A demand letter is a formal, professional document sent by one party to another requesting payment or other action to right a wrong. Rather, "[b]reach of contract is a cause of action,32 but not the action or relief itself"33 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. enforce the accessory obligation In a June 29, 2015 Resolution,19 this Court resolved to give due course to the Petition, which claims that 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. On 08 SEP 2011, parties entered and signed a Remarkable Laundry Dealer Outlet Contract for the processing of laundry materials, plaintiff being the owner of Remarkable Laundry and the defendant being the authorized dealer of the said business. In the words of Innes J, Farmers' Co-op Socy (Reg) v Berry 1912 AD 350: "Prima facie every party to a binding agreement who is ready to carry out his own obligation under it has a right to demand from the other party, so far as it is possible, a performance of his undertaking in terms of the contract . 28 Russel v. Hon. Juan was able to pay on July 6, 2011. Otherwise, we will be constrained to file the necessary legal action against you to protect the interest of our client. - Regional Trial Courts shall exercise exclusive original jurisdiction: (1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation; (8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses, and costs or the value of the property in controversy exceeds one hundred thousand pesos (₱100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the abovementioned items exceeds two hundred thousand pesos (₱200,000.00). (Emphasis supplied). CEB-39025 falls within the jurisdiction of the RTC pursuant to Section 19 of Batas Pambansa Blg. Copy of the latest demand letter is hereto attached and marked as Annex “E” hereof; 11. c) Thirty Thousand Pesos (₱30,000.00) as exemplary damages. August 31, 2012, Cebu City, Philippines.29. Payment in lieu of performance. Despite repeated demands, you failed and continuously fail to pay the aforesaid amount. A demand letter is the layperson's version of a legal complaint. 14. Ten [percent] (10%) interest charge per month will be collected on all unpaid obligations but should not be more than 45 days or an additional 10% on top of uncollected amount shall be imposed and shall earn additional 10% on the next succeeding months if it still remains unpaid. Respondent's complaint denominated de Atas. Demand Letter Benefits. 5. To avoid legal proceedings, full payment of the total amount due must be received in our office within thirty (30) days after receipt of this letter. WHEREFORE, in view of the foregoing, the Order dated February 19, 2013 of the Regional Trial Court, 7th Judicial Region, Branch 17, Cebu City in Civil Case No. 7691. Neither can we sustain respondent's contention that its Complaint is incapable of pecuniary estimation since it primarily seeks to enforce the penal clause contained in Article IV of the Remarkable Dealer Outlet Contract, which reads: Article IV: STANDARD REQUIRED QUOTA & PENALTIES. "It is attached to an obligation in order to ensure performance and has a double function: (1) to provide for liquidated damages, and (2) to strengthen the coercive force of the obligation by the threat of greater responsibility in the event of breach."36. In the event that the court does not order specific performance of the contract, for compensatory damages in the amount of $__ for breach of contract; 3. In sum, after juxtaposing Article IV of the Remarkable Dealer Outlet Contract vis-a-vis the prayer sought in respondent's Complaint, this Court is convinced that said Complaint is one for damages. 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.17, Thus, the totality of damages principle finds no application in the instant case since the same applies only when damages is principally and primarily demanded in accordance with the specification in Administrative Circular No. 39 AN ACT EXPANDING THE JURISDICTION OF THE METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS, AND MUNICIPAL CIRCUIT TRIAL COURTS, AMENDING FOR THE PURPOSE BATAS PAMBANSA BLG. 2. To reiterate, the defendant temporarily stopped its business operation prior to the two-year contract duration had elapsed to the prejudice of the plaintiff, which is a clear disregard of its two-year obligation to operate the business unless a pre-termination is called. THE DEALER OUTLET SHALL ALSO BE LIABLE TO PAY A FINE OF TWENTY FIVE THOUSAND PESOS, (₱25,000), FOR EVERY VIOLATION AND PHP 50,000 IF PRE-TERMINATION BY THE RL MAIN OPERATOR DUE TO BREACH OF THIS AGREEMENT.'. The Complaint's body, heading, and relief are bereft of such allegation. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. Watch This Earlier than You Proceed . Banilad, Heman Cortes St., Mandaue City. Concomitantly, what respondent primarily seeks in its Complaint is to recover aforesaid liquidated damages (which it termed as "incidental and consequential damages") premised on the alleged breach of contract committed by the petitioners when they unilaterally ceased business operations. 07711 are REVERSED and SET ASIDE. as one for "'Breach of Contract & CEB-39025 for lack of jurisdiction, stating: In the instant case, the plaintiffs complaint is for the recovery of damages for the alleged breach of contract. Automatic charging shall become part of the billing on the services of the dealer outlet on cases where the minimum requirements on required kilos are not met.[']. Pursuant to the Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division. Under Article 1159 of the Civil Code of the Philippines provides [sic]: 'Obligations arising .from contracts have the force of law between the contracting parties and should be complied with in good faith. Juan borrowed money from John in order to finance his business. You should discuss your objectives with your lawyer, who can modulate the tone of the demand letter based on the specific situation and the most productive method of achieving your goal. Always seek legal advice before entering into any contract, agreement or executing any legal document. NOTICE AND DEMAND FOR. Defendant Ida Pajares is of legal age, Filipino, married with address at Hermag Village, Basak Mandaue City where she can be served with summons and other processes of the Honorable Court. CEB-39025 for lack of jurisdiction. REMARKABLE LAUNDRY AND DRY CLEANING, represented by ARCHEMEDES G. SOLIS, Respondent. 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). which has jurisdiction is determined by Respondent filed its Motion for Reconsideration,12 arguing that as Civil Case No. CEB SP No. 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. Important tips to write a demand or collection letter are following; Determine the tone of letter first of all. 2 See Pacmac, Inc. v. Intermediate Appellate Court, 234 Phil. Hence, Civil Case No. 11. As for the terms of payment, it was agreed that Juan will pay in five equal installments every month starting July 6, 2011. CEB-39025. The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. Otherwise, jurisdiction belongs to the Municipal Trial Court.40, The above jurisdictional amount had been increased to ₱200,000.00 on March 20, 1999 and further raised to ₱300,000.00 on February 22, 2004 pursuant to Section 5 of RA 7691.41, Then in Administrative Circular No. 09-9442 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." 5 Id. - Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise: (l) Exclusive original jurisdiction over civil actions and probate proceedings, testate and intestate, including the grant of provisional remedies in proper cases, where the value of the property, estate, or amount of the demand does not exceed one hundred thousand pesos (₱100,000.00) or, in Metro Manila where such personal property, estate, or amount of the demand does not exceed two hundred thousand pesos (₱200,000.00), exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses, and costs, the amount of which must be specifically alleged: Provided, That interest, damages of whatever kind, attorney's fees, litigation expenses and costs shall be included in the determination of the filing fees: Provided further, That where there are several claims or causes of actions between the same or different parties embodied in the same complaint, the amount of the demand shall be the totality of the claims in all the causes of action, irrespective of whether the causes of action arose out of the same or different transactions; 41 Crisostomo v. De Guzman, 551 Phil. 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. 4 Id. WHEREFORE, premises considered, the instant case is hereby DISMISSED for lack of jurisdiction. 7691, the amount of demand or claim in the complaint for the Regional Trial Courts (RTCs) to exercise exclusive original jurisdiction shall exceed ₱300,000.00; otherwise, the action shall fall under the jurisdiction of the Municipal Trial Courts. Records disclose that you have an outstanding obligation with our client in the amount of Php100,000.00 inclusive of interest and surcharges. 19. Rescission – In the case of Rescission, the court orders, essentially, a cancellation of the contract. In Pacmac, Inc. v. Intermediate Appellate Court,37 this Court held that the party who unilaterally terminated the exclusive distributorship contract without any legal justification can be held liable for damages by reason of the breach committed pursuant to Article 1170. On December 11, 2013, the CA rendered the assailed Decision setting aside the February 19, 2013 Order of the RTC and remanding the case to the court a quo for further proceedings. 38 SEC. Sample Special Power of Attorney to Sell Parcel of Land. Before pursuing legal action, it's wise to send the other party a short, clear letter, like the customizable one below, demanding money owed. During pre-trial, the issue of jurisdiction was raised, and the parties were required to submit their respective position papers. Download this free demand letter template below and have it customized for your unique business legal needs today. All legal forms contained in this website are collected from multiple data sources for general reference purposes only. They asserted that in determining jurisdiction over the subject matter, the allegations in the Complaint and the principal relief in the prayer thereof must be considered; that since respondent merely prayed for the payment of damages in its Complaint and not a judgment on the claim of breach of contract, then jurisdiction should be determined based solely on the total amount of the claim or demand as alleged in the prayer; that while breach of contract may involve a claim for specific performance or rescission, neither relief was sought in respondent's Complaint; and, that respondent "chose to focus his [sic] primary relief on the payment of damages,"21 which is "the true, actual, and principal relief sought, and is not merely incidental to or a consequence of the alleged breach of contract. Other than this letter, no additional demands will be made upon you to pay prior to suit being filed. True, breach of contract may give rise to a complaint for specific performance or rescission of contract. Respondent thus prayed, as fol1ows: WHEREFORE, premises considered, by reason of the above-mentioned breach of the subject dealer contract agreement made by the defendant, it is most respectfully prayed of the Honorable Court to order the said defendant to pay the following incidental and consequential damages to the plaintiff, to wit: a) TWO HUNDRED THOUSAND PESOS (PHP200,000.00) plus legal interest as incidental and consequential [sic] for violating Articles IV and XVI of the Remarkable Laundry Dealer Contract dated 08 September 2011. b) Thirty Thousand Pesos (₱30,000.00) as legal expenses. However, where the basic 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, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts 1of first instance (now Regional Trial Courts).28. The person needs to resolve an issue such as acting on a contract they agreed upon. Defendant through a letter dated April 24, 2012 said it [sic] would CEASE OPERATION. The plaintiff is the owner of a certain parcel of realty consisting of 2,695.24 square meters, situated in the city of Manila, and fully described in the complaint. The defendant purposely ignored the letters by [sic] the plaintiff. MARIA LOURDES P.A. 33 Baguioro v. Barrios and Tupas Vda. The DEALER OUTLET must have a minimum 200 kilos on a six-day or per week pick-up for the entire duration of the contract to free the dealer outlet from being charge[d] Php 200/week on falling below required minimum kilos per week of laundry materials. Plaintiff, by counsels, to the Honorable Court most respectfully states THAT: 1. The RTC was correct in categorizing Civil Case No. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation and the jurisdiction of the court depends on the amount of the claim. He may also seek rescission even after he has chosen fulfillment, if the latter should become impossible. In it, you state what your dispute is and why you want to handle it in court. an action for damages capable of These Demand Letter Samples include the following: Final Demand for Payment; Draft includes a summary of a debtor’s account and how the company repeatedly demanded payment to no avail. WHEREFORE, the Petition is GRANTED and the December 11, 2013 Decision and March 19, 2014 Resolution of the Court of Appeals in CA-G.R. This demand letter sample is available for free use on UpCounsel. 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. 8. Respondent, on the other hand, counters in its Comment23 that the CA is correct in declaring that Civil Case No. 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.24, without, however, determining whether, from the four corners of the Complaint, respondent actually intended to initiate an action for specific performance or an action for rescission of contract. 42 GUIDELINES IN THE IMPLEMENTATION OF REPUBLIC ACT NO. Automatic charging shall become part of the billing on the services of the dealer outlet on cases where the minimum requirements on required kilos are not met. 951 (2007). The particular action is for the specific performance of a contract for the sale and purchase of real estate. A demand letter does not need to be aggressive and can refer to impending litigation only in the most subtle terms. 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. Luisa C. Quijano-Padilla and concurred in by Associate Justices Ramon Paul L. Hernando and Carmelita Salandanan-Manahan. The complaint sought the award of ₱200,000.00 as incidental and consequential damages; the amount of ₱30,000.00 as legal expenses; the amount of ₱30,000.00 as exemplary damages; and the amount of ₱20,000.00 as cost of the suit, or for the total amount of ₱280,000.00 as damages. Under the aforementioned Dealer Contract, specifically in Article XV of the same are classified as BREACH BY THE OUTLETS: 'The parties agree that the happening of any of the stipulation and events by the dealer outlet is otherwise [sic] in default of any of its obligations or violate any of the terms and condition under this agreement. For extra demand letters, see the Minnesota Demand Letters web page. Hence, the present Petition. (Attached and marked as Annex "B'' is a copy of letter of the defendant dated April 24, 2012.). John and Juan are friends. "31 There is no such thing as an "action for breach of contract." Complaint for Specific Performance or Damages Based on a Contract to Convey Real Property. 6. The cessation of operation by the defendant, which is tantamount to gross infraction to [sic] the subject contract, resulted to [sic] incidental damages amounting to Two Hundred Thousand Pesos (PHP200,000.00). Damages" is neither an action for The plaintiff formally reminded the defendant of her obligations under the subject contract through demand letters, but to no avail. Specific performance is ''[t]he remedy of requiring exact performance of a contract in the specific form in which it was made, or according to the precise terms agreed upon. CEB-39025 is for breach of contract, or one whose subject is incapable of pecuniary estimation, jurisdiction thus falls with the RTC. On September 3, 2012, Remarkable Laundry and Dry Cleaning (respondent) filed a Complaint denominated as "Breach of Contract and Damages"6 against spouses Romeo and Ida Pajares (petitioners) before the RTC of Cebu City, which was docketed as Civil Case No. According to respondent, said case is one whose subject matter is incapable of pecuniary estimation and that the damages prayed for therein are merely incidental thereto. (Attached and marked as Annex "A" is a copy of the Remarkable Laundry Dealer Outlet Contract.). Some states actually require that you send a 30-day demand letter before you are able to sue over certain types of issues. 392, 400 (1999), citing Singson v. Isabela Sawmill, 177 Phil. Would a demand letter for specific performance be the best recourse to recoup purchased domains? See Restatement (Second) of Contracts § 357, cmt. Defendant should have opted to comply with the Pre-termination clause in the subject contract other than its [sic] unilateral and whimsical cessation of operations. Write a demand letter letting them know that they need to stop this practice or find a way to clean their windows without ruining your balcony. This erroneous notion was reiterated in respondent's Memorandum30 wherein it was stated that "the main action of CEB 39025 is one for a breach of contract. d) Twenty Thousand Pesos (₱20,000.00) as cost of suit. Having thus determined the nature of respondent's principal action, the next question brought to fore is whether it is the RTC which has jurisdiction over the subject matter of Civil Case No. However, breach of contract may also be the cause of action in a complaint for damages. 07711 that set aside the February 19, 2013 Order5 of the RTC, Branch 17, Cebu City dismissing Civil Case No. pecuniary estimation. Hence, this Court (RTC) has no jurisdiction over the instant case.1âwphi1. [It is t]he actual accomplishment of a contract by a party bound to fulfill it. Many courts require you to make a formal demand for payment before filing your lawsuit. 1170. 129, OTHERWISE KNOWN AS THE "JUDICIARY REORGANIZATION ACT OF 1980.". BRANCH ______ the total amount of damages claimed. However, if the cause of default is due to issuance of a bouncing check the amount of such check shall earn same penalty charge with additional 5% for the first two weeks and 10% for the next two weeks and its succeeding two weeks thereafter from the date of dishonor until fully paid without prejudice to the filling of appropriate cases before the courts of justice. Such a demand is called “specific performance.” Specific performance is an order by a court that a contract be fully performed according to its terms. 548, 556 (1987). To the contrary, respondent's counsels designated the Complaint as one for "Breach of Contract & Damages," which is a misnomer and inaccurate. 129, as amended (BP 129). John agreed and lent him P50,000.00. Under the provisions of Batas Pambansa Blg. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. Respondent filed CA-G.R. the specific performance of a contract for the delivery of personal property, which is not unique (such as heirlooms, and so forth)" is a misstatement of a rule of law, and that whether the remedy of specific performance can be successfully invoked has no relation to the charac-ter of the property involved. Use this sample demand letter for breach of contract as a template for your demand letter. for rescission of contract. On February 19, 2013, the RTC issued an Order dismissing Civil Case No. specific performance nor a complaint ... (Attached and marked as Annex "C" to "C-2" are the Demand Letters dated May 2, 2012, June 2, 2012 and June 19, 2012 respectively.) It [sic] further stated that they [sic] would just notify or advise the office when they are [sic] ready for the business again making the whole business endeavor totally dependent upon their [sic] whims and caprices. 09-94 which reads: 'in cases where the claim for damages is the main cause of action ... the amount of such claim shall be considered in determining the jurisdiction of the court.'. at 25-34; penned by Associate Justice Ma. 4. A demand letter, or letter of demand (of payment), is a letter stating a legal claim (usually drafted by a lawyer) which makes a demand for restitution or performance of some obligation, owing to the recipients' alleged breach of contract, or for a legal wrong.Although demand letters are not legally required they are frequently used, especially in contract law, tort law, and commercial law cases. In the case for damages, however, the court that has jurisdiction depends upon the total amount of the damages claimed. 11. Violation of this provision if remained unsettled for two months shall be considered as violation [wherein] Article XV of this agreement shall be applied.34, To Our mind, petitioners' responsibility under the above penal clause involves the payment of liquidated damages because under Article 222635 of the Civil Code the amount the parties stipulated to pay in case of breach are liquidated damages. But even if writing a formal demand letter isn't legally necessary, there are two reasons why sending one makes sense: In as many as one-third of all disputes, your demand letter … 120, 124 (1946). DEMAND FOR SPECIFIC PERFORMANCE We therefore demand hereby that you disclose the correct identity and the current mailing address (or the last known mailing address) for service of legal process upon the principal(s) responsible for: “wayne@mail.msen.com”, “James H. Daugherty” aka “jhdaugh@garnet.msen.com”, Petitioners sought to reconsider, but were denied. The party owed should include language that motivates the debtor to make a payment. 40 SEC. ----------------------------------------------------------------------------------------------------------. 77 Phil. The aforementioned act of unilateral cessation of operation by the defendant constitutes a serious breach to [sic] the contract because it totally, whimsically and grossly disregarded the Remarkable Laundry Dealer Outlet Contract, which resulted to [sic] failure on its part in obtaining the minimum purchase or delivery of 200 kilos per week for the entire duration of its cessation of operations. When someone receives such a letter, he also received a legal obligation. Fixing of a sum of money in the case of rescission, the court orders, essentially a. Action in a complaint primarily seeking to enforce the accessory obligation contained in the case proceed. 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