G.R. No. L-17473, June 30, 1964
Fernando Gozon, plaintiff-appellee, vs. Salud Vda. de Barrameda, defendant-appellant.

FACTS

Fernando Gozon filed an ejectment complaint (detainer) against Salud Vda. de Barrameda in the Justice of the Peace Court of Caloocan, Rizal, in June 1958. The complaint prayed for recovery of the leased premises, unpaid rentals, and the sum of P5,000.00 as liquidated damages stipulated in their lease contract. The court issued a preliminary injunction, after which Barrameda surrendered possession to Gozon. Barrameda, in her answer, contested the peace court’s jurisdiction over the claim for liquidated damages, arguing it exceeded the court’s monetary jurisdiction for ordinary civil cases. The peace court ruled in Gozon’s favor, ordering payment of rentals and the P5,000.00 liquidated damages.
Barrameda appealed to the Court of First Instance of Rizal, reiterating her jurisdictional challenge and alternatively arguing that the P5,000.00 liquidated damages was unconscionable. The CFI affirmed the peace court’s decision. Barrameda then elevated the case to the Supreme Court, contending that a claim for liquidated damages is an ordinary action that cannot be joined with the summary action for ejectment and that the amount was beyond the peace court’s jurisdictional limit.

ISSUE

The primary issues were: (1) whether the justice of the peace court had jurisdiction to award the stipulated P5,000.00 as liquidated damages in an ejectment case; and (2) whether the stipulated amount was unconscionable.

RULING

The Supreme Court affirmed the lower courts’ decisions, holding that the justice of the peace court had jurisdiction and the liquidated damages were not unconscionable. On jurisdiction, the Court ruled that inferior courts have exclusive original jurisdiction over forcible entry and detainer cases regardless of the amount of damages claimed. Crucially, the Court applied the rule against splitting a cause of action. The breach of the lease contract—specifically, the failure to pay an installment—constituted a single cause of action from which Gozon derived several rights: to eject the lessee, to collect unpaid rentals, and to claim the stipulated liquidated damages. All these claims arising from the single breach must be asserted in one complaint. The claim for liquidated damages was therefore a proper incident to the ejectment suit, and the peace court correctly assumed jurisdiction over it.
Regarding the amount, the Court found the P5,000.00 not unconscionable. The lease contract involved a total consideration of P48,000.00 for a six-year term. The stipulated damages accounted for potential losses like difficulty in finding a new tenant and litigation expenses. In the absence of sufficient proof of its iniquitous nature, the Court upheld the contractual stipulation. The decision also noted that the jurisdictional issue had become largely academic due to a subsequent law increasing the jurisdictional limit of such courts.