G.R. No. 169823-24 - Disini vs. Sandiganbayan

Petitioner Jose C. Zulueta is the registered owner of a residential house and lot situated within the Antonio Subdivision in Pasig, Rizal.
Respondent Lamberto Avellana, a private individual and movie director, entered into a contractual relationship with petitioner and subsequently occupied the property.

On November 6, 1964, the parties executed a “Contract to Sell” for the property at a price of P75,000.00, payable over twenty years.
The payment terms stipulated a down payment of P5,000.00 and monthly installments of P630.00, payable in advance before the 5th day of each month starting December 1964.
A key contractual clause provided that if the buyer failed to meet any stipulated conditions, the buyer automatically and irrevocably authorized the seller to recover extra-judicial physical possession of the property and any personal property therein, effectively converting the contract upon default.

Despite the title remaining with petitioner, respondent Avellana took possession of the property in December 1964.
Petitioner alleged that Avellana failed to comply with his financial obligations under the contract (i.e., the monthly installments), which led petitioner to contend that the contract had been converted into one of lease.
Petitioner subsequently initiated an ejectment suit to regain possession and to secure payment for alleged arrearages and ongoing monthly rentals.

On June 22, 1966, petitioner filed an ejectment suit (Civil Case No. 1190) before the Municipal Court of Pasig, praying for:

An order directing respondent to vacate the premises;
Payment of P11,751.30 representing respondent’s balance as of May 1966;
Payment of monthly rental at P630.00 from May 1966 onward, in addition to costs.

The Municipal Court lacked jurisdiction since the case involved the interpretation and/or rescission of the contract rather than a mere detainer action.
A separate issue involving petitioner’s alleged indebtedness to respondent (amounting to P31,269.00 related to prior transactions involving movie productions and a borrowed projector) ought to serve as a set-off, though this counterclaim was later dismissed as being beyond the court’s jurisdiction.

On May 10, 1967, the Municipal Court found that respondent Avellana had indeed failed to comply with the financial obligations under the contract.
The lower court ordered respondent to:

In reaching its decision, the Municipal Court noted that a breach of any contractual condition automatically converted the agreement into a lease and that defenses such as alleged indebtedness were not proper in an action whose subject-matter was essentially a question of possession.

Respondent Avellana appealed to the Court of First Instance of Rizal, presided by respondent Judge.
On February 19, 1968, Avellana filed a Motion to Dismiss Appeal, contending that the case involved interpretation and/or rescission of the contract — matters beyond the jurisdiction of the Municipal Court.
On March 21, 1968, respondent Judge dismissed the appeal on jurisdictional grounds, emphasizing that:

Although the contract contained a provision for automatic rescission upon breach, judicial intervention was required when there was an objection to such extra-judicial action;
The issue at hand was not merely one of possession (detainer) but rather involved the rescission or annulment of the contract.

Petitioner filed a Motion for Reconsideration, which was denied.
Petitioner then availed of the extraordinary remedy by filing for a Writ of Mandamus and a Writ of Prohibition:

The Writ of Mandamus was requested to compel the respondent Judge to assume appellate jurisdiction over the ejectment case;
The Writ of Prohibition was sought to bar the lower court from exercising original jurisdiction over a case that improperly involved contract rescission issues.

The Court of First Instance ultimately reviewed these submissions in light of Section 11, Rule 40, which provides that if an inferior court acts without jurisdiction, the higher court may dismiss the case unless the parties agree to submit to the original jurisdiction of the reviewing court.

Whether the Municipal Court of Pasig had original jurisdiction over an ejectment (detainer) suit that essentially involved the interpretation or rescission of a contract to sell.
Whether the presence of an extra-judicial rescission clause in the contract, when objected to by one party, necessitated judicial determination of the violation and subsequent rescission.

Whether the case should be treated as a detainer action (for unlawful possession) or as one involving contract rescission/annulment, which would require adjudication by a Court of First Instance.
Whether the alleged conversion of the contract to a lease due to respondent’s non-compliance constituted a valid basis for the lower court to exercise jurisdiction.

Whether petitioner’s recourse via a Writ of Mandamus to compel appellate action was valid.
Whether granting a Writ of Prohibition to enjoin the lower court from taking cognizance of the case was proper under the circumstances.