G.R. No. 136423 ; August 20, 2002
SPOUSES EFREN N. RIGOR and ZOSIMA D. RIGOR, for themselves and as owners of CHIARA CONSTRUCTION, petitioners, vs. CONSOLIDATED ORIX LEASING and FINANCE CORPORATION, respondent.

FACTS

Petitioners obtained a loan from respondent and executed a promissory note on July 31, 1996, promising to pay in 24 monthly installments. The promissory note contained a venue provision stating that “all legal actions arising out of this note or in connection with the chattels subject hereof shall only be brought in or submitted to the proper court in Makati City, Philippines.” To secure the loan, petitioners executed a deed of chattel mortgage over two dump trucks. The deed of chattel mortgage contained a different venue provision, stating that “in case of litigation arising out of the transaction that gave rise to this contract, complete jurisdiction is given the proper court of the city of Makati or any proper court within the province of Rizal, or any court in the city, or province where the holder/mortgagee has a branch office, waiving for this purpose any proper venue.”
Petitioners defaulted on several installments. Respondent filed a complaint for Replevin with Damages before the Regional Trial Court (RTC) of Dagupan City, where it has a branch office. Petitioners moved to dismiss the complaint on the ground of improper venue, arguing that under the promissory note, venue was exclusively in Makati City. Respondent opposed, citing the alternative venue provision in the deed of chattel mortgage. The RTC denied the motion to dismiss, and the Court of Appeals affirmed the RTC’s orders. Hence, this petition.

ISSUE

Whether venue was properly laid in the Dagupan City RTC under the provisions of the chattel mortgage contract, in light of Article 1374 of the Civil Code, considering the conflicting venue provisions in the promissory note and the deed of chattel mortgage.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Decision of the Court of Appeals, holding that venue was properly laid in the Dagupan City RTC.
The Court ruled that the promissory note (the principal contract) and the deed of chattel mortgage (the accessory contract) must be interpreted together as one agreement. The chattel mortgage is an accessory contract that cannot exist independently from the principal loan obligation. Following Article 1374 of the Civil Code, the various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly. Therefore, the venue provisions in both documents must be reconciled.
While the promissory note’s venue clause (“shall only be brought in… Makati City”) appears restrictive, the deed of chattel mortgage provides alternative venues, including “any court in the city, or province where the holder/mortgagee has a branch office.” This alternative provision in the accessory contract effectively modifies the venue stipulation in the principal contract. To give effect to both contracts and avoid rendering the chattel mortgage’s venue clause meaningless, the broader venue stipulation allowing suit where the mortgagee has a branch office (Dagupan City) must be given effect. The convenience of the parties also supports this interpretation, as the loan was negotiated and concluded in Dagupan City, and petitioners reside in nearby Tarlac.
The Court also noted that petitioners failed to specifically deny under oath the genuineness and due execution of the promissory note and deed of chattel mortgage, as required by the Rules of Court, thereby deemed admitting these documents. Furthermore, the Court found no merit in petitioners’ claim that the contracts were contracts of adhesion, as they did not present evidence to show they were not given the opportunity to question the stipulations.