Saraza vs.

Francisco

Facts:
On September 1, 1999, Francisco and Fernando executed an Agreement. The Agreement provides that Fernando was to sell his 100-
sqm share in a lot in Bangkal, Makati City (Makati property) to Francisco which at that time was still registered in the name of one Emilia
Serafico for a total consideration of P3.2M. The amount of P1.2M was paid upon the Agreement’s execution, while the balance of P2M
was to be paid on installments to the 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
Sarazas fail for any reason to transfer the subject property to the Francisco, Rosario and Fernando’s 136-sqm property (2nd property)
and mortgaged to PNB to secure the loan to be paid by the respondent shall be collateral in favor of the Francisco. Francisco was also
allowed to take immediate possession of the 2nd property through a contract of lease.
When the remaining balance of the PNB loan reached P226,582.13, the respondent asked for the petitioners’ issuance of a Special
Power of Attorney that would authorize him to receive from PNB the owner’s duplicate copy of the 2 nd property 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 the 2nd property title should be returned to the mortgagors upon full payment
of the loan. Spouses Saraza also caused the eviction of the respondent from the 2nd property. 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. The petitioners
admitted the existence of the Agreement and the Authority which was addressed to PNB. They, nonetheless, opposed the respondent’s
complaint on the ground that the respondent did not pay the P1.2M he had to pay at the execution of the Agreement. They nonetheless
did not formally demand payment from him but merely waited for him to pay the amount.
The RTC rendered a Decision in favor of the respondent. Fernando questioned the RTC Decision before the CA. In addition to the
defenses which he raised during the proceedings before the RTC, he argued that the RTC of Imus lacked jurisdiction over the case as it
involved an adjudication of ownership of a property situated in Makati City.
The CA affirmed the RTC rulings. On the issue of jurisdiction, the CA cited Fernando’s failure to seasonably file before the lower court a
motion to dismiss stating that the action should have been filed in Makati City. More importantly, the Court explained that the case was
a personal action since it did not involve a claim of ownership of the subject property, but only sought Fernando’s execution of a deed of
sale in the respondent’s favor. Thus, the venue for the action was the residence of the plaintiff or the defendant, at the plaintiff’s option.
Issue/s:
Whether the action was a personal or real action – PERSONAL
Whether the proper venue for the action is in Makati or in Imus – IMUS
Ruling:
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
That 'he ultimately sought the conveyance of real property' not located in the territorial jurisdiction of the RTC of Pasig is . . . an anticipated
consequence and beyond the cause for which the action [for specific performance with damages] was instituted."
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.
PBComm vs. Lim And Calderon
Facts:
PBCom filed a complaint against respondents in the RTC of Manila for the collection of a deficiency. Petitioner alleged therein
that respondents obtained a loan from it and executed a continuing surety agreement 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. It was expressly stipulated threrein 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…” Respondents allegedly failed to pay said obligation
upon maturity. Thus, petitioner foreclosed the real estate mortgage executed by respondents, leaving a deficiency balance.
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 had separatecauses 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. An MR of said order was likewise denied.
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.” 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 the action against the sureties is covered by the restriction on venue stipulated in the PN–YES
Ruling:
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.
The prestation is not an original and direct obligation for the performance of the surety's own act, but merely accessory or
collateral to the obligation contracted by the principal.
In enforcing a surety contract, the "complementary-contracts-construed-together" doctrine finds application. According to this
principle, an accessory contract must be read in its entirety and together with the principal agreement.
This no-segregation principle is based on Article 1374 of the Civil Code.
The aforementioned doctrine is applicable to the present case. Incapable of standing by itself, the SA can be enforced only
in conjunction with the PN. The latter documents the debt that is sought to be collected in the action against the sureties.
The circumstances that related to the issuance of the PN and the SA are so intertwined that neither one could be separated
from the other.
Notably, the PN was a contract of adhesion that petitioner required the principal debtor to execute as a condition of the
approval of the loan. It was made in the form and language prepared by the bank.
Petitioner correctly argues that there are two causes of action contained in its Complaint. As against Tri-Oro International
Trading & Manufacturing Corporation, petitioner's cause of action is the alleged failure to pay the debt in violation of the PN;
as against Elena Lim and Ramon Calderon, in violation of the SA.
Because of the variance between the causes of action, petitioner could have filed separate actions against respondents to
recover the debt, on condition that it could not recover twice from the same cause.
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.
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.
Besides, this alleged technicality caused no miscarriage of substantial justice, as petitioner may refile the case.
Paglaum Management and Development Corp. vs. Union Bank of the Ph
Facts:
Paglaum Management and Development Corporation (PAGLAUM) is the registered owner of three parcels of land located in
the Province of Cebu with Benjamin B. Dy, the president of petitioner Health Marketing Technologies, Inc. (HealthTech) as
co-owner. On 3 February 1994, Union Bank of the Philippines (Union Bank) extended HealthTech a credit line in the amount
of P 10,000,000 which was eventually increased to 36,500,000. This was secured by three real estate mortgage on the lands.
The venue in the real estate mortgage was stipulated to be in Makati, Metro Manila or in the place where any of the Mortgaged
Properties is located (Cebu), at the absolute option of the Mortgagee, the parties hereto waiving any other venue.
Unfortunately, Healthtech is having difficulties on paying its obligation. They both executed a Restructuring Agreement
whereby it states that 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.
Healthtech still defaulted on the obligation. Union Bank foreclosed the properties through an auction sale, bought it as the
sole bidder as secured a Certificate of Sale. Healthcare filed a complaint for annulment of sale and titles on the RTC of
MAKATI. The RTC ruled in favor of Healthtech and restrained restraining Union Bank from proceeding with the auction sale.
Union Bank filed a Motion to Dismiss citing lack of jurisdiction and improper venue. RTC of Makati granted Union Banks
motion to dismiss. CA affirmed Makati RTC.
Union Bank argues that the Restructuring Agreement only pertains to the loan and does not affect the stipulations in the real
mortgage which states that it has the option to choose the venue. Healthtech argues the restructuring agreement also carries
with it the venue for the settlement of cases for the real mortgages. Hence, this appeal to the Supreme Court.
Issue: Which venue clause should apply, the one in the Mortgage Deed or in the Restructuring Agreement – RESTRUCTURE
Ruling:
All three mortgage contracts contain a dragnet clause, which secures succeeding obligations, including renewals, extensions,
amendments or novations thereof, incurred by HealthTech from Union Bank.
On the other hand, the Restructuring Agreement was entered into by HealthTech and Union Bank to modify the entire loan
obligation. Section 7 thereof provides:
Security. — The principal, interests, penalties and other charges for which the BORROWER may be bound to the BANK under
the terms of this Restructuring Agreement [...] shall continue to be secured by the [previous] security arrangements (the
"Collaterals").

Section 20 of the Restructuring Agreement as regards the venue of actions state:

20. Venue — Venue of any action or proceeding arising out of or connected with this Restructuring Agreement, the Note, the
Collateral and any and all related documents shall be in Makati City, [HealthTech] and [Union Bank] hereby waiving any other
venue.

These quoted 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.
Even if this Court were to consider the venue stipulations under the Real Estate Mortgages, it must be underscored that those
provisions did not contain words showing exclusivity or restrictiveness.
Ochoa vs. China Bank
Facts:
The extrajudicial foreclosure sale of a real estate mortgage is governed by Act No. 3135, as amended by Act No. 4118.
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
ecurity 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.

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 and sanctioned by Section 4, Rule 4 of the Rules of Court,
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.
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."

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.