JIMMY T. GO, petitioner, vs. UNITED COCONUT PLANTERS BANK, ANGELO V.

MANAHAN,
FRANCISCO C. ZARATE, PERLITA A. URBANO and ATTY. EDWARD MARTIN, respondents.

Doctrine: The cancellation of the real estate mortgage is a real action, considering that a real estate mortgage is a
real right and a real property by itself; and an action for cancellation of real estate mortgage is necessarily an action
affecting the title to the property.

Facts:

Petitioner Go and Looyuko are co-owners of Noah’s Ark International, Noah’s Ark Sugar Carriers, etc. Their
application for an Omnibus Line accommodation with respondent United Coconut Planters Bank (UCPB) in the
amount of P900, 000, 000 was approved.

- The transaction was secured by Real Estate Mortgages over parcels of land located at Mandaluyong City and
registered in the name of Mr. Looyuko; and another property also located at Mandaluyong City, registered in the
name of Noah’s Ark Sugar Refinery.

- UCPB subsequently cancelled the approved Omnibus Line accommodation; so, Go demanded from UCPB the
return of the two TCTS (No. 64070 and No. 3325) covered by Real Estate Mortgages. UCPB however refused to
return the same and proceeded to have the two (2) pre-signed Real Estate Mortgages notarized and caused the
registration thereof before the Registry of Deeds of Mandaluyong City.

- UCPB filed the with the Office of the Clerk of Court and Ex-Officio Sheriff of Mandaluyong City an extrajudicial
foreclosure of the mortgaged land that was registered in the name of Looyuko , for nonpayment of the obligation
secured by said mortgage. Public auction sale was set. Hence, 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 with the Regional Trial Court of Pasig City. The complaint was later
amended.

- Respondent bank, instead of filing an answer, filed a motion to dismiss based on the several grounds. Among
which is that the complaint was filed in the wrong venue.

Trial Court: issued an order granting petitioner’s application for a writ of preliminary injunction. Correspondingly,
the auction sale was enjoined. The trial court denied respondent bank’s motion to dismiss. A motion for
reconsideration was likewise denied. UCPB filed a petition for certiorari.

CA: set aside orders issued by the trial court and directed the trial court to dismiss case on the ground of improper
venue. A motion for reconsideration was filed by petitioner, which was denied. Hence, this petition for review on
certiorari.

Petitioner argues: that a case for cancellation of mortgage is a personal action and since he resides at Pasig City,
venue was properly laid therein. He tries to make a point by alluding to the case of Francisco S. Hernandez v. Rural
Bank of Lucena.

Issue: WON petitioner’s complaint for cancellation of real estate mortgage is a personal or real action for the
purpose of determining venue. [It is a real action which should be commenced and tried in Mandaluyong City, the
place where the subject property lies.]

Held/Ratio: 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. It is quite clear then that the controlling factor in determining venue for cases of
the above nature is the primary objective for which said cases are filed.

In a long line of cases, the Court held that annulment of foreclosure sale is a real action. Particularly in Carandang v.
Court of Appeals, the Court held that an action for nullification of the mortgage documents and foreclosure of
the mortgaged property is a real action that affects the title to the property. Petitioner’s reliance in the case of
Francisco S. Hernandez v. Rural Bank of Lucena is misplaced. Firstly, said case 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 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. Hence, the venue of the plaintiffs’
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 over which the bank had already initiated foreclosure proceedings . The prime
objective is to recover said real properties. Secondly, Carandang distinctly articulated that the ruling in Hernandez
does not apply where the mortgaged property had already been foreclosed. Here, bank had already initiated
extrajudicial foreclosure proceedings, and were it not for the timely issuance of a restraining order secured by
petitioner Go in the lower court, the same would have already been sold at a public auction. In a relatively recent
case, Asset Privatization Trust v. Court of Appeals. It was succinctly stated that the prayer for the nullification of
the mortgage is a prayer affecting real property, hence, is a real action.