Saraza vs. Francisco

An action for specific performance of a contract to sell real property is a personal action that may be instituted in the court where the plaintiff or defendant resides, notwithstanding that the subject property is located elsewhere, because the relief sought is the execution of a deed of sale rather than the recovery of ownership or possession of the property itself.

Fernando Saraza agreed to sell his 100-square meter share in a lot located in Bangkal, Makati City to William Francisco for ₱3,200,000.00, with ₱1,200,000.00 paid upon execution and the balance of ₱2,000,000.00 to be paid through installments to Philippine National Bank (PNB) to settle a loan secured by Spouses Teodoro and Rosario Saraza. The agreement provided that upon full payment of the bank loan, Fernando would execute a final deed of sale, with a collateral provision designating another property should the transfer fail. Spouses Saraza signified their conformity to the agreement and authorized Francisco to settle the bank obligations and receive the title documents upon full payment.

• The Agreement: On September 1, 1999, Fernando Saraza and William Francisco executed a notarized Agreement for the sale of Fernando's 100-square meter share in a lot in Bangkal, Makati City (then covered by TCT No. 40376, later TCT No. 220530) for ₱3,200,000.00. The document acknowledged receipt of ₱1,200,000.00 upon execution, with the remaining ₱2,000,000.00 to be paid in installments to PNB to settle a loan secured by Spouses Teodoro and Rosario Saraza. Upon full payment of the PNB loan, Fernando obligated himself to execute a final deed of sale.
• Collateral Arrangement: The Agreement stipulated that should the parties fail to transfer the subject property to Francisco, the 136-square meter property of Rosario and Fernando covered by TCT No. 156126 and encumbered to PNB would serve as collateral. Spouses Saraza signified their conformity to the Agreement.
• Authority to Pay: Spouses Saraza furnished PNB with an Authority allowing Francisco to pay their obligations, negotiate for loan restructuring, receive the owner's duplicate copy of TCT No. 156126 upon full payment, and perform acts necessary for loan settlement. Francisco was also allowed immediate possession of the collateral property through a lease contract.
• Breach: When the remaining loan balance reached ₱226,582.13, Francisco requested a Special Power of Attorney to receive the title from PNB. The petitioners refused and instead executed an Amended Authority directing that the title be returned to the mortgagors upon full payment. Spouses Saraza subsequently evicted Francisco from the collateral property.
• Payment Status: Francisco alleged full satisfaction of the ₱3,200,000.00 consideration through the initial payment and settlement of the PNB loan. The petitioners claimed the ₱1,200,000.00 initial payment was never made, alleging Francisco took advantage of their trust and that they merely waited for payment without formal demand.

• Unpaid Consideration: Petitioners maintained that Francisco failed to pay the ₱1,200,000.00 due upon execution of the Agreement, asserting that Francisco took advantage of the trust reposed in him and that they had not formally demanded payment but merely waited for him to pay.
• Lack of Jurisdiction: Fernando argued that the RTC of Imus, Cavite lacked jurisdiction because the action involved adjudication of ownership of property situated in Makati City, requiring venue in Makati.
• New Defenses on Appeal: In a Supplemental Petition, petitioners raised for the first time that Spouses Saraza did not fully understand the Agreement as it was written in English, and that the Agreement was a contract of adhesion prepared solely by Francisco.

• Full Payment: Respondent countered that the Agreement's explicit acknowledgment of receipt of ₱1,200,000.00 upon execution, being a notarized document, established payment. The PNB Certification confirming full settlement of the ₱2,000,000.00 loan balance completed the consideration.
• Proper Venue: Respondent argued that the action was for specific performance, a personal action seeking execution of a deed of sale, not a real action for recovery of property, thus properly instituted in Imus, Cavite where he resides pursuant to Section 2, Rule 4 of the Rules of Court.

• Payment of Consideration: Whether the petitioners were bound to comply with their obligations under the Agreement given respondent's alleged full payment of the ₱3,200,000.00 consideration.
• Venue: Whether the RTC of Imus, Cavite had jurisdiction over the action given that the subject property was located in Makati City.
• Damages: Whether the award of ₱100,000.00 in damages was supported by the evidence and properly classified.

• Payment of Consideration: Full payment by Francisco was established, entitling him to specific performance. The notarized Agreement's categorical acknowledgment that ₱1,200,000.00 was paid upon execution constituted substantial evidence of payment, reinforced by the presumption that a notary public performed his duty regularly. The PNB Certification confirmed settlement of the remaining ₱2,000,000.00 loan balance. Petitioners' bare denial was self-serving and belied by their failure to demand payment, which conduct was inconsistent with the presumption that persons take ordinary care of their concerns. The parol evidence rule barred unsubstantiated testimony offered to vary the written agreement's terms.
• Venue: The RTC of Imus properly exercised jurisdiction. The action was for specific performance—a personal action seeking to compel Fernando to execute a deed of absolute sale based on a pre-existing contractual obligation—not a real action for recovery of ownership or possession of the Makati property. Pursuant to Section 2, Rule 4 of the Rules of Court, personal actions may be commenced where the plaintiff or defendant resides.
• Damages: The award of ₱100,000.00 was deleted. Neither the RTC nor the CA indicated whether the award constituted moral or compensatory damages, and the allegations of mental anguish or business losses were not substantiated by evidence.

• Scope of Rule 45 Review: A petition for review on certiorari under Rule 45 raises only questions of law, not questions of fact, which are conclusive when supported by substantial evidence and not reviewable by the Supreme Court except in recognized exceptions such as when the inference is manifestly mistaken or absurd, when there is grave abuse of discretion, or when the findings are contrary to those of the trial court.
• Parol Evidence Rule: When the parties have reduced their agreement to writing, the document becomes the exclusive repository of the terms of the deal, and unsubstantiated testimony offered as proof of verbal agreements tending to vary the terms of the written agreement is inadmissible.
• Presumption of Regularity: The recitals in a public instrument executed with all legal formalities are evidence against the parties and their successors in interest, and a high degree of proof is necessary to overcome the presumption that such recitals are true and that official duty has been regularly performed.
• Specific Performance as Personal Action: An action for specific performance of a contract to convey real property is a personal action because it seeks to compel the defendant to execute a conveyance pursuant to a contractual obligation, not to recover ownership or possession of the property itself. The venue for personal actions lies in the place where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, at the election of the plaintiff.

• "The recitals in a public instrument executed with all the legal formalities are evidence against the parties thereto and their successors in interest, and a high degree of proof is necessary to overcome the presumption that such recitals are true."
• "Unsubstantiated testimony, offered as proof of verbal agreements which tend to vary the terms of the written agreement, is inadmissible under the rule."
• "The petitioners are presumed under the law to have taken ordinary care of their concerns; thus, they would have exerted efforts to demand payment of the amount due them if in fact, no payment had been made."
• "Although the end result of the respondent’s claim was the transfer of the subject property to his name, the suit was still essentially for specific performance, a personal action, because it sought Fernando’s execution of a deed of absolute sale based on a contract which he had previously made."

• Cabutihan v. Landcenter Construction & Development Corporation, 432 Phil. 927 (2002) — Controlling precedent establishing that an action for specific performance involving property located elsewhere is a personal action properly brought in the plaintiff's place of residence because the relief sought is the execution of a conveyance, not the recovery of the property itself.
• La Tondeña Distillers, Inc. v. Ponferrada — Followed for the rule that venue in specific performance actions lies in the residence of the plaintiff even if the property is located elsewhere.
• Siasoco v. Court of Appeals — Followed for the proposition that specific performance with damages is a personal action cognizable where the parties reside.
• National Steel Corporation v. Court of Appeals, 362 Phil. 150 (1999) — Distinguished; held that an action seeking execution of a deed of sale is for recovery of real property when the primary objective is to regain ownership and possession, unlike cases where the prayer is connected to a previously executed contract.

• Section 1, Rule 45, Rules of Court — Limits petitions for review on certiorari to questions of law which must be distinctly set forth; questions of fact are not entertained.
• Section 3(m), Rule 131, Rules of Court — Establishes the presumption that official duty has been regularly performed, applicable to notarization of documents.
• Section 3(d), Rule 131, Rules of Court — Establishes the presumption that a person takes ordinary care of his concerns.
• Section 2, Rule 4, Rules of Court — Governs venue of personal actions, which may be commenced where the plaintiff or defendant resides.

Maria Lourdes P. A. Sereno (Chief Justice, Chairperson), Teresita J. Leonardo-De Castro, Lucas P. Bersamin, and Martin S. Villarama, Jr.