G.R. No.

63201 May 27, 1992

PHILIPPINE NATIONAL BANK, petitioner,

MEDIALDEA, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court seeking to annul and set aside the orders of respondent Court of First
Instance of Rizal, Pasig, Branch 21 (now Regional Trial Court) dated April 22, 1982, September 14, 1982 and January 12, 1983 in LRC Case
No. R-2744 on the ground that they had been issued without or in excess of jurisdiction and with grave abuse of discretion.

The antecedent facts of this case are as follows:

Private respondents are the registered owners of three parcels of land in Pasig, Metro Manila covered by OCT No. 853, TCT Nos. 32843 and
32897 of the Registry of Deeds of Rizal.

On March 1, 1954, private respondents entered into a contract of lease with Philippine Blooming Mills, Co., Inc., (PBM for brevity) whereby
the letter shall lease the aforementioned parcels of land as factory site. PBM was duly organized and incorporated on January 19, 1952 with
a corporate term of twenty-five (25) years. This leasehold right of PBM covering the parcels of land was duly annotated at the back of the
above stated certificates of title as Entry No. 9367/T-No. 32843.

The contract of lease provides that the term of the lease is for twenty years beginning from the date of the contract and "is extendable for
another term of twenty years at the option of the LESSEE should its term of existence be extended in accordance with law." (p. 76, Rollo).
The contract also states that the lessee agrees to "use the property as factory site and for that purpose to construct whatever buildings or
improvements may be necessary or convenient and/or . . . for any purpose it may deem fit; and before the termination of the lease to remove
all such buildings and improvements" (pp. 76-77 Rollo).

In accordance with the contract, PBM introduced on the land, buildings, machineries and other useful improvements. These constructions
and improvements were registered with the Registry of Deeds of Rizal and annotated at the back of the respondents' certificates of title as
Entry No. 85213/T-No. 43338.

On October 11, 1963, PBM executed in favor of Philippine National Bank (PNB for brevity), petitioner herein, a deed of assignment,
conveying and transferring all its rights and interests under the contract of lease which it executed with private respondents. The assignment
was for and in consideration of the loans granted by PNB to PBM. The deed of assignment was registered and annotated at the back of the
private respondents' certificates of title as Entry No. 85215/T-No. 32843.

On November 6, 1963 and December 23, 1963 respectively, PBM executed in favor of PNB a real estate mortgage for a loan of P100,000.00
and an addendum to real estate mortgage for another loan of P1,590,000.00, covering all the improvements constructed by PBM on the
leased premises. These mortgages were registered and annotated at the back of respondents' certificates as Entry No. 85214/T-No. 43338
and Entry No. 870971/T-No. 32843, respectively.

PBM filed a petition for registration of improvements in the titles of real property owned by private respondents docketed as Case No. 6530.

On October 7, 1981, private respondents filed a motion in the same proceedings which was given a different case number to wit, LRC Case
No.
R-2744, because of the payment of filing fees for the motion. The motion sought to cancel the annotations on respondents' certificates of title
pertaining to the assignment by PBM to PNB of the former's leasehold rights, inclusion of improvements and the real estate mortgages made
by PBM in favor of PNB, on the ground that the contract of lease entered into between PBM and respondents-movants had already expired
by the failure of PBM and/or its assignee to exercise the option to renew the second 20-year lease commencing on March 1, 1974 and also
by the failure of PBM to extend its corporate existence in accordance with law. The motion also states that since PBM failed to remove its
improvements on the leased premises before the expiration of the contract of lease, such improvements shall accrue to respondents as
owners of the land.

On April 22, 1982, respondent court issued an order directing the cancellation of the inscriptions on respondents' certificates of title. The
dispositive portion of the order provides:

WHEREFORE, the Register of Deeds having jurisdiction over the movant's land Certificates of Title Nos. 853, 32843
and 32897 is hereby ordered, upon the payment of the corresponding fees, to cancel therein
memoranda/inscriptions/entries Nos. 85213/T-No. 43338, 85215/T-No. 32843, 85214/T-No. 43338 and 87097/T-No.
32843.
 SO ORDERED. (pp. 147-148, Rollo)

Petitioner PNB filed a motion for reconsideration of the above order of the respondent court but the latter denied it on June 28, 1982.

On August 25, 1982, private respondents filed a motion for entry of final judgment and issuance of a writ of execution of the order of April 22,
1982.

On September 14, 1982, respondent court granted the aforesaid motion for entry of final judgment and ordered the Register of Deeds of
Pasig, Rizal to cancel the entries on respondents' certificates of title stated in the order of April 22, 1982.

Petitioner PNB filed an omnibus motion to set aside the entry of judgment as ordered by the respondent court on the ground that it has no
prior notice or knowledge of the order of respondent court dated June 28, 1982 which denied its motion for reconsideration of the order of
April 22, 1982 and that while there was a certification from the Bureau of Posts that three registry notices were sent to petitioner's counsel,
there was no allegation or certification whatsoever that said notices were actually received by the addressee.

On January 12, 1983, the respondent court denied the omnibus motion.

Hence, this petition.

Petitioner alleges that respondent court acted capriciously and arbitrarily in issuing the orders of September 14, 1982 and January 12, 1983
which considered its previous order of April 22, 1982 as having become final on the ground that it had no notice or knowledge that the order
of June 28, 1982 denying its motion for reconsideration was issued; that the notices of registered mail allegedly containing the order of June
28, 1982 were not received by petitioner's counsel of record, and that the certification of the Bureau of Posts refers only to the fact that
registry notices were sent, and not to the fact that the notices were actually received by the addressee.

In resolving this matter, the respondent court stated in the questioned order of January 12, 1983 as follows:

The respondent PNB filed a motion of May 20, 1982 to set aside the Order of April 22, 1982. This was denied by the
Order of June 28, 1982. Then the movants filed a motion of August 25, 1982 for entry of judgment, based on the
postmaster's certification that not only one but three notices of the registered mail containing a copy of the order of
June 28, 1982 was sent to respondent PNB's counsel at the PNB Building at Escolta, Manila which is his address of
record in this case. Consequently the entry of judgment Order of September 14, 1982.

xxx xxx xxx

The respondent PNB's counsel at the hearing of said incidents on October 12, 1982 admitted that the aforesaid
registered notices could have been received by PNB's regular Receiving Section at the PNB Building at the Escolta but
could not have been forwarded by said Receiving Section to said counsel's Litigation and Collection Division, Legal
Department at an upper floor of the same building. Thus the presumption that official duty was regularly performed by
the postmaster was not overcome, as most recently reiterated by the Supreme Court in Feraren vs. Santos
promulgated on April 27, 1982, 113, SCRA 707 . . . (p. 195, Rollo)

Section 8 of Rule 13 of the Rules of Court, as amended, provides that service by registered mail is complete upon actual receipt by the
addressee; but if he fails to claim his mail from the post office within five (5) days from the date of first notice of the postmaster, service shall
take effect at the expiration of such time. The fair and just application of that exception depends upon the conclusive proof that the first notice
was sent by the postmaster to the addressee. The best evidence of that fact would be the certification from the postmaster (Barrameda v.
Castillo, L-27211, July 6, 1977, 78 SCRA 1).

In the instant case, the respondent court found that the postmaster's certification stated that three (3) notices of the registered mail which
contained the order of June 28, 1982 denying the motion for reconsideration of the order of April 22, 1982, were sent to petitioner PNB's
counsel at Escolta, Manila which is the address stated in the record of the case. The factual findings of the trial court bear great weight and is
binding upon this Court. Hence, as between the denial of the petitioners' counsel that he received the notice of the registered mail and the
postmaster's certification that said notices were sent to him, the postmaster's claim should prevail. The postmaster has the official duty to
send notices of registered mail and the presumption is that official duty was regularly performed (Aportadera, Sr. v. Court of Appeals, G.R.
No. 41358, March 16, 1988, 158 SCRA 695).

Petitioner alleges that it is not the respondent court but the Securities and Exchange Commission which has jurisdiction over the private
respondents' motions, which raised as issue the corporate existence of PBM. Petitioner further submits that the respondent court committed
grave abuse of discretion in ordering the cancellation of entries in the certificates of title of respondents on the following grounds: 1) the
motion for cancellation would amount to a collateral attack upon the due incorporation of PBM which cannot be done legally, 2) the contract
of lease between PBM as petitioner's assignor and private respondents did not expire since PBM exercised its option to renew the lease with
the acquiescence of private respondents, and 3) respondent court's ruling that ownership over the improvements passed from PBM to
private respondents upon the expiration of lease violates the law and the contract between the parties.
Even if We were to set aside the questioned orders directing the entry of finality of the order cancelling entries in the titles, petitioner's case
must still fail on the merits.

Private respondent's motion with the respondent court was for the cancellation of the entries on their titles on the ground that the contract of
lease executed between them and PBM had expired. This action is civil in nature and is within the jurisdiction of the respondent court. The
circumstance that PBM as one of the contracting parties is a corporation whose corporate term had expired and which fact was made the
basis for the termination of the lease is not sufficient to confer jurisdiction on the Securities and Exchange Commission over the case.
Presidential Decree No. 902-A, as amended, enumerates the cases over which the SEC has exclusive jurisdiction and authority to resolve.
The case at bar is not covered by the enumeration.

Anent the issue of whether the cancellation of the entries on respondent's certificates of title is valid and proper, We find that the respondent
court did not act in excess of its jurisdiction, in ordering the same.

The contract of lease expressly provides that the term of the lease shall be twenty years from the execution of the contract but can be
extended for another period of twenty years at the option of the lessee should the corporate term be extended in accordance with law.
Clearly, the option of the lessee to extend the lease for another period of twenty years can be exercised only if the lessee as corporation
renews or extends its corporate term of existence in accordance with the Corporation Code which is the applicable law. Contracts are to be
interpreted according to their literal meaning and should not be interpreted beyond their obvious intendment. Thus, in the instant case, the
initial term of the contract of lease which commenced on March 1, 1954 ended on March 1, 1974. PBM as lessee continued to occupy the
leased premises beyond that date with the acquiescence and consent of the respondents as lessor. Records show however, that PBM as a
corporation had a corporate life of only twenty-five (25) years which ended an January 19, 1977. It should be noted however that PBM
allowed its corporate term to expire without complying with the requirements provided by law for the extension of its corporate term of
existence.

Section 11 of Corporation Code provides that a corporation shall exist for a period not exceeding fifty (50) years from the date of
incorporation unless sooner dissolved or unless said period is extended. Upon the expiration of the period fixed in the articles of
incorporation in the absence of compliance with the legal requisites for the extension of the period, the corporation ceases to exist and is
dissolved ipso facto (16 Fletcher 671 cited by Aguedo F. Agbayani, Commercial Laws of the Philippines, Vol. 3, 1988 Edition p. 617). When
the period of corporate life expires, the corporation ceases to be a body corporate for the purpose of continuing the business for which it was
organized. But it shall nevertheless be continued as a body corporate for three years after the time when it would have been so dissolved, for
the purpose of prosecuting and defending suits by or against it and enabling it gradually to settle and close its affairs, to dispose of and
convey its property and to divide its assets (Sec. 122, Corporation Code). There is no need for the institution of a proceeding for quo
warranto to determine the time or date of the dissolution of a corporation because the period of corporate existence is provided in the articles
of incorporation. When such period expires and without any extension having been made pursuant to law, the corporation is dissolved
automatically insofar as the continuation of its business is concerned. The quo warranto proceeding under Rule 66 of the Rules of Court, as
amended, may be instituted by the Solicitor General only for the involuntary dissolution of a corporation on the following grounds: a) when
the corporation has offended against a provision of an Act for its creation or renewal; b) when it has forfeited its privileges and franchises by
non-user; c) when it has committed or omitted an act which amounts to a surrender of its corporate rights, privileges or franchises; d) when it
has mis-used a right, privilege or franchise conferred upon it by law, or when it has exercised a right, privilege or franchise in contravention of
law. Hence, there is no need for the SEC to make an involuntary dissolution of a corporation whose corporate term had ended because its
articles of incorporation had in effect expired by its own limitation.

Considering the foregoing in relation to the contract of lease between the parties herein, when PBM's corporate life ended on January 19,
1977 and its 3-year period for winding up and liquidation expired on January 19, 1980, the option of extending the lease was likewise
terminated on January 19, 1977 because PBM failed to renew or extend its corporate life in accordance with law. From then on, the
respondents can exercise their right to terminate the lease pursuant to the stipulations in the contract.

We now come to the question of the ownership over the improvements constructed by PBM over the leased premises, which improvements
were mortgaged in favor of PNB, petitioner herein.

The rights of the lessor and the lessee over the improvements which the latter constructed on the leased premises is governed by Article
1678 of the Civil Code which provides:

Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is
intended, without altering the form or substance of the property leased, the lessor upon the termination of the lease
shall pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to reimburse said
amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. He
shall not however, cause any more impairment upon the property leased than is necessary. . . .

The aforequoted provision gives the lessee the right to remove the improvements if the lessor chooses not to pay one-half of the value
thereof. However, in the case at bar, the law will not apply because the parties herein have stipulated in the contract their own terms and
conditions concerning the improvements, to wit, that the lessee, namely PBM, bound itself to remove the improvements before the
termination of the lease. Petitioner PNB, as assignee of PBM succeeded to the obligation of the latter under the contract of lease. It could not
possess rights more than what PBM had as lessee under the contract. Hence, petitioner was duty bound to remove the improvements before
the expiration of the period of lease as what we have already discussed in the preceding paragraphs. Its failure to do so when the lease was
terminated was tantamount to a waiver of its rights and interests over the improvements on the leased premises.
In view of the foregoing, this Court finds that respondent court did not act with grave abuse of discretion in directing the cancellation of
entries on private respondents' certificates of title as set forth in the questioned order.

ACCORDINGLY, the petition is DISMISSED and the assailed orders of respondent court dated April 22, 1982, September 14, 1982 and
January 12, 1983 are AFFIRMED.