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PHIL. BANK OF COMM vs.

LIM TOPIC: RULE 4

APRIL 12, 2005


PETITION FOR REVIEW ON CERTIORARI OF THE DECISION OF THE CA
PETITIONER: PHILIPPINE BANK OF COMMUNICATIONS
RESPONDENTS: ELENA LIM, RAMON CALDERON & TRI-ORO INT’L TRADING AND
MANUFACTURING CORP.
FACTS: Rs obtained a loan from P and executed a continuing surety agreement, applicable to
all past and future loans and credits. The loan was renewed in the amount of P3M. In the
accompanying Promissory Note Renewal (PN), it was expressly stipulated that the venue for
any legal action that may arise out of said PN shall be Makati to the exclusion of other courts.
When Rs failed to pay, P foreclosed the REM, leaving a deficiency balance of P4,014,297.23.

PETITIONER COURT RESPONDENT


COMPLAINT FOR
COLLECTION OF SUM OF RTC MANILA
MONEY (P4,014,297.23) DENIED MTD
MOTION TO DISMISS
(Venue proper; separate causes
(Improper venue as per
of action arising from the PN
stipulation in the PN)
and continuing surety
agreement)

RTC MANILA
MR
DENIED

CA:
GRANTED
APPEAL
(Debt based on PN; surety
agreement to be interpreted in
consonance with PN stipulation)
PETION FOR REVIEW ON
CERTIORARI
 WON the action against
SC:
the sureties is covered by
DENIED
the restriction on venue
stipulated in the PN (SC:
Yes)

RATIO:
1. The cause of action to recover on the basis of the surety agreement is inseparable from that
which is based on the promissory note
 Sec. 2, Rule 4, ROC  personal actions must be commenced and tried (a) where
plaintiff resides, (b) where defendant resides, or (c) in case of non-resident
defendants, where they may be found, at the choice of the plaintiff
o When not applicable  (a) law provides otherwise; (b) before the filing of the
action, the parties agree in writing on the exclusive venue thereof
o 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

BAUTISTA │ ESTERON │ HIPOLITO │ MANANTAN | RAMIREZ │ PIOQUINTO │ SALES | YAMO 3-EVE


PHIL. BANK OF COMM vs. LIM TOPIC: RULE 4

 Surety obligation accessory or collateral to the principal obligation, secondary to the


latter
o Complementary-contracts-construed-together doctrine: an accessory contract must
be read in its entirety and together with the principal agreement
o SA can only be enforced in conjunction with the PN  the circumstances that
relate to the issuance of the PN and SA are so intertwined that neither one
could be separated from the other
o By inserting the provision that “Makati City would be the venue for any legal
action that may arise out of the PN”, P also restricted the venue of the actions
against the sureties  the legal action against the sureties arose not only from
the SA, but also from the PN
 Although there are 2 causes of action contained in the complaint (vs. Trio-Oro: failure
to pay debt in violation of PN; vs. Lim: failure to pay in violation of the SA), the cause of
action does not affect the venue of the action
o Vital issue in the case is WON the action against the sureties is covered by the
restriction on venue stipulated in the PN (Yes)

BAUTISTA │ ESTERON │ HIPOLITO │ MANANTAN | RAMIREZ │ PIOQUINTO │ SALES | YAMO 3-EVE