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Obligation and Contracts Case Study

1) Remarkable Laundry and Dry Cleaning filed a complaint against spouses Romeo and Ida Pajares for breach of contract seeking payment of penalties for failing to meet the weekly quota of 200 kilos of laundry items required under their dealer outlet contract. 2) The issue is whether the complaint, while denominated as a breach of contract case, is essentially a claim for simple payment of damages. 3) The court held that the complaint does not support rescission of contract or specific performance, as Remarkable did not seek to compel performance of the contract or rescind it. The complaint seeks monetary damages and is properly characterized as such, rather than mislabeled as an "action for breach of

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242 views2 pages

Obligation and Contracts Case Study

1) Remarkable Laundry and Dry Cleaning filed a complaint against spouses Romeo and Ida Pajares for breach of contract seeking payment of penalties for failing to meet the weekly quota of 200 kilos of laundry items required under their dealer outlet contract. 2) The issue is whether the complaint, while denominated as a breach of contract case, is essentially a claim for simple payment of damages. 3) The court held that the complaint does not support rescission of contract or specific performance, as Remarkable did not seek to compel performance of the contract or rescind it. The complaint seeks monetary damages and is properly characterized as such, rather than mislabeled as an "action for breach of

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joanna mercado
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© © All Rights Reserved
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SPOUSES ROMEO PAJARES and IDA T. PAJARES VS.

REMARKABLE
LAUNDRY AND DRY CLEANING

G.R. NO. 212690,


20 February 2017

FACTS
On September 3, 2012, Remarkable Laundry and Dry Cleaning (respondent) filed
a Complaint denominated as "Breach of Contract and Damages" against spouses Romeo
and Ida Pajares (petitioners) before the RTC of Cebu City, which was docketed as Civil
Case No. CEB-39025 and assigned to Branch 17 of said court. Respondent alleged that it
entered into a Remarkable Dealer Outlet Contract7 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, on
April 30, 2012, 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.

ISSUE
Whether or not the respondent’s complaint although denominated as one for
breach of contract which will give rise to either specific performance or rescission, is
essentially one for simple payment of damages.

HELD
An analysis of the factual and material allegations in the Complaint shows that
there is nothing therein which would support a conclusion that respondent’s Complaint
is one for specific performance or rescission of contract. Rescission of contract under
Article 1191 of the Civil Code, on the other hand, is a remedy available to the obligee
when the obligor cannot comply with what is incumbent upon him which in this case
cannot be apply. It is predicated on a breach of faith by the other party who violates the
reciprocity between them. It should be recalled that the principal obligation of
petitioners under the Remarkable Laundry Dealership Contract is to act as respondent’s
dealer outlet. Respondent, however, neither asked the RTC to compel petitioners to
perform such obligation as contemplated in said contract nor sought the rescission
thereof. The primary issue is something other than the right to recover a sum of money,
where the money claim is purely incidental to, or a consequence of the principal relief
sought, such are actions whose subjects are incapable of pecuniary estimation. The
Complaint’s body, heading, and relief are bereft of such allegation. In fact, neither
phrase appeared on or was used in the Complaint when, for purposes of clarity,
respondent’s counsels, who are presumed to be learned in law, could and should have
used any of those phrases to indicate the proper designation of the Complaint. To the
contrary, respondent’s counsels designated the Complaint as one for “Breach of
Contract & Damages,” which is a misnomer and inaccurate. This erroneous notion was
reiterated in respondent’s Memorandum wherein it was stated that “the main action is
one for a breach of contract.” There is no such thing as an “action for breach of
contract.” Rather, “breach of contract is a cause of action, but not the action or relief
itself” Breach of contract may be the cause of action in a complaint for specific
performance or rescission of contract, both of which are incapable of pecuniary
estimation and, therefore, cognizable by the RTC. However, breach of contract may also
be the cause of action in a complaint for damages but on other cases. The complaint,
however, concluded as one incapable of pecuniary estimation.

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