G.R. No. L-55729 March 28, 1983
ANTONIO PUNSALAN, JR., petitioner, vs. REMEDIOS VDA. DE LACSAMANA and THE HONORABLE JUDGE RODOLFO A. ORTIZ, respondents.

FACTS

Petitioner Antonio Punsalan, Jr. mortgaged a parcel of land in Tarlac to the Philippine National Bank (PNB), which was subsequently foreclosed. PNB emerged as the highest bidder. While the property was still allegedly in Punsalan’s possession and with PNB’s acquiescence, he constructed a warehouse on the land in 1974. In 1978, PNB sold the property to respondent Remedios Vda. de Lacsamana through a Deed of Sale, later amended to explicitly include the warehouse in the sale. Lacsamana then obtained title to both the land and the building.
Punsalan filed a complaint for “Annulment of Deed of Sale with Damages” against PNB and Lacsamana before the Court of First Instance of Rizal, Quezon City. He alleged that the bank fraudulently sold the warehouse, which he owned, as evidenced by his tax declaration, and argued the sale violated the principle against pactum commisorium. Lacsamana filed an Answer, raising affirmative defenses but not challenging venue. PNB, however, filed a Motion to Dismiss on the ground of improper venue, contending the action affected title to real property.

ISSUE

Whether the respondent court erred in dismissing the entire case, including the action against respondent Lacsamana, on the ground of improper venue.

RULING

The Supreme Court affirmed the dismissal. The Court ruled that the warehouse, being a building, is immovable property under Article 415(1) of the Civil Code. While the action was denominated as one for annulment of sale and damages, its fundamental objective was to recover the building, making it a real action. The prevalent doctrine holds that an action for annulment or rescission of a sale of real property is a real action because it ultimately seeks recovery of the property itself. Consequently, under Section 2, Rule 4 of the Rules of Court, the action must be filed in the province where the property is located—in this case, Tarlac, not Rizal. The venue objection was timely raised by PNB under the rules.
The Court also rejected Punsalan’s contention that the case should proceed against Lacsamana alone since she had filed an Answer without raising the venue issue. PNB was deemed an indispensable party to the suit questioning the validity of the sale contract between it and Lacsamana. Proceeding against Lacsamana alone would be futile. Therefore, the trial court correctly denied the motion to set the case for pre-trial and dismissed the complaint in its entirety, without prejudice to its refiling in the proper venue.