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THIRD DIVISION

G.R. No. 234499, June 06, 2018

RUDY L. RACPAN, Petitioner, v. SHARON BARROGA-HAIGH, Respondent.

DECISION

VELASCO JR., J.:

Nature of the Case

This treats of the Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing
the February 13, 2017 Decision1 and August 17, 2017 Resolution2 of the Court of Appeals (CA)
in CA G.R. CV No. 04034-MIN. Said rulings affirmed the dismissal of the petitioner's complaint
for improper venue and failure to comply with a condition precedent to its filing.

Factual Antecedents

Petitioner Rudy Racpan filed a Complaint "For Declaration For Nullity of Deed of Sale with Right
to Repurchase & Attorney's Fees"3 before the Regional Trial Court of Davao City, Branch 11
(RTC-Davao). In his Complaint, which was docketed as Civil Case No. 34, 742-2012, petitioner
alleged that after his wife's death on November 12, 2011, he instructed their daughter to
arrange his wife's important documents. In so doing, their daughter discovered a Deed of Sale
with Right to Purchase dated March 29, 2011. The Deed of Sale was purportedly signed by him
and his late wife and appeared to convey to respondent Sharon Barroga-Haigh a real property
registered in his name under TCT No. T-142-2011009374 and located in Bo. Tuganay,
Municipality of Carmen, Province of Davao del Norte.4 Petitioner maintained that the Deed of
Sale was falsified and fictitious as he never signed any contract, not even any special power of
attorney, for the sale or conveyance of the property which is still in his possession. Thus, he
prayed for the declaration of the Deed of Sale's nullity.

In her Answer with Compulsory Counterclaim,5 respondent contended, by way of affirmative


defense, that the venue of the Complaint was improperly laid and that the filing of the case lacks
the mandatory requirement of Barangay Clearance. Subsequently, respondent filed a motion for
preliminary hearing on her affirmative defenses.

Acting on the motion, the RTC-Davao set the case for preliminary hearing and thereafter issued
an Order dated September 18, 20136 dismissing the petitioner's Complaint as follows:
WHEREFORE, in view of the foregoing, the present case is hereby ORDERED DISMISSED for
being improperly filed before the Regional Trial Court of Davao City and for failure to comply
with a condition precedent prior to its filing.

SO ORDERED.7
Petitioner moved for the RTC-Davao to reconsider8 its Order dismissing the complaint but the
trial court remained steadfast and denied his motion in its June 19, 2004 Order.9 Hence, the
petitioner came to the CA on appeal.10

Ruling of the Court of Appeals

As stated at the outset hereof, the appellate court affirmed the dismissal of the petitioner's
Complaint as follows:
WHEREFORE, the order dated September 18, 2013 of the Regional Trial Court, Branch 11,
Davao City in Civil Case No. 34,742-12 is AFFIRMED.
SO ORDERED.11
The CA explained that petitioner's Complaint is a real action as it wants the court to abrogate
and nullify. whatever right or claim the respondent might have on the property subject of the
Deed of Sale. Hence, for the appellate court, Section 1, Rule 4 of the Rules of Court is
applicable. Under this Rule, real actions shall be commenced and tried in the proper court which
has jurisdiction over the area wherein the real property involved is situated. As the property
involved is located in Bo. Tuganay, Municipality of Cannen, Province of Davao del Norte, the
appellate court held that the Complaint should have been lodged with the RTC of Davao del
Norte and not the RTC-Davao.

Further, the CA found that the petitioner's prayer for the issuance of a writ of preliminary
injunction is a mere ploy to avoid the requirement of a barangay conciliation, as a mere
annotation of a notice of lis pendens would achieve the same effect without having to undergo
trial or post a bond.

In a Resolution dated August 17, 201712 the CA stood its ground by denying the petitioner's
Motion for Reconsideration.13

Hence, the petitioner's present recourse, it being his contention that the Complaint he
interposed with the RTC-Davao is a personal action. He maintains that his Complaint is not
concerned with title to or possession of real property, as in fact, no transfer of possession or title
of the real property to the respondent has occurred.14 For the petitioner, the Complaint's venue
was properly laid in Davao City where both he and the respondent reside.

Petitioner likewise reiterated that, as his Complaint was coupled with a prayer for the issuance
of a writ of preliminary injunction, it is exempt from barangay conciliation proceedings.

Issue

The main and decisive issue for resolution is whether the CA erred in affirming the dismissal of
the petitioner's Complaint.

Our Ruling

The petition is impressed with merit.

The venue was properly laid as the complaint was a personal action.

By weight of jurisprudence, the nature of an action is determined by the allegations in the


complaint. In turn, the nature of the action determines its proper venue. Rule 4 of the Rules of
Court provides the rules on the situs for bringing real and personal actions, viz:
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.

Section 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.
Expounding on the foregoing provisions, the Court delineated the basic distinction between a
real and a personal action and their respective venues in Bank of the Philippine Islands v.
Hontanosas, Jr.,15 stating that:
The determinants of whether an action is of a real or a personal nature have been fixed by
the Rules of Court and relevant jurisprudence. According to Section 1, Rule 4 of the Rules of
Court, a real action is one that affects title to or possession of real property, or an interest
therein. Such action is to be commenced and tried in the proper court having jurisdiction over
the area wherein the real property involved, or a portion thereof, is situated, which explains why
the action is also referred to as a local action. In contrast, the Rules of Court declares all other
actions as personal actions. Such actions may include those brought for the recovery of
personal property, or for the enforcement of some contract or recovery of damages for its
breach, or for the recovery of damages for the commission of an injury to the person or
property. The venue of a personal action is the place 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, for
which reason the action is considered a transitory one.
Otherwise stated, what determines the venue of a case is the primary objective for the filing of
the case.16 On one hand, if the plaintiff seeks the recovery of personal property, the
enforcement of a contract or the recovery of damages, his complaint is a personal action that
may be filed in the place of residence of either party. On the other hand, if the plaintiff seeks the
recovery of real property, or if the action affects title to real property or for the recovery of
possession, or for partition or condemnation of, or foreclosure of mortgage on, real property,
then the complaint is a real action that must be brought before the court where the real property
is located. Thus, in Chua v. Total Office Products and Services, Inc.,17 this Court ruled that
where the action is not intended for the recovery of real property but solely for the annulment of
a contract, it is a personal action that may be filed in the court where the plaintiff or the
respondent resides. It held:
Well-settled is the rule that an action to annul a contract of loan and its accessory real estate
mortgage is a personal action. In a personal action, the plaintiff seeks the recovery of personal
property, the enforcement of a contract or the recovery of damages. In contrast, in a real action,
the plaintiff seeks the recovery of real property, or, as indicated in Section 2 (a), Rule 4 of the
then Rules of Court, a real action is an action affecting title to real property or for the recovery of
possession, or for partition, or condemnation of, or foreclosure of mortgage on, real property.

In the Pascual case, relied upon by petitioner, the contract of sale of the fishpond was assailed
as fictitious for lack of consideration. We held that there being no contract to begin with, there is
nothing to annul. Hence, we deemed the action for annulment of the said fictitious contract
therein as one constituting a real action for the recovery of the fishpond subject thereof

We cannot, however, apply the foregoing doctrine to the instant case. Note that in Pascual, title
to and possession of the subject fishpond had already passed to the vendee. There was,
therefore, a need to recover the said fishpond. But in the instant case, ownership of the
parcels of land subject of the questioned real estate mortgage was never transferred to
petitioner, but remained with TOPROS. Thus, no real action for the recovery of real
property is involved. This being the case, TOPROS' action for annulment of the contracts
of loan and real estate mortgage remains a personal action. (emphasis supplied)
In the Complaint filed with the court a quo, petitioner sought the nullification of the Deed of Sale
with Right to Repurchase on the strength of this claim: he did not sign the same nor did he
execute any special power of attorney in favor of his late wife to do so in his behalf. 18 But, as
there was no allegation that the possession and title to the property have been
transferred to respondent, nowhere in the Complaint did petitioner allege or pray for the
recovery or reconveyance of the real property. Pertinent parts of the Complaint read thus:
4. Plaintiff was married to Ma. Lucila B. Racpan on 20 December 1978. The latter died on 13
November 2011 at Oroville, California...

5. Plaintiff Racpan purchased a property from his brother Lorezo L. Racpan formerly covered by
Transfer Certificate of Title No. T-189893 and located at Carmen, Davao del Norte and the said
property is now covered by Transfer Certificate of Title No. T-142-2011009374. Hereto
attached and marked as Annex "B" is a copy of the Transfer Certificate of Title No. T-142-
2011009374 registered under the name of plaintiff Rudy L. Racpan. Also attached and
marked as Annex "C'" is the tax declaration of the subject property to prove that plaintiff is the
owner of the same.

6. Plaintiff's wife died at Oroville, California on 12 November 2011. However, her remains were
returned to Davao City, Philippines. Nonetheless, it was the daughter of the plaintiff in the
person of Lani Racpan who arrived first in Davao City.

xxxx

8. On 12 December 2011, plaintiff's daughter showed to him the subject deed of sale with right
to repurchase dated 29 March 2011. Plaintiff was surprised because he did not know or has NO
knowledge of the said deed of sale with right to repurchase. When plaintiff navigated the
Deed of Sale, he was surprised because his signature appearing on the same is
COMPLETELY FALSIFIED....

8.a Moreover, plaintiff did not also execute any special power of attorney in favour of his
deceased wife authoring the latter to [sell] the subject property to the defendant.

8.b On the other hand, the subject property is registered under the name of plaintiff Rudy
Racpan and NOT TO SPOUSES Racpan. The words "married to Ma. Lucila B. Racpan" only
signified the civil status of plaintiff to the latter.

xxxx

9.d Evidently, from the foregoing the (alleged) subject deed of sale with right to repurchase
is NULL AND VOID as the same contains the falsified signature of the herein plaintiff.

xxxx

11. Plaintiff before and during the time of the execution of the subject Deed of Sale with Right to
Repurchase dated 29 March 2011 NEVER MET defendant Saigh. It was only sometime in
December 7 or 8, 2011 that he met defendant Saigh during the wake of his wife wherein he was
introduced to the former by Orly Gabriel.

12. To date, plaintiff is in possession of the subject property. However, his daughter has
been receiving text message from defendant requiring him to settle the said alleged obligation of
his deceased wife to her.19
Evidently, as the Complaint was not concerned with the title to or recovery of the real property, it
was a personal action. Thus, Davao City, where both the petitioner and the respondent reside
is the proper venue for the complaint. The appellate court therefore committed a reversible error
in affirming the trial court's dismissal of the case for improper venue.

The Complaint was exempted from Barangay Conciliation Proceedings

As for petitioner's failure to resort to barangay conciliation, Section 412 of the Local Government
Code (LGC) provides that parties may go directly to court where the action is coupled with
provisional remedies:
SEC. 412. Conciliation. - (a) Pre-condition to filing of complaint in court. - No complaint,
petition, action, or proceeding involving any matter within the authority of the lupon shall be filed
or instituted directly in court or any other government office for adjudication, unless there has
been a confrontation between the parties before the lupon chairman or the pangkat, and that no
conciliation or settlement has been reached as certified by the lupon secretary or pangkat
secretary as attested to by the lupon chairman or pangkat chairman or unless the settlement
has been repudiated by the parties thereto.

(b) Where parties may go directly to court. - The parties may go directly to court in the following
instances:

(1) Where the accused is under detention;

(2) Where a person has otherwise been deprived of personal liberty calling for habeas corpus
proceedings;

(3) Where actions are coupled with provisional remedies such as preliminary injunction,
attachment, delivery of personal property, and support pendente lite; and

(4) Where the action may otherwise be barred by the statute of limitations.

(c) Conciliation among members of indigenous cultural communities. - The customs and
traditions of indigenous cultural communities shall be applied in settling disputes between
members of the cultural communities.
While there is no dispute herein that the present case was never referred to the Barangay
Lupon for conciliation before petitioner instituted Civil Case No. 34, 742-2012, there is likewise
no quibbling that his Complaint was coupled with a prayer for the issuance of a preliminary
injunction.20 Hence, it falls among the exceptions to the rule requiring the referral to baranggay
conciliation.

As good faith is always presumed,21 in the absence of proof of improper motive on the part of
the petitioner, the Court cannot countenance the appellate court's assumption that petitioner
was solely intent on evading the requirements of the LGC in applying for a preliminary
injunction. This Court cannot sustain a dismissal of an action on account of an unproven
assertion of bad faith.

WHEREFORE, the petition is GRANTED. The February 13, 2017 Decision and August 17,
2017 Resolution of the Court of Appeals in CA-G.R. CV No. 04034-MIN, as well as
the Orders dated September 18, 2013 and June 19, 2004 of the Regional Trial Court of Davao
City, Branch 11, in Civil Case No. 34, 742-2012 are REVERSED and SET ASIDE. Civil Case
No. 34, 742-2012 is hereby ordered REINSTATED. The RTC is ordered to proceed with
dispatch in the disposition of the mentioned case.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 175796 July 22, 2015


BPI FAMILY SAVINGS BANK INC., Petitioner,
vs.
SPOUSES BENEDICTO & TERESITA YUJUICO, Respondents,

DECISION

BERSAMIN, J.:

An action to recover the deficiency after extrajudicial foreclosure of a real property mortgage is a
personal action because it does not affect title to or possession of real property, or any interest
therein.

The Case

This appeal is taken by the petitioner to overturn the decision promulgated on March 31,
2006,1 whereby the Court of Appeals (CA) set aside the orders issued by the Regional Trial
Court, Branch 60, in Makati City (Makati RTC) on October 17, 2003 2 and February 1,
2005 3 dismissing

their action against the respondents to recover the deficiency after the extrajudicial foreclosure
of their mortgage (Civil Case No.03-450) on the ground of improper venue.

Antecedents

On August 22, 1996, the City of Manila filed a complaint against the respondents for the
expropriation of five parcels of land located in Tondo, Manila and registered in the name of
respondent Teresita Yujuico. Two of the parcels of land, covered by Transfer Certificate of Title
(TCT) No. 261331 and TCT No. 261332, were previously mortgaged to Citytrust Banking
Corporation, the petitioner's predecessor-in-interest, under a First Real Estate Mortgage
Contract.4On June 30, 2000, the Regional Trial Court in Manila (Manila RTC) rendered its
judgment declaring the five parcels of land expropriated for public use. The judgment became
final and executory on January 28, 2001 and was entered in the book of entries of judgment on
March 23, 2001.5 The petitioner subsequently filed a Motion to Intervene in Execution with
Partial Opposition to Defendant's Request to Release, but the RTC denied the motion for having
been "filed out of time." Hence, the petitioner decided to extrajudicially foreclose the mortgage
constituted on the two parcels of land subject of the respondents' loan. After holding the public
auction, the sheriff awarded the two lots to the petitioner as the highest bidder at ₱10, 000,
000.00. 6

Claiming a deficiency amounting to Pl8, 522155.42, the pet1t1oner sued the respondents to
recover such deficiency in the Makati RTC (Civil Case No. 03-450).1âwphi1 The respondents
moved to dismiss the complaint on several grounds, namely: that the suit was barred by res
judicata; that the complaint stated no cause of action; and that the plaintiffs claim had been
waived, abandoned, or extinguished. 7

In its order issued on October 17, 2003, the Makati RTC denied the respondents' motion to
dismiss, ruling that there was no res judicata; that the complaint stated a sufficient cause of
action to recover the deficiency; and that there was nothing to support the claim that the
obligation had been abandoned or extinguished apart from the respondents' contention that the
properties had been subjected to expropriation by the City of Manila.8

On November 4, 2003, the respondents moved for reconsideration, reiterating their grounds
earlier made in their motion to dismiss. 9
In turn, the petitioner adopted its comment/opposition to the motion to dismiss. 10

The respondents then filed their reply, 11 in which they raised for the first time their objection on
the ground of improper venue. They contended that the action for the recovery of the deficiency,
being a supplementary action of the extrajudicial foreclosure proceedings, was a real action that
should have been brought in the Manila RTC because Manila was the place where the
properties were located.12

On February 1, 2005, the Makati RTC denied the respondents' motion for reconsideration for its
lack of merit; and held on the issue of improper venue that:

It would be improper for this Court to dismiss the plaintiffs complaint on the ground of improper
venue, assuming that the venue is indeed improperly laid, since the said ground was not raised
in the defendant's Motion to Dismiss. On this point, it was held in the case of Malig, et al. vs.
Bush, L 22761, May 31, 1969 that "an action cannot be dismissed on a ground not alleged in
the motion therefore even if said ground, e.g., prescription, is provided in Rule 16. 13

Decision of the CA

Not satisfied, the respondents assailed the orders dated October 1 7, 2003 and February 1,
2005 by petition for certiorari.14 They submitted for consideration by the CA the following issues,
namely:

x x x (WHETHER OR NOT) RESPONDENT TRIAL COURT COMMITTED GRAVE ABUSE OF


DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT ISSUED ITS
ASSAILED ORDERS CONSIDERING THAT:

A THE COMPLAINT A QUO IS BARRED BY RES JUDICATA.

B. THE COMPLAINT STATED NO CAUSE OF ACTION.

C. PRIVATE RESPONDENT'S CLAIM HAS BEEN WAIVED, ABANDONED OR


OTHERWISE EXTINGUISHED.

D. VENUE WAS IMPROPERLY LAID. 15

On March 31, 2006, the CA granted the petition for certiorari of the respondents on the basis of
the fourth issue, opining:

xxxx

Thus, a suit for recovery of the deficiency after the foreclosure of a mortgage is in the nature of
a mortgage action because its purpose is precisely to enforce the mortgage contract; it is upon
a written contract and upon an obligation of the mortgage-debtor to pay the deficiency which is
created by law. As such, the venue of an action for recovery of deficiency must necessarily be
the same venue as that of the extrajudicial foreclosure of mortgage.

xxxx

In this regard, We take note that the parcels of land subject of the mortgage contract are located
in Tondo, Manila, under Transfer Certificates of Title Nos. 216331 and 216332. On the other
hand, the extrajudicial foreclosure of the real estate mortgage took place at the R TC of Manila
on January 28, 2003. Thus, the suit for judgment on the deficiency filed by respondent BPI
against petitioners Yujuico, being an action emanating from the foreclosure of the real estate
mortgage contract between them, must necessarily be filed also at the RTC of Manila, not at the
RTC of Makati.

x x x x 16

The CA denied the respondents' Motion for Partial Reconsideration and the petitioner's Partial
Motion for Reconsideration on December 7, 2006.17

Issues

Hence, this appeal by the petitioner, to assail the CA's dismissal of Civil Case No. 03-450 on the
ground of improper venue upon the following grounds,18 namely:

I.

WHETHER OR NOT THE HONORA.BLE COURT OF APPEALS' DENIAL OF THE


PETITIONER'S PARTIAL MOTION FOR RECONSIDERATION ON THE GROUND OF
IMPROPER VENUE AS A RESULT DISMISSED THE COMPLAINT FOR SUM OF MONEY IS
CONTRARY TO LAW.

II.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS['] ACT OF APPRECIATING


THE ADDITIONAL GROUND OF IMPROPER VENUE, ONLY RAISED IN THE MOTION FOR
RECONSIDERATION FILED IN THE LOWER COURT AFTER IT DENIED RESPONDENTS'
MOTION TO DISMISS, IS CONTRARY TO LAW AND JURISPRUDENCE.19

Ruling of the Court

We grant the petition for review on certiorari.

It is basic that the venue of an action depends on whether it is a real or a personal action. The
determinants of whether an action is of a real or a personal nature have been fixed by the Rules
of Court and relevant jurisprudence. According to Section 1, Rule 4 of the Rules of Court, a real
action is one that affects title to or possession of real property, or an interest therein. Thus, an
action for partition or condemnation of, or foreclosure of mortgage on, real property is a real
action. 20 The real action is to be commenced and tried in the proper court having jurisdiction
over the area wherein the real property involved, or a portion thereof, is situated, which explains
why the action is also referred to as a local action. In contrast, the Rules of Court declares all
other actions as personal actions. 21 such actions may include those brought for the recovery of
personal property, or for the enforcement of some contract or recovery of damages for its
breach, or for the recovery of damages for the commission of an injury to the person or
property.22 The venue of a personal action is the place 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, 23 for
which reason the action is considered a transitory one.

Based on the distinctions between real and personal actions, an action to recover the deficiency
after the extrajudicial foreclosure of the real property mortgage is a personal action, for it does
not affect title to or possession of real property, or any interest therein.

It is true that the Court has said in Caltex Philippines, Inc. v. Intermediate Appellate Court 24 that
"a suit for the recovery of the deficiency after the foreclosure of a mortgage is in the nature of a
mortgage action because its purpose is precisely to enforce the mortgage contract." However,
the CA erred in holding, upon the authority of Caltex Philippines, Inc., that the venue of Civil
Case No. 03 450 must necessarily be Manila, the same venue as that of the extrajudicial
foreclosure of mortgage. An examination of Caltex Philippines, Inc. reveals that the Court was
thereby only interpreting the prescriptive period within which to bring the suit for the recovery of
the deficiency after the foreclosure of the mortgage, and was not at all ruling therein on the
venue of such suit or on the nature of such suit being either a real or a personal action.

Given the foregoing, the petitioner correctly brought Civil Case No.03-450 in the Makati RTC
because Makati was the place where the main office of the petitioner was located.1avvphi1

Moreover, the Makati RTC observed, and the observation is correct in our view, that it would be
improper to dismiss Civil Case No. 03-450 on the ground of improper venue, assuming that the
venue had been improperly laid, considering that the respondents had not raised such ground in
their Motion to Dismiss. As earlier indicated, they came to raise the objection of improper venue
for the first time only in their reply to the petitioner's comment on their Motion for
Reconsideration. They did so belatedly.

We underscore that in civil proceedings, venue is procedural, not jurisdictional, and may be
waived by the defendant if not seasonably raised either in a motion to dismiss or in the
answer.25 Section 1, Rule 9 of the Rules of Court thus expressly stipulates that defenses and
objections not pleaded either in a motion to dismiss or in the answer are deemed waived. As it
relates to the place of trial, indeed, venue is meant to provide convenience to the parties, rather
than to restrict their access to the courts.26 In other words, unless the defendant seasonably
objects, any action may be tried by a court despite its being the improper venue.

WHEREFORE, we GRANT the petition for review on certiorari; REVERSE and SET ASIDE the
decision promulgated by the Court of Appeals on March 31, 2006; REINSTATE the orders
dated October 17, 2003 and February 1, 2005 of the Regional Trial Court, Branch 60, in Makati
City; and ORDER the respondents to pay the costs of suit.

SO ORDERED.

SECOND DIVISION

[G.R. No. 192877, March 23 : 2011] BR>


SPOUSES HERMES P. OCHOA AND ARACELI D. OCHOA, PETITIONERS, VS. CHINA
BANKING CORPORATION, RESPONDENT.

RESOLUTION

NACHURA, J.:

For resolution is petitioners' motion for reconsideration[1] of our January 17, 2011
Resolution[2] denying their petition for review on certiorari[3] for failing to sufficiently show any
reversible error in the assailed judgment[4] 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 parties[6] 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. 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.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

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.

SECOND DIVISION

G.R. No. 222711, August 23, 2017

LEY CONSTRUCTION AND DEVELOPMENT CORPORATION, REPRESENTED BY ITS


PRESIDENT, JANET C. LEY, Petitioner, v. MARVIN MEDEL SEDANO, DOING BUSINESS
UNDER THE NAME AND STYLE "LOLA TABA LOLO PATO PALENGKE AT PALUTO SA
SEASIDE," Respondent.

MARVIN MEDEL SEDANO, DOING BUSINESS UNDER THE NAME AND STYLE "LOLA
TABA LOLO PATO PALENGKE AT PALUTO SA SEASIDE," Respondent (THIRD-PARTY
PLAINTIFF), VS. PHILIPPINE NATIONAL CONSTRUCTION
CORPORATION, Respondent (THIRD-PARTY DEFENDANT).

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Orders dated June 15, 20152 and
January 27, 20163 of the Regional Trial Court (RTC) of Valenzuela City, Branch 75 (Valenzuela-
RTC) in Civil Case No. 40-V-12, which dismissed petitioner Ley Construction and Development
Corporation's (as represented by its President, Janet C. Ley; petitioner) complaint for collection
of sum of money and damages, without prejudice, on the ground of improper venue.

The Facts

On March 13, 2012, petitioner filed a Complaint for Collection of Sum of Money and
Damages4 against respondent Marvin Medel Sedano (respondent), doing business under the
name and style "Lola Taba Lolo Pato Palengke at Paluto sa Seaside," before the Valenzuela-
RTC, docketed as Civil Case No. 40-V-12. In its complaint, petitioner alleged that on January
14, 2005, it leased5 a 50,000-square meter (sq.m.) parcel of land located at Financial Center
Area, Pasay City (now, Lot 5-A Diosdado Macapagal Boulevard, Pasay City) from respondent
third-party defendant, the Philippine National Construction Corporation (PNCC).6 On September
11, 2006, petitioner subleased7 the 14,659.80-sq.m. portion thereof to respondent for a term
often (10) years beginning November 15, 2005, for a monthly rent of P1,174,780.00, subject to
a ten percent (10%) increase beginning on the third year and every year thereafter (lease
contract).8 Respondent allegedly failed to pay the rent due for the period August 2011 to
December 2011, amounting to a total of P8,828,025.46, and despite demands,9 refused to settle
his obligations;10 hence, the complaint.

In his Answer with Third-Party Complaint,11 respondent countered that he religiously paid rent to
petitioner until PNCC demanded12 that the rent be paid directly to it, in view of the petitioner's
eviction from the subject property by virtue of a court order.13 Thus, during the period from
August 2011 until December 2011, he remitted the rentals to PNCC.14 Should he be found liable
to petitioner, respondent maintained that the RTC should hold PNCC liable to reimburse to him
the amounts he paid as rentals; hence, the third-party complaint.15

Respondent likewise pointed out that the venue was improperly laid since Section 2116 of the
lease contract provides that "[a]ll actions or case[s] filed in connection with this case shall be
filed with the Regional Trial Court of Pasay City, exclusive of all others."17 Hence, the complaint
should be dismissed on the ground of improper venue.

Finally, respondent argued that he paid petitioner the amounts of P3,518,352.00 as deposit and
advance rentals under the lease contract, and that he made a P400,000.00 overpayment, all of
which amounts were not liquidated or credited to respondent during the subsistence of the lease
contract. Thus, respondent interposed a counterclaim, seeking petitioner to reimburse the said
amounts to him, and to pay him moral and exemplary damages, including litigation expenses, in
view of petitioner's filing of such baseless suit.18

In its Comment/Opposition19 to respondent's affirmative defense of improper venue, petitioner


argued that Section 21 of the lease contract is not a stipulation as to venue, but a stipulation on
jurisdiction which is void.20 This is because such stipulation deprives other courts, i.e., the
Municipal Trial Courts, of jurisdiction over cases which, under the law, are within its exclusive
original jurisdiction, such as an action for unlawful detainer.21 Petitioner further posited that
respondent had already submitted himself to the jurisdiction of the Valenzuela-RTC and had
waived any objections on venue, since he sought affirmative reliefs from the said court when he
asked several times for additional time to file his responsive pleading, set-up counterclaims
against petitioner, and impleaded PNCC as a third-party defendant.22

Meanwhile, in its Answer to Third Party Complaint with Counterclaim,23 PNCC contended that
respondent has no cause of action against it, since he acknowledged PNCC's right to receive
rent, as evidenced by his direqt payment thereof to PNCC.24 Respondent also entered into a
contract of lease with PNCC after learning that petitioner had been evicted from the premises by
virtue of a court ruling.25

The Valenzuela-RTC Ruling

In an Order26 dated June 15, 2015, the Valenzuela-RTC granted respondent's motion and
dismissed the complaint on the ground of improper venue. It held that Section 21 of the lease
contract between petitioner and respondent is void insofar as it limits the filing of cases with the
RTC of Pasay City, even when the subject matter jurisdiction over the case is with the
Metropolitan Trial Courts.27 However, with respect to the filing of cases cognizable by the RTCs,
the stipulation validly limits the venue to the RTC of Pasay City.28 Since petitioner's complaint is
one for collection of sum of money in an amount that is within the jurisdiction of the RTC,
petitioner should have filed the case with the RTC of Pasay City.29

The Valenzuela-RTC also found no merit in petitioner's claim that respondent waived his right to
question the venue when he filed several motions for extension of time to file his answer. It
pointed out that improper venue was among the defenses raised in respondent's Answer. As
such, it was timely raised and, therefore, not waived.30

Aggrieved, petitioner moved for reconsideration31 which was, however, denied by the
Valenzuela-RTC in its Order32 dated January 27, 2016; hence, the present petition.

The Issue Before the Court

The sole issue for the Court's resolution is whether or not the

Valenzuela-RTC erred in ruling that venue was improperly laid.

The Court's Ruling

The petition has no merit.

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

Section 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.

Section 3. Venue of actions against nonresidents. - If any of the defendants does not reside and
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.

Section 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. (Emphases supplied)
Based on these provisions, the venue for personal actions shall - as a general rule - lie with the
court which has jurisdiction where the plaintiff or the defendant resides, at the election of the
plaintiff.33 As an exception, parties may, through a written instrument, restrict the filing of said
actions in a certain exclusive venue.34 In Briones v. Court of Appeals,35 the Court
explained:chanRoblesvirtualLawlibrary
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 suit not 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 that
such stipulation is exclusive. 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.36
In Pilipino Telephone Corporation v. Tecson,37 the Court held that an exclusive venue stipulation
is valid and binding, provided that: (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.38

After a thorough study of the case, the Court is convinced that all these elements are present
and that the questioned stipulation in the lease contract, i.e., Section 21 thereof, is a valid venue
stipulation that limits the venue of the cases to the courts of Pasay City. It
states:chanRoblesvirtualLawlibrary

21. Should any of the party (sic) renege or violate any terms and conditions of
this lease contract, it shall be liable for damages. All actions or case[s] filed
in connection with this lease shall be filed with the Regional Trial Court of
Pasay City, exclusive of all others.39 (Emphases and underscoring supplied)

The above provision clearly shows the parties' intention to limit the place where actions or
cases arising from a violation of the terms and conditions of the contract of lease may be
instituted. This is evident from the use of the phrase "exclusive of all others" and the
specification of the locality of Pasay City as the place where such cases may be filed.

Notably, the fact that this stipulation generalizes that all actions or cases of the aforementioned
kind shall be filed with the RTC of Pasay City, to the exclusion of all other courts, does not mean
that the same is a stipulation which attempts to curtail the jurisdiction of all other courts. It is
fundamental that jurisdiction is conferred by law and not subject to stipulation of the
parties.40 Hence, following the rule that the law is deemed written into every contract,41 the said
stipulation should not be construed as a stipulation on jurisdiction but rather, one which merely
limits venue. Moreover, "[t]he parties are charged with knowledge of the existing law at the time
they enter into the contract and at the time it is to become operative."42 Thus, without any clear
showing in the contract that the parties intended otherwise, the questioned stipulation should be
considered as a stipulation on venue (and not on jurisdiction), consistent with the basic
principles of procedural law.

In this case, it is undisputed that petitioner's action was one for collection of sum of money in an
amount43 that falls within the exclusive jurisdiction of the RTC.44 Since the lease contract
already provided that all actions or cases involving the breach thereof should be filed with the
RTC of Pasay City, and that petitioner's complaint purporting the said breach fell within the
RTC's exclusive original jurisdiction, the latter should have then followed the contractual
stipulation and filed its complaint before the RTC of Pasay City. However, it is undeniable that
petitioner filed its complaint with the Valenzuela-RTC; hence, the same is clearly dismissible on
the ground of improper venue, without prejudice, however, to its refiling in the proper court.

That respondent had filed several motions for extension of time to file a responsive pleading, or
that he interposed a counterclaim or third-party complaint in his answer does not necessarily
mean that he waived the affirmative defense of improper venue. The prevailing rule on
objections to improper venue is that the same must be raised at the earliest opportunity, as in
an answer or a motion to dismiss; otherwise, it is deemed waived.45 Here, respondent timely
raised the ground of improper venue since it was one of the affirmative defenses raised in his
Answer with Third-Party Complaint.46 As such, it cannot be said that he had waived the same.

Further, it should be pointed out that the case of Pangasinan Transportation Co., Inc. v.
Yatco(Pantranco)47 cited in the instant petition48 should not apply to this case, considering that
the invocation of the ground of improper venue therein was not based on a contractual
stipulation, but rather on respondent Elpidio O. Dizon's alleged violation of the Rules of Court,
as he filed his case for damages before the Court of First Instance of Rizal, Branch IV (Quezon
City), despite testifying that he was actually a resident of Dagupan City. In that case, the Court
ruled that the filing of a counterclaim and third party-complaint, and additionally, the introduction
of evidence of petitioner Pantranco (respondent in the case for damages) after the denial of its
motion to dismiss on the ground of improper venue, "necessarily implied a submission to the
jurisdiction of [the trial court therein], and, accordingly, a waiver of such right as Pantranco may
have had to object to the venue, upon the ground that it had been improperly laid."49 The
rationale for the Pantranco ruling is that a party cannot invoke a violation of a rule on venue
against his counter-party, when he himself is bound by the same rule, but nonetheless, seeks
his own relief and in so doing, violates it.

In contrast, the counterclaim of respondent was alleged to be a compulsory


counterclaim,50 which he was prompted to file only because of petitioner's complaint for
collection of sum of money, else the same would be barred.51 In fact, his counterclaim only
sought reimbursement of his overpayment to petitioner in the amount of P400,000.00, as well as
damages for the filing of a purported baseless suit. Thus, his counterclaim is not covered by the
venue stipulation, since he is not asserting a violation of the terms and conditions of the lease
contract, but rather an independent right which arose only because of the complaint. The same
goes for his third-party complaint, whereby he only pleaded that the rental payments remitted to
PNCC for the period August 2011 to December 2011 be reimbursed to him in the event that
petitioner's complaint is found to be meritorious. Since his counterclaim and third-party
complaint are not covered by the venue stipulation, respondent had, therefore, every right to
invoke the same whilst raising the ground of improper venue against petitioner's complaint,
which action was, on the contrary, covered by the stipulation. Thus, there is no inconsistency in
respondent's posturing, which perforce precludes the application of the Pantranco ruling, as well
as negates the supposition that he had waived the defense of improper venue.

WHEREFORE, the petition is DENIED. Accordingly, the Orders dated June 15, 2015 and
January 27, 2016 of the Regional Trial Court of Valenzuela City, Branch 75 in Civil Case No. 40-
V-12 are hereby AFFIRMED.

SO ORDERED.

SECOND DIVISION

G.R. No. 217694, January 27, 2016

FAIRLAND KNITCRAFT CORPORATION, Petitioner, v. ARTURO LOO PO, Respondent.

DECISION

MENDOZA, J.:
This is a petition for review on certiorari1 seeking to reverse and set aside the October 31, 2014
Decision2and the March 6, 2015 Resolution3 of the Court of Appeals (CA), in CA-G.R. SP No.
134701 which affirmed the September 16, 2013 Decision4 of the Regional Trial Court of Pasig
City, Branch 67 (RTC) in SCA Case No. 3831. The RTC decision, in turn, sustained the March
21, 2013 Decision5 of the Metropolitan Trial Court, Branch 72, Pasig City (MeTC), which
dismissed the unlawful detainer case filed by petitioner Fairland Knitcraft Corporation (Fairland)
against respondent Arturo Loo Po (Po) for failure to prove its case by preponderance of
evidence.

The Antecedents

In a complaint6 for unlawful detainer, docketed as Civil Case No. 19429, filed before the MeTC,
Fairland alleged that it was the owner of Condominium Unit No. 205 in Cedar Mansion II on Ma.
Escriba Street, Pasig City. The said unit was leased by Fairland to Po by verbal agreement, with
a rental fee of P20,000.00 a month, to be paid by Po at the beginning of each month. From
March 2011, Po had continuously failed to pay rent. For said reason, Fairland opted not to
renew the lease agreement anymore.

On January 30, 2012, Fairland sent a formal letter7 to Po demanding that he pay the amount of
P220,000.00, representing the rental arrears, and that he vacate the leased premises within
fifteen (15) days from the receipt of the letter. Despite receipt of the demand letter and the lapse
of the said 15-day period to comply, Po neither tendered payment for the unpaid rent nor
vacated the premises. Thus, on December 12, 2012, Fairland was constrained to file the
complaint for unlawful detainer before the MeTC. Po had until January 7, 2013 to file his answer
but he failed to do so. Hence, on February 6, 2013, Fairland filed a motion to render judgment. 8

In its February 21, 2013 Order,9 the MeTC considered the case submitted for decision.

On March 1, 2013, Po's counsel filed his Entry of Appearance with Motion for Leave of Court to
file Comment/Opposition to Motion to Render Judgment.10 In the attached Comment/Opposition,
Po denied the allegations against him and commented that there was no supporting document
that would show that Fairland owned the property; that there was no lease contract between
them; that there were no documents attached to the complaint which would show that previous
demands had been made and received by him; that the alleged unpaid rental was P220,000.00,
but the amount of damages being prayed for was P440,000.00; that the issue in the case was
one of ownership; and that it was the RTC which had jurisdiction over the case.

The MeTC treated the comment/opposition as Po's answer to the complaint. Considering,
however, that the case fell under the Rules of Summary Procedure, the same was deemed filed
out of time. Hence, the motion was denied.11

The Ruling of the Metropolitan Trial Court

In its March 21, 2013 Decision, the MeTC dismissed the complaint for lack of merit due to
Fairland's failure to prove its claim by preponderance of evidence. The MeTC explained that
although the complaint sufficiently alleged a cause of action, Fairland failed to prove that it was
entitled to the possession of the subject property. There was no evidence presented to support
its claim against Po either.

Aggrieved, Fairland seasonably filed its appeal before the RTC under Rule 40 of the Rules of
Court. Being an appealed case, the RTC required the parties to submit their respective
memoranda.

In its memorandum,12 Fairland argued that an unlawful detainer case was a special civil action
governed by summary procedure. In cases where a defendant failed to file his answer, there
was no need for a declaration of default. Fairland claimed that the Rules stated that in such
cases, judgment should be based on the "facts alleged in the complaint,"13 and that there was
no requirement that judgment must be based on facts proved by preponderance of evidence.
Considering that the presentation of evidence was not required when a defendant in an
ejectment case failed to appear in a preliminary conference, the same should be applied when
no answer had been filed.

Fairland continued that the failure to file an answer in an ejectment case was tantamount to an
admission by the defendant of all the ultimate facts alleged in the complaint. There was no more
need for evidence in such a situation as every allegation of ultimate facts in the complaint was
deemed established by the defendant's acquiescence.

On July 18, 2013, Po filed his memorandum14 and countered that there was no merit in
Fairland's insistence that evidence was unnecessary when no answer had been filed. The facts
stated in the complaint did not warrant a rendition of judgment in the plaintiffs favor. The court
had the discretion to rule on the pleadings based on its evaluation of the allegation of facts.

Further, all the statements in the complaint were mere allegations which were not substantiated
by any competent evidence. Po asserted that there was no proof presented to show that the
subject property was indeed owned by Fairland; that there was no lease contract between the
parties; that he never received the demand letter, dated January 30, 2012; and that the amount
stated in the prayer of the complaint did not coincide with the amount of unpaid rent. Po also
reiterated that the case involved an issue of ownership over the condominium unit he was
occupying.

The Ruling of the Regional Trial Court

On September 16, 2013, the RTC affirmed the MeTC ruling and agreed that Fairland failed to
establish its case by preponderance of evidence. There was nothing on record that would
establish Fairland's right over the property subject of the complaint. Though it had been
consistently ruled that the only issue for resolution in an ejectment case was the physical or
material possession of the property involved, independent of any claim of ownership by any of
the party-litigants, the court may go beyond the question of physical possession provisionally.
The RTC concluded that even assuming that Po was not the lawful owner, his actual physical
possession of the subject property created the presumption that he was entitled to its
possession thereof.

Fairland filed a motion for reconsideration15 attaching its condominium certificate of title16 over
the subject property, but it was denied by the RTC in its Order,17 dated February 24, 2014.

Undaunted, Fairland filed a petition for review18 under Rule 42 of the Rules of Court before the
CA.

The Ruling of the Court of Appeals

In the assailed Decision, dated October 31, 2014, the CA dismissed the petition and ruled that
an action for unlawful detainer would not lie against Po. Notwithstanding the abbreviated
proceeding it ordained and the limited pleadings it allowed, the Rules on Summary Procedure
did not relax the rules on evidence. In order for an action for recovery of possession to prosper,
it was indispensable that he who brought the action should prove not only his ownership but
also the identity of the property claimed. The CA concluded, however, that Fairland failed to
discharge such bounden duty.

Fairland filed its motion for reconsideration, but it was denied by the CA in its assailed
Resolution, dated March 6, 2015.
Hence, this petition.

ARGUMENTS/DISCUSSIONS

IN AN EJECTMENT CASE WHEREIN NO ANSWER WAS SEASONABLY FILED, IT IS AN


ERROR OF LAW TO BASE JUDGMENT ON PREPONDERANCE OF EVIDENCE

II

HOLDING THAT EVIDENCE IN AN EJECTMENT CASE SHOULD HAVE BEEN ATTACHED


TO THE COMPLAINT IS AN ERROR OF LAW.19ChanRoblesVirtualawlibrary
Fairland argues that in ejectment cases, presentation of evidence was undertaken through the
submission of position papers but the same was dispensed with when the defendant failed to
file an answer or when either party failed to appear during the preliminary conference. In an
ejectment case, the scope of inquiry should be limited to the sufficiency of the cause of action
stated in the complaint when no seasonable answer was filed. The attachment of documentary
evidence to the Complaint was not a requirement and was even proscribed by law.

In his Comment,20 Po countered that the present petition raised a question of fact. Although
couched in different words, the issues raised here were substantially the same as the issues
raised before the CA. There was no legal basis in Fairland's assertion that evidence was
dispensed with when no answer to the complaint had been filed. Such argument would
undermine the inherent authority of the courts to resolve legal issues based on the facts of the
case and on the rules on evidence. Contrary to Fairland's position, the court decided the case
on the basis of the complaint which was found wanting in preponderance of evidence.

In its Reply,21 Fairland posited that the petition did not raise mere questions of fact but one of
law as what was being sought for review was the erroneous dismissal of the ejectment case for
lack of preponderance of evidence. Since no answer was filed and the complaint sufficiently
alleged a cause of action for unlawful detainer, it became the duty of the MeTC to decide the
case in its favor.

The Court's Ruling

The petition is meritorious.

Complaint has a valid cause of action for Unlawful Detainer

Section 1 of Rule 70 of the Rules of Court lays down the requirements for filing a complaint for
unlawful detainer, to wit:
Section 1. - Who may institute proceedings, and when. - Subject to the provision of the next
succeeding section, a person deprived of the possession of any land or building by force,
intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against
whom the possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession, by virtue of any contract, express or implied, or the
legal representatives or assigns of any such lessor, vendor, vendee, or other person, may, at
any time within one (l) year after such unlawful deprivation or withholding of possession, bring
an action in the proper Municipal Trial Court against the person or persons unlawfully
withholding or depriving of possession, or any person or persons claiming under them, for the
restitution of such possession, together with damages and costs.
Stated differently, unlawful detainer is a summary action for the recovery of possession of real
property. This action may be filed by a lessor, vendor, vendee, or other person from whom the
possession of any land or building is unlawfully withheld after the expiration or termination of the
right to hold possession by virtue of any contract, express or implied. The possession of the
defendant was originally legal, as his possession was permitted by the plaintiff on account of an
express or implied contract between them. The defendant's possession, however, became
illegal when the plaintiff demanded that the defendant vacate the subject property due to the
expiration or termination of the right to possess under the contract, and the defendant refused to
heed such demand. A case for unlawful detainer must be instituted one year from the unlawful
withholding of possession.22

A complaint sufficiently alleges a cause of action for unlawful detainer if it recites the following:
(1) initially, possession of the property by the defendant was by contract with or by tolerance of
the plaintiff; (2) eventually, such possession became illegal upon notice by the plaintiff to the
defendant of the termination of the latter's right of possession; (3) thereafter, the defendant
remained in possession of the property, and deprived the plaintiff of the enjoyment thereof; and
(4) within one (1) year from the last demand on defendant to vacate the property, the plaintiff
instituted the complaint for ejectment.23

There is no question that the complaint filed by Fairland adequately alleged a cause of action for
unlawful detainer. The pertinent portion of the said complaint reads:
xxx

3. Plaintiff is the owner of, and had been leasing to the defendant, the premises mentioned
above as the residence of the latter;

4. There is no current written lease contract between plaintiff and the defendant, but the latter
agreed to pay the former the amount of Php2o,ooo.oo as rent at the beginning of each month.
Thus, the term of the lease agreement is renewable on a month-to-month basis;

5. Since March 2011, defendant has not been paying the aforesaid rent despite plaintiffs
repeated demands;

6. Due to defendant's continuous failure to pay rent, plaintiff reached a decision not to renew the
lease agreement. It sent a formal letter, x x x demanding defendant to pay the amount of
Php220,000.00, representing defendant's twelve month rental arrears beginning January 2011,
and to vacate the leased premises, both within fifteen (15) days from receipt of said letter;

7. Despite receipt of the aforesaid demand letter and lapse of the fifteen day period given to
comply with plaintiffs demand, defendant neither tendered payment for the unpaid rent nor
vacated the leased premises. Worse, defendant has not been paying rent up to now;

x x x24ChanRoblesVirtualawlibrary
The above-cited portions of the complaint sufficiently alleged that Fairland was the owner of the
subject property being leased to Po by virtue of an oral agreement. There was a demand by
Fairland for Po to pay rent and vacate before the complaint for unlawful detainer was instituted.
The complaint was seasonably filed within the one-year period prescribed by law. With all the
elements present, there was clearly a cause of action in the complaint for unlawful detainer.

Under the Rules of Summary Procedure, the weight of evidence is not considered when a
judgment is rendered based on the complaint

The question now is whether the MeTC correctly dismissed the case for lack of preponderance
of evidence. Fairland posits that judgment should have been rendered in its favor on the basis
of the complaint itself and not on its failure to adduce proof of ownership over the subject
property.
The Court agrees with Fairland's position.

The summons, together with the complaint and its annexes, was served upon Po on December
28, 2012. This presupposes that the MeTC found no ground to dismiss the action for unlawful
detainer.25Nevertheless, Po failed to file his answer on time and the MeTC had the option to
render judgment motu proprio or on motion of the plaintiff. In relation thereto, Sections 5 and 6
of the Rules on Summary Procedure provide:
Sec. 5. Answer. - Within ten (10) days from service of summons, the defendant shall file his
answer to the complaint and serve a copy thereof on the plaintiff. Affirmative and negative
defenses not pleaded therein shall be deemed waived, except for lack of jurisdiction over the
subject matter. Cross-claims and compulsory counterclaims not asserted in the answer shall be
considered barred. The answer to counterclaims or cross-claims shall be filed and served within
ten (10) days from service of the answer in which they are pleaded.

Sec. 6. Effect of failure to answer. - Should the defendant fail to answer the complaint within the
period above provided, the court, motu proprio or on motion of the plaintiff, shall render
judgment as may be warranted by the facts alleged in the complaint and limited to what
is prayed for therein. The court may in its discretion reduce the amount of damages and
attorney's fees claimed for being excessive or otherwise unconscionable, without prejudice to
the applicability of Section 4, Rule 18 of the Rules of Court, if there are two or more defendants.

[Emphasis supplied]
Section 6 is clear that in case the defendant failed to file his answer, the court shall render
judgment, either motu proprio or upon plaintiffs motion, based solely on the facts alleged in
the complaint and limited to what is prayed for. The failure of the defendant to timely file his
answer and to controvert the claim against him constitutes his acquiescence to every allegation
stated in the complaint. Logically, there is nothing to be done in this situation26 except to render
judgment as may be warranted by the facts alleged in the complaint.27

Similarly, under Section 7, Rule 70 of the Rules of Court, which governs the rules for forcible
entry and unlawful detainer, if the defendant fails to answer the complaint within the period
provided, the court has no authority to declare the defendant in default. Instead, the court, motu
proprio or on motion of the plaintiff, shall render judgment as may be warranted by the facts
alleged in the complaint and limited to what is prayed for.28

This has been enunciated in the case of Don Tino Realty and Development Corporation v.
Florentino,29citing Bayog v. Natino,30 where the Court held that there was no provision for an
entry of default under the Rules of Summary Procedure if the defendant failed to file his answer.

In this case, Po failed to file his answer to the complaint despite proper service of summons. He
also failed to provide a sufficient justification to excuse his lapses. Thus, as no answer was filed,
judgment must be rendered by the court as may be warranted by the facts alleged in the
complaint.

Failure to attach annexes is not fatal if the complaint alleges a sufficient cause of action;
evidence need not be attached to the complaint

The lower courts erroneously dismissed the complaint of Fairland simply on the ground that it
failed to establish by preponderance of evidence its ownership over the subject property. As can
be gleaned above, the rules do not compel the plaintiff to attach his evidence to the complaint
because, at this inception stage, he only has to file his complaint to establish his cause of
action. Here, the court was only tasked to determine whether the complaint of Fairland alleged a
sufficient cause of action and to render judgment thereon.

Also, there was no need to attach proof of ownership in the complaint because the allegations
therein constituted a sufficient cause of action for unlawful detainer. Only when the allegations
in the complaint are insufficient to form a cause of action shall the attachment become material
in the determination thereof. Even under Section 4 of the Rules of Summary Procedure,31 it is
not mandatory to attach annexes to the complaint.

In the case of Lazaro v. Brewmaster32 (Lazaro), where judgment was rendered based on the
complaint due to the failure of the defendant to file an answer under the Rules of Summary
Procedure, it was written that:
x x x To determine whether the complaint states a cause of action, all documents attached
thereto may, in fact, be considered, particularly when referred to in the complaint. We
emphasize, however, that the inquiry is into the sufficiency, not the veracity of the
material allegations in the complaint. Thus, consideration of the annexed documents
should only be taken in the context of ascertaining the sufficiency of the allegations in
the complaint.

[Emphasis supplied]
In Lazaro, the assailed invalid invoices attached to the complaint were not considered because
the complaint already alleged a sufficient cause of action for collection of sum of money. Those
assailed documents were not the bases of the plaintiffs action for sum of money, but were only
attached to the complaint to provide evidentiary details on the alleged transactions.

Similarly, in the case at bench, there was no need for documentary attachments to prove
Fairland's ownership over the subject property. First, the present action is an action for unlawful
detainer wherein only de facto or material possession is required to be alleged. Evidently, the
attachment of any deed of ownership to the complaint is not indispensable because an action
for unlawful detainer does not entirely depend on ownership.

Second, Fairland sufficiently alleged ownership and superior right of possession over the
subject property. These allegations were evidently manifest in the complaint as Fairland claimed
to have orally agreed to lease the property to Po. The Court is of the view that these allegations
were clear and unequivocal and did not need supporting attachments to be considered as
having sufficiently established its cause of action. Even the MeTC conceded that the complaint
of Fairland stated a valid cause of action for unlawful detainer.33 It must be stressed that inquiry
into the attached documents in the complaint is for the sufficiency, not the veracity, of the
material allegations in the complaint.

Third, considering that Po failed to file an answer within the prescribed period, he was deemed
to have admitted all the allegations in the complaint including Fairland's claim of ownership. To
reiterate, the failure of the defendant to timely file his answer and controvert the claim against
him constituted his acquiescence to every allegation stated in the complaint.

In the Entry of Appearance with Motion for Leave of Court to file Comment/Opposition to Motion
to Render Judgment, which was belatedly filed and so was denied by the MeTC, Po merely
denied the allegations against him without even bothering to aver why he claimed to have a
superior right of possession of the subject property.34

Fourth, it is only at the later stage of the summary procedure when the affidavits of witnesses
and other evidence on factual issues shall be presented before the court. Sections 8 and 9 of
the Rules on Summary Procedure state:
Sec. 8. Record of preliminary conference. - Within five (5) days after the termination of the
preliminary conference, the court shall issue an order stating the matters taken up therein, x x x

Sec. 9. Submission of affidavits and position papers. - Within ten (10) days from receipt of the
order mentioned in the next preceding section, the parties shall submit the affidavits of their
witnesses and other evidence on the factual issues defined in the order, together with their
position papers setting forth the law and the facts relied upon by them.

[Emphasis supplied]
Again, it is worth stressing that these provisions are exactly Sections 9 and 10 under Rule 70 of
the Rules of Court.

Accordingly, it is only at this part of the proceedings that the parties will be required to present
and offer their evidence before the court to establish their causes and defenses. Before the
issuance of the record of preliminary conference, the parties are not yet required to present their
respective evidence.

These specific provisions under the Rules of Summary Procedure which are also reflected in
Rule 70 of the Rules of Court, serve their purpose to immediately settle ejectment proceedings.
"Forcible entry and unlawful detainer cases are summary proceedings designed to provide for
an expeditious means of protecting actual possession or the right to possession of the property
involved. It does not admit of a delay in the determination thereof. It is a 'time procedure'
designed to remedy the situation.35 Thus, as a consequence of the defendant's failure to file an
answer, the court is simply tasked to render judgment as may be warranted by the facts alleged
in the complaint and limited to what is prayed for therein.

As the complaint contains a valid cause of action, a judgment can already be rendered

In order to achieve an expeditious and inexpensive determination of unlawful detainer cases, a


remand of this case to the lower courts is no longer necessary and the case can be determined
on its merits by the Court.

To recapitulate, as Po failed to file his answer on time, judgment shall be rendered based only
on the complaint of Fairland without the need to consider the weight of evidence. As discussed
above, the complaint of Fairland had a valid cause of action for unlawful detainer.

Consequently, there is no more need to present evidence to establish the allegation of Fairland
of its ownership and superior right of possession over the subject property. Po's failure to file an
answer constitutes an admission of his illegal occupation due to his non-payment of rentals, and
of Fairland's rightful claim of material possession. Thus, judgment must be rendered finding that
Fairland has the right to eject Po from the subject property.

The Judicial Affidavit Rule

On a final note, the Court deems it proper to discuss the relevance of the Judicial Affidavit Rule
or A.M. No. 12-8-8-SC, where documentary or object evidence are required to be attached. To
begin with, the rule is not applicable because such evidence are required to be attached to a
judicial affidavit, not to a complaint. Moreover, as the rule took effect only on January 1, 2013, it
cannot be required in this case because this was earlier filed on December 12, 2012.

Granting that it can be applied retroactively, the rule being essentially remedial, still it has no
bearing on the ruling of this Court.

In the Judicial Affidavit Rule, the attachments of documentary or object evidence to the affidavits
is required when there would be a pre-trial or preliminary conference or the scheduled
hearing. As stated earlier, where a defendant fails to file an answer, the court shall render
judgment, either motu proprio or upon plaintiffs motion, based solely on the facts alleged in the
complaint and limited to what is prayed for. Thus, where there is no answer, there is no need for
a pre-trial, preliminary conference or hearing. Section 2 of the Judicial Affidavit Rule reads:
Section 2. Submission of Judicial Affidavits and Exhibits in lieu of direct testimonies. - (a) The
parties shall file with the court and serve on the adverse party, personally or by licensed courier
service, not later than five days before pre-trial or preliminary conference or the scheduled
hearing with respect to motions and incidents, the following:

(1) The judicial affidavits of their witnesses, which shall take the place of such witnesses'
direct testimonies; and

(2) The parties' documentary or object evidence, if any, which shall be attached to the
judicial affidavits and marked as Exhibits A, B, C, and so on in the case of the
complainant or the plaintiff, and as Exhibits 1, 2, 3, and so on in the case of the
respondent or the defendant.
(b) Should a party or a witness desire to keep the original document or object evidence in his
possession, he may, after the same has been identified, marked as exhibit, and authenticated,
warrant in his judicial affidavit that the copy or reproduction attached to such affidavit is a faithful
copy or reproduction of that original. In addition, the party or witness shall bring the original
document or object evidence for comparison during the preliminary conference with the
attached copy, reproduction, or pictures, failing which the latter shall not be admitted.

This is without prejudice to the introduction of secondary evidence in place of the original when
allowed by existing rules.
WHEREFORE, the petition is GRANTED. The October 31, 2014 Decision and the March 6,
2015 Resolution of the Court of Appeals in CA-G.R. SP No. 134701 are
hereby REVERSED and SET ASIDE. Respondent Arturo Loo Po is ORDERED TO
VACATE Condominium Unit No. 205 located in Cedar Mansion II on Ma. Escriba Street, Pasig
City.

Respondent Po is further ORDERED TO PAY the rentals-in-arrears, as well as the rentals


accruing in the interim until he vacates the property. The unpaid rentals shall incur a legal
interest of six percent (6%) per annum from January 30, 2012, when the demand to pay and to
vacate was made, up to the finality of this decision. Thereafter, an interest of six percent (6%)
per annum shall be imposed on the total amount due until full payment is made.

SO ORDERED.chanroblesvirtuallawlibrary