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Rule 4 Cases condemnation of, or foreclosure of mortgage on, real

property is a real action.1


BPI Family Bank vs. Yujuico
GR NO. 175796, July 22, 2015 The real action is to be commenced and tried in the
proper court having jurisdiction over the area wherein
Facts: The City of Manila filed a complaint for the real property involved, or a portion thereof, is
expropriation of five parcels of land located in Tondo, situated, which explains why the action is also
Manila, owned by the respondents before the RTC of referred to as a local action. In contrast, the Rules of
Manila. Two of the five parcels of lands were under a Court declares all other actions as personal actions.2
First Real Estate Mortgage Contract to Citytrust Such actions may include those brought for the
Banking Coroporaiton, predecessor in interest of the recovery of personal property, or for the enforcement
petitioner. After the RTC rendered judgment of some contract or recovery of damages for its
expropriating the lots, the petitioner filed its Motion breach, or for the recovery of damages for the
to Intervene in Execution with Partial Opposition to commission of an injury to the person or property.3
Defendants Request to Release, which the RTC The venue of a personal action is the place where the
denied. The petitioner then extrajudicially foreclosed plaintiff or any of the principal plaintiffs resides, or
the two lots, and after the public auction, the amount where the defendant or any of the principal
of P18,522,155.42 remained as judgment deficiency, defendants resides, or in the case of a non-resident
which the petitioners sought to recover from the defendant where he may be found, at the election of
respondents by filing a complaint before the RTC of the plaintiff,4 for which reason the action is
Makati City (Civil Case No. 03-450). The respondents considered a transitory one.
moved to dismiss on the ground of res judicata, lack
of cause of cause of action and that plaintiffs claim Based on the distinctions between real and personal
had been abandoned, waived or extinguished. The actions, an action to recover the deficiency after the
petitioners opposed the motion. While the RTC extrajudicial foreclosure of the real property
denied the motion to dismiss, the respondents filed mortgage is a personal action, for it does not affect
their reply to the petitioners comment to the motion title to or possession of real property, or any interest
to dismiss, raising for the first time the issue of therein.
improper venue. They aver that the action to
recover deficiency judgment should be filed in the It is true that the Court has said in Caltex Philippines,
RTC of Manila which ruled on the extra-judicial Inc. v. Intermediate Appellate Court5 that a suit for
foreclosure of real estate mortgage, being a the recovery of the deficiency after the foreclosure of
supplementary action to the latter. The RTC denied a mortgage is in the nature of a mortgage action
the respondents motion for reconsideration; on the because its purpose is precisely to enforce the
issue of improper venue, it held that even if the mortgage contract. However, the CA erred in
venue was improperly laid, the respondents failed to holding, upon the authority of Caltex Philippines, Inc.,
allege it in their motion to dismiss; an action cannot that the venue of Civil Case No. 03-450 must
be dismissed on a ground not alleged in the motion to necessarily be Manila, the same venue as that of the
dismiss eve if said ground is provided in Rule 16. On extrajudicial foreclosure of mortgage. An examination
petition for certiorari, the CA reversed the RTC. It of Caltex Philippines, Inc. reveals that the Court was
ruled that a suit for recovery of the deficiency thereby only interpreting the prescriptive period
after the foreclosure of a mortgage is in the within which to bring the suit for the recovery of the
nature of a mortgage action because its deficiency after the foreclosure of the mortgage, and
purpose is precisely to enforce the mortgage was not at all ruling therein on the venue of such suit
contract; it is upon a written contract and upon or on the nature of such suit being either a real or a
an obligation of the mortgage-debtor to pay personal action.
the deficiency which is created by law. As such,
the venue of an action for recovery of deficiency Given the foregoing, the petitioner correctly brought
must necessarily be the same venue as that of the Civil Case No. 03-450 in the Makati RTC because
extrajudicial foreclosure of mortgage.. Thus the Makati was the place where the main office of the
action should have been filed before the RTC of petitioner was located.
Manila.
The petitioner sought recourse with the Supreme Moreover, the Makati RTC observed, and the
Court. observation is correct in our view, that it would be
improper to dismiss Civil Case No. 03-450 on the
Issue: Whether venue was improperly laid. i.e. The ground of improper venue, assuming that the venue
action to recover deficiency judgment should be filed had been improperly laid, considering that the
before the court which ruled on the extra-judicial respondents had not raised such ground in their
foreclosure of real estate mortgage. Motion to Dismiss. As earlier indicated, they came to
raise the objection of improper venue for the first
Held: It is basic that the venue of an action depends time only in their reply to the petitioners comment
on whether it is a real or a personal action. The on their Motion for Reconsideration. They did so
determinants of whether an action is of a real or a belatedly.
personal nature have been fixed by the Rules of Court
and relevant jurisprudence. According to Section 1, We underscore that in civil proceedings, venue is
Rule 4 of the Rules of Court, a real action is one that procedural, not jurisdictional, and may be waived by
affects title to or possession of real property, or an the defendant if not seasonably raised either in a
interest therein. Thus, an action for partition or 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 Section 1, Rule 2 [of the Rules of Court] defines an
motion to dismiss or in the answer are deemed action in this wise:
waived. As it relates to the place of trial, indeed,
venue is meant to provide convenience to the parties, "Action means an ordinary suit in a court of justice,
rather than to restrict their access to the courts.7 In by which one party prosecutes another for the
other words, unless the defendant seasonably enforcement or protection of a right, or the
objects, any action may be tried by a court despite its prevention or redress of a wrong."
being the improper venue.
Hagans v. Wislizenus does not depart from this
SPOUSES HERMES P. OCHOA and ARACELI D. definition when it states that "[A]n action is a formal
OCHOA, petitioners, vs. CHINA BANKING demand of one's legal rights in a court of justice in
CORPORATION, respondent. the manner prescribed by the court or by the
law. . . . ." It is clear that the determinative or
RESOLUTION operative fact which converts a claim into an "action
or suit" is the filing of the same with a "court of
For resolution is petitioners' motion for justice." Filed elsewhere, as with some other body or
reconsideration 1 of our January 17, 2011 Resolution office not a court of justice, the claim may not be
2 denying their petition for review on certiorari 3 for categorized under either term. Unlike an action, an
failing to sufficiently show any reversible error in the extrajudicial foreclosure of real estate mortgage is
assailed judgment 4 of the Court of Appeals (CA). initiated by filing a petition not with any court of
justice but with the office of the sheriff of the
Petitioners insist that it was error for the CA to rule province where the sale is to be made. By no stretch
that the stipulated exclusive venue of Makati City is of the imagination can the office of the sheriff come
binding only on petitioners' complaint for Annulment under the category of a court of justice. And as aptly
of Foreclosure, Sale, and Damages filed before the observed by the complainant, if ever the executive
Regional Trial Court of Paraaque City, but not on judge comes into the picture, it is only because he
respondent bank's Petition for Extrajudicial exercises administrative supervision over the sheriff.
Foreclosure of Mortgage, which was filed with the But this administrative supervision, however, does
same court. not change the fact that extrajudicial foreclosures are
We disagree. not judicial proceedings, actions or suits. 9
The extrajudicial foreclosure sale of a real estate
mortgage is governed by Act No. 3135, as amended These pronouncements were confirmed on August 7,
by Act No. 4118, otherwise known as "An Act to 2001 through A.M. No. 99-10-05-0, entitled
Regulate the Sale of Property Under Special Powers "Procedure in Extra-Judicial Foreclosure of Mortgage,"
Inserted In or Annexed to Real-Estate Mortgages." the significant portions of which provide:
Sections 1 and 2 thereof clearly state: In line with the responsibility of an Executive Judge
Section 1. When a sale is made under a special power under Administrative Order No. 6, date[d] June 30,
inserted in or attached to any real-estate mortgage 1975, for the management of courts within his
hereafter made as security for the payment of money administrative area, included in which is the task of
or the fulfillment of any other obligation, the supervising directly the work of the Clerk of Court,
provisions of the following sections shall govern as to who is also the Ex-Office Sheriff, and his staff, and
the manner in which the sale and redemption shall be the issuance of commissions to notaries public and
effected, whether or not provision for the same is enforcement of their duties under the law, the
made in the power. ETHaDC following procedures are hereby prescribed in extra-
judicial foreclosure of mortgages:
Sec. 2. Said sale cannot be made legally outside of
the province in which the property sold is situated; 1. All applications for extrajudicial foreclosure of
and in case the place within said province in which mortgage whether under the direction of the sheriff
the sale is to be made is the subject of stipulation, or a notary public, pursuant to Act 3135, as amended
such sale shall be made in said place or in the by Act 4118, and Act 1508, as amended, shall be filed
municipal building of the municipality in which the with the Executive Judge, through the Clerk of Court
property or part thereof is situated. 5 who is also the Ex-Officio Sheriff.

The case at bar involves petitioners' mortgaged real Verily then, with respect to the venue of extrajudicial
property located in Paraaque City over which foreclosure sales, Act No. 3135, as amended, applies,
respondent bank was granted a special power to it being a special law dealing particularly with
foreclose extra-judicially. Thus, by express provision extrajudicial foreclosure sales of real estate
of Section 2, the sale can only be made in Paraaque mortgages, and not the general provisions of the
City. Rules of Court on Venue of Actions.
The exclusive venue of Makati City, as stipulated by Consequently, the stipulated exclusive venue of
the parties 6 and sanctioned by Section 4, Rule 4 of Makati City is relevant only to actions arising from or
the Rules of Court, 7 cannot be made to apply to the related to the mortgage, such as petitioners'
Petition for Extrajudicial Foreclosure filed by complaint for Annulment of Foreclosure, Sale, and
respondent bank because the provisions of Rule 4 Damages.
pertain to venue of actions, which an extrajudicial The other arguments raised in the motion are a mere
foreclosure is not. reiteration of those already raised in the petition for
Pertinent are the following disquisitions in Supena v. review. As declared in this Court's Resolution on
De la Rosa: 8 January 17, 2011, the same failed to show any
sufficient ground to warrant the exercise of our City while Kubotas principal place of business is in
appellate jurisdiction. Quezon City. In accord with the the Rules of Court, the
WHEREFORE, premises considered, the motion for proper venue would either be Quezon City or
reconsideration is hereby DENIED. Tacloban City at the election of the plaintiff.
Hence,the filing in the RTC of Tacloban is proper.6.
Paglaum Management Development Corp. vs Kubota appealed both orders on the grounds they
Union Bank were issued with grave abuse of discretion in aspecial
GR No 179018; June 18, 2012 action for certiorari and prohibition filed with the CA.
Kubota asserted that RTC of Taclobanhad no
G.R. No. 179018, April 17, 2013 jurisdiction was improperly laid.7. The Court of
Paglaum Management and Dev't Corp. and Health Appeals decided in favor of Kubota and it held that:
Marketing Technologies, Inc., petitioners the stipulation respectingvenue in its Dealership
vs Union Bank of the Philippines, etc., respondents Agreement with UNIMASTERS did in truth limit the
Ponente: Sereno venue of all suits arisingthereunder only and
exclusively to the proper courts of Quezon City.
Facts: Subsequently, Unimasters filed a motion for
Union Bank filed this motion for reconsideration reconsideration but was turned down by theappellate
saying that restructuring agreement is null and void court.
because the borrower has not complied with the
condition precedent of the bank. It is also ISSUE:WON the venue stipulations in a contract has
unenforceable because it was only between Health the effect of limiting the venue to a specified place.
and Union bank. Paglaum was a party only to the real
estate mortgages and not in the restructuring RULING:
agreement. The venue is exclusively in Cebu City, NO. The Polytrade doctrine was applied in the case at
and the assumption of the RTC's jurisdiction was bar. This doctrine enunciated that aslong as the
without basis. stipulation does not set forth qualifying or restrictive
words to indicate that the agreedplace alone and
Held: We deny the Motion for Reconsideration. none other is the venue of the action, the parties do
not lose the option of choosingthe venueAbsence of
Issues raised for the first time in a motion for qualifying or restrictive words, venue stipulations in a
reconsideration before this Court are deemed waived, contract should be consideredmerely as agreement
because these should have been brought up at the on additional forum, not as limiting venue to the
first opportunity.7 Nevertheless, there is no cogent specified place.
reason to warrant a reconsideration or modification of
our 18 June 2012 Decision.
Auction in Malinta, Inc. vs. Luyaben
[G.R. No. 173979. February 12, 2007
Union Bank raises three new issues that require a
factual determination that is not within the province
Mere stipulation on the venue of an action is not
of this Court.8 These questions can be brought to and
enough to preclude parties from bringing a case in
resolved by the RTC as it is the proper avenue in
other venues. It must be shown that such stipulation
which to raise factual issues and to present evidence
is exclusive.
in support of these claims.
Facts: Warren Embes Luyaben filed a complaint for
Anent Union Bank's last contention, there is no need
damages against Auction in Malinta, Inc. (AIMI) in
for the Court to discuss and revisit the issue, being a
RTC-Kalinga where Luyaben resides. AIMI moved to
mere rehash of what we have already resolved in our
dismiss the complaint on the ground of improper
Decision.
venue by invoking the following stipulation in their
agreement: ALL COURT LITIGATION PROCEDURES
Unimasters Conglomeration, Inc vs CA
SHALL BE CONDUCTED IN THE APPROPRIATE COURTS
FACTS:
OF VALENZUELA CITY, METRO MANILA.

Kubota Agri-Machinery Philippines, Inc. and Issue: Did the stipulation in the Agreement effectively
Unimasters Conglomeration, Inc. entered into limit the venue of the case exclusively to the proper
aDealership Agreement for Sales and Services of the court of Valenzuela City?
former's products in Samar and Leyte Province. The
Dealership Agreement contained a stipulation that Held: No. Mere stipulation on the venue of an action
All suits arising out of this Agreement shall be filed is not enough to preclude parties from bringing a
with / in t he proper Courts of Quezon City. Five case in other venues. It must be shown that such
years later, Umimasters filed an action in the RTC of stipulation is exclusive. In the absence of qualifying
Tacloban against Kubota, Reynaldo Goand Metrobank or restrictive words, such as exclusively and
for damages and breach of contracts, and injunction waiving for this purpose any other venue, shall
with prayer for temporaryrestraining order. Kubota only preceding the designation of venue, to the
filed two motions One for the dismissal of the case on exclusion of the other courts, or words of similar
the ground of improper venue .The other prayed for import, the stipulation should be deemed as merely
the transfer of the injunction hearing its counsel was an agreement on an additional forum, not as limiting
not available. The court issued an order allowing the venue to the specified place. (Auction in Malinta, Inc.
issuance of preliminary injunction and a motion vs. Warren Embes Luyaben, G.R. No. 173979,
denyingthe motion to dismiss on the reason that February 12, 2007)
Umimasters place of business is in Tacloban