G.R. No. 198718.

November 27, 2013

SPOUSES TEODORO and ROSARIO SARAZA and FERNANDO SARAZA, vs. WILLIAM FRANCISCO

FACTS: The case stems from an amended complaint filed by William Francisco against Fernando and Spouses Teodoro
and Rosario (Rosario) Saraza (Spouses Saraza). The respondent alleged in his complaint that on September 1, 1999, he
and Fernando executed an Agreement that provided for the latter’s sale of his 100-square meter share in a lot situated in
Bangkal, Makati City, which at that time was still registered in the name of one Emilia Serafico and covered by Transfer
Certificate of Title (TCT) No. 40376 (later covered by TCT No. 220530), for a total consideration of ₱3,200,000.00. The
amount of ₱1,200,000.00 was paid upon the Agreement’s execution, while the balance of ₱2,000,000.00 was to be paid on
installments to the Philippine National Bank (PNB), to cover a loan of Spouses Saraza, Fernando’s parents, with the bank.
A final deed of sale conveying the property was to be executed by Fernando upon full payment of the PNB loan.

It was also agreed upon that should the parties fail for any reason to transfer the subject property to the respondent’s
name, Rosario and Fernando’s 136-sq m property covered by TCT No. 156126 and encumbered to PNB to secure the loan
that was to be paid by the respondent shall be considered a collateral in favor of the respondent. Spouses Saraza signified
their conformity to the Agreement. The respondent was also allowed to take immediate possession of the property covered
by TCT No. 156126 through a contract of lease. The petitioners likewise furnished PNB with an Authority, allowing the
respondent to pay their obligations to the PNB, to negotiate for a loan restructuring, to receive the owner’s duplicate copy
of TCT No. 156126 upon full payment of the loan secured by its mortgage, and to perform such other acts as may be
necessary in connection with the settlement of the loan.

When the remaining balance of the PNB loan reached ₱226,582.13, the respondent asked for the petitioners’ issuance of a
Special Power of Attorney (SPA) that would authorize him to receive from PNB the owner’s duplicate copy of TCT No.
156126 upon full payment of the loan. The petitioners denied the request. Upon inquiry from PNB, the respondent found
out that the petitioners had instead executed an Amended Authority, which provided that the owner’s copy of TCT No.
156126 should be returned to the mortgagors upon full payment of the loan. Spouses Saraza also caused the eviction of the
respondent from the property covered by TCT No. 156126. These prompted the respondent to institute the civil case for
specific performance, sum of money and damages with the RTC of Imus, Cavite on December 7, 2004.

ISSUE: Whether or not RTC of Imus lacked jurisdiction over the case as it involved an adjudication of ownership of a
property situated in Makati City.

HELD: As to the issue of venue, the petitioners’ argument that the action should have been instituted with the RTC of
Makati City, and not the RTC of Imus, Cavite, is misplaced. Although the end result of the respondent’s claim was the
transfer of the subject property to his name, the suit was still essentially for specific performance, a personal action,
because it sought Fernando’s execution of a deed of absolute sale based on a contract which he had previously made.

In Siasoco v. Court of Appeals, private respondent filed a case for specific performance with damages before the RTC of
Quezon City. It alleged that after it accepted the offer of petitioners, they sold to a third person several parcels of land
located in Montalban, Rizal. The Supreme Court sustained the trial court’s order allowing an amendment of the original
Complaint for specific performance with damages. Contrary to petitioners’ position that the RTC of Quezon City had no
jurisdiction over the case, as the subject lots were located in Montalban, Rizal, the said RTC had jurisdiction over the
original Complaint. The Court reiterated the rule that a case for specific performance with damages is a personal action
which may be filed in a court where any of the parties reside.

Section 2, Rule 4 of the Rules of Court then governs the venue for the respondent’s action. It provides that personal
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." Considering the respondent’s statement in his complaint that he resides in Imus, Cavite, the
filing of his case with the RTC of Imus was proper.

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PHILIPPINE BANK OF, COMMUNICATIONS, Petitioners, v. ELENA LIM, RAMON CALDERON, and TRI-
ORO INTERNATIONAL TRADING & MANUFACTURING CORPORATION, Respondents. [G.R. NO. 158138.
April 12, 2005]

Facts

 On September 3, 1999, the Philippine Bank of Communications (hereinafter '[petitioner']) filed a

complaint against [Respondents Elena Lim, Ramon Calderon and Tri-Oro International Trading &
Manufacturing Corporation ('Tri-Oro' for brevity)] with the Regional Trial Court of Manila for the
collection of a deficiency amounting to P4,014,297.23 exclusive of interest.

 [Petitioner] alleged therein that [respondents] obtained a loan from it and executed a continuing surety
agreement dated November 16, 1995 in favor of [petitioner] for all loans, credits, etc., that were extended
or may be extended in the future to [respondents].

 [Petitioner] granted a renewal of said loan upon [respondent's] request, the most recent being on January
21, 1998 as evidenced by Promissory Note Renewal BD-Variable No. 8298021001 in the amount
of P3,000,000.00. It was expressly stipulated therein that the venue for any legal action that may arise out
of said promissory note shall be Makati City, 'to the exclusion of all other courts' x x x. [Respondents
allegedly] failed to pay said obligation upon maturity. Thus, [petitioner] foreclosed the real estate
mortgage executed by [respondents] valued at P1,081,600.00 leaving a deficiency balance
of P4,014,297.23 as of August 31, 1999.

 [Respondents] moved to dismiss the complaint on the ground of improper venue, invoking the stipulation
contained in the last paragraph of the promissory note with respect to the restrictive/exclusive venue. [The
trial court] denied said motion asseverating that [petitioner] ha[d] separate causes of action arising from
the promissory note and the continuing surety agreement. Thus, [under] Rule 4, Section 2, of the 1997
Rules of Civil Procedure, as amended, x x x venue was properly laid in Manila. [The trial court]
supported [its] order with cases where venue was held to be merely permissive. A motion for
reconsideration of said order was likewise denied.

Ruling of the Court of Appeals

On appeal, the CA ruled that respondents' alleged debt was based on the Promissory Note, which had provided an
exclusionary stipulation on venue "to the exclusion of all other courts."5 The parties' Surety Agreement, though silent as to
venue, was an accessory contract that should have been interpreted in consonance with the Promissory Note. Hence, this
Petition.

Issue

Whether or not the Honorable Court of Appeals had decided the issue of venue in a way not in accord with law
and applicable decisions of this Honorable Court and had thereby departed from the accepted and usual course of judicial
proceedings, as to call for this Honorable Supreme Court's power of supervision and appellate review.

Ruling

The Petition is unmeritorious.

Sole Issue:

Venue

At the outset, this Court observes that petitioner took liberties with the stipulated facts to suit its allegations in the present
Petition. In its Complaint, petitioner bank averred that respondents had entered into the Surety Agreement (SA) to

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guarantee existing and future credit facilities, and that they had executed the Promissory Note (PN) to document their
loan. Now, the bank is claiming that Tri-Oro issued the PN on which the other respondents should be made liable as
sureties.

This strategy is obviously intended to disconnect the SA from the PN and to support the claim of petitioner that the
stipulation on venue does not apply to the SA. However, as will be discussed below, the cause of action to recover on
the basis of the SA is inseparable from that which is based on the PN.

Rule on Venue

Section 2 of Rule 4 of the Rules of Court provides that personal actions must be commenced and tried (1) in the
place where the plaintiff resides, or (2) where the defendant resides, or (3) in case of non-resident defendants, where
they may be found, at the choice of the plaintiff. This rule on venue does not apply when the law specifically
provides otherwise, or when - - before the filing of the action - - the contracting parties agree in writing on the
exclusive venue thereof. Venue is not jurisdictional and may be waived by the parties.

A stipulation as to venue does not preclude the filing of the action in other places, unless qualifying or restrictive
words are used in the agreement.

In the instant case, the stipulation on the exclusivity of the venue as stated in the PN is not at issue. What petitioner claims
is that there was no restriction on the venue, because none was stipulated in the SA on which petitioner had allegedly
based its suit. Accordingly, the action on the SA may be filed in Manila, petitioner's place of residence.

Petitioner adds that its Complaint filed in the trial court had two causes of action: the first was founded on a breach of the
PN; and the second, on a violation of the SA. Consequently, it was allegedly correct to join the causes of action and to file
the case in Manila, per Section 5 of Rule 2 of the Rules of Court, which reads:

"Section 5. Joinder of Causes of Action. 'A party may in one pleading assert, in the alternative or otherwise, as many
causes of action as he may have against an opposing party, subject to the following conditions:

(c) Where the causes of action are between the same parties but pertain to different venue or jurisdictions, the
joinder may be allowed in the Regional Trial Court provided one of the causes of action falls within the jurisdiction
of the said court and venue lies therein."

Cause of Action

The cause of action, however, does not affect the venue of the action. The vital issue in the present case is
whether the action against the sureties is covered by the restriction on venue stipulated in the PN. As earlier stated, the
answer is in the affirmative. Since the cases pertaining to both causes of action are restricted to Makati City as the proper
venue, petitioner cannot rely on Section 5 of Rule 2 of the Rules of Court.

Liberal Construction

Petitioner's final plea for liberality in applying the rules on venue must be rejected. As earlier discussed, the PN was a
contract of adhesion. Ambiguities therein are to be construed against the party that prepared the contract. On the same
principle, petitioner can no longer disavow the stipulation on venue, considering that it drafted the Surety Agreement.
Besides, this alleged technicality caused no miscarriage of substantial justice, as petitioner may refile the case. The
inconveniences brought about by its failure to observe the rules on venue sprang from its own acts. Hence, it cannot blame
the courts or anyone else for the resulting delay in the adjudication of the merits of its cause.

FALLO

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED.

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 Paglaum Management & Development Corp. and Health Marketing Technologies, Inc. v. Union Bank of the
Philippines, et al.,
GR. No. 179018, June 18, 2012
SERENO, J.

Doctine:
Rule 4, Section 1 states that: 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. 3. When Rule not applicable. This Rule shall not apply
(a) In those cases where a specific rule or law provides otherwise; or
(b) Where the parties have validly agreed in writing before the filing of the action on the exclusive venue thereof.

Facts:
On 3 February 1994, respondent Union Bank extended HealthTech a credit line in the amount of ₱10,000,000. To
secure this obligation, PAGLAUM executed three Real Estate Mortgages on behalf of HealthTech and in favor of Union
Bank. It must be noted that the Real Estate Mortgage, on the provision regarding the venue of all suits and actions arising
out of or in connection therewith, originally stipulates:
Section 9. Venue. The venue of all suits and actions arising out of or in connection with this Mortgage shall be in Makati,
Metro Manila or in the place where any of the Mortgaged Properties is located, at the absolute option of the
Mortgagee, the parties hereto waiving any other venue.
However, under the two Real Estate Mortgages dated February 11, 1994, it stated that the venue shall be in Cebu
City, Metro Manila or in the place where any of the mortgaged properties is located, at the absolute option of the
Mortgagee. Meanwhile, the same provision in Real Estate Mortgage date April 22, 1998 contains a blank space for the
venue or in the place where any of the mortgaged properties is located.
HealthTech and Union Bank agreed to subsequent renewals and increases in the credit line, with the total amount of
debt reaching ₱36,500,000. Unfortunately, according to HealthTech, the 1997 Asian financial crisis adversely affected its
business and caused it difficulty in meeting its obligations with Union Bank. Thus, on December 11, 1998, both parties
entered into a Restructuring Agreement, which states that any action or proceeding arising out of or in connection
therewith shall be commenced in Makati City, with both parties waiving any other venue. Despite the Restructuring
Agreement, HealthTech failed to pay its obligation, prompting Union Bank to send a demand letter dated 9 October 2000,
stating that the latter would be constrained to institute foreclosure proceedings, unless HealthTech settled its account in
full. Since HealthTech defaulted on its payment, Union Bank extra-judicially foreclosed the mortgaged properties. The
bank as the sole bidder, was then issued a Certificate of Sale. Consequently, HealthTech filed a Complaint for Annulment
of Sale and Titles with Damages and Application for Temporary Restraining Order and Writ of Injunction, which the RTC
ruled in favor of them and issued the said writ. Thereafter, Union Bank filed a Motion to Dismiss, which the RTC granted
and resulted to the dismissal of the case, as well as the dissolution of the Writ of Preliminary Injunction. It likewise denied
the subsequent Motion for Reconsideration filed by PAGLAUM and HealthTech. PAGLAUM and HealthTech elevated
the case to the CA, which affirmed the decision of the trial court and denied the Motion for Reconsideration.
Issue: Whether Makati City is the proper venue to assail the foreclosure of the subject real estate mortgage.
Ruling:
The Supreme Court rules in the affirmative. According to the Rules, real actions shall be commenced and tried in
the court that has jurisdiction over the area where the property is situated. In this case, all the mortgaged properties are
located in the Province of Cebu. Thus, following the general rule, PAGLAUM and HealthTech should have filed their
case in Cebu, and not in Makati. However, the Rules provide an exception, in that real actions can be commenced and
tried in a court other than where the property is situated in instances where the parties have previously and validly agreed
in writing on the exclusive venue thereof. In the case at bar, the parties claim that such an agreement exists. The only
dispute is whether the venue that should be followed is that contained in the Real Estate Mortgages, as contended by
Union Bank, or that in the Restructuring Agreement, as posited by PAGLAUM and HealthTech. This Court rules that the
venue stipulation in the Restructuring Agreement should be controlling.
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 The said provisions of the Real Estate Mortgages and the later Restructuring Agreement clearly reveal the intention
of the parties to implement a restrictive venue stipulation, which applies not only to the principal obligation, but also to
the mortgages. The phrase waiving any other venue plainly shows that the choice of Makati City as the venue for actions
arising out of or in connection with the Restructuring Agreement and the Collateral, with the Real Estate Mortgages being
explicitly defined as such, is exclusive.
Dispositive Portion:
WHEREFORE, the Petition for Review is GRANTED. The Decision dated 31 May 2007 and Resolution dated 24
July 2007 in CA-G.R. CV No. 82053 of the Court of Appeals, as well as the Orders dated 11 March 2003 and 19
September 2003 issued by the Regional Trial Court, Makati City, Branch 134, are REVERSED and SET ASIDE. The
Complaint in Civil Case No. 01-1567 is hereby REINSTATED. SO ORDERED.

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G.R. No. 192877               March 23, 2011

SPOUSES HERMES P. OCHOA and ARACELI D. OCHOA, Petitioners,

vs.
CHINA BANKING CORPORATION, Respondent.

RESOLUTION

NACHURA, J.:

For resolution is petitioners’ motion for reconsideration1 of our January 17, 2011 Resolution2 denying their petition for
review on certiorari3 for failing to sufficiently show any reversible error in the assailed judgment 4 of the Court of
Appeals (CA).

Petitioners insist that it was error for the CA to rule that the stipulated exclusive venue of Makati City is binding only
on petitioners’ complaint for Annulment of Foreclosure, Sale, and Damages filed before the Regional Trial Court of
Parañaque City, but not on respondent bank’s Petition for Extrajudicial Foreclosure of Mortgage, which was filed
with the same court.

We disagree.

The extrajudicial foreclosure sale of a real estate mortgage is governed by Act No. 3135, as amended by Act No.
4118, otherwise known as "An Act to Regulate the Sale of Property Under Special Powers Inserted In or Annexed to
Real-Estate Mortgages." Sections 1 and 2 thereof clearly state:

Section 1. When a sale is made under a special power inserted in or attached to any real-estate mortgage hereafter
made as security for the payment of money or the fulfillment of any other obligation, the provisions of the following
sections shall govern as to the manner in which the sale and redemption shall be effected, whether or not provision
for the same is made in the power.

Sec. 2. Said sale cannot be made legally outside of the province in which the property sold is situated;  and in case
the place within said province in which the sale is to be made is the subject of stipulation, such sale shall be made
in said place or in the municipal building of the municipality in which the property or part thereof is situated. 5

The case at bar involves petitioners’ mortgaged real property located in Parañaque City over which respondent
bank was granted a special power to foreclose extra-judicially. Thus, by express provision of Section 2, the sale can
only be made in Parañaque City.

The exclusive venue of Makati City, as stipulated by the parties 6 and sanctioned by Section 4, Rule 4 of the Rules of
Court,7 cannot be made to apply to the Petition for Extrajudicial Foreclosure filed by respondent bank because the
provisions of Rule 4 pertain to venue of actions, which an extrajudicial foreclosure is not.

Pertinent are the following disquisitions in Supena v. De la Rosa:8

Section 1, Rule 2 [of the Rules of Court] defines an action in this wise:

"Action means an ordinary suit in a court of justice, by which one party prosecutes another for the enforcement or
protection of a right, or the prevention or redress of a wrong."

Hagans v. Wislizenus does not depart from this definition when it states that "[A]n action is a formal demand of one's
legal rights in a court of justice in the manner prescribed by the court or by the law. x x x." It is clear that the
determinative or operative fact which converts a claim into an "action or suit" is the filing of the same with a "court of
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justice." Filed elsewhere, as with some other body or office not a court of justice, the claim may not be categorized
under either term. Unlike an action, an extrajudicial foreclosure of real estate mortgage is initiated by filing a petition
not with any court of justice but with the office of the sheriff of the province where the sale is to be made.  By no
1avvphi1

stretch of the imagination can the office of the sheriff come under the category of a court of justice. And as aptly
observed by the complainant, if ever the executive judge comes into the picture, it is only because he exercises
administrative supervision over the sheriff. But this administrative supervision, however, does not change the fact
that extrajudicial foreclosures are not judicial proceedings, actions or suits.9

These pronouncements were confirmed on August 7, 2001 through A.M. No. 99-10-05-0, entitled "Procedure in
Extra-Judicial Foreclosure of Mortgage," the significant portions of which provide:

In line with the responsibility of an Executive Judge under Administrative Order No. 6, date[d] June 30, 1975, for the
management of courts within his administrative area, included in which is the task of supervising directly the work of
the Clerk of Court, who is also the Ex-Office Sheriff, and his staff, and the issuance of commissions to notaries
public and enforcement of their duties under the law, the following procedures are hereby prescribed in extra-judicial
foreclosure of mortgages:

1. All applications for extrajudicial foreclosure of mortgage whether under the direction of the sheriff or a notary
public, pursuant to Act 3135, as amended by Act 4118, and Act 1508, as amended, shall be filed with the Executive
Judge, through the Clerk of Court who is also the Ex-Officio Sheriff.

Verily then, with respect to the venue of extrajudicial foreclosure sales, Act No. 3135, as amended, applies, it being
a special law dealing particularly with extrajudicial foreclosure sales of real estate mortgages, and not the general
provisions of the Rules of Court on Venue of Actions.

Consequently, the stipulated exclusive venue of Makati City is relevant only to actions arising from or related to the
mortgage, such as petitioners’ complaint for Annulment of Foreclosure, Sale, and Damages.

The other arguments raised in the motion are a mere reiteration of those already raised in the petition for review. As
declared in this Court’s Resolution on January 17, 2011, the same failed to show any sufficient ground to warrant
the exercise of our appellate jurisdiction.

WHEREFORE, premises considered, the motion for reconsideration is hereby DENIED.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

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