335 Phil. 415; 93 OG No. 52, 8777 (December 29, 1977)
NARVASA, C.J.:
1) a stipulation reading: "** All suits arising out of this Agreement shall be filed with / in the proper Courts of Quezon City," andSome five years later, or more precisely on December 24, 1993, UNIMASTERS filed an action in the Regional Trial Court of Tacloban City against KUBOTA, a certain Reynaldo Go, and Metropolitan Bank and Trust Company-Tacloban Branch (hereafter, simply METROBANK) for damages for breach of contract, and injunction with prayer for temporary restraining order. The action was docketed as Civil Case No. 93-12-241 and assigned to Branch 6.
2) a provision binding UNIMASTERS to obtain (as it did in fact obtain) a credit line with Metropolitan Bank and Trust Co.-Tacloban Branch in the amount of P2,000,000.00 to answer for its obligations to KUBOTA.
"The plaintiff UNIMASTERS Conglomeration is holding its principal place of business in the City of Tacloban while the defendant ** (KUBOTA) is holding its principal place of business in Quezon City. The proper venue therefore pursuant to Rules of Court would either be Quezon City or Tacloban City at the election of the plaintiff. Quezon City and Manila (sic), as agreed upon by the parties in the Dealership Agreement, are additional places other than the place stated in the Rules of Court. The filing, therefore, of this complaint in the Regional Trial Court in Tacloban City is proper."Both orders were challenged as having been issued with grave abuse of discretion by KUBOTA in a special civil action of certiorari and prohibition filed with the Court of Appeals, docketed as CA-G.R. SP No. 33234. It contended, more particularly, that (1) the RTC had "no jurisdiction to take cognizance of ** (UNIMASTERS') action considering that venue was improperly laid," (2) UNIMASTERS had in truth "failed to prove that it is entitled to the ** writ of preliminary injunction;" and (3) the RTC gravely erred "in denying the motion to dismiss."[4]
1) "in concluding, contrary to decisions of this ** Court, that the agreement on venue between petitioner (UNIMASTERS) and private respondent (KUBOTA) limited to the proper courts of Quezon City the venue of any complaint filed arising from the dealership agreement between ** (them);"The issue last mentioned, of whether or not the participation by the lawyer of KUBOTA at the injunction hearing operated as a waiver of its objection to venue, need not occupy the Court too long. The record shows that when KUBOTA's counsel appeared before the Trial Court in the morning of January 11, 1994 and was then informed that he should cross-examine UNIMASTERS' witness, who had testified the day before, said counsel drew attention to the motion to dismiss on the ground of improper venue and insistently attempted to argue the matter and have it ruled upon at the time; and when the Court made known its intention (a) "to (resolve first the) issue (of) the injunction then rule on the motion to dismiss," and (b) consequently its desire to forthwith conclude the examination of the witness on the injunction incident, and for that purpose reset the hearing in the afternoon of that day, the 11th, so that the matter might be resolved before the lapse of the temporary restraining order on the 13th, KUBOTA's lawyer told the Court: "Your Honor, we are not waiving our right to submit the Motion to Dismiss."[10] It is plain that under these circumstances, no waiver or abandonment can be imputed to KUBOTA.
2) "in ignoring the rule settled in Philippine Banking Corporation vs. Tensuan,[9] that 'in the absence of qualifying or restrictive words, venue stipulations in a contract should be considered merely as agreement on additional forum, not as limiting venue to the specified place;" and in concluding, contrariwise, that the agreement in the case at bar "was the same as the agreement on venue in the Gesmundo case," and therefore, the Gesmundo case was controlling; and
3) "in concluding, based solely on the self-serving narration of ** (KUBOTA that its) participation in the hearing for the issuance of a ** preliminary injunction did not constitute waiver of its objection to venue."
This Court declared that the stipulation does not clearly show the intention of the parties to limit the venue of the action to the City of Manila only. "It must be noted that the venue in personal actions is fixed for the convenience of the plaintiff and his witnesses and to promote the ends of justice. We cannot conceive how the interest of justice may be served by confining the situs of the action to Manila, considering that the residences or offices of all the parties, including the situs of the acts sought to be restrained or required to be done, are all within the territorial jurisdiction of Rizal. ** Such agreements should be construed reasonably and should not be applied in such a manner that it would work more to the inconvenience of the parties without promoting the ends of justice."3. Lamis Ents. v. Lagamon, decided in 1981.[16] Here, the stipulation in the promissory note and the chattel mortgage specifed Davao City as the venue.
The Court, again citing Polytrade, stated that the provision "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 ** (the affected party) of his right to pursue remedy in the court specifically mentioned in Section 2(b) of Rule 4, Rules of Court. Renuntiato non praesumitur."4. Capati v. Ocampo, decided in 1982.[17] In this case, the provision of the contract relative to venue was as follows:
" ** (A)ll actions arising out, or relating to this contract may be instituted in the Court of First Instance of the City of Naga."5. Western Minolco v. Court of Appeals, decided in 1988.[18] Here, the provision governing venue read:
The Court ruled that the parties "did not agree to file their suits solely and exclusively with the Court of First Instance of Naga;" they "merely agreed to submit their disputes to the said court without waiving their right to seek recourse in the court specifically indicated in Section 2 (b), Rule 4 of the Rules of Court."
"The parties stipulate that the venue of the actions referred to in Section 12.01 shall be in the City of Manila."The court restated the doctrine that a stipulation in a contract fixing a definite place for the institution of an action arising in connection therewith, does not ordinarily supersede the general rules set out in Rule 4, and should be construed merely as an agreement on an additional forum, not as limiting venue to the specified place.
This Court held that such an invoice was not the contract of sale of the linotype machine in question; consequently the printed provisions of the invoice could not have been intended by the parties to govern the sale of the machine, especially since said invoice was used for other types of transactions. This Court said: "It is obvious that a venue stipulation, in order to bind the parties, must have been intelligently and deliberately intended by them to exclude their case from the reglementary rules on venue. Yet, even such intended variance may not necessarily be given judicial approval, as, for instance, where there are no restrictive or qualifying words in the agreement indicating that venue cannot be laid in any place other than that agreed upon by the parties, and in contracts of adhesion."7. Hongkong and Shanghai Banking Corp. v. Sherman, decided in 1989.[20] Here the stipulation on venue read:
" ** (T)his guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under this guarantee **."8. Nasser v. Court of Appeals, decided in 1990,[21] in which the venue stipulation in the promissory notes in question read:
This Court held that due process dictates that the stipulation be liberally construed. The parties did not thereby stipulate that only the courts of Singapore, to the exclusion of all the others, had jurisdiction. The clause in question did not operate to divest Philippine courts of jurisdiction.
" ** (A)ny action involving the enforcement of this contract shall be brought within the City of Manila, Philippines."
The Court's verdict was that such a provision does not as a rule supersede the general rule set out in Rule 4 of the Rules of Court, and should be construed merely as an agreement on an additional forum, not as limiting venue to the specified place.
" ** (A)ny disagreement or dispute arising out of the lease shall be settled by the parties in the proper court in the province of Surigao del Norte."
The venue provision was invoked in an action filed in the Regional Trial Court of Manila to recover damages arising out of marine subrogation based on a bill of lading. This Court declared that since the action did not refer to any disagreement or dispute arising out of the contract of lease of the barge, the venue stipulation in the latter did not apply; but that even assuming the contract of lease to be applicable, a statement in a contract as to venue does not preclude the filing of suits at the election of the plaintiff where no qualifying or restrictive words indicate that the agreed place alone was the chosen venue.
"I/We hereby expressly submit to the jurisdiction of the courts of Valenzuela any legal action which may arise out of this promissory note."11. Philippine Banking Corporation v. Hon. Salvador Tensuan, etc., Brinell Metal Works Corp., et al., decided in 1994:[24] In this case the subject promissory notes commonly contained a stipulation reading:
This Court held the stipulation to be merely permissive since it did not lay the venue in Valenzuela exclusively or mandatorily. The plain or ordinary import of the stipulation is the grant of authority or permission to bring suit in Valenzuela; but there is not the slightest indication of an intent to bar suit in other competent courts. The Court stated that there is no necessary or customary connection between the words "any legal action" and an intent strictly to limit permissible venue to the Valenzuela courts. Moreover, since the venue stipulations include no qualifying or exclusionary terms, express reservation of the right to elect venue under the ordinary rules was unnecessary in the case at bar. The Court made clear that "to the extent Bautista and Hoechst Philippines are inconsistent with Polytrade (an en banc decision later in time than Bautista) and subsequent cases reiterating Polytrade, Bautista and Hoechst Philippines have been rendered obsolete by the Polytrade line of cases."
"I/we expressly submit to the jurisdiction of the courts of Manila, any legal action which may arise out of this promissory note."Still other precedents adhered to the same principle.
the Court restated the rule in Polytrade that venue stipulations in a contract, absent any qualifying or restrictive words, should be considered merely as an agreement on additional forum, not limiting venue to the specified place. They are not exclusive, but rather, permissive. For to restrict venue only to that place stipulated in the agreement is a construction purely based on technicality; on the contrary, the stipulation should be liberally construed. The Court stated: "The later cases of Lamis Ents v. Lagamon [108 SCRA 1981], Capati v. Ocampo [113 SCRA 794 [1982], Western Minolco v. Court of Appeals [167 SCRA 592 [1988], Moles v. Intermediate Appellate Court [169 SCRA 777 [1989], Hongkong and Shanghai Banking Corporation v. Sherman [176 SCRA 331], Nasser v. Court of Appeals [191 SCRA 783 [1990] and just recently, Surigao Century Sawmill Co. v. Court of Appeals [218 SCRA 619 [1993], all treaded the path blazed by Polytrade. The conclusion to be drawn from all these is that the more recent jurisprudence shall properly be deemed modificatory of the old ones."
The lone dissent observed: "There is hardly any question that a stipulation of contracts of adhesion, fixing venue to a specified place only, is void for, in such cases, there would appear to be no valid and free waiver of the venue fixed by the Rules of Courts. However, in cases where both parties freely and voluntarily agree on a specified place to be the venue of actions, if any, between them, then the only considerations should be whether the waiver (of the venue fixed by the Rules of Court) is against public policy and whether the parties would suffer, by reason of such waiver, undue hardship and inconvenience; otherwise, such waiver of venue should be upheld as binding on the parties. The waiver of venue in such cases is sanctioned by the rules on jurisdiction."
" ** that any and all actions arising out or the condition and provisions of this ticket, irrespective of where it is issued, shall be filed in the competent courts in the City of Cebu"On the other hand, in the cases hereunder mentioned, stipulations on venue were held to be restrictive, or mandatory.
-- was declared unenforceable, being subversive of public policy. The Court explained that the philosophy on transfer of venue of actions is the convenience of the plaintiffs as well as his witnesses and to promote the ends of justice; and considering the expense and trouble a passenger residing outside of Cebu City would incur to prosecute a claim in the City of Cebu, he would most probably decide not to file the action at all.
" ** (V)enue for all suits, whether for breach hereof or damages or any cause between the LESSOR and LESSEE, and persons claiming under each, ** (shall be) the courts of appropriate jurisdiction in Pasay City. . ."3. Hoechst Philippines, Inc. v. Torres,[29] decided much earlier, in 1978, involved a strikingly similar stipulation, which read:
This Court held that: "(t)he language used leaves no room for interpretation. It clearly evinces the parties' intent to limit to the 'courts of appropriate jurisdiction of Pasay City' the venue for all suits between the lessor and the lessee and those between parties claiming under them. This means a waiver of their right to institute action in the courts provided for in Rule 4, sec. 2(b)."
" ** (I)n case of any litigation arising out of this agreement, the venue of any action shall be in the competent courts of the Province of Rizal."WHEREFORE, the appealed judgment of the Court of Appeals is REVERSED, the Order of the Regional Trial Court of Tacloban City, Branch 6, dated February 3, 1994, is REINSTATED and AFFIRMED, and said Court is DIRECTED to forthwith proceed with Civil Case No. 93-12-241 in due course.
This Court held: "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."
4. Villanueva v. Mosqueda, decided in 1982.[30] In this case, it was stipulated that if the lessor violated the contract of lease he could be sued in Manila, while if it was the lessee who violated the contract, the lessee could be sued in Masantol, Pampanga. This Court held that there was an agreement concerning venue of action and the parties were bound by their agreement. "The agreement as to venue was not permissive but mandatory."
5. Arquero v. Flojo, decided in 1988.[31] The condition respecting venue -- that any action against RCPI relative to the transmittal of a telegram must be brought in the courts of Quezon City alone -- was printed clearly in the upper front portion of the form to be filled in by the sender. This Court held that since neither party reserved the right to choose the venue of action as fixed by Section 2 [b], Rule 4, as is usually done if the parties mean to retain the right of election so granted by Rule 4, it can reasonably be inferred that the parties intended to definitely fix the venue of action, in connection with the written contract sued upon, in the courts of Quezon City only.
An analysis of these precedents reaffirms and emphasizes the soundness of the Polytrade principle. Of the essence is the ascertainment of the parties' intention in their agreement governing the venue of actions between them. That ascertainment must be done keeping in mind that convenience is the foundation of venue regulations, and that that construction should be adopted which most conduces thereto. Hence, the invariable construction placed on venue stipulations is that they do not negate but merely complement or add to the codal standards of Rule 4 of the Rules of Court. In other words, unless the parties make very clear, by employing categorical and suitably limiting language, that they wish the venue of actions between them to be laid only and exclusively at a definite place, and to disregard the prescriptions of Rule 4, agreements on venue are not to be regarded as mandatory or restrictive, but merely permissive, or complementary of said rule. The fact that in their agreement the parties specify only one of the venues mentioned in Rule 4, or fix a place for their actions different from those specified by said rule, does not, without more, suffice to characterize the agreement as a restrictive one. There must, to repeat, be accompanying language clearly and categorically expressing their purpose and design that actions between them be litigated only at the place named by them,[32] regardless of the general precepts of Rule 4; and any doubt or uncertainty as to the parties' intentions must be resolved against giving their agreement a restrictive or mandatory aspect. Any other rule would permit of individual, subjective judicial interpretations without stable standards, which could well result in precedents in hopeless inconsistency.
The record of the case at bar discloses that UNIMASTERS has its principal place of business in Tacloban City, and KUBOTA, in Quezon City. Under Rule 4, the venue of any personal action between them is "where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff."[33] In other words, Rule 4 gives UNIMASTERS the option to sue KUBOTA for breach of contract in the Regional Trial Court of either Tacloban City or Quezon City.
But the contract between them provides that " ** All suits arising out of this Agreement shall be filed with/in the proper Courts of Quezon City," without mention of Tacloban City. The question is whether this stipulation had the effect of effectively eliminating the latter as an optional venue and limiting litigation between UNIMASTERS and KUBOTA only and exclusively to Quezon City.
In light of all the cases above surveyed, and the general postulates distilled therefrom, the question should receive a negative answer. Absent additional words and expressions definitely and unmistakably denoting the parties' desire and intention that actions between them should be ventilated only at the place selected by them, Quezon City -- or other contractual provisions clearly evincing the same desire and intention -- the stipulation should be construed, not as confining suits between the parties only to that one place, Quezon City, but as allowing suits either in Quezon City or Tacloban City, at the option of the plaintiff (UNIMASTERS in this case).
One last word, respecting KUBOTA's theory that the Regional Trial Court had "no jurisdiction to take cognizance of ** (UNIMASTERS') action considering that venue was improperly laid." This is not an accurate statement of legal principle. It equates venue with jurisdiction; but venue has nothing to do with jurisdiction, except in criminal actions. This is fundamental.[34] The action at bar, for the recovery of damages in an amount considerably in excess of P20,000.00, is assuredly within the jurisdiction of a Regional Trial Court.[35] Assuming that venue were improperly laid in the Court where the action was instituted, the Tacloban City RTC, that would be a procedural, not a jurisdictional impediment -- precluding ventilation of the case before that Court of wrong venue notwithstanding that the subject matter is within its jurisdiction. However, if the objection to venue is waived by the failure to set it up in a motion to dismiss,[36] the RTC would proceed in perfectly regular fashion if it then tried and decided the action.
This is true also of real actions. Thus, even if a case "affecting title to, or for recovery of possession, or for partition or condemnation of, or foreclosure of mortgage on, real property"[37] were commenced in a province or city other than that "where the property or any part thereof lies,"[38] if no objection is seasonably made in a motion to dismiss, the objection is deemed waived, and the Regional Trial Court would be acting entirely within its competence and authority in proceeding to try and decide the suit.[39]
"x x x The courts cannot ignore that nowadays monopolies, cartels and concentrations of capital, endowed with overwhelming economic power, manage to impose upon parties dealing with them cunningly prepared 'agreements' that the weaker party may not change one whit, his participation in the 'agreement' being reduced to the alternative to take it or leave it, labelled x x x 'contracts by adherence' (contracts d'adhesion), in contrast to those entered into by parties bargaining on an equal footing, such contracts x x x obviously call for greater strictness and vigilance on the part of courts of justice with a view to protecting the weaker party from abuses and imposition, and prevent their becoming traps for the unwa(r)y" (authorities omitted).While it is true that in civil cases venue is a procedural, and not a jurisdictional, matter and the former may be the subject of stipulation, the quoted portion of the contract not only refers to the venue of prospective suits but actually trenches on the jurisdiction of our courts. Of course, in that case this Court did not enforce the quoted portion of the agreement but on the theory that a literal interpretation shows that the parties did not thereby stipulate that only the courts of Singapore, to the exclusion of all others, had jurisdiction. In other words, that agreement was not enforced because it was not a restrictive or mandatory provision.
I respectfully submit, therefore, that while the enunciated rule on restrictive venue stipulations should ordinarily be respected, a greater caution on a case-to-case basis must be adopted by the courts where such stipulation is contained in a contract of adhesion. Not only should they consider the disadvantaged position of the adherent but, more importantly, the fact that the raison d'etre for rules of venue is to afford due process, greater convenience and more ready access to the court in favor of the adhering contracting party.
I also submit that the rule on restrictive venue stipulations should not apply where it would be violative of a settled and important policy of the State. Thus, for instance, in the cited case of Hongkong and Shanghai Banking Corporation vs. Sherman,[4] aside from the agreement that the contract should be determined in accordance with the laws of Singapore, that contract also contained this provision: "We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under this guarantee x x x"