G.R. No. 254787. April 26, 2023.
LUCILLE B. ODILAO, REPRESENTED BY ARIEL B. ODILAO, PETITIONER, VS. UNION BANK OF THE PHILIPPINES, RESPONDENT.

FACTS

Petitioner Lucille B. Odilao, represented by her son Ariel B. Odilao, filed a Complaint for reformation of mortgage, nullity of foreclosure, damages, and attorney’s fees with temporary restraining order and preliminary injunction against respondent Union Bank of the Philippines and the Register of Deeds of Davao City before the Regional Trial Court (RTC) of Davao City. The complaint prayed for the reformation of the loan and mortgage agreements, which petitioner alleged were contracts of adhesion that did not reflect the true mutual intention of the parties. Specifically, petitioner sought reforms concerning the sending of demands and notices, interest rates, penalties, and the venue of suits. Respondent bank moved to dismiss the complaint on the ground of improperly laid venue, citing stipulations in the loan documents that any action arising from the agreements should be filed in the courts of Pasig City. The RTC granted the motion and dismissed the complaint, ruling that the venue stipulations were restrictive and that the action could not be heard in Davao City absent the bank’s express option to litigate there. The Court of Appeals affirmed the RTC’s dismissal. Petitioner filed the present Petition for Review on Certiorari, arguing that the dismissal based on improper venue was erroneous, citing jurisprudence that venue stipulations are not controlling when the contract itself is assailed and that stipulations granting an exclusive option to choose venue are void.

ISSUE

Whether the Court of Appeals erred in affirming the dismissal of the complaint on the ground of improper venue.

RULING

Yes. The Supreme Court granted the petition, reversed the assailed Decision and Resolution of the Court of Appeals, and reinstated the complaint. The Court held that the dismissal on the ground of improperly laid venue was erroneous. The Real Estate Mortgage contained a restrictive venue stipulation stating: “The venue of all suits and actions arising out of or in connection with this Mortgage shall be Pasig City or in the place where any of the Mortgaged properties are located, at the absolute option of the Mortgagee, the parties hereto waiving any other venue.” The Court found this stipulation to be restrictive, limiting venue to either Pasig City or the location of the mortgaged property. Since the mortgaged property was located in Davao City, filing the complaint there complied with the stipulation. The trial court and the CA misinterpreted the phrase “at the absolute option of the Mortgagee” to mean that petitioner needed to obtain the bank’s express manifestation of its chosen venue before filing. The Court clarified that such an interpretation would leave the petitioner at the mercy of the bank and unduly restrict the right to litigate. The phrase is significant only when the bank is the plaintiff filing the case. Rules on venue are intended for the convenience of the parties and should not curtail the right to file an action. Therefore, the RTC of Davao City was a proper venue, and the complaint should not have been dismissed. The case was remanded to the trial court for further proceedings.