Rule 4 Cases
property is a real action.1
BPI Family Bank vs. Yujuico
GR NO. 175796, July 22, 2015
Facts: The City of Manila filed a complaint for
expropriation of five parcels of land located in Tondo,
Manila, owned by the respondents before the RTC of
Manila. Two of the five parcels of lands were under a
First Real Estate Mortgage Contract to Citytrust
Banking Coroporaiton, predecessor in interest of the
petitioner. After the RTC rendered judgment
expropriating the lots, the petitioner filed its Motion
to Intervene in Execution with Partial Opposition to
Defendants Request to Release, which the RTC
denied. The petitioner then extrajudicially foreclosed
the two lots, and after the public auction, the amount
of P18,522,155.42 remained as judgment deficiency,
which the petitioners sought to recover from the
respondents by filing a complaint before the RTC of
Makati City (Civil Case No. 03-450). The respondents
moved to dismiss on the ground of res judicata, lack
of cause of cause of action and that plaintiffs claim
had been abandoned, waived or extinguished. The
petitioners opposed the motion. While the RTC
denied the motion to dismiss, the respondents filed
their reply to the petitioners comment to the motion
to dismiss, raising for the first time the issue of
improper venue. They aver that the action to
recover deficiency judgment should be filed in the
RTC of Manila which ruled on the extra-judicial
foreclosure of real estate mortgage, being a
supplementary action to the latter. The RTC denied
the respondents motion for reconsideration; on the
issue of improper venue, it held that even if the
venue was improperly laid, the respondents failed to
allege it in their motion to dismiss; an action cannot
be dismissed on a ground not alleged in the motion to
dismiss eve if said ground is provided in Rule 16. On
petition for certiorari, the CA reversed the RTC. It
ruled that a suit for recovery of the deficiency
after the foreclosure of a mortgage is in the
nature of a mortgage action because its
purpose is precisely to enforce the mortgage
contract; it is upon a written contract and upon
an obligation of the mortgage-debtor to pay
the deficiency which is created by law. As such,
the venue of an action for recovery of deficiency
must necessarily be the same venue as that of the
extrajudicial foreclosure of mortgage.. Thus the
action should have been filed before the RTC of
Manila.
The petitioner sought recourse with the Supreme
Court.
Issue: Whether venue was improperly laid. i.e. The
action to recover deficiency judgment should be filed
before the court which ruled on the extra-judicial
foreclosure of real estate mortgage.
Held: It is basic that the venue of an action depends
on whether it is a real or a personal action. 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. Thus, an action for partition or
condemnation of, or foreclosure of mortgage on, real
The real 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.2
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.3
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,4 for which reason the action is
considered a transitory one.
Based on the distinctions between real and personal
actions, an action to recover the deficiency after the
extrajudicial foreclosure of the real property
mortgage is a personal action, for it does not affect
title to or possession of real property, or any interest
therein.
It is true that the Court has said in Caltex Philippines,
Inc. v. Intermediate Appellate Court5 that a suit for
the recovery of the deficiency after the foreclosure of
a mortgage is in the nature of a mortgage action
because its purpose is precisely to enforce the
mortgage contract. However, the CA erred in
holding, upon the authority of Caltex Philippines, Inc.,
that the venue of Civil Case No. 03-450 must
necessarily be Manila, the same venue as that of the
extrajudicial foreclosure of mortgage. An examination
of Caltex Philippines, Inc. reveals that the Court was
thereby only interpreting the prescriptive period
within which to bring the suit for the recovery of the
deficiency after the foreclosure of the mortgage, and
was not at all ruling therein on the venue of such suit
or on the nature of such suit being either a real or a
personal action.
Given the foregoing, the petitioner correctly brought
Civil Case No. 03-450 in the Makati RTC because
Makati was the place where the main office of the
petitioner was located.
Moreover, the Makati RTC observed, and the
observation is correct in our view, that it would be
improper to dismiss Civil Case No. 03-450 on the
ground of improper venue, assuming that the venue
had been improperly laid, considering that the
respondents had not raised such ground in their
Motion to Dismiss. As earlier indicated, they came to
raise the objection of improper venue for the first
time only in their reply to the petitioners comment
on their Motion for Reconsideration. They did so
belatedly.
We underscore that in civil proceedings, venue is
procedural, not jurisdictional, and may be waived by
the defendant if not seasonably raised either in a
motion to dismiss or in the answer.6 Section 1, Rule 9
of the Rules of Court thus expressly stipulates that
defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed
waived. As it relates to the place of trial, indeed,
venue is meant to provide convenience to the parties,
rather than to restrict their access to the courts.7 In
other words, unless the defendant seasonably
objects, any action may be tried by a court despite its
being the improper venue.
SPOUSES HERMES P. OCHOA and ARACELI D.
OCHOA, petitioners, vs. CHINA BANKING
CORPORATION, respondent.
RESOLUTION
For resolution is petitioners' motion for
reconsideration 1 of our January 17, 2011 Resolution
2 denying their petition for review on certiorari 3 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 Paraaque 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. ETHaDC
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 Paraaque 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 Paraaque
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. . . . ." 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
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 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.
Paglaum Management Development Corp. vs
Union Bank
GR No 179018; June 18, 2012
G.R. No. 179018, April 17, 2013
Paglaum Management and Dev't Corp. and Health
Marketing Technologies, Inc., petitioners
vs Union Bank of the Philippines, etc., respondents
Ponente: Sereno
Facts:
Union Bank filed this motion for reconsideration
saying that restructuring agreement is null and void
because the borrower has not complied with the
condition precedent of the bank. It is also
unenforceable because it was only between Health
and Union bank. Paglaum was a party only to the real
estate mortgages and not in the restructuring
agreement. The venue is exclusively in Cebu City,
and the assumption of the RTC's jurisdiction was
without basis.
Held: We deny the Motion for Reconsideration.
Issues raised for the first time in a motion for
reconsideration before this Court are deemed waived,
because these should have been brought up at the
first opportunity.7 Nevertheless, there is no cogent
reason to warrant a reconsideration or modification of
our 18 June 2012 Decision.
Union Bank raises three new issues that require a
factual determination that is not within the province
of this Court.8 These questions can be brought to and
resolved by the RTC as it is the proper avenue in
which to raise factual issues and to present evidence
in support of these claims.
Anent Union Bank's last contention, there is no need
for the Court to discuss and revisit the issue, being a
mere rehash of what we have already resolved in our
Decision.
Unimasters Conglomeration, Inc vs CA
FACTS:
Kubota Agri-Machinery Philippines, Inc. and
Unimasters Conglomeration, Inc. entered into
aDealership Agreement for Sales and Services of the
former's products in Samar and Leyte Province. The
Dealership Agreement contained a stipulation that
All suits arising out of this Agreement shall be filed
with / in t he proper Courts of Quezon City. Five
years later, Umimasters filed an action in the RTC of
Tacloban against Kubota, Reynaldo Goand Metrobank
for damages and breach of contracts, and injunction
with prayer for temporaryrestraining order. Kubota
filed two motions One for the dismissal of the case on
the ground of improper venue .The other prayed for
the transfer of the injunction hearing its counsel was
not available. The court issued an order allowing the
issuance of preliminary injunction and a motion
denyingthe motion to dismiss on the reason that
Umimasters place of business is in Tacloban
City while Kubotas principal place of business is in
Quezon City. In accord with the the Rules of Court, the
proper venue would either be Quezon City or
Tacloban City at the election of the plaintiff.
Hence,the filing in the RTC of Tacloban is proper.6.
Kubota appealed both orders on the grounds they
were issued with grave abuse of discretion in aspecial
action for certiorari and prohibition filed with the CA.
Kubota asserted that RTC of Taclobanhad no
jurisdiction was improperly laid.7. The Court of
Appeals decided in favor of Kubota and it held that:
the stipulation respectingvenue in its Dealership
Agreement with UNIMASTERS did in truth limit the
venue of all suits arisingthereunder only and
exclusively to the proper courts of Quezon City.
Subsequently, Unimasters filed a motion for
reconsideration but was turned down by theappellate
court.
ISSUE:WON the venue stipulations in a contract has
the effect of limiting the venue to a specified place.
RULING:
NO. The Polytrade doctrine was applied in the case at
bar. This doctrine enunciated that aslong as the
stipulation does not set forth qualifying or restrictive
words to indicate that the agreedplace alone and
none other is the venue of the action, the parties do
not lose the option of choosingthe venueAbsence of
qualifying or restrictive words, venue stipulations in a
contract should be consideredmerely as agreement
on additional forum, not as limiting venue to the
specified place.
Auction in Malinta, Inc. vs. Luyaben
[G.R. No. 173979. February 12, 2007
Mere stipulation on the venue of an action is not
enough to preclude parties from bringing a case in
other venues. It must be shown that such stipulation
is exclusive.
Facts: Warren Embes Luyaben filed a complaint for
damages against Auction in Malinta, Inc. (AIMI) in
RTC-Kalinga where Luyaben resides. AIMI moved to
dismiss the complaint on the ground of improper
venue by invoking the following stipulation in their
agreement: ALL COURT LITIGATION PROCEDURES
SHALL BE CONDUCTED IN THE APPROPRIATE COURTS
OF VALENZUELA CITY, METRO MANILA.
Issue: Did the stipulation in the Agreement effectively
limit the venue of the case exclusively to the proper
court of Valenzuela City?
Held: No. Mere stipulation on the venue of an action
is not enough to preclude parties from bringing a
case in other venues. It must be shown that such
stipulation is exclusive. In the absence of qualifying
or restrictive words, such as exclusively and
waiving for this purpose any other venue, shall
only preceding the designation of venue, to the
exclusion of the other courts, or words of similar
import, the stipulation should be deemed as merely
an agreement on an additional forum, not as limiting
venue to the specified place. (Auction in Malinta, Inc.
vs. Warren Embes Luyaben, G.R. No. 173979,
February 12, 2007)