GR 109020; (March, 1994) (Digest)
G.R. No. 109020 March 3, 1994
FELISA CHAN, petitioner, vs. HON. COURT OF APPEALS, and GRACE CU, respondents.
FACTS
On February 1, 1983, Felisa Chan and Grace Cu entered into a contract of lease for Room 401 and the roof top of Room 442 of a building in Manila for residential purposes, with a term of one year at a monthly rental of P2,400.00. The contract was renewed yearly up to February 1, 1986. After this date, there was no written contract, but Grace Cu continuously occupied the premises as a learning center, with the monthly rental being increased over time. In November 1989, Felisa Chan padlocked the way to the roof top, leading to a dispute. Chan maintained only Room 401 was leased, while Cu insisted the roof top was included. Chan terminated the lease, demanding Cu vacate by January 1, 1990. Chan refused to accept the rental for December 1989. Cu tendered payment by check, then by cash through her lawyer, with notice of consignation if refused. Chan allowed Cu to hold classes only until March 1990. On January 15, 1990, Cu filed a complaint for consignation with the Metropolitan Trial Court (MTC). In her answer, Chan interposed a counterclaim for ejectment, contending the lease, being month-to-month, had expired and Cu refused to vacate. The MTC ruled the roof top was included in the lease, fixed the lease term until June 30, 1992, declared the consignation valid, and dismissed claims for damages. Both parties appealed to the Regional Trial Court (RTC), which affirmed the MTC decision. Cu then filed a petition for review with the Court of Appeals, which reversed the lower courts, dismissed the complaint for consignation for lack of merit, and held the MTC and RTC erred in passing upon the ejectment counterclaim, stating an ejectment action can only be initiated by a verified complaint, not a counterclaim. Chan’s motion for reconsideration was denied, prompting this petition.
ISSUE
1. Whether the Court of Appeals erred in holding that the counterclaim for unlawful detainer was improperly included in the complaint for consignation.
2. Whether the Court of Appeals erred in relying on Ching Pue vs. Gonzales as basis for not acting upon the counterclaim for unlawful detainer.
3. Whether the Court of Appeals’ decision promotes multiplicity of suits.
4. Whether the Court of Appeals’ decision gives the private respondent unwarranted benefits.
RULING
The Supreme Court GRANTED the petition, SET ASIDE the decision of the Court of Appeals, and REINSTATED the decisions of the RTC and MTC.
1. The Court of Appeals erred in holding the counterclaim for ejectment was improper. A counterclaim is defined as any claim which a defending party may have against an opposing party. The Rules of Court do not prohibit the interposition of a counterclaim for ejectment in an answer to a complaint for consignation. The MTC had exclusive original jurisdiction over both the consignation complaint and the ejectment counterclaim, as the counterclaim did not involve a question of ownership nor allege a claim in excess of P20,000.00, making it cognizable under the Rule on Summary Procedure.
2. The case of Ching Pue vs. Gonzales is not applicable. In Ching Pue, the consignation cases were filed with the Court of First Instance, which did not have jurisdiction over ejectment cases properly cognizable by the Municipal Court. In the instant case, the consignation was filed with the MTC, which also had jurisdiction over the ejectment counterclaim. Therefore, the MTC properly took cognizance of both the complaint and the counterclaim.
3. The Court of Appeals’ decision would promote multiplicity of suits by implying Chan should file a separate ejectment complaint, which would be laborious and contrary to the policy against multiplicity of suits. The counterclaim mechanism is designed to avoid this very situation.
4. The Supreme Court found the extended lease term fixed by the MTC (until June 30, 1992) to be reasonable under Article 1687 of the Civil Code, which allows courts to fix a longer term for the lease when no period has been set and the lessee has occupied the premises for over one year. Since the lease contracts were renewed yearly until 1986 and Cu continued in possession thereafter, an implied new lease on a month-to-month basis was created under Article 1670. The court’s authority to fix a longer term was properly exercised based on the circumstances, including Cu’s use of the premises for a learning center.