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SPS. ROMEO PAJARES v. REMARKABLE LAUNDRY

FACTS:

The case involves a complaint for breach of contract and damages filed by Remarkable Laundry and Dry Cleaning (respondent) against Romeo and Ida Pajares (petitioners) before the Regional Trial Court (RTC) of Cebu City. Respondent alleged that petitioners violated their contract by ceasing dealer outlet operations, which resulted in a breach of contract. Respondent sought payment of damages for the violation, including incidental and consequential damages, legal expenses, exemplary damages, and cost of suit. The RTC initially dismissed the case for lack of jurisdiction, as the total amount of damages claimed was less than the jurisdictional amount for the RTC. Respondent filed a motion for reconsideration, but the RTC upheld its decision. Respondent then filed a petition for certiorari before the Court of Appeals (CA), arguing that the case falls within the jurisdiction of the RTC, as the subject matter is incapable of pecuniary estimation. The CA set aside the RTC's decision and remanded the case for further proceedings, stating that the jurisdiction of the court depends on the nature of the principal action or remedy sought.

The case involves a complaint for breach of contract and damages filed by the respondent against the petitioners. The respondent alleged that the petitioners breached the Remarkable Dealer Outlet Contract, which gave rise to a cause of action seeking damages. The petitioners argued that the complaint should be dismissed because it falls below the jurisdictional threshold of the Regional Trial Court (RTC). The RTC dismissed the case, but the Court of Appeals reversed the decision, ruling that the RTC had jurisdiction over the complaint. The petitioners filed a petition to reconsider the decision, but it was denied. They then filed the present petition, claiming that the RTC did not have jurisdiction over the case. The Court ultimately granted the petition, agreeing with the petitioners that the complaint is for damages and falls below the jurisdictional limit of the RTC.

This case involves a dispute between the petitioner, Alvero, and the respondents, Bugayong and Fernandez, over the ownership and possession of a parcel of land located in Manila. The petitioner claims that he is the legal and registered owner of the said land, having acquired it from a third party through a Deed of Absolute Sale. On the other hand, respondents Bugayong and Fernandez contend that they have been in open, continuous, and adverse possession of the land for more than ten years, which under the law allows them to acquire ownership through acquisitive prescription.

In order to settle the dispute, the petitioner filed an action for recovery of possession and ownership with damages before the regional trial court (RTC) of Manila. He sought to compel the respondents to vacate the land and to pay him damages for the allegedly erroneous claim of ownership and possession. The respondents then filed a motion to dismiss the case on the ground of lack of jurisdiction, arguing that the complaint primarily sought the recovery of possession and ownership, which are incapable of pecuniary estimation.

The RTC denied the motion to dismiss, ruling that it had jurisdiction over the case because the primary relief sought was the recovery of possession and ownership, which are capable of pecuniary estimation. The respondents filed a motion for reconsideration, but it was likewise denied by the RTC. Aggrieved, the respondents filed a petition for certiorari before the Court of Appeals (CA) seeking the nullification of the RTC's orders. However, the CA dismissed the petition for lack of merit. Hence, the respondents filed the present petition for review on certiorari before the Supreme Court.

ISSUES:

  1. Whether the action filed by the plaintiff is one that is incapable of pecuniary estimation.

  2. Whether the plaintiff is entitled to damages for the defendant's breach of contract.

  3. Whether the complaint filed by the respondent is one for specific performance or rescission of contract.

  4. Whether the complaint is capable of pecuniary estimation.

  5. Whether the complaint filed by the respondent is one for damages based on breach of contract.

  6. Whether the Regional Trial Court (RTC) has jurisdiction over the case.

RULING:

  1. The action filed by the plaintiff is one that is incapable of pecuniary estimation. The basic issue in the case is the breach of contract by the defendant, with the recovery of damages being purely incidental to the principal relief sought. Therefore, the case is within the jurisdiction of the Regional Trial Court.

  2. The plaintiff is entitled to damages for the defendant's breach of contract. The defendant's unilateral cessation of operations, which violated the terms of the contract, resulted in damages amounting to Two Hundred Thousand Pesos (PHP200,000.00).

  3. The complaint filed by the respondent is not one for specific performance or rescission of contract. The respondent did not ask the court to compel the petitioners to perform their obligation under the contract nor sought the rescission of the contract itself. The complaint was designated as one for "Breach of Contract & Damages," which is a misnomer and inaccurate. Breach of contract is a cause of action but not the action or relief itself. The complaint primarily seeks to enforce the accessory obligation contained in the penal clause, which makes it an action for damages capable of pecuniary estimation.

  4. The complaint is capable of pecuniary estimation since it primarily seeks to enforce the penal clause contained in the contract, which imposes penalties for failure to meet the required minimum kilos of laundry materials. This makes the action a complaint for damages.

  5. The complaint filed by the respondent is one for damages based on breach of contract. Under Article 1170 of the Civil Code, those who contravene the tenor of their obligations are liable for damages. In this case, the petitioners are being held liable for the breach of their obligation under the contract. Therefore, the complaint for damages is a valid cause of action.

  6. The RTC does not have jurisdiction over the case. Under paragraph 8, Section 19 of BP 129, as amended by Republic Act No. 7691, the RTC has exclusive jurisdiction over cases where the amount of the demand exceeds P100,000.00. Since the damages claimed by the respondent in its complaint only amounted to P280,000.00, the RTC correctly refused to take cognizance of the case.

PRINCIPLES:

  • Actual performance of a contract refers to the accomplishment of a contract by a party bound to fulfill it according to the precise terms agreed upon.

  • Rescission of contract under Article 1191 of the Civil Code is a remedy available to the obligee when the obligor cannot comply with what is incumbent upon him.

  • Rescission may refer to a remedy granted by law to secure reparation of damages caused by a valid contract by restoring things to their condition prior to the contract's celebration.

  • In determining whether an action is one that is incapable of pecuniary estimation, the nature of the principal action or remedy sought must be ascertained.

  • If the primary purpose of the action is the recovery of a sum of money, the claim is considered capable of pecuniary estimation.

  • If the basic issue is something other than the right to recover a sum of money, and the money claim is purely incidental to or a consequence of the principal relief sought, the action is considered one that is incapable of pecuniary estimation.

  • Actions that are incapable of pecuniary estimation are cognizable exclusively by the Regional Trial Courts.

  • Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith (Article 1159, Civil Code).

  • Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof are liable for damages (Article 1170, Civil Code).

  • Breach of contract is a cause of action but not the action or relief itself. It may be the cause of action in a complaint for specific performance or rescission of contract, as well as in a complaint for damages.

  • An action seeking to enforce the accessory obligation contained in a penal clause is an action for damages capable of pecuniary estimation.

  • Liquidated damages are attached to an obligation to ensure performance and strengthen the coercive force of the obligation.

  • Breach of contract may give rise to a complaint for specific performance or rescission of contract, as well as a complaint for damages.

  • The court with jurisdiction over an action for damages is determined by the total amount of damages claimed.

  • Administrative Circular No. 09-94 states that where the claim for damages is the main cause of action or one of the causes of action, the amount of such claim shall be considered in determining the jurisdiction of the court.