AGUSTIN vs.

BACALAN

FACTS:
The precursor of this case was a complaint for ejectment with damages filed by plaintiff-appellant
Agustin, as adininistrator of the Intestate Estate of Susana Agustin, against defendant-appellee
Bacalan, before the City Court of Cebu. Bacalan is a lessee of a one-door ground floor space in a
building owned by the late Susana Agustin. Due to nonpayment of rentals despite repeated
demands an action to eject him was filed.

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 counter-claim 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, and that 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, and P3,500.00 as attorney's fees.

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'. The defendant filed an appeal with Branch
Ill of the Court of First Instance of Cebu.

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 and 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. 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-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 because it grants relief in the total sum of P16,000.00,
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.

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. 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. It is the considered opinion of this Court that
this allegation of the herein plaintiff cannot be availed of as a ground for 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. 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.

ISSUE: Whether or not the present action for the annulment of judgement in the ejection
case is the proper remedy after it has become final and executory

HELD:
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.

It is well-settled that a court has no jurisdiction to hear and determine a set-off or counterclaim in
excess of its jurisdiction. 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.

Nevertheless, the defendant-appellee, 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? The amount
of P10, 000 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. 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.