” arising from issues like those
raised:

a. Amoz vs. Alnjado, ct al., L-22153. March 31.1 % 7 (the legality or illegality ofthc conveyance
sought for and the determination ofthc validity of the money deposit made);

b Dc Ursua vv Pelayo, L-132X5, April IX. 1950 (validity ofa judgment): Bunayog vs. Tunas. L-
12707, December 23,1959 (validity of a mortgage);

24SCRA479.
* Lapilan ix VkJu. 24 SIRA 4791196k) iflnl lu RnvmunUn >s ( ouO wl Aftt-nlt, 211 M'KA4S?<I992i; SnusotW vi. lubrU
S*wi*ll,»SCRA(iW.
■ OR Ni» 116109. Amju.l I 2002

36 JOURNAL a iU /uVjr.Ad tUf a !U PM^fMo

 "la/vftMi tf IViimmn Ijoiomam'

c. Banovs. Sunnicnio.l.-13105. August 25.1960 (the relations of the panics. the right to support
created by the relation, etc., in actions for support);

d. Do Rivera, ct al. vs. Hahli, L-15159. September 30.1963 (the validity or nullity of documents
upon which claims arc predicated). Issues of the same nature may be raised by a party against
whom an uction lor rescission has been brought, or by the plaintiff hinisclf. I p. 4X2)

4. The classi fication above involves act ions for breach of contract such as act ions for rescission
or specific performance.10 i.c.. an action for specific performance of a stipulation in a lease contract (RTC),
such as to maintain the lessee in peaceful possess ion ofthc premises," an action to compel defendant to
accept the goods and pay P3.000 (RTC) (amount to be collected is but a consequence of specific
pcrfonnunce),'' or an action which seeks the performance of petitioner's obligation under a written contract
to make u refund but under certain specific conditions still to be proven or established. The Supreme Court
explained that in a case for the recovery of a sum of money, such as the collection of a debt, the claim is
considered capable of pecuniary estimation because the obligation to pay the debt is not conditioned upon
any specific fact or matter. But w hen a party to a contract has agreed to refund to the other party a sum of
money upon compl iuncc by the latter of certain con dit ions 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 is the more basic issue to be inquired into "

Thus, under the existing law at the time w lien the claim is conditioned upon any specific fact or
matter, w Inch demands an inquiry into other factors the law then deemed to he outside the competence of
the municipal courts (which were then not courts of rccnidk the ease was classified as a case “incapable of
pecuniary estimation” and falls under the original and exclusive jurisdiction of (lie Court of First Instance.

IV. Cases Involving Any Interest In Kcul Property As a Real Action

Generally, actions involving real property, affecting title to or the recovery of possession tlwteof, the
partition, condemnation, or foreclosure of mongaKC on real property, arc considered ical actions1J On the
oilier hand. Section !9(2)ofBatas Pamhansa Big. 129, in allocating the jurisdiction ofthc Regional Trial
Court, refers to real actions as civil actions, which involve the title to, or possession of real property, or any
interest therein. The 1997 Rules of Civil Procedure followed suit by defining a real action as an action
aifccting title to or possession of real property or an interest therein. The I imitation under the former rule to

Lapiun vi. Sundui. 24 SlKA 47UIIWAI.

AnnogMKlo v». Court of Vppviiv <» R I -SOOtO. Xcpk-mK'f JO. I9SK, I to. SCR A 20311 VKK>
MjnuOctuicr OitinbuiK>n, Iik. vi. Yu Siu Lump. 16 SCKA6HOIIV66)
(htifu A Omtpuiiy. I si. PdMucoJiip v». Hcwo»
f ununc Motors vt.Coun of Appeal*. I ?* St RA I IViKSl>citinpl ominenu on the Rule* of C ourt by Mcoin. Vol. I. pngc 122.

JOURNAL htau 37
 "lasyvinV if IV.TMMT1 El

actions for partition or condemnation of or foreclosure of mortgage on real property was removed and
embraced within the broader term "any interest therein."

The Supreme Court, in determining whether or not an action is a real action, likew ise employed the
prime and ultimate objective test. The Supreme Court held "While it is true that petitioner does not directly
seek the recovery of title or possession of the property in question, his action lor annulment of sale and his
claim for damages are closely intertwined with the issue of ownership of the building which, under the law. is
considered immovable property, the recovery of which cs petitioner's primary objective."1*

The prevalent doctrine as stressed in Fortune Motors is. Court afA/tprah1* is that "an action for
the annulment or rescission of a sale of real property docs not operate to cfTacc the fundamental and pnmc
objective and nature of the ease, which is to recover said real property."

In fine, for as long as the action would result in affecting title to or possession of or an interest in real
property, then it should be classified as a real action The concept is rendered more significant in view of the
expanded jurisdiction of the Municipal Trial Courts pursuant toR A. No 7691, which vested the latter with
exclusive original jurisdiction in all civil actions ‘which inv oh e title to. or possession of real property, or
any interest therein** where Ihe assessed value of the property or an interest therein does not exceed
Twenty thousand pesos (20,00000) or in civil actions in Metro Manila where the assessed value does not
exceed Fifty thousand pesos (P50,000.00).,T

V. C onlusing Application of Criteria

The Supreme Court did not strictly adhere to the foregoing test in determining whether or not an
action is a real action. Tlie same test applied in the seminal case of Lapitan w Scundia.'' was likew ise
applied to cases involving real property or an interest therein Thus

a. In assessing the docket fee to be paid, a complaint for annulment or rescission of sale of
parcels of land was held as not susceptible of pecuniary estimation, and. therefore, the docket Ice should be
based on a fiat rate, rather than the value of the parcel of land Although eventually the result may be recovery
of land, it is the nature ofthc action as one for rescission of contract that is controlling.14

" Sec. I. Rule 16. Pun/almi. I* »» Vd» Of I anMWm. 121 SCRA VM>.<I<M1|
.Vufx-u. tiled in Pun/iiui. ir. \ V V di Uc liKwimaru. tupra
" See V'lolR A 7n»l
H *rn>.
" Or lean n four! of Appeal.. OR No KMIRft. Mwvti 6. IWM

38 JOURNAL W A. /**tr*u tUr U tu Woty-ton

 b. An action for declaration of nullity and partition was considered as on action for specific
pcrtbnnancc, the pumtion merely being merely an incident thereto. Ihc Supreme Court held that jurisdiction
is with the Regional Trial Court.*

Curiously, the Supreme Court stated that under Section 33{3)ofBPBIg. 12^, cases incapable of
pecuniary estimation are cognizable by tlie Metropolitan or Municipal Trial Courts where the assessed value
of the real property does not exceed P20.000.00 and P50.000.00 in Metro Manila*

c. An expropriation suit was held as i ncapablc of pecuniary estimation, and, accordingly tails
under the jurisdiction of the Regional Thai Court, regardless of the value of the subject property. The Supreme
Court i\i led that an expropriation suit does not involve the rocov-cry of sum of money; rather, it deals with the
exercise by the government of its iiuthnnty and the nght to take pnvatc property for public use. The Supreme
Court pointed to the two stages of expropriation of real property, namely. (11 the authority of the plaintiff to
exercise the power of eminent domain and its propriety, and ends with an order of condemnation and 121 the
ascertainment of just compensation. The Supreme Court stressed that the primary consideration in an
expropnation suit is whether the government or any of its instrumentalities lias complied with the requisites for
the taking of private property. Hence, the courts determine the uuthonty of the government entity, die necessity
of expropriation, and the observance of due process. In the main, the subject of an expropriation suit is the
government's exercise of eminent domain, a matter that ts incapable of pecuniary estimation. Ihc Supreme
Court further held that the settled rule ts that eminent domain eases fall under the jurisdiction of the Regional
Tnal Court.”

d. It has also been held that when the suit is for breach of contract, the action is either for
specific performance or fix rescission. A suit for such breach is not capable of pecuniary estimation, lienee
the assessed value of the real estate subject of the sai d action should not be considered in computing the filing
fees.”

e. The avennents in the complaint reveal that the suit was primarily one for spocitie performance
as it was aimed to enforce a three-year lease contract, which would incidentally entitle plaintiff to monetary
awards if the court should find that the subject contract of lease was breached by defendant s failure to pay
rentals due. a violation of their contnict that hid the eftcct of accelerating the payment of monthly rentals. The
same complaint likew isc implied a premature and unilateral termination of the term of the lease w nil the
closure of and removal all communication equipment in the leased premises. Under the circumstances, tlie
court has to scrutinize tlie facts and the applicable law s in order to determine whether there* w as indeed a
violation of the lease agreement that would justify »he award of rentals and damages. The prayer, therefore.

RirtH vt Ucslil. <iR Hu IIW7, MumIi IT IW »04 S(TtA7JK

" Supra.
IUiM>'piy.SHnR»|>«.-t< PiftiurUR Nu I IK**. WTO. JlWlI Rc.lculcU o. nuUilkovs HwangM \U..I..<iR No. MMM
April Ml. M0J.
Cahutihin *s I jiiJ C enter tVvrtopmnM ( ixponluw <1 R No |4hSM, lunr 10. MSI?.

JOURNAL .vdrfa^uWJUX atr Haifpimu 39

 lasywnV tj fVowirr l.nmatH*"

foe the payment of unpaid rentals in the amount of PX4.000.00 plus damages consequent 10 the breach is
merely incidental to the main action for specific performance .* Similarly. in Manufacturer's Distnbutor's
I in*the Supreme Court explained that the payment of such amounts can only be ordered as a consequence
of the specific performance primarily sought. In other words, such payment would be but an incident or
consequence of defendant's liability for specific performance If no such liability is judicially declared, the
payment can not be aw arded. Hence, the amounts sought do not represent the v alue of the subject of
litigatMi.

f An action for specific performance. irrespective of the amount of rentals and damages sought
to be recovered, is mcapublc of pecuniary estimation, hence cognizable exclusively by the Regional Trial
Court.*

g. I-ven if the dispute penains to the title, possession and interest of each of the contending
parties over the contested property the assessed value of which falls within the jurisdictional range of the
MT (\ the court held that nonetheless, the nature of the action II led, the al legations set forth, and the reliefs
prayed for. forestall its cognizance by the MTC.

The action for "Reconveyance and/or Recovery of Common Properties Illegally Disposed, with
Annulment of Sales and other Instnuncnts of False Conveyance, with Damages, and Restraining Onlcr" was
considered a case of joinder of causes of action which comprehends more than the issue of title Its. possession
of. orany interest in the real property under contention but includes an action to annul contracts, reconveyance
or specific performance, and a claim for damages, which are incapable of pecuniary estimation and thus
properly within tlie jurisdiction of the RTC.r

VI. Cases Considered As Real Actions Regardless of Nature of Question

On the other side of tlie coin, the Supreme Court continued to consider tlie action as a real action as
it did in Fortune Motors for as long as it involves title to real property or an interest tlierein. Thus:

a. (iumabon is. Larin ' held that real actions, as opposed to personal actions, arc those
which affect the title to or possession of real property. Where a contrary claim to ow nership is made by
an adverse party, and where the relief prayed for cannot be granted without the court deciding on
the merits the issue of ownership and title, more specifically who. as between the contending panics,
w ould have a better right to the property, the case can only be but a real action. •*

•* No ciluliim

>* Kjdio<tiiiiiiiuiui ttiimt at rile PSulipptnct. In. »v I ouil of Apfv»l>. C.H No 116IIW. Augu.1 I. 2002
" (<T»» '» <of*wo.GR No 149343. October 2S.1002
UR No, 14232.1. Nmcmba 27. 2U02

40 JOURNAL I u i u P l d f f j t o i i
 *f IV.JW1W1 IjVlauAMl'’
b. Ouano is. {'GUT*, an action for “recovery of ownership and possession of real properly
and damages", was held as a real action since it involves ownership und possession of real property, and the
jurisdiction over the subject matter of the claim is determined by the assessed value not by the market value,
furthermore, since the assessed value of the property is less than P20.000.00. jurisdiction is with the MIC.
The damages were held merely us incidental to. or u consequence of. the main cutise of action for recovery
of ownership and possession, mid should thus be excluded in the determination of jurisdiction of Ok Court.
Incidentally, the issue in said ease is not merely one of""naked ownership” or “possession" but u controversial
and conllrcting issue of ownership as both parties are claiming ownership over the lot in question.

c. The ultimate objective test was also applied in National Steel Corporation is. Court of
Appealt." where an action “for specific performance to execute deed of assignment retransferring slock
certificates" was considered an action to recover property rather than specific pcrfhtmancc. hence the docket
fee should be based on value of property to be rc-translcrrcd.

The Supreme Court cited Rui: vs. J.M. Tuason «S Co. Inc.,* 11 which is an actum for specific
performance to compel J.M.Tbason to execute a final deed Of sale of the lot in queslion based on compl iance
with tk compromise agroeiiKnt, Hie Supreme Court held tluri where* the primary objective and nature of tire
action is to recover a parcel of land, then it is a real action.

d. Again, in the ease of Spouses Huftuete vs. Spouses Amarillo, which involves a complaint
for Annulment of fide. Tax Declaration, and Deed of Sale. Partition. Damages und attorneys' fees, over a
parcel of land with on assessed value of Fifteen Thousand Pesos, the Supreme Court upheld the dismissal of
the ease by the RTCon the ground that it is a real actum since the principal purpose of the complaint was
to secure title to the portion of the propertv w hich the petitioners purchased from the respondents.
The annulment of the Deed of Sale and of the title to the property were prayed for in the complaint because
they were necessary before the lot may be partitioned and portion subject thereof may be conveyed to
petitioners Since the assessed value of the property is only Phpl 5.000.1X1. jurisdiction is with the MTC.

The Supreme Court rejected petitioner's aig ument that the action re incapable of pecuniary estimation
on the ground that it is for annulment of the deed of sale and for partition. The nature of the action is not
determined by what is stated in the caption of the complaint hut by the allegations of the complaint and the
reliefs prayed for. Where the ultimate objective of the plaintiffs is to obtain title to real propertv. it
should be tiled in the proper courts having jurisdiction over the assessed value of the property subject thereof.N

The Court distinguished the case from Russel w. I istil in that in the said case, petitioners sought (Ik
annulment of the document entitled: Declaration of Heirs ami Deed of Confirmation of Previous OraI

" C»R. No IM2MI. Jul> 17. 2001.

•• OR No 121715. FelHuwy 2. IW
*' 7 SCRAMS.
11 UR No IWWI. Jail) I. Sim
JOURNAL 41
Partition, whereby respondents declared themselves us the only heirs to the exclusion of petitioners. Petitioners
brought the action in order for them to be recognized us heirs in the pattition of the property of the deceased.
It was held that the action to annul the said deed was incupablc of pecuniary estimation and the consequent
annulment of title and partition of the property was merely incidental to the main action."

e. Again, in Chanliongto i \ Ramos, the Supreme Court held that a complaint filed w ilh the
Regional Trial Court thal called for an interpleader to dele imine the ownership of the real property in question
isa real action. Specifically, it forecd persons claiming an interest in the land to settle the dispute among
themselves as to which of them owned the property. Essentially. it sought to resolve the ownership of the land
and was not directed against the personal liability of any particular person. It was therefore a real action,
because it affected title to or possession of real property “

f. An uction lor quiclmg of lit le ami nullification and cancellation of title is a real action. utTccting
title to or possession of real property, jurisdiclion over which is clearly vested in the Regional Trial Court as
provided in par. (21 Section 19 of Dl* Big 129.”

In fine, under die foregoing formulation, for as long as the action w ould result in affecting title to. or
possession of. or an interest in real property, then it should be classified as a real action. The concept is
rendered more significant in view of the expanded junsdi ction of the Municipal Trial t 'ourts pursuant to RA.
7691 vesting the latter with exclusive original jurisdiction in all civil actions "which involve title to. or
possession of real property, or any interest therein " where the assessed value of the property or an
interest therein docs not exceed Tw enty thousand pesos (20.000.00) or in civil actions in Metro Manila
where the assessed value docs not exceed fifty thousand pesos (P50.000.00)”

These concepts that actions which affect ti tic to real property are real actions'’ and. where
primary objective is to regain the ownership and possession of die parcel of land, it isa real action" - were
recognized by the Court, which noted that the National Steel and the Rui: cases both reveal prayers for

“ U.
“ OiwiHWgcv w Rotkm. GR No 144J94 Mm* 11. M0).
Metis ol Sutaru dc tiu/man I union w. I oun or Appeals UR. No. 12)75*. January 20. 2000; Wh.se Ok petition nuket nul u
rate few n\-vti* eyinrc and not ■ mere annulment of judgment of the R7* judcmoit. toritdidion <nvt the cj tt n with fht Kryvrvil I ml
C oun I Clime *>r rhe UlC Mcreakv Jan* v*. Court of Appeal*. 20) SCRA 474. AS 1.482110*7)
In real action, whether it it the RlC'orMTC ihm hupvtulsctioncnct rcalaitiont depend* on the location und attested >alue
of the real property purtuini lo RA 7001 vetting the lullvi with rvdumw original yontdiction m all civil actions "»Wi involve title
to, or |Smrv.H<n of teal property, t» uny •metro there**' where Ihc uttettnd value ol the puptlly »t tm Inleretf Iherein dxt not
evceed twenty (houtnul pevot (20.000001 ol in civil idiot* m Menu MimU where (he attetool value duct nut eve cod I »n>
ihiNitund pevot <P50.OOOOOt.
■' See. t| l| ol RA 7041.
Commodmr* Storage v». Cowl of Appeal*. CR No. 12)000 >anc 10. 1907
Nulumul Steel ( tap v. ( i«l ol Appeal*. <i K. No 12)215. Kchrutry 2. PWO
•* Ml S<it A 522

42 JOURNAL iV li, W-WO Air if Mr fuiffM,,

 The continued reliance by the Court in the 1968ease of luipiian vs. ScanJia that when the claim ts
conditioned upon any specific tact or matter that demands an inquiry into other factors the action should be
considered as a case "incapable of pecuniary estunat ion" and falls under Use original and exclusive jurisdiction
of the Cowt of first Instance < now the K1CI and the sptl I over of the paradigm to actions involving title to real
property or recovery of possession, or any intetrst therein, is unfortunate.

VIII. C onfusing Tests In Classification of Actions

As maybe gleaned from the foregoing eases, the test in distinguishing eases winch are "capable or
incapable of pecuniar)' estimation" and its application to actions involving title to teal property or recovery of
possession, or any interest therein is not only contusing but rest on an antiquated concept that has long lost its
vitality. It is an anachronistic paradigm that has served its purpose In view of the ever changing and growing
jurisdiction of the Municipal Trial Courts ova cuscs which heretofore fall under the originul and exclusive
jurisdiction of the Regional Trust Courts, there is an imperative necessity of recasting and modifying the tests
employed in lAipihm vs ScanJio and its progeny w ith a simpler method that would be more in keeping with
an orderly administration of justice

IX. Rationale of Classifying C ates Incapable of Pecuniary estimation No linger Exists

The rationale of the role, according to Justice JUL Reyes, why eases incapable of pecuniary estimation
was vested in the ( ourt of First Instance, is plainly dial the second class of cases besides the dctcmiination
of damages, demand an inquiry into other factors wh ich the la w has deemed to he more within the competence
ofCourts of First Instance, which were tin* lowest courts of record at the time that the first organic
laws of the Judiciary were enacted allocatingjurivdiction."*1

The rationale of the rule no longer holds. The jurisdiction of the municipal courts had gradually
expanded thru the years.*1 The Municipal Trial Courts arc now courts of record. They arc now vested with
jurisdiction over real actions, admiralty and maritime eases and probate eases and as will hereafter be shown
over eases that are then considered "incapable of pecuniary estimation."*4

As now expressly provided by the 1997 Rules ofCivil Procedure: “The procedure in the Municipal
Trial Courts shall he (he same as in the Regional Trial Courts, except (a) where a particular provision expressly
or impliedly applies only to either of said courts, or (b| in civil cases governed by l lie Rule on Summary
Procedure."

It is difficult to conceive of a real action to recover real property or an interest therein where the basic
issue muy not involve something more than die right to recover real property or which would not require "an * ••

" An I.Vftof ibe FtrilipfMK l mnmiiMc* of June 11, WO I; I jprtui v» V .India, Inc.. 21 SCRA 479.4*1, July 31, I9t>*.
' RcputilK Act No. 296; I He JiullclMy Act of OHS III’ 12V. *nU R A 7MI
•• RA. Wl

JOURNAL 45
 "Id'.yMRV 91 IV>»sV.in

investigation into loos that would justify one act or the other" arising from issues raised in an action to recover
possession or title to real property or an interest thcrein.

11 inlet this formulation, the Municipal Trial Court would hardly have no occasion to exercise its
jurisdiction over real actions.

Other than eases of fore iblc entry and unlawful detainer, a party seeks to recover possession or
ownership of real property because his ownership thereto is in dispute, otherwise there is no sense in filing the
action. The issue of possession or ownership may only be resolved by a determination of the rights of the
parties thereto. It is only after this issue have been resolved that the right to recover follow s as a consequence.

I Municipal Trial Courts vested with jurisdiction over eases formerly considered as actions
incapable of pecuniary estimation

Under Republic Act 7691. Section 3, which amended Section 33 of BP No. 129:

Metropolitan Trial Courts. Municipal Trial Courts, and Municipal Circuit Thai Courts
sltallcxctvisc:

< 11 Exclusive original jurisdiction over civil actions and probate proceedings,
testate and intestate, including the grant of provisional remedies in proper eases, where the
value of the personal property, estate, or amount olebe demand does not exceed One H untbed
thousand pesos (P 100.000.00). 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..
*B*

(2) Exclusive original junvIictUMi over eases of forcible cntiy and unlawful detainer,
provided. Tlul when, in such eases, the defendant raises qucslkvt of ownership in his pleadings
and the question of possession cannot he resolved without deciding the issue of ownership,
the issue of ownership shall be resolved only to determine the issue of possession.

(3) Exclusive original jurisdiction in all civil actions which involve title to. or
possession of. real property, or any interest therein where the assessed value of the property
or interest therein does not exceed twenty thousand pesos or (P20,000.00) or in civil actions
in Metro Manila where such assessed vulue does mil exceed fifty thousand pesos
(P50.000.00). exclusive of interest, damages or whatever kind, attorney’s fees, litigation
expenses and costs.* * *4’

Section V.tol HP I'll j> amctklctl.

46 JOURNAL
 Section 4 ot' Republic Act 7691 likewise prov ides:

I Meg* ted Jurisdiction in Cadastral and I and Registration Cases Metropolitan

Inal Courts. Municipal Trial Courts, and Municipal Circuit Trial Courts may be assigned by
the Supreme Court to hear and determine cadastral and land registration eases covering lots
where there i> no controversy, or opposition or contested kits when: the value of which does
not exceed One Hundred Thousand Pesos (PI 00.000,00). such v alue to he ascertained by
the afTidav it uf the claimant or by agreement of the tvspeclivc claimants if there ate more than
one. or front the corresponding tat declare lion of the real property Their decisions in these
cases shall he appealable m the same manner as decisions of the Regional Trial Court*

Thus, the jurisdiction of die Municipal Trial Courts was expanded to include civil actions arul probate
proceedings, testate and intestate, including the grant of provisional remedies in proper eases, w here the
value of the personal property, estate, or amount of the demand docs not exceed One Hundred thousand
pesos (P100,000.00), or in Metro Manila w here such personal property, estate, or amount of the demand
does not exceed Two hundred thousand pesos (P200.000.00). exclusive olintcrcst. damages of whatever
kind, attorney's fees, litigation expenses and costs.

RA 7691 transferred a certain class of actions from the Regional T rial Courts, and conferred original
and exclusive jurisdiction thereto in the Municipal Trial Courts, such ns civil actions which involve title to. or
possession of. real property or any interest therein w here the assessed v alue of the real property does not
exceed P20,000.00or PM),000,00 in Metro Manila«

The trend now is to allow eases, which were formerly treated as actions incapable ofpecumary
estimation to be resolved by the Municipal Trial Courts, because "the claim is conditioned upon any spcctfk
fact or matter that demands an inquiry into other factors that the law then deemed to be outside the competence
of the municipal courts, which were then not courts of record." Thus, aside from vesting Municipal Trial
Courts w ith jurisdiction over real actions, udmiralty and maritime cases and probulc eases, the Supreme
Court husdekgated to Municipal Trial Courts lund registration eases of contested kits the value of which
does not exceed P100,000.00. Since these are contested eases, the issue may take various forms depending
on the position of the contending putties, which mu si first have to be determined before granting or denying
the application.

Jurisdiction to annul or rescind settlements or arbitration before the Katamngan Pamhurangav. which
are eases incapable ofpccuniary estimation tails under the exclusive jurisdiction of the Municipal Trial Court
of the Barangay involved.

“ Section H of BP INi> amended.

•' Section* I ft J ora A.

JOURNAL .V Of, n#<vH*AfetyMw 47

 tf fVuvurr £i
The authonly of Municipal Tn«l Courts to determine questions incapable of pecuniary estimation
under the above fnrmulution is their lore beyond cavil.

Moirver, not all actions for rescission, annulment or specific performance are incapuhe of
pecuniary estimation w here ihe complaint filed w ith the trial court was in the nature of a teal action,
although ostensibly denominated as one for specific perfomtancc. Consequent ly. the basis for dctcmiining
tlie correct docket fees shall be Ihe assessed value of the property, or the estimated value thereof as alleged
by the claimant.M

2. Gumabon vs Larin" held that real actions, as so opposed to personal actions, urc those
which a fleet the title to or possession of real property. W here u contrary claim to ownership is made by an
ud verse party, and where the relief prayed few cannot be granted without the court deciding on the merits the
issue of ownership and title, more specifically, as to who. between Ihe contending parties, would have a
belter right to the property, the ease cun only be but a real action

3. In Ouano vs PGCT,utm action for “recovery of ownership and possession of real property
and damages" was held as a real action. If the action involves ownership and possession of real property,
linn jurisdiction over the subject matter of Ihe claim is determined by the assessed value not by the market
value, and since ihe assessed value of the property is levs than P20.000.0f), jurisdiction is with ilk* MTC. The
damages were held merely as incidental to. or a consequence of. the main cause of action for recovery of
ownership and possession, and should thus be excluded in the determination of jurisdiction of the Court
Incidentally, the issue in said case is not merely one of “naked ownership" or "possession" hut a controversial
conflict of ow ncishtp as both parties arc claiming ownership over the lot in question.

In other wools, even if the questions are complicated, or involves a breach of contract and the action
is for specific performance or rescission, the action w ould still be considered either as real or personal, and
jurisdiction is determined by the value of the property. Thus if the assessed value of the property is less than
P20.000.00junsdiction is with the MTC.*'

Rut: vs. J.M. TUason & Co. Inc..v which is an action for specific performance to compel J.M.
1 uason to execute a final deed of sale of the lot in question, based on compliance with the compromise
agreement, was held as a real action. The court held that where the primary objective and nature of the action
is lo recover a parcel of land, then it is a real action.

'• OihWh vt GmSiiii. O.R No I+MIW*. tVivmtvi I). 2001

“ till No 14312). November 27, 2002
“ UR No IM2.Mi.lub 17.2002
RumcI vt. Vmil. wipni
'• 7 SCRA 20?

48 JOURNAL n» /v.'.-.'-wo' fUr *t it* /'jUvtyyaWi

 The ultimate objective test was also applied in the eases o( National Steel Corporation is. Court
of Appeals." and Colarina vs. Court of Appeals.u (abut than vs. Land Center Development
Coqtoranon'' recognized that where the action affects title to real property, it is a real action which should
be filed in the trial court where the property is situated.

Proposed Solution and Recommendation

Considered in the light of the foregoing, classifying cases as "incapable of pecuniary estimation" is an
anachronism. Since its only purpose in Nesting this, class of cases in the Court of First Instance was because
of the nature then of the Justice of the Peace Court which wen: not courts of record, then the reason for its
existence has become functus oficio. It hu» only generated confusion The better test would be the "ultimate
objective test" in which ease jurisdiction os well as the amount of docket fee may simply be based on the
v alueof the property or the value of the demand.

The distinction between actuals capable and incapable of pecuniary estimation w as originally conceived
to exclude these types of eases from the jurisdiction of the municipal or Justice of the Peace court because
the latter were not courts of record and of very li mited jurisdiction. A real action is a classification as to
cause or foundation and is distinguished from a personal action, w Inch may include claims tliat may or may
not he capable of pecuniary estimation, and atl'ccts merely the venue and amount of docket fee to he paid but
not the other class of eases cognizable by the Courts of First Instance (now Regional Tnal Courts).

Cases incapable of pecuniary estimation should not include the succeeding class of eases allocated to
the RT C. such as real actions, udmmilty and man time eases, probate cases, marital and agranan eases,
tlscwisc stated, insofar as the other classes of BCtion arc concerned such as real actions, its classification
should not be based on the nature of the question!* involved, but on the subject mutter of recovery Civil
acltuns “which involve title to. or possession of real property, or any interest therein" should be classified us
real actions, regardless of the nature of the questions to be resolved as a condition for recovery. Cases not
cupabtc of pecuniary estimation arc not among ihc classifications of ordinary civil actions but ure included in
some type* of personal actions.

IXMcrmining the nature of the action on the basis of the ultimate objective of the action is a clear and
simple test, instead ofbusing such determination on the basis of whether or not the issues are complicated.
This is a tortured approach since one may overlap the other class of actions. Under the ultimate objective
tcsi. the determination of jurisdiction, venue and payment of the docket fee would be based on the prime and
ultimate objective of the action. The jurisdiction and docket fee should based on the value of the property or
amount involved, if it is an action to recover personal property or sum of money. It is only when there is no * •*

■ GR Ni* I2MIS. Ichrvwry J. IWI.

•* GR. No. 1194)9, February )). 1*99.
GR N«> 146)94. tune 10. 200)

JOURNAL tei 49
Issue as to the title to or possession of the property, or -an interest therein, that a case may be deemed as
incapable of pecuniary estimation. Hus would avoid the convoluted and unnecessary analysis in making a
preliminary dctennmalion of iIk nature of the action, based on whether the issues would involve complicated
quest Mins of law or foci only to determine the amount of docket fee. the venue, the jurisdiction of the court
and. whether or not the action had already prescribed. A Her all. MTC'sarv now also authorized to beat and
resolve complicated questions of fact and law as a condi lion for recovery.

50 JOURNAL lU /uvtW fi* u PM#*,,