LIGAYA S. ORBETA, REPRESENTTED BY HER ATTY.-IN-FACT, RUBEN S. ORBETA, JR., PETITIONER, VS. RUBEN P. ORBETA AND ANITA B. WOLCOTT, RESPONDENTS.

Orbeta versus Orbeta

The Case

This is a petition for review on certiorari brought by Ligaya Orbeta, represented by her attorney in fact, Ruben Orbeta Junior, against her estranged husband Ruben Orbeta and Anita Wolcott. The action below was a complaint for annulment of a deed of mortgage with damages, and the question that reaches the Supreme Court is purely procedural: is such a complaint a real action, which must be filed where the land lies, or a personal action, which may be filed where the plaintiff or the defendant resides? The case matters because it fixes the venue of a suit to annul a mortgage that has not yet been foreclosed, a question examiners love to test against the older doctrine on foreclosure.

Procedural History

Ligaya Orbeta filed her complaint for annulment of deed of mortgage with damages before the Regional Trial Court of Las Piñas City. The respondents moved to dismiss on two grounds: that the complaint was a real action and so should have been filed where the property is situated, and that it violated the requirement of earnest efforts toward a compromise among members of the same family. The trial court granted the motion and dismissed the complaint solely on the ground that venue was improperly laid. Ligaya then went up to the Supreme Court by petition for review on certiorari, and the Supreme Court reversed the dismissal and remanded the case to the trial court for further proceedings.

Facts

Ligaya Orbeta and Ruben Orbeta are lawfully married and are co-owners of a four hundred fifty-five square meter parcel of land in Pililla, Rizal. The couple became estranged, and in 1994 Ligaya left for the United States.

When she returned to the Philippines on the twenty-ninth of January 2003, she learned that her estranged husband had obtained a loan of two hundred thousand pesos from Anita Wolcott and had used the co-owned property as collateral. She then filed a complaint to annul the deed of mortgage with damages, claiming that she never consented to its execution and that her signature on it was forged. She pointed out that she was not in the Philippines on the date the deed was executed, the sixth of January 2003.

The respondents moved to dismiss, and the trial court dismissed the complaint on the ground of improper venue. Hence the petition before the Supreme Court.

Issues

• Whether or not a complaint for annulment of a deed of mortgage with damages, where the mortgage has not been foreclosed, is a real action or a personal action for purposes of venue.

Applicable Provisions

Section 1, Rule 4 of the Rules of Court defines real actions and fixes their venue:

Section 1. Venue of real actions. Actions affecting title to or possession of real property, or interest therein, shall be commenced and tried in the proper court which has jurisdiction over the area wherein the real property involved, or a portion thereof, is situated.

This is the provision the trial court applied when it held that the complaint affected the land and so had to be filed in Rizal.

Section 2, Rule 4 of the Rules of Court governs the venue of personal actions:

Section 2. Venue of personal actions. All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff.

This is the provision the Supreme Court applied in holding that Las Piñas City, where respondent Wolcott resides, was the proper venue.

Ruling

The Court ruled that the complaint is a personal action. A real action, under Section 1, Rule 4, is one that affects title to or possession of real property, or an interest therein; all other actions are personal. The Court found that the property had not been foreclosed, that there was no indication that Ruben Orbeta had defaulted on the loan, and that title remained in the names of the spouses, who remained in possession. It relied on its earlier ruling that an action for cancellation of a real estate mortgage is a personal action, since it is not among the actions expressly enumerated as real.

The Court also relied on its recent ruling that an action to annul a contract of loan and its accessory real estate mortgage is a personal action, even if it will necessarily affect the accessory mortgage. It found the allegations strikingly similar, since Ligaya likewise sought annulment on the ground that she never consented and that her signature was forged. Accordingly, under Section 2, Rule 4, Las Piñas City, where respondent Wolcott resides, was the proper venue.

Doctrine

An action to annul a deed of mortgage is a personal action, not a real action, where the mortgage has not been foreclosed and the mortgagor remains in possession of the property. The test is whether the action affects title to or possession of real property, or an interest therein, as stated in Section 1, Rule 4; if it does not, it is personal and may be filed where the plaintiff or the defendant resides under Section 2, Rule 4. The accessory nature of a mortgage does not convert a suit against the loan or the mortgage into a real action.

Disposition

The petition was granted, the dismissal order of the trial court was set aside, and the case was remanded to the trial court for further proceedings, with no pronouncement as to costs.

Remember This

Memorize this line: an action to annul a mortgage that has not been foreclosed is a personal action, because it does not affect title to or possession of the land. Examiners use this case to test venue, contrasting it with a suit to foreclose, which is a real action.