ANACLETO MENDOZA, PLAINTIFF AND APPELLANT, VS. MANUEL ARELLANO AND FILOMENA B. DE ARELLANO, DEFENDANTS AND APPELLANTS.

Plaintiff-appellant instituted summary proceedings (forcible entry
and detainer) in the court of the justice of the peace of Manila for
the recovery of possession of certainreal estate, and of rent for its
use and occupation, alleging that defendant was in possession under the
terms of a rental contract entered into with the plaintiff; that the
term of the rental contract had expired; and that defendant had failed
and refused to pay the stipulated rent for several months prior to the
close of the term. Defendant answered alleging that he is the owner of
the land in question, that the alleged rental contract was a mere
simulated and fictitious contract, a part of a simulated and fictitious
contract of sale with reserved right of repurchase (pacto de
retro)which had been executed as a cloak to conceal the true nature of
the contract actually entered into, which, as defendant alleged, was in
truth and in fact a contract in the nature of a mortgage, whereby title
to the real estate was conveyed to the plaintiff as security for the
repayment of a loan.

The justice of the peace dismissed the complaint on the ground that
he was without jurisdiction, because the issues raised by the pleadings
involved questions of title to real estate. Appeal was taken to the
Court of First Instance from the judgment of dismissal, and that court
reversed the order of dismissal and remanded the record to the justice
of the peace with instructions to certify the record to the Court of
First Instance in accordance with the provisions of the second
paragraph of section 68 of Act No. 136 as amended by section 3 of Act
No. 1627. The record was certified in due course, and upon its return
to the Court of First Instance the plaintiff reproduced and relied upon
his original complaint in the court of the justice of the peace. A
demurrer to this complaint was sustained, apparently on the ground that
in a case thus certified to the Court of First Instance from a court of
the justice of the peace the Court of First Instance exercises original
and not appellate jurisdiction; that Courts of First Instance have no
original jurisdiction to entertain actions of forcible entry and
detainer; and that while the complaint set forth facts sufficient to
maintain such an action, the facts alleged are insufficient to maintain
an action of ejectment in a Court of First Instance. Plaintiff excepted
to the various orders of theCourt of First Instance above set forth,
including the order sustaining the demurrer, and declined to amend his
complaint. The case is now before us on plaintiff’s bill of exceptions.

We think it is very clear .that the various orders entered in the
Court of First Instance whereby the record was brought to that court by
certificate of the justice of thepeace must be sustained. The correct
adjudication of the issues raised by the pleadings in the court of the
justice of the peace involved “questions of title to real estate or an
interest therein.” (Carroll and Ballesteros vs. Paredes, 17 Phil. Rep.,
94; Falcon and Falcon vs. Barretto, 26 Phil. Rep., 72.)

Counsel for plaintiff contends, however, that no such question can
properly arise, because, as he insists, defendant is estopped from
setting up a claim of title by the execution of the contract of sale
with a right to repurchase, and by the rule which forbids a tenant from
challenging the title of his landlord. But the real issue raised by
defendant’s pleadings is whether the alleged contract of sale with
right to repurchase, including the alleged rental contract, is a valid
contract duly executed by the parties, or a fictitious and simulated
contract which does not set forth the real nature of the agreement
actually entered into by the parties. Counsel’s contentions assume the
existence of a valid, binding contract; but that is the very question
raised by the pleadings. Until that question is disposed of the
doctrine of estoppel and the rule which forbids a tenant to challenge
the title of his landlord, upon which appellant relies, cannot be
invoked.

In the case of Falcon and Falcon vs. Barretto (supra) we said:

“In every case where there has been a controversy in this court
growing out of a sale with a right to repurchase the question of title
has been necessarily at issue. This isbecause the question of title is
the only one that can be raised. In these cases it is contended either
that the instrument constitutes a mortgage only or that the payments
stipulated therein have not been made. Usually it is contended that the
instrument is not a sale with a right to repurchase, but is a mortgage
instead. The resolution of that question requires, of course, an
interpretation of the instrument. If it is a sale with a right to
repurchase, the question then arises as to performance. If the time
within which the payment is to be made has expired, the title has
become irrevocable in the vendee and he is entitled to immediate
possession. On the other hand, if the instrument is a mortgage, or if
the payment required by the instrument has been made, or if there has
been a tender of payment, or if the vendor has tried in good faith to
make the payment required by the contract and has been prevented from
so doing by some act of the vendee, then the title has not become
absolute and the vendor is entitled to retain possession. In other
words, in all of these cases the question of title
necessarily arises one way or the other. Until the instrument has been
denned by interpretation no one knows where the title to the premises
is; and if the instrument be found to be a sale with a right to
repurchase, still no one knows where the title is until the questions
revolving around the fact of payment have been settled. Both of these
questions affect title, and a bona fide disputeas to either of them
will raise the question of title in such a way and to such an extent
that it must be one of the necessary determinations of the court trying
the cause.”

We are of opinion, nevertheless, that the order sustaining the demurrer must be reversed.

The trial judge appears to have been of opinion that an original
action for forcible entry and unlawful detainer will not lie in a Court
of First Instance. But while we heldin Alonso vs.
Municipality of Placer (5 Phil. Rep., 71, 74) that justices of the
peace had exclusive original jurisdiction in actions of this nature for
one year from the inception of the unlawful possession, that decision
was written prior to the enactment of section 3 of Act No. 1627, and
there can be no question that such jurisdiction is conferred on those
courts in cases wherein, under the provisions of section 3 of Act No.
1627, one of these actions is duly certified from the court of a
justice of the peace; otherwise it would be a vain and useless thing to
prescribe, as does that section, that when the adjudication of an
action of this kind which has been instituted in the court of a justice
of the peace involves questions of title to land, it must be certified
to the Court of First Instance. It is certified to that court for
trial, under and by authority of the express terms of the statute; and
the Legislature, having authorized the proceeding by which the action
is brought to the Court of First Instance for trial, must be presumed
to have conferred the necessary jurisdiction upon that court to try the
action thus brought before it.

The action thus certified to the Court of First Instance is not an
ordinary action of ejectment brought to try title, necessitating, as
the trial judge appears to have thought, an allegation of ownership and
title in the plaintiff. It is a mere possessory action, in which the
complaint sets forth facts sufficient to entitle him to possession as
against the defendant, and the judgment finally entered is merely a
judgment for possession and damages for the unlawful detention of the
property. The proceedings, however, differ from those had in similar
actions in courts of a justice of the peace in that the Court of First
Instance has jurisdiction, which a court of the justice of the peace
has not, to adjudicate and decide any incidental question touching
title to real estate which arises or may be involved in the
adjudication and decision of the issue as to the right of possession
asserted by the plaintiff.

In the course of the proceedings in the Court of First Instance
plaintiff prayed for the appointment of a receiver for the lands in
question pending the outcome of this litigation, and excepted to the
ruling of the court denying such appointment. Appointments of receivers
of real estate in cases of this kind lie largely in the sound
discretion of the court, and where the effect of such an appointment is
to take real estate out of the possession of the defendant before the
final adjudication of the rights of the parties, the appointment should
be made only in extreme cases and on a clear showing of necessity
therefor in order to save the plaintiff from grave and irremediable
loss or damage. (34 Cyc, 51, and cases there cited.) No such showing
has been made in this case as would justify us in interfering with the
exercise by the trial judge of his discretion in denying the
application for a receiver.

The judgment entered in the court below sustaining the demurrer to
the complaint should be reversed and the record returned for further
proceeding in conformity with law.

No costs in this instance to either party. So ordered.

Torres, Trent, and Araullo, JJ., concur.