G.R. No. 163021. April 27, 2007.

*      Inocentes,   Lacuanan   and   Associates for

PATRICIO   A.   VILLENA,   petitioner, vs. PATRICIO   S. respondent.
PAYOYO, respondent.
QUISUMBING, J.:
Civil   Procedure; Courts; Jurisdictions; What
determines the nature of the action and which court has This   petition   for   review   on   certiorari   assails   the
jurisdiction   over   it   are   the   allegations   of   the   complaint Decision1 dated   November   21,   2003   of   the   Court   of
and the character of the relief sought.—In determining the Appeals   in   CA­G.R.   CV   No.   70513   and   its
jurisdiction   of   an   action   whose   subject   is   incapable   of Resolution2 dated   March   18,   2004,   denying   petitioner’s
pecuniary estimation, the nature of the principal action or motion   for   reconsideration.   The   appellate   court   had
remedy sought must first be ascertained. If it is primarily affirmed  with   modification  the Decision 3 dated  April  26,
for the recovery of a sum of money, the claim is considered 2000 of the Regional Trial Court (RTC) of Quezon  City,
capable of pecuniary estimation and the jurisdiction of the Branch 78.
court depends on the amount of the claim. But, where the The facts are undisputed.
primary issue is something other than the right to recover On October 28, 1997, respondent Patricio Payoyo and
a   sum   of   money,   where   the   money   claim   is   purely Novaline,  Inc.,  through   its  president,  petitioner   Patricio
incidental   to,   or   a   consequence   of,   the   principal   relief Villena,   entered   into   a   contract   for   the   delivery   and
sought, such are actions whose subjects are incapable of installation of kitchen cabinets in Payoyo’s residence. The
pecuniary   estimation,   hence   cognizable   by   the   RTCs. cabinets   were   to   be   delivered   within   ninety   days   from
Verily,   what   determines   the   nature   of   the   action   and downpayment of 50% of the purchase price. On October
which court has jurisdiction over it are the allegations of 29, 1997, Payoyo paid Villena P155,183 as downpayment.
the complaint and the character of the relief sought. On   December   9,   1997,   Payoyo   entered   into   another
contract with Villena for the delivery of home appliances.
Same; Same; Same; A case for breach of contract is On the same day, Payoyo paid 50% of the purchase price
a   cause   of   action   either   for   specific   performance   or equal to P29,638.50 as downpayment.
_______________
rescission of contract; An action for rescission of contract,
as a counterpart of an action for specific performance, is 1
 Rollo, pp. 38­56.
incapable   of   pecuniary   estimation   and   therefore   falls 2
 Id., at pp. 58­59.
under the jurisdiction of the Regional Trial Court.—A case 3
 Id., at pp. 104­107.
for breach of contract is a cause of action either for specific
performance   or   rescission   of   contracts.   An   action   for
594
rescission   of   contract,   as   a   counterpart   of   an   action   for
specific performance, is incapable of pecuniary estimation, 594 SUPREME COURT REPORTS ANNOTATED
and therefore falls under the jurisdiction of the RTC. In Villena vs. Payoyo
the   present   case,   the   averments   in   the   complaint   show However, Villena failed to install the kitchen cabinets and
that Payoyo sought the cancellation of the contracts and deliver   the   appliances.   Payoyo   made   several   demands
refund of the downpayments since Villena failed to comply upon Villena but the latter failed to comply.
with  the obligation  to deliver the appliances and install In a letter dated March 12, 1998, Payoyo demanded
the   kitchen   cabinets   subject  of   the   contracts.   The   court the cancellation of the contracts and the refund in full of
then   must   examine   the   facts  and   the  applicable   law   to the   downpayments   amounting   to   P184,821.50.   Villena
determine whether there is in fact substantial breach that promised to install the kitchen cabinets on or before May
would warrant rescission or cancellation of the contracts 10, 1998 and to deliver the appliances. Despite repeated
and demands, Villena again failed to do so.
_______________ Payoyo sent Villena two demand letters on June 24,
1998   and   on   July   28,   1998   asking   the   latter   to   either
*
 SECOND DIVISION. deliver all items or return the downpayments.
On   October   26,   1998,   Payoyo   filed   a   complaint   for
593 recovery of a sum of money and damages against Villena.
Villena moved to dismiss the complaint for failure to state
VOL. 522, APRIL 27, 2007 a cause of action. He argued that there was no ground to
Villena vs. Payoyo cancel the contract; thus, there was no basis for refund.
entitle   the   respondent   for   a   refund.   While   the The trial court denied his motion. Villena thereafter filed
respondent prayed for the refund, this is just incidental to an   answer   with   compulsory   counterclaim   citing   as   an
the main action, which is the rescission or cancellation of affirmative   defense   Payoyo’s   failure   to   state   a   cause   of
the contracts. action.
On   June   1,   1999,   immediately   after   the   trial   court
PETITION   for   review   on   certiorari   of   the   decision   and issued a pre­trial order, Villena filed a second motion to
resolution of the Court of Appeals. dismiss   on   the   ground   of   lack   of   jurisdiction   over   the
The facts are stated in the opinion of the Court. subject matter but it was denied. Thereafter, trial ensued.
     Argue Law Firm for petitioner.

1
 The trial court decided in favor of Payoyo, reasoning Petitioner   maintains   that   the   RTC   should   have
that   the   power   to   rescind   is   implied   in   reciprocal dismissed the complaint for lack of jurisdiction. He posits
obligations. Considering that Villena repeatedly failed to that the RTC has no jurisdiction over the complaint since
comply   with   his   obligation,   Payoyo   had   the   right   to it is mainly for
rescind the contract and demand a refund. The trial court _______________
ordered   petitioner   to   pay   respondent   P184,821.50   as
actual   damages   plus   12%   interest per   annum from   the 4
 Id., at p. 55.
date   of   filing   of   the   complaint   and   P20,000   as   moral 5
 Id., at p. 233.
damages   plus   legal   interest   from   judicial   demand   until
fully paid. 596
The Court of Appeals affirmed the RTC decision with
596 SUPREME COURT REPORTS ANNOTATED
the following modifications:
595 Villena vs. Payoyo
recovery of a sum of money in the amount of P184,821.50
VOL. 522, APRIL 27, 2007
which   is   below   the   jurisdictional   amount   set   for
Villena vs. Payoyo RTCs.6 Moreover,   petitioner   contends   that   the   issue   of
jurisdiction  may  be  raised at any  time, even  on  appeal,
1. “1)[Petitioner Villena is] hereby ordered to pay since jurisdiction is conferred only by law and cannot be
[respondent   Payoyo]   actual   damages   in   the acquired through or waived by any act or omission of the
parties.7
amount of P 155,183.00 with 12% interest per
Respondent,   on   the   other   hand,   contends   that   the
annum from   the   date   of   the   filing   of   the
RTC has jurisdiction over the complaint as the allegations
complaint;
therein show that it is actually a case for rescission of the
contracts.   The   recovery   of   a   sum   of   money   is   merely   a
2. 2)[Petitioner is] likewise ordered to deliver the necessary   consequence   of   the   cancellation   of   the
Indesit Multifunction Oven and Indesit Hob in contracts.8
favor   of   [respondent]   within   thirty   (30)   days The   pertinent   portion   of   Section   19   of Batas
from the finality of this decision; and Pambansa  Bilang 129, as  amended  by  Republic  Act  No.
7691,9 provides:
3. 3)[Respondent]   is   hereby   ordered   to   pay   the “SEC.   19.   Jurisdiction   in   civil   cases.—Regional   Trial
purchase   price   of   the   Indesit   Multifunction Courts shall exercise exclusive original jurisdiction:
Oven and Indesit Hob in favor of [petitioner] (1)   In   all   civil   actions   in   which   the   subject   of   the
on the day the delivery is made.”4 litigation is incapable of pecuniary estimation;
x x x x
(8) In all other cases in which the demand, exclusive
The appellate court reasoned that while there was delay
of   interest,   damages   of   whatever   kind,   attorney’s   fees,
in   the  delivery  and  installation   of  the  kitchen   cabinets,
litigation expenses, and costs or the value of the property
there   was   none   in   the   delivery   of   the   appliances.   The
in   controversy   exceeds   One   Hundred   Thousand   pesos
contract   for   said   appliances   did   not   specify   the   date   of
(P100,000.00)   or,   in   such   other   cases   in   Metro   Manila,
delivery but that delivery should be made upon payment
where the demand, exclusive of the abovementioned items
of the 50% balance of the purchase price. Considering that
exceeds Two Hundred Thousand pesos (P200,000.00).”
Payoyo   failed   to   pay   the   balance,   Villena   did   not   incur
delay. In determining the jurisdiction of an action whose subject
Hence,   the   instant   petition,   where   petitioner   raises is   incapable   of   pecuniary   estimation,   the   nature   of   the
the following issues: principal   action   or   remedy   sought   must   first   be
I. ascertained. If it is
_______________
WHETHER   OR   NOT   THE   TRIAL   COURT   HAD
JURISDICTION   OVER   THE   SUBJECT   MATTER   OF 6
 Id., at p. 238.
THE CASE. 7
 Id., at p. 243.
8
 Id., at p. 257.
II. 9
 AN   ACT   EXPANDING   THE   JURISDICTION   OF
THE   METROPOLITAN   TRIAL   COURTS,MUNICIPAL
WHETHER   OR   NOT   [THE]   DEFENDANTS­
TRIAL   COURTS,   AND   MUNICIPAL   CIRCUIT   TRIAL
APPELLANTS   (PETITIONER   AND   NOVALINE,   INC.),
COURTS,AMENDING   FOR   THE   PURPOSE   BATAS
ARE   ESTOPPED   FROM   QUESTIONING   THE
PAMBANSA BLG. 129, OTHERWISE KNOWN AS THE
JURISDICTION   OF   THE   COURT   UNDER   THE
“JUDICIARY REORGANIZATION ACT OF 1980.”
CIRCUMSTANCES.5
597
Simply, the issue in this case is whether the trial court
had jurisdiction over the complaint. VOL. 522, APRIL 27, 2007

2
 complete   delivery   of   home   appliances   were   made,   but
Villena vs. Payoyo
defendants did nothing;
primarily for the recovery of a sum of money, the claim is
x x x x”12 (Emphasis added.)
considered   capable   of   pecuniary   estimation   and   the
jurisdiction   of   the   court   depends   on   the   amount   of   the A case for breach of contract is a cause of action either for
claim. But, where the primary  issue is something  other specific performance or rescission of contracts. 13 An action
than   the   right   to   recover   a   sum   of   money,   where   the for rescission of contract, as a counterpart of an action for
money claim is purely incidental to, or a consequence of, specific performance, is incapable of pecuniary estimation,
the   principal   relief   sought,   such   are   actions   whose and therefore falls under the jurisdiction of the RTC.14 In
subjects   are   incapable   of   pecuniary   estimation,   hence the   present   case,   the   averments   in   the   complaint   show
cognizable by the RTCs.10 that Payoyo sought the cancellation of the contracts and
Verily, what determines the nature of the action and refund of the downpayments since Villena failed to comply
which court has jurisdiction over it are the allegations of with  the obligation  to deliver the appliances and install
the complaint and the character of the relief sought.11 the   kitchen   cabinets   subject  of   the   contracts.   The   court
In our considered view, the complaint, albeit entitled then   must   examine   the   facts  and   the  applicable   law   to
as one for collection of a sum of money with damages, is determine whether there is in fact substantial breach that
one  incapable  of  pecuniary  estimation;  thus,  one  within would warrant rescission or cancellation of the contracts
the RTC’s jurisdiction. The allegations therein show that and   entitle   the   respondent   for   a   refund.   While   the
it is actually for breach of contract, thus, respondent prayed for the refund, this is just incidental to
“x x x x the main action, which is the rescission or cancellation of
7. Under their Contracts, prestation and/or delivery of the contracts.
the items will be performed and delivered within NINETY WHEREFORE,   the   petition   is   DENIED   for   lack   of
(90)   DAYS   from   the   receipt   of   downpayment.   Plaintiff merit. The Decision dated November 21, 2003 of the Court
complied   with   its   prestation   but   defendants   defaulted of Ap­
with their obligation; _______________
x x x x
10.   On   12   March   1998,   plaintiff   sent   letter   to 12
 Rollo, pp. 62­64.
defendants requesting the latter for the cancellation of the
purchase   contracts   and   refund   in   full   the   (50%)
13
 Radio   Communications   of   the   Philippines, Inc.   v.
downpayment paid  in the total amount of (P184,821.50) Court   of   Appeals, G.R.   No.   136109,   August  1,   2002, 386
within five (5) days upon receipt of the letter. . . SCRA 67, 71.
x x x x 14
 Russell   v.   Vestil, G.R.   No.   119347,   March   17,
12.   On   24   March   1998,   plaintiff   and   defendant 1999, 304   SCRA   738,   745,   citing Lapitan   v.   Scandia,
Patricio   A.   Villena,   personally   talked   [to]   each   other Inc., No. L­24668, July 31, 1968, 24 SCRA 479, 482.
regarding the full refund of
599
_______________
VOL. 522, APRIL 27, 2007

 Huguete   v.   Embudo, G.R.   No.   149554,   July   1,

10
Chiongbian-Oliva vs. Republic
2003, 405 SCRA 273, 278­279, citing Singsong v. Isabela peals in CA­G.R. CV No. 70513 and the Resolution dated
March 18, 2004 are AFFIRMED.
Sawmill, No.  L27343,  February   28,  1979, 88   SCRA   623,
Costs against petitioner.
637­638.
SO ORDERED.
11
 Huguete  v. Embudo, Id., citing Cañiza v. Court of
     Carpio, Carpio­Morales, Tinga and Velasco,   Jr.,
Appeals, G.R. No. 110427, February 24, 1997, 268 SCRA
JJ., concur.
640, 647­648.

598 Petition denied, judgment and resolution affirmed.
Note.—Jurisdiction is determined by  the averments
598 SUPREME COURT REPORTS ANNOTATED
in the complaint. (Perez vs. Cruz, 404 SCRA 487 [2003])
Villena vs. Payoyo
the (50%) downpayment in the amount of P184, 821.50. ——o0o——
Defendant  informed  the  plaintiff   that  it  was  their  fault
because   the   order   from   their   Australian   supplier   was © Copyright 2019 Central Book Supply, Inc. All rights
made   only   on   15   December   1997.   Defendant   promised
plaintiff [delivery of] the three (3) Kitchen Cabinets on or
before 10 [M]ay 1998, and the three (3) home appliances
were   considered   fully   paid   applying   the   (50%)
downpayment   of   (P29,638.50)   for   home   appliances  only.
But defendant did not fulfill his promise;
13.   Despite   all   these,   repeated   demands   for   the
installation   of   the   (3)   three   kitchen   [c]abinets   and