PAGLAUM MANAGEMENT v. UNION BANK OF PHILIPPINES, GR No. 179018, 2012-06-18
Facts:
Petitioner Paglaum Management and Development Corporation is
the registered owner of three parcels of land located in the Province of Cebu. These
lots are co-owned by Benjamin B. Dy, the president of petitioner Health
Marketing Technologies, Inc., and his mother and siblings.
On 3 February 1994, respondent Union Bank of the Philippines
extended HealthTech a credit line in the
amount of P10,000,000. 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 11
February 1994, the following version appears: Section 9. Venue. The venue of
all suits and actions arising out of or in connection with this Mortgage 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 the Real Estate Mortgage
dated 22 April 1998 contains the following:
Section 9. Venue. The venue of all suits and actions arising
out of or in connection with this Mortgage shall be in _________ 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.
HealthTech and Union Bank agreed to subsequent renewals and increases
in the credit line, with the total amount of debt reaching P36,500,000.
On 11 December 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 in the auction sale, 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
The case was docketed as Civil Case No. 01-1567 and raffled
to RTC Makati Branch, which issued in favor of PAGLAUM and HealthTech a Writ of
Preliminary Injunction restraining Union Bank from proceeding with the auction
sale of the three mortgaged properties.
On 23 November 2001, Union Bank filed a Motion to Dismiss on
the following grounds: (a) lack of jurisdiction over the issuance of the
injunctive relief; (b) improper venue; and (c) lack of authority of the person
who signed the Complaint. RTC Br. 134 granted this Motion in its Order dated 11
March 2003, resulting in the dismissal of the case, as well as the dissolution
of the Writ of Preliminary Injunction.
PAGLAUM and HealthTech elevated the case to the CA, which
affirmed the Order dated 11 March 2003 and denied the Motion for
Reconsideration.
In the instant Petition, PAGLAUM and HealthTech argue that:
(a) the Restructuring Agreement governs the choice of venue between the
parties, and (b) the agreement on the choice of venue must be interpreted with
the convenience of the parties in mind and the view that any... obscurity therein
was caused by Union Bank.
On the other hand, Union Bank contends that: (a) the Restructuring Agreement is applicable only to the contract of loan, and not to the Real Estate Mortgage, and (b) the mortgage contracts explicitly state that the choice of venue exclusively belongs to it.
Issues:
whether Makati City is the proper venue to assail the foreclosure of the subject real estate mortgage
Ruling:
Civil Case No. 01-1567, being an action for Annulment of
Sale and Titles resulting from the extrajudicial foreclosure by Union Bank of
the mortgaged real properties, is classified as a real action.
In Fortune Motors v. Court of Appeals, the Court held that “an
action to annul a real estate mortgage foreclosure sale is no different from an
action to annul a private sale of real property.”
While it is true that petitioner does not directly seek the
recovery of title or possession of the property in question, his action for
annulment of sale and his claim for damages are closely intertwined with the
issue of ownership of the building which, under the law, is considered
immovable property, the recovery of which is petitioner's primary objective.
The prevalent doctrine is that an action for the annulment or rescission of a
sale of real property does not operate to efface the fundamental and prime objective
and nature of the case, which is to
recover said real property. It is a real action.
Being a real action, the filing and trial of the Civil Case
No. 01-1567 should be governed by the following relevant provisions of the
Rules of Court (the Rules):
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.
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.
At the outset, we must make clear that under Section 4 (b)
of Rule 4 of the 1997 Rules of Civil Procedure, the general rules on venue of
actions shall not apply where the parties, before the filing of the action,
have validly agreed in writing on an exclusive venue.
The mere stipulation on the venue of an action, however, is
not enough to preclude parties from bringing a case in other venues. The
parties must be able to show that such stipulation is exclusive. In the absence
of qualifying or restrictive words, the stipulation should be deemed as merely
an agreement on an additional forum, not as limiting venue to the specified
place.
Clearly, the words "exclusively" and "waiving
for this purpose any other venue" are restrictive and used advisedly to
meet the requirements.
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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