Saraza v. Francisco
REITERATIONFacts
The Antecedents: Respondent William Francisco (Francisco) filed an amended complaint against petitioners Spouses Teodoro and Rosario Saraza and Fernando Saraza. Francisco alleged that on September 1, 1999, he and Fernando executed an Agreement for the sale of Fernando's 100-square meter share in a lot in Makati City for ₱3,200,000.00. Francisco paid ₱1,200,000.00 upon execution, with the balance of ₱2,000,000.00 to be paid to Philippine National Bank (PNB) to cover Spouses Saraza's loan. A final deed of sale was to be executed by Fernando upon full loan payment. The Agreement also stipulated that should the property not be transferred, Spouses Saraza's 136-sq m property (TCT No. 156126), encumbered to PNB, would serve as collateral. Francisco was allowed immediate possession of this collateral property via a lease contract. Petitioners authorized Francisco to pay their PNB loan, negotiate restructuring, and receive the owner's duplicate copy of TCT No. 156126 upon full payment. When the loan balance was ₱226,582.13, petitioners denied Francisco's request for a Special Power of Attorney (SPA) to claim the TCT. Francisco discovered petitioners had executed an Amended Authority to return the owner's copy to the mortgagors and caused his eviction from the collateral property. This prompted Francisco to file a civil case for specific performance, sum of money, and damages. Procedural History: The Regional Trial Court (RTC) of Imus, Cavite, Branch 20, ruled in favor of Francisco, ordering Fernando to execute a Deed of Absolute Sale, deliver the owner's copy of TCT No. 220530, pay taxes for the transfer, and pay damages, attorney's fees, and costs. The RTC found that Francisco had fully paid the ₱3,200,000.00 consideration, supported by the Agreement's acknowledgment of the ₱1,200,000.00 initial payment and PNB's certification of full loan payment. Fernando appealed to the Court of Appeals (CA), arguing lack of jurisdiction as the property was in Makati City. The CA affirmed the RTC's decision, rejecting the claim of unpaid ₱1,200,000.00 and holding that the case was a personal action, thus proper in the residence of the plaintiff or defendant. Fernando's motion for reconsideration was denied. The Petition: Petitioners filed a petition for review on certiorari with the Supreme Court, assailing the CA's decision and resolution.
Issue(s)
Whether or not the petitioners are bound to comply with their obligations to the respondent as embodied in their Agreement dated September 1, 1999. Whether the RTC of Imus, Cavite, had jurisdiction over the case, considering the action for specific performance and the property's location in Makati City.
Ruling
The Supreme Court affirmed the Court of Appeals' decision with modification, deleting the award of ₱100,000.00 as damages. The Court ruled that petitioners are bound to comply with their obligations under the Agreement dated September 1, 1999, and that the venue for the action for specific performance was properly laid in the RTC of Imus, Cavite.
Ratio Decidendi
On the obligation to comply with the Agreement: The Court held that the respondent had fully satisfied his obligation under the Agreement. This was supported by the stipulation in the document acknowledging the initial payment of ₱1,200,000.00 and PNB's certification that the ₱2,000,000.00 loan of Spouses Saraza had been fully settled. The petitioners' denial of receiving the initial payment was unsubstantiated and contradicted by the notarized Agreement, which enjoys a presumption of regularity. The Court also noted that the petitioners' claim that the Agreement was a contract of adhesion and that they did not understand English were defenses raised for the first time on appeal, which are generally not allowed. The parol evidence rule also barred the admission of unsubstantiated testimony tending to vary the terms of the written agreement. Therefore, Fernando, being bound by the terms of the Agreement, was correctly ordered to execute the deed of sale. On the venue of the action: The Court reiterated that an action for specific performance is a personal action, not a real action, even if it involves the transfer of real property. This is because the primary objective is to compel the performance of an obligation arising from a contract, not to recover ownership or possession. Citing Cabutihan v. Landcenter Construction & Development Corporation, the Court explained that personal actions may be commenced and tried where the plaintiff or any of the principal defendants resides, at the plaintiff's election. Since the respondent resided in Imus, Cavite, the filing of the case with the RTC of Imus was proper. The Court distinguished this from cases where the primary objective is the recovery of real property, which are real actions governed by the location of the property. The petitioners' argument regarding jurisdiction was therefore misplaced.
Main Doctrine
A case for specific performance, even if it involves the transfer of real property, is considered a personal action and may be filed in the court where the plaintiff or any of the principal defendants resides, at the election of the plaintiff, provided it does not primarily seek to recover ownership or possession of the property but rather to compel the execution of a deed of sale based on a prior contract.