Philippine Bank of Communications v. Lim
REITERATIONFacts
The Antecedents: Respondents Elena Lim, Ramon Calderon, and Tri-Oro International Trading & Manufacturing Corporation (Tri-Oro) obtained a loan from petitioner Philippine Bank of Communications (PBCom). As security for existing and future loans, respondents executed a continuing surety agreement. The most recent loan renewal was evidenced by a Promissory Note (PN) for P3,000,000.00, which stipulated that any legal action arising from it must be filed exclusively in Makati City. Respondents failed to pay the loan upon maturity. PBCom foreclosed a real estate mortgage executed by respondents, valued at P1,081,600.00, leaving a deficiency balance of P4,014,297.23 as of August 31, 1999. Procedural History: PBCom filed a collection case against respondents with the Regional Trial Court (RTC) of Manila, seeking the deficiency balance. Respondents moved to dismiss the complaint on the ground of improper venue, citing the exclusive venue stipulation in the Promissory Note. The RTC denied the motion, reasoning that PBCom had separate causes of action arising from the Promissory Note and the continuing surety agreement, and thus venue was properly laid in Manila. The RTC's denial was reiterated upon a motion for reconsideration. On appeal, the Court of Appeals (CA) granted respondents' petition, annulling and setting aside the RTC's orders and dismissing the case without prejudice to its refiling in the stipulated venue of Makati City. The Petition: Petitioner PBCom filed a Petition for Review under Rule 45 of the Rules of Court, assailing the CA's decision. Petitioner argues that the CA erred in ruling that the venue stipulation in the Promissory Note also applied to the surety agreement, which was silent on the matter of venue. Petitioner contends that it had two separate causes of action: one based on the Promissory Note and another on the surety agreement. It asserts that under Section 5 of Rule 2 of the Rules of Civil Procedure, the joinder of these causes of action was permissible in Manila, as one of the causes of action fell within the jurisdiction of the RTC and venue lay therein. Petitioner seeks the reversal of the CA's decision, asserting that the CA departed from the accepted and usual course of judicial proceedings.
Issue(s)
Whether the Court of Appeals decided the issue of venue in a way not in accord with law and applicable decisions of the Supreme Court; and whether a restrictive stipulation on venue in a promissory note extends to a surety agreement supporting it.
Ruling
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that the restrictive stipulation on venue in the promissory note applies to the surety agreement. Therefore, the case should have been filed in Makati City, as stipulated by the parties, to the exclusion of all other courts. The dismissal of the case by the CA was upheld, without prejudice to its refiling in the proper venue.
Ratio Decidendi
On the issue of venue and the applicability of the stipulation in the promissory note to the surety agreement: The Court affirmed the ruling of the Court of Appeals that the restrictive stipulation on venue in the promissory note applies to the surety agreement. The Court explained that suretyship is an accessory contract, merely collateral to the principal obligation. Applying the "complementary-contracts-construed-together" doctrine, an accessory contract must be read in its entirety and together with the principal agreement. The Court emphasized that the "no-segregation principle" is based on Article 1374 of the Civil Code, which mandates that various stipulations of a contract shall be interpreted together. In this case, the surety agreement was entered into to facilitate the loan agreement documented by the promissory note, making the circumstances surrounding their issuance intertwined. Therefore, it was illogical to argue that the parties to the surety agreement were not bound by the stipulations in the promissory note, especially since the promissory note was a contract of adhesion prepared by the bank. The legal action against the sureties arose not only from the surety agreement but also from the promissory note itself, thus the venue stipulation in the latter should govern. The Court rejected the petitioner's argument that it had separate causes of action, stating that while there were indeed two causes of action, this did not affect the venue, as both causes of action were restricted to Makati City. The Court also rejected the plea for liberality in applying the rules on venue, noting that the promissory note was a contract of adhesion and any ambiguities should be construed against the preparer, which was the petitioner. The Court concluded that the inconvenience and delay were a result of the petitioner's own actions in failing to observe the rules on venue.
Main Doctrine
A restrictive stipulation on the venue of actions contained in a promissory note applies to the surety agreement supporting it, because the nature of the two contracts and the factual circumstances surrounding their execution are intertwined or interconnected, with the surety agreement being merely an accessory to the principal loan agreement.