Civil Law, Remedial Law

GO vs. UCPB G.R. No. 156187 November 11, 2004 Real v. Personal Action, Real Estate Mortgage

FACTS:

Petitioner Jimmy Go and Alberto T. Looyuko applied for an Omnibus Line accommodation with respondent UCPB in the amount of 900 Million Pesos. The transaction was secured by Real Estate Mortgages over parcels of land located in Mandaluyong.

The approved Omnibus Line accommodation was subsequently cancelled by respondent UCPB. Hence, petitioner demanded the return of the 2 TCTs covered by the Real Estate Mortgages earlier executed.

UCPB refused to return the TCTs and thereafter filed an extrajudicial foreclosure of real estate mortgage for nonpayment of the obligation secured by said mortgage. A public auction sale of the mortgaged property was then set.

Hence, petitioner filed a complaint for Cancellation of Real Estate Mortgage and damages, with prayer for temporary restraining order and/or writ of preliminary injunction, against respondent with RTC Pasig City.

Respondent bank, instead of filing an answer, filed a motion to dismiss alleging, among others, that the complaint was filed in the wrong venue.

The trial court granted petitioner’s application for a writ of preliminary injunction and denied respondent bank’s motion to dismiss as well as its motion for reconsideration.

Respondent bank questioned said orders before the CA via a petition for certiorari.

The CA set aside the subject Orders issued by the trial court and directed the trial court to dismiss the case on the ground of improper venue.

Petitioner in this case contends that a case for cancellation of mortgage is a personal action and since he resides at Pasig City, venue was properly laid therein.

ISSUE:

Whether or not petitioner’s complaint for cancellation of real estate mortgage is a personal or real action for the purpose of determining venue.

RULING:

In a real action, the plaintiff seeks the recovery of real property, or as provided for in Section 1, Rule 4, a real action is an action affecting title to or possession of real property, or interest therein. These include partition or condemnation of, or foreclosure of mortgage on real property. The venue for real actions is the same for regional trial courts and municipal trial courts — the court which has territorial jurisdiction over the area where the real property or any part thereof lies.

Personal action is one brought for the recovery of personal property, for the enforcement of some contract or recovery of damages for its breach, or for the recovery of damages for the commission of an injury to the person or property. The venue for personal actions is likewise the same for the regional and municipal trial courts — the court of the place where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, at the election of the plaintiff, as indicated in Section 2 of Rule 4.

It is quite clear then that the controlling factor in determining venue for cases of the above nature is the primary objective for which said cases are filed.

In Carandang v. CA, we held that an action for nullification of the mortgage documents and foreclosure of the mortgaged property is a real action that affects the title to the property. Thus, venue of the real action is before the court having jurisdiction over the territory in which the property lies.

In a relatively recent case, Asset Privatization Trust v. CA, it was succinctly stated that the prayer for the nullification of the mortgage is a prayer affecting real property, hence, is a real action.

In sum, the cancellation of the real estate mortgage, subject of the instant petition, is a real action, considering that a real estate mortgage is a real right and a real property by itself. An action for cancellation of real estate mortgage is necessarily an action affecting the title to the property. It is, therefore, a real action which should be commenced and tried in Mandaluyong City, the place where the subject property lies.

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