Case No. 5: Eustacio Atwel, Lucia Pilpil and Manuel Melgazo v. Concepcion Progressive Assoc. Inc.

Topic: Estoppel on Questioning Courts Jurisdiction Facts: Then Assemblyman Emiliano Melgazo founded and organized Concepcion Progressive Assoc. (CPA) in Hilongos, Leyte. Said organization aimed to provide livelihood and generate income for his supporters. Emiliano, after elected as CPA president, bought a parcel of land in behalf of the association which was later on converted into a wet market, which also housed a cockpit and an area for amusement. The rentals from the vendors were then paid to CPA. When Emiliano died, his son Manuel Melgazo succeeded him as CPA President and administrator of the property. While in the process of registering as a stock corporation, its other elected officers and members formed their own group and registered themselves in the Securities and Exchange Commission (SEC) as officers os Concepcion Progressive Assoc. Inc. (CPAI). Later, CPAI objected to petitioners collection of rentals from the wet market vendors. CPAI then filed a case in the SEC for mandatory injunction. With the passage of R.A. No. 8799, the case was transferred to Branch 24 of the Southern Leyte RTC and subsequently to Branch 8 of Tacloban City RTC. Both were special commercial courts. Petitioners alleged that the property was purchased using the money of petitioner Emiliano. The Special Commercial Court ruled for the CPAI; in that the deed of sale covering the property was in the name of CPA, not Emiliano. The latter signed the deed for and in behalf of the CPA, thus, there is no doubt as to who the vendee is. Petitioners are directed to cease and desist from collecting the rentals. On appeal with the CA, the petitioners contested the jurisdiction of the special commercial court over the case. The CA found that the special commercial court should not have tried the case since there was no intra-corporate dispute among CPAI members. However, the said court denied the appeal based on the doctrine of estoppel. Issue: WON the petitioners are barred from questioning the courts jurisdiction over the case when they Held: The SC held in the negative. Originally, Sec. 5 of P.D. 902-A conferred on SEC the original and exclusive jurisdiction over xxx controversies arising out of intra-corporate, partnership, or association relations between and among stockholders xxx

members or associates, however, upon the enactment of R.A. No. 8799 in the year 2000, the jurisdiction of the SEC over intracorporate controversies and other cases enumerated in Sec. 5 of P.D. 902-A was transferred to the courts of general jurisdiction. It has been proven that the special commercial court has no jurisdiction over the case since petitioners were not members/officers of CPAI, but of CPA. The two associations are distinct of each other. In previous cases, the SC ruled that the operation of estoppel on the question of jurisdiction seemingly depends on whether the lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction, for the same must exist as a matter of law, and may not be conferred by the consent of the parties or by estoppel. The rule remains that estoppel does not confer jurisdiction on a tribunal that has none over the cause of action or subject matter of the case. Unfortunately for CPAI, no exceptional circumstance appears in this case to warrant divergence from the rule. Jurisdiction by estoppel is not available here. The decision grants the petition of Melgazo and others; in that the case filed by CPAI before SEC is hereby dismissed for lack of jurisdiction. G.R. No. L-37750 May 19, 1978 SWEET LINES, INC., v. HON. BERNARDO TEVES, Presiding Judge, CFI of Misamis Oriental Branch VII, LEOVIGILDO TANDOG, JR., and ROGELIO TIRO, respondents. SANTOS, J.: Topic: Venue of Actions FACTS: Private respondents Atty. Leovigildo Tandog and Rogelio Tiro bought tickets at the branch office of petitioner Sweet Lines, a shipping company transporting inter-island passengers and cargoes, at Cagayan de Oro City. Respondents were to board petitioner's vessel, M/S "Sweet Hope" bound for Tagbilaran City via the port of Cebu. Upon learning that the vessel was not proceeding to Bohol, since many passengers were bound for Surigao, private respondents per advice, went to the branch office for proper relocation to M/S "Sweet Town". Because the said vessel was already filled to capacity, they were forced to agree "to hide at the cargo section to avoid inspection of the officers of the Philippine Coastguard." Private respondents alleged that they were, during

the trip," "exposed to the scorching heat of the sun and the dust coming from the ship's cargo of corn grits," and that the tickets they bought at Cagayan de Oro City for Tagbilaran were not honored and they were constrained to pay for other tickets. In view thereof, private respondents sued petitioner for damages and for breach of contract of carriage in the alleged sum of P10,000.00 before respondents Court of First Instance of Misamis Oriental. Petitioner moved to dismiss the complaint on the ground of improper venue. This motion was premised on the condition printed at the back of the tickets, i.e., Condition No. 14, which reads: 14. It is hereby agreed and understood that any and all actions arising out of the conditions and provisions of this ticket, irrespective of where it is issued, shall be filed in the competent courts in the City of Cebu. The motion was denied by the trial court. Petitioner moved to reconsider the order of denial, but no avail. Hence, this instant petition for prohibition for preliminary injunction, 'alleging that the respondent judge has departed from the accepted and usual course of judicial proceeding" and "had acted without or in excess or in error of his jurisdiction or in gross abuse of discretion. ISSUE: May a common carrier engaged in inter-island shipping stipulate thru condition printed at the back of passage tickets to its vessels that any and all actions arising out of the contract of carriage should be filed only in a particular province or city, in this case the City of Cebu, to the exclusion of all others? RULING: No. The Court held that Condition No. 14 is void and unenforceable because it is subversive of public policy on transfers of venue of actions. For, although venue may be changed or transferred from one province to another by agreement of the parties in writing t to Rule 4, Section 3, of the Rules of Court, such an agreement will not be held valid where it practically negates the action of the claimants, such as the private respondents herein. The philosophy underlying the provisions on transfer of venue of actions is the convenience of the plaintiffs as well as his witnesses and to promote the ends of justice. Considering the expense and trouble a passenger residing outside of Cebu City would incur to prosecute a claim in the City of Cebu, he would most probably decide not to file the action at all. The condition will thus defeat, instead of enhance, the ends of justice. Upon the other hand, petitioner has branches or offices in the respective ports of call of its vessels and can afford to litigate in any of these places. Hence,

the filing of the suit in the CFI of Misamis Oriental, as was done in the instant case, will not cause inconvenience to, much less prejudice, petitioner. Public policy is ". . . that principle of the law which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public or against the public good ... Under this principle" ... freedom of contract or private dealing is restricted by law for the good of the public. Clearly, Condition No. 14, if enforced, will be subversive of the public good or interest, since it will frustrate in meritorious cases, actions of passenger cants outside of Cebu City, thus placing petitioner company at a decided advantage over said persons, who may have perfectly legitimate claims against it. The said condition should, therefore, be declared void and unenforceable, as contrary to public policy to make the courts accessible to all who may have need of their services. PUROK BAGONG SILANG ASSOCIATION, INC., vs. HON. EVANGELINE S. YUIPCO Doctrine/Topic: PRINCIPLE OF JUDICIAL HIERARCHY FACTS: Lydia Kaimo et al. were the co-owners of three parcels of land located in Kaskag, Surigao City. However, about 400 private individuals constructed their houses and other improvements on the property. In 1982, the occupants formed an association known as the Purok Bagong Silang Association, Inc. (PBSAI). The Kaimos filed a Complaint in the RTC of Surigao City for the recovery of possession of real property, damages and attorneys fees against 64 occupants.The trial court rendered judgment on August 15, 1985 in favor of the plaintiffs. The defendants did not appeal the decision. Consequently, it became final and executory. The court issued a Special Order directing the eviction, not only of the defendants, but also those occupying and squatting on the property. The Deputy Sheriff served copies of said notice not only on the defendants but also on 309 other individuals whose houses stood on the plaintiffs property. The appellate court issued a Temporary Restraining Order on July 1, 1998 enjoining the enforcement of the writ of demolition. The Deputy Sheriff tried to implement on two occasions the Writ of Demolition on the same day.

PBSAI then filed a Petition for Prohibition before the Supreme Court. ISSUE: Whether the petition filed in SC is appropriate. HELD: No, petitioner sought relief from this Court for a writ of prohibition under Rule 65 of the Rules of Court.Where the issuance of an extraordinary writ is also within the competence of the CA or the RTC, it is in either of these courts that the specific action for the issuance of such writ must be proscribed unless special and important laws are clearly and specifically set forth in the petition. The reason for this is that the Court is a court of last resort and must so remain if it is to satisfactorily perform the functions assigned to it by the Constitution and immemorial tradition. It cannot and should not be burdened with the task of deciding cases in the first instance. Its original jurisdiction to issue extraordinary writs should be exercised only where absolutely necessary or where serious and important reasons exist therefor. Petitioner has not alleged, in its petition, any special and important reasons why it sought relief from this Court for a writ of prohibition before seeking relief in the respondent court or the CA. Moreover, there was no urgency for the petitioner or its 309 members to file their petition in this Court considering that, earlier, on July 1, 1998, the CA had already issued a temporary restraining order, on the basis of which the Ex-Officio Sheriff stopped implementing Writ of Demolition issued by the respondent Judge. G.R. No. 167979, March 15, 2006, WILSON S. UY v. THE HON. COURT OF APPEALS Petitioner assails the August 20, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 72678,1 affirming the January 22, 2002 Order of the Regional Trial Court, Branch 52 of Bacolod City in Special Proceedings No. 97-241,2 as well as the April 29, 2005 Resolution denying the motion for reconsideration.3 The facts of the case show that Jose K.C. Uy (Deceased) died intestate on August 20, 1996 and is survived by his spouse, Sy Iok Ing Uy, and his five children, namely, Lilian S. Uy, Lilly S. Uy, Livian S. Uy-Garcia , Lilen S. Uy and Wilson S. Uy (Petitioner). On February 18, 1997, Special Proceedings No. 97-241 was instituted and Lilia Hofilea was appointed as special administrator of the estate of the deceased. Petitioner moved to reconsider the

order appointing Lilia Hofilea as special administrator with prayer that letters of administration be issued to him instead.4 On June 9, 1998, Judge Ramon B. Posadas revoked Lilia Hofileas appointment as special administrator and denied her petition to be appointed as regular administrator. Meanwhile, letters of administration were granted to petitioner, who took his oath of office as administrator on June 23, 1998. On February 17, 1999, Johnny K. H. Uy (Private Respondent) filed a motion to intervene, praying that he be appointed as administrator of the estate in lieu of petitioner. He alleged that he is the brother and a creditor of the deceased, and has knowledge of the properties that should be included in the estate. The trial court initially denied private respondents motion to intervene,5 but on March 16, 2000,6 it reconsidered its earlier order and appointed private respondent as co-administrator of the estate. Petitioners motion for reconsideration was denied. Petitioner then moved that private respondent bring into the estate properties belonging to the deceased, which motion was granted by the trial court. Not satisfied with the compliance of private respondent, petitioner reiterated his motion for removal of the former as co-administrator, but the same was denied. The trial court found that private respondent substantially complied with the order directing him to bring into the estate properties owned by or registered in the name of the deceased not subject of any adverse claim or controversy when he listed the alleged properties suspected to be concealed, embezzled or conveyed away by the persons named therein. Thus, it found no cogent reason to remove private respondent as co-administrator.7 Thereafter, petitioner appealed to the Court of Appeals by way of a petition for certiorari which however, dismissed the petition. The Court of Appeals held that the refusal of the trial court to remove private respondent as co-administrator of the estate is neither an error of jurisdiction nor a grave abuse of discretion; that the appointment of private respondent was justified; that the order of preference under Section 6 of Rule 78 of the Rules of Court does not rule out the appointment of co-administrators; that the institution of a case for annulment of title and reconveyance against respondent does not justify private respondents removal as co-administrator. Petitioners motion for reconsideration was denied, hence, this petition on the following grounds: WHETHER OR NOT THE COURT OF APPEALS AND THE RESPONDENT REGIONAL TRIAL COURT HAVE ACTED WITHOUT JURISDICTION OR IN GRAVE ABUSE OF THEIR DISCRETION TANTAMOUNT TO LACK OF JURISDICTION (sic), IN VIOLATION [OF] THE ESTABLISHED AND ACCEPTED RULE OF LAW AND IN COMPLETE DISREGARD OF

SUBSTANTIAL JUSTICE AND EQUITY IN APPOINTING A COADMINISTRATOR OF AN ESTATE (IN THE PROCESS OF SETTLEMENT) WHERE THERE IS AN INCUMBENT ADMINISTRATOR WHOSE APPOINTMENT IS FIRM, FINAL, IMPLEMENTED AND INAPPEALABLE, AND WHICH (sic) APPOINTMENT HAS NOT BEEN CANCELLED, RECALLED, REVOKED OR RESCINDED BY APPOINTING, AT THAT, A PERSON (A) ALIEN TO THE ESTATE OF THE DECEASED, WITH VARIOUS SERIOUS INTERESTS (ACTUAL JUDICIAL CONTROVERSIES) IN CONFLICT WITH THOSE OF THE ESTATE, AND (B) WITH NO PROPER INTEREST IN THE ESTATE AND WHO IS PERSONALLY UNFIT, UNSUITABLE, UNWORTHY, UNDESERVING OF THE TRUST INHERENT IN THE POSITION OF CO-ADMINISTRATOR OF THE ESTATE, AND UNACCEPTABLE AND REPULSIVE TO THE FAMILY OF THE LEGAL HEIRS OF THE DECEASED; AND THEN REFUSING TO REMOVE HIM AS CO-ADMINISTRATOR AFTER IT WAS SHOWN THAT HIS REPRESENTATIONS ON WHICH HE WAS APPOINTED COADMINISTRATOR WERE EMPTY AND FALSE; AND WHETHER OR NOT THE RESPONDENT COURT OF APPEALS DENIED PETITIONER HIS CONSTITUTIONAL RIGHTS TO DUE PROCESS OF LAW AND HIS RIGHT TO PETITION THE GOVERNMENT FOR REDRESS OF GRIEVANCES BY NOT ADDRESSING AND RESOLVING THE ISSUES BROUGHT TO IT BY THE PETITIONER, MORE ESPECIFICALLY THE ISSUES OF (1) RES JUDICATA AND STABILITY OF THE JUDGMENT APPOINTING THE PETITIONER HEREIN AS JUDICIAL ADMINISTRATOR OF THE ESTATE IN QUESTION, AND (2) DECIDING THE ISSUES INVOLVED IN A MANNER CONTRARY TO THE RULES SET DOWN BY THE SUPREME COURT ON THE MATTER.8 The main issues for resolution are: (1) whether the trial court acted with grave abuse of discretion in appointing private respondent as co-administrator to the estate of the deceased; and (2) whether the Court of Appeals deprived petitioner of his constitutional right to due process and his right to petition the government for redress of grievances by not addressing the issues raised before it. The petition is without merit. Petitioner asserts that his appointment as a regular administrator is already final, unassailable or res judicata; that the inferior court has no authority to re-open the issue of the appointment of an administrator without removing the incumbent administrator; that private respondent is not only alien to the estate, but has a conflict of interest with it; that the trial courts appointment of private respondent as co-administrator constitutes grave abuse of discretion tantamount to lack of jurisdiction. There is no question that petitioner was appointed as regular administrator of the estate of the deceased Jose K. C. Uy on June 9,

1998. However, private respondent in his motion to intervene sought to be appointed as administrator as he is not only the brother of the decedent but also a creditor who knows the extent of the latters properties. Thus, the trial court, while retaining petitioner as administrator, appointed private respondent as coadministrator of the estate. The main function of a probate court is to settle and liquidate the estates of deceased persons either summarily or through the process of administration.9 In the case at bar, the trial court granted letters of administration to petitioner and thereafter to private respondent as co-administrator. Under Section 6, Rule 78 of the Rules of Court, the preference to whom letters of administration may be granted are as follows: SEC. 6. When and to whom letters of administration granted. If no executor is named in the will, or the executor or executors are incompetent, refuse the trust, or fail to give bond, or a person dies intestate, administration shall be granted: (a) To the surviving husband or wife, as the case may be, or next of kin, or both, in the discretion of the court, or to such person as such surviving husband or wife, or next of kin, requests to have appointed, if competent and willing to serve; (b) If such surviving husband or wife, as the case may be, or next of kin, or the person selected by them, be incompetent or unwilling, or if the husband or widow, or next of kin, neglects for thirty (30) days after the death of the person to apply for administration or to request that administration be granted to some other person, it may be granted to one or more of the principal creditors, if competent and willing to serve; (c) If there is no such creditor competent and willing to serve, it may be granted to such other person as the court may select. The order of preference in the appointment of an administrator depends on the attendant facts and circumstances.10 In Sioca v. Garcia,11 this Court set aside the order of preference, to wit: It is well settled that a probate court cannot arbitrarily and without sufficient reason disregard the preferential rights of the surviving spouse to the administration of the estate of the deceased spouse.But, if the person enjoying such preferential rights is unsuitable, the court may appoint another person. The determination of a persons suitability for the office of administrator rests, to a great extent, in the sound judgment of the court exercising the power of appointment and such judgment will not be interfered with on appeal unless it appears affirmatively that the court below was in error. x x x Unsuitableness may consist in adverse interest of some kind or hostility to those immediately interested in the estate. x x x.12 (Emphasis supplied, citations omitted)

In the instant case, the order of preference was not disregarded by the trial court. Instead of removing petitioner, it appointed private respondent, a creditor, as co-administrator since the estate was sizeable and petitioner was having a difficult time attending to it alone. In fact, petitioner did not submit any report regarding the estate under his administration. In its March 16, 2000 Order,13 the trial court found thus: Going over all the arguments of the parties, after hearing has been set relative thereto, this Court has observed that indeed the judicial administrator had not submitted to the Court any report about the Estate under his administration except those involving the cases he filed and/or intervened in other branches. This may be due to his being inexperienced, but this fact will not be reason enough to remove him from the administration of the Estate as Judicial Administrator thereof. However, considering that the Intervenor is claiming to be the patriarch of the Uy family and who claims to have enormous knowledge of the businesses and properties of the decedent Jose K.C. Uy, it is the feeling of this Court that it will be very beneficial to the Estate if he be appointed co-administrator (without removing the already appointed Judicial Administrator) of the Estate of Jose K.C. Uy, if only to shed more light to the alleged enormous properties/businesses and to bring them all to the decedents Estate pending before this Court.14 A co-administrator performs all the functions and duties and exercises all the powers of a regular administrator, only that he is not alone in the administration.15 The practice of appointing coadministrators in estate proceedings is not prohibited. In Gabriel v. Court of Appeals,16 this Court reaffirmed that jurisprudence allows the appointment of co-administrators under certain circumstances, to wit: Under both Philippine and American jurisprudence, the appointment of co-administrators has been upheld for various reasons, viz: (1) to have the benefit of their judgment and perhaps at all times to have different interests represented; (2) where justice and equity demand that opposing parties or factions be represented in the management of the estate of the deceased; (3) where the estate is large or, from any cause, an intricate and perplexing one to settle; (4) to have all interested persons satisfied and the representatives to work in harmony for the best interests of the estate; and (5) when a person entitled to the administration of an estate desires to have another competent person associated with him in the office.17 (Emphasis supplied) Thus, petitioners argument that the trial court cannot re-open the issue of the appointment of an administrator without removing the incumbent administrator is erroneous. In probate proceedings, considerable latitude is allowed a probate court in modifying or

revoking its own orders as long as the proceedings are pending in the same court and timely applications or motions for such modifications or revocations are made by the interested parties.18 In the instant case, the estate of the deceased has not yet been settled and the case is still within the jurisdiction of the court. The foregoing discussion renders moot the second issue raised by petitioner. We see no cogent reason to set aside the findings of the Court of Appeals, because its findings of fact is conclusive and binding on the parties and not subject to review by this Court, unless the case falls under any of the exceptions to the rule.19 WHEREFORE, the petition is DENIED. The August 20, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 72678 affirming the January 22, 2002 Order of the Regional Trial Court in Special Proceedings No. 97-241, as well as the April 29, 2005 Resolution denying the motion for reconsideration are AFFIRMED. SO ORDERED. G.R. No. L-24680 , October 7, 1968, JESUSA VDA. DE MURGA v. JUANITO CHAN In this appeal, two issues involving questions of law are posed for resolution: First, whether or not the allegations in the complaint constitute a cause of action for unlawful detainer, and confer jurisdiction over the case to the municipal court (now city court) of Zamboanga City, under the provisions of Rule 70 of the Rules of Court and decisions interpreting the same, when particularly considered in the light of the contexture of the pertinent letter of demand to vacate the leased premises (Annex J of the Complaint), couched in the following wise: Please be advised further that we reiterate our demand made to you in our registered letter dated February 4, 1959 (to vacate the leased premises) which was received by you on the 10th instant, unless you pay the amount of Six Hundred pesos (P600.00) or Seven Hundred pesos (P700.00) as new rental per our letter of January 19, 1959, before the expiration of the 15-day period granted you for vacating the same. and, Second, whether or not the lessor and the lessee had agreed upon an automatic renewal of the lease of the premises, under the stipulation in clause "7" of the corresponding contract of lease, containing the following agreement: 7. That upon the termination of the term of Ten (10) years above expressed, the said Jesusa Vda. de Murga shall have the option to purchase the building or buildings belonging to and constructed by the said Juanito Chan, and the price of said building or buildings shall be determined by three commissioners, two of whom shall be appointed by each of the parties, and the remainder commissioner shall be appointed by both. However, in the event that the said

Jesusa Vda. de Murga shall not exercise the right granted her for any reason or cause, this contract of lease shall be automatically renewed but the period for said renewal shall, however, be fixed and adjusted again by the parties. It is agreed further that in case of said renewal, the rental shall also be adjusted by the parties depending on the business condition which shall then at that time prevail. (Exhibit A.) Jesusa Vda. de Murga was the owner of two parcels of land in the City of Zamboanga, designated as lots 36 and 38 of the cadastral plan of the place, and covered by Transfer Certificates of Title Nos. 3237 and 3238, respectively. On January 31, 1949, a contract of lease over said two lots was entered into by and between Jesusa Vda. de Murga as lessor, and Juanito Chan as lessee, the basic terms of which pertinent to the present case are: The period of the lease was ten (10) years from January 31, 1949; the lessee to pay a monthly rent of P500.00 within the first ten days of every month; with the consent of the lessor, the lessee may introduce improvements on the land; and Clause "7" quoted hereinabove. (Exhibit A.) Upon taking possession of the leased premises, with the consent of the lessor, the lessee introduced improvements on the land consisting of buildings of the total costs of P70,000.00. It is not disputed that the lessee paid in full the monthly rent during the ten- year period of the lease. As early as July 23, 1958, before the expiration of the ten-year period of the lease, there had been intercourse of communications between the lessor and the lessee for the renewal of the lease, but the parties failed to arrive at an agreement; hence, this action by the lessor against the lessee. Thus, on July 23, 1958, the lessor informed the lessee of her willingness to renew the lease for five years at a monthly rent of P700.00. (Exhibit B.) In his reply the lessee said: ... Much as I am willing to consider the suggested increase of rental, however, I would like to plead with you that due to very poor business at present, I may not be able to consider your indicated increase. (Exhibit C.) On August 1, 1958, the lessor advised the lessee that: Beginning February 1, 1959, ... the rental of my lots ... will be P700.00. (Exhibit D.) On January 18, 1959, the lessee advised the lessor that she (lessor) should purchase the buildings constructed on the land in accordance with the stipulation in the contract of lease, and ... In case you do not agree with the purchase of the aforesaid buildings, I am willing to continue occupying the land and execute a new contract of lease, but I am appealing to you to take into

consideration the prevailing business conditions by reducing the monthly rental to P400.00, ... (Exhibit L.) On January 19, 1959, the lessor replied that ... she rejects the option to purchase the buildings, ... and her present last offer is: (a) Six hundred pesos (P600.00) rentals payable within the first fifteen days of every month, without contract; or (b) Seven hundred pesos (P700.00) rentals payable within the first fifteen days of every month, one year advanced rental, with a five-year contract. (Exhibit F.) On January 20, 1959, the lessor informed the lessee that the conditions stated in the latter's letter of January 18, 1959, were not acceptable to her. (Exhibit G.) On January 21, 1959, the lessee advised the lessor that he (lessee) cannot accept the conditions stated in her (lessor's) letters of January 19 and 20, 1959 ... y, insists que Vd. compre mis casas enclavadas en los lotes objeto de arrendamiento. Y en caso de su negative seguire ocupando el solar bajo el pago de un alquiler mensual de Quinientos pesos (P500.00) debido al negocio reinante en estos dias, tal como esta dispuesto en el contrato de arrendamiento firmado por Vd. y yo el dia 31 de Enero de 1949." (Exhibit H.) On February 4, 1959, the lessor made demand on the lessee to vacate the premises ... for the reason that the lease contract had expired on January 31, 1959, ... and the lessor had waived the right to exercise the option granted her under paragraph "7" of said contract, ... (Exhibit I.) On February 16, 1959, the lessee sent his check for P500.00 to the lessor in payment of the monthly rental corresponding to the month of February, 1959. (See Exhibit J.) On February 19, 1959, the lessor returned to the lessee the check which the latter had sent to the former, stating further in the letter that she was demanding that the leased premises be vacated, if he (lessor) would not agree to pay the new rental of P600.00 or P700.00 a month beginning February 1, 1959, as embodied in the letter, Exhibit J, hereinabove quoted. Disregarding the written demand of the lessor, dated February 19, 1959, Exhibit J, the lessee chose to remain in the possession of the leased premises and insisted that the contract of lease stipulated an automatic renewal of the lease, and conformably thereto, he has a right to continue occupying the premises; and as token of his decision, he sent to the lessor his check for P500.00 in payment of the monthly rent corresponding to the month of February 1959. The lessor was undoubtedly not satisfied with the tendered amount of P500.00, because she had demanded P600.00 or P700.00, as new monthly rent as a condition for the renewal of the lease. And without any further definite demand on the lessee to vacate the

premises filed, on March 10, 1959, a complaint of unlawful detainer in the municipal court of Zamboanga City against the lessee, Juanito Chan, to eject the latter from the leased premises. The facts alleged in the complaint as cause of action, consisted in reproducing and reiterating the substance of the correspondence exchanged between lessor and lessee, as narrated above, and claiming that the possession of the lessee of the premises had become illegal by his failure and refusal to pay the increased new rental. For relief, the plaintiff prayed that the defendant be ordered to vacate the premises, and "TO PAY THE NEW RENTS DEMANDED OF P600.00 or P700.00 FROM FEBRUARY 1, 1959 MONTHLY AS THE CASE MAY BE." Attached to the complaint, as annexes thereto, were copies of the letters exchanged between the lessor and the lessee, Exhibits B to J. In his answer (as amended), the defendant admitting the genuineness and authenticity of the letters annexed to the complaint, but traversing some of the allegations therein, raised the defenses of lack of jurisdiction of the court over the case, and lack of cause of action for unlawful detainer. After a trial, decision was rendered ordering the defendant to vacate the premises, to pay the plaintiff the sum of P600.00 as monthly rent from February 1, 1959, and P500.00 as attorney's fees. The defendant appealed from the decision to the Court of First Instance of Zamboanga City. Before this Court, the defendant again raised the special defenses of lack of jurisdiction of the municipal court and lack of cause of action for unlawful detainer. Ruling on the issue of lack of jurisdiction, the court said: With reference to the contention of defendant that the municipal court had no jurisdiction to try this case because the interpretation, application and enforcement of the terms of the Lease Agreement is within the competence of a court higher than that of the municipal court, deserves hardly any discussion. Suffice it to say that the jurisdiction of the municipal court is grounded on Section 88 of the Judiciary Act of 1948. After a trial, the Court of First Instance rendered judgment ordering the defendant to vacate the premises, to pay the plaintiff the sum of P1,200.00 from February 1, 1959, as monthly rental of the land, and P2,000.00 as attorney's fees. From the foregoing decision, the defendant interposed a direct appeal to this Court. Therefore, only questions of law may be considered in this appeal. Among the four errors assigned by the appellant in his brief, the first two pose the issue of lack of jurisdiction of the municipal Court and of the lack of cause of action for unlawful detainer; the remaining errors delving on questions of fact which, by reason of

the nature of the appeal are, therefore, deemed admitted and may not be reviewed in this appeal. In relation to the issue of lack of jurisdiction of the municipal court over the case, it is to be noted that, after the lessor and the lessee had failed to agree on the renewal of the lease which terminated on January 31, 1959, the lessor, on February 19, 1959, sent the demand letter hereinabove quoted, Exhibit J. It was, then, as it is now, the contention of the lessee that such demand is not that kind of demand contemplated in the Rules of Court as complying with the jurisdictional requirement that demand to vacate is indispensable in order to determine whether the tenant's possession has become illegal. On this matter, the rulings in the following cases are pertinent and applicable: The notice giving lessee the alternative either to pay the increased rental or otherwise to vacate the land is not the demand contemplated by the Rules of Court in unlawful detainer cases. When after such notice, the lessee elects to stay, he thereby merely assumes the new rental and cannot be ejected until he defaults in said obligation and necessary demand is first made. (Manotok vs. Guinto, L-9540, April 30, 1957.) The lessor may, under Article 1569 of the Civil Code, judicially disposses the lessee for default in the payment of the price agreed upon. But where such default is based on the fact that the rent sought to be collected is not that agreed upon, an action for ejectment cannot lie. (Belmonte vs. Martin, 42 Off. Gaz. No. 10, 2146.) In the case at bar, it clearly appears from the demand letter of February 19, 1959, that the obligation to vacate the leased premises would be dependent on the failure of the lessee to agree to the new rent demanded by the lessor. As the lessee, however, was in the physical possession of the land by virtue of a prior contract of lease, and the demand was in the alternative imposing a new rental, even without taking into account the efficacy of the stipulation for an automatic renewal of the lease, which shall be discussed hereafter, in the light of the ruling in Belmonte vs. Martin, supra, without any subsequent definite demand to vacate the premises, subject to no condition, the lessee did not incur in default which would give rise to a right on the part of the lessor to bring an action of unlawful detainer. Delving on the second special defense to wit, that the allegations in the complaint do not constitute a cause of action of unlawful detainer, it is the contention of the lessee-appellant that clause "7" of the contract of lease, quoted hereinabove, meant an express grant to the lessee to renew the lease at his option, contrary to the claim of the lessor-appellee that there must be a prior mutual agreement of the parties. As we read clause "7", We find that it

envisioned the happening of two eventualities at the expiration of the lease on January 31, 1959 either the lessor may purchase the improvements constructed by the lessee on the land, or in case the lessor fails, for any cause or reason, to exercise the option to buy, the lease shall be deemed automatically renewed. The evidence has established that the lessor had refused to buy the buildings on the land. The statement in said clause "7" that in case of renewal the duration of the lease and the new rental to be paid shall be adjusted by the parties, is of no moment in the solution of the issue, whether or not the facts alleged in the complaint constitute a cause of action of unlawful detainer. The pleadings of the parties, and the annexes thereto, clearly show that the jugular vein of the controversy hinges on the correct interpretation of clause "7" of the contract of lease, a matter outside the jurisdiction of the municipal court. The lessor-appellee maintains that the lease had terminated on January 31, 1959, renewable only upon a new agreement of the parties; on the other hand, the lessee-appellant contends that, inasmuch as the controversy hinges on the interpretation of clause "7" of the contract, that is, whether or not said clause contemplated an automatic renewal of the lease, the action was not for unlawful detainer but one not capable of pecuniary estimation and, therefore, beyond the competence of the municipal court. The contention of the lessee-appellant must be sustained. In Cruz vs. Alberto, 39 Phil. 991, the contract of lease had the following provision: That the term of this contract of lease shall be six years from the date of the execution, and extendible for another six years agreed upon by both parties. It was contended by the lessor that the lease cannot be extended except upon mutual agreement. Ruling on the contention, the Supreme Court said: We are of the opinion that the trial judge was entirely correct in his interpretation of the contracts in question; and though it must be admitted that this interpretation renders the words "agreed upon by both parties" superfluous yet this does not involve any strain upon the meaning of the entire passage. If the interpretation which the appellant would have us adopt be true, the entire clause relative to the extension of the term would be superfluous, for if the extension is only to be effective upon a new agreement of the parties to be made at the expiration of the original term, why should anything at all be said about an extension? Parties who are free to make one contract of lease are certainly free to make a new one when the old has expired without being reminded of their faculty to do so by the insertion of a clause of this kind in the first lease. This would not only be superfluous but nonsensical. The

clause relative to the extension of the lease should, if possible, be so interpreted as to give it some force. As we interpret the contracts before us, the parties meant to express the fact that they had already agreed that there might be an extension of the lease and had agreed upon its duration, thus giving the defendant the right of election to take for a second term or to quit upon the expiration of the original term. The clause in question has the same meaning as if the words "agreed upon by both parties" had been omitted and the passage had closed with a period after the word "years" in the first contract and after "extension" in the third contract. It has been held by this court that the word "extendible" standing without qualification in a contract of lease, means that the term of the lease may be extended and is equivalent to a promise to extend, made by the lessor to the lessee, and, as unilateral stipulation, obliges the promisor to fulfill his promise. (Legarda Koh vs. Ongsiako, 36 Phil. Rep. 185). Such a stipulation is supported by the consideration which is at the basis of the contract of lease (16 R.C.L. pp. 883, 884) and obviously involves a mutuality of benefit, or reciprocity, between the parties, notwithstanding the right of election is conceded solely to the lessee. As a general rule, in construing provisions of this character, the tenant is favored, where there is any uncertainty, and not the landlord, upon the principle that a grant should be taken most strongly against the grantor. (15 R.C.L. p. 884, 24 Cyc. 915.) In the case of Legarda Koh vs. Ongsiaco, 36 Phil. 189-190, the contract of lease had this provision: The term of the said contract shall be for one year, counting from the 1st of December of the present year (1963) which term shall be extendible at the will of both parties. Said the Supreme Court: According to Article 1091 of the Civil Code, obligations arising from contracts have legal force between the contracting parties and must be fulfilled in accordance with their stipulation. Therefore, if the defendant bound himself to lease his properties for the period of one year, which term should be extendible, it is evident and strictly in accord with justice that the plaintiff-lessee has a right, at the termination of the first period of one year, to have the said contract of lease renewed in fulfillment of the stipulated extension of the term of the lease; otherwise, the clause contained in the document Exhibit 1, that the lease at its termination would be extendible, would be worthless. The defendant-appellant is wrong in his contention that the renewal or extension of the contract depended solely upon himself, notwithstanding the stipulations contained in said contract, inasmuch as the renewal and continuation of the lease could not be

left wholly to the plaintiff's free will, without counting on the defendant's consent a consent expressly granted in the promise that the term would be extended, which term, although its duration was not fixed, should be understood to be for another year, a period equal to and not greater than the term of the lease. When a contract of lease provides that the term thereof is extendible, the agreement is understood as being in favor of the lessee, and the latter is authorized to renew the contract and to continue to occupy the leased property, after notifying the lessor to that effect. The lessor can withdraw from the said contract only after having fulfilled his promise to grant the extension of time stipulated therein, unless the lessee has failed to comply with or has violated the conditions of the contract. It is not necessary that the extension be expressly conceded by the lessor because he consented thereto in the original contract. UPON THE FOREGOING CONSIDERATIONS, We declare that the municipal court (now city court) of Zamboanga City had no jurisdiction over the case; therefore, the appealed decision is set aside and reversed, with costs against the plaintiff-appellee. JIMMY T. GO, petitioner, vs. UNITED COCONUT PLANTERS BANK, ANGELO V. MANAHAN, FRANCISCO C. ZARATE, PERLITA A. URBANO and ATTY. EDWARD MARTIN, respondents. Doctrine: The cancellation of the real estate mortgage is a real action, considering that a real estate mortgage is a real right and a real property by itself; and an action for cancellation of real estate mortgage is necessarily an action affecting the title to the property. Facts: Petitioner Go and Looyuko are co-owners of Noahs Ark International, Noahs Ark Sugar Carriers, etc. Their application for an Omnibus Line accommodation with respondent United Coconut Planters Bank (UCPB) in the amount of P900, 000, 000 was approved. - The transaction was secured by Real Estate Mortgages over parcels of land located at Mandaluyong City and registered in the name of Mr. Looyuko; and another property also located at Mandaluyong City, registered in the name of Noahs Ark Sugar Refinery. - UCPB subsequently cancelled the approved Omnibus Line accommodation; so, Go demanded from UCPB the return of the two TCTS (No. 64070 and No. 3325) covered by Real Estate Mortgages.

UCPB however refused to return the same and proceeded to have the two (2) pre-signed Real Estate Mortgages notarized and caused the registration thereof before the Registry of Deeds of Mandaluyong City. - UCPB filed the with the Office of the Clerk of Court and Ex-Officio Sheriff of Mandaluyong City an extrajudicial foreclosure of the mortgaged land that was registered in the name of Looyuko , for nonpayment of the obligation secured by said mortgage. Public auction sale was set. Hence, Go filed a complaint for Cancellation of Real Estate Mortgage and damages, with prayer for temporary restraining order and/or writ of preliminary injunction, against respondent bank and its officers with the Regional Trial Court of Pasig City. The complaint was later amended. - Respondent bank, instead of filing an answer, filed a motion to dismiss based on the several grounds. Among which is that the complaint was filed in the wrong venue. Trial Court: issued an order granting petitioners application for a writ of preliminary injunction. Correspondingly, the auction sale was enjoined. The trial court denied respondent banks motion to dismiss. A motion for reconsideration was likewise denied. UCPB filed a petition for certiorari. CA: set aside orders issued by the trial court and directed the trial court to dismiss case on the ground of improper venue. A motion for reconsideration was filed by petitioner, which was denied. Hence, this petition for review on certiorari. Petitioner argues: that a case for cancellation of mortgage is a personal action and since he resides at Pasig City, venue was properly laid therein. He tries to make a point by alluding to the case of Francisco S. Hernandez v. Rural Bank of Lucena. Issue: WON petitioners complaint for cancellation of real estate mortgage is a personal or real action for the purpose of determining venue. [It is a real action which should be commenced and tried in Mandaluyong City, the place where the subject property lies.] Held/Ratio: In a real action, the plaintiff seeks the recovery of real property, or as provided for in Section 1, Rule 4, a real action is an action affecting title to or possession of real property, or interest therein. These include partition or condemnation of, or foreclosure

of mortgage on, real property. The venue for real actions is the same for regional trial courts and municipal trial courts -- the court which has territorial jurisdiction over the area where the real property or any part thereof lies. Personal action is one brought for the recovery of personal property, for the enforcement of some contract or recovery of damages for its breach, or for the recovery of damages for the commission of an injury to the person or property. The venue for personal actions is likewise the same for the regional and municipal trial courts -- the court of the place where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, at the election of the plaintiff, as indicated in Section 2 of Rule 4. It is quite clear then that the controlling factor in determining venue for cases of the above nature is the primary objective for which said cases are filed. In a long line of cases, the Court held that annulment of foreclosure sale is a real action. Particularly in Carandang v. Court of Appeals, the Court held that an action for nullification of the mortgage documents and foreclosure of the mortgaged property is a real action that affects the title to the property. Petitioners reliance in the case of Francisco S. Hernandez v. Rural Bank of Lucena is misplaced. Firstly, said case was primarily an action to compel the mortgagee bank to accept payment of the mortgage debt and to release the mortgage. That action, which is not expressly included in the enumeration found in Section 1, Rule 4 of the 1997 Rules of Civil Procedure, does not involve titles to the mortgaged lots. It is a personal action and not a real action. Hence, the venue of the plaintiffs personal action is the place where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. In the case at bar, the action for cancellation of real estate mortgage filed by herein petitioner was primarily an action to compel private respondent bank to return to him the properties over which the bank had already initiated foreclosure proceedings . The prime objective is to recover said real properties. Secondly, Carandang distinctly articulated that the ruling in Hernandez does not apply where the mortgaged property had already been foreclosed. Here, bank had already initiated extrajudicial foreclosure proceedings, and were it not for the timely issuance of a restraining order secured by petitioner Go in the lower court, the same would have already been sold at a public auction. In a relatively recent case, Asset Privatization Trust v. Court of Appeals. It was succinctly stated that the prayer for the nullification of the mortgage is a prayer affecting real property, hence, is a real action.

WHEREFORE, the instant petition is DENIED for lack of merit. The assailed decision of the Court of Appeals denying the motion for reconsideration are hereby AFFIRMED. With costs.