SPS PAJARES v. REMARKABLE LAUNDRY

SPOUSES ROMEO PAJARES and IDA T. PAJARES vs. REMARKABLE LAUNDRY AND DRY CLEANING, represented by ARCHEMEDES G. SOLIS
G.R. No. 212690
February 20, 2017

“Breach of contract may give rise to an action for specific performance or rescission of contract.1 It may also be the cause of action in a complaint for damages filed pursuant to Art. 1170 of the Civil Code.2 In the specific performance and rescission of contract cases, the subject matter is incapable of pecuniary estimation; hence jurisdiction belongs to the Regional Trial Court (RTC). In the case for damages, however, the court that has jurisdiction depends upon the total amount of the damages claimed.”

Facts:

Remarkable Laundry and Dry Cleaning filed a Complaint denominated as "Breach of Contract and Damages" against spouses Romeo and Ida Pajares before the RTC of Cebu City. Respondent alleged that it entered into a Remarkable Dealer Outlet Contract with petitioners whereby the latter, acting as a dealer outlet, shall accept and receive items or materials for laundry which are then picked up and processed by the former in its main plant or laundry outlet; that petitioners violated Article IV (Standard Required Quota & Penalties) of said contract, which required them to produce at least 200 kilos of laundry items each week, when they ceased dealer outlet operations on account of lack of personnel; that respondent made written demands upon petitioners for the payment of penalties imposed and provided for in the contract, but the latter failed to pay; and, that petitioners' violation constitutes breach of contract. The RTC dismissed the case for lack of jurisdiction.

Respondent filed its Motion for Reconsideration to Court of Appeals. And the CA rendered the assailed Decision setting aside the Order of the RTC and remanding the case to the court a quo for further proceedings.

Petitioners sought to reconsider, but were denied. Hence, appealed the Petition.

Issue:

Whether or not the CA erred in declaring that the RTC had jurisdiction over respondent's Complaint which, although denominated as one for breach of contract, is essentially one for simple payment of damages.

Ruling:

The Court grants the Petition. The RTC was correct in categorizing Civil Case as an action for damages seeking to recover an amount below its jurisdictional limit.

In ruling that respondent's Complaint is incapable of pecuniary estimation and that the RTC has jurisdiction, the CA comported itself with the following ratiocination: A case for breach of contract [sic] is a cause of action either for specific performance or rescission of contracts. An action for rescission of contract, as a counterpart of an action for specific performance, is incapable of pecuniary estimation, and therefore falls under the jurisdiction of the RTC.

Then in Administrative Circular No. 09-94 this Court declared 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." In other words, where the complaint primarily seeks to recover damages, all claims for damages should be considered in determining which court has jurisdiction over the subject matter of the case regardless of whether they arose from a single cause of action or several causes of action.