Ochoa v. China Banking Corp.
REITERATIONFacts
The Antecedents: Petitioners Spouses Hermes P. Ochoa and Araceli D. Ochoa filed a complaint for Annulment of Foreclosure, Sale, and Damages before the Regional Trial Court (RTC) of Parañaque City. The parties had previously stipulated an exclusive venue of Makati City for any legal action arising from their mortgage agreement. Procedural History: The respondent, China Banking Corporation, filed a Petition for Extrajudicial Foreclosure of Mortgage with the same RTC of Parañaque City, concerning the mortgaged real property located in Parañaque City. The RTC of Parañaque City entertained the foreclosure petition despite the stipulation of venue in Makati City. The Petition: Petitioners moved for reconsideration of the Supreme Court's Resolution denying their petition for review on certiorari, arguing that the Court of Appeals (CA) erred in ruling that the stipulated exclusive venue of Makati City was binding only on their complaint and not on the respondent bank's Petition for Extrajudicial Foreclosure.
Issue(s)
Whether the stipulated exclusive venue of Makati City applies to the respondent bank's Petition for Extrajudicial Foreclosure of Mortgage. Whether an extrajudicial foreclosure of mortgage is considered an "action" under the Rules of Court.
Ruling
The motion for reconsideration is DENIED. The Court held that the stipulated exclusive venue of Makati City is binding only on actions arising from or related to the mortgage, such as the petitioners' complaint for Annulment of Foreclosure, Sale, and Damages, but not on the respondent bank's Petition for Extrajudicial Foreclosure of Mortgage.
Ratio Decidendi
On Whether the stipulated exclusive venue of Makati City applies to the respondent bank's Petition for Extrajudicial Foreclosure of Mortgage: The Court ruled that the venue for extrajudicial foreclosure sales is governed by Act No. 3135, as amended by Act No. 4118. Section 2 of Act No. 3135 explicitly states that the sale cannot be made legally outside the province in which the property is situated, and if a place within the province is stipulated, the sale shall be made in that place or in the municipal building of the municipality where the property is located. In this case, the mortgaged property is in Parañaque City, thus the sale must be made in Parañaque City. The stipulation of Makati City as an exclusive venue, sanctioned by Section 4, Rule 4 of the Rules of Court, pertains to the venue of "actions" and cannot be made to apply to an extrajudicial foreclosure, which is not considered an action under the Rules of Court. Therefore, the stipulated venue does not govern the extrajudicial foreclosure proceedings. On Whether an extrajudicial foreclosure of mortgage is considered an "action" under the Rules of Court: The Court clarified that an "action" is defined as "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." Unlike an action, an extrajudicial foreclosure of a 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. The pronouncements in Supena v. De la Rosa were reiterated, emphasizing that the office of the sheriff is not a court of justice, and the administrative supervision exercised by the Executive Judge does not transform extrajudicial foreclosures into judicial proceedings, actions, or suits. This was further confirmed by A.M. No. 99-10-05-0, which prescribes procedures for extra-judicial foreclosure filed with the Executive Judge through the Clerk of Court, who is also the Ex-Officio Sheriff. Thus, an extrajudicial foreclosure is not an "action" in the legal sense contemplated by the Rules of Court concerning venue.
Main Doctrine
The venue for extrajudicial foreclosure of real estate mortgage is governed by Act No. 3135, as amended, and not by the general provisions of the Rules of Court on venue of actions, unless the stipulation of venue specifically includes extrajudicial foreclosure proceedings.