FACTS:

Sometime in 1973, petitioner JORGE C. PADERANGA and private respondent ELUMBA INDUSTRIES COMPANY, entered into an oral contract of lease for the use of a commercial space within a building owned by petitioner in Ozamiz City. 

The lease was for an indefinite period although the rent of P150.00 per month was paid on a month-to-month basis. 

On 4 April 1977, PADERANGA subdivided the leased premises into two (2) by constructing a partition wall in between. He then took possession of the other half.

On 18 July 1977, private respondent instituted an action for damages, and prayed for the fixing of the period of lease at five (5) years, before the Court of First Instance in Dipolog City, Zamboanga del Norte. 

Petitioner, a resident of Ozamiz City, moved for its dismissal contending that the action was a real action which should have been filed in Ozamiz City where the property in question was situated.

Respondent Judge Dimalanes B. Buissan denied the Motion to Dismiss and held that the case merely involved the enforcement of the contract of lease, and while affecting a portion of real property, there was no question of ownership raised. Hence, venue was properly laid.

Petitioner pleaded for reconsideration, contending that while the action did not involve a question of ownership, it was nevertheless seeking recovery of possession; thus, it was a real action which, consequently, must be filed in Ozamiz City.

Respondent judge denied reconsideration, ruling that this matter was not the main issue at hand; neither was the question of ownership raised. 

Hence, the petitioner filed the present recourse.

ISSUE:

Whether the action filed by ELUMBA INDUSTRIES COMPANY is a real action or a personal action for purposes of determining proper venue, and whether the Court of First Instance of Zamboanga del Norte (Dipolog City) acted with grave abuse of discretion in denying the motion to dismiss for improper venue.

RULING:

Dismissal of the case for improper venue is warranted.

The Court held that while the action affects the parties alone, and is therefore an action in personam, this does not automatically mean that the action is also a personal action. 

For purposes of venue, the distinction between an action in personam and an action in rem is irrelevant. What is controlling is whether the action is personal or real, since real actions should be brought before the Regional Trial Court having jurisdiction over the territory in which the subject property or part thereof lies.

Although the complaint was for damages and for the fixing of the period of lease at five (5) years, the Court ruled that such is the necessary consequence thereof, that private respondent would be entitled to remain not only as lessee, but also to the recovery of the portion earlier taken from him. Thus, even if recovery of possession was not expressly prayed for, such an action therefore does not operate to efface the fundamental and prime objective which is to recover the one-half portion repossessed by the lessor.

Accordingly, where the ultimate purpose of an action involves title to or seeks recovery of possession of real property, such an action must be deemed a real action and must be filed where the property is located. The respondent judge, in denying the motion to dismiss, gravely abused his discretion amounting to lack or excess of jurisdiction, warranting dismissal of the case for improper venue.