FACTS:

The Philippine National Bank (PNB) and the Philippine Blooming Mills, Co., Inc. (PBM) filed a petition for certiorari to annul and set aside the orders of the Court of First Instance of Rizal, Pasig, Branch 21. The private respondents, who are the registered owners of three parcels of land in Pasig, Metro Manila, entered into a lease contract with PBM in 1954, which was later assigned to PNB in 1963. In 1981, the private respondents filed a motion to cancel the annotations on their titles, claiming that the lease had expired and the improvements made on the land should accrue to them. The court issued an order in 1982 directing the cancellation of the inscriptions on the titles. PNB filed a motion for reconsideration, which was denied. The court granted the motion for entry of final judgment and ordered the cancellation of the entries on the titles. PNB filed an omnibus motion to set aside the entry of judgment, arguing that it had no notice of the denial of its motion for reconsideration. The court denied the omnibus motion, leading PNB to file a petition for certiorari. PNB argues that the court acted arbitrarily as it had no knowledge of the denial of its motion for reconsideration due to the failure of the registered mail to reach its counsel. The court justified its decision by referring to the postmaster's certification and the counsel's admission that the notices could have been received by PNB's regular receiving section but not forwarded to the counsel's department.

ISSUES:

1. Whether the presumption of regularity in the performance of official duty by the postmaster was overcome in this case.

2. Whether the Securities and Exchange Commission has jurisdiction over the private respondents' motion.

3. Whether the cancellation of entries on the respondents' certificates of title is valid and proper.

4. Whether the corporation is dissolved ipso facto when its period of existence expires and without any extension having been made pursuant to law.

5. Whether there is a need for the institution of a quo warranto proceeding to determine the dissolution of a corporation whose period of existence has ended.

6. Whether the option to extend a lease is terminated when a corporation's corporate life ends and its period for winding up and liquidation expires.

7. Whether the lessee has the right to remove improvements if the lessor refuses to pay one-half of the value thereof.

8. Whether the lessee's obligation to remove improvements can be waived.

RULING:

1. The presumption of regularity in the performance of official duty by the postmaster was not overcome. The postmaster's certification stating that three (3) notices of the registered mail containing the order were sent to the petitioner's counsel carries more weight than the counsel's claim of non-receipt.

2. The Securities and Exchange Commission does not have jurisdiction over the private respondents' motion. The case falls under the jurisdiction of the respondent court, as it involves a civil action for the cancellation of entries on the respondents' titles.

3. The cancellation of entries on the respondents' certificates of title is valid and proper. The contract of lease between the parties provided for a specific term, which had already expired. The lessee, PBM, did not comply with the legal requisites for the extension of its corporate term, therefore, it ceased to exist and the lease was terminated.

4. Yes, the corporation is dissolved ipso facto when its period of existence expires and without any extension having been made pursuant to law.

5. No, there is no need for the institution of a quo warranto proceeding to determine the dissolution of a corporation whose period of existence has ended.

6. Yes, the option to extend a lease is terminated when a corporation's corporate life ends and its period for winding up and liquidation expires.

7. No, the lessee does not have the right to remove improvements if the lessor refuses to pay one-half of the value thereof because the parties have stipulated their own terms and conditions concerning the improvements.

8. Yes, the lessee's obligation to remove improvements can be waived if it fails to do so when the lease is terminated.

PRINCIPLES:

• The presumption of regularity in the performance of official duty by the postmaster.

• The jurisdiction of the Securities and Exchange Commission is limited to those cases enumerated in Presidential Decree No. 902-A, as amended.

• Contracts are to be interpreted according to their literal meaning and should not be interpreted beyond their obvious intendment.

• A corporation's existence ceases and is dissolved ipso facto upon the expiration of the period fixed in its articles of incorporation, in the absence of compliance with the legal requisites for the extension of the period.

• When the period of corporate life expires without any extension made pursuant to law, the corporation is dissolved ipso facto and ceases to be a body corporate for the purpose of continuing its business.

• There is no need for the institution of a quo warranto proceeding to determine the dissolution of a corporation whose period of existence has ended.

• The option to extend a lease is terminated when a corporation's corporate life ends and its period for winding up and liquidation expires.

• Article 1678 of the Civil Code governs the rights of the lessor and lessee over improvements made by the lessee on the leased premises.

• The lessee's obligation to remove improvements can be waived if it fails to do so when the lease is terminated.