G.R. No. L-49475 September 28, 1993
JORGE C. PADERANGA, petitioner, vs. Hon. DIMALANES B. BUISSAN, Presiding Judge, Court of First Instance of Zamboanga del Norte, Branch III and ELUMBA INDUSTRIES COMPANY, represented by its General Manager, JOSE J. ELUMBA, respondents.

FACTS

In 1973, petitioner Jorge C. Paderanga and private respondent Elumba Industries Company, a partnership, entered into an oral contract of lease for a commercial space in a building owned by Paderanga in Ozamiz City. The lease was indefinite, with rent paid monthly. Elumba used the space as a sales office. On April 4, 1977, Paderanga subdivided the leased premises by constructing a partition wall and took possession of one half, allegedly with the acquiescence of Elumba’s local manager, though Elumba disputes this. On July 18, 1977, Elumba filed an action for damages and to fix the lease period at five years before the Court of First Instance of Zamboanga del Norte in Dipolog City (Civil Case No. 2901). Paderanga, a resident of Ozamiz City, moved to dismiss, arguing the action was a real action that should have been filed in the Court of First Instance of Misamis Occidental in Ozamiz City, where the property is located. Respondent Judge Dimalanes B. Buissan denied the motion, ruling the case merely involved enforcement of a lease contract without raising ownership issues, so venue was proper. Paderanga’s motion for reconsideration was denied, prompting this petition.

ISSUE

Whether the action filed by Elumba Industries Company is a personal action or a real action for purposes of determining proper venue.

RULING

The Supreme Court granted the petition, ruling the action is a real action, and venue was improperly laid in Dipolog City. The Court clarified the distinction between personal/real actions and actions in personam/in rem. While the action for damages and to fix the lease period is in personam (binding only on the parties), it is not necessarily a personal action. A personal action seeks recovery of personal property, enforcement of a contract, or damages, while a real action involves recovery of real property, possession, partition, condemnation, or foreclosure of mortgage on real property. Here, although the complaint did not explicitly pray for recovery of possession, its ultimate purpose—to fix the lease period at five years and recover the subdivided portion taken by Paderanga—necessarily involves recovery of possession. Since the action affects title to or recovery of possession of real property, it is a real action under Rule 4, Section 2(a) of the Revised Rules of Court. Real actions must be filed in the court having jurisdiction over the territory where the property lies (Ozamiz City, Misamis Occidental), not where the plaintiff or defendant resides. Respondent judge gravely abused his discretion in denying the motion to dismiss. The orders dated November 6, 1978, and December 4, 1978, were set aside, and the Dipolog court was directed to dismiss the case for improper venue. Costs were imposed on private respondent.