In the syllabus, this case falls under the topic Right of Action v Cause of Action but there is close

to nothing in this case in connection with that

topic. In the Arellano Reviewer, this case is under Real Action v Personal Action which is really what the case was all about. Thank you.
FAR EAST BANK AND TRUST CO V SPOUSES PLAZA
July 25, 2003 | Bellosillo, J. | Petition for Review | Right of Action v Cause of Action
PETITIONER: Far East Bank and Trust Company (FEBTC) and/or Bank of the Philippine Islands
RESPONDENT: Spouses Romulo and Wilma Plaza

SUMMARY: The Spouses Plaza file a civil suit to compel the Banks to accept their payment to cancel the mortgage over their property
constituted to secure a Charlie Angs loan. The Banks file a Motion to dismiss the the complaint on the ground of lack of jurisdiction for non-
payment of docket fees. The Banks assert that the action is a real action while the Spouses maintain that their action is a personal one as the
possession or ownership of the property is not in question.

DOCTRINE: A right of action is the right of the plaintiff to bring an action and to prosecute that action to final judgment.
A cause of action is an act or omission by which a party violates a right of another. (Rule 2, 2)
Cause of Action Right of Action
delict or wrong committed by the defendant right of the plaintiff to institute the action
created by substantive law regulated by procedural law
not affected by statute of limitations, estoppel or other affected by statute of limitations, estoppel or other circumstances
circumstances

Real Action Personal Action

As to the Subject Ownership or possession of real property Recovery of personal property, or damages are sought for
breach of contract
As to what it is Privity of real estate Privity of contract
founded on
As to Venue In the court in whose territorial jurisdiction the property In the court in whose territorial jurisdiction the plaintiff or
of any of its parts is located any of the defendants reside at the plaintiffs option

FACTS:
1. One Charlie Ang obtained from the Banks a loan
of P2,158,000.00 secured by a mortgage over a piece of land owned
by respondent-spouses. Ang later obtained more loans from the
Banks covered by promissory notes amounting to P4,800,000.00.
When Ang failed to pay the loans upon maturity, the Banks started
proceedings to foreclose the mortgage. The Spouses offered to pay
the mortgage indebtedness of P2,158,000.00 but the Banks refused to
accept payment unless the spouses assumed the other obligations of
Ang to them.
2. The spouses filed a civil action against Banks and Charlie
Ang for release of the real estate mortgage and damages with prayer
for a TRO and issuance of writ of injunction. Banks filed a motion to
dismiss the complaint on the ground of lack of jurisdiction for non-
payment of docket fees. The RTC of Cebu denied the Motion to
Dismiss as well as their MR. Banks filed a petition
for certiorari before the CA. The appellate court dismissed the
petition and MR. The Banks then filed this petition for review.
3. On 3 March 2003, the trial court issued a writ of preliminary
injunction enjoining Banks from foreclosing the mortgage while the
case before it was pending. The trial court also denied their MR.
4. In the meantime, the civil case before the trial court
proceeded to the pre-trial stage where petitioners expressed their
willingness to await any written offer to pay by respondents.
Respondents sent a formal letter to petitioners offering to pay the
mortgage indebtedness and asking the release of the real estate
mortgage with a cashiers check in that amount. Petitioners accepted
the check only as partial payment without prejudice to the remaining
balance of the loans. Respondents now insist that they have already
paid the loans in full and that petitioners should release the mortgage
in view of the payment. Petitioners already accepted the payment of
P2,158,000.00 but the mortgage has not been released.
ISSUE:
Whether the action filed by the spouses is a real action or a
personal one. PERSONAL ACTION
WoN the RTC of Cebu lacks jurisdiction over the case. NO.
RULING: The Petition is DENIED.
RATIO:
The action filed by respondent-spouses before the RTC is a
personal action. An action to compel the mortgagee to accept
payment and for the consequent cancellation of a real estate
mortgage is a personal action if the mortgagee has not foreclosed
the mortgage and the mortgagor is in possession of the premises
since neither the mortgagors title to nor possession of the
property is in question.
Rule 4
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.
Sec. 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.
Contrary to petitioners contention, respondents do not question
the validity of the real estate mortgage they entered into. In fact they
uphold its validity since they are willing to pay their obligation under
the contract after which the contract should then be declared without
legal effect. Also, there is as yet no transfer of title from
respondents to petitioners. Respondents maintain that the title
remains in their name and they are still in actual physical
possession of the property. There is no foreclosure yet of the
mortgage. Hence, there is no title to the land to be affected by the
action.