G.R. No.

234499, June 06, 2018

RUDY L. RACPAN, Petitioner, v. SHARON BARROGA-HAIGH, Respondent.

DECISION

VELASCO JR., J.:

Nature of the Case

This treats of the Petition for Review on Certiorari under Rule 45 of the Rules of
Court, assailing the February 13, 2017 Decision1 and August 17,
2017 Resolution2 of the Court of Appeals (CA) in CA G.R. CV No. 04034-MIN.
Said rulings affirmed the dismissal of the petitioner's complaint for improper
venue and failure to comply with a condition precedent to its filing.

Factual Antecedents

Petitioner Rudy Racpan filed a Complaint "For Declaration For Nullity of Deed of
Sale with Right to Repurchase & Attorney's Fees"3 before the Regional Trial
Court of Davao City, Branch 11 (RTC-Davao). In his Complaint, which was
docketed as Civil Case No. 34, 742-2012, petitioner alleged that after his wife's
death on November 12, 2011, he instructed their daughter to arrange his wife's
important documents. In so doing, their daughter discovered a Deed of Sale
with Right to Purchase dated March 29, 2011. The Deed of Sale was purportedly
signed by him and his late wife and appeared to convey to respondent Sharon
Barroga-Haigh a real property registered in his name under TCT No. T-142-
2011009374 and located in Bo. Tuganay, Municipality of Carmen, Province of
Davao del Norte.4 Petitioner maintained that the Deed of Sale was falsified and
fictitious as he never signed any contract, not even any special power of
attorney, for the sale or conveyance of the property which is still in his
possession. Thus, he prayed for the declaration of the Deed of Sale's nullity.

In her Answer with Compulsory Counterclaim,5 respondent contended, by way

of affirmative defense, that the venue of the Complaint was improperly laid and
that the filing of the case lacks the mandatory requirement of Barangay
Clearance. Subsequently, respondent filed a motion for preliminary hearing on
her affirmative defenses.

Acting on the motion, the RTC-Davao set the case for preliminary hearing and
thereafter issued an Order dated September 18, 20136 dismissing the
petitioner's Complaint as follows:
WHEREFORE, in view of the foregoing, the present case is hereby ORDERED
DISMISSED for being improperly filed before the Regional Trial Court of Davao
City and for failure to comply with a condition precedent prior to its filing.
SO ORDERED.7
Petitioner moved for the RTC-Davao to reconsider8 its Order dismissing the
complaint but the trial court remained steadfast and denied his motion in its
June 19, 2004 Order.9 Hence, the petitioner came to the CA on appeal.10

Ruling of the Court of Appeals

As stated at the outset hereof, the appellate court affirmed the dismissal of the
petitioner's Complaint as follows:
WHEREFORE, the order dated September 18, 2013 of the Regional Trial Court,
Branch 11, Davao City in Civil Case No. 34,742-12 is AFFIRMED.

SO ORDERED.11
The CA explained that petitioner's Complaint is a real action as it wants the
court to abrogate and nullify. whatever right or claim the respondent might
have on the property subject of the Deed of Sale. Hence, for the appellate
court, Section 1, Rule 4 of the Rules of Court is applicable. Under this Rule, real
actions shall be commenced and tried in the proper court which has jurisdiction
over the area wherein the real property involved is situated. As the property
involved is located in Bo. Tuganay, Municipality of Cannen, Province of Davao
del Norte, the appellate court held that the Complaint should have been lodged
with the RTC of Davao del Norte and not the RTC-Davao.

Further, the CA found that the petitioner's prayer for the issuance of a writ of
preliminary injunction is a mere ploy to avoid the requirement of a barangay
conciliation, as a mere annotation of a notice of lis pendens would achieve the
same effect without having to undergo trial or post a bond.

In a Resolution dated August 17, 201712 the CA stood its ground by denying the
petitioner's Motion for Reconsideration.13

Hence, the petitioner's present recourse, it being his contention that the
Complaint he interposed with the RTC-Davao is a personal action. He maintains
that his Complaint is not concerned with title to or possession of real property,
as in fact, no transfer of possession or title of the real property to the
respondent has occurred.14 For the petitioner, the Complaint's venue was
properly laid in Davao City where both he and the respondent reside.

Petitioner likewise reiterated that, as his Complaint was coupled with a prayer
for the issuance of a writ of preliminary injunction, it is exempt from barangay
conciliation proceedings.

Issue
The main and decisive issue for resolution is whether the CA erred in affirming
the dismissal of the petitioner's Complaint.

Our Ruling

The petition is impressed with merit.

The venue was properly laid as the complaint was a personal action.

By weight of jurisprudence, the nature of an action is determined by the

allegations in the complaint. In turn, the nature of the action determines its
proper venue. Rule 4 of the Rules of Court provides the rules on the situs for
bringing real and personal actions, viz:
Rule 4

VENUE OF ACTIONS

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.

Forcible entry and detainer actions shall be commenced and tried in the
municipal trial court of the municipality or city wherein the real property
involved, or a portion thereof, is situated.

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.
Expounding on the foregoing provisions, the Court delineated the basic
distinction between a real and a personal action and their respective venues
in Bank of the Philippine Islands v. Hontanosas, Jr.,15 stating that:
The determinants of whether an action is of a real or a personal nature have
been fixed by the Rules of Court and relevant jurisprudence. According to
Section 1, Rule 4 of the Rules of Court, a real action is one that affects title to
or possession of real property, or an interest therein. Such action is to be
commenced and tried in the proper court having jurisdiction over the area
wherein the real property involved, or a portion thereof, is situated, which
explains why the action is also referred to as a local action. In contrast,
the Rules of Court declares all other actions as personal actions. Such actions
may include those brought for the recovery of personal property, or 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 of a personal action is the place 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, for which reason the action is considered a
transitory one.
Otherwise stated, what determines the venue of a case is the primary objective
for the filing of the case.16 On one hand, if the plaintiff seeks the recovery of
personal property, the enforcement of a contract or the recovery of damages,
his complaint is a personal action that may be filed in the place of residence of
either party. On the other hand, if the plaintiff seeks the recovery of real
property, or if the action affects title to real property or for the recovery of
possession, or for partition or condemnation of, or foreclosure of mortgage on,
real property, then the complaint is a real action that must be brought before
the court where the real property is located. Thus, in Chua v. Total Office
Products and Services, Inc.,17 this Court ruled that where the action is not
intended for the recovery of real property but solely for the annulment of a
contract, it is a personal action that may be filed in the court where the plaintiff
or the respondent resides. It held:
Well-settled is the rule that an action to annul a contract of loan and its
accessory real estate mortgage is a personal action. In a personal action, the
plaintiff seeks the recovery of personal property, the enforcement of a
contract or the recovery of damages. In contrast, in a real action, the plaintiff
seeks the recovery of real property, or, as indicated in Section 2 (a), Rule 4 of
the then Rules of Court, 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 mortgage on, real property.

In the Pascual case, relied upon by petitioner, the contract of sale of the

fishpond was assailed as fictitious for lack of consideration. We held that there
being no contract to begin with, there is nothing to annul. Hence, we deemed
the action for annulment of the said fictitious contract therein as one
constituting a real action for the recovery of the fishpond subject thereof

We cannot, however, apply the foregoing doctrine to the instant case. Note that
in Pascual, title to and possession of the subject fishpond had already passed to
the vendee. There was, therefore, a need to recover the said fishpond. But in
the instant case, ownership of the parcels of land subject of the
questioned real estate mortgage was never transferred to petitioner,
but remained with TOPROS. Thus, no real action for the recovery of real
property is involved. This being the case, TOPROS' action for annulment
of the contracts of loan and real estate mortgage remains a personal
action. (emphasis supplied)
In the Complaint filed with the court a quo, petitioner sought the nullification of
the Deed of Sale with Right to Repurchase on the strength of this claim: he did
not sign the same nor did he execute any special power of attorney in favor of
his late wife to do so in his behalf.18 But, as there was no allegation that the
possession and title to the property have been transferred to
respondent, nowhere in the Complaint did petitioner allege or pray for
the recovery or reconveyance of the real property. Pertinent parts of the
Complaint read thus:
4. Plaintiff was married to Ma. Lucila B. Racpan on 20 December 1978. The
latter died on 13 November 2011 at Oroville, California...

5. Plaintiff Racpan purchased a property from his brother Lorezo L. Racpan

formerly covered by Transfer Certificate of Title No. T-189893 and located at
Carmen, Davao del Norte and the said property is now covered by Transfer
Certificate of Title No. T-142-2011009374. Hereto attached and marked as
Annex "B" is a copy of the Transfer Certificate of Title No. T-142-
2011009374 registered under the name of plaintiff Rudy L. Racpan. Also
attached and marked as Annex "C'" is the tax declaration of the subject
property to prove that plaintiff is the owner of the same.

6. Plaintiff's wife died at Oroville, California on 12 November 2011. However,

her remains were returned to Davao City, Philippines. Nonetheless, it was the
daughter of the plaintiff in the person of Lani Racpan who arrived first in Davao
City.

xxxx

8. On 12 December 2011, plaintiff's daughter showed to him the subject deed of

sale with right to repurchase dated 29 March 2011. Plaintiff was surprised
because he did not know or has NO knowledge of the said deed of sale with
right to repurchase. When plaintiff navigated the Deed of Sale, he was
surprised because his signature appearing on the same is COMPLETELY
FALSIFIED....

8.a Moreover, plaintiff did not also execute any special power of attorney
in favour of his deceased wife authoring the latter to [sell] the subject
property to the defendant.

8.b On the other hand, the subject property is registered under the name
of plaintiff Rudy Racpan and NOT TO SPOUSES Racpan. The words
"married to Ma. Lucila B. Racpan" only signified the civil status of plaintiff to the
latter.

xxxx

9.d Evidently, from the foregoing the (alleged) subject deed of sale with
right to repurchase is NULL AND VOID as the same contains the
falsified signature of the herein plaintiff.

xxxx
11. Plaintiff before and during the time of the execution of the subject Deed of
Sale with Right to Repurchase dated 29 March 2011 NEVER MET defendant
Saigh. It was only sometime in December 7 or 8, 2011 that he met defendant
Saigh during the wake of his wife wherein he was introduced to the former by
Orly Gabriel.

12. To date, plaintiff is in possession of the subject property. However, his

daughter has been receiving text message from defendant requiring him to
settle the said alleged obligation of his deceased wife to her.19
Evidently, as the Complaint was not concerned with the title to or recovery of
the real property, it was a personal action. Thus, Davao City, where both the
petitioner and the respondent reside is the proper venue for the complaint. The
appellate court therefore committed a reversible error in affirming the trial
court's dismissal of the case for improper venue.

The Complaint was exempted from Barangay Conciliation Proceedings

As for petitioner's failure to resort to barangay conciliation, Section 412 of the

Local Government Code (LGC) provides that parties may go directly to court
where the action is coupled with provisional remedies:
SEC. 412. Conciliation. - (a) Pre-condition to filing of complaint in court. - No
complaint, petition, action, or proceeding involving any matter within the
authority of the lupon shall be filed or instituted directly in court or any other
government office for adjudication, unless there has been a confrontation
between the parties before the lupon chairman or the pangkat, and that no
conciliation or settlement has been reached as certified by the lupon secretary
or pangkat secretary as attested to by the lupon chairman or pangkat chairman
or unless the settlement has been repudiated by the parties thereto.

(b) Where parties may go directly to court. - The parties may go directly to

court in the following instances:

(1) Where the accused is under detention;

(2) Where a person has otherwise been deprived of personal liberty calling for
habeas corpus proceedings;

(3) Where actions are coupled with provisional remedies such as

preliminary injunction, attachment, delivery of personal property, and
support pendente lite; and

(4) Where the action may otherwise be barred by the statute of limitations.

(c) Conciliation among members of indigenous cultural communities. - The

customs and traditions of indigenous cultural communities shall be applied in
settling disputes between members of the cultural communities.
While there is no dispute herein that the present case was never referred to
the Barangay Lupon for conciliation before petitioner instituted Civil Case No.
34, 742-2012, there is likewise no quibbling that his Complaint was coupled
with a prayer for the issuance of a preliminary injunction.20 Hence, it falls
among the exceptions to the rule requiring the referral to baranggay
conciliation.

As good faith is always presumed,21 in the absence of proof of improper motive

on the part of the petitioner, the Court cannot countenance the appellate court's
assumption that petitioner was solely intent on evading the requirements of the
LGC in applying for a preliminary injunction. This Court cannot sustain a
dismissal of an action on account of an unproven assertion of bad faith.

WHEREFORE, the petition is GRANTED. The February 13, 2017 Decision and

August 17, 2017 Resolution of the Court of Appeals in CA-G.R. CV No. 04034-
MIN, as well as the Orders dated September 18, 2013 and June 19, 2004 of the
Regional Trial Court of Davao City, Branch 11, in Civil Case No. 34, 742-2012
are REVERSED and SET ASIDE. Civil Case No. 34, 742-2012 is hereby
ordered REINSTATED. The RTC is ordered to proceed with dispatch in the
disposition of the mentioned case.

SO ORDERED.