Shoemart, Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Anson Emporium Corporation (Anson) leased a portion of Shoemart, Inc.'s (Shoemart) building for two years starting August 1, 1971, at a monthly rental of P18,842.00. The lease stipulated that after termination, if the tenant remained in possession without a written agreement, the lease would be on a month-to-month basis. Anson remained in possession after the initial term at an increased rental of P34,622.00. On August 1, 1977, Shoemart terminated the month-to-month lease and demanded Anson vacate by August 31, 1977. Anson failed to vacate, prompting Shoemart to file an ejectment suit. Procedural History: Anson raised defenses that the lease agreement did not reflect the true intention (guaranteed stay of 24 years) and that ejectment was premature under Article 1673 in relation to Article 1687 of the Civil Code. Shoemart filed a supplemental complaint for increased rentals (P45,142.00 effective January 1, 1979), which was admitted after a petition for certiorari. Anson responded with defenses of estoppel, novation, statute of frauds/limitations, condonation, release, and laches, and claimed the increase was inequitable. The Metropolitan Trial Court dismissed the complaint. The Regional Trial Court reversed, ordering Anson to vacate, pay damages for unlawful detainer at P34,622.00/month (Sept 1977-Dec 1978) and P45,142.00/month (Jan 1979 onwards), reimbursement for electricity (P313,493.25 as of March 1986 plus subsequent consumption), and attorney's fees. The RTC later amended its decision to include further rental increases from 1980 to 1987. The Court of Appeals reinstated the RTC decision except for the 1% monthly interest and electricity reimbursement, reducing the damages for use and occupation to P45,142.00 monthly from January 1, 1979. The CA later corrected a clerical error regarding the interest start date. Shoemart filed the instant petition. The Petition: Shoemart seeks review of the Court of Appeals' decision, arguing that the CA erred in limiting monthly damages to P45,142.00 despite evidence of four rental increases, in eliminating the 1% interest on unpaid damages, and in eliminating the award for electricity reimbursement.
Issue(s)
Whether the Court of Appeals erred in limiting the monthly damages to P45,142.00 despite evidence of subsequent rental increases. Whether the Court of Appeals erred in eliminating the 1% interest on unpaid damages. Whether the Court of Appeals erred in eliminating the award for reimbursement of electricity costs.
Ruling
The petition is granted. The decision of the Court of Appeals is reversed and set aside. The decision of the Regional Trial Court dated November 10, 1987, is reinstated with the modification that the award of 1% interest starting October 1, 1977, and the reimbursement of cost of electrical consumption are excluded, without prejudice to the institution of a proper collection case for such costs.
Ratio Decidendi
On the limitation of monthly damages: The Supreme Court held that the petitioner's recovery is not limited by the amount prayed for in the supplemental complaint. A supplemental complaint supplies deficiencies in aid of an original pleading, not to substitute it. The original complaint prayed for monthly rentals and "all other rentals and charges that may be due until such time that defendant . . . shall have vacated the premises." Therefore, Shoemart did not foreclose its right to demand increased rentals, which could be expressed as fair rental value or reasonable compensation for use and occupation. Furthermore, the Court noted that issues not raised in the pleadings but tried by express or implied consent of the parties are treated as if they had been raised. Evidence of four rental increases was presented without objection from Anson, thus Anson is deemed to have consented to the trial of these issues. The Court rejected Anson's argument that board resolutions were necessary, as this defense was not raised before the trial court and Anson failed to present evidence to substantiate its claim that the increases were unconscionable. The Court pointed out that other tenants in the Makati Arcade did not question the reasonableness of the rental increases. On the elimination of 1% interest on unpaid damages: The Supreme Court affirmed the Court of Appeals' elimination of the 1% interest. The Court cited Article 1956 of the Civil Code, which states that no interest shall be due unless it has been expressly stipulated in writing. While the original lease contract contained a stipulation for 1% interest on delayed payments, this contract had already terminated. By the time the ejectment complaint was filed in 1977, there was no longer a written contract, and consequently, no written stipulation on the payment of interest. Therefore, the imposition of interest was not justified under the existing circumstances. On the elimination of reimbursement for electricity costs: The Supreme Court upheld the Court of Appeals' decision to exclude the award for electricity costs. Citing the case of Felisilda vs. Villanueva, the Court reiterated its consistent holding that in an ejectment suit, the only damages recoverable are the fair rental value or reasonable compensation for the use and occupation of the property. Other damages, such as reimbursement for electricity consumption, must be claimed in a separate, ordinary action before the proper forum. This ensures that the ejectment proceedings remain summary in nature and are not encumbered by claims for damages beyond the scope of the action.
Main Doctrine
A supplemental complaint serves to supply deficiencies in aid of an original pleading, not to entirely substitute it. Issues not raised in the pleadings but tried by express or implied consent of the parties shall be treated as if they had been raised. The recovery of damages in an ejectment suit is limited to the fair rental value or reasonable compensation for the use and occupation of the property; other damages must be claimed in an ordinary action.