G.R. No.

L-49475 September 28, 1993

JORGE C. PADERANGA, petitioner,

A.E. Dacanay for petitioner.

Uldarico Mejorada & Associates for private respondent.

BELLOSILLO, J.:

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 petition in Ozamiz City. The
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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, although private respondent maintains that this is
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not the case. At any rate, the validity of the repossession is not here in issue.
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On 18 July 1977, private respondent instituted an action for damages which, at the same time, prayed for the
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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. Petitioner, a resident of Ozamiz City, moved for its dismissal contending that the action
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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. Hence, venue was properly laid.
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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. While admitting that Civil Case No. 2901 did
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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 the 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. However, this does not automatically mean that the action for
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damages and to fix the period of the lease contract is also a personal action. For, a personal action may not
at the same time be an action in rem. In Hernandez v. Rural Bank of Lucena, Inc., we held thus —
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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 mortgage 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
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. On the other hand, real actions should be brought
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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 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. The instant action therefore does not operate to efface the fundamental
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and prime objective of the nature of the case which is to recover the one-half portion repossessed by the
lessor, herein petitioner. Indeed, where the ultimate purpose of an action involves title to or seeks recovery
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of possession, partition or condemnation of, or foreclosure of mortgage on, real property, such an action
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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, Davide, Jr. and Quiason, JJ., concur.

Griño-Aquino, J., is on leave.