G.R. No. 156187 November 11, 2004
Jimmy T. Go, petitioner, vs. United Coconut Planters Bank, Angelo V. Manahan, Francisco C. Zarate, Perlita A. Urbano and Atty. Edward Martin, respondents.

FACTS

Petitioner Jimmy T. Go, co-owner of several Noah’s Ark entities with Alberto T. Looyuko, applied for and was granted an Omnibus Credit Line by respondent United Coconut Planters Bank (UCPB). The loan was secured by real estate mortgages over properties in Mandaluyong City, including one covered by TCT No. 64070 registered in Looyuko’s name. UCPB cancelled the credit line on July 21, 1997. Despite the cancellation and Go’s demand for the return of the titles, UCPB proceeded to notarize the pre-signed mortgage deeds and register them. UCPB later initiated the extrajudicial foreclosure of the mortgage on TCT No. 64070.
To prevent the foreclosure sale, Go filed a complaint for Cancellation of Real Estate Mortgage and Damages with the Regional Trial Court (RTC) of Pasig City. UCPB moved to dismiss the case on several grounds, including improper venue, arguing the action was a real action that should have been filed in Mandaluyong City where the property is located. The RTC denied the motion to dismiss and issued a writ of preliminary injunction. The Court of Appeals reversed the RTC, setting aside its orders and directing the dismissal of the case on the ground of improper venue.

ISSUE

Whether the complaint for cancellation of a real estate mortgage is a personal action or a real action for the purpose of determining proper venue.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The complaint is a real action; therefore, venue was improperly laid in Pasig City. The Court explained that the determination of whether an action is real or personal depends on the nature of the plaintiff’s cause of action and the relief sought. A real action is one that affects title to or possession of real property, or any interest therein. A personal action is one that seeks the recovery of personal property, money, or damages.
The Court held that an action for the cancellation of a real estate mortgage is a real action. A real estate mortgage is a real right and constitutes an interest in the land itself. The primary objective of Go’s complaint was to nullify the mortgage and its foreclosure, which directly affects title to and interest in the mortgaged real property located in Mandaluyong City. The Court distinguished this case from Hernandez v. DBP, which involved a personal action for damages arising from a wrongful foreclosure, because here, the foreclosure had already been initiated and the prayer sought the direct cancellation of the mortgage interest in the land. Consequently, under Section 1, Rule 4 of the Rules of Court, a real action must be commenced and tried in the proper court of the province or city where the real property is situated. Venue was therefore improperly laid in Pasig City instead of Mandaluyong City.