ADELFO MACEDA, PETITIONER, VS. HON. COURT OF APPEALS & CEMENT CENTER, INC., RESPONDENTS.

The issue raised in this case is the jurisdiction of the metropolitan
trial court, in an ejectment case, over the lessee’s
counterclaim for the value of improvements exceeding the court’s jurisdictional
limit of P20,000. 
The Court of Appeals dismissed the counterclaim for lack of
jurisdiction, hence, this petition for review by the lessee, Adelfo Maceda.

The leased property originally belonged to the spouses Arturo
Victoria and Maxima Monserrat, a maternal aunt of the
petitioner.  After the spouses emigrated
to the U.S. in
1970, they leased their house and lot in San Juan,
Metro Manila, to the petitioner for P200 per month in 1970.  As the house was old and run down, petitioner
proposed to have it repaired and renovated subject to reimbursement of his
expenses.  The lessors
allowed him to do so (Exh. 3) and requested him to
send them pictures of the work accomplished (Exh.
3-a).  He made extensive repairs, tearing
down rotten parts of the house, rebuilding and extending it up to the garage
which he converted into a dining room.  He also moved the bathrooms around.  The remodeling job cost P40,000.  His aunt and uncle were pleased with the
pictures of the remodelled house and made plans to
reimburse him for his expenditures.  But Maceda did not stop there. 
In what appears to be an orgy of building, he introduced more
improvements.  He constructed a new
driveway, a basketball court and raised the ground level near the creek,
elevated the fence, remodelled the gate, and
landscaped the lawn.

In 1972, Arturo Victoria
passed away in the United States.  In
1973, his aunt’s attorney-in-fact, Atty. Rustico
Zapata, Sr., promised to sell the property to him for P125,000
after the title should have been transferred to his widowed aunt.  On February 12, 1974, Atty. Zapata and a Mr. Gomez visited the
place and informed him that his aunt had sold the property to Mrs. Gomez
so he should vacate it.  He refused to leave.  As a result, Atty. Zapata filed an ejectment case against him on April 4, 1974, in the Municipal Court of San Juan, Rizal
(Civil Case No. 3773).  It was dismissed
on the plaintiff’s own motion.

In November 1974, Atty.
Zapata informed the petitioner that the property had been sold to Pablo Zubiri for P145,000.  He was asked to vacate it.  Again, he refused.  Zubiri filed an ejectment case against him (Civil Case No. 37781) in the
Municipal Court of San Juan, Rizal.  Petitioner insisted that he was entitled to
retain possession of the premises until his expenses were duly reimbursed to
him.  The complaint was dismissed for
failure to prosecute.

In 1978 Maxima Monserrat died in the United
States.

On December 4, 1981,
the property was sold by Zubiri to Cement Center, Inc. which obtained TCT
Nos. 30844 and 30845 for the property. 
The president of the company inspected the premises.  Maceda was asked to
vacate the property because the company would build a housing project on it for
its employees.  Maceda
insisted on being reimbursed for his improvements as the original owners had
promised to do.  Formal demands to vacate
and for payment of P4,000 monthly rental from April 15, 1982 were sent to him by
the company.  On January 17, 1984, another ejectment
suit was filed against him in the Metropolitan Trial Court of San Juan, Metro
Manila.

In his answer to the complaint, Maceda
set up a counterclaim for P240,000, the alleged value
of his improvements.

In its decision, the Metropolitan Trial Court ordered him to
vacate the premises and pay the plaintiff P2,000 per
month as reasonable compensation for
his use of the premises until he actually vacates, and P5,000 as attorney’s
fees.  It ordered the plaintiff to pay
the defendant P158,000 as the value of his
improvements and repairs, less his accrued rentals of P64,000 as of December
1985 and the sum of P12,000 which he had earlier received as partial
reimbursement.

Both parties appealed to the Regional Trial Court.  The Regional Trial Court set aside the
inferior court’s decision.  On May 19, 1987, it dismissed the ejectment complaint, and ordered Cement
Center to pay Maceda
P182,000 for his necessary and useful improvements
(pp. 31-49, Rollo of CA-G.R. No. 12536).

Cement Center filed a petition for review in the Court of
Appeals (CA-G.R. SP No. 12536).  On February
17, 1988, the Court
of Appeals rendered a decision, modifying the appealed decision, the dispositive part of which reads thus:

“PREMISES CONSIDERED, the decision appealed from is hereby
AFFIRMED insofar as it dismissed the complaint for ejectment
filed by petitioner against private respondent. 
However, the portions of the decision declaring petitioner (plaintiff)
under obligation to pay private respondent the sum of P182,200.00
corresponding to the value of the supposed necessary and useful improvements,
as well as the pronouncement therein regarding private respondent’s right of
retention, are hereby SET ASIDE.  With costs against
petitioner.” (p. 35, Rollo.)

The reason for the Court of Appeals’ denial of Maceda’s claim for reimbursement of the cost of his
improvements was that the MTC lacked jurisdiction over the claim which exceeds P20,000.  The Court of Appeals said:

“The Regional Trial Court, however, erred in declaring that petitioner is under obligation to pay private respondents the sum of
P182,200.00 supposedly corresponding to the value of the necessary and useful
improvements he had introduced on the leased premises, with the right of
retention until he shall have been fully reimbursed therefor.  The claim for reimbursement in the total
amount of P240,000.00 was alleged by private
respondent by way of counterclaim in his answer (pp. 40-41, Records).  It is clear that the amount of counterclaim, is
beyond the jurisdiction of the Metropolitan Trial Court.  Under Section 33, B.P. Blg.
129, the Metropolitan Trial Court shall have exclusive original jurisdiction
over civil actions where the amount of the demand does not exceed P20,000.00
exclusive of interest and costs but inclusive of damages of whatever kind.  It goes without saying that the Regional
Trial Court has no authority to entertain the counterclaim because it took cognizance of the case by
virtue of its appellate jurisdiction.

“Considering that
the Metropolitan Trial Court did not have jurisdiction to adjudicate the
counterclaim, the decision of the Regional Trial Court on appeal giving private
respondent the right of retention is without legal basis.  Besides, the right of retention applies only
to a possessor in good faith under Article 546 of the Civil Code.  In lease, the lessee knows that his occupancy of the premises
continues only during the lifetime of the lease contract.  If he introduces improvements thereon, he
does so at his own risk (Imperial Insurance vs. Simon, 14 SCRA 855).  The rights of a lessee in good faith, which
do not include the right of retention, are defined in Article 1678, x x x.” (pp. 34-35, Rollo.)

In his petition
for review of that decision in this
Court, Maceda assails the setting aside of the
money judgment or award for his improvements in the sum of P182,200, and the rejection of his claim to
a right of retention over the leased premises.

Maceda’s petition for review (G.R. No.
83545) has no merit.  The Court of
Appeals correctly ruled that the municipal trial court did not have original
jurisdiction over his counterclaim as it exceeds P20,000.  Correspondingly, the regional trial court did
not have appellate jurisdiction over the claim. 
The decision of the Municipal Trial Court of San Juan awarding him P158,000 on his counterclaim, and that of the Regional Trial
Court raising the award to P182,200, were invalid for lack of
jurisdiction.  The jurisdiction of the
Metropolitan Trial Court in a civil action for sum of money (Maceda’s counterclaim for the value of his improvements is
one such action) is limited to a demand that “does not exceed twenty
thousand pesos exclusive of interest and costs but inclusive of damages of whatever kind.” (Sec. 33, subpar. 1, B.P. Blg. 129.) A
counterclaim in the municipal or city court beyond that jurisdictional limit
may be pleaded only by way of defense to weaken the plaintiff’s claim, but not
to obtain affirmative relief (Agustin vs. Bacalan,
135 SCRA 340).

Maceda was not a possessor in good
faith, i.e., one who possesses in concept of an owner,
hence, he had no right to retain possession of the leased premises pending
reimbursement of his improvements thereon. 
No mere lessee can claim to be a possessor in good faith.  (Art. 546, Civil Code; Eusebio vs. IAC, 144 SCRA 154; Laureano
vs. Adil, 72 SCRA 148.)

The promise of the now
deceased spouses Arturo Victoria and Maxima Monserrat,
to reimburse Maceda for his improvements was limited
only to the initial remodelling job which cost
P40,000, pictures of which he sent to the Victorias
and which they approved and promised to reimburse.  No similar promise to pay may be implied with
regard to the additional improvements which he made without their approval and which
were evidently intended to improve them out of their property.

In any event, since the undertaking of the Victorias
to reimburse Maceda for the P40,000 worth of
improvements which he introduced on their property was not recorded on their
title, that promise did not encumber the property nor bind the purchaser
thereof or the successor-in-interest
of the Victorias (Mun. of Victorias vs. CA, 149 SCRA 32).

While it is true that under B.P. Blg.
877 a lessee may not be ejected on account of the sale or mortgage of the
leased premises, the new owner’s need of the premises for the construction of
dwellings for its employees, coupled with the lessee’s failure to pay the rentals since December 1981, are, to our
mind, a legitimate ground for the judicial ejectment
of the lessee.

Maceda’s original rental of P200 per month could not
be increased by the new owner, Cement Center, when it acquired the
property on December 5, 1981 until B.P. Blg. 25
allowed a cumulative and compounded 10% yearly increase effective April 15,
1982, and a 20% increase effective April 15, 1985, pursuant to B.P. Blg. 867 and 887 and R.A. 6643.  Based on those
guidelines, the rentals due from Maceda from December
4, 1981 were as
follows:

WHEREFORE, the petition for review is granted with respect
to the computation of the rentals due from the petitioner.  He is ordered to pay the unpaid rentals of
P32,864.36 for his occupancy of the private
respondent’s property from December 1981 to August 14, 1989 plus P662.36 monthly thereafter until he
vacates the premises.  The dismissal of
his counterclaim for the value of his improvements is affirmed.  No pronouncement as to costs.

SO ORDERED.

Narvasa, (Chairman), Cruz, Gancayco, and Medialdea, JJ., concur.