G.R. No.

192877 March 23, 2011

SPOUSES HERMES P. OCHOA and ARACELI D. OCHOA, Petitioners, vs. CHINA BANKING CORPORATION, Respondent.

RESOLUTION

NACHURA, J.:

For resolution is petitioners’ motion for reconsideration1 of our January 17, 2011 Resolution2 denying their petition for
review on certiorari3 for failing to sufficiently show any reversible error in the assailed judgment4 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
Parañaque 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.

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 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 parties6 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. x x x." 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.1avvphi1 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.

SO ORDERED.

G.R. No. 151037 June 23, 2005

SAN MIGUEL CORPORATION, petitioner, vs. TROY FRANCIS L. MONASTERIO, respondent.

RESOLUTION

QUISUMBING, J.:

This appeal by certiorari seeks to reverse and set aside the D E C I S I O N1 dated July 16, 2001, and
the Resolution2 dated November 27, 2001, of the Court of Appeals in CA-G.R. SP No. 52622. The Court of Appeals
dismissed the special civil action for certiorari filed by San Miguel Corporation (SMC)3 assailing the Orders4 of the
Regional Trial Court of Naga City, Branch 20, which denied its Motion to Dismiss on the ground of improper venue and
the subsequent Motion for Reconsideration in Civil Case No. RTC’98-4150.

The facts are as follows:

On August 1, 1993, petitioner SMC entered into an Exclusive Warehouse Agreement5 (hereafter EWA for brevity) with
SMB Warehousing Services (SMB), represented by its manager, respondent Troy Francis L. Monasterio. SMB undertook
to provide land, physical structures, equipment and personnel for storage, warehousing and related services such as, but
not limited to, segregation of empty bottles, stock handling, and receiving SMC products for its route operations at
Sorsogon, Sorsogon and Daet, Camarines Norte.

The agreement likewise contained a stipulation on venue of actions, to wit:

26. GENERAL PROVISIONS

...

b. Should it be necessary that an action be brought in court to enforce the terms of this Agreement or the duties or
rights of the parties herein, it is agreed that the proper court should be in the courts of Makati or Pasig, Metro
Manila, to the exclusion of the other courts at the option of the COMPANY.6[Underscoring supplied.]

...

On November 3, 1998, respondent Monasterio, a resident of Naga City, filed a complaint docketed as Civil Case No.
RTC’98-4150 for collection of sum of money against petitioner before the Regional Trial Court of Naga City, Branch 20.

In his Complaint,7 Monasterio claimed ₱900,600 for unpaid cashiering fees. He alleged that from September 1993 to
September 1997 and May 1995 to November 1997, aside from rendering service as warehouseman, he was given the
additional task of cashiering in SMC’s Sorsogon and Camarines Norte sales offices for which he was promised a separate
fee. He claims that of approximately 290 million pesos in cash and checks of the sales office and the risks of pilferage,
theft, robbery and hold-up, he had assumed what amounted to approximately 35 million pesos per annum for Sorsogon,
Sorsogon, and 60 million pesos for Daet, Camarines Norte. He also said that he hired personnel for the job. Respondent
added that it was only on December 1, 1997, that petitioner SMC started paying him ₱11,400 per month for his
cashiering services.

Monasterio demanded ₱82,959.32 for warehousing fees, ₱11,400 for cashiering fees for the month of September, 1998,
as well as exemplary damages, and attorney’s fees in the amount of ₱500,000 and ₱300,000, respectively.8

On November 19, 1998, SMC filed a Motion to Dismiss9 on the ground of improper venue. SMC contended that
respondent’s money claim for alleged unpaid cashiering services arose from respondent’s function as warehouse
contractor thus the EWA should be followed and thus, the exclusive venue of courts of Makati or Pasig, Metro Manila is
the proper venue as provided under paragraph 26(b) of the Exclusive Warehouse Agreement. SMC cites in its favor
Section 4(b) in relation to Section 2 of Rule 410 of the Rules of Court allowing agreement of parties on exclusive venue of
actions.

Respondent filed an Opposition11 contending that the cashiering service he rendered for the petitioner was separate and
distinct from the services under the EWA. Hence, the provision on venue in the EWA was not applicable to said services.
Hence, respondent insists that in accordance with Section 2 of Rule 4 of the Rules of Court the venue should be in Naga
City, his place of residence.

On February 22, 1999, the Regional Trial Court, of Naga City, Branch 20 issued an Order12 denying petitioner’s motion to
dismiss. The court held that the services agreed upon in said contract is limited to warehousing services and the claim of
plaintiff in his suit pertains to the cashiering services rendered to the defendant, a relationship which was not
documented, and is certainly a contract separate and independent from the exclusive warehousing agreements.13

SMC’s subsequent Motion for Reconsideration was likewise denied.14 While the motion was pending, the respondent
filed an Amended Complaint15 deleting his claim for unpaid warehousing and cashiering fees but increasing the
exemplary damages from ₱500,000 to ₱1,500,000.16

Petitioner elevated the controversy to the Court of Appeals by way of a special civil action for certiorari with a prayer for
the issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction, imputing grave abuse of discretion
on the RTC Naga City for denying its motion to dismiss and subsequent motion for reconsideration.

On June 11, 1999, during the pendency of the certiorari petition SMC filed before the trial court an answer ex abundanti
cautela17 with a compulsory counterclaim for moral and exemplary damages and attorney’s fees. SMC averred lack of
cause of action, payment, waiver, abandonment and extinguishment.

In its decision dated July 16, 2001, the Court of Appeals found respondent’s claim for cashiering services inseparable
from his claim for warehousing services, thus, the venue stipulated in the EWA is the proper venue. However, the Court
of Appeals noted that prior to the filing of SMC’s petition, respondent Monasterio filed an amended complaint to which
SMC filed an answer. Thus, the Court of Appeals dismissed San Miguel’s petition for certiorari, stating that the case was
already moot and academic.

Petitioner filed a motion for reconsideration which was denied by the Court of Appeals. Hence, this petition wherein
petitioner raises the following as issues:18

1. Whether or not this Honorable Court may review the finding of the Court of Appeals that the Complaint and
Amended Complaint were filed in the wrong venue.

2. Assuming arguendo that this Honorable Court may review the finding of the Court of Appeals that the
Complaint and Amended Complaint were filed in the wrong venue, whether or not such finding should be
reversed.

3. Whether or not the Court of Appeals gravely erred in ruling that SMC’s Petition For Certiorari has become
moot and academic in view of the filing of Monasterio’s Amended Complaint and SMC’s Answer (Ex Abundanti
Cautela).19

In our view, two issues only require resolution: (1) Did the RTC of Naga City err in denying the motion to dismiss filed by
SMC alleging improper venue? (2) Did the CA gravely err in ruling that SMC’s petition for certiorari has become moot?

On disputes relating to the enforcement of the rights and duties of the contracting parties, the venue stipulation in the
EWA should be construed as mandatory. Nothing therein being contrary to law, morals, good custom or public policy,
this provision is binding upon the parties.20 The EWA stipulation on venue is clear and unequivocal, thus it ought to be
respected.

However, we note that the cause of action in the complaint filed by the respondent before the RTC of Naga was not
based on the EWA, but concern services not enumerated in the EWA. Records show also that previously, respondent
received a separate consideration of ₱11,400 for the cashiering service he rendered to SMC. Moreover, in the amended
complaint, the respondent’s cause of action was specifically limited to the collection of the sum owing to him for his
cashiering service in favor of SMC. He already omitted petitioner’s non-payment of warehousing fees. As previously
ruled, allegations in the complaint determines the cause of action or the nature of the case.21Thus, given the
circumstances of this case now before us, we are constrained to hold that it would be erroneous to rule, as the CA did,
that the collection suit of the respondent did not pertain solely to the unpaid cashiering services but pertain likewise to
the warehousing services.22

Exclusive venue stipulation embodied in a contract restricts or confines parties thereto when the suit relates to breach
of the said contract. But where the exclusivity clause does not make it necessarily all encompassing, such that even
those not related to the enforcement of the contract should be subject to the exclusive venue, the stipulation
designating exclusive venues should be strictly confined to the specific undertaking or agreement. Otherwise, the basic
principles of freedom to contract might work to the great disadvantage of a weak party-suitor who ought to be allowed
free access to courts of justice.

Restrictive stipulations are in derogation of the general policy of making it more convenient for the parties to institute
actions arising from or in relation to their agreements.23 Thus, the restriction should be strictly construed as relating
solely to the agreement for which the exclusive venue stipulation is embodied. Expanding the scope of such limitation
on a contracting party will create unwarranted restrictions which the parties might find unintended or worse, arbitrary
and oppressive.

Moreover, since convenience is the raison d’etre of the rules on venue,24 venue stipulation should be deemed merely
permissive, and that interpretation should be adopted which most serves the parties’ convenience.25Contrawise, the
rules mandated by the Rules of Court should govern.26 Accordingly, since the present case for the collection of sum of
money filed by herein respondent is a personal action,27 we find no compelling reason why it could not be instituted in
the RTC of Naga City, the place where plaintiff resides.

Having settled the issue on venue, we need not belabor the issue of whether SMC’s petition has become moot.

WHEREFORE, it is hereby ruled that no reversible error was committed by the Regional Trial Court of Naga City, Branch
20, in denying petitioner’s motion to dismiss. Said RTC is the proper venue of the amended complaint for a sum of
money filed by respondent against petitioner San Miguel Corporation, in connection with his cashiering services. The
case is hereby REMANDED to the RTC of Naga City, Branch 20, for further proceedings on respondent’s amended
complaint, without further delay.

Costs against petitioner.

SO ORDERED.

G.R. No. 204444 January 14, 2015

VIRGILIO C. BRIONES, Petitioner, vs. COURT OF APPEALS and CASH ASIA CREDIT CORPORATION, Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for certiorari1 are the Decision2 dated March 5, 2012 and the Resolution3 dated October 4, 2012
of the Court of Appeals (CA) in CA-G.R. SP No. 117474, which annulled the Orders dated September 20, 20104 and
October 22, 20105 of the Regional Trial Court of Manila, Branch 173 (RTC) in Civil Case No. 10-124040, denying private
respondent Cash Asia Credit Corporation's (Cash Asia) motion to dismiss on the ground of improper venue.

The Facts

The instant case arose from a Complaint6 dated August 2, 2010 filed by Virgilio C. Briones (Briones) for Nullity of
Mortgage Contract, Promissory Note, Loan Agreement, Foreclosure of Mortgage, Cancellation of Transfer Certificate of
Title (TCT) No. 290846, and Damages against Cash Asia before the RTC.7 In his complaint, Briones alleged that he is the
owner of a property covered by TCT No. 160689 (subject property), and that, on July 15, 2010, his sister informed him
that his property had been foreclosed and a writ of possession had already been issued in favor of Cash Asia.8 Upon
investigation, Briones discovered that: (a) on December 6, 2007, he purportedly executed a promissory note,9 loan
agreement,10 and deed of real estate mortgage11 covering the subject property (subject contracts) in favor of Cash Asia
in order to obtain a loan in the amount of ₱3,500,000.00 from the latter;12 and (b) since the said loan was left unpaid,
Cash Asia proceeded to foreclose his property.13 In this relation, Briones claimed that he never contracted any loans
from Cash Asia as he has been living and working in Vietnam since October 31, 2007. He further claimed that he only
went back to the Philippines on December 28, 2007 until January 3, 2008 to spend the holidays with his family, and that
during his brief stay in the Philippines, nobody informed him of any loan agreement entered into with Cash Asia.
Essentially, Briones assailed the validity of the foregoing contracts claiming his signature to be forged.14

For its part, Cash Asia filed a Motion to Dismiss15 dated August 25, 2010, praying for the outright dismissal of Briones’s
complaint on the ground of improper venue.16 In this regard, Cash Asia pointed out the venue stipulation in the subject
contracts stating that "all legal actions arising out of this notice in connection with the Real Estate Mortgage subject
hereof shall only be brought in or submitted tothe jurisdiction of the proper court of Makati City." 17In view thereof, it
contended that all actions arising out of the subject contracts may only be exclusively brought in the courts of Makati
City, and as such, Briones’s complaint should be dismissed for having been filed in the City of Manila.18 In response,
Briones filed an opposition,19 asserting, inter alia, that he should not be covered by the venue stipulation in the subject
contracts as he was never a party therein. He also reiterated that his signatures on the said contracts were forgeries.20

The RTC Ruling

In an Order21 dated September 20, 2010, the RTC denied Cash Asia’s motion to dismiss for lack of merit. In denying the
motion, the RTC opined that the parties must be afforded the right to be heard in view of the substance of Briones’s
cause of action against Cash Asia as stated in the complaint.22

Cash Asia moved for reconsideration23 which was, however, denied in an Order24 dated October 22, 2010. Aggrieved, it
filed a petition for certiorari25 before the CA.

The CA Ruling

In a Decision26 dated March 5, 2012, the CA annulled the RTC Orders, and accordingly, dismissed Briones’s complaint
without prejudice to the filing of the same before the proper court in Makati City.27 It held that the RTC gravely abused
its discretion in denying Cash Asia’s motion to dismiss, considering that the subject contracts clearly provide that actions
arising therefrom should be exclusively filed before the courts of Makati City only.28 As such, the CA concluded that
Briones’s complaint should have been dismissed outright on the ground of improper venue,29this, notwithstanding
Briones’s claim of forgery.

Dissatisfied, Briones moved for reconsideration,30 which was, however, denied in a Resolution31 dated October 4, 2012,
hence, this petition.

The Issue Before the Court

The primordial issue for the Court’s resolution is whether or not the CA gravely abused its discretion in ordering the
outright dismissal of Briones’s complaint on the ground of improper venue.

The Court’s Ruling

The petition is meritorious.

At the outset, the Court stresses that "[t]o justify the grant of the extraordinary remedy of certiorari, [the petitioner]
must satisfactorily show that the court or quasi-judicial authority gravely abused the discretion conferred upon it. Grave
abuse of discretion connotes judgment exercised in a capricious and whimsical manner that is tantamount to lack of
jurisdiction. To be considered ‘grave,’ discretion must be exercised in a despotic manner by reason of passion or
personal hostility, and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined by or to act at all in contemplation of law."32 Guided by the foregoing considerations, the
Court finds that the CA gravely abused its discretion in ordering the outright dismissal of Briones’s complaint against
Cash Asia, without prejudice to its re-filing before the proper court in Makati City.

Rule 4 of the Rules of Court governs the rules on venue of civil actions, to wit:

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. 2. Venue of personal actions. — All other actions may be commenced and tried 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.

SEC. 3. Venue of actions against nonresidents. — If any of the defendants does not resideand is not found in the
Philippines, and the action affects the personal status of the plaintiff, or any property of said defendant located in the
Philippines,the action may be commenced and tried in the court of the place where the plaintiff resides, or where the
property or any portion thereof is situated or found.

SEC. 4. 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.

Based therefrom, the general rule is that the venue of real actions is the court which has jurisdiction over the area
wherein the real property involved, or a portion thereof, is situated; while the venue of personal actions is the court
which has jurisdiction where the plaintiff or the defendant resides, at the election of the plaintiff. As an exception,
jurisprudence in Legaspi v. Rep. of the Phils.33 instructs that the parties, thru a written instrument, may either introduce
another venue where actions arising from such instrument may be filed, or restrict the filing of said actions in a certain
exclusive venue, viz.:

The parties, however, are not precluded from agreeing in writing on an exclusive venue, as qualified by Section 4 of the
same rule. Written stipulations as to venue may be restrictive in the sense that the suit may be filed only in the place
agreed upon, or merely permissive in that the parties may file their suitnot only in the place agreed upon but also in the
places fixed by law. As in any other agreement, what is essential is the ascertainment of the intention of the parties
respecting the matter.

As regards restrictive stipulations on venue, jurisprudence instructs that it must be shown thatsuch stipulation is
exclusive.1âwphi1 In the absence of qualifying or restrictive words, such as "exclusively," "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.34 (Emphases and underscoring supplied) In this relation, case law likewise provides that in cases where
the complaint assails only the terms, conditions, and/or coverage of a written instrument and not its validity, the
exclusive venue stipulation contained therein shall still be binding on the parties, and thus, the complaint may be
properly dismissed on the ground of improper venue.35 Conversely, therefore, a complaint directly assailing the validity
of the written instrument itself should not be bound by the exclusive venue stipulation contained therein and should be
filed in accordance with the general rules on venue. To be sure, it would be inherently consistent for a complaint of this
nature to recognize the exclusive venue stipulation when it, in fact, precisely assails the validity of the instrument in
which such stipulation is contained.

In this case, the venue stipulation found in the subject contracts is indeed restrictive in nature, considering that it
effectively limits the venue of the actions arising therefrom to the courts of Makati City. However, it must be
emphasized that Briones' s complaint directly assails the validity of the subject contracts, claiming forgery in their
execution. Given this circumstance, Briones cannot be expected to comply with the aforesaid venue stipulation, as his
compliance therewith would mean an implicit recognition of their validity. Hence, pursuant to the general rules on
venue, Briones properly filed his complaint before a court in the City of Manila where the subject property is located. In
conclusion, the CA patently erred and hence committed grave abuse of discretion in dismissing Briones's complaint on
the ground of improper venue.

WHEREFORE, the petition is GRANTED. Accordingly, the Decision dated March 5, 2012 and the Resolution dated October
4, 2012 of the Court of Appeals in CA-G.R. SP No. 117474 are hereby ANNULLED and SET ASIDE. The Orders dated
September 20, 2010 and October 22, 2010 of the Regional Trial Court of Manila, Branch 173 in Civil Case No. 10-124040
are REINSTATED.
SO ORDERED.

G.R. No. 154096 August 22, 2008

IRENE MARCOS-ARANETA, DANIEL RUBIO, ORLANDO G. RESLIN, and JOSE G. RESLIN,petitioners,

vs.
COURT OF APPEALS, JULITA C. BENEDICTO, and FRANCISCA BENEDICTO-PAULINO,respondents.

DECISION

VELASCO, JR., J.:

The Case

This Petition for Review on Certiorari under Rule 45 assails and seeks to nullify the Decision1 dated October 17, 2001 of
the Court of Appeals (CA) in CA-G.R. SP No. 64246 and its Resolution2 of June 20, 2002 denying petitioners' motion for
reconsideration. The assailed CA decision annulled and set aside the Orders dated October 9, 2000, December 18, 2000,
and March 15, 2001 of the Regional Trial Court (RTC), Branch 17 in Batac, Ilocos Norte which admitted petitioners'
amended complaint in Civil Case Nos. 3341-17 and 3342-17.

The Facts

Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now deceased, and his business associates (Benedicto
Group) organized Far East Managers and Investors, Inc. (FEMII) and Universal Equity Corporation (UEC), respectively. As
petitioner Irene Marcos-Araneta would later allege, both corporations were organized pursuant to a contract or
arrangement whereby Benedicto, as trustor, placed in his name and in the name of his associates, as trustees, the shares
of stocks of FEMII and UEC with the obligation to hold those shares and their fruits in trust and for the benefit of Irene to
the extent of 65% of such shares. Several years after, Irene, through her trustee-husband, Gregorio Ma. Araneta III,
demanded the reconveyance of said 65% stockholdings, but the Benedicto Group refused to oblige.

In March 2000, Irene thereupon instituted before the RTC two similar complaints for conveyance of shares of stock,
accounting and receivership against the Benedicto Group with prayer for the issuance of a temporary restraining order
(TRO). The first, docketed as Civil Case No. 3341-17, covered the UEC shares and named Benedicto, his daughter, and at
least 20 other individuals as defendants. The second, docketed as Civil Case No. 3342-17, sought the recovery to the
extent of 65% of FEMII shares held by Benedicto and the other defendants named therein.

Respondent Francisca Benedicto-Paulino,3 Benedicto's daughter, filed a Motion to Dismiss Civil Case No. 3341-17,
followed later by an Amended Motion to Dismiss. Benedicto, on the other hand, moved to dismiss4 Civil Case No. 3342-
17, adopting in toto the five (5) grounds raised by Francisca in her amended motion to dismiss. Among these were: (1)
the cases involved an intra-corporate dispute over which the Securities and Exchange Commission, not the RTC, has
jurisdiction; (2) venue was improperly laid; and (3) the complaint failed to state a cause of action, as there was no
allegation therein that plaintiff, as beneficiary of the purported trust, has accepted the trust created in her favor.

To the motions to dismiss, Irene filed a Consolidated Opposition, which Benedicto and Francisca countered with a Joint
Reply to Opposition.

Upon Benedicto's motion, both cases were consolidated.

During the preliminary proceedings on their motions to dismiss, Benedicto and Francisca, by way of bolstering their
contentions on improper venue, presented the Joint Affidavit5 of Gilmia B. Valdez, Catalino A. Bactat, and Conchita R.
Rasco who all attested being employed as household staff at the Marcos' Mansion in Brgy. Lacub, Batac, Ilocos Norte
and that Irene did not maintain residence in said place as she in fact only visited the mansion twice in 1999; that she did
not vote in Batac in the 1998 national elections; and that she was staying at her husband's house in Makati City.

Against the aforesaid unrebutted joint affidavit, Irene presented her PhP 5 community tax certificate6(CTC) issued on
"11/07/99" in Curimao, Ilocos Norte to support her claimed residency in Batac, Ilocos Norte.

In the meantime, on May 15, 2000, Benedicto died and was substituted by his wife, Julita C. Benedicto, and Francisca.

On June 29, 2000, the RTC dismissed both complaints, stating that these partly constituted "real action," and that Irene
did not actually reside in Ilocos Norte, and, therefore, venue was improperly laid. In its dismissal order,7 the court also
declared "all the other issues raised in the different Motions to Dismiss x x x moot and academic."
From the above order, Irene interposed a Motion for Reconsideration8 which Julita and Francisca duly opposed.

Pending resolution of her motion for reconsideration, Irene filed on July 17, 2000 a Motion (to Admit Amended
Complaint),9 attaching therewith a copy of the Amended Complaint10 dated July 14, 2000 in which the names of Daniel
Rubio, Orlando G. Reslin, and Jose G. Reslin appeared as additional plaintiffs. As stated in the amended complaint, the
added plaintiffs, all from Ilocos Norte, were Irene's new trustees. Parenthetically, the amended complaint stated
practically the same cause of action but, as couched, sought the reconveyance of the FEMII shares only.

During the August 25, 2000 hearing, the RTC dictated in open court an order denying Irene's motion for reconsideration
aforementioned, but deferred action on her motion to admit amended complaint and the opposition thereto.11

On October 9, 2000, the RTC issued an Order12 entertaining the amended complaint, dispositively stating:

WHEREFORE, the admission of the Amended Complaint being tenable and legal, the same is GRANTED.

Let copies of the Amended Complaint be served to the defendants who are ordered to answer within the reglementary
period provided by the rules.

The RTC predicated its order on the following premises:

(1) Pursuant to Section 2, Rule 10 of the Rules of Court,13 Irene may opt to file, as a matter of right, an amended
complaint.

(2) The inclusion of additional plaintiffs, one of whom was a Batac, an Ilocos Norte resident, in the amended complaint
setting out the same cause of action cured the defect of improper venue.

(3) Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4 allow the filing of the amended complaint in question in the
place of residence of any of Irene's co-plaintiffs.

In time, Julita and Francisca moved to dismiss the amended complaint, but the RTC, by Order14dated December 18,
2000, denied the motion and reiterated its directive for the two to answer the amended complaint.

In said order, the RTC stood pat on its holding on the rule on amendments of pleadings. And scoffing at the argument
about there being no complaint to amend in the first place as of October 9, 2000 (when the RTC granted the motion to
amend) as the original complaints were dismissed with finality earlier, i.e., on August 25, 2000 when the court denied
Irene's motion for reconsideration of the June 29, 2000 order dismissing the original complaints, the court stated thusly:
there was actually no need to act on Irene's motion to admit, it being her right as plaintiff to amend her complaints
absent any responsive pleading thereto. Pushing its point, the RTC added the observation that the filing of the amended
complaint on July 17, 2000 ipso facto superseded the original complaints, the dismissal of which, per the June 29, 2000
Order, had not yet become final at the time of the filing of the amended complaint.

Following the denial on March 15, 2001 of their motion for the RTC to reconsider its December 18, 2000 order
aforestated, Julita and Francisca, in a bid to evade being declared in default, filed on April 10, 2001 their Answer to the
amended complaint.15 But on the same day, they went to the CA via a petition for certiorari, docketed as CA-G.R. SP No.
64246, seeking to nullify the following RTC orders: the first, admitting the amended complaint; the second, denying their
motion to dismiss the amended complaint; and the third, denying their motion for reconsideration of the second
issuance.

Inasmuch as the verification portion of the joint petition and the certification on non-forum shopping bore only
Francisca's signature, the CA required the joint petitioners "to submit x x x either the written authority of Julita C.
Benedicto to Francisca B. Paulino authorizing the latter to represent her in these proceedings, or a supplemental
verification and certification duly signed by x x x Julita C. Benedicto."16 Records show the submission of the
corresponding authorizing Affidavit17 executed by Julita in favor of Francisca.

Later developments saw the CA issuing a TRO18 and then a writ of preliminary injunction19 enjoining the RTC from
conducting further proceedings on the subject civil cases.

On October 17, 2001, the CA rendered a Decision, setting aside the assailed RTC orders and dismissing the amended
complaints in Civil Case Nos. 3341-17 and 3342-17. The fallo of the CA decision reads:

WHEREFORE, based on the foregoing premises, the petition is hereby GRANTED. The assailed Orders admitting
the amended complaints are SET ASIDE for being null and void, and the amended complaints a quo are,
accordingly, DISMISSED.20
Irene and her new trustees' motion for reconsideration of the assailed decision was denied through the equally assailed
June 20, 2002 CA Resolution. Hence, this petition for review is before us.

The Issues

Petitioners urge the setting aside and annulment of the assailed CA decision and resolution on the following submissions
that the appellate court erred in: (1) allowing the submission of an affidavit by Julita as sufficient compliance with the
requirement on verification and certification of non-forum shopping; (2) ruling on the merits of the trust issue which
involves factual and evidentiary determination, processes not proper in a petition for certiorari under Rule 65 of the
Rules of Court; (3) ruling that the amended complaints in the lower court should be dismissed because, at the time it
was filed, there was no more original complaint to amend; (4) ruling that the respondents did not waive improper
venue; and (5) ruling that petitioner Irene was not a resident of Batac, Ilocos Norte and that none of the principal parties
are residents of Ilocos Norte.21

The Court's Ruling

We affirm, but not for all the reasons set out in, the CA's decision.

First Issue: Substantial Compliance with the Rule

on Verification and Certification of Non-Forum Shopping

Petitioners tag private respondents' petition in CA-G.R. SP No. 64246 as defective for non-compliance with the
requirements of Secs. 422 and 523 of Rule 7 of the Rules of Court at least with regard to Julita, who failed to sign the
verification and certification of non-forum shopping. Petitioners thus fault the appellate court for directing Julita's
counsel to submit a written authority for Francisca to represent Julita in the certiorari proceedings.

We are not persuaded.

Verification not Jurisdictional; May be Corrected

Verification is, under the Rules, not a jurisdictional but merely a formal requirement which the court may motu
proprio direct a party to comply with or correct, as the case may be. As the Court articulated in Kimberly Independent
Labor Union for Solidarity, Activism and Nationalism (KILUSAN)-Organized Labor Associations in Line Industries and
Agriculture (OLALIA) v. Court of Appeals:

V]erification is a formal, not a jurisdictional requisite, as it is mainly intended to secure an assurance that the allegations therein made are done in good faith or are true and
correct and not mere speculation. The Court may order the correction of the pleading, if not verified, or act on the unverified pleading if the attending circumstances are such
that a strict compliance with the rule may be dispensed with in order that the ends of justice may be served.24

Given this consideration, the CA acted within its sound discretion in ordering the submission of proof of Francisca's
authority to sign on Julita's behalf and represent her in the proceedings before the appellate court.

Signature by Any of the Principal Petitioners is Substantial Compliance

Regarding the certificate of non-forum shopping, the general rule is that all the petitioners or plaintiffs in a case should
sign it.25 However, the Court has time and again stressed that the rules on forum shopping, which were designed to
promote the orderly administration of justice, do not interdict substantial compliance with its provisions under
justifiable circumstances.26 As has been ruled by the Court, the signature of any of the principal petitioners27 or principal
parties,28 as Francisca is in this case, would constitute a substantial compliance with the rule on verification and
certification of non-forum shopping. It cannot be overemphasized that Francisca herself was a principal party in Civil
Case No. 3341-17 before the RTC and in the certiorari proceedings before the CA. Besides being an heir of Benedicto,
Francisca, with her mother, Julita, was substituted for Benedicto in the instant case after his demise.

And should there exist a commonality of interest among the parties, or where the parties filed the case as a "collective,"
raising only one common cause of action or presenting a common defense, then the signature of one of the petitioners
or complainants, acting as representative, is sufficient compliance. We said so in Cavile v. Heirs of Clarita Cavile.29 Like
Thomas Cavile, Sr. and the other petitioners in Cavile, Francisca and Julita, as petitioners before the CA, had filed their
petition as a collective, sharing a common interest and having a common single defense to protect their rights over the
shares of stocks in question.

Second Issue: Merits of the Case cannot be Resolved

on Certiorari under Rule 65
Petitioners' posture on the second issue is correct. As they aptly pointed out, the CA, in the exercise of its certiorari
jurisdiction under Rule 65, is limited to reviewing and correcting errors of jurisdiction only. It cannot validly delve into
the issue of trust which, under the premises, cannot be judiciously resolved without first establishing certain facts based
on evidence.

Whether a determinative question is one of law or of fact depends on the nature of the dispute. A question of law exists
when the doubt or controversy concerns the correct application of law or jurisprudence to a certain given set of facts; or
when the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood
of facts being admitted. A question of fact obtains when the doubt or difference arises as to the truth or falsehood of
facts or when the query invites the calibration of the whole evidence considering mainly the credibility of the witnesses,
the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the
whole, and the probability of the situation.30

Clearly then, the CA overstepped its boundaries when, in disposing of private respondents' petition for certiorari, it did
not confine itself to determining whether or not lack of jurisdiction or grave abuse of discretion tainted the issuance of
the assailed RTC orders, but proceeded to pass on the factual issue of the existence and enforceability of the asserted
trust. In the process, the CA virtually resolved petitioner Irene's case for reconveyance on its substantive merits even
before evidence on the matter could be adduced. Civil Case Nos. 3341-17 and 3342-17 in fact have not even reached the
pre-trial stage. To stress, the nature of the trust allegedly constituted in Irene's favor and its enforceability, being
evidentiary in nature, are best determined by the trial court. The original complaints and the amended complaint
certainly do not even clearly indicate whether the asserted trust is implied or express. To be sure, an express trust
differs from the implied variety in terms of the manner of proving its existence.31 Surely, the onus of factually
determining whether the trust allegedly established in favor of Irene, if one was indeed established, was implied or
express properly pertains, at the first instance, to the trial court and not to the appellate court in a special civil action for
certiorari, as here. In the absence of evidence to prove or disprove the constitution and necessarily the existence of the
trust agreement between Irene, on one hand, and the Benedicto Group, on the other, the appellate court cannot
intelligently pass upon the issue of trust. A pronouncement on said issue of trust rooted on speculation and conjecture,
if properly challenged, must be struck down. So it must be here.

Third Issue: Admission of Amended Complaint Proper

As may be recalled, the CA veritably declared as reversibly erroneous the admission of the amended complaint. The flaw
in the RTC's act of admitting the amended complaint lies, so the CA held, in the fact that the filing of the amended
complaint on July 17, 2000 came after the RTC had ordered with finality the dismissal of the original complaints.
According to petitioners, scoring the CA for its declaration adverted to and debunking its posture on the finality of the
said RTC order, the CA failed to take stock of their motion for reconsideration of the said dismissal order.

We agree with petitioners and turn to the governing Sec. 2 of Rule 10 of the Rules of Court which provides:

SEC. 2. Amendments as a matter of right. -- A party may amend his pleading once as a matter of right at any time
before a responsive pleading is served or in the case of a reply, at any time within ten (10) days after it is served.

As the aforequoted provision makes it abundantly clear that the plaintiff may amend his complaint once as a matter of
right, i.e., without leave of court, before any responsive pleading is filed or served. Responsive pleadings are those which
seek affirmative relief and/or set up defenses,32 like an answer. A motion to dismiss is not a responsive pleading for
purposes of Sec. 2 of Rule 10.33Assayed against the foregoing perspective, the RTC did not err in admitting petitioners'
amended complaint, Julita and Francisca not having yet answered the original complaints when the amended complaint
was filed. At that precise moment, Irene, by force of said Sec. 2 of Rule 10, had, as a matter of right, the option of
amending her underlying reconveyance complaints. As aptly observed by the RTC, Irene's motion to admit amended
complaint was not even necessary. The Court notes though that the RTC has not offered an explanation why it saw fit to
grant the motion to admit in the first place.

In Alpine Lending Investors v. Corpuz, the Court, expounding on the propriety of admitting an amended complaint before
a responsive pleading is filed, wrote:

W]hat petitioner Alpine filed in Civil Case No. C-20124 was a motion to dismiss, not an answer. Settled is the rule that a motion to dismiss is not a responsive pleading for
purposes of Section 2, Rule 10. As no responsive pleading had been filed, respondent could amend her complaint in Civil Case No. C-20124 as a matter of right. Following this
Court's ruling in Breslin v. Luzon Stevedoring Co. considering that respondent has the right to amend her complaint, it is the correlative duty of the trial court to accept the
amended complaint; otherwise, mandamus would lie against it. In other words, the trial court's duty to admit the amended complaint was purely ministerial. In fact, respondent
should not have filed a motion to admit her amended complaint.34

It may be argued that the original complaints had been dismissed through the June 29, 2000 RTC order. It should be
pointed out, however, that the finality of such dismissal order had not set in when Irene filed the amended complaint on
July 17, 2000, she having meanwhile seasonably sought reconsideration thereof. Irene's motion for reconsideration was
only resolved on August 25, 2000. Thus, when Irene filed the amended complaint on July 17, 2000, the order of dismissal
was not yet final, implying that there was strictly no legal impediment to her amending her original complaints.35

Fourth Issue: Private Respondents did not Waive Improper Venue

Petitioners maintain that Julita and Francisca were effectively precluded from raising the matter of improper venue by
their subsequent acts of filing numerous pleadings. To petitioners, these pleadings, taken together, signify a waiver of
private respondents' initial objection to improper venue.

This contention is without basis and, at best, tenuous. Venue essentially concerns a rule of procedure which, in personal
actions, is fixed for the greatest convenience possible of the plaintiff and his witnesses. The ground of improperly laid
venue must be raised seasonably, else it is deemed waived. Where the defendant failed to either file a motion to dismiss
on the ground of improper venue or include the same as an affirmative defense, he is deemed to have waived his right
to object to improper venue.36 In the case at bench, Benedicto and Francisca raised at the earliest time possible,
meaning "within the time for but before filing the answer to the complaint,"37 the matter of improper venue. They
would thereafter reiterate and pursue their objection on venue, first, in their answer to the amended complaints and
then in their petition for certiorari before the CA. Any suggestion, therefore, that Francisca and Benedicto or his
substitutes abandoned along the way improper venue as ground to defeat Irene's claim before the RTC has to be
rejected.

Fifth Issue: The RTC Has No Jurisdiction

on the Ground of Improper Venue

Subject Civil Cases are Personal Actions

It is the posture of Julita and Francisca that the venue was in this case improperly laid since the suit in question partakes
of a real action involving real properties located outside the territorial jurisdiction of the RTC in Batac.

This contention is not well-taken. In a personal action, the plaintiff seeks the recovery of personal property, the
enforcement of a contract, or the recovery of damages.38 Real actions, on the other hand, are those affecting title to or
possession of real property, or interest therein. In accordance with the wordings of Sec. 1 of Rule 4, the venue of real
actions shall be the proper court which has territorial jurisdiction over the area wherein the real property involved, or a
portion thereof, is situated. The venue of personal actions is the court 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.39

In the instant case, petitioners are basically asking Benedicto and his Group, as defendants a quo, to acknowledge
holding in trust Irene's purported 65% stockownership of UEC and FEMII, inclusive of the fruits of the trust, and to
execute in Irene's favor the necessary conveying deed over the said 65% shareholdings. In other words, Irene seeks to
compel recognition of the trust arrangement she has with the Benedicto Group. The fact that FEMII's assets include real
properties does not materially change the nature of the action, for the ownership interest of a stockholder over
corporate assets is only inchoate as the corporation, as a juridical person, solely owns such assets. It is only upon the
liquidation of the corporation that the stockholders, depending on the type and nature of their stockownership, may
have a real inchoate right over the corporate assets, but then only to the extent of their stockownership.

The amended complaint is an action in personam, it being a suit against Francisca and the late Benedicto (now
represented by Julita and Francisca), on the basis of their alleged personal liability to Irene upon an alleged trust
constituted in 1968 and/or 1972. They are not actions in rem where the actions are against the real properties instead of
against persons.40 We particularly note that possession or title to the real properties of FEMII and UEC is not being
disputed, albeit part of the assets of the corporation happens to be real properties.

Given the foregoing perspective, we now tackle the determinative question of venue in the light of the inclusion of
additional plaintiffs in the amended complaint.

Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4

We point out at the outset that Irene, as categorically and peremptorily found by the RTC after a hearing, is not a
resident of Batac, Ilocos Norte, as she claimed. The Court perceives no compelling reason to disturb, in the confines of
this case, the factual determination of the trial court and the premises holding it together. Accordingly, Irene cannot, in
a personal action, contextually opt for Batac as venue of her reconveyance complaint. As to her, Batac, Ilocos Norte is
not what Sec. 2, Rule 4 of the Rules of Court adverts to as the place "where the plaintiff or any of the principal plaintiffs
resides" at the time she filed her amended complaint. That Irene holds CTC No. 1701945141 issued sometime in June
2000 in Batac, Ilocos Norte and in which she indicated her address as Brgy. Lacub, Batac, Ilocos is really of no moment.
Let alone the fact that one can easily secure a basic residence certificate practically anytime in any Bureau of Internal
Revenue or treasurer's office and dictate whatever relevant data one desires entered, Irene procured CTC No. 17019451
and appended the same to her motion for reconsideration following the RTC's pronouncement against her being a
resident of Batac.

Petitioners, in an attempt to establish that the RTC in Batac, Ilocos Norte is the proper court venue, asseverate that
Batac, Ilocos Norte is where the principal parties reside.

Pivotal to the resolution of the venue issue is a determination of the status of Irene's co-plaintiffs in the context of Secs.
2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4, which pertinently provide as follows:

Rule 3
PARTIES TO CIVIL ACTIONS

SEC. 2. Parties in interest. -- A real party in interest is the party who stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these
Rules, every action must be prosecuted or defended in the name of the real party in interest.

SEC. 3. Representatives as parties. -- Where the action is allowed to be prosecuted or defended by a

representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case
and shall be deemed to be the real party in interest. A representative may be a trustee of an express trust, a
guardian, an executor or administrator, or a party authorized by law or these Rules. An agent acting in his own
name and for the benefit of an undisclosed principal may sue or be sued without joining the principal except
when the contract involves things belonging to the principal.

Rule 4
VENUE OF ACTIONS

SEC. 2. Venue of personal actions. -- All other actions may be commenced and tried 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.

Venue is Improperly Laid

There can be no serious dispute that the real party-in-interest plaintiff is Irene. As self-styled beneficiary of the disputed
trust, she stands to be benefited or entitled to the avails of the present suit. It is undisputed too that petitioners Daniel
Rubio, Orlando G. Reslin, and Jose G. Reslin, all from Ilocos Norte, were included as co-plaintiffs in the amended
complaint as Irene's new designated trustees. As trustees, they can only serve as mere representatives of Irene.

Upon the foregoing consideration, the resolution of the crucial issue of whether or not venue had properly been laid
should not be difficult.

Sec. 2 of Rule 4 indicates quite clearly that when there is more than one plaintiff in a personal action case, the
residences of the principal parties should be the basis for determining proper venue. According to the late Justice Jose Y.
Feria, "the word 'principal' has been added [in the uniform procedure rule] in order to prevent the plaintiff from
choosing the residence of a minor plaintiff or defendant as the venue."42 Eliminate the qualifying term "principal" and
the purpose of the Rule would, to borrow from Justice Regalado, "be defeated where a nominal or formal party is
impleaded in the action since the latter would not have the degree of interest in the subject of the action which would
warrant and entail the desirably active participation expected of litigants in a case."43

Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-17, Irene stands undisputedly as the principal plaintiff, the
real party-in-interest. Following Sec. 2 of Rule 4, the subject civil cases ought to be commenced and prosecuted at the
place where Irene resides.

Principal Plaintiff not a Resident in Venue of Action

As earlier stated, no less than the RTC in Batac declared Irene as not a resident of Batac, Ilocos Norte. Withal, that court
was an improper venue for her conveyance action.

The Court can concede that Irene's three co-plaintiffs are all residents of Batac, Ilocos Norte. But it ought to be stressed
in this regard that not one of the three can be considered as principal party-plaintiffs in Civil Case Nos. 3341-17 and
3342-17, included as they were in the amended complaint as trustees of the principal plaintiff. As trustees, they may be
accorded, by virtue of Sec. 3 of Rule 3, the right to prosecute a suit, but only on behalf of the beneficiary who must be
included in the title of the case and shall be deemed to be the real party-in-interest. In the final analysis, the residences
of Irene's co-plaintiffs cannot be made the basis in determining the venue of the subject suit. This conclusion becomes
all the more forceful considering that Irene herself initiated and was actively prosecuting her claim against Benedicto,
his heirs, assigns, or associates, virtually rendering the impleading of the trustees unnecessary.

And this brings us to the final point. Irene was a resident during the period material of Forbes Park, Makati City. She was
not a resident of Brgy. Lacub, Batac, Ilocos Norte, although jurisprudence44 has it that one can have several residences, if
such were the established fact. The Court will not speculate on the reason why petitioner Irene, for all the
inconvenience and expenses she and her adversaries would have to endure by a Batac trial, preferred that her case be
heard and decided by the RTC in Batac. On the heels of the dismissal of the original complaints on the ground of
improper venue, three new personalities were added to the complaint doubtless to insure, but in vain as it turned out,
that the case stays with the RTC in Batac.

Litigants ought to bank on the righteousness of their causes, the superiority of their cases, and the persuasiveness of
arguments to secure a favorable verdict. It is high time that courts, judges, and those who come to court for redress
keep this ideal in mind.

WHEREFORE, the instant petition is hereby DISMISSED. The Decision and Resolution dated October 17, 2001 and June
20, 2002, respectively, of the CA in CA-G.R. SP No. 64246, insofar as they nullified the assailed orders of the RTC, Branch
17 in Batac, Ilocos Norte in Civil Case Nos. 3341-17 and 3342-17 on the ground of lack of jurisdiction due to improper
venue, are hereby AFFIRMED. The Orders dated October 9, 2000, December 18, 2000, and March 15, 2001 of the RTC in
Civil Case Nos. 3341-17 and 3342-17 are accordingly ANNULLED and SET ASIDE and said civil cases are DISMISSED.

Costs against petitioners.

SO ORDERED.

G.R. No. 171206 September 23, 2013

HEIRS OF THE LATE SPOUSES FLA VIANO MAGLASANG and SALUD ADAZA-MAGLASANG, namely, OSCAR A.
MAGLASANG, EDGAR A. MAGLASANG, CONCEPCION CHONA A. MAGLASANG, GLENDA A. MAGLASANG-ARNAIZ,
LERMA A. MAGLASANG, FELMA A. · MAGLASANG, FE DORIS A. MAGLASANG, LEOLINO A. MAGLASANG, MARGIE LEILA
A. MAGLASANG,MA. MILALIE A. MAGLASANG, SALUD A. MAGLASANG, and MA. FLASALIE A. MAGLASANG,
REPRESENTING THE ESTATES OF THEIR AFORE-NAMEDDECEASED PARENTS, Petitioners,
vs.
MANILA BANKING CORPORATION, now substituted by FIRST SOVEREIGN ASSET MANAGEMENT SPV-AMC, INC.
FSAMI, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated July 20, 2005 and Resolution3 dated January 4,
2006 of the Court of Appeals (CA) in CA-G.R. CV No. 50410 which dismissed petitioners’ appeal and affirmed the
Decision4 dated April 6, 1987 of the Regional Trial Court of Ormoc City, Branch 12 (RTC) directing petitioners to jointly
and severally pay respondent Manila Banking Corporation the amount of ₱434,742.36, with applicable interests,
representing the deficiency of the former’s total loan obligation to the latter after the extra-judicial foreclosure of the
real estate mortgage subject of this case, including attorney’s fees and costs of suit.

The Facts

On June 16, 1975, spouses Flaviano and Salud Maglasang (Sps.Maglasang) obtained a credit line from respondent5 in the
amount of ₱350,000.00 which was secured by a real estate mortgage6 executed over seven of their properties7 located
in Ormoc City and the Municipality of Kananga, Province of Leyte.8 They availed of their credit line by securing loans in
the amounts of ₱209,790.50 and ₱139,805.83 on October 24, 1975and March 15, 1976, respectively, 9 both of which
becoming due and demandable within a period of one year. Further, the parties agreed that the said loans would earn
interest at 12% per annum (p.a.) and an additional 4% penalty would be charged upon default.10

After Flaviano Maglasang (Flaviano) died intestate on February 14,1977, his widow Salud Maglasang (Salud) and their
surviving children, herein petitioners Oscar (Oscar), Concepcion Chona, Lerma, Felma, FeDoris, Leolino, Margie Leila, Ma.
Milalie, Salud and Ma. Flasalie, all surnamed Maglasang, and Glenda Maglasang-Arnaiz, appointed11 their brother
petitioner Edgar Maglasang (Edgar) as their attorney-in-fact.12 Thus, on March 30, 1977, Edgar filed a verified petition for
letters of administration of the intestate estate of Flaviano before the then Court of First Instance of Leyte, Ormoc City,
Branch 5 (probate court), docketed as Sp. Proc. No. 1604-0.13 On August 9, 1977, the probate court issued an
Order14 granting the petition, thereby appointing Edgar as the administrator15 of Flaviano’s estate.

In view of the issuance of letters of administration, the probate court, on August 30, 1977, issued a Notice to
Creditors16 for the filing of money claims against Flaviano’s estate. Accordingly, as one of the creditors of Flaviano,
respondent notified17 the probate court of its claim in the amount of ₱382,753.19 as of October 11, 1978, exclusive of
interests and charges.

During the pendency of the intestate proceedings, Edgar and Oscar were able to obtain several loans from respondent,
secured by promissory notes18 which they signed.

In an Order19 dated December 14, 1978 (December 14, 1978 Order),the probate court terminated the proceedings with
the surviving heirs executing an extra-judicial partition of the properties of Flaviano’s estate. The loan obligations owed
by the estate to respondent, however, remained unsatisfied due to respondent’s certification that Flaviano’s account
was undergoing a restructuring. Nonetheless, the probate court expressly recognized the rights of respondent under the
mortgage and promissory notes executed by the Sps. Maglasang, specifically, its "right to foreclose the same within the
statutory period."20

In this light, respondent proceeded to extra-judicially foreclose the mortgage covering the Sps. Maglasang’s properties
and emerged as the highest bidder at the public auction for the amount of ₱350,000.00.21 There, however, remained a
deficiency on Sps. Maglasang’s obligation to respondent. Thus, on June 24, 1981, respondent filed a suit to recover the
deficiency amount of ₱250,601.05 as of May 31, 1981 against the estate of Flaviano, his widow Salud and petitioners,
docketed as Civil Case No. 1998-0.22

The RTC Ruling and Subsequent Proceedings

After trial on the merits, the RTC (formerly, the probate court)23 rendered a Decision24 on April 6, 1987 directing the
petitioners to pay respondent, jointly and severally, the amount of ₱434,742.36 with interest at the rate of 12% p.a.,
plus a 4% penalty charge, reckoned from September 5,1984 until fully paid.25 The RTC found that it was shown, by a
preponderance of evidence, that petitioners, after the extra-judicial foreclosure of all the properties mortgaged, still
have an outstanding obligation in the amount and as of the date as above-stated. The RTC also found in order the
payment of interests and penalty charges as above-mentioned as well as attorney’s fees equivalent to 10% of the
outstanding obligation.26

Dissatisfied, petitioners elevated the case to the CA on appeal, contending,27 inter alia, that the remedies available to
respondent under Section 7, Rule 86 of the Rules of Court (Rules) are alternative and exclusive, such that the election of
one operates as a waiver or abandonment of the others. Thus, when respondent filed its claim against the estate of
Flaviano in the proceedings before the probate court, it effectively abandoned its right to foreclose on the mortgage.
Moreover, even on the assumption that it has not so waived its right to foreclose, it is nonetheless barred from filing any
claim for any deficiency amount.

During the pendency of the appeal, Flaviano’s widow, Salud, passed away on July 25, 1997.28

The CA Ruling

In a Decision29 dated July 20, 2005, the CA denied the petitioners’ appeal and affirmed the RTC’s Decision. At the outset,
it pointed out that the probate court erred when it, through the December 14, 1978 Order, closed and terminated the
proceedings in Sp. Proc. No. 1604-0 without first satisfying the claims of the creditors of the estate – in particular,
respondent – in violation of Section 1, Rule 90 of the Rules.30 As a consequence, respondent was not able to collect from
the petitioners and thereby was left with the option of foreclosing the real estate mortgage.31Further, the CA held that
Section 7, Rule 86 of the Rules does not apply to the present case since the same does not involve a mortgage made by
the administrator over any property belonging to the estate of the decedent.32According to the CA, what should apply is
Act No. 313533 which entitles respondent to claim the deficiency amount after the extra-judicial foreclosure of the real
estate mortgage of Sps. Maglasang’s properties.34

Petitioners’ motion for reconsideration was subsequently denied in a Resolution35 dated January 4, 2006. Hence, the
present recourse.

The Issue Before the Court

The essential issue in this case is whether or not the CA erred in affirming the RTC’s award of the deficiency amount in
favor of respondent.
Petitioners assert36 that it is not Act No. 3135 but Section 7, Rule 86of the Rules which applies in this case. The latter
provision provides alternative and exclusive remedies for the satisfaction of respondent’s claim against the estate of
Flaviano.37 Corollarily, having filed its claim against the estate during the intestate proceedings, petitioners argue that
respondent had effectively waived the remedy of foreclosure and, even assuming that it still had the right to do so, it
was precluded from filing a suit for the recovery of the deficiency obligation.38

Likewise, petitioners maintain that the extra-judicial foreclosure of the subject properties was null and void, not having
been conducted in the capital of the Province of Leyte in violation of the stipulations in the real estate mortgage
contract.39 They likewise deny any personal liability for the loans taken by their deceased parents.40

The Court’s Ruling

The petition is partly meritorious.

Claims against deceased persons should be filed during the settlement proceedings of their estate.41 Such proceedings
are primarily governed by special rules found under Rules 73 to 90 of the Rules, although rules governing ordinary
actions may, as far as practicable, apply suppletorily.42 Among these special rules, Section 7, Rule 86 of the Rules
(Section 7, Rule86) provides the rule in dealing with secured claims against the estate:

SEC. 7. Mortgage debt due from estate. – A creditor holding a claim against the deceased secured by a mortgage or
other collateral security, may abandon the security and prosecute his claim in the manner provided in this rule, and
share in the general distribution of the assets of the estate; or he may foreclose his mortgage or realize upon his
security, by action in court, making the executor or administrator a party defendant, and if there is a judgment for a
deficiency, after the sale of the mortgaged premises, or the property pledged, in the foreclosure or other proceeding to
realize upon the security, he may claim his deficiency judgment in the manner provided in the preceding section; or he
may rely upon his mortgage or other security alone, and foreclose the same at any time within the period of the statute
of limitations, and in that event he shall not be admitted as a creditor, and shall receive no share in the distribution of
the other assets of the estate; but nothing herein contained shall prohibit the executor or administrator from redeeming
the property mortgaged or pledged, by paying the debt for which it is held as security, under the direction of the court, if
the court shall adjudged it to be for the best interest of the estate that such redemption shall be made. (Emphasis and
underscoring supplied)

As the foregoing generally speaks of "a creditor holding a claim against the deceased secured by a mortgage or other
collateral security" as above-highlighted, it may be reasonably concluded that the aforementioned section covers all
secured claims, whether by mortgage or any other form of collateral, which a creditor may enforce against the estate of
the deceased debtor. On the contrary, nowhere from its language can it be fairly deducible that the said section would –
as the CA interpreted – narrowly apply only to mortgages made by the administrator over any property belonging to the
estate of the decedent. To note, mortgages of estate property executed by the administrator, are also governed by Rule
89 of the Rules, captioned as "Sales, Mortgages, and Other Encumbrances of Property of Decedent."

In this accord, it bears to stress that the CA’s reliance on Philippine National Bank v. CA43 (PNB) was misplaced as the
said case did not, in any manner, limit the scope of Section 7, Rule 86. It only stated that the aforesaid section equally
applies to cases where the administrator mortgages the property of the estate to secure the loan he obtained.44 Clearly,
the pronouncement was a ruling of inclusion and not one which created a distinction. It cannot, therefore, be doubted
that it is Section 7, Rule 86which remains applicable in dealing with a creditor’s claim against the mortgaged property of
the deceased debtor, as in this case, as well as mortgages made by the administrator, as that in the PNB case.

Jurisprudence breaks down the rule under Section 7, Rule 86 and explains that the secured creditor has three
remedies/options that he may alternatively adopt for the satisfaction of his indebtedness. In particular, he may choose
to: (a) waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim; (b) foreclose
the mortgage judicially and prove the deficiency as an ordinary claim; and (c) rely on the mortgage exclusively, or other
security and foreclose the same before it is barred by prescription, without the right to file a claim for any deficiency.45 It
must, however, be emphasized that these remedies are distinct, independent and mutually exclusive from each other;
thus, the election of one effectively bars the exercise of the others. With respect to real properties, the Court in Bank of
America v. American Realty Corporation46 pronounced:

In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative and not cumulative. Notably,
an election of one remedy operates as a waiver of the other. For this purpose, a remedy is deemed chosen upon the
filing of the suit for collection or upon the filing of the complaint in an action for foreclosure of mortgage, pursuant to
the provision of Rule 68 of the 1997 Rules of Civil Procedure. As to extrajudicial foreclosure, such remedy is deemed
elected by the mortgage creditor upon filing of the petition not with any court of justice but with the Office of the Sheriff
of the province where the sale is to be made, in accordance with the provisions of Act No. 3135, as amended by Act
No.4118.47 (Emphasis supplied)
Anent the third remedy, it must be mentioned that the same includes the option of extra-judicially foreclosing the
mortgage under Act No. 3135,as availed of by respondent in this case. However, the plain result of adopting the last
mode of foreclosure is that the creditor waives his right to recover any deficiency from the estate.48 These precepts
were discussed in the PNB case, citing Perez v. Philippine National Bank49 which overturned the earlier Pasno v. Ravina
ruling:50

Case law now holds that this rule grants to the mortgagee three distinct, independent and mutually exclusive remedies
that can be alternatively pursued by the mortgage creditor for the satisfaction of his credit in case the mortgagor dies,
among them:

(1) to waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim;

(2) to foreclose the mortgage judicially and prove any deficiency as an ordinary claim; and

(3) to rely on the mortgage exclusively, foreclosing the same at anytime before it is barred by prescription
without right to file a claim for any deficiency

In Perez v. Philippine National Bank, reversing Pasno vs. Ravina, we held:

The ruling in Pasno v. Ravina not having been reiterated in any other case, we have carefully reexamined the same, and
after mature deliberation have reached the conclusion that the dissenting opinion is more in conformity with reason and
law. Of the three alternative courses that section 7, Rule 87 (now Rule 86), offers the mortgage creditor, to wit, (1) to
waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim; (2) foreclose the
mortgage judicially and prove any deficiency as an ordinary claim; and (3) to rely on the mortgage exclusively,
foreclosing the same at any time before it is barred by prescription, without right to file a claim for any deficiency, the
majority opinion in Pasno v. Ravina, in requiring a judicial foreclosure, virtually wipes out the third alternative conceded
by the Rules to the mortgage creditor, and which would precisely include extra-judicial foreclosures by contrast with the
second alternative.

The plain result of adopting the last mode of foreclosure is that the creditor waives his right to recover any deficiency
from the estate. Following the Perez ruling that the third mode includes

extrajudicial foreclosure sales, the result of extrajudicial foreclosure is that the creditor waives any further deficiency
claim. x x x.51 (Emphases and underscoring supplied; italics in the original)

To obviate any confusion, the Court observes that the operation of Act No. 3135 does not entirely discount the
application of Section 7, Rule 86, or vice-versa. Rather, the two complement each other within their respective spheres
of operation. On the one hand, Section 7, Rule 86 lays down the options for the secured creditor to claim against the
estate and, according to jurisprudence, the availment of the third option bars him from claiming any deficiency amount.
On the other hand, after the third option is chosen, the procedure governing the manner in which the extra-judicial
foreclosure should proceed would still be governed by the provisions of Act No. 3135.Simply put, Section 7, Rule 86
governs the parameters and the extent to which a claim may be advanced against the estate, whereas Act No. 3135sets
out the specific procedure to be followed when the creditor subsequently chooses the third option – specifically, that of
extra-judicially foreclosing real property belonging to the estate. The application of the procedure under Act No. 3135
must be concordant with Section 7, Rule 86 as the latter is a special rule applicable to claims against the estate, and at
the same time, since Section 7, Rule 86 does not detail the procedure for extra-judicial foreclosures, the formalities
governing the manner of availing of the third option – such as the place where the application for extra-judicial
foreclosure is filed, the requirements of publication and posting and the place of sale – must be governed by Act No.
3135.

In this case, respondent sought to extra-judicially foreclose the mortgage of the properties previously belonging to Sps.
Maglasang (and now, their estates) and, therefore, availed of the third option. Lest it be misunderstood, it did not
exercise the first option of directly filing a claim against the estate, as petitioners assert, since it merely notified52the
probate court of the outstanding amount of its claim against the estate of Flaviano and that it was currently
restructuring the account.53 Thus, having unequivocally opted to exercise the third option of extra-judicial foreclosure
under Section 7, Rule 86, respondent is now precluded from filing a suit to recover any deficiency amount as earlier
discussed.

As a final point, petitioners maintain that the extra-judicial foreclosure of the subject properties was null and void since
the same was conducted in violation of the stipulation in the real estate mortgage contract stating that the auction sale
should be held in the capital of the province where the properties are located, i.e., the Province of Leyte.

The Court disagrees.

As may be gleaned from the records, the stipulation under the real estate mortgage54 executed by Sps. Maglasang which
fixed the place of the foreclosure sale at Tacloban City lacks words of exclusivity which would bar any other acceptable
for a wherein the said sale may be conducted, to wit:

It is hereby agreed that in case of foreclosure of this mortgage under Act 3135, the auction sale shall be held at the
capital of the province if the property is within the territorial jurisdiction of the province concerned, or shall be held in
the city if the property is within the territorial jurisdiction of the city concerned; x x x.55

Case law states that absent such qualifying or restrictive words to indicate the exclusivity of the agreed forum, the
stipulated place should only be as an additional, not a limiting venue.56 As a consequence, the stipulated venue and that
provided under Act No. 3135 can be applied alternatively.

In particular, Section 2 of Act No. 3135 allows the foreclosure sale to be done within the province where the property to
be sold is situated, viz.:

SEC. 2. Said sale cannot be made legally outside of the province which the property sold is situated; and in case the place
within said province in which the sale is to be made is subject to 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. (Italics supplied) ..

In this regard, since the auction sale was conducted in Ormoc City, which is within the territorial jurisdiction of the
Province of Leyte, then the Court finds sufficient compliance with the above-cited requirement.

All told, finding that the extra-judicial foreclosure subject of this case was properly conducted in accordance with the
formalities of Act No. 3135,the Court upholds the same as a valid exercise of respondent's third option under Section 7,
Rule 86. To reiterate, respondent cannot, however, file any suit to recover any deficiency amount since it effectively
waived its right thereto when it chose to avail of extra-judicial foreclosure as jurisprudence instructs.

WHEREFORE, the petition is PARTLY GRANTED. The complaint for the recovery of the deficiency amount after extra-
judicial foreclosure filed by respondent Manila Banking Corporation is hereby DISMISSED. The extra-judicial foreclosure
of the mortgaged properties, however, stands.

SO ORDERED.

G.R. No. 179018 June 18, 2012

PAGLAUM MANAGEMENT & DEVELOPMENT CORP. and HEALTH MARKETING TECHNOLOGIES, INC.,Petitioners,
vs.
UNION BANK OF THE PHILIPPINES, NOTARY PUBLIC JOHN DOE, and REGISTER OF DEEDS of Cebu City and Cebu
Province Respondents.
J. KING & SONS CO., INC. Intervenor.

DECISION

SERENO, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision dated
31 May 20071 and Resolution dated 24 July 20072 issued by the Court of Appeals (CA).

Petitioner Paglaum Management and Development Corporation (PAGLAUM) is the registered owner of three parcels of
land located in the Province of Cebu3 and covered by Transfer Certificate of Title (TCT) Nos. 112488,4112489,5 and T-
68516.6 These lots are co-owned by Benjamin B. Dy, the president of petitioner Health Marketing Technologies, Inc.
(HealthTech), and his mother and siblings.7

On 3 February 1994, respondent Union Bank of the Philippines (Union Bank) extended HealthTech a credit line in the
amount of ₱ 10,000,000.8 To secure this obligation, PAGLAUM executed three Real Estate Mortgages on behalf of
HealthTech and in favor of Union Bank.9 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.10 (Emphasis supplied.)

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, the xxxxxxxxxxxxx any other venue.11 (Emphasis supplied.)

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.12

HealthTech and Union Bank agreed to subsequent renewals and increases in the credit line,13 with the total amount of
debt reaching ₱ 36,500,000.14 Unfortunately, according to HealthTech, the 1997 Asian financial crisis adversely affected
its business and caused it difficulty in meeting its obligations with Union Bank.15 Thus, on 11 December 1998, both
parties entered into a Restructuring Agreement,16 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.17

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.18

Since HealthTech defaulted on its payment, Union Bank extra-judicially foreclosed the mortgaged properties.19 The bank,
as the sole bidder in the auction sale, was then issued a Certificate of Sale dated 24 May 2001.20 Thereafter, it filed a
Petition for Consolidation of Title.21

Consequently, HealthTech filed a Complaint for Annulment of Sale and Titles with Damages and Application for
Temporary Restraining Order and Writ of Injunction dated 23 October 2001, praying for: (a) the issuance of a temporary
restraining order, and later a writ of preliminary injunction, directing Union Bank to refrain from exercising acts of
ownership over the foreclosed properties; (b) the annulment of the extra-judicial foreclosure of real properties; (c) the
cancellation of the registration of the Certificates of Sale and the resulting titles issued; (d) the reinstatement of
PAGLAUM’s ownership over the subject properties; and (e) the payment of damages.22 The case was docketed as Civil
Case No. 01-1567 and raffled to the Regional Trial Court, National Capital Judicial Region, Makati City, Branch 134 (RTC
Br. 134), 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.23

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.24 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.25 It likewise denied the subsequent Motion for
Reconsideration filed by PAGLAUM and HealthTech.26

PAGLAUM and HealthTech elevated the case to the CA, which affirmed the Order dated 11 March 200327 and denied the
Motion for Reconsideration.28

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.29

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.30

Meanwhile, intervenor J. King & Sons Company, Inc. adopts the position of Union Bank and reiterates the position that
Cebu City is the proper venue.31

The sole issue to be resolved is whether Makati City is the proper venue to assail the foreclosure of the subject real
estate mortgage. This Court rules in the affirmative.

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,32 this
Court held that a case seeking to annul a foreclosure of a real estate mortgage is a real action, viz:

An action to annul a real estate mortgage foreclosure sale is no different from an action to annul a private sale of real
property. (Muñoz v. Llamas, 87 Phil. 737, 1950).
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.33

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. (Emphasis supplied.)

In Sps. Lantin v. Lantion,34 this Court explained that a venue stipulation must contain words that show exclusivity or
restrictiveness, as follows:

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.

xxx xxx xxx

Clearly, the words "exclusively" and "waiving for this purpose any other venue" are restrictive and used advisedly to
meet the requirements.35 (Emphasis supplied.)

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.

The Real Estate Mortgages were executed by PAGLAUM in favor of Union Bank to secure the credit line extended by the
latter to HealthTech. 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, to wit:

Section 1. Secured Obligations. – The obligations secured by this Mortgage (the "Secured Obligations") are the following:

a) All the obligations of the Borrower and/or the Mortgagor under: (i) the Notes, the Agreement, and this
Mortgage; (ii) any and all instruments or documents issued upon the renewal, extension, amendment or
novation of the Notes, the Agreement and this Mortgage, irrespective of whether such obligations as renewed,
 extended, amended or novated are in the nature of new, separate or additional obligations; and (iii) any and all
instruments or documents issued pursuant to the Notes, the Agreement and this Mortgage;

b) All other obligations of the Borrower and/or the Mortgagor in favor of the Mortgagee, whether presently
owing or hereinafter incurred and whether or not arising from or connected with the Agreement, the Notes
and/or this Mortgage; and

c) Any and all expenses which may be incurred in collecting any and all of the above and in enforcing any and all
rights, powers and remedies of the Mortgagee under this Mortgage.36

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, including the renewal, extension, amendment or novation of this
Restructuring Agreement, irrespective of whether the obligations arising out of or in connection with this Restructuring
Agreement, as renewed, extended, amended or novated, are in the nature of new, separate or additional obligations,
and all other instruments or documents covering the Indebtedness or otherwise made pursuant to this Restructuring
Agreement (the "Secured Obligations"), shall continue to be secured by the following security arrangements (the
"Collaterals"):

a. Real Estate Mortgage dated February 11, 1994 executed by Paglaum Management and Development
Corporation over a 474 square meter property covered by TCT No. 112489;

b. Real Estate Mortgage dated February 11, 1994 executed by Paglaum Management and Development
Corporation over a 2,796 square meter property covered by TCT No. T-68516;

c. Real Estate Mortgage dated April 22, 1998 executed by Paglaum Management and Development Corporation
over a 3,711 square meter property covered by TCT No. 112488;

d. Continuing Surety Agreement of Benjamin B. Dy;

Without need of any further act and deed, the existing Collaterals, shall remain in full force and effect and continue to
secure the payment and performance of the obligations of the BORROWER arising from the Notes and this Restructuring
Agreement.37 (Emphasis supplied.)

Meanwhile, 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.38 (Emphasis supplied.)

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. In fact, in the Real Estate Mortgages dated
11 February 1994, the phrase "parties hereto waiving" – from the entire phrase "the parties hereto waiving any other
venue" – was stricken from the final executed contract. Following the ruling in Sps. Lantin as earlier quoted, in the
absence of qualifying or restrictive words, the venue stipulation should only be deemed as an agreement on an
additional forum, and not as a restriction on a specified place.1âwphi1 Considering that Makati City was agreed upon by
the parties to be the venue for all actions arising out of or in connection with the loan obligation incurred by HealthTech,
as well as the Real Estate Mortgages executed by PAGLAUM, the CA committed reversible error in affirming the
dismissal of Civil Case No. 01-1567 by RTC Br. 134 on the ground of improper venue.

WHEREFORE, the Petition for Review is GRANTED. The Decision dated 31 May 2007 and Resolution dated 24 July 2007 in
CA-G.R. CV No. 82053 of the Court of Appeals, as well as the Orders dated 11 March 2003 and 19 September 2003
issued by the Regional Trial Court, Makati City, Branch 134, are REVERSED and SET ASIDE. The Complaint in Civil Case No.
01-1567 is hereby REINSTATED.SO ORDERED.