PAGLAUM MANAGEMENT AND DEVT CORP.

AND HEALTH MARKETING

TECHNOLOGIES,INC., VS UNION BANK OF THE PHILIPPINES
[April 17, 2013]
SERENO, J.
Doctrine/subject: When the rules on venue do not apply
FACTS:
Paglaum Management and Development Corporation (PAGLAUM) is the registered owner of
three parcels of land located in the Province of Cebu with Benjamin B. Dy, the president of
petitioner Health Marketing Technologies, Inc. (HealthTech) as co-owner. On 3 February 1994,
Union Bank of the Philippines (Union Bank) extended HealthTech a credit line in the amount of
P 10,000,000 which was eventually increased to 36,500,000. This was secured by three real
estate mortgage on the lands.
The venue in the real estate mortgage was stipulated to be in Makati, Metro Manila or in the
place where any of the Mortgaged Properties is located (Cebu), at the absolute option of the
Mortgagee, the parties hereto waiving any other venue. Unfortunately, Healthtech is having
difficulties on paying its obligation. They both executed a Restructuring Agreement whereby it
states that that any action or proceeding arising out of or in connection therewith shall be
commenced in Makati City, with both parties waiving any other venue.
Healthtech still defaulted on the obligation. Union Bank foreclosed the properties through an
auction sale, bought it as the sole bidder as secured a Certificate of Sale. Healthcare filed a
complaint for annulment of sale and titles on the RTC of MAKATI. The RTC ruled in favor of
Healthtech and restrained restraining Union Bank from proceeding with the auction sale. Union
Bank filed a Motion to Dismiss citing lack of jurisdiction and improper venue. RTC of Makati
granted Union Banks motion to dismiss. CA affirmed Makati RTC.
Union Bank argues that the Restructuring Agreement only pertains to the loan and does not
affect the stipulations in the real mortgage which states that it has the option to choose the
venue. Healthtech argues the restructuring agreement also carries with it the venue for the
settlement of cases for the real mortgages. Hence, this appeal to the Supreme Court.
ISSUE:
Whether or not RTC Makati is a proper venue for the case
RULING:
YES.
The Supreme Court held that an action to annul a real estate mortgage foreclosure sale is no
different from an action to annul a private sale of real property. Therefore, this case falls under
Rule 4. The general rule in Rule 4 is that the venue is on where the property is located.
However, among the exceptions is where the parties have validly agreed in writing before the
filing of the action on the exclusive venue thereof. The Supreme Court adds that the mere
stipulation on the venue of an action, however, is not enough to preclude parties from bringing a

case in other venues. The parties must be able to show that such stipulation is exclusive.
Failure to do so would result to the parties stipulating additional venues for the case.
In the case at bar, both the stipulation in the Real Estate Mortgage and the Restructuring
Agreement have words of exclusivity. The Supreme Court held that the Restructuring
Agreement should prevail as this modified the entire loan obligation. The later Restructuring
Agreement reveals the intention of the parties to implement a restrictive venue stipulation, which
applies not only to the principal obligation, but also to the mortgages.