AGUSTIN V BACALAN MACABINGKIL V PEOPLE’S HOMESITE AND HOUSING CORP – the validity of a
MAR 18 1985 | GUTIERREZ, JR., J judgment or of the court, which has become final and executory, may be attacked only
FACTS
 AGUSTIN, as administrator of the Intestate Estate of SUSANA AGUSTIN, filed a
complaint for ejectment against BACALAN before the City Court of Cebu
o BACALAN: Lessee of a 1-door ground floor space in a building owned by
SUSANA [did not pay rentals despite demands]
 AGUSTIN (in complaint): prayed that BACALAN be ordered to immediately vacate
the place, pay P2,300 representing arrearages in rentals plus rentals until he
actually vacates the place, attorney’s fees, expenses and costs
 BACALAN (answer): included a counterclaim alleging that the action was clearly
unfounded and devoid of merits, as it is tainted with malice and bad faith on the
part of AGUSTIN
o Alleges that AGUSTIN knows that BACALAN does not have any rentals in
arrears due to the estate but still, he filed the action merely to annoy, vex,
embarrass and inconvenience BACALAN
o By virtue of the unwarranted and malicious filing of the action, he sustained
actual and moral damages (P50K) and exemplary damages (P10K)
o He was also compelled to retain the services of a counsel to resist AGUSTIN’s
reckless, malicious and frivolous claim and to protect and enforce his rights
for which he obligated himself to pay (attorney’s fees = P3,500)
CITY COURT: Counterclaim [DISMISSED] BACALAN ordered to vacate and pay back
rentals and attorney’s fees
 BACALAN filed an appeal with CFI Cebu
 Because of RA 6031 (does away with trials de novo in appeals before it), CFI
rendered a decision in favor of BACALAN [awarding moral (P10K) and exemplary
(P5K) damages and attorney’s fees (P1K)]
 NO APPEAL BY AGUSTIN – 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 was issued to satisfy the
judgment – AGUSTIN’S COUNSEL FILED MR [confessing his fault and giving the
reason why he failed to perfect the appeal on time – MR DENIED
With the aid of a new counsel, AGUSTIN filed a complaint against BACALAN in CFI
and Deputy Sheriff for declaration of nullity of CFI decision in the ejectment case on
the ground that the exercise of its appellate jurisdiction was null and void from the
beginning
(1) It grants relief in the total sum of P16K – beyond the jurisdiction of the City
Courts of Cebu [Sec 88 Judiciary Act of 1948 limits the jurisdiction of the city
courts in civil cases to P10K as the maximum amount of the demand]
(2) It grants moral damages of P10K which constitutes a grave abuse of discretion
amounting to lack of jurisdiction – no evidence to support it and the subject
matter of the suit being purely contractual where moral damages are not
recoverable
 BACALAN filed a Motion to Dismiss [no cause of action and court lacks
jurisdiction to declare the nullity of a decision of another branch]
CFI: Complaint fails to allege a valid cause of action [only a clear attempt at utilizing
the remedy for the annulment of the judgment rendered by the court]; MR DENIED
CA: Certified to SC because it involves pure questions of law
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 [Sec 44 Rule 39]
 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
 A third manner is by a petition for relief from the judgment or order as
authorized by the statues or by the rules, such as those expressly provided in
Rule 38. The relief is granted by express statutory authority in the same action nor
proceeding in which the judgment order was entered
ISSUE: WON CFI may, in an appeal, award BACALAN
RE: MONEY JUDGMENT [GRANTING OF DAMAGES]
COURT: MONEY JUDGMENT WAS AWARDED 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 [Sec 6 Rule 6]
 The court may, if warranted, grant actual, moral or exemplary damages as prayed
for
 IN CASE AT BAR, the grant of moral damages as a counterclaim and not as
damages for the unlawful detention of property must be upheld [ISSUE LIES IN
AMOUNT AWARDED]
RULE: A court has no jurisdiction to hear and determine a set-off or counterclaim in
excess of its jurisdiction [Sec 5 Rule 5]
 A counterclaim beyond the court’s jurisdiction may only be pleaded by way of
defense, the purpose of which is only to defeat or weaken plaintiff’s claim but not
to obtain affirmative relief [Sec 5 Rule 5]
IN CASE AT BAR, by presenting his claim voluntarily before the CITY COURT,
BACALAN submitted the same to the jurisdiction of the court [became bound thereby]
 The amount of P10K being the jurisdiction al amount assigned the CITY COURTS,
whose jurisdiction BACALAN has invoked, he is thereby deemed to have waived
the excess of his claim beyond P10K
 It is as if BACALAN had set up a counterclaim in the amount of P10K only
RULE: A counterclaim not presented in the inferior court cannot be entertained in CFI
on appeal
YU LAY V GALMES – Upon appeal to CFI 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
 Upon an appeal to CFI, the plaintiff as well as defendant cannot file any pleading
or allegation which raises a question essentially distinct form that raised and
decided in the justice of the peace court
IN CASE AT BAR, Counterclaim beyond P10K [jurisdictional amount of CITY COURT]
should be treated as having been deemed waived – it is as though it has never been
brought before the trial court
 The amount of judgment obtained by BACALAN 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
 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

RULE: When courts transcends the limits prescribed for it by law and assumes to act
where it has no jurisdiction, its adjudication will be utterly void and of no effect either
as an estoppel or otherwise

WHEREFORE, CFI DECISION FOR EJECTMENT – NULL AND VOID (insofar as it

awards damages on BACALAN’s counterclaim in excess of P6K); AFFIRMED in all
other respects
CFI ORDER [dismissing case for declaration of nullity of judgment] MODIFIED – Civil
Case DISMISSED insofar as the decision sought to be annulled upholds BACALAN’s
right to possession of the property; BACALAN’S COUNTERCLAIM GRANTED to the
extent of P10K [grant of P6K in excess declared NULL AND VOID for having been
awarded beyond jurisdiction]