G.R. No. L-48117 November 27, 1986
Briccio B. Tenorio, petitioner, vs. Hon. Ernani Cruz Paño (District Judge, CFI-Rizal, Branch XVIII), Lagrimas C. Lagdameo, Sol C. Lagdameo and the Heirs of the Late Alfredo C. Lagdameo, respondents.

FACTS

Petitioner Briccio Tenorio (the capitalist) and respondent Lagdameo family (the owners) entered into a Subdivision Contract on October 7, 1956, concerning land in Gumaca, Quezon. Under the contract, Tenorio was granted full possession to develop, subdivide, and sell the lots, bearing all expenses, while the owners retained title. The owners were to receive a fixed 40% share of gross sales. On September 9, 1977, the Lagdameos filed a complaint for accounting, breach of contract, and damages with a prayer for termination of the contract in the Court of First Instance of Rizal, Quezon City. They alleged Tenorio failed to construct required improvements, pay taxes, and render a proper accounting.
Tenorio filed a Motion to Dismiss, arguing improper venue, lack of cause of action, and estoppel/laches. He contended the action was a real action affecting title to and possession of land in Quezon, and thus venue was improperly laid in Rizal. The respondent judge, in the assailed orders, deferred resolution of the motion to dismiss until trial, holding the grounds were not indubitable. Tenorio’s motion for reconsideration was denied, prompting this petition for review.

ISSUE

Whether the action filed by the respondents is a real action, requiring venue in the location of the property, or a personal action, which can be filed in Rizal.

RULING

The Supreme Court granted the petition, set aside the assailed orders, and dismissed the complaint on the ground of improper venue. The Court ruled the action was a real action. While the complaint was styled as one for accounting and breach of contract with a prayer for termination, the necessary consequence of the rescission (or resolution) of the Subdivision Contract was the recovery of possession of the unsold lots and the return of the Torrens titles to the owners. The demand for damages was merely incidental to this primary relief affecting the land.
Applying Section 3, Rule 5 of the Rules of Court, real actions affecting title to or possession of real property must be instituted in the province where the property is situated. The Court cited the analogous case of De Jesus v. Coloso, which held that an action for rescission of a contract involving the return of the property is an action for recovery of possession, governed by the venue rule for real actions. Since the subdivision land was located in Gumaca, Quezon, and the contract was executed there, proper venue was exclusively in Quezon province. Filing the case in Rizal was a flagrant evasion of the venue rule. The rules of venue are designed for convenience and to prevent conflicting decisions from different courts on matters of ownership and possession.