BPI Family Savings Bank, Inc. v. Spouses Yujuico
REITERATIONFacts
The Antecedents: On August 22, 1996, the City of Manila initiated an expropriation action against respondents for five parcels of land in Tondo, Manila. Two of these parcels, previously mortgaged to Citytrust Banking Corporation (petitioner's predecessor-in-interest), were subject to a First Real Estate Mortgage Contract. The Regional Trial Court in Manila (Manila RTC) ruled in favor of expropriation on June 30, 2000, a decision that became final and executory. After the petitioner's motion to intervene in the execution was denied as untimely, it proceeded to extrajudicially foreclose the mortgage on the two parcels. The sheriff awarded these lots to the petitioner for P10,000,000.00. Claiming a deficiency of P18,522,155.42, the petitioner filed a suit against the respondents to recover this amount. Procedural History: The respondents moved to dismiss the petitioner's complaint in the Makati Regional Trial Court (Makati RTC) on grounds of res judicata, lack of cause of action, and waiver or extinguishment of the claim. The Makati RTC denied this motion on October 17, 2003. The respondents moved for reconsideration, and in their reply, raised for the first time the issue of improper venue, arguing that the action, being supplementary to the foreclosure, should have been filed in Manila where the properties are located. The Makati RTC denied this motion for reconsideration on February 1, 2005, holding that the venue objection was not timely raised. The respondents then filed a petition for certiorari with the Court of Appeals (CA), challenging the Makati RTC's orders. On March 31, 2006, the CA granted the petition, setting aside the Makati RTC's orders and dismissing the case on the ground of improper venue. The Petition: BPI Family Savings Bank, Inc. (petitioner) seeks review of the CA's decision through a petition for certiorari under Rule 45 of the Rules of Court. The petitioner argues that the CA erred in dismissing the complaint for the recovery of the deficiency on the ground of improper venue. Specifically, the petitioner contends that the CA's appreciation of the improper venue, an issue raised belatedly by the respondents in their motion for reconsideration before the lower court, is contrary to law and jurisprudence. The petitioner asserts that an action to recover a deficiency after extrajudicial foreclosure is a personal action, and thus, the venue was properly laid in Makati, where the petitioner's main office is located. Furthermore, the petitioner argues that the respondents waived their objection to venue by failing to raise it in their initial motion to dismiss.
Issue(s)
Whether the Court of Appeals erred in dismissing the complaint for recovery of deficiency on the ground of improper venue. Whether the Court of Appeals erred in appreciating the additional ground of improper venue, which was raised for the first time in the respondents' motion for reconsideration.
Ruling
The Supreme Court granted the petition for review on certiorari, reversed and set aside the decision of the Court of Appeals, and reinstated the orders of the Regional Trial Court, Branch 60, in Makati City. The respondents were ordered to pay the costs of suit.
Ratio Decidendi
On the Issue of Venue for Deficiency Recovery: The Court held that an action to recover the deficiency after the extrajudicial foreclosure of a real property mortgage is a personal action. This is because such an action does not affect the title to or possession of real property, or any interest therein, which are the defining characteristics of a real action under Section 1, Rule 4 of the Rules of Court. Personal actions, on the other hand, encompass those brought for the enforcement of a contract or recovery of damages, and their venue is generally the residence of the plaintiff or defendant, as provided in Section 2, Rule 4 of the Rules of Court. The Court clarified that while the case of Caltex Philippines, Inc. v. Intermediate Appellate Court mentioned a suit for deficiency recovery as being in the nature of a mortgage action to enforce the contract, this interpretation was solely for the purpose of determining the prescriptive period and did not rule on the venue or the nature of the action as real or personal. Therefore, the petitioner correctly filed the action in the Makati RTC, where its main office was located. On the Issue of Waiver of Venue Defense: The Court affirmed the Makati RTC's observation that it would be improper to dismiss the case on the ground of improper venue, even if it were indeed improperly laid, because this ground was not raised in the respondents' initial motion to dismiss. The respondents raised the objection of improper venue for the first time in their reply to the petitioner's comment on their motion for reconsideration, which was considered belated. The Court emphasized that venue is procedural, not jurisdictional, and may be waived by the defendant if not seasonably raised either in a motion to dismiss or in the answer, as stipulated in Section 1, Rule 9 of the Rules of Court. Defenses and objections not pleaded are deemed waived. Venue is intended for the convenience of the parties, and unless seasonably objected to, an action may be tried by a court despite being the improper venue.
Main Doctrine
An action to recover the deficiency after the extrajudicial foreclosure of a real property mortgage is a personal action, and thus its venue is determined by the residence of the parties, not by the location of the property. Furthermore, the defense of improper venue, if not seasonably raised, is deemed waived.