GR 192877; (March, 2011) (Digest)
G.R. No. 192877 ; March 23, 2011
SPOUSES HERMES P. OCHOA and ARACELI D. OCHOA, Petitioners, vs. CHINA BANKING CORPORATION, Respondent.
FACTS
Petitioners Spouses Ochoa filed a motion for reconsideration of the Supreme Court’s January 17, 2011 Resolution, which denied their petition for review on certiorari. The petition assailed the Court of Appeals (CA) judgment. The core dispute centered on the applicability of a stipulated exclusive venue clause in a mortgage contract. The mortgage contract (Paragraph 16) stipulated that any action for foreclosure or any other action arising from the mortgage must be filed in the Regional Trial Court (RTC) of Makati City. Petitioners argued that this exclusive venue clause should bind not only their own complaint for “Annulment of Foreclosure, Sale, and Damages” (which they filed in the RTC of Parañaque City) but also the respondent bank’s “Petition for Extrajudicial Foreclosure of Mortgage,” which was filed with the Office of the Clerk of Court/Ex-Officio Sheriff in Parañaque City, where the mortgaged property is located.
ISSUE
Whether the stipulated exclusive venue of Makati City applies to an extrajudicial foreclosure of mortgage proceeding, thereby rendering the respondent bank’s petition filed in Parañaque City improper.
RULING
The Supreme Court DENIED the motion for reconsideration and held that the stipulated exclusive venue of Makati City does not apply to an extrajudicial foreclosure proceeding.
1. Extrajudicial foreclosure is governed by Act No. 3135 , as amended, not by the Rules of Court on venue of actions. Sections 1 and 2 of Act No. 3135 mandate that the sale under a special power of attorney in a real estate mortgage must be made within the province where the property is situated. Since the mortgaged property in this case is in Parañaque City, the extrajudicial foreclosure sale could only be made there.
2. An extrajudicial foreclosure is not an “action” as defined by the Rules of Court. The Court cited Supena v. De la Rosa, which defines an “action” as an ordinary suit filed in a court of justice. An extrajudicial foreclosure is initiated by filing a petition with the office of the sheriff (or the Clerk of Court/Ex-Officio Sheriff, as per A.M. No. 99-10-05-0), which is not a court of justice. Therefore, Rule 4 of the Rules of Court on “Venue of Actions” is inapplicable.
3. The exclusive venue stipulation applies only to judicial actions. The stipulated venue clause in the mortgage contract is binding only for judicial actions filed in court, such as the petitioners’ complaint for annulment. It cannot supersede the specific statutory venue requirement for extrajudicial foreclosure sales under the special law, Act No. 3135 .
Consequently, the respondent bank correctly filed its Petition for Extrajudicial Foreclosure in Parañaque City, and the CA did not err in its ruling.