FIRST DIVISION

ADORACION PAGUYO, A.M. No. P-06-2135

Complainant, (Formerly OCA I.P.I. No. 05-2281-P)
Present:

PUNO, C.J., Chairperson,

SANDOVAL-GUTIERREZ,
- versus - *
CORONA,
AZCUNA, and
GARCIA, JJ.

Promulgated:
CHARLIE S. GATBUNTON,
May 25, 2007
Respondent.

x------------------------------------------------------------------------------------x

D E C I S I ON

GARCIA, J.:

This is an administrative complaint for grave abuse of authority and/or

gross ignorance of the law filed by complainant Adoracion Paguyo against
the herein respondent Charlie S. Gatbunton, Sheriff IV of the Regional Trial
Court (RTC), Branch 4, Balanga, Bataan. The complaint stemmed from
respondents alleged irregular extrajudicial foreclosure of a real estate
mortgage constituted on the property of complainant Adoracion Paguyo and
her husband Danilo S. Paguyo, Sr.

As culled from the record, the antecedent facts are as follows:

On September 9, 2002, the spouses Danilo Paguyo, Sr. and Adoracion
Paguyo, by way of security for a loan of P20,000.00 which they obtained
from Jeanlyns Lending Investor, executed in favor of the latter a Deed of
Real Estate Mortgage[1] over their residential property located in
Mariveles, Bataan.

On February 11, 2003, an application for the extrajudicial

foreclosure[2] of the aforesaid mortgage pursuant to Act 3135, as amended,
was filed with the Regional Trial Court, Branch 4, Balanga, Bataan by the
spouses Celso Garcia and Jenelita Garcia, owners and operators of Jeanlyns
Lending Investor, it being alleged thereunder that the Paguyo spouses
defaulted in the payment of their loan obligation and the interests due
thereon since January 9, 2003.

Thereafter, a Notice of Sheriffs Sale[3] was issued by the respondent,

therein setting the public auction sale of the mortgaged realty on April 11,
2003. The notice was posted on February 24, 2003 and subsequently
published in Sierra Pacific News in its issues of March 12, 15 and 19, 2003.
[4]
However, instead of the auction sale being held onApril 11, 2003, as
announced, the same was actually conducted by the respondent
on December 1, 2003 with Jenelita Garcia emerging as the highest bidder. [5]

Claiming that the conduct by the respondent sheriff of the extrajudicial

foreclosure proceedings against their property was highly irregular and
patently illegal, complainant Adoracion Paguyo filed with the Office of the
Court Administrator (OCA) the basic sworn letter-complaint [6] in this case,
charging respondent with grave abuse of authority and/or gross ignorance
of the law. In said letter-complaint, docketed as OCA IPI No. 05-2281,
complainant Adoracion Paguyo essentially alleged that the loan obligation
secured by the real estate mortgage in question, including all interest due,
was already fully paid by her and her husband even before the Garcia
spouses filed the application for extrajudicial foreclosure; that the
respondent sheriff has no authority to extrajudicially foreclose the mortgage
because no special power of attorney is attached to or incorporated in the
Deed of Real Estate Mortgage authorizing the extrajudicial foreclosure of the
mortgage pursuant to Act 3135, as amended; and the extrajudicial
foreclosure, assuming it could be done, was nonetheless fatally defective
since there was no republication of the sheriffs Notice of Sale vis-a-vis the
auction conducted on December 1, 2003.

In his Comment[7] to the complaint, the respondent sheriff denied the

charges against him, claiming that it is his ministerial duty to proceed with
the auction sale of the mortgaged property because it has already been
approved by the Ex-Officio Provincial Sheriff and Acting Clerk of Court,
Priscilla S. Salazar. He added that the application for extrajudicial
foreclosure was sufficient in form and substance since it is stated therein
that the Paguyos violated the conditions of the mortgage contract by
defaulting in the payment of their loan obligation. As regards the auction
sale having been conducted on December 1, 2003 and not on the date it
was originally set, respondent explained that after the posting and
publication of the Notice of Sheriffs Sale which set the auction on April 11,
2003, the spouses Garcia requested him for the deferment of the auction to
enable the Paguyos to settle their loan obligation but nonetheless failed;
that thereafter the Garcias asked him to proceed with the auction sale but
he relented and gave the Paguyos a 15-day grace period to settle their
obligation but still failed, prompting him to reschedule and conduct the
auction on December 1, 2003, after reposting the Notice of Sheriffs Sale and
informing the Paguyos about it.

In its Report[8] of January 4, 2006, the OCA finds no basis to hold the
respondent liable for his failure to check if the deed of real estate mortgage
in question incorporates a Special Power of Attorney authorizing the
mortgagee to extrajudicially foreclose the mortgage in case the debtor fails
to pay the obligation upon its maturity. On the same breath, however, the
OCA faults the respondent sheriff for conducting the auction sale of the
mortgaged property on December 1, 2003 without republishing the Notice
of Sheriffs Sale with the corresponding change in the date of the auction.
The OCA thus recommended the re-docketing of the case as a regular
administrative matter and that respondent be penalized to pay a fine
of P10,000 for gross ignorance of the law with a warning that repetition of
the same or similar offense shall be dealt with more severely.

In its Resolution of March 6, 2006,[9] the Court ordered the re-docketing of

the case as an administrative matter, and, via a separate resolution of the
same date, required the parties to manifest if they are willing to submit the
case for resolution based on the pleadings on record. In their respective
manifestations,[10] the parties agreed.
We partly concur with the OCA.

Proceedings for the extrajudicial foreclosure of real estate mortgage are

governed by Act 3135, as amended, entitled An Act To Regulate The Sale of
Property Under Special Powers Inserted In or Annexed to Real Estate
Mortgages. Under Section 1 of the Act, extrajudicial foreclosure sales are
proper only when so provided under a special power inserted in or attached
to the mortgage contract.
While the Deed of Real Estate Mortgage in this case contains no special
power authorizing the Garcia spouses as mortgagees to extrajudicially
foreclose the mortgage in case the Paguyos defaulted in their loan
obligation, nonetheless, the respondent sheriff cannot be held
administratively liable for proceeding with the extrajudicial foreclosure of
the mortgage in question.
Concededly, it is provided for in Administrative Order No. 3 series of
1984 (re: Procedure in Extrajudicial Foreclosure of Mortgage) [11] that it is the
sheriffs duty to examine if the application for extrajudicial foreclosure of real
estate mortgage has complied with the requirements under Section 4 of Act
3135, as amended. However, amendments had already been introduced to
Administrative Order No. 3 by making it the specific duty of the Clerk of
Court to examine applications for extrajudicial foreclosure of mortgages.
[12]
The very recent amendment is now provided for in Circular No. 7-
2002[13] issued on January 22, 2002 and which became effective on April 22,
2002.Sections 1 and 2(a) of said Circular specifically state that:

Sec. 1. All applications for the extrajudicial foreclosure of mortgage whether

under the direction of the Sheriff or a notary public pursuant to Act No. 3135,
as amended, and Act No. 1508, as amended shall be filed with the Executive
Judge, through the Clerk of Court, who is also the Ex-Officio Sheriff. (A.M. No.
99-10-05-0, as amended, March 1, 2001).

Sec. 2. Upon receipt of the application, the Clerk of Court shall:

a. Examine the same to insure that the special power of

attorney authorizing the extrajudicial foreclosure of the
real property is either inserted into or attached to the
deed of real estate mortgage. (Act No. 3135, Sec. 1, as
amended) (Emphasis ours)
 We note that in this case, the application for extrajudicial foreclosure
was filed on February 11, 2003, obviously after the amendment of
Administrative Order No. 3. Hence, the duty to examine said application to
determine whether the deed of mortgage contains or incorporates a special
power authorizing the spouses Garcia to extrajudicially foreclose the
mortgage in the event of nonpayment of the loan by the Paguyos devolved
upon the Clerk of Court, not on the respondent sheriff. Hence, respondent
cannot be held administratively liable for proceeding with the foreclosure
sale.

However, for his having conducted the auction sale of the mortgaged
property on December 1, 2003 without causing the republication of Notice
of Sheriffs Sale with the new auction date, the Court holds the respondent
sheriff liable, not for gross ignorance of the law as recommended by the
OCA because there is no such administrative offense, but for inefficiency
and incompetence in the performance of his official duties under Section
52(A)(16) of the Revised Uniform Rules on Administrative Cases in the Civil
Service.

Section 4(b) of the same Circular 7-2002 is explicit that the sheriff shall
cause the publication of the Notice of Sheriffs Sale in a newspaper of
general circulation in the municipality or city where the property is
situated. In full, said Section 4(b) states:

Sec. 4. The sheriff to whom the application for extrajudicial foreclosure

of mortgage was raffled shall do the following:

a. x x x

b. (1) In case of foreclosure of real estate mortgage, cause the

publication of the notice of sale by posting it for not less than twenty (20)
days in at least three (3) public places in the municipality or city where the
property is situated and if such property is worth more than four hundred
(P400.00) pesos, by having such notice published once a week for at least
three (3) consecutive weeks in a newspaper of general circulation in the
municipality or city (Sec. 3, Act No. 3135, as amended). x x x
In Development Bank of the Philippines v. Court of Appeals, [14] the
Court emphasized the need for the republication of the Notice of
Sheriffs Sale of a postponed extrajudicial sale for the latters validity. In that
case, we held, citing Ouano v. CA:[15]

x x x republication in the manner prescribed by Act No. 3135 is necessary for

the validity of a postponed extrajudicial foreclosure sale. Another publication
is required in case the auction sale is rescheduled, and the absence of such
republication invalidates the foreclosure sale.

xxx xxx xxx

Publication, therefore, is required to give the foreclosure sale a

reasonably wide publicity such that those interested might attend the public
sale. To allow the parties to waive this jurisdictional requirement would result
in converting into a private sale what ought to be a public auction.
 Here, the only Notice of Sheriffs Sale which was published in Sierra
Pacific News refers to the scheduled sheriffs sale on April 11, 2003. Nowhere
is there any record to show that a new Notice of Sheriffs Sale for
the December 1, 2003 auction sale was actually published. Likewise, while
respondent sheriff explained the reason for his deferment of the auction
sale on the originally scheduled date, none whatsoever was proffered by
him regarding his failure to publish a new notice for the rescheduled date of
the auction.

Time and time again, this Court has reminded sheriffs that, as court
employees, they must conduct themselves with propriety and decorum -
their actions must be above suspicion at all times. As we emphasized
in Tagaloguin v. Hingco, Jr.:[16]

x x x the conduct and behavior of everyone connected with an office

charged with the dispensation of justice, from the presiding judge to the
sheriff down to the lowliest clerk should be circumscribed with the heavy
burden of responsibility. Their conduct, at all times, must be characterized
with propriety and decorum, but above all else, must be above and beyond
suspicion.For every employee of the judiciary should be an example of
integrity, uprightness and honesty.

Thus, for failing to do what was incumbent upon him under the law,
which was to publish in a newspaper of general circulation the notice of the
rescheduled auction sale of the mortgaged real property, we find
respondent sheriff to have been inefficient and incompetent in the
performance of his official duties, an offense punishable under Section 52(A)
(16) of the Revised Uniform Rules on Administrative Cases in the Civil
Service (Civil Service Commission Resolution No. 991936) with suspension
of six (6) months and one (1) day to one (1) year for the first offense.
WHEREFORE, respondent Charlie S. Gatbunton, Sheriff IV of the RTC,
Branch 4, Balanga, Bataan, is administratively found GUILTY of inefficiency
and incompetence in the performance of his official duties and meted the
penalty of SUSPENSION for six (6) months and one (1) day without pay
with a stern WARNING that a repetition of the same or similar act shall be
dealt with more severely.

SO ORDERED.

[1]
Rollo, p. 6.
[2]
Id. at 9.
[3]
Id. at 10.
[4]
Id. at 11.
[5]
Id. at 12.
[6]
Id. at 1-5.
[7]
Id. at 17-22.
[8]
Id. at 44-47.
[9]
Id. at 49.
[10]
Id. at 50-51.
[11]
Administrative Order No. 3, Series of 1984, pertinently provides the following:
TO: ALL EXECUTIVE JUDGES AND CLERKS OF COURT OF THE
REGIONAL TRIAL COURTS
SUBJECT: Procedure in Extrajudicial Foreclosure of Mortgage
xxx xxx xxx
1. All applications for extrajudicial foreclosure of mortgage under Act 3135, as amended by Act 4118, and
Act 1508, as amended, shall be filed with the Executive Judge, through the Clerk of Court who is
also the Ex-Oficio Sheriff;
2. Upon receipt of an application for extrajudicial foreclosure of mortgage, it shall be the duty
of the Office of the Sheriff to:
a) receive and docket said application and to stamp the same with the corresponding file
number and date of filing;
b) collect the filing fees therefor and issue the corresponding official receipt;
c) examine, in case of real estate mortgage foreclosure, whether the applicant has
complied with all the requirements before the public auction is conducted
under its direction or under the direction of a notary public, pursuant to
Section 4 of Act 3135, as amended;
xxx xxx xxx. (Emphasis Ours);
[12]
In Administrative Matter No. 99-10-05-0 dated December 14, 1999 as amended March 1, 2001 and
further amended August 7, 2001, it is pertinently provided that:
1. All applications for extrajudicial foreclosure of mortgage whether under the direction of the
sheriff or a notary public, pursuant to Act 3135, as amended by Act 4118, and Act 1508, as
amended, shall be filed with the Executive Judge, through the Clerk of Court, who is also the Ex-
Officio Sheriff.
2. Upon receipt of an application for extrajudicial foreclosure of mortgage, it shall be the
duty of the Clerk of Court to:
xxx xxx xxx
c) examine, in case of real estate mortgage foreclosure, whether the applicant has
complied with all the requirements before the public auction is conducted under the
direction of the sheriff or a notary public, pursuant to Sec. 4 of Act 3135, as amended;
xxx xxx xxx. (Emphasis Ours)
[13]
Guidelines for the Enforcement of Supreme Court Resolution of December 14, 1999 in Administrative
Matter No. 99-10-05-0 (re Procedure in Extrajudicial Foreclosure of Mortgage), as amended by the
Resolutions dated January 30, 2001 andAugust 7, 2001.
[14]
G.R. No. 125838, June 10, 2003, 403 SCRA 460, 469, 470.
[15]
G.R. No. 129279, March 4, 2003, 398 SCRA 525.
[16]
A.M. No. P-05-2008, June 21, 2005, 460 SCRA 360, 373 .

FIRST DIVISION

[A.M. No. RTJ-93-1031. January 28, 1997]

RODRIGO B. SUPENA, petitioner, vs. JUDGE ROSALIO G. DE LA

ROSA, respondent.

DECISION
HERMOSISIMA, JR., J.:

In his verified complaint dated June 16, 1993, Mr. Rodrigo B. Supena, President of
Mortgagee BPI Agricultural Development Bank (BAID, for short), charges respondent
Judge Rosalio G. de la Rosa with gross ignorance of the law for issuing an unlawful Order,
dated May 25, 1993, in Foreclosure Case No. 93-822, entitled, "BPI Agricultural
Development Bank v. PQL Realty Incorporated." The Order in effect held in abeyance the
public auction sale set on May 26, 1993, per Notice of Extrajudicial Sale of one (1) parcel
of land, together with the building and all the improvements existing thereon, described
and covered by TCT No. 112644 of the Registry of Deeds of Manila, on the basis of a
mere Ex-Parte Motion to Hold Auction Sale in Abeyance filed by Mortgagor, PQL Realty
Incorporated (PQL, for short).
The antecedent facts are as follows:
On April 1, 1993, mortgagee BAID decided to extrajudicially foreclose the Real Estate
Mortgage executed by mortgagor PQL in the former's favor. Accordingly, BAID
[1]

petitioned theEx-Officio Sheriff of Manila to take the necessary steps for the foreclosure
of the mortgaged property and its sale to the highest bidder.
On April 21, 1993, Jesusa P. Maningas, the Clerk of Court and Ex-Officio Sheriff of
Manila, issued a Notice of Extrajudicial Sale, scheduling the public auction sale on May
26, 1993 at 10:00 o'clock a.m. in front of the City Hall Building, Manila. Said notice was
subsequently published in the People's Journal Tonight on May 4, 11 and 19, 1993.
However, on May 25, 1993, or one day before the scheduled sale, the Hon. Rosalio G.
de la Rosa, in his capacity as Executive Judge of the Regional Trial Court of Manila, issued
an Order holding in abeyance the scheduled public auction sale, on the basis of a
mere ex-parte motion filed by PQL, a copy of which was received by mortgagee-
complainant only on May 31, 1993. Complainant avers that, said order is, for all practical
intents and purposes, a restraining order for an indefinite period, issued without the
proper case being filed and without the benefit of notice and hearing, or even an
injunction bond from which the mortgagee may seek compensation and restitution for
the damages it may suffer by reason of the improper cancellation of the auction sale.
The only ground relied upon by the ex-parte Motion, "that the parties have agreed to
hold the foreclosure proceedings in Makati and not in Manila," is patently without merit,
according to the complainant, as the venue of foreclosure proceedings is fixed by law
and cannot be subject of stipulation. In sum, complainant submits that the actuations of
respondent judge in granting the ex-parte motion of mortgagor were without basis and
highly suspicious.
Respondent, in his comment, maintains that he held in abeyance the extrajudicial
foreclosure and sale of the property mortgaged supposed to be held on May 26, 1993
and instead scheduled the same for hearing on June 16, 1993 (which however did not
transpire), to determine two issues: first, whether the venue in Foreclosure Proceeding
No. 93-822 was improperly laid in light of the stipulation in the "Loan Agreement" duly
entered into by both parties and acknowledged before a Notary Public which provides:

"14) VENUE OF ACTIONS Any action or suit brought under this Agreement or
any other documents related hereto shall be instituted in the proper Courts of
Makati, Metro Manila, Republic of the Philippines." [2]

and, secondly, in order to determine the veracity of the mortgagor's allegation

that the Five Hundred Thousand Pesos (P500,000.00) paid to BPI Agri-Bank last
January, 1993 does not reflect and does not appear to have been credited or
deducted from the accounts of mortgagor. It was, allegedly, under the principle
of fair play, equity and substantial justice which compelled him to issue the
Order dated May 25, 1993. [3]

We find the respondent judge culpable as charged.

Any judge, worthy of the robe he dons, or any lawyer, for that matter, worth his salt,
ought to know that different laws apply to different kinds of sales under our
jurisdiction. We have three different types of sales, namely: an ordinary execution sale, a
judicial foreclosure sale, and an extrajudicial foreclosure sale. An ordinary execution sale
is governed by the pertinent provisions of Rule 39 of the Rules of Court on Execution,
Satisfaction and Effect of Judgments. Rule 68 of the Rules, captioned Foreclosure of
Mortgage, governs judicial foreclosure sales. On the other hand, Act No. 3135, as
amended by Act No. 4118, otherwise known as "An Act to Regulate the Sale of Property
under Special Powers Inserted in or Annexed to Real Estate Mortgages," applies in cases
of extrajudicial foreclosure sales of real estate mortgages.
[4]

The case at bench involves an extrajudicial foreclosure sale of a real estate mortgage
executed by mortgagor PQL in favor of mortgagee BAID. If the main concern of
respondent judge in holding in abeyance the auction sale in Manila scheduled on May 26,
1993 was to determine whether or not venue of the execution sale was improperly laid,
he would have easily been enlightened by referring to the correct law, definitely not the
Rules of Court, which is Act No. 3135, as amended particularly Sections 1 and 2, viz:

"SECTION 1. When a sale is made under a special power inserted in or

attached to any real estate mortgage hereafter made as security for the
payment of money or the fulfillment of any other obligation, the provisions of
the following sections shall govern as to the manner in which the sale and
redemption shall be effected, whether or not provision for the same is made in
the power.

SEC. 2. Said sale cannot be made legally outside of the province in which the
property sold is situated; and in case the place within said province in which
the sale is to be made is the subject of stipulation, such sale shall be made in
said place or in the municipal building of the municipality in which the property
or part thereof is situated."

Here, the real property subject of the sale is situated in Felix Huertas Street, Sta.
Cruz, Manila. Thus, by express provision of Section 2, the sale cannot be made outside
[5]

of Manila.Moreover, were the intention of the parties be considered with respect to

venue in case the properties mortgaged be extrajudicially foreclosed, they even
unequivocably stipulated in the Deed of Real Estate Mortgage itself under paragraph 15
that:
"xxx xxx xxx

It is hereby agreed that in case of foreclosure of this mortgage under Act 3135,
as amended by Act 4118, the auction sale, in case of properties situated in the
province, shall be held at the capital thereof." [6]

Respondent judge, therefore, had no valid reason to entertain any doubt as to the
propriety of the venue of the auction sale in Manila. The law as well as the intention of
the parties cannot be more emphatic in this regard.
Respondent judge, however, refers to the venue stipulation in the Loan Agreement
signed by the parties to the effect that, "Any action or suit brought under this Agreement
or any other documents related hereto shall be instituted in the proper courts of Makati x
x x." And under the pertinent provisions of Rule 4 of the Rules of Court on Venue of
[7]

Actions, which provide:

"Sec. 2. Venue in Courts of First Instance (a) Real actions. Actions affecting title
to, or for recovery of possession, or partition or condemnation of,
or foreclosure of mortgage on, real property, shall be commenced and tried in
the province where the property or any part thereof lies.

Sec. 3. Venue by agreement. By written agreement of the parties the venue of

an action may be changed or transferred from one province to another."

venue of the auction sale should have been laid in Makati as mutually agreed upon by
the parties.
Again, in this regard, we reiterate that the law in point here is Act No. 3135, as
amended, which is a special law, dealing particularly on extrajudicial foreclosure sales of
real estate mortgages, and not the general provisions of the Rules of Court on Venue of
Actions. In fact, even Section 5, Rule 4, is quite explicit in stating that:
"When rule not applicable. This rule shall not apply in those cases where a
specific rule or law provides otherwise."

The failure of respondent to recognize this is an utter display of ignorance of the law to
which he swore to maintain professional competence. Furthermore, provisions quoted
[8]

by respondent under Rule 4 pertains to the venue of actions, which an extrajudicial

foreclosure is not. Section 1, Rule 2 defines an action in this wise:

"Action means 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."

Hagans v. Wislizenus does not depart from this definition when it states that "[A]n
[9]

action is a formal demand of one's legal rights in a court of justice in the manner
prescribed by the court or by the law. x x x." It is clear that the determinative or
operative fact which converts a claim into an "action or suit" is the filing of the same with
a "court of justice." Filed elsewhere, as with some other body or office not a court of
justice, the claim may not be categorized under either term. Unlike an action, an
[10]

extrajudicial foreclosure of 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
[11]

be made. By no stretch of the imagination can the office of the sheriff come under the
category of a court of justice. And as aptly observed by the complainant, if ever the
executive judge comes into the picture, it is only because he exercises administrative
supervision over the sheriff. But this administrative supervision, however, does not
change the fact that extrajudicial foreclosures are not judicial proceedings, actions or
suits.
Granting arguendo that an extrajudicial foreclosure sale can be classified as an
"action or suit" (which it is not) and that the venue stipulation in the Loan Agreement
would gain relevance, respondent judge still committed a grievous error in holding the
auction sale in abeyance due to improper laying of venue. We again quote the subject
stipulation for easy reference, to wit:

"14) VENUE OF ACTIONS Any action or suit brought under this Agreement or
any other documents related hereto shall be instituted in the proper Courts of
Makati, Metro Manila, Republic of the Philippines."

Written stipulations as to venue are either mandatory or permissive. In interpreting

stipulations, inquiry must be made as to whether or not the agreement is restrictive in
the sense that the suit may be filed only in the place agreed upon or merely permissive
in that the parties may file their suits not only in the place agreed upon but also in the
places fixed by the rules. [12]

In Polytrade Corporation v. Blanco, [13]

the stipulation on venue there involved read:

"The parties agree to sue and be sued in the Courts of Manila."

The Court, in ruling that venue had been properly laid in the then Court of First Instance
of Bulacan (the place of defendant's residence), said:

"x x x. An accurate reading, however, of the stipulation, 'The parties agree to

sue and be sued in the Courts of Manila,' does not preclude the filing of suits in
the residence of plaintiff or defendant. The plain meaning is that the parties
merely consented to be sued in Manila. Qualifying or restrictive words which
would indicate that Manila and Manila alone is the venue are totally absent
therefrom. We cannot read into that clause that plaintiff and defendant bound
themselves to file suits with respect to the last two transactions in question
only or exclusively in Manila. For, that agreement did not change or transfer
venue. It simply is permissive. The parties solely agreed to add the courts of
Manila as tribunals to which they may resort. They did not waive their right to
pursue remedy in the courts specifically mentioned in Section 2 (b) of Rule 4.
Renuntiatio non praesumitur." [14]

In Lamis Ents. v. Lagamon, [15]

the promissory note sued on had the following
stipulation:

"In case of litigation, jurisdiction shall be vested in the Court of Davao City."

The collection suit was instituted in the then Court of First Instance of Tagum, Davao,
where the defendant resides, and not in Davao City as stipulated. We rejected the
defense of improper venue and, citing the case of Polytrade, therein held:

"x x x. Anent the claim that Davao City had been stipulated as the venue,
suffice it to say that a stipulation as to venue does not preclude the filing of
suits in the residence of plaintiff or defendant under Section 2 (b), Rule 4, Rules
of Court, in the absence of qualifying or restrictive words in the agreement
which would indicate that the place named is the only venue agreed upon by
the parties. The stipulation did not deprive Maningo of his right to pursue
remedy in the court specifically mentioned in Section 2 (b)-of Rule 4, Rules of
Court, Renuntiatio non praesumitur. x x x. [16]

In Western Minolco v. Court of Appeals, [17]

the clause on venue read:

"The parties stipulate that the venue of the actions referred to in Section 12.01
[Article XII of the Agreement] shall be in the City of Manila."

The initial action was commenced in the then Court of First Instance of Baguio and
Benguet instead of Manila. This Court took the occasion to reiterate once more
the Polytrade doctrine:

"x x x. In any event, it is not entirely amiss to restate the doctrine

that stipulations in a contract, which specify a definite place for the institution
of an action arising in connection therewith, do not, as a rule, supersede the
general rules on the matter set out in Rule 4 of the Rules of Court, but should
be construed merely as an agreement on an additional forum, not as limiting
venue to the specified place. [18]

It is true that there have been early decisions of the Supreme Court inconsistent with
the Polytrade line of cases, notably Bautista v. de Borja. and Hoechst Philippines, Inc. v.
[19]

Torres. However, Lamis

[20]
Enterprises and Western Minolco followed by Moles v.
Intermediate Appellate Court, Hongkong and Shanghai Banking Corporation v.
[21]

Sherman, Nasser v. Court of Appeals, and Surigao Century Sawmill Co., Inc. v. Court
[22] [23]

of Appeals settled the matter by treading the path blazed by Polytrade. Hence, the
[24]

inevitable conclusion to be drawn, which respondent judge should have appreciated and
followed, is that Bautista and Hoechst Philippines have been rendered obsolete by
the Polytrade line of cases. Needless to say, the more recent jurisprudence shall be
deemed modificatory of the old ones. Restating the settled rule, therefore, as belabored
by this Court in Philippine Banking Corporation v. Tensuan, venue stipulations in a
[25]

contract, while considered valid and enforceable, do not as a rule supersede the general
rule set forth in Rule 4 of the Revised Rules of Court. In the absence of qualifying or
restrictive words, they should be considered merely as an agreement on additional
forum, not as limiting venue to the specified place. They are not exclusive but, rather
permissive.
Notwithstanding the above fundamental considerations, respondent judge still issued
the May 25, 1993 Order stopping indefinitely the foreclosure sale scheduled the following
day on May 26, 1993. Clearly, he can be held accountable for ignorance of the foregoing
jurisprudential developments on the applicable rules governing venue stipulations.
 It has been said that when the law transgressed is elementary, the failure to know or
observe it constitutes gross ignorance of the law. In this case, a mere reference by
[26]

respondent judge to Act No. 3135, as opposed to Rule 4 of the Revised Rules of Court, as
well as the Deed of the Real Estate Mortgage itself, would dictate that there is no
justification whatsoever for him to hold in abeyance the extrajudicial foreclosure sale
scheduled on May 26, 1993 in front of the City Hall of Manila. A judge owes it to the
public and to the legal profession to know the very law he is supposed to apply to a
given controversy as mandated by the Code of Judicial Conduct. He is called upon to [27]

exhibit more than just a cursory acquaintance with the statutes and procedural rules.
There will be great faith in the administration of justice if there be a belief on the part
[28]

of the parties that the occupants of the bench cannot justly be accused of an apparent
deficiency in their grasp of legal principles. Unfortunately, respondent judge, instead of
[29]

inspiring faith and confidence in the administration of justice, committed a rank

disservice to its cause when he issued the May 25, 1993 Order based on the inapplicable
provisions of the Rules of Court.
As to the second averment of respondent judge, that he issued the May 25, 1993
Order so as to determine the truthfulness of the mortgagor's allegation that
the P500,000.00 previously paid to the mortgagee BAID was not duly credited nor
deducted from the accounts of the mortgagor, suffice it to state that the same, by no
means, provide any justification for the highly questionable actuation of respondent
judge in issuing the subject Order. This matter, respondent judge ought to have known,
should have been the subject of a proper court action for the purpose of seeking a
temporary restraining order with prayer for a possible injunction to stop the scheduled
extrajudicial foreclosure sale. Definitely, a mere ex-parte Motion to Hold Auction Sale in
Abeyance is not the proper remedy, and this recourse by PQL evinces a clear attempt on
its part to shortcut the entire process. Unfortunately, respondent judge fell prey to this
scheme, wittingly or unwittingly. Instead of providing some legal justification for his
irregular conduct in issuing the questioned Order, this flimsy argument advanced by the
respondent judge all the more has convinced this Court of his culpability.
WHEREFORE, the Court, resolving to hold respondent Judge Rosalio G. de la Rosa
administratively liable for gross ignorance of the law, imposes on him a FINE
of P2,000.00, the same to be deducted from whatever retirement benefits he may be
entitled to receive from the government.
SO ORDERED.
Bellosillo, Vitug, and Kapunan, JJ., concur.
Padilla, (Chairman), J., took no part, being a former director and counsel for BAID.

[1]
Annex "A"; Rollo, pp.7-10.
[2]
Rollo, p. 63.
[3]
Comment, pp. 2-3; Rollo, pp. 23-24.
[4]
See Fiestan v. Court of Appeals, 185 SCRA 751, 756 [1990].
[5]
Annex "B"; Rollo, p. 11.
[6]
Annex "A"; Rollo, p. 8.
[7]
Supra.
[8]
Rule 3.01, Canon 3, Code of Judicial Conduct.
[9]
42 Phil. 880, 882 [1920], citing People v. County Judge, 13 How. Pr. [N.Y.], 398.
[10]
Lopez v. Filipinas Compaia de Seguros, 16 SCRA 855, 859 [1966].
[11]
See Section 4, Act 3135, as amended.
[12]
Herrera, Oscar M., Remedial Law, Vol. I, 1994 ed., p. 317.
[13]
SCRA 187, 190 [1969].
[14]
Ibid., at 191.
[15]
108 SCRA 740, 743 [1981].
[16]
Ibid., at 753-754.
[17]
167 SCRA 592, 594 [1988].
[18]
Ibid., at 598.
[19]
18 SCRA 474, 477 [1966]. Here, the venue stipulation read:
"[I]n case of any litigation, arising [t]herefrom or in connection [t]herewith, the venue of the action
shall be in the City of Manila.
The Court read the above stipulation as an agreement to definitely fix the venue of actions arising
out of the written contracts sued upon, in the proper courts of the City of Manila and granted dismissal
of the complaint. The Court did not seek to analyze the stipulation; not finding any clause reserving to
the parties the right of election, the Court surmised that the agreement was one requiring venue to be
laid in one place only, to the exclusion of other competent tribunals.
[20]
83 SCRA 297, 299 [1978]. In this case, the venue clause provided:
"[I]n case of any litigation arising out of this agreement, the venue of anyaction shall be in the
competent courts of the Province of Rizal."
The Supreme Court, through Mr. Justice Barredo, followed the case of Bautista v. de Borja (supra.)
and interpreted the venue clause as an agreement requiring venue to be laid in only one place, i.e., the
Province of Rizal, and sustained the trial court's dismissal of the action for improper venue. The Court
said that
"No further stipulations are necessary to elicit the thought that both parties agreed that any action
by either of them would be filed only in the competent courts of Rizal province exclusively." (83 SCRA at
301).
[21]
169 SCRA 777, 785 [1989].
[22]
176 SCRA 331, 337 [1989].
[23]
191 SCRA 783, 792 [1990].
[24]
218 SCRA 619, 623 [1993].
[25]
230 SCRA 413, 420 [1994].
[26]
See Agcaoili v. Ramos, 229 SCRA 705, 710 [1994], citing Santos v. Judge Isidro, 200 SCRA 597 [1991].
[27]
Canon 3, Rule 3.01 A judge in accordance with his sworn duties should be faithful to the law and
maintain professional competence in it. Canon 3, Rule 3.02 In every case, a judge shall endeavor
diligently to ascertain the fact and the applicable law unswayed by partisan interests, public opinion or
fear of criticism.
[28]
De los Santos-Reyes v. Montesa, Jr., 247 SCRA 85, 96 [1995].
[29]
Mamolo Sr. v. Narisma, 252 SCRA 613, 618-619 [1996].