Pajares v. Remarkable Laundry
REITERATIONFacts
The Antecedents: Respondent Remarkable Laundry and Dry Cleaning filed a Complaint for "Breach of Contract and Damages" against petitioners Spouses Romeo and Ida Pajares before the RTC of Cebu City. Respondent alleged that petitioners violated the Remarkable Dealer Outlet Contract by ceasing operations, failing to meet the required weekly quota, and failing to pay penalties. Respondent prayed for incidental and consequential damages amounting to PHP200,000.00, legal expenses of PHP30,000.00, exemplary damages of PHP30,000.00, and costs of suit of PHP20,000.00, totaling PHP280,000.00. Procedural History: The RTC dismissed the case for lack of jurisdiction, finding that the total amount of damages claimed (PHP280,000.00) was below the RTC's exclusive original jurisdiction threshold of PHP300,000.00. The CA reversed the RTC's order, holding that the case was for breach of contract, an action incapable of pecuniary estimation, and thus within the RTC's jurisdiction. The CA reasoned that the damages prayed for were merely incidental to the principal action. The RTC denied petitioners' motion for reconsideration. The Petition: Petitioners argued before the Supreme Court that the CA erred in finding that the RTC had jurisdiction, asserting that the complaint, despite being denominated as breach of contract, was essentially for the recovery of damages, and thus jurisdiction should be determined by the total amount claimed.
Issue(s)
Whether the Court of Appeals erred in ruling that the Regional Trial Court has jurisdiction over the respondent's Complaint; and whether the respondent's Complaint, denominated as "Breach of Contract and Damages," is an action for specific performance or rescission of contract (incapable of pecuniary estimation) or an action for damages (capable of pecuniary estimation).
Ruling
The Supreme Court granted the petition, reversed the Court of Appeals' decision, and reinstated the Regional Trial Court's order dismissing the case for lack of jurisdiction.
Ratio Decidendi
On the issue of jurisdiction and the nature of the action: The Supreme Court held that the Court of Appeals erred in ruling that the Regional Trial Court (RTC) had jurisdiction. The Court found that the respondent's complaint, despite being denominated as "Breach of Contract and Damages," was neither an action for specific performance nor a complaint for rescission of contract. The complaint did not seek to compel the petitioners to perform their contractual obligations nor did it pray for the termination of the contract. Instead, the allegations and the prayer clearly focused on the recovery of monetary damages. The Court emphasized that "breach of contract" is a cause of action, not an action itself, and it can be the basis for an action for damages. The Court clarified that while actions for specific performance or rescission are incapable of pecuniary estimation and fall within the RTC's jurisdiction, an action for damages arising from breach of contract is capable of pecuniary estimation, and jurisdiction is determined by the amount of damages claimed. The Court noted that the respondent's complaint specifically prayed for various sums as "incidental and consequential damages," legal expenses, exemplary damages, and costs of suit, totaling PHP280,000.00. This totality of claims indicated that the primary relief sought was monetary recovery. Therefore, the RTC correctly dismissed the case for lack of jurisdiction as the total amount claimed was below the jurisdictional threshold for RTCs at the time.
Main Doctrine
An action for breach of contract, if primarily for the recovery of a sum of money, is capable of pecuniary estimation, and jurisdiction is determined by the amount of the claim. However, if the primary issue is something other than the recovery of money, and the monetary claim is incidental, the action is incapable of pecuniary estimation and falls under the jurisdiction of the Regional Trial Court. A complaint primarily seeking to enforce a penal clause or recover damages is an action for damages capable of pecuniary estimation.