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MAR 18 1985 | GUTIERREZ, JR., J judgment or 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
FACTS if, in the latter case, the court had no jurisdiction to enter the order or pronounce the
 AGUSTIN, as administrator of the Intestate Estate of SUSANA AGUSTIN, filed a judgment [Sec 44 Rule 39]
complaint for ejectment against BACALAN before the City Court of Cebu  The first proceeding is a direct attack against the order or judgment because it is
o BACALAN: Lessee of a 1-door ground floor space in a building owned by not incidental to, but is the main object of the proceeding
SUSANA [did not pay rentals despite demands]  The other one is the collateral attack, in which the purpose of the proceedings is
 AGUSTIN (in complaint): prayed that BACALAN be ordered to immediately vacate to obtain some relief, other than the vacation or setting aside of the judgment and
the place, pay P2,300 representing arrearages in rentals plus rentals until he the attack is only an incident
actually vacates the place, attorney’s fees, expenses and costs  A third manner is by a petition for relief from the judgment or order as
 BACALAN (answer): included a counterclaim alleging that the action was clearly authorized by the statues or by the rules, such as those expressly provided in
unfounded and devoid of merits, as it is tainted with malice and bad faith on the Rule 38. The relief is granted by express statutory authority in the same action nor
part of AGUSTIN proceeding in which the judgment order was entered
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, ISSUE: WON CFI may, in an appeal, award BACALAN
o By virtue of the unwarranted and malicious filing of the action, he sustained COURT: MONEY JUDGMENT WAS AWARDED IN THE CONCEPT OF A
actual and moral damages (P50K) and exemplary damages (P10K) COUNTERCLAIM
o He was also compelled to retain the services of a counsel to resist AGUSTIN’s  A defending party may set up a claim for money or any other relief which he may
reckless, malicious and frivolous claim and to protect and enforce his rights have against the opposing party in a counterclaim [Sec 6 Rule 6]
for which he obligated himself to pay (attorney’s fees = P3,500)  The court may, if warranted, grant actual, moral or exemplary damages as prayed
CITY COURT: Counterclaim [DISMISSED] BACALAN ordered to vacate and pay back  IN CASE AT BAR, the grant of moral damages as a counterclaim and not as
rentals and attorney’s fees damages for the unlawful detention of property must be upheld [ISSUE LIES IN
 BACALAN filed an appeal with CFI Cebu AMOUNT AWARDED]
 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 RULE: A court has no jurisdiction to hear and determine a set-off or counterclaim in
(P5K) damages and attorney’s fees (P1K)] excess of its jurisdiction [Sec 5 Rule 5]
 NO APPEAL BY AGUSTIN – Decision lapsed into finality and became executory  A counterclaim beyond the court’s jurisdiction may only be pleaded by way of
 A writ of execution was issued by virtue of which a notice to sell at public auction defense, the purpose of which is only to defeat or weaken plaintiff’s claim but not
real properties belonging to the estate of SUSANA was issued to satisfy the to obtain affirmative relief [Sec 5 Rule 5]
judgment – AGUSTIN’S COUNSEL FILED MR [confessing his fault and giving the
reason why he failed to perfect the appeal on time – MR DENIED 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]
With the aid of a new counsel, AGUSTIN filed a complaint against BACALAN in CFI  The amount of P10K being the jurisdiction al amount assigned the CITY COURTS,
and Deputy Sheriff for declaration of nullity of CFI decision in the ejectment case on whose jurisdiction BACALAN has invoked, he is thereby deemed to have waived
the ground that the exercise of its appellate jurisdiction was null and void from the the excess of his claim beyond P10K
beginning  It is as if BACALAN had set up a counterclaim in the amount of P10K only
(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 RULE: A counterclaim not presented in the inferior court cannot be entertained in CFI
courts in civil cases to P10K as the maximum amount of the demand] on appeal
(2) It grants moral damages of P10K which constitutes a grave abuse of discretion YU LAY V GALMES – Upon appeal to CFI from the judgment of a justice of the peace,
amounting to lack of jurisdiction – no evidence to support it and the subject it is not possible, without changing the purpose of the appeal, to alter the nature
matter of the suit being purely contractual where moral damages are not of the question raised by the complaint and the answer in the original action
recoverable  Upon an appeal to CFI, the plaintiff as well as defendant cannot file any pleading
 BACALAN filed a Motion to Dismiss [no cause of action and court lacks or allegation which raises a question essentially distinct form that raised and
jurisdiction to declare the nullity of a decision of another branch] decided in the justice of the peace court
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
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


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]