CARMEN FUENTES AND GO TEK, PETITIONERS, VS. HON. CECILIA MUÑOZ-PALMA, AS JUDGE OF THE COURT OF FIRST INSTANCE OF RIZAL, BRANCH I AND AYALA SECURITIES INC., RESPONDENTS.

This is a petition for the issuance of a writ of certiorari against the
judge of, and the proceedings before, the Court of First Instance of
Rizal in its Civil Case No. 4590, entitled Ayala Securities
Incorporated) plaintiff vs. Carmen Fuentes and Go Tek,
defendants, to annul the proceedings in said case and enjoin the
enforcement of certain orders of the court in the case. It is alleged
in the petition that both the Justice of the Peace court, which
originally took cognizance of and decided the case of unlawful
detainer, as well as the Court of First Instance, to which the decision
of the Justice of the Peace was appealed, had no jurisdiction to hear
and determine the said action, which is one of unlawful detainer. It is
also alleged that the Court of First Instance had issued an order for
the demolition of certain buildings and other constructions made by the
defendants on the land subject of the action, and that this demolition
order was beyond the court’s power to issue.

Upon the filing
of the petition, We gave due course thereto and issue a writ of
preliminary injunction, prohibiting the court below from carrying out
the order of demolition mentioned above and from proceeding with the
hearing of the case.

The record discloses that on February
7, 1956 the Ayala Securities and Carmen Fuentes signed three separate
Agreements wherein the former had agreed and contracted to sell Lots
Nos. 23, 24 and 25, Block No. 26, in Makati, Rizal, covered by Transfer
Certificate of Title No. 16339 of the Register of Deeds of Rizal, and
the latter had in turn bound herself to pay the initial installments
and the consecutive monthly installments on the purchase prices
specified for the lots at the office of the owner in Manila, without
the need of demand. The other pertinent provisions of the Agreements
are as follows:

“4. The PURCHASER/S will be
allowed to enter into and take possession of the property upon the
payment of one-fourth (1/4) of the purchase price1 unless sooner
allowed by the OWNER, provided, however, that the PURCHASER/S
possession under this section shall only be that of a tenant or lessee
and subject to ejectment proceedings during all the period of this
agreement.

“5. Upon taking possession of the property, the
PURCHASER/S shall not erect thereon any building or permanent
improvements at a distance of less than two (2) meters from the
boundaries of the property which face the street/s or proposed street/s.

“All the buildings which may be constructed at any time on the property
must be of strong materials, with modern sanitary installations
connected either to a public sewer or to an approved septic tank, and
must be constructed at a distance of more than two (2) meters from the
boundaries of the property which face the streets or proposed street/s.
All such constructions must be approved by the health, fire and police
authorities of the city or locality where the property is situated.

* * * * * * *

“The OWNER, in its absolute discretion, may require that all the
buildings and permanent improvements which may be constructed on the
property conform to a certain type of architecture or to certain
designs approved by the OWNER, as to be in harmony with the surrounding
landscape or general vicinity of the property.

“9. The
PURCHASER/S hereby agree/s that representatives of the OWNER shall have
the right to enter the property at any time for the purpose of
inspection, measurement, relocation, survey, laying of monuments or of
necessary lines for water, gas, electric power, telephone and other
public services, and any inconvenience or disturbance thus caused shall
not be a cause for the rescission of this contract or an action for
damages.

* * * * * * *

“13.
Should the PURCHASER/S fail to make the payment of any of the monthly
installments together with the interests thereon as agreed herein,
within ninety (90) days from its due date, this contract shall, by the
mere fact of non-payment expire by itself and become cancelled without
necessity of notice to the PURCHASER/S or of any judicial declaration
to that effect, and any and all sums of money paid under this contract
shall be considered and become rentals on the property and in this
event, the PURCHASER/S should she be in possession of the property,
become, mere intruder/s or unlawful detainer/s of the same and may be
ejected therefrom by the means provided for by law for trespassers or
unlawful detainers. Immediately after the expiration of the ninety (90)
days provided for in this section, the OWNER shall be at liberty to
dispose of and sell said parcel/s of land to any other person in the
same manner as if this contract had never been executed or entered into.

* * * * * * *

On January 15, 1957, the plaintiff filed an action in the Justice of
the Peace court of Makati, Rizal, alleging that the defendant had
failed to pay any and all the monthly installments which become due and
payable on and after March, 1956; that defendant Carmen Fuentes and her
co-defendant Go Tek are in actual physical possession of the lots and
they failed and refused and still fail and refuse to vacate the same
and to remove therefrom the buildings, bodegas, pieces of machinery,
junks and other surplus materials existing thereon, in violation of
Clause No. 13 of the Agreements. Plaintiff prayed that it be restored
to the possession of the lots sold; that the defendants vacate the
premises and removed therefrom the bodegas, garages, pieces of
machinery, etc. found standing or deposited thereon; that defendants
pay plaintiff the amount of P1,800.00 for the use and occupation of the
land, and to pay the costs and attorney’s fees.

After
rendition of the above judgment, the defendants appealed to the Court
of First Instance and when the records were elevated to this court, the
defendants filed a motion to dismiss the action on two grounds, namely,
that the court has no jurisdiction over the subject matter of the
action and that there is another action pending between the same
parties for the same cause. The second grounds for the motion to
dismiss was due to the fact that in 1955 the plaintiff filed another
action against the defendants for the recovery of the land for their
failure to pay the installments from June, 1954 up to April, 1955, as
provided in the original contracts dated January 21, 1954. However, the
case ended in a compromise and the parties executed the Agreements on
February 7, 1956, already mentioned above.

Plaintiff
objected to the motion to dismiss and cited the provisions of Section
13 of the Agreements, wherein it is stated that should the purchasers
fail to pay any of the monthly installments together with interest
thereon within 90 days, the contracts shall be cancelled and the
purchaser shall be considered as mere intruder and may be ejected
therefrom. Plaintiff’s counsel argued that under Section 1, Rule 72 of
the Rules of Court, the right of possession of defendants had
terminated by virtue of her failure to pay the monthly installments, so
that the action of ejectment may be cognizable by the Justice of the
Peace court. On December 5, 1958, upon application of the plaintiff,
the Court of First Instance issued a demolition order, commanding the
Sheriff of Rizal to demolish the houses, bodegas, garages and other
improvements of said defendants on Lots Nos. 23, 24 and 25, at their
own expense. A motion to reconsider this order was denied and as all
attempts by defendants to stop the proceedings and the demolition order
were in vain, the present petition for certiorari with preliminary
injunction was presented.

In the answer filed by the Ayala
Securities Inc. as respondent before this Court, it is claimed that
Clause No. 13 of the Agreements is valid; that the Agreements
constitute a contract to sell and not a contract of sale, for which
reason Article 1592 of the Civil Code can not be applicable. It is also
alleged in the answer that the immediate execution of the judgment of
the Justice of the Peace is authorized in Section 8 of Rule 72.

The sole and only question to decide in this case is whether the action
instituted by the respondent Ayala Securities, Inc. in the Justice of
the Peace Court, which is a summary action of unlawful detainer, is the
proper remedy. Were we to follow the terms used in Clause No. 13 of the
Agreements, that upon the failure of the purchaser to pay the
installments due within 90 days, the purchaser shall become a mere
intruder and may be ejected therefrom, as an unlawful trespasser, it
would seem the remedy was the proper one. However, the action that may
be instituted under the Agreements to enforce their terms is not a
matter that can be fixed by the agreement or the will of the parties;
that question is determined by law, according to which the nature of
the questions and issues actually involved determine the nature of the
action appropriate to resolve the same and the court that may take
cognizance thereof. A perusal of the terms of the Agreements shows
various provisions, the interpretation and construction of which are
demanded before the nature of said Agreements can be determined. The
Agreements allow the purchaser to enter upon the premises and to
construct buildings thereon and she in fact constructed the garages,
warehouses, etc. An action of unlawful detainer, which is a summary
proceeding to wrest possession from one who has no right thereto, is
applicable only when the issue is that of possession; but rights of
property in the land created by the Agreements, especially the relative
rights and obligations of the parties to the improvements are directly
involved. The provisions of the Agreements themselves need judicial
interpretation as to their scope and effect; the delivery of the
possession of the land and the grant of permission to construct
buildings thereon require the determination of the respective rights of
the purchaser-builder and the owner-vendor on the land and on the
buildings and constructions. Plaintiff contends that the Agreements are
contracts to sell; the defendants, that they are contracts of sale
(with a resolutory clause). These questions and issues are beyond the
scope or competence of the Justice of the Peace and clearly fall within
the jurisdiction of the Court of First Instance as the issues involved
refer to rights over real property.

The present case is
parallel to a case of seduction which under the criminal law is triable
in the Justice of the Peace court because the penalty therefor is
within the Justice of the Peace court’s jurisdiction; but as the
judgment to be rendered may affect the status of the offspring
resulting from the offense of seduction, the offense falls beyond the
jurisdiction of the justice of the Peace court. Similarly, the suit
filed in the case at bar is only one of possession, but inasmuch as
various questions as to the nature and scope of the transaction,
whether it is a contract of sale or a mere contract to sell, and the
respective rights of the vendor and the vendee to the land, the
possession thereof and the constructions thereon, are involved and
related to the matters in dispute, the case is beyond the power and
authority of the Justice of the Peace court to try and decide. In other
words, various necessary issues incident to the action are beyond the
Justice of the Peace court’s jurisdiction, hence the Justice of the
Peace court has no power to try the action.

Let Us first
examine the law defining the respective jurisdictions of the courts of
first instance and the justice of the peace courts, with respect to
real property. Courts of first instance have original jurisdiction “in
all civil actions which involve the title to or possession of real
property, or any interest therein, * * * except actions of forcible
entry into and detainer of lands or buildings, original jurisdiction of
which is conferred by this Act upon justice of the peace courts and
municipal courts.” (Sec. 43 Rep. Act 296). On the other hand, justice
of the peace courts are granted jurisdiction to try all civil actions
in his municipality or city, and not exclusively cognizable by the
court of first instance. (Sec. 88, Rep. Act 296). The pleadings and
papers submitted by the petitioner before the Court of First Instance
show that while counsel for plaintiff claims that the contract,
contained in the three Agreements is a contract to sell, counsel for
the defendants argues that said Agreements are a contract of sale. The
determination of this very question which affects title, is necessary
to resolve in the case at bar; hence the case falls beyond the
jurisdiction of the Justice of the Peace court. A case decided by this
Court which closely resembles the case at bar is that of Aquino vs. Deala, 63 Phil., 582. This Court, thru Mr. Justice Recto, stated the rule to be followed as follows:

“The
other point to be resolved is whether or not the municipal court had
jurisdiction to proceed with the trial of the case after the defendant
had raised the question of ownership therein. We have repeatedly held
that the mere fact that the defendant, in his answer, claims to be the
owner of the property from which the plaintiff seeks to eject him is
not sufficient to divest a justice of the peace court of its summary
jurisdiction in actions of forcible entry and detainer, because were
the principle otherwise, the ends of justice would be frustrated by
making: the efficacy of this kind of actions depend upon the defendant
in all cases. However, we have also held (Supia and Batioco vs. Quintero and Ayala, 59 Phil., 312), favorably citing Pertit vs. Black (13 Neb. 142, 154), and Green vs.
Morse (57 Neb. 391), that the foregoing rule does not hold when the
evidence shows that the question of title is actually involved in the
litigation and that the defendant’s contention according to said
evidence, is meritorious. In this case the records do not disclose the
nature of the evidence presented in the municipal court of origin in
connection with the question of ownership raised by the defendant and,
therefore, we are not in a position to rule that said court was without
jurisdiction to proceed with the trial of the case. We find,
however, that the evidence presented in the Court of First Instance of
Manila, where the case was brought on appeal, shows that the title to
the disputed property was correctly questioned. Therefore the Court of
First Instance should have declared itself without jurisdiction to
proceed with the trial of the case on appeal after examining said
evidence, and ordered the dismissal thereof.”

We do not decide herein what kind of contract has been entered into,
whether it is one of sale or to sell. But in deciding the right of
plaintiff to eject defendants, it is necessary to determine if the
defendant Carmen Fuentes is the owner of the property, or has a right
to possession thereof, or interest therein. The action therefore
necessarily involves the title of the defendants and their interest in
the property subject matter of the action. So the case falls under the
jurisdiction of the Court of First Instance as provided for in Section
43 of the Judiciary Act.

For the foregoing considerations,
we hold that as the issues involved in the case refer to real rights
created by the Agreements, matters which are beyond the scope of the
jurisdiction of the Justice of the Peace court to resolve, the remedy
availed of by the respondent Ayala Securities, Inc., which is a simple
and summary action for possession, is not the proper remedy, as the
Justice of the Peace court has no jurisdiction to try and decide said
issues. The proceedings in the court below are hereby declared null and
void and the case, dismissed. The preliminary injunction issued by Us
is hereby made permanent, with costs against the respondent.

Paras, C. J., Bengzon, Bautista Angelo, Concepcion, Barrera, and Gutierrez David, JJ., concur.