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, REPRESE…

We are called upon in this case to determine the proper venue of
an action to fix the period of a contract of lease which, in the main, also
prays for damages.

Sometime in 1973, petitioner JORGE C. PADERANGA and private
respondent ELUMBA INDUSTRIES COMPANY, a partnership represented by its General
Manager JOSE J. ELUMBA, entered into an oral contract of lease for the use of a
commercial space within a building owned by petitioner in Ozamiz City.^[1] The lease was for an indefinite period
although the rent of P150.00 per month was paid on a month-to-month basis. ELUMBA INDUSTRIES COMPANY utilized the area
under lease as the Sales Office of Allied Air Freight in Ozamiz City.

On 4 April 1977, PADERANGA subdivided the leased premises into
two (2) by constructing a partition wall in between. He then took possession of the other half, which repossession was
said to have been undertaken with the acquiescence of the local manager of
ELUMBA,^[2]
although private respondent maintains that this is not the case.^[3]
At any rate, the validity of the repossession is not here in issue.

On 18 July 1977, private respondent instituted an action for
damages^[4]
which, at the same time, prayed for the fixing of the period of lease at five
(5) years, before the then Court of First Instance of Zamboanga del Norte based
in Dipolog City.^[5]
Petitioner, a resident of Ozamiz City, moved for its dismissal contending that
the action was a real action which should have been filed with the Court of
First Instance of Misamis Occidental stationed in Ozamiz City where the
property in question was situated.

On 6 November 1978, respondent Judge Dimalanes B. Buissan denied
the Motion to Dismiss and held that Civil Case No. 2901 merely involved the
enforcement of the contract of lease, and while affecting a portion of real
property, there was no question of ownership raised.^[6]
Hence, venue was properly laid.

Petitioner pleaded for reconsideration of the order denying his
Motion to Dismiss. He contended that
while the action did not involve a question of ownership, it was nevertheless
seeking recovery of possession; thus, it was a real action which, consequently,
must be filed in Ozamiz City.^[7]

On 4 December 1978, respondent judge denied reconsideration.^[8]
While admitting that Civil Case No. 2901 did pray for recovery of possession,
he nonetheless ruled that this matter was not the main issue at hand; neither
was the question of ownership raised. Not satisfied, petitioner instituted the present recourse.

PADERANGA argues that inasmuch as ELUMBA seeks to recover
possession of the portion surrendered to him by the local manager of private
respondent, as well as to fix the period of lease at five (5) years, Dipolog
City could not be the proper venue of the action. It being a real action, venue is laid in the court having
jurisdiction over the territory in which the property lies.

ELUMBA counters that the present action is chiefly for damages
arising from an alleged breach in the lease contract; hence, the issue of
recovery of possession is merely incidental. ELUMBA further argues that the action is one in personam and not in
rem. Therefore venue may be laid in
the place where plaintiff or defendant resides at the option of plaintiff.

Private respondent appears to be confused over the difference
between personal and real actions vis-a-vis actions in personam and in
rem. The former determines venue;
the latter, the binding effect of a decision the court may render over a party,
whether impleaded or not.

In the case before us, it is indubitable that the action
instituted by private respondent against petitioner affects the parties alone,
not the whole world. Hence, it is an
action in personam, i.e., any judgment therein is binding only upon the
parties properly impleaded.^[9]
However, this does not automatically mean that the action for damages and to
fix the period of the lease contract is also a personal action. For, a personal action may not necessarily
be an action in personam and a real action may not at the same time be
an action in rem. In Hernandez
v. Rural Bank of Lucena, Inc.,^[10]
we held thus –

In a personal action, the plaintiff seeks the recovery of personal
property, the enforcement of a contract or the recovery of damages. In a real action, the plaintiff seeks the
recovery of real property, or, as indicated in section 2(a) of Rule 4, a real
action is an action affecting title to real property or for the recovery of
possession, or for partition or condemnation of, or foreclosure of a mortage
on, real property.

An action in personam is an action against a person on the
basis of his personal liability, while an action in rem is an action
against the thing itself, instead of against the person. Hence, a real action may at the same time be
an action in personam and not necessarily an action in rem.

Consequently, the distinction between an action in personam
and an action in rem for purposes of determining venue is
irrelevant. Instead, it is imperative
to find out if the action filed is a personal action or a real action. After all, personal actions may be
instituted in the Regional Trial Court (then Court of First Instance) where the
defendant or any of the defendants resides or may be found, or where the
plaintiff or any of the plaintiffs resides, at the election of the plaintiff.^[11]
On the other hand, real actions should be brought before the Regional Trial
Court having jurisdiction over the territory in which the subject property or
part thereof lies.^[12]

While the instant action is for damages arising from an alleged
breach of the lease contract, it likewise prays for the fixing of the period of
lease at five (5) years. If found
meritorious, private respondent will be entitled to remain not only as lessee
for another five (5) years but also to the recovery of the portion earlier
taken from him as well. This is because
the leased premises under the original contract was the whole commercial space
itself and not just the subdivided portion thereof.

While it may be that the instant complaint does not explicitly
pray for recovery of possession, such is the necessary consequence thereof.^[13]
The instant action therefore does not operate to efface the fundamental and
prime objective of the nature of the case which is to recover the one-half
portion repossessed by the lessor, herein petitioner.^[14]
Indeed, where the ultimate purpose of an action involves title to or seeks
recovery of possession, partition or condemnation of, or foreclosure of mortgage
on, real property,^[15]
such an action must be deemed a real action and must perforce be commenced and
tried in the province where the property or any part thereof lies.

Respondent judge, therefore, in denying petitioner’s Motion to
Dismiss gravely abused his discretion amounting to lack or excess of
jurisdiction.

WHEREFORE, the Petition for Prohibition is GRANTED. The Orders of 6 November 1978 and 4 December
1978 of respondent Judge Dimalanes B. Buissan are SET ASIDE. The branch of the Regional Trial Court of
Dipolog City where Civil Case No. 2901 may be presently assigned is DIRECTED to
DISMISS the case for improper venue. This decision is immediately executory.

Costs against private respondent ELUMBA INDUSTRIES COMPANY.

SO ORDERED.

Cruz, (Chairman), Davide, Jr., and
Quiason, JJ., concur.

Griño-Aquino, J., on official
leave.

^[1]
Amended Petition, p. 4; Rollo, p. 78.

^[2]
Motion to Dismiss, p. 4; Annex “D”, Amended Petition.

^[3]
Complaint, p. 3; Annex “C”, Amended Petition.

^[4]
Docketed as Civil Case No. 2901. Private
respondent seeks the following amounts as damages: (a) P100,000.00 as moral damages; (b) P50,000.00 as exemplary
damages; (c) P5,000.00 as attorney’s fees; and, (d) P1,000.00 as costs of suit.

^[5]
Raffled to Branch III.

^[6]
CFI Order, 6 November 1978; Rollo, p. 67.

^[7]
Motion for Reconsideration, p. 1; Rollo, p. 68.

^[8]
CFI Order, 4 December 1978; Rollo, p. 72.

^[9]
Ching v. Court of Appeals, G.R. No. 59731, 11 January 1990, 181 SCRA 9.

^[10]
No. L-29791, 10 January 1978, 81 SCRA 75, 84-85.

^[11]
Fortune Motors (Phils.), Inc. v. Court of Appeals, G.R. No. 76431, 16
October 1989, 178 SCRA 565, citing Sec. 1, Rule 4, Revised Rules of Court.

^[12]
Carandang v. Court of Appeals, No. L-44932, 15 April 1988, 160 SCRA 266.

^[13]
Tenorio v. Paño, No. L-48117, 27 November 1986, 146 SCRA 74.

^[14]
Punsalan, Jr. v. Vda. de Lacsamana, G.R. No. 55729, 28 March 1983, 121
SCRA 331.

^[15]
Sec. 2, par. (a), Rule 4, Revised Rules of Court.