GR 117051; (January, 1996) (Digest)
G.R. No. 117051 ; January 22, 1996
FRANCEL REALTY CORPORATION, petitioner, vs. COURT OF APPEALS and FRANCISCO T. SYCIP, respondents.
FACTS
Petitioner Francel Realty Corporation filed an unlawful detainer complaint in the Municipal Trial Court (MTC) of Bacoor, Cavite, against respondent Francisco T. Sycip. Francel alleged that Sycip defaulted on monthly amortizations under a Contract to Sell for a townhouse unit, prompting the rescission of the contract and a demand to vacate. Sycip moved to dismiss, arguing the MTC lacked jurisdiction because his defense involved the developer’s alleged failure to develop the subdivision according to approved plans, a matter falling under the exclusive jurisdiction of the Housing and Land Use Regulatory Board (HLURB), where he had a pending case against Francel.
The MTC initially denied the motion to dismiss but later dismissed the complaint for lack of jurisdiction, ruling the case was cognizable by the HLURB. However, the MTC simultaneously awarded Sycip moral and exemplary damages and attorney’s fees. The Regional Trial Court affirmed the dismissal, and the Court of Appeals upheld the MTC’s jurisdiction to award damages despite its finding of lack of jurisdiction over the main ejectment case.
ISSUE
Whether the MTC, after declaring it lacked jurisdiction over the unlawful detainer case, could validly award damages on Sycip’s counterclaim.
RULING
No. The Supreme Court reversed the Court of Appeals. The determinative issue in the ejectment case—whether Sycip had a right to stop payments due to alleged violations of P.D. No. 957 by the developer—was exclusively cognizable by the HLURB. Consequently, the MTC correctly dismissed the complaint for lack of jurisdiction. However, the MTC committed a grave error in awarding damages. A court that lacks jurisdiction over the principal action has no jurisdiction to entertain a counterclaim. The award was further invalid because Sycip’s answer containing the counterclaim was filed out of time under the Revised Rule on Summary Procedure, meaning no counterclaim was effectively pleaded. Moreover, the record was devoid of any proof of bad faith or malice by Francel in filing the suit to justify moral and exemplary damages and attorney’s fees. The complaint was properly dismissed, and the counterclaim was likewise dismissed.