(13) GO v.
UCPB
G.R. No. 156187. November 11, 2004
The cancellation of the real estate mortgage, subject of the instant petition, is a real action,
considering that a real estate mortgage is a real right and a real property by itself.
FACTS. Petitioner Jimmy T. Go and Alberto T. Looyuko are co-owners of Noahs Ark International,
Noahs Ark Sugar Carriers, Noahs Ark Sugar Truckers, Noahs Ark Sugar Repacker, Noahs Ark Sugar
Insurers, Noahs Ark Sugar Terminal, Noahs Ark Sugar Building, and Noahs Ark Sugar Refinery.
Sometime in August 1996, petitioner Jimmy T. Go and Alberto T. Looyuko applied for an Omnibus
Line accommodation with respondent United Coconut Planters Bank (UCPB) in the amount of Nine
Hundred Million (P900,000,000) Pesos and was favorably acted upon by the latter and was secured
by Real Estate Mortgages over parcels of land, covered by Transfer Certificate of Title (TCT) No.
64070, located at Mandaluyong City, and registered in the name of Mr. Looyuko; and TCT No. 3325,
also located at Mandaluyong City registered in the name of Noahs Ark Sugar Refinery.
Subsequently, the the approved Omnibus Line accommodation granted to petitioner was cancelled
by respondent UCPB.
Petitioner Jimmy T. Go filed a complaint for Cancellation of Real Estate Mortgage and damages, with
prayer for temporary restraining order and/or writ of preliminary injunction, against respondent
bank and its officers.
ID., ARGUMENT OF THE COMPLAINANT. The complaint alleged that that the approved omnibus
credit line applied for by him and Looyuko did not materialize and was cancelled by respondent
bank on 21 July 1997, so that the pre-signed real estate mortgages were likewise cancelled; that he
demanded from respondent bank that TCTs No. 64070 and No. 3325 be returned to him, but
respondent bank refused to do so; that despite the cancellation of the omnibus credit line on 21 July
1997, respondent bank had the two deeds of real estate mortgage dated and notarized on 22 July
1997 and caused the extrajudicial foreclosure of mortgage constituted on TCT No. 64070; that the
auction sale scheduled on 11 April 2000 and 03 May 2000 be enjoined; that the two real estate
mortgages be cancelled and TCTs No. 64070 and No. 3325 be returned to him; and that respondent
bank and its officers be ordered to pay him moral and exemplary damages and attorney’s fees.
ID., DEFENSE OF THE RESPONDENT. The respondedent filed a motion to dismiss based on the
following grounds: 1) that the court has no jurisdiction over the case due to nonpayment of the
proper filing and docket fees; 2) that the complaint was filed in the wrong venue; 3) an
indispensable party/real party in interest was not impleaded and, therefore, the complaint states
no cause of action; 4) that the complaint was improperly verified; and 5) that petitioner is guilty of
forum shopping and submitted an insufficient and false certification of non-forum shopping.
ISSUE. Does the complaint for cancellation of real estate mortgage is a real action for the purpose of
determining venue?
RULING. YES. In a real action, the plaintiff seeks the recovery of real property, or as provided for in
Section 1, Rule 4, a real action is an action affecting title to or possession of real property, or
interest therein. These include partition or condemnation of, or foreclosure of mortgage on, real
property. The venue for real actions is the same for regional trial courts and municipal trial courts
-- the court which has territorial jurisdiction over the area where the real property or any part
thereof lies.
Personal action is one brought for the recovery of personal property, for the enforcement of
some contract or recovery of damages for its breach, or for the recovery of damages for the
commission of an injury to the person or property. The venue for personal actions is likewise the
same for the regional and municipal trial courts -- the court of the place where the plaintiff or any of
the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, at
the election of the plaintiff, as indicated in Section 2 of Rule 4.
In the case of Francisco S. Hernandez v. Rural Bank of Lucen, it was primarily an action to
compel the mortgagee bank to accept payment of the mortgage debt and to release the mortgage.
That action, which is not expressly included in the enumeration found in Section 2(a) of Rule 4 of
the Old Civil Procedure and now under Section 1, Rule 4 of the 1997 Rules of Civil Procedure, does
not involve titles to the mortgaged lots. It is a personal action and not a real action. The mortgagee
has not foreclosed the mortgage. Hence, the venue of the plaintiff’s personal action is the place
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.
In the case at bar, the action for cancellation of real estate mortgage filed by herein
petitioner was primarily an action to compel private respondent bank to return to him the
properties covered by TCTs No. 64070 and No. 3325 over which the bank had already initiated
foreclosure proceedings because of the cancellation by the said respondent bank of the omnibus
credit line. The prime objective is to recover said real properties.
In sum, the cancellation of the real estate mortgage, subject of the instant petition, is a real
action, considering that a real estate mortgage is a real right and a real property by itself. An action
for cancellation of real estate mortgage is necessarily an action affecting the title to the property. It
is, therefore, a real action which should be commenced and tried in Mandaluyong City, the place
where the subject property lies.
