SUBJECTS/DOCTRINES/DIGEST:
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SUBJECTS/DOCTRINES/DIGEST:
WHAT HAPPENED IN THIS CASE?
LABRADOR OBTAINED A LOAN FROM PETITIONER AND SECURED IT BY MORTGAGE OVER SUBJECT PROPERTIES. THEN HE EXECUTED A TRUST AGREEMENT WITH A SCHOOL WHICH CLAIMS THAT LABRADO HOLDS THE PROPERTY IN TRUST FOR THE SCHOOL. BUT PART OF THE LOAN WAS USED BY THE SCHOOL TO PURCHASE THE PROPERTY. LABRADOR DEFAULTED. PETITIONER FORECLOSED AND APPLIED FOR WRIT. THE SCHOOL OPPOSED THE ISSUANCE OF THE WRIT ON THE GROUND THAT IT IS THIRD PARTY WHO POSSESSES THE PROPERTIES AND HAVE INTERESTS OVER THEM ADVERSE TO LABRADOR. SUPREME COURT SAID THE SCHOOL CANNOT BE CONSIDERED AS SUCH THIRD PARTY. THE RTC SHOULD NOT HAVE DENIED THE ISSUANCE OF WRIT ON THE BASIS OF THE ALLEGATIONS OF THE SCHOOL; IT SHOULD HAVE CONDUCTED A HEARING TO DETERMINE WHETHER THERE IS MERIT TO SUCH ALLEGATIONS.
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WHEREFORE, the Petition for Review of Certiorari is hereby
GRANTED. The Decision dated July 17, 2019 and the Resolution dated
October 9, 2020 of the Court of Appeals Cagayan De Oro City Station, in CAG.
R. CV No. 04749-MIN, are REVERSED and SET ASIDE. The Complaint
for reformation of mortgage, nullity of foreclosure, damages, and attorney’s
fees with temporary restraining order and preliminary injunction filed by
petitioner Lucille B. Odilao, represented by Ariel B. Odilao, against
respondent Union Bank of the Philippines and Atty. Natasha M. Go-De Mesa,
the Register of Deeds of Davao City, before Branch 77 of the Regional Trial
Court of Davao City and docketed as Civil Case No. R-DVO-16-01024-CV
is REINSTATED. The trial court is further ordered to proceed with the
disposition of the case with dispatch.
SO ORDERED.
SUBJECTS/DOCTRINES/DIGEST:
ON VENUE OF ACTION
Guided by the foregoing jurisprudential precept, the Court examined
the Real Estate Mortgage entered into between petitioner and respondent bank,
which relevantly provides-
Section 8. Venue. – The venue of all suits and actions arising out of
or in connection with this Mortgage shall be Pasig City or in the place where
any of the Mortgaged properties are located, at the absolute option of the
Mortgagee, the parties hereto waiving any other venue.18
Clearly, the aforesaid venue stipulation is not permissive but restrictive
in nature, considering that it effectively limits the venue of the actions arising
therefrom to the courts of: (a) Pasig City; or (b) in the place where any of
the Mortgaged properties are located. 19
Such being the case, petitioner’s complaint, which was filed before
the Regional Trial Court of Davao City where the mortgaged property is
located, should not have been dismissed as the same complied with the
venue stipulation stated in the Real Estate Mortgage.
Upon this point, the Court is perplexed as to why the CA affirmed the
trial court’s dismissal of petitioner’s complaint when it itself pronounced that
“the venue stipulation in the Real Estate Mortgage should be controlling.”20
On the other hand, the trial court, mistakenly interpreted the phrase “at the
absolute option of the Mortgagee” to mean that “the present action cannot still
be heard and adjudicated in this court absent the express manifestation of the
mortgagee [respondent bank] of its option to have this case litigated in Davao
City_,,21
In this regard, it must be borne in mind that rules on venue are intended
to provide convenience to the parties, rather than restrict their access to the
courts. It simply arranges for the convenient and effective transaction of
business in the courts.22 Appositely, an exclusive venue stipulation can only
be valid and binding, when: (a) the stipulation on the chosen venue is
exclusive in nature or in intent; ( b) it is expressed in writing by the parties
thereto; and (c) it is entered into before the filing of the suit.23 Simply put, the
preferred venue must be stipulated in writing before an action is instituted.
Moreover, it must be emphasized that the restrictive stipulation on
venue only refers to the geographical location and should not in any way curb
the right of a party to file a case. This being so, to interpret the phrase “at the
absolute option of the Mortgagee” to mean that petitioner should have
inquired first from respondent bank which venue it preferred, i.e., Pasig City
or Davao City, before she filed the instant action, would mean that she would
be left at the mercy of the bank, as she would still have to wait for its response
before she could exercise her right to litigate. At most, such phrase takes
significance only when it is respondent bank which would file the case.
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