G.R. No. L-16774; May 30, 1963
Eugenio Urbayan and Patrocinia Mercado Urbayan, plaintiffs-appellees, vs. Evaristo Salvoro, defendant-appellant.

FACTS

On January 12, 1954, plaintiffs-appellees Eugenio and Patrocinia Urbayan filed an action in the Municipal Court of Tacloban, Leyte, against defendant-appellant Evaristo Salvoro. They sought the rescission of a lease contract dated December 23, 1953, for two apartments and a portion of a lot, alleging that Salvoro prevented them from making necessary adjustments to the premises. The complaint also demanded compensatory and moral damages totaling over P2,225, plus P31 daily from January 4, 1954, attorney’s fees, and costs. In his answer, Salvoro contended that the lease covered only specific apartments, as others were already leased to a third party, and counterclaimed for damages due to unauthorized alterations by the plaintiffs.
The Municipal Court, after trial, rendered judgment on February 15, 1954, ordering the rescission of the contract, refund of an advanced rental, and awarding moral damages, compensatory damages, and attorney’s fees to the plaintiffs. Salvoro appealed to the Court of First Instance (CFI) of Leyte. In his answer filed with the CFI, he reiterated his defenses and specifically raised the affirmative defense that the Municipal Court lacked original jurisdiction over the case. The CFI proceeded to trial and, on March 15, 1956, rendered a judgment similarly rescinding the contract and awarding damages and attorney’s fees to the plaintiffs. Salvoro appealed, and the Court of Appeals certified the case to the Supreme Court, as the issue involved was jurisdictional.

ISSUE

Whether the Municipal Court of Tacloban had jurisdiction over an action for rescission of a lease contract and recovery of damages exceeding two thousand pesos, and consequently, whether the Court of First Instance of Leyte validly exercised jurisdiction on appeal.

RULING

The Supreme Court ruled that the Municipal Court lacked jurisdiction. Under Section 88 of Republic Act No. 296 (The Judiciary Act of 1948), the Municipal Court’s original jurisdiction was limited to civil actions where the demand, exclusive of interest and costs, did not exceed two thousand pesos. The plaintiffs’ action sought rescission and recovery of damages clearly exceeding this jurisdictional amount. Therefore, the judgment rendered by the Municipal Court was a nullity.
The Court further held that the defendant-appellant did not waive his objection to jurisdiction. By raising the lack of the Municipal Court’s jurisdiction in his answer filed with the Court of First Instance on appeal, Salvoro preserved the jurisdictional challenge. The CFI, upon finding that the Municipal Court acted without jurisdiction, had no authority to try the case on its merits. Its only proper course was to dismiss the complaint for lack of jurisdiction. Consequently, the CFI’s judgment, having been rendered without jurisdiction, was also a patent nullity. The Supreme Court set aside the appealed judgment and ordered the complaint dismissed, with costs against the appellees.