G.R. No. L-6206; April 13, 1954
AURELIO G. GAVIERES, plaintiff-appellant, vs. EMILIO SANCHEZ, LORENZO T. OÑA, THE PRESIDENT OF THE HACARIN DAIRY FARM, INC., and THE PRESIDENT OF THE REHABILITATION FINANCE CORPORATION, defendants-appellees.

FACTS

On December 23, 1950, plaintiff Aurelio G. Gavieres filed a complaint in the Court of First Instance of Rizal. He alleged that in 1931, he was the registered owner of 1/3 of a lot in San Miguel de Mayumo, Bulacan. On February 6, 1931, he sold this share to defendant Emilio Sanchez for P10,000, payable in installments, with the final balance due in April 1931. Sanchez took possession but paid only P2,470. That same year, Sanchez sold the property under a pacto de retro to defendant Lorenzo T. Oña for P400. Upon Sanchez’s failure to repurchase, Oña consolidated ownership and obtained Transfer Certificate of Title No. 6640. In 1941, Oña sold the property to defendant Hacarin Dairy Farm Corporation, which obtained Transfer Certificate of Title No. 27257. On September 29, 1947, Hacarin Dairy Farm mortgaged the property to defendant Rehabilitation Finance Corporation for P100,000. The complaint prayed for a declaration of plaintiff’s ownership, annulment of the sale to Sanchez for failure of consideration, annulment of the subsequent sales and titles, and invalidation of the mortgage, plus damages.
Defendants filed various motions to dismiss. Sanchez’s answer alleged no cause of action, prescription, and lack of jurisdiction. Oña moved to dismiss on improper venue. Hacarin Dairy Farm moved to dismiss for lack of cause of action and prescription. The Rehabilitation Finance Corporation moved to dismiss for lack of cause of action. The trial court, presided by Judge Gatmaitan, issued an order on January 20, 1951, dismissing the complaint. The court held that if the action was for recovery of real property, venue was improperly laid in Rizal as the property was in Bulacan. If the action was for rescission due to non-payment (the cause accruing in April 1931), it was barred by prescription, having been filed over 18 years later in December 1950. The court also noted no showing that subsequent defendants (Oña, Hacarin, RFC) were purchasers in bad faith. Plaintiff appealed to the Court of Appeals, which indorsed the case to the Supreme Court as only questions of law were involved.

ISSUE

Whether the trial court correctly dismissed the complaint on the grounds of improper venue and prescription.

RULING

Yes, the trial court’s order of dismissal is affirmed. The Supreme Court agreed with the trial court that venue was improperly laid. Under Section 3, Rule 5 of the Rules of Court, an action affecting title to or recovery of possession of real property must be commenced and tried in the province where the property is located. The action, whether framed as one for annulment/rescission of sale or for recovery of real property, fundamentally seeks recovery of the land, which is situated in Bulacan. Bringing the action in Rizal was improper, justifying dismissal under Rule 8, section 1(b). Furthermore, the dismissal was well-founded on prescription. Whether the action is considered one to recover a sum of money (unpaid balance) or to recover real property, the cause of action accrued in April 1931 when the final payment was due and not made. Filing the complaint in December 1950, over 18 years later, meant the action was barred by prescription. The order of dismissal is affirmed, with costs against appellant.