CivPro1st Agustin v Bacalan 01 Page 1 of 6

FIRST DIVISION
[G.R. No. L-46000. March 18, 1985.]
GLICERIO AGUSTIN (Deceased) as Administrator of the Intestate Estate of Susana Agustin,
petitioner-plaintiff-appellant, vs. LAUREANO BACALAN and the PROVINCIAL SHERIFF OF
CEBU, respondents-defendants-appellees.
SYLLABUS
1.
REMEDIAL LAW; CIVIL ACTIONS; COUNTERCLAIM; GRANT OF MORAL DAMAGES AS
COUNTERCLAIM, UPHELD. A defending party may set up a claim for money or any
other relief which he may have against the opposing party in a counterclaim (Section 6,
Rule 6, Revised Rules of Court). And the court may, if warranted, grant actual, moral, or exemplary
damages as prayed for. The grant of moral damages, in the case at bar, as a counterclaim,
and not as damages for the unlawful detention of property must be upheld. However, the
amount thereof is another matter.
2.
ID.; ID.; ID.; COUNTERCLAIM BEYOND COURT'S JURISDICTION MAY ONLY BE PLEADED
BY WAY OF DEFENSE. It is well-settled that a court has no jurisdiction to hear and
determine a set-off or counterclaim in excess of its jurisdiction (Section 5, Rule 5, Revised
Rules of Court; Ago v. Buslon, 10 SCRA 202). A counterclaim beyond the court's jurisdiction
may only be pleaded by way of defense, the purpose of which, however, is only to defeat
or weaken plaintiff's claim, but not to obtain affirmative relief (Section 5, Rule 5, Revised
Rules of Court).
3.
ID.; ID.; ID.; ID.; FAILURE TO CONTRADICT COURT'S JURISDICTION CONSTITUTES
WAIVER. An appellant who files his brief and submits his case to the Court of Appeals
for decision, without questioning the latter's jurisdiction until decision is rendered
therein, should be considered as having voluntarily waives so much of his claim as
would exceed the jurisdiction of said Appellate Court; for the reason that a contrary rule
would encourage the undesirable practice of appellants submitting their cases for decision to
the Court of Appeals in expectation of favorable judgment, but with intent of attacking
its jurisdiction should the decision be unfavorable. Thus, by presenting his claim
voluntarily before the City Court of Cebu, the defendant-appellee submitted the same to
the jurisdiction of the court. He became bound thereby. The amount of P10,000.00 being the
jurisdictional amount assigned the City Court of Cebu, whose jurisdiction the defendant-appellee
has invoked, he is thereby deemed to have waived the excess of his claim beyond P10,000.00. It is
as though the defendant-appellee had set up a counterclaim in the amount of P10,000.00 only.
4.
ID.; ID.; ID.; A COUNTERCLAIM NOT PRESENTED IN LOWER COURT CANNOT BE
ENTERTAINED ON APPEAL. A counter-claim not presented in the inferior court cannot be
entertained in the Court of First Instance on appeal (Francisco, The Revised Rules of Court in the
Philippines, Vol. III, p. 26, citing the cases of Bernardo v. Genato, 11 Phil. 603 and Yu Lay v. Galmes,
40 Phil. 651). As explained in Yu Lay v. Galmes "Upon an appeal to a court of first instance from
the judgment of a justice of the peace, it is not possible, without changing the purpose of the
appeal, to alter the nature of the question raised by the complaint and the answer in the original
action. There can be no doubt, therefore, of the scope of the doctrine laid down in the several
decisions of the Court. Consequently, We hold that, upon an appeal to the Court of First Instance,
the plaintiff as well as the defendant cannot file any pleading or allegation which raises a question
essentially distinct from that raised and decided in the justice of the peace court." This rule was
reiterated in cases from Ng Cho Cio v. Ng Diong (1 SCRA 275) to Development Bank of the
Philippines v. Court of Appeals (116 SCRA 636). Thus, the defendant-appellee's counterclaim
beyond P10,000.00, the jurisdictional amount of the City Court of Cebu, should be treated as having
been deemed waived. It is as though it has never been brought before trial court. It may not be
entertained on appeal.
5.
ID.; JURISDICTION; AMOUNT OF JUDGMENT ON APPEAL CANNOT EXCEED THE
JURISDICTION OF THE COURT OF ORIGIN. The amount of judgment, therefore, obtained
by the defendant-appellee on appeal, cannot exceed the jurisdiction of the court in
which the action began. Since the trial court did not acquire jurisdiction over the
defendant's counterclaim in excess of the jurisdictional amount, the appellate court,
likewise, acquired no jurisdiction over the same by its decisions or otherwise. Appellate
jurisdiction being not only a continuation of the exercise of the same judicial power which has been
executed in the court of original jurisdiction, also presupposes that the original and appellate

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courts are capable of participating in the exercise of the same judicial power (See 2 Am.
Jur. 850; Stacey Cheese Company v. R.E. Pipkin, Appt. 155 NC 394, 71 S.E. 442, 37 LRA 606) It is the
essential criterion of appellate jurisdiction that it revises and corrects the proceedings
in a cause already instituted, and does not create that cause (See 2 Am. Jur 850 citing
Marbury v. Madison, 1 Cranch US, 137, 2 L. ed. 60).
6.
ID.; ID.; EFFECTS OF PROCEEDINGS WHERE COURT EXCEED ITS JURISDICTION; CASE
AT BAR. It is, of course, a well-settled rule that when court transcends the limits prescribed
for it by law and assumes to act where it has no jurisdiction, its adjudications will be
utterly void and of no effect either as an estoppel or otherwise (Planas v. Collector of
Internal Revenue, 3 SCRA 395; Paredes v. Moya, 61 SCRA 526). The Court of First Instance, in the
case at bar, having awarded judgment in favor of the defendant-appellee in excess of its
appellate jurisdiction to the extent of P6,000.00 over the maximum allowable award of
P10,000.00, the excess is null and void and of no effect. Such being the case, an action to
declare the nullity of the award as brought by the plaintiff-appellant before the Court of First
Instance of Cebu, Branch V is a proper remedy. The nullity of such portion of the decision in
question, however, is not such as to affect the conclusions reached by the court in the main case
for ejectment. As held in Vda. de Pamintuan v. Tiglao (53 Phil. 1) where the amount set up by the
defendant was not proper as a defense and it exceeded the inferior court's jurisdiction, it cannot be
entertained therein, but the court's jurisdiction over the main action will remain unaffected.
Consequently, the decision over the main action, in the case at bar, must stand, best remembering
that a counterclaim, by its very nature, is a cause of action separate and independent from the
plaintiff's claim against the defendant.
DECISION
GUTIERREZ, JR., J p:
The precursor of this case was a complaint for ejectment with damages filed by plaintiffappellant Agustin, as administrator of the Intestate Estate of Susana Agustin, against
defendant-appellee Bacalan, before the City Court of 9Cebu. prLL
Bacalan is a lessee of a one-door ground floor space in a building owned by the late
Susana Agustin. Due to non-payment of rentals despite repeated demands an action to
eject him was filed.
In his complaint, the plaintiff-appellant prayed that the defendant-appellee be ordered to
immediately vacate the place in question, to pay plaintiff-appellant the sum of
P2,300.00 representing arrearages in rentals plus the corresponding rentals until he
actually vacates the place, attorney's fees, expenses, and costs.
In his answer, the defendant-appellee included a counterclaim alleging that the present
action was "clearly unfounded and devoid of merits, as it is tainted with malice and bad
faith on the part of the plaintiff for the obvious reason that plaintiff pretty well knows
that defendant does not have any rentals in arrears due to the estate of Susana
Agustin, but notwithstanding this knowledge, plaintiff filed the present action merely to
annoy, vex, embarrass and inconvenience the defendant." He stated, "That by virtue of the
unwarranted and malicious filing of this action by the plaintiff against the defendant, the latter
suffered, and will continue to suffer, actual and moral damages in the amount of no less than
P50,000.00; P10,000.00 in concept of exemplary damages. In addition, defendant has been
compelled to retain the services of undersigned counsel to resist plaintiffs' reckless, malicious and
frivolous claim and to protect and enforce his rights for which he obligated himself to pay the
further sum of P3,500.00 as attorney's fees."
The City Court of Cebu subsequently rendered judgment dismissing the counterclaim and
ordering the defendant to vacate the premises in question and to pay the plaintiff the
sum of P3,887.10 as unpaid back rentals and the sum of P150.00 as attorney's fees. From this
decision, the defendant filed an appeal with Branch III of the Court of First Instance of
Cebu. The case was designated as Civil Case No. R-12430. prcd
Availing of Republic Act 6031 which does away with trials de novo in appeals before it,
the Court of First Instance rendered a decision, the dispositive portion of which reads:
"WHEREFORE, based on all the foregoing considerations, the appealed judgment is hereby set
aside. Judgment is hereby required in favor of the defendant

CivPro1st Agustin v Bacalan 01 Page 3 of 6

"1.

Ordering the plaintiff to pay.

"a)

P10,000.00 as moral damages;

"b)

P5,000.00 as exemplary damages;

"c)

P1,000.00 as attorney's fees; and.

"2.

With costs against plaintiff.

"JUDGMENT REVERSED."
No appeal was taken by the plaintiff-appellant. The decision lapsed into finality and
became executory. A writ of execution was issued by virtue of which a notice to sell at
public auction real properties belonging to the estate of Susana Agustin was issued by
the Deputy Sheriff to satisfy judgment in the case. Plaintiff's counsel filed a motion for
reconsideration, confessing his fault and giving the reason why he failed to perfect the appeal on
time. The motion was denied.
Thereafter, with the aid of new counsel, the plaintiff-appellant filed a complaint with
Branch V, Court of First Instance of Cebu, against the defendant and the Deputy Sheriff of
Cebu for the declaration of the nullity of the above-cited decision of Branch III, Court of First
Instance of Cebu in the ejectment case on the ground that the exercise of its appellate
jurisdiction was null and void from the beginning for the following reasons:
"(a)

It grants relief in the total sum of P16,000.00 (exclusive of costs) distributed thus:

P10,000.00 as moral damages

P5,000.00 as exemplary damages
P1,000.00 as attorney's fees.
which is clearly beyond the jurisdiction of the City Court of Cebu; Section 88 of the Judiciary
Act of 1948, as amended by Rep. Acts Nos. 2613 and 3828, limits the jurisdiction of the city
courts in civil cases to P10,000.00 as the maximum amount of the demand (exclusive of
interest and costs);
"(b)
Moreover, said Decision (Annex "G") grants moral damages to the defendant in the sun of
P10,000.00 which constitutes a grave abuse of discretion amounting to lack of jurisdiction, there
being no evidence to support it and the subject matter of the suit in Civil Case No. R-13504 being
purely contractual where moral damages are not recoverable."
A motion to dismiss was filed by the defendant on the grounds that the plaintiff has no cause of
action and that the court lacks jurisdiction to declare the nullity of a decision of another branch of
the Court of First Instance of Cebu. LibLex
While rejecting the second ground for the motion to dismiss, the court sustained the defendant and
ruled:
"Clearly from a reading of the complaint, the plaintiff seeks the annulment of the decision rendered
by the Third Branch of this Court because the award exceeded the jurisdiction amount cognizable
by the City Court of Cebu and the said Branch III of this Court has no jurisdiction to award the
defendants herein (plaintiff in Civil Case No. 12430) an amount more than P10,000.00;
"It is the considered opinion of this Court that this allegation of the herein plaintiff cannot be availed
of as a ground for an annulment of a judgment. It may perhaps, or at most, be a ground for a
petition for certiorari. But then, the remedy should be availed of within the reglementary period to
appeal. Nevertheless, even if the plaintiff did take his cause by certiorari, just the same, it would
have been futile . . .
xxx

xxx

xxx

"In fine, this Court believes that the present complaint fails to allege a valid cause of action as the
same is only a clear attempt at utilizing the remedy for the annulment of the judgment rendered by
this Court in Civil Case No. 12430 to offset the adverse effects of failure to appeal."
Plaintiff-appellant's motion for reconsideration was denied, prompting him to file an appeal before
the Court of Appeals, which, in a resolution, certified the same to us on the ground that it involves
pure questions of law.
We ruled in Macabingkil v. People's Homesite and Housing Corporation (72 SCRA 326, citing Reyes
v. Barreto-Datu, 94 Phil. 446, 448-449)

CivPro1st Agustin v Bacalan 01 Page 4 of 6

"Under our rules of procedure, the validity of a judgment or order of the court, which has
become final and executory, may be attacked only by a direct action or proceeding to
annul the same, or by motion in another case if, in the latter case, the court had no
jurisdiction to enter the order or pronounce the judgment (section 44, Rule 39 of the Rules
of Court). The first proceeding is a direct attack against the order or judgment, because it
is not incidental to, but is the main object of, the proceeding. The other one is the
collateral attack, in which the purpose of the proceedings is to obtain some relief, other
than the vacation or setting aside of the judgment, and the attack is only an incident. (I
Freeman on Judgments, sec. 306, pages 607-608.) A third manner is by a petition for relief from
the judgment or order as authorized by the statutes or by the rules, such as those
expressly provided in Rule 38 of the Rules of Court, but in this case it is to be noted that the relief is
granted by express statutory authority in the same action or proceeding in which the judgment or
order was entered . . ."
The question is thus poised, whether or not the present action for the annulment of the
judgment in the ejectment case is the proper remedy after it has become final and
executory.
To this procedural dilemma, the solution lies in the determination of the validity of the
judgment sought to be annulled, for against a void judgment, plaintiff-appellant's
recourse would be proper.
There is no question as to the validity of the court's decision with respect to the issue of
physical possession of property, the defendant-appellee's right to the same having been
upheld. However, the plaintiff-appellant assails the money judgment handed down by the
court which granted damages to the defendant-appellee. By reason thereof, he seeks the
declaration of the nullity of the entire judgment. LLpr
It is the plaintiff-appellant's contention that moral damages may not properly be awarded in
ejectment cases, the only recoverable damages therein being the reasonable compensation for use
and occupancy of the premises and the legal measure of damages being the fair rental value of the
property.
Plaintiff-appellant loses sight of the fact that the money judgment was awarded the
defendant-appellee in the concept of a counterclaim. A defending party may set up a
claim for money or any other relief which he may have against the opposing party in a
counterclaim (Section 6, Rule 6, Revised Rules of Court). And the court may, if warranted, grant
actual, moral, or exemplary damages as prayed for. The grant of moral damages, in the case
at bar, as a counterclaim, and not as damages for the unlawful detention of property
must be upheld. However, the amount thereof is another matter.
Plaintiff-appellant raises the issue of whether or not the Court of First Instance may, in an
appeal, award the defendant-appellee's counterclaim in an amount exceeding or beyond
the jurisdiction of the court of origin.
It is well-settled that a court has no jurisdiction to hear and determine a set-off or
counterclaim in excess of its jurisdiction (Section 5, Rule 5, Revised Rules of Court; Ago v.
Buslon, 10 SCRA 202). A counterclaim beyond the court's jurisdiction may only be pleaded by way
of defense, the purpose of which, however, is only to defeat or weaken plaintiff's claim, but not to
obtain affirmative relief (Section 5, Rule 5, Revised Rules of Court). Nevertheless, the defendantappellee, in the case at bar, set up his claim in excess of the jurisdiction of the city court
as a compulsory counterclaim. What is the legal effect of such a move?
Pertinent to our disposition of this question is our pronouncement in the case of Hyson Tan, et al. v.
Filipinas Compania de Seguros, et al. (G.R. No. L-10096, March 23, 1956) later adopted in Pindagan
Agricultural Co., Inc. v. Dans (6 SCRA 14) and the later case of One Heart Club, Inc. v. Court of
Appeals (108 SCRA 416) to wit:
xxx

xxx

xxx

". . . An appellant who files his brief and submits his case to the Court of Appeals for
decision, without questioning the latter's jurisdiction until decision is rendered therein,
should be considered as having voluntarily waives so much of his claim as would exceed
the jurisdiction of said Appellate Court; for the reason that a contrary rule would encourage
the undesirable practice of appellants submitting their cases for decision to the Court of

CivPro1st Agustin v Bacalan 01 Page 5 of 6

Appeals in expectation of favorable judgment, but with intent of attacking its
jurisdiction should the decision be unfavorable . . ."
Thus, by presenting his claim voluntarily before the City Court of Cebu, the defendantappellee submitted the same to the jurisdiction of the court. He became bound thereby.
The amount of P10,000.00 being the jurisdictional amount assigned the City Court of
Cebu, whose jurisdiction the defendant-appellee has invoked, he is thereby deemed to
have waived the excess of his claim beyond P10,000.00. It is as though the defendantappellee had set up a counterclaim in the amount of P10,000.00 only. May the Court of
First Instance then, on appeal, award defendant-appellee's counterclaim beyond that
amount?
The rule is that a counterclaim not presented in the inferior court cannot be entertained
in the Court of First Instance on appeal (Francisco, The Revised Rules of Court in the
Philippines, Vol. III, p. 26, citing the cases of Bernardo v. Genato, 11 Phil. 603 and Yu Lay v. Galmes,
40 Phil. 651). As explained in Yu Lay v. Galmes "Upon an appeal to a court of first instance from
the judgment of a justice of the peace, it is not possible, without changing the purpose of the
appeal, to alter the nature of the question raised by the complaint and the answer in the original
action. There can be no doubt, therefore, of the scope of the doctrine laid down in the several
decisions of the Court. Consequently, We hold that, upon an appeal to the Court of First
Instance, the plaintiff as well as the defendant cannot file any pleading or allegation
which raises a question essentially distinct from that raised and decided in the justice of
the peace court." This rule was reiterated in cases from Ng Cho Cio v. Ng Diong (1 SCRA 275) to
Development Bank of the Philippines v. Court of Appeals (116 SCRA 636). cdphil
Thus, the defendant-appellee's counterclaim beyond P10,000.00, the jurisdictional amount of the
City Court of Cebu, should be treated as having been deemed waived. It is as though it has never
been brought before trial court. It may not be entertained on appeal.
The amount of judgment, therefore, obtained by the defendant-appellee on appeal,
cannot exceed the jurisdiction of the court in which the action began. Since the trial
court did not acquire jurisdiction over the defendant's counterclaim in excess of the
jurisdictional amount, the appellate court, likewise, acquired no jurisdiction over the
same by its decisions or otherwise. Appellate jurisdiction being not only a continuation
of the exercise of the same judicial power which has been executed in the court of
original jurisdiction, also presupposes that the original and appellate courts are capable
of participating in the exercise of the same judicial power (See 2 Am. Jur. 850; Stacey
Cheese Company v. R.E. Pipkin, Appt. 155 NC 394, 71 S.E. 442, 37 LRA 606) It is the essential
criterion of appellate jurisdiction that it revises and corrects the proceedings in a cause
already instituted, and does not create that cause (See 2 Am. Jur 850 citing Marbury v.
Madison, 1 Cranch US, 137, 2 L. ed. 60).
It is, of course, a well-settled rule that when court transcends the limits prescribed for it by
law and assumes to act where it has no jurisdiction, its adjudications will be utterly void
and of no effect either as an estoppel or otherwise (Planas v. Collector of Internal Revenue, 3
SCRA 395; Paredes v. Moya, 61 SCRA 526). The Court of First Instance, in the case at bar,
having awarded judgment in favor of the defendant-appellee in excess of its appellate
jurisdiction to the extent of P6,000.00 over the maximum allowable award of
P10,000.00, the excess is null and void and of no effect. Such being the case, an action to
declare the nullity of the award as brought by the plaintiff-appellant before the Court of First
Instance of Cebu, Branch V is a proper remedy. cdphil
The nullity of such portion of the decision in question, however, is not such as to affect the
conclusions reached by the court in the main case for ejectment. As held in Vda. de Pamintuan v.
Tiglao (53 Phil. 1) where the amount set up by the defendant was not proper as a defense and it
exceeded the inferior court's jurisdiction, it cannot be entertained therein, but the court's
jurisdiction over the main action will remain unaffected. Consequently, the decision over the main
action, in the case at bar, must stand, best remembering that a counterclaim, by its very nature, is
a cause of action separate and independent from the plaintiff's claim against the defendant.
WHEREFORE, the decision of the Court of First Instance of Cebu, Branch III in Civil Case
No. R-12430 for ejectment is hereby DECLARED NULL AND VOID insofar as it awards
damages on the defendant-appellee's counterclaim in excess of P6,000.00 beyond its
appellate jurisdiction. The decision in all other respects is AFFIRMED. The order of the Court of
First Instance of Cebu, Branch V dismissing Civil Case No. R-13462 for declaration of nullity of

CivPro1st Agustin v Bacalan 01 Page 6 of 6

judgment with preliminary injunction is hereby MODIFIED, Civil Case No. R-13462 is ordered
DISMISSED insofar as the decision sought to be annulled upholds the defendant's right to
possession of the disputed property. The defendant's counterclaim for damages is GRANTED to the
extent of TEN THOUSAND (P10,000.00) PESOS. The grant of SIX THOUSAND (P6,000.00) PESOS in
excess of such amount is hereby declared NULL and VOID, for having been awarded beyond the
jurisdiction of the court. cdll
SO ORDERED.
Teehankee, Melencio-Herrera, Plana, Relova, De la Fuente and Alampay, JJ., concur.