G.R. No. 83545 August 11, 1989
ADELFO MACEDA, petitioner, vs. HON. COURT OF APPEALS AND CEMENT CENTER, INC., respondents.

FACTS

Petitioner Adelfo Maceda leased a house and lot in San Juan from his aunt and uncle, the spouses Victoria, in 1970. With their permission, he undertook extensive renovations costing P40,000, which they promised to reimburse. Maceda subsequently introduced further, more extensive improvements without clear approval. After the original owners died, the property was sold several times, ultimately to private respondent Cement Center, Inc. in 1981. Cement Center demanded that Maceda vacate so it could use the land for a housing project. When he refused, citing his right to reimbursement for improvements, Cement Center filed an ejectment case in the Metropolitan Trial Court (MTC) of San Juan in 1984.
In his Answer, Maceda interposed a counterclaim seeking P240,000 as reimbursement for the value of the improvements he introduced on the leased property. The MTC ruled in favor of Cement Center’s right to eject but also ordered it to pay Maceda P158,000 for the improvements. Both parties appealed to the Regional Trial Court (RTC), which dismissed the ejectment complaint and ordered Cement Center to pay Maceda P182,000. Cement Center then elevated the case to the Court of Appeals (CA).

ISSUE

The core issue is whether the MTC, in an ejectment case, has jurisdiction to adjudicate a lessee’s counterclaim for the value of useful improvements when the amount claimed exceeds the court’s jurisdictional limit.

RULING

The Supreme Court affirmed the Court of Appeals’ decision, ruling that the MTC lacked jurisdiction over Maceda’s counterclaim. The legal logic is grounded on the statutory limits of court jurisdiction. Under Batas Pambansa Blg. 129, the MTC’s exclusive original jurisdiction is limited to cases where the demand does not exceed P20,000, exclusive of interest and costs. Maceda’s counterclaim for P240,000 far exceeded this jurisdictional ceiling. Consequently, the MTC had no authority to hear and decide upon that monetary claim.
Since the MTC lacked original jurisdiction, the RTC, acting in its appellate capacity, similarly could not validly adjudicate the counterclaim. An appellate court’s jurisdiction is derivative from that of the court below; it cannot grant relief on a claim that the inferior court could not originally entertain. The Supreme Court further clarified that a lessee is not a possessor in good faith under Article 546 of the Civil Code, as a lessee knows his possession is temporary. Therefore, Maceda could not assert a right of retention over the property pending reimbursement. His claim for reimbursement, based on a personal promise from the original owners that was not registered, did not bind subsequent purchasers like Cement Center. The Court, however, modified the rental computations in accordance with applicable rent control laws.