[G.R. No. 76431. October 16, 1989.]
; ACTION TO ANNUL FORECLOSURE SALE OF REALTY; AFFECTS
FORTUNE MOTORS, (PHILS.), INC., petitioner, vs. THE HONORABLE
COURT OF APPEALS, METROPOLITAN BANK and TRUST COMPANY,
respondents.
SYLLABUS
1. CIVIL PROCEDURE; REAL ACTION; CONSTRUED. In a real action, the
plaintiff seeks the recovery of real property, or as indicated in Sec. 2 (a) of Rule 4, a
real action is an action affecting title to real property, or for the recovery of possession,
or for the partition or condemnation of, or foreclosure of a mortgage on real property.
(Comments on the Rules of Court by Moran, Vol. I, p. 122)
2. ID.; ID.; VENUE THEREOF. Real actions or actions affecting title to, or
for the recovery of possession, or for the partition or condemnation of, or foreclosure
of mortgage on real property, must be instituted in the Court of First Instance of the
province where the property or any part thereof lies. (Enriquez v. Macadaeg, 84 Phil.
674, 1949; Garchitorena v. Register of Deeds, 101 Phil. 1207, 1957)
3. ID.; PERSONAL ACTIONS; VENUE THEREOF. Personal actions upon
the other hand, may be instituted in the Court of First Instance 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 (Sec. 1, Rule 4, Revised Rules of Court).
4. ID.; ACTION TO ANNUL REAL ESTATE FORECLOSURE OR SALE OF
REAL PROPERTY; A REAL ACTION. A prayer for annulment or rescission of
contract does not operate to efface the true objectives and nature of the action which
is to recover real property. (Inton, et al., v. Quintan, 81 Phil. 97, 1948). An action for
the annulment or rescission of a sale of real property is a real action. Its prime
objective is to recover said real property. (Gavieres v. Sanchez, 94 Phil. 760, 1954) An
action to annul a real estate mortgage foreclosure sale is no different from an action to
annul a private sale of real property. (Muoz v. Llamas, 87 Phil. 737, 1950.)
5. ID.; ACTION TO ANNUL SALE OF REAL PROPERTY; RECOVERY
THEREOF THE PRIMARY OBJECTIVE. While it is true that petitioner does not
directly seek the recovery of title or possession of the property in question, his action
for annulment of sale and his claim for damages are closely intertwined with the issue
of ownership of the building which, under the law, is considered immovable property,
the recovery of which is petitioner's primary objective. The prevalent doctrine is that
an action for the annulment or rescission of a sale of real property does not operate to
efface the fundamental and prime objective and nature of the case, which is to recover
said real property. It is a real action. Respondent Court, therefore, did not err in
dismissing the case on the ground of improper venue (Sec. 2, Rule 4) which was
timely raised (Sec. 1, Rule 16). (Punzalan, Jr. v. Vda. de Lacsamana, 121 SCRA 336,
[1983]).
6. ID.
TITLE OF THE PROPERTY; PROVINCE WHERE PROPERTY OR PART THEREOF
LIES, PROPER VENUE. "Since an extrajudicial foreclosure of real property results
in a conveyance of the title of the property sold to the highest bidder at the sale, an
action to annul the foreclosure sale is necessarily an action affecting the title of the
property sold. It is therefore a real action which should be commenced and tried in
the province where the property or part thereof lies."
DECISION
PARAS, J p:
This is a petition for review on certiorari seeking the reversal of: (a) the July 30, 1986
decision of the Court of Appeals in AC-G.R. SP No. 09255 entitled "Metropolitan Bank
& Trust Co. v. Hon. Herminio C. Mariano, et al." dismissing Civil Case No. 85-33218
entitled "Fortune Motors (Phils.) Inc. v. Metropolitan Bank & Trust Co." filed in the
Regional Trial Court of Manila, Branch IV for improper venue and (b) the resolution
dated October 30, 1986 denying petitioner's motion for reconsideration. prLL
The undisputed facts of the case are as follows:
On March 29, 1982 up to January 6, 1984, private respondent Metropolitan Bank
extended various loans to petitioner Fortune Motors in the total sum of
P32,500,000.00 (according to the borrower; or P34,150,000.00 according to the
Bank) which loan was secured by a real estate mortgage on the Fortune building and
lot in Makati, Rizal. (Rollo, pp. 60-62)
Due to financial difficulties and the onslaught of economic recession, the petitioner
was not able to pay the loan which became due. (Rollo, p. 62)
For failure of the petitioner to pay the loans, the respondent bank initiated
extrajudicial foreclosure proceedings. After notices were served, posted, and
published, the mortgaged property was sold at public auction for the price of
P47,899,264.91 to mortgagee Bank as the highest bidder. (Rollo, p. 11)
The sheriff's certificate of sale was registered on October 24, 1984 with the one-year
redemption period to expire on October 24, 1985. (Rollo, p. 12)
On October 21, 1985, three days before the expiration of the redemption period,
petitioner Fortune Motors filed a complaint for annulment of the extrajudicial
foreclosure sale alleging that the foreclosure was premature because its obligation to
the Bank was not yet due, the publication of the notice of sale was incomplete, there
was no public auction, and the price for which the property was sold was "shockingly
low". (Rollo, pp. 60-68)
Before summons could be served private respondent Bank filed a motion to dismiss
the complaint on the ground that the venue of the action was improperly laid in
1
Manila for the realty covered by the real estate mortgage is situated in Makati,
therefore the action to annul the foreclosure sale should be filed in the Regional Trial
Court of Makati. (Rollo, pp. 67-71-A)
The motion was opposed by petitioner Fortune Motors alleging that its action "is a
personal action" and that "the issue is the validity of the extrajudicial foreclosure
proceedings" so that it may have a new one year period to redeem. (Rollo, pp. 72-73)
On January 8, 1986 an order was issued by the lower court reserving the resolution of
the Bank's motion to dismiss until after the trial on the merits as the grounds relied
upon by the defendant were not clear and indubitable. (Rollo, p. 81)
The Bank filed a motion for reconsideration of the order dated January 8, 1986 but it
was denied by the lower court in its order dated May 28, 1986. (Rollo, Annex "L" pp.
93-96; Annex "N" p. 99)
On June 11, 1986 the respondent Bank filed a petition for certiorari and prohibition in
the Court of Appeals. (Rollo, Annex "O" pp. 100-115)
And on July 30, 1986, a decision was issued by the Court of Appeals, the dispositive
part of which reads as follows:
"WHEREFORE, the petition for certiorari and prohibition is granted. The complaint
in the Civil Case No. 85-33218 is dismissed without prejudice to its being filed in the
proper venue. Costs against the private respondent."
SO ORDERED. (Rollo, p. 15)
A motion for reconsideration was filed on August 11, 1986 on the said decision and on
October 30, 1986 a resolution was issued denying such motion for reconsideration.
(Rollo, Annex "O" pp. 121-123; Annex "S" p. 129)
Hence, the petition for review on certiorari.
On June 10, 1987 the Court gave due course to the petition, required the parties to file
their respective memoranda within twenty (20) days from the notice hereof, and pay
deposit for costs in the amount of P80.40. llcd
Both parties have filed their respective memoranda, and the case was submitted for
Court's resolution in the resolution dated December 14, 1987. (Rollo, Metrobank's
Memorandum pp. 45-59; petitioner's memorandum pp. 130-136 Res. p. 138)
The only issue in this case is whether petitioner's action for annulment of the real
estate mortgage extrajudicial foreclosure sale of Fortune Building is a personal action
or a real action for venue purposes.
In a real action, the plaintiff seeks the recovery of real property, or as indicated in Sec.
2 (a) of Rule 4, a real action is an action affecting title to real property, or for the
recovery of possession, or for the partition or condemnation of, or foreclosure of a
mortgage on real property. (Comments on the Rules of Court by Moran, Vol. I, p. 122)
Real actions or actions affecting title to, or for the recovery of possession, or for the
partition or condemnation of, or foreclosure of mortgage on real property, must be
instituted in the Court of First Instance of the province where the property or any part
thereof lies. (Enriquez v. Macadaeg, 84 Phil. 674, 1949; Garchitorena v. Register of
Deeds, 101 Phil. 1207, 1957)
Personal actions upon the other hand, may be instituted in the Court of First Instance
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 (Sec. 1, Rule 4,
Revised Rules of Court).
A prayer for annulment or rescission of contract does not operate to efface the true
objectives and nature of the action which is to recover real property. (Inton, et al., v.
Quintan, 81 Phil. 97, 1948)
An action for the annulment or rescission of a sale of real property is a real action. Its
prime objective is to recover said real property. (Gavieres v. Sanchez, 94 Phil. 760,
1954)
An action to annul a real estate mortgage foreclosure sale is no different from an
action to annul a private sale of real property. (Muoz v. Llamas, 87 Phil. 737, 1950)
While it is true that petitioner does not directly seek the recovery of title or possession
of the property in question, his action for annulment of sale and his claim for damages
are closely intertwined with the issue of ownership of the building which, under the
law, is considered immovable property, the recovery of which is petitioner's primary
objective. The prevalent doctrine is that an action for the annulment or rescission of a
sale of real property does not operate to efface the fundamental and prime objective
and nature of the case, which is to recover said real property. It is a real action.
Respondent Court, therefore, did not err in dismissing the case on the ground of
improper venue (Sec. 2, Rule 4) which was timely raised (Sec. 1, Rule 16). (Punzalan,
Jr. v. Vda. de Lacsamana, 121 SCRA 336, [1983]). cdll
Thus, as aptly decided by the Court of Appeals in a decision penned by then Court of
Appeals Associate Justice now Associate Justice of the Supreme Court Carolina C.
Grio-Aquino, the pertinent portion reads: "Since an extrajudicial foreclosure of real
property results in a conveyance of the title of the property sold to the highest bidder
at the sale, an action to annul the foreclosure sale is necessarily an action affecting the
title of the property sold. It is therefore a real action which should be commenced and
tried in the province where the property or part thereof lies."
PREMISES CONSIDERED, the instant petition is DENIED for lack of merit and the
assailed decision of the respondent Court of Appeals is AFFIRMED.
2
G.R. No. L-19668 October 22, 1964
DOMINGA TORRES, plaintiff-appellant,
vs.
J.M. TUASON & CO., INC. and EUSTAQUIO ALQUIROS, defendants-
appellees.
Atinidoro E. Sison for plaintiff-appellant.
Tuason & Sison for defendant-appellee J. M. Tuason & Co., Inc.
Ruiz Law Offices for defendant-appellee Eustaquio Alquiros.
REYES, J.B.L., J.:
Sustaining a motion to dismiss of defendant J. M. Tuason & Co., Inc., the Court of
First Instance of Manila, by order of 20 January 1962, ordered the dismissal of the
complaint, in its Civil Case No. 48909, for improper venue. Plaintiff appealed directly
to this Court on points of law.
The complaint, dated 4 December 1961, recites in substance that since prior to 1813 to
his death, one Telesforo Deudor was the sole owner of a parcel of land situated in
Matalahib, Tatalon and Masambong, Quezon City, with an area of 50 quiones1; that
when Telesforo Deudor died he was succeeded by his son, Tomas Deudor, who sold
one and a half quiones of the land to one Juliana @ Juana de la Cruz; that when the
latter died in 1944 she was succeeded by her only son, Eustaquio Alquiros; that on 20
October 1951, Alquiros sold to the plaintiff, Dominga Torres, a portion of 690 square
meters for a consideration of P2,760.00, as evidenced by a public instrument (Annex
"A"); that to quiet title to their property of 50 quiones the successors in interest of
Tomas Deudor filed in 1950 actions against J. M. Tuason & Co. in the Court of First
Instance of Quezon City (Civil Cases Nos. Q-135, Q-174, Q-177, Q-186); that plaintiff
tried to intervene in said actions, but intervention was denied; that on 16 March 1953
the Deudors, including Eustaquio Alquiros, and J. M. Tuason & Co. entered into a
compromise, in Case No. Q-135, whereby said "Deudors" and Alquiros, in
consideration of P1,201,063.00 to be paid them, ceded and quitclaimed in favor of
said company any right or title that said Deudors had over the property in litigation,
including the 690 square meters sold to plaintiff Torres, which compromise was
approved by the court; that in the Annex "C" to said compromise the name of plaintiff
appeared; that the compromise stipulated that the buyers listed in Annex "B" shall
buy the lots occupied by them and shall sign new contracts with Tuason & Co., at the
current prices and terms set by the latter, but the amounts paid by them to the
Deudors (subject to verification by the Court) shall be credited by Tuason & Company
to the buyers and deducted from the amounts to be paid to the Deudors; that in the
case of Evangelista vs. Deudor, G.R. L-12826, the Supreme Court ruled that by the
aforementioned compromise agreement "a sort of contractual relation" existed
between J. M. Tuason & Company and the purchasers of land from the Deudors,
among whom is plaintiff herein, and Tuason & Company assumed certain obligations
in favor of said purchasers, as regards the sales of their respective lots; that sometime
in May, 1953 the plaintiff demanded from J. M. Tuason & Company the execution of a
new contract of sale in her favor of the portion of land she is occupying, at the current
price, which was then seven pesos (P7.00) per square meter, but the Company failed
to do so; that plaintiff was always willing and ready to pay said price or such
reasonable price as the court may fix.
The complaint concluded with the following prayer:
WHEREFORE, plaintiff most respectfully prays that judgment be rendered:
(a) Ordering the defendant J. M. Tuason & Co. Inc., to execute the final deed of sale of
the property described in Annex "A" of the complaint, of approximately (690) square
meters in area, in favor of the plaintiff upon payment by the latter of the purchase
price at the rate of SEVEN PESOS (P7.00) per square meter, or such other rate as this
Honorable Court may deem as the reasonable price per square meter in or about May,
1953; to consider the sum of P2,760.00 already paid to Eustaquio Alquiros by the
plaintiff as a partial payment thereof; and to cause to be issued a Transfer Certificate
of Title therefor in the name of the plaintiff, and
(b) Ordering the defendant J. M. Tuason & Co. Inc., to pay the costs of the suit.
Plaintiff further prays for such other relief or remedy as this Honorable Court may
deem just and equitable in the premises. (Rec. on App., pp. 12-13)
The Manila Court held that it "has no doubt that the action really concerns title of real
property which is in Quezon City", and on 20 January 1962 dismissed the complaint
on the ground of improper venue. Plaintiff duly appealed.
In this Court, the appellant insists that her action is one of specific performance, and,
therefore, personal and transitory in nature.
This very issue was considered and decided by this Court in the case of Manuel B.
Ruiz vs. J. M. Tuason & Co., Inc., et al., L-18692, promulgated 31 January 1963. There
the Court, by unanimous vote of all the Justices, held as follows:
This contention has no merit. Although appellant's complaint is entitled to be one for
specific performance, yet the fact that he asked that a deed of sale of a parcel of land
situated in Quezon City be issued in his favor and that a transfer certificate of title
covering said land be issued to him shows that the primary objective and nature of the
action is to recover the parcel of land itself because to execute in favor of appellant the
conveyance requested there is need to make a finding that he is the owner of the land
which in the last analysis resolves itself into an issue of ownership. Hence, the action
must be commenced in the province where the property is situated pursuant to
Section 3, Rule 5, of the Rules of Court, which provides that actions affecting title to or
recovery of possession of real property shall be commenced and tried in the province
3
where the property or any part thereof lies. This contention finds support in the
following authorities:

An action by which plaintiff seeks to have it adjudged that he is the owner of an

undivided third of mining property, and to have defendants directed to execute to him
a conveyance thereof, is within the Code of Civ. Proc., Section 392, providing that
actions for recovery of real property or of an interest therein, or for the determination
of such interest, must be tried in the country in which the subject of the action is
situated. (McFarland v. Martin, et al., p. 239)

Suit by purchaser for ascertainment of amount due on contract and for vendors'
execution of deed on payment thereof held suit for specific performance, triable where
land was situated. (Kopke vs. Carlson, et al. 276 P. 606)

The Ruiz decision applies, and is determinative of the present case.

WHEREFORE, the order of dismissal appealed from is affirmed. with costs against
appellant.

Bengzon, C.J., Bautista Angelo, Concepcion, Barrera, Paredes, Dizon, Regala,

Makalintal, Bengzon, J.P., and Zaldivar JJ., concur.

4
[G.R. No. L-17699. March 30, 1962.]
DR. ANTONIO A. LIZARES, INC., petitioner, vs. HON. HERMOGENES CALUAG, as
Judge of the Court of First Instance of Quezon City, and FLAVIANO CACNIO,
respondents.
SYLLABUS
1. ACTIONS; VENUE; ACTION TO COMPEL ACCEPTANCE OF TENDER OF
PAYMENT FOR REAL PROPERTY AS A STEP TO ESTABLISH TITLE THERETO.
An action praying that defendant be ordered "to accept the payment being made" by
plaintiff for the lot which the latter contracted to buy on installment basis from the
former, to pay plaintiff compensatory damages and attorney's fees and to enjoin
defendant and his agents from repossessing the lot in question, is one that affects title
to land under section 3 of Rule 5 of the Rules of Court, and "shall be commenced and
tried in the province where the property or any part thereof lies," because, although
the immediate remedy is to compel the defendant to accept the tender of payment
allegedly made, it is obvious that this relief is merely the first step to establish
plaintiff's title to real property.
DECISION
CONCEPCION, J p:
Appeal by certiorari from a decision of the Court of Appeals dismissing the petition of
Dr. Antonio A. Lizares & Co., Inc., for a writ of prohibition, with costs against said
petitioner.
On or about June 14, 1960, Flaviano Cacnio instituted Civil Case No. Q-5197 of the
Court of First Instance of Rizal, Quezon City Branch, against said petitioner. In his
complaint, Cacnio alleged that on April 20, 1955, he bought from petitioner, on
installment, Lot 4, Block 1 of the Sinkang Subdivision in Bacolod City, making
therefor a down payment of P1,206, the balance of P10,858 to be paid in ten (10)
yearly installments of P1,085.80 each, with interest thereon at the rate of 6% per
annum; that on March 25, 1960, Cacnio received from petitioner a letter demanding
payment of P7,324.69, representing arrears in the payment of installments up to April
20, 1960, plus "regular and overdue" interest, as well as "land taxes up to 70% of
1960"; that the sum then due from Cacnio by way of arrears amounted only to
P5,824.69, he having paid P1,500 to petitioner "sometime in 1958"; that in view of the
aforementioned demand of petitioner, Cacnio sent thereto a check for P5,824.69,
dated May 26, 1960, drawn by one Antonino Bernardo in favor of said petitioner, in
payment of the amount due from Cacnio by way of arrears; that "without legal and
equitable grounds" therefor, petitioner returned said check and "refused the tender of
payment" aforementioned; that by reason of said illegal act of petitioner. Cacnio is
entitled to compensatory damages in the sum of P5,000, plus P2,000 by way of
attorney's fees, Cacnio having been constrained to engage the services of counsel and
bring the action; and that petitioner "is doing, threatens, or is about to do, or is
procuring or suffering to be done some act in violation of" Cacnio's rights respecting
the subject of the action, viz. the repossession of the lot bought by" the latter, who,
accordingly, prayed that petitioner be ordered "to accept the payment being made" by
him (Cacnio) and to pay him P5,000 as compensatory damages and P2,000 as
attorney's fees, and that, upon the filing of a bond to be fixed by the court, a writ of
preliminary injunction enjoining petitioner and its agents or representatives from
repossessing the lot adverted to above be issued. Said writ of preliminary injunction
was issued on June 16, 1960. On July 5, 1960, petitioner moved to dismiss the
complaint upon the ground that "venue is improperly laid," for the action affects the
title to or possession of real property located in Bacolod City, which was the subject
matter of a contract, between petitioner and Cacnio, made in said City. The motion
having been denied by the Court of First Instance of Rizal, Quezon City Branch, by an
order of July 9, 1960, upon the ground that the action was in personam, petitioner
filed with the Court of Appeals a petition, which was docketed as Civil Case CA-G.R.
No. 28013-R, praying that said order be set aside and that a writ of prohibition be
issued commanding respondent Hon. Hermogenes Caluag, as Judge of said Court, to
desist from taking cognizance of said Civil Case No. Q-5197. In due course, the Court
of Appeals rendered a decision on October 27, 1960, dismissing said petition. Hence,
this appeal by certiorari taken by petitioner herein.
The issue is whether or not the main case falls under section 3 of Rule 5 of the Rules
of Court, reading:
"Actions affecting title to, or for recovery of possession, or for 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."
The Court of Appeals and the Court of First Instance of Rizal, Quezon City Branch,
held that Civil Case No. Q-5197 of the latter court is an action in personam, and that,
as such, it does not fall within the purview of said section 3, and was properly
instituted in the court of first instance of the province in which Cacnio, as plaintiff in
said case, resided, pursuant to section 1 of said rule 5.
We are unable to share such view. Although the immediate remedy sought by Cacnio
is to compel petitioner to accept the tender of payment allegedly made by the former,
it is obvious that this relief is merely the first step to establish Cacnio's title to the real
property adverted to above. Moreover, Cacnio's complaint is a means resorted to by
him in order that he could retain the possession of said property. In short, venue in
the main case was improperly laid and the Court of First Instance of Rizal, Quezon
City Branch, should have granted the motion to dismiss.
WHEREFORE, the decision appealed from is hereby reversed and another one shall
be entered directing respondent Judge to desist from taking further cognizance of
5
Civil Case No. Q-5197 of said court, with costs against respondent Flaviano Cacnio. It
is so ordered.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Barrera, Paredes and Dizon, JJ.,
concur.
[G.R. No. L-31095. June 18, 1976.]
JOSE M. HERNANDEZ, petitioner, vs. DEVELOPMENT BANK OF THE
PHILIPPINES and COURT OF FIRST INSTANCE OF BATANGAS, LIPA CITY
BRANCH, respondents.
Tomas Yumol for petitioners.
Graciano V. Sebastian for respondent Development Bank of the Philippines.
SYNOPSIS
In August 1964, private respondent awarded to its employee, petitioner herein, a lot
and house in Quezon City. Petitioner retired in February, 1966. In August, 1968,
petitioner paid by check the purchase price of the lot and house, but private
respondent returned the check, informing petitioner that the award had been
cancelled. Petitioner sued private respondent in the Court of First Instance of
Batangas. On motion of private respondent, the respondent Court dismissed the
complaint on the ground of improper venue.
On review, the Supreme Court held that petitioner's action to declare null and void
the cancellation of the award and to restore him to his right is not real but a personal
action which may be properly brought by petitioner in his residence.
SYLLABUS
1. CIVIL PROCEDURE; ACTIONS; VENUE; TEST TO DETERMINE VENUE.
The venue of actions depends to a great extent on to nature of the action to be filed,
whether it is real or personal. A real action is brought for the specific recovery of land,
tenements or hereditaments. A personal action is one brought for the recovery of
personal property, of the enforcement of some contract or recovery of damages for the
commission of an injury the person or property. Under Section 2, Rule 14 of the Rules
of Court, "Actions affecting title to, or for recovery of possession, or for 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. All other actions
may be commenced and tried 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."
2. ID.; ID.; ID; ACTION TO ANNUL THE CANCELLATION OF AWARD OF
LOT IS A PERSONAL ACTION. Plaintiff's action to declare null and void the
cancellation of the award of a lot and house originally given in his favor does not
involve title and ownership over said properties, for it merely seeks to compel
defendant to recognize that the award is valid and subsisting one which defendant
cannot unilaterally cancel. Such an action is not a real but a personal action which
may be properly brought by plaintiff in his residence.
DECISION
MARTIN, J p:
This is a case which involves the question of proper venue in a real action.
Petitioner Jose M. Hernandez was an employee of private respondent Development
Bank of the Philippines in its Legal Department for twenty-one (21) years until his
retirement on February 28, 1966 due to illness. On August 12, 1964, in due
recognition of his unqualified service as Assistant Attorney in its Legal Department,
the private respondent awarded to the petitioner a lot, identified as Lot No. 15, Block
No. W-21, in the private respondent's Housing Project at No. 1 West Avenue, Quezon
City, containing an area of 810 square meters with a Type E house. On August 31,
1968, after the petitioner received from the private respondent's Housing Project
Committee a statement of account of the purchase price of the said lot and house in
the total amount of P21,034.56, payable on a monthly amortization of P153,32 for a
term of fifteen (15) years, he sent to the said Committee a Cashier's Check No. 77089
CC, dated October 21, 1968, issued by the Philippine Banking Corporation in the
name of his wife in the sum of P21,500.00 to cover the cash and full payment of the
purchase price of the lot and house awarded to him. However, more than a week
thereafter, or on October 29, 1968, the Chief Accountant and Comptroller of the
private respondent returned to the petitioner the aforementioned check, informing
him that the private respondent, through its Committee on Organization, Personnel
and Facilities, had cancelled the award of the lot and house previously awarded to him
on the following grounds: (1) that he has already retired; (2) that he has only an
option to purchase said house and lot; (3) that there are a big number of employees
who have no houses or lots; (4) that he has been given his retirement gratuity; and (5)
that the awarding of the aforementioned house and lot to an employee of the private
respondent would better subserve the objective of its Housing Project. Petitioner
protested against the cancellation of the award of the house and lot in his favor and
demanded from private respondent the restoration of all his rights to said award.
However, private respondent refused.
On May 15, 1969 the petitioner filed a complaint in the Court of First Instance of
Batangas against the private respondent seeking the annulment of the cancellation of
the award of the lot and house in his favor and the restoration of all his rights thereto.
He contends that the cancellation of said award was unwarranted and illegal for he
6
has already become the owner of said house and lot by virtue of said award on August
12, 1964 and has acquired a vested right thereto, which cannot be unilaterally
cancelled without his consent; that he had requested the private respondent to restore
to him all his rights to said award but the latter refused and failed and still refuses and
fails to comply with said request.
Such an action is a personal action which may be properly brought by petitioner in his
residence, as held in the case of Adamos vs. J.M. Tuason & Co., Inc. 5 where this
Court through former Chief Justice Querube C. Makalintal distinguished the case
from an earlier line of J.M. Tuason & Co., Inc. cases involving lot purchasers from the
Deudors 6 follows: LLjur

Private respondent filed a motion to dismiss the complaint on the ground of improper ". . . All the allegations as well as the prayer in the complaint show that this is not a
venue, contending that since the petitioner's action affects the title to a house and lot real but a personal action to compel the defendants to execute the corresponding
situated in Quezon City, the same should have been commenced in the Court of First purchase contracts in favor of the plaintiffs and to pay damages. The plaintiffs do not
Instance of Quezon City where the real property is located and not in the Court of claim ownership of the lots in question: they recognize the title of the defendant J.M.
First Instance of Batangas where petitioner resides. On July 24, 1969, the respondent Tuason & Co., Inc. They do not ask that possession be delivered to them, for they
Court sustained the motion to dismiss filed by private respondent on the ground of allege to be in possession. The case cited by the defendants (Abao, et al. vs. J. M.
improper venue. Tuason & Co., Inc. G.R. No. L-16796, Jan. 30, 1962) is therefore not in point. In that
case, as stated by this Court in its decision, the 'plaintiffs' action is predicated on the
Hence, the instant petition to review the order of respondent Court. theory that they are 'occupants, landholders,' and 'most' of them 'owners by purchase'
of the residential lots in question; that, in consequence of the compromise agreement
The only issue in this petition is whether the action of the petitioner was properly filed
adverted to above, between the Deudors and defendant corporations, the latter had
in the Court of First Instance of Batangas. It is a well settled rule that venue of actions
acknowledged the right and title of the Deudors in and to said lots; and hence, the
or, more appropriately, the county where the action is triable 1 depends to a great
right and title of the plaintiffs, as successors-in-interest of the Deudors; that, by
extent on the nature of the action to be filed, whether it is real or personal. 2 A real
entering into said agreement, defendant corporations had, also, waived their right to
action is one brought for the specific recovery of land, tenements, or hereditaments.
invoke the indefeasibility of the Torrens title in favor of J. M. Tuason & Co., Inc.; and
3 A personal action is one brought for the recovery of personal property, for the
that defendants have no right, therefore, to oust plaintiffs from the lots respectively
enforcement of some contract or recovery of damages for its breach, or for the
occupied by them and which they claim to be entitled to hold. Obviously, the action
recovery of damages for the commission of an injury to the person or property. 4
affects, therefore, not only the possession of real property, but, also, the title thereto.
Under Section 2, Rule 4 of the Rules of Court, "actions affecting title to, or for
Accordingly, it should have been instituted in the Court of First Instance of the
recovery of possession, or for partition, or condemnation of, or foreclosure of
Province of Rizal in which said property is situated (Section 3, Rule 5 of the Rules of
mortgage on real property, shall be commenced and tried in the province where the
Court)."
property or any part thereof lies. All other actions may be commenced and tried where
the defendant or any of the defendants resides or may be found, or where the plaintiff WHEREFORE, the order of dismissal appealed from is set aside and the case is
or any of the plaintiffs resides, at the election plaintiff". remanded for further proceedings and disposition on the merits. No costs.
A close scrutiny of the essence of the petitioner's complaint the court a quo would Teehankee (Chairman), Makasiar, Esguerra and Muoz Palma, JJ., concur.
readily show that he seeks the annulment of the cancellation of the award of the
Quezon City lot and house in his favor originally given him by respondent DBP in
recognition of his twenty-one years of service in its Legal Department, in pursuance of
his contention that he had acquired a vested right to the award which cannot be
unilaterally cancelled by respondent without his consent.

The Court agrees that petitioner's action is not a real but a personal action. As
correctly insisted by petitioner, his action is one to declare null and void the
cancellation of the lot and house in his favor which does not involve title and
ownership over said properties but seeks to compel respondent to recognize that the
award is a valid and subsisting one which it cannot arbitrarily and unilaterally cancel
and accordingly to accept the proffered payment in full which it had rejected and
returned to petitioner.

7
[G.R. No. 80380. September 28, 1988.]
CARLOS BELL RAYMOND and AGUSTIN ALBA, petitioners, vs. HON. COURT OF
APPEALS, HON. RICARDO M. ILARDE, etc., and SANTIAGO BITERA, respondents.
Lenin R. Victoriano for petitioners.
Cirilo T. Ganzon for respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; VENUE IN PERSONAL ACTION.
Under Section 2, Rule 4 of the Rules of Court, personal action "may be commenced
and tried where the defendant or any of the defendants resides as may be found, or
where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff."
2. ID.; ID.; VENUE PROVISION; WORDS "RESIDE OR "RESIDENCE" AS
USED THEREIN, CONSTRUED. it was held in Garcia Fule v. Court of Appeals, 74
SCRA 189, 199 (citing cases) that the doctrinal rule is that the term "resides" connotes
Ex Vi Termini "actual residence' as distinguished from 'legal residence or domicile."
Even where the statute uses the word "domicile," still it construed as meaning
residence and not "domicile" in the technical sense. Some cases make a distinction
between the terms "residence and "domicile," but as generally used in statutes fixing
venue, the terms are synonymous and convey the same meaning as the term
"inhabitant". In other words, "resides" should be viewed or understood in its popular
sense, meaning, the personal, actual or physical habitation of a person, actual
residence or place of abode.
3. ID.; SPECIAL CIVIL ACTION; CERTIORARI; REFUSAL TO DISMISS
ACTION DESPITE PATENT IMPROPER LAYING VENUE; A REVERSIBLE ERROR.
Reversible error was committed when both the trial court and the Court of Appeals
did not dismiss the action despite the seasonable motion to dismiss filed by the
defendant on the ground that the plaintiff's residence is not the place where the action
was filed, the improper venue being clearly established by the affidavit appended to
the complaint.
DECISION
NARVASA, J p:
The petition for review on certiorari filed with this Court by the petitioners Raymond
and Alba seeks reversal of the decision of the Court of Appeals which dismissed for
lack of merit their petition for certiorari and prohibition; that petition, in turn, had
assailed the refusal of the respondent Judge to dismiss the action filed against
petitioners by private respondent Santiago Bitera on the ground of improper venue.
By Resolution dated February 1, 1988, this Court required the respondents to
comment on the petition within a ten-day period which expired on February 29, 1988.
Upon motions timely filed by private respondent, said period was extended by a total
of thirty (30) days. This notwithstanding, no word has been received from private
respondent on whom is reposed, by established rule, the function of sustaining the
challenged action of the respondent Courts. Be this as it may, since the relevant facts
are not and cannot be disputed, and only one legal issue is raised, the Court has
resolved to give due course to the petition and decide that issue on the merits. LLpr
A complaint for damages was filed with the Regional Trial Court of Iloilo by Santiago
Bitera against Carlos Bell Raymond and Agustin Alba. The latter moved to dismiss the
action on the ground of improper venue. They argued that although Bitera's
complaint gives his address as 240-C Jalandoni Street, Iloilo City, he is, and for many
years has been actually residing at the so-called UPSUMCO Compound, Bais City, he
being the officer-in-charge of the business firm known as UPSUMCO, which has
offices at Bais and Manjuyod, Negros Oriental, and that, indeed, his affidavit,
appended to his complaint, contains his affirmation that he is "a resident of the
UPSUMCO Compound, City of Bais," and shows (in the jurat) that his residence
certificate had been issued at Manjuyod, Negros Oriental. The Trial Court however
denied their motion to dismiss. They then filed a special civil action of certiorari and
prohibition with the Court of Appeals. But, as above stated, they fared no better in
that court. It dismissed their petition, saying:
"Why Bitera chose to file this action for damages in Iloilo City instead of in
Dumaguete City is beyond this Court, even as the pleadings show that plaintiff is
actually residing at UPSUMCO, the defendants are both residents of UPSUMCO, the
cause of damages arose out of a controversy in the UPSUMCO and because of
plaintiff's and defendant's positions as officer and board members of UPSUMCO.
"While it would seem the height of inequity were We to allow plaintiff to bring suit in
Iloilo City instead of in Dumaguete City on the basis of his allegation that his
permanent place of abode is in Iloilo City and he only temporarily resides in Bais City,
Dumaguete City, it is, however, the plaintiff who is given the right to elect where to
bring his action. As plaintiff chose his legal domicile or residence, We cannot compel
him to bring suit in the place where he has his temporary residence." 1
According to Section 2, Rule 4 of the Rules of Court, personal actions, such as Bitera's,
"may be commenced and tried 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." The term, where a person "resides," or "residence," may be
understood as synonymous with domicile: as referring to a person's "permanent home,
the place to which, whenever absent for business or pleasure, one intends to return,"
and it has been held that "a man can have but one domicile at a time." 2 The term
may also be taken in another sense, and it is this which is germane to the
determination of venue, as meaning a person's actual residence, different and distinct
from his permanent one, or domicile, where he was born and rested, and e.g., where
he usually casts his vote during elections. Thus this Court has held that venue was
8
improperly laid in a case where the complaint was filed in the Court of First Instance
of Ilocos Norte by the plaintiff who was born and reared in that province, but whose
actual residence at time of suit was admittedly at Quezon City. 3 In another case,
where the plaintiffs instituted a personal action 4 in the Court of First Instance at
Lipa City, claiming that their domicile was San Juan, Batangas, the Court declared the
venue to be erroneously selected in view of the fact that the plaintiffs' place of abode,
where they actually reside, was at Quezon City. 5

Garcia Fule v. Court of Appeals 6 definitively explained and settled the meaning to be
put to the words "reside" or "residence" as used in the venue provisions:

"2. But, the far-ranging question is this: What does the term 'resides' mean?
Does it refer to the actual residence or domicile of the decedent at the time of his
death? We lay down the doctrinal rule that the term 'resides' connotes ex vi termini
'actual residence' as distinguished from 'legal residence or domicile.' This term
'resides,' like the terms 'residing' and 'residence,' is elastic and should be interpreted
in the light of the object or purpose of the statute or rule in which it is employed. In
the application of venue statutes and rules Section 1, Rule 73 of the Revised Rules
of Court is of such nature - residence rather than domicile is the significant factor.
Even where the statute uses the word 'domicile' still it is construed as meaning
residence and not 'domicile' in the technical sense. Some cases make a distinction
between the terms 'residence' and 'domicile' but as generally used in statutes fixing
venue, the terms are synonymous, and convey the same meaning as the term
'inhabitant.' In other words, 'resides' should be viewed or understood in its popular
sense, meaning the personal, actual or physical habitation of a person, actual
residence or place of abode. It signifies physical presence in a place and actual stay
thereat. In this popular sense, the term means merely residence, that is, personal
residence, not legal residence or domicile. Residence simply requires bodily presence
as an inhabitant in a given place, while domicile requires bodily presence in that place
and also an intention to make it one's domicile . . ." 7

It therefore clearly appears that both the respondent Judge and the Court of Appeals,
the former in the first instance and the latter on review, committed reversible legal
error, if not grave abuse of discretion, in not dismissing Bitera's action despite the fact
that its venue had clearly been improperly laid, and had been seasonably objected to
on that ground by petitioners in a motion to dismiss. 8

WHEREFORE, the questioned Order of the respondent Judge denying petitioner's

motion to dismiss and the Decision of the Court of Appeals affirming said order are
REVERSED AND SET ASIDE. Civil Case No. 17354 of the Regional Trial Court of
Iloilo City, Branch XXVI, is hereby DISMISSED on the ground that venue has been
improperly laid. No pronouncement as to costs. LexLib

SO ORDERED.

9
[G.R. No. 53485. February 6, 1991.]
PATRIA ESUERTE and HERMINIA JAYME, petitioners, vs. HON. COURT OF
APPEALS (Eleventh Division), HON. RAFAEL T. MENDOZA, Judge, Branch VI,
Court of First Instance of Cebu and MA. BEVERLY TAN, respondents.
Romeo B . Esuerte for petitioners.
Eleno V . Andales & Sisinio M . Andales for private respondent.
DECISION
MEDIALDEA, J p:
This petition for certiorari with a prayer for preliminary injunction seeks to set aside
the decision of the Court of Appeals in CA G.R. No. SP-08999-R, involving the same
parties.
An action for damages was filed by private respondent Beverly Tan against herein
petitioners Patria Esuerte and Herminia Jayme with the Court of First Instance (now
Regional Trial Court) of Cebu and docketed as Civil Case No. R-17584. The claim for
damages arose from an incident involving the parties and summarized by the Court of
Appeals, as follows:
". . . that on September 22, 23 and 27, 1978, private respondent Ma. Beverly Tan, a
Junior Resident Physician of Corazon Locsin-Montelibano Memorial Hospital,
Bacolod City, without any justifiable reason shouted at, humiliated and insulted the
petitioner, Patria Esuerte, Head Nurse, Medicare Department of the said hospital and
as a result of the said incident, said petitioner complained to the Chief of the Hospital,
Dr. Teodoro P. Motus, in writing. The other petitioner, Herminia Jayme, who was one
of those who were present at the time of the incident also sent a letter to the Chief of
the Hospital, Dr. Teodoro Motus, informing the latter of what she had witnessed. As a
result thereof, private respondent was advised to explain in writing by the Chief of the
Hospital, but private respondent instead of explaining only her side of the incident
also complained against the petitioners. The Discipline and Grievance Committee,
Corazon Locsin-Montelibano Memorial Hospital, conducted a fact-finding
investigation and later, the Chief of the Hospital, Dr. Teodoro P. Motus, issued a
resolution dated November 8, 1978, transmitting the records of the case to the
Regional Health Office, No. 6, Jaro, Iloilo City for appropriate action; . . ." (pp. 91-92,
Rollo)
Esuerte and Jayme filed a motion to dismiss the complaint on the ground of improper
venue and for being premature for failure of Tan to exhaust administrative remedies.
On January 2, 1979, the trial court denied the motion to dismiss. The motion for
reconsideration of the denial was likewise denied by the court on February 16, 1979.
Esuerte and Jayme filed a petition for certiorari and prohibition with a prayer for
preliminary injunction with the Court of Appeals. On September 18, 1979, the petition
was dismissed without pronouncement as to costs. The motion for reconsideration of
the decision was likewise denied for lack of merit on February 18, 1980.
The following reasons were advanced by petitioners for the allowance of this petition:
1) The Court of Appeals committed gross error and grave abuse of discretion
when it dismissed the petition despite petitioners' overwhelming evidence showing
that the venue of private respondent's action (Civil Case No. R-17584) was improperly
laid. prcd
2) The Court of Appeals committed gross error and grave abuse of discretion
when it dismissed the petition despite petitioners' overwhelming evidence showing
that the filing of Civil Case No. R-17584 is premature due to non-exhaustion of
administrative remedies.
It is the contention of petitioners that the proper venue of the action filed by Tan
should be Bacolod City and not Cebu City. At the time of the filing of her action in
court, Tan was actually residing and may be found in Bacolod City. In fact, in her
"Statement of Assets and Liabilities," submitted by Tan to her employer, the Corazon
Locsin Montelibano Memorial Hospital, she declared that she is a resident of FRAYU
INTERIOR, 6th Street, Bacolod City.
Section 2(b), Rule 4 of the Rules of Court provides:
"Sec. 2. Venue in Courts of First Instance.
"xxx xxx xxx
"(b) Personal Actions. All other actions may be commenced and tried where
the defendants 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."
The choice of venue for personal actions cognizable by the Regional Trial Court is
given to the plaintiff but not to the plaintiff's caprice because the matter is regulated
by the Rules of Court (see Clavecilla Radio System v. Antillon, 19 SCRA 379). The rule
on venue, like other procedural rules, are designed to insure a just and orderly
administration of justice or the impartial and evenhanded determination of every
action and proceeding (Sy v. Tyson Enterprises Inc., 19 SCRA 367). The option of the
plaintiff in personal actions cognizable by the Regional Trial Court is either the place
where the defendant resides or may be found or the place where the plaintiff resides.
If plaintiff opts for the latter, he is limited to that place.
"Resides" in the rules on venue on personal actions means the place of abode, whether
permanent or temporary, of the plaintiff or defendants as distinguished from
10
"domicile" which denotes a fixed permanent residence (Dangwa Transportation Co., civil action for damages, the trial court's concern is whether or not damages, personal
Inc. v. Sarmiento, G.R. No. L-22795, January 31, 1977, 75 SCRA 124). And, in to the plaintiff, were caused by the acts of the defendants. The civil action for damages
Hernandez v. Rural Bank of Lucena, Inc., G.R. No. L-29791, January 10, 1978, 81 can proceed notwithstanding the pendency of the administrative action. LLpr
SCRA 75), venue of personal actions should be at the place of abode or place where
plaintiffs actually reside, not in domicile or legal residence. cdphil WHEREFORE, the position is GRANTED. The questioned decision of the Court of
Appeals is SET ASIDE. Civil Case No. R-17584 is DISMISSED for improper venue.
In Koh v. CA, L-40428, December 17, 1975, 70 SCRA 298; 305, We ruled:
SO ORDERED.
"Applying the foregoing observation to the present case, We are fully convinced that
private respondent Coloma's protestations of domicile in San Nicolas, Ilocos Norte, Narvasa, Cruz, Gancayco and Grio-Aquino, JJ., concur.
based on his manifested intention to return there after the retirement of his wife from
government service to justify his bringing of an action for damages against petitioner
in the C.F.I. of Ilocos Norte, is entirely of no moment since what is of paramount
importance is where he actually resided or where he may be found at the time he
brought the action, to comply substantially with the requirements of Sec. 2(b) of Rule
4, Rules of Court, on venue of personal actions . . ."

As perspicaciously observed by Justice Moreland, the purpose of procedure is not to

restrict the court's jurisdiction over the subject matter but to give it effective facility
"in righteous action," "to facilitate and promote the administration of justice" or to
insure "just judgments" by means of a fair hearing. If the objective is not achieved,
then "the administration of justice becomes incomplete and unsatisfactory and lays
itself open to criticism." (Manila Railroad Co. v. Attorney General, 20 Phil. 523, 530).

There is no question that private respondent as plaintiff in the Civil Case is a legal
resident of Cebu City. Her parents live there. However, it cannot also be denied that at
the time of her filing of the complaint against petitioners, she was a temporary
resident of Bacolod City. She was then employed with the Corazon Locsin
Montelibano Memorial Hospital, Bacolod City, as resident physician. Moreover, the
acts complained of were committed in Bacolod City. The private respondents were all
residents of Bacolod City at the time of the bringing of the action. Though Tan's
employment was only temporary there was no showing when this employment will
end. Justice would be better served if the complaint were heard and tried in Bacolod
City where all the parties resided.

The second ground raised by petitioners is devoid of merit. The alleged need by
private respondent Tan to exhaust administrative remedies before filing the
complaint for damages does not apply to the instant case. Private respondent as
plaintiff in the civil case for damages has no administrative remedy available to her. It
is true that the same incident complained of in the administrative case filed by
petitioners against Tan is the subject of the action for damages filed by Tan against
the petitioners in the trial court. However, the cause of action in the administrative
case is different from that of the civil case for damages. While the complainant in the
administrative case may be a private person, it is the government who is the aggrieved
party and no award for damages may be granted in favor of private persons. In the

11
G.R. No. 154096, August 22, 2008 toto the five (5) grounds raised by Francisca in her amended motion to dismiss.
Among these were: (1) the cases involved an intra-corporate dispute over which the
IRENE MARCOS-ARANETA, DANIEL RUBIO, ORLANDO G. RESLIN, AND Securities and Exchange Commission, not the RTC, has jurisdiction; (2) venue was
JOSE G. RESLIN, PETITIONERS, VS. COURT OF APPEALS, JULITA C. improperly laid; and (3) the complaint failed to state a cause of action, as there was no
BENEDICTO, AND FRANCISCA BENEDICTO-PAULINO, RESPONDENTS. allegation therein that plaintiff, as beneficiary of the purported trust, has accepted the
trust created in her favor.
DECISION
To the motions to dismiss, Irene filed a Consolidated Opposition, which Benedicto
VELASCO JR., J.:
and Francisca countered with a Joint Reply to Opposition.
The Case
Upon Benedicto's motion, both cases were consolidated.

This Petition for Review on Certiorari under Rule 45 assails and seeks to nullify the
Decision[1] dated October 17, 2001 of the Court of Appeals (CA) in CA-G.R. SP No.
64246 and its Resolution[2] of June 20, 2002 denying petitioners' motion for
reconsideration. The assailed CA decision annulled and set aside the Orders dated
October 9, 2000, December 18, 2000, and March 15, 2001 of the Regional Trial Court
(RTC), Branch 17 in Batac, Ilocos Norte which admitted petitioners' amended
complaint in Civil Case Nos. 3341-17 and 3342-17.
During the preliminary proceedings on their motions to dismiss, Benedicto and
Francisca, by way of bolstering their contentions on improper venue, presented the
Joint Affidavit[5] of Gilmia B. Valdez, Catalino A. Bactat, and Conchita R. Rasco who
all attested being employed as household staff at the Marcos' Mansion in Brgy. Lacub,
Batac, Ilocos Norte and that Irene did not maintain residence in said place as she in
fact only visited the mansion twice in 1999; that she did not vote in Batac in the 1998
national elections; and that she was staying at her husband's house in Makati City.

The Facts Against the aforesaid unrebutted joint affidavit, Irene presented her PhP 5 community
tax certificate[6] (CTC) issued on "11/07/99" in Curimao, Ilocos Norte to support her
Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now deceased, and claimed residency in Batac, Ilocos Norte.
his business associates (Benedicto Group) organized Far East Managers and Investors,
Inc. (FEMII) and Universal Equity Corporation (UEC), respectively. As petitioner In the meantime, on May 15, 2000, Benedicto died and was substituted by his wife,
Irene Marcos-Araneta would later allege, both corporations were organized pursuant Julita C. Benedicto, and Francisca.
to a contract or arrangement whereby Benedicto, as trustor, placed in his name and in
the name of his associates, as trustees, the shares of stocks of FEMII and UEC with On June 29, 2000, the RTC dismissed both complaints, stating that these partly
the obligation to hold those shares and their fruits in trust and for the benefit of Irene constituted "real action," and that Irene did not actually reside in Ilocos Norte, and,
to the extent of 65% of such shares. Several years after, Irene, through her trustee- therefore, venue was improperly laid. In its dismissal order, [7] the court also declared
husband, Gregorio Ma. Araneta III, demanded the reconveyance of said 65% "all the other issues raised in the different Motions to Dismiss x x x moot and
stockholdings, but the Benedicto Group refused to oblige. academic."

In March 2000, Irene thereupon instituted before the RTC two similar complaints for
conveyance of shares of stock, accounting and receivership against the Benedicto
Group with prayer for the issuance of a temporary restraining order (TRO). The first,
docketed as Civil Case No. 3341-17, covered the UEC shares and named Benedicto, his
daughter, and at least 20 other individuals as defendants. The second, docketed as
Civil Case No. 3342-17, sought the recovery to the extent of 65% of FEMII shares held
by Benedicto and the other defendants named therein.
Respondent Francisca Benedicto-Paulino,[3] Benedicto's daughter, filed a Motion to
Dismiss Civil Case No. 3341-17, followed later by an Amended Motion to Dismiss.
Benedicto, on the other hand, moved to dismiss[4] Civil Case No. 3342-17, adopting in
From the above order, Irene interposed a Motion for Reconsideration[8] which Julita
and Francisca duly opposed.
Pending resolution of her motion for reconsideration, Irene filed on July 17, 2000 a
Motion (to Admit Amended Complaint),[9] attaching therewith a copy of the Amended
Complaint[10] dated July 14, 2000 in which the names of Daniel Rubio, Orlando G.
Reslin, and Jose G. Reslin appeared as additional plaintiffs. As stated in the amended
complaint, the added plaintiffs, all from Ilocos Norte, were Irene's new trustees.
Parenthetically, the amended complaint stated practically the same cause of action
but, as couched, sought the reconveyance of the FEMII shares only.
12
During the August 25, 2000 hearing, the RTC dictated in open court an order denying G.R. SP No. 64246, seeking to nullify the following RTC orders: the first, admitting
Irene's motion for reconsideration aforementioned, but deferred action on her motion the amended complaint; the second, denying their motion to dismiss the amended
to admit amended complaint and the opposition thereto.[11] complaint; and the third, denying their motion for reconsideration of the second
issuance.
On October 9, 2000, the RTC issued an Order[12] entertaining the amended complaint,
dispositively stating: Inasmuch as the verification portion of the joint petition and the certification on non-
forum shopping bore only Francisca's signature, the CA required the joint petitioners
WHEREFORE, the admission of the Amended Complaint being tenable and legal, the "to submit x x x either the written authority of Julita C. Benedicto to Francisca B.
same is GRANTED. Paulino authorizing the latter to represent her in these proceedings, or a
supplemental verification and certification duly signed by x x x Julita C.
Let copies of the Amended Complaint be served to the defendants who are ordered to Benedicto."[16] Records show the submission of the corresponding authorizing
answer within the reglementary period provided by the rules. Affidavit[17] executed by Julita in favor of Francisca.
The RTC predicated its order on the following premises:
Later developments saw the CA issuing a TRO[18] and then a writ of preliminary
injunction[19] enjoining the RTC from conducting further proceedings on the subject
(1) Pursuant to Section 2, Rule 10 of the Rules of Court,[13] Irene may opt to file, as a
civil cases.
matter of right, an amended complaint.
On October 17, 2001, the CA rendered a Decision, setting aside the assailed RTC
(2) The inclusion of additional plaintiffs, one of whom was a Batac, an Ilocos Norte
orders and dismissing the amended complaints in Civil Case Nos. 3341-17 and 3342-
resident, in the amended complaint setting out the same cause of action cured the
17. The fallo of the CA decision reads:
defect of improper venue.
WHEREFORE, based on the foregoing premises, the petition is hereby GRANTED.
(3) Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4 allow the filing of the The assailed Orders admitting the amended complaints are SET ASIDE for being null
amended complaint in question in the place of residence of any of Irene's co-plaintiffs. and void, and the amended complaints a quo are, accordingly, DISMISSED.[20]

In time, Julita and Francisca moved to dismiss the amended complaint, but the RTC, Irene and her new trustees' motion for reconsideration of the assailed decision was
by Order[14] dated December 18, 2000, denied the motion and reiterated its directive denied through the equally assailed June 20, 2002 CA Resolution. Hence, this
for the two to answer the amended complaint. petition for review is before us.

In said order, the RTC stood pat on its holding on the rule on amendments of The Issues
pleadings. And scoffing at the argument about there being no complaint to amend in
the first place as of October 9, 2000 (when the RTC granted the motion to amend) as
Petitioners urge the setting aside and annulment of the assailed CA decision and
the original complaints were dismissed with finality earlier, i.e., on August 25, 2000
resolution on the following submissions that the appellate court erred in: (1) allowing
when the court denied Irene's motion for reconsideration of the June 29, 2000 order
the submission of an affidavit by Julita as sufficient compliance with the requirement
dismissing the original complaints, the court stated thusly: there was actually no need
on verification and certification of non-forum shopping; (2) ruling on the merits of
to act on Irene's motion to admit, it being her right as plaintiff to amend her
the trust issue which involves factual and evidentiary determination, processes not
complaints absent any responsive pleading thereto. Pushing its point, the RTC added
proper in a petition for certiorari under Rule 65 of the Rules of Court; (3) ruling that
the observation that the filing of the amended complaint on July 17, 2000 ipso facto
the amended complaints in the lower court should be dismissed because, at the time it
superseded the original complaints, the dismissal of which, per the June 29, 2000
was filed, there was no more original complaint to amend; (4) ruling that the
Order, had not yet become final at the time of the filing of the amended complaint.
respondents did not waive improper venue; and (5) ruling that petitioner Irene was
not a resident of Batac, Ilocos Norte and that none of the principal parties are
Following the denial on March 15, 2001 of their motion for the RTC to reconsider its
residents of Ilocos Norte.[21]
December 18, 2000 order aforestated, Julita and Francisca, in a bid to evade being
declared in default, filed on April 10, 2001 their Answer to the amended complaint.[15] The Court's Ruling
But on the same day, they went to the CA via a petition for certiorari, docketed as CA-
13

We affirm, but not for all the reasons set out in, the CA's decision.
First Issue: Substantial Compliance with the Rule
on Verification and Certification of Non-Forum Shopping
Petitioners tag private respondents' petition in CA-G.R. SP No. 64246 as defective for
non-compliance with the requirements of Secs. 4[22] and 5[23] of Rule 7 of the Rules of
Court at least with regard to Julita, who failed to sign the verification and certification
of non-forum shopping. Petitioners thus fault the appellate court for directing Julita's
counsel to submit a written authority for Francisca to represent Julita in the certiorari
proceedings.
We are not persuaded.
Verification not Jurisdictional; May be Corrected
Verification is, under the Rules, not a jurisdictional but merely a formal requirement
which the court may motu proprio direct a party to comply with or correct, as the case
may be. As the Court articulated in Kimberly Independent Labor Union for Solidarity,
Activism and Nationalism (KILUSAN)-Organized Labor Associations in Line
Industries and Agriculture (OLALIA) v. Court of Appeals:
[V]erification is a formal, not a jurisdictional requisite, as it is mainly intended to
secure an assurance that the allegations therein made are done in good faith or are
true and correct and not mere speculation. The Court may order the correction of the
pleading, if not verified, or act on the unverified pleading if the attending
circumstances are such that a strict compliance with the rule may be dispensed with
in order that the ends of justice may be served.[24]
Given this consideration, the CA acted within its sound discretion in ordering the
submission of proof of Francisca's authority to sign on Julita's behalf and represent
her in the proceedings before the appellate court.
Signature by Any of the Principal Petitioners is Substantial Compliance
Regarding the certificate of non-forum shopping, the general rule is that all the
petitioners or plaintiffs in a case should sign it.[25] However, the Court has time and
again stressed that the rules on forum shopping, which were designed to promote the
orderly administration of justice, do not interdict substantial compliance with its
provisions under justifiable circumstances.[26] As has been ruled by the Court, the
signature of any of the principal petitioners[27] or principal parties,[28] as Francisca is
in this case, would constitute a substantial compliance with the rule on verification
and certification of non-forum shopping. It cannot be overemphasized that Francisca
herself was a principal party in Civil Case No. 3341-17 before the RTC and in the
certiorari proceedings before the CA. Besides being an heir of Benedicto, Francisca,
with her mother, Julita, was substituted for Benedicto in the instant case after his
demise.
And should there exist a commonality of interest among the parties, or where the
parties filed the case as a "collective," raising only one common cause of action or
presenting a common defense, then the signature of one of the petitioners or
complainants, acting as representative, is sufficient compliance. We said so in Cavile
v. Heirs of Clarita Cavile.[29] Like Thomas Cavile, Sr. and the other petitioners in
Cavile, Francisca and Julita, as petitioners before the CA, had filed their petition as a
collective, sharing a common interest and having a common single defense to protect
their rights over the shares of stocks in question.
Second Issue: Merits of the Case cannot be Resolved
on Certiorari under Rule 65
Petitioners' posture on the second issue is correct. As they aptly pointed out, the CA,
in the exercise of its certiorari jurisdiction under Rule 65, is limited to reviewing and
correcting errors of jurisdiction only. It cannot validly delve into the issue of trust
which, under the premises, cannot be judiciously resolved without first establishing
certain facts based on evidence.
Whether a determinative question is one of law or of fact depends on the nature of the
dispute. A question of law exists when the doubt or controversy concerns the correct
application of law or jurisprudence to a certain given set of facts; or when the issue
does not call for an examination of the probative value of the evidence presented, the
truth or falsehood of facts being admitted. A question of fact obtains when the doubt
or difference arises as to the truth or falsehood of facts or when the query invites the
calibration of the whole evidence considering mainly the credibility of the witnesses,
the existence and relevancy of specific surrounding circumstances, as well as their
relation to each other and to the whole, and the probability of the situation. [30]
Clearly then, the CA overstepped its boundaries when, in disposing of private
respondents' petition for certiorari, it did not confine itself to determining whether or
not lack of jurisdiction or grave abuse of discretion tainted the issuance of the assailed
RTC orders, but proceeded to pass on the factual issue of the existence and
enforceability of the asserted trust. In the process, the CA virtually resolved petitioner
Irene's case for reconveyance on its substantive merits even before evidence on the
matter could be adduced. Civil Case Nos. 3341-17 and 3342-17 in fact have not even
reached the pre-trial stage. To stress, the nature of the trust allegedly constituted in
Irene's favor and its enforceability, being evidentiary in nature, are best determined
by the trial court. The original complaints and the amended complaint certainly do
14
not even clearly indicate whether the asserted trust is implied or express. To be sure,
an express trust differs from the implied variety in terms of the manner of proving its
existence.[31] Surely, the onus of factually determining whether the trust allegedly
established in favor of Irene, if one was indeed established, was implied or express
properly pertains, at the first instance, to the trial court and not to the appellate court
in a special civil action for certiorari, as here. In the absence of evidence to prove or
disprove the constitution and necessarily the existence of the trust agreement between
Irene, on one hand, and the Benedicto Group, on the other, the appellate court cannot
intelligently pass upon the issue of trust. A pronouncement on said issue of trust
rooted on speculation and conjecture, if properly challenged, must be struck down. So
it must be here.
Third Issue: Admission of Amended Complaint Proper
As may be recalled, the CA veritably declared as reversibly erroneous the admission of
the amended complaint. The flaw in the RTC's act of admitting the amended
complaint lies, so the CA held, in the fact that the filing of the amended complaint on
July 17, 2000 came after the RTC had ordered with finality the dismissal of the
original complaints. According to petitioners, scoring the CA for its declaration
adverted to and debunking its posture on the finality of the said RTC order, the CA
failed to take stock of their motion for reconsideration of the said dismissal order.
We agree with petitioners and turn to the governing Sec. 2 of Rule 10 of the Rules of
Court which provides:
SEC. 2. Amendments as a matter of right. -- A party may amend his pleading once as
a matter of right at any time before a responsive pleading is served or in the case of a
reply, at any time within ten (10) days after it is served.
As the aforequoted provision makes it abundantly clear that the plaintiff may amend
his complaint once as a matter of right, i.e., without leave of court, before any
responsive pleading is filed or served. Responsive pleadings are those which seek
affirmative relief and/or set up defenses,[32] like an answer. A motion to dismiss is not
a responsive pleading for purposes of Sec. 2 of Rule 10. [33] Assayed against the
foregoing perspective, the RTC did not err in admitting petitioners' amended
complaint, Julita and Francisca not having yet answered the original complaints when
the amended complaint was filed. At that precise moment, Irene, by force of said Sec.
2 of Rule 10, had, as a matter of right, the option of amending her underlying
reconveyance complaints. As aptly observed by the RTC, Irene's motion to admit
amended complaint was not even necessary. The Court notes though that the RTC has
not offered an explanation why it saw fit to grant the motion to admit in the first place.
In Alpine Lending Investors v. Corpuz, the Court, expounding on the propriety of
admitting an amended complaint before a responsive pleading is filed, wrote:
[W]hat petitioner Alpine filed in Civil Case No. C-20124 was a motion to dismiss, not
an answer. Settled is the rule that a motion to dismiss is not a responsive pleading for
purposes of Section 2, Rule 10. As no responsive pleading had been filed, respondent
could amend her complaint in Civil Case No. C-20124 as a matter of right.
Following this Court's ruling in Breslin v. Luzon Stevedoring Co. considering that
respondent has the right to amend her complaint, it is the correlative duty of the trial
court to accept the amended complaint; otherwise, mandamus would lie against it. In
other words, the trial court's duty to admit the amended complaint was purely
ministerial. In fact, respondent should not have filed a motion to admit her amended
complaint.[34]
It may be argued that the original complaints had been dismissed through the June
29, 2000 RTC order. It should be pointed out, however, that the finality of such
dismissal order had not set in when Irene filed the amended complaint on July 17,
2000, she having meanwhile seasonably sought reconsideration thereof. Irene's
motion for reconsideration was only resolved on August 25, 2000. Thus, when Irene
filed the amended complaint on July 17, 2000, the order of dismissal was not yet final,
implying that there was strictly no legal impediment to her amending her original
complaints.[35]
Fourth Issue: Private Respondents did not Waive Improper Venue
Petitioners maintain that Julita and Francisca were effectively precluded from raising
the matter of improper venue by their subsequent acts of filing numerous pleadings.
To petitioners, these pleadings, taken together, signify a waiver of private
respondents' initial objection to improper venue.
This contention is without basis and, at best, tenuous. Venue essentially concerns a
rule of procedure which, in personal actions, is fixed for the greatest convenience
possible of the plaintiff and his witnesses. The ground of improperly laid venue must
be raised seasonably, else it is deemed waived. Where the defendant failed to either
file a motion to dismiss on the ground of improper venue or include the same as an
affirmative defense, he is deemed to have waived his right to object to improper
venue.[36] In the case at bench, Benedicto and Francisca raised at the earliest time
possible, meaning "within the time for but before filing the answer to the
complaint,"[37] the matter of improper venue. They would thereafter reiterate and
pursue their objection on venue, first, in their answer to the amended complaints and
then in their petition for certiorari before the CA. Any suggestion, therefore, that
Francisca and Benedicto or his substitutes abandoned along the way improper venue
as ground to defeat Irene's claim before the RTC has to be rejected.
Fifth Issue: The RTC Has No Jurisdiction
on the Ground of Improper Venue
15

Subject Civil Cases are Personal Actions
It is the posture of Julita and Francisca that the venue was in this case improperly laid
since the suit in question partakes of a real action involving real properties located
outside the territorial jurisdiction of the RTC in Batac.
This contention is not well-taken. In a personal action, the plaintiff seeks the recovery
of personal property, the enforcement of a contract, or the recovery of damages. [38]
Real actions, on the other hand, are those affecting title to or possession of real
property, or interest therein. In accordance with the wordings of Sec. 1 of Rule 4, the
venue of real actions shall be the proper court which has territorial jurisdiction over
the area wherein the real property involved, or a portion thereof, is situated. The
venue of personal actions is the court where the plaintiff or any of the principal
plaintiffs resides, or where the defendant or any of the principal defendants resides,
or in the case of a non-resident defendant where he may be found, at the election of
the plaintiff.[39]
In the instant case, petitioners are basically asking Benedicto and his Group, as
defendants a quo, to acknowledge holding in trust Irene's purported 65%
stockownership of UEC and FEMII, inclusive of the fruits of the trust, and to execute
in Irene's favor the necessary conveying deed over the said 65% shareholdings. In
other words, Irene seeks to compel recognition of the trust arrangement she has with
the Benedicto Group. The fact that FEMII's assets include real properties does not
materially change the nature of the action, for the ownership interest of a stockholder
over corporate assets is only inchoate as the corporation, as a juridical person, solely
owns such assets. It is only upon the liquidation of the corporation that the
stockholders, depending on the type and nature of their stockownership, may have a
real inchoate right over the corporate assets, but then only to the extent of their
stockownership.
The amended complaint is an action in personam, it being a suit against Francisca
and the late Benedicto (now represented by Julita and Francisca), on the basis of their
alleged personal liability to Irene upon an alleged trust constituted in 1968 and/or
1972. They are not actions in rem where the actions are against the real properties
instead of against persons.[40] We particularly note that possession or title to the real
properties of FEMII and UEC is not being disputed, albeit part of the assets of the
corporation happens to be real properties.
Given the foregoing perspective, we now tackle the determinative question of venue in
the light of the inclusion of additional plaintiffs in the amended complaint.
Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4
We point out at the outset that Irene, as categorically and peremptorily found by the
RTC after a hearing, is not a resident of Batac, Ilocos Norte, as she claimed. The Court
perceives no compelling reason to disturb, in the confines of this case, the factual
determination of the trial court and the premises holding it together. Accordingly,
Irene cannot, in a personal action, contextually opt for Batac as venue of her
reconveyance complaint. As to her, Batac, Ilocos Norte is not what Sec. 2, Rule 4 of
the Rules of Court adverts to as the place "where the plaintiff or any of the principal
plaintiffs resides" at the time she filed her amended complaint. That Irene holds CTC
No. 17019451[41] issued sometime in June 2000 in Batac, Ilocos Norte and in which
she indicated her address as Brgy. Lacub, Batac, Ilocos is really of no moment. Let
alone the fact that one can easily secure a basic residence certificate practically
anytime in any Bureau of Internal Revenue or treasurer's office and dictate whatever
relevant data one desires entered, Irene procured CTC No. 17019451 and appended
the same to her motion for reconsideration following the RTC's pronouncement
against her being a resident of Batac.
Petitioners, in an attempt to establish that the RTC in Batac, Ilocos Norte is the
proper court venue, asseverate that Batac, Ilocos Norte is where the principal parties
reside.
Pivotal to the resolution of the venue issue is a determination of the status of Irene's
co-plaintiffs in the context of Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4,
which pertinently provide as follows:
Rule 3
PARTIES TO CIVIL ACTIONS
SEC. 2. Parties in interest. -- A real party in interest is the party who stands to be
benefited or injured by the judgment in the suit, or the party entitled to the avails of
the suit. Unless otherwise authorized by law or these Rules, every action must be
prosecuted or defended in the name of the real party in interest.
SEC. 3. Representatives as parties. -- Where the action is allowed to be prosecuted or
defended by a representative or someone acting in a fiduciary capacity, the beneficiary
shall be included in the title of the case and shall be deemed to be the real party in
interest. A representative may be a trustee of an express trust, a guardian, an executor
or administrator, or a party authorized by law or these Rules. An agent acting in his
own name and for the benefit of an undisclosed principal may sue or be sued without
joining the principal except when the contract involves things belonging to the
principal.
Rule 4
VENUE OF ACTIONS
16
 As trustees, they may be accorded, by virtue of Sec. 3 of Rule 3, the right to prosecute
SEC. 2. Venue of personal actions. -- All other actions may be commenced and tried a suit, but only on behalf of the beneficiary who must be included in the title of the
where the plaintiff or any of the principal plaintiffs resides, or where the defendant or case and shall be deemed to be the real party-in-interest. In the final analysis, the
any of the principal defendants resides, or in the case of a non-resident defendant residences of Irene's co-plaintiffs cannot be made the basis in determining the venue
where he may be found, at the election of the plaintiff. of the subject suit. This conclusion becomes all the more forceful considering that
Irene herself initiated and was actively prosecuting her claim against Benedicto, his
Venue is Improperly Laid heirs, assigns, or associates, virtually rendering the impleading of the trustees
unnecessary.
There can be no serious dispute that the real party-in-interest plaintiff is Irene. As
self-styled beneficiary of the disputed trust, she stands to be benefited or entitled to And this brings us to the final point. Irene was a resident during the period material
the avails of the present suit. It is undisputed too that petitioners Daniel Rubio, of Forbes Park, Makati City. She was not a resident of Brgy. Lacub, Batac, Ilocos Norte,
Orlando G. Reslin, and Jose G. Reslin, all from Ilocos Norte, were included as co- although jurisprudence[44] has it that one can have several residences, if such were the
plaintiffs in the amended complaint as Irene's new designated trustees. As trustees, established fact. The Court will not speculate on the reason why petitioner Irene, for
they can only serve as mere representatives of Irene. all the inconvenience and expenses she and her adversaries would have to endure by a
Batac trial, preferred that her case be heard and decided by the RTC in Batac. On the
Upon the foregoing consideration, the resolution of the crucial issue of whether or not heels of the dismissal of the original complaints on the ground of improper venue,
venue had properly been laid should not be difficult. three new personalities were added to the complaint doubtless to insure, but in vain
as it turned out, that the case stays with the RTC in Batac.
Sec. 2 of Rule 4 indicates quite clearly that when there is more than one plaintiff in a
personal action case, the residences of the principal parties should be the basis for Litigants ought to bank on the righteousness of their causes, the superiority of their
determining proper venue. According to the late Justice Jose Y. Feria, "the word cases, and the persuasiveness of arguments to secure a favorable verdict. It is high
`principal' has been added [in the uniform procedure rule] in order to prevent the time that courts, judges, and those who come to court for redress keep this ideal in
plaintiff from choosing the residence of a minor plaintiff or defendant as the mind.
venue."[42] Eliminate the qualifying term "principal" and the purpose of the Rule
would, to borrow from Justice Regalado, "be defeated where a nominal or formal WHEREFORE, the instant petition is hereby DISMISSED. The Decision and
party is impleaded in the action since the latter would not have the degree of interest Resolution dated October 17, 2001 and June 20, 2002, respectively, of the CA in CA-
in the subject of the action which would warrant and entail the desirably active G.R. SP No. 64246, insofar as they nullified the assailed orders of the RTC, Branch 17
participation expected of litigants in a case."[43] in Batac, Ilocos Norte in Civil Case Nos. 3341-17 and 3342-17 on the ground of lack of
jurisdiction due to improper venue, are hereby AFFIRMED. The Orders dated
Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-17, Irene stands October 9, 2000, December 18, 2000, and March 15, 2001 of the RTC in Civil Case
undisputedly as the principal plaintiff, the real party-in-interest. Following Sec. 2 of Nos. 3341-17 and 3342-17 are accordingly ANNULLED and SET ASIDE and said
Rule 4, the subject civil cases ought to be commenced and prosecuted at the place civil cases are DISMISSED.
where Irene resides.
Costs against petitioners.
Principal Plaintiff not a Resident in Venue of Action
SO ORDERED
As earlier stated, no less than the RTC in Batac declared Irene as not a resident of
Batac, Ilocos Norte. Withal, that court was an improper venue for her conveyance Quisumbing, (Chairperson), Carpio Morales, Tinga, and Brion, JJ., concur.
action.

The Court can concede that Irene's three co-plaintiffs are all residents of Batac, Ilocos
Norte. But it ought to be stressed in this regard that not one of the three can be
considered as principal party-plaintiffs in Civil Case Nos. 3341-17 and 3342-17,
included as they were in the amended complaint as trustees of the principal plaintiff.

17
[G.R. No. L-27033. October 31, 1969.]
POLYTRADE CORPORATION, plaintiff-appellee, vs. VICTORIANO BLANCO,
defendant-appellant.
Paredes, Poblador, Cruz & Nazareno for plaintiff-appellee.
Isidro T . Almeda and Mario T . Benzuela for defendant-appellant.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; VENUE; VENUE IN PERSONAL
ACTIONS. Section 2(b), Rule 4 of the Rules of Court on venue of personal actions
triable by courts of first instance provides that such actions may be commenced and
tried 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." Qualifying
this provision is Sec. 3 of the same Rules which states that venue may be stipulated by
written agreement of the parties.
2. ID., ID., ID., ID; VENUE PROPERLY LAID IN THE COURT WHERE
DEFENDANT RESIDES WHERE THERE IS NO STIPULATION TO THE
CONTRARY. Where no such stipulation to sue and be sued exclusively in the
Manila courts appears in the contracts covering the first two causes of action, the
general rule set forth in Sec. 2(b), Rule 4 governs, and as to said two causes of action,
venue was properly laid in Bulacan, the province of defendant's residence. cdasia
3. ID.; ID.; ID.; ID.; STIPULATION OF THE PARTIES IN INSTANT CASE,
MERELY PERMISSIVE WHICH DOES NOT TRANSFER THE VENUE OF THE
ACTION; REASON. An accurate reading 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 defendants 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 Sec. 2(b) of
Rule 4. Renuntiatio non praesumitur.
4. CIVIL LAW; DAMAGES; ATTORNEY'S FEES AS LIQUIDATED DAMAGES;
AMOUNT RECOVERABLE BY THE LITIGANT JUDGMENT CREDITOR AND
NOT BY COUNSEL. The attorney's fees of 25% of the total principal indebtedness
are in the nature of liquidated damages and not, strictly speaking, the attorney's fees
recoverable as between attorney and client spoken of and regulated by the Rules of
Court. As long as this stipulation, called a penal clause, does not contravene law,
morals, or public order, it is strictly binding upon defendant. The attorneys' fees so
provided are awarded in favor of the litigant, not his counsel. It is the litigant, not
counsel, who is the judgment creditor entitled to enforce the judgment by execution.
The governing law is Article 2227 of the Civil Code.
5. ID.; ID.; ID.; ID.; FACTORS THAT AID IN DETERMINING INIQUITY OR
UNCONSCIONABLENESS, NOT APPLICABLE. The reasonableness of the
attorney's fees that are awarded in favor of the litigant and are governed by Article
2227 of the Civil Code are not strictly viewed in the light of such factors as the amount
and character of the services rendered, the nature and importance of the litigation,
and the professional character and the social standing of the attorney. These factors
may be an aid in the determination of the iniquity or unconscionableness of attorneys'
fees as liquidated damages.
6. ID.; ID.; ID.; ATTORNEYS' FEES AWARDED IN CASE AT BAR, NOT
INIQUITOUS OR UNCONSCIONABLE. The attorneys' fees awarded in the amount
of P51,961.63 in the instant case is not iniquitous or unconscionable under the
following circumstances: Plaintiff's lawyers concededly are of high standing. More
important is that the case should not have gone to court, it could have been easily
obligations. Defendant raises no defense nor does he deny the principal liability. The
writ of attachment issued upon defendant's properties yielded no more than P400,
and the continued maintenance by defendant of the suit is plainly intended for delay.
DECISION
SANCHEZ, J p:
Suit before the Court of First Instance of Bulacan on four causes of action to recover
the purchase price of rawhide delivered by plaintiff to defendant. 1 Plaintiff
corporation has its principal office and place of business in Makati, Rizal. Defendant
is a resident of Meycauayan, Bulacan. Defendant moved to dismiss upon the ground
of improper venue. He claims that by contract suit may only be lodged in the courts of
Manila. The Bulacan court overruled him. He did not answer the complaint. In
consequence, a default judgment was rendered against him on September 21, 1966,
thus:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff and against
defendant ordering defendant to pay plaintiff the following amounts:
First Cause of Action P60,845.67, with interest thereon at 1% a month from May 9,
1965 until the full amount is paid.
Second Cause of Action P51,952.55, with interest thereon at 1% a month from
March 30, 1965 until the full amount is paid.
Third Cause of Action P53,973.07, with interest thereon at 1% a month from July 3,
1965 until the full amount is paid.
18
Fourth Cause of Action P41,075.22, with interest thereon at 1% a month 2 until the
full amount is paid. cdphil
In addition, defendant shall pay plaintiff attorney's fees amounting to 25% of the
principal amount due in each cause of action, and the costs of the suit. The amount of
P400.00 shall be deducted from the total amount due plaintiff in accordance with this
judgment."
Defendant appealed.
1. The forefront question is whether or not venue was properly laid in the
province of Bulacan where defendant is a resident.
Section 2(b), Rule 4 of the Rules of Court on venue of personal actions triable by
courts of first instance and this is one provides that such "actions may be
commenced and tried 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." Qualifying this provision in Section 3 of the same Rule which states that
venue may be stipulated by written agreement "By written agreement of the
parties the venue of an action may be changed or transferred from one province to
another."
Defendant places his case upon Section 3 of Rule 4 just quoted. According to
defendant, plaintiff and defendant, by written contracts covering the four causes of
action, stipulated that: "The parties agree to sue and be sued in the Courts of
Manila." This agreement is valid. 3 Defendant says that because of such covenant
he can only be sued in the courts of Manila. We are thus called upon to shake
meaning from the terms of the agreement just quoted.
But first to the facts. No such stipulation appears in the contracts covering the first
two causes of action. The general rule set forth in Section 2(b), Rule 4, governs, and as
to said two causes of action, venue was properly laid in Bulacan, the province of
defendant's residence.
The stipulation adverted to is only found in the agreements covering the third and
fourth causes of action. 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.
Illuminating on this point is Engel vs. Schubert Theatrical Co., 151 N.Y.S. 593, 594.
And this, became there the stipulation as to venue is along lines similar to the present.
Said stipulation reads: "In case of dispute, both contracting parties agree to submit to
the jurisdiction of the Vienna courts." And the ruling is: "By the clause in question the
parties do not agree to submit their disputes to the jurisdiction of the Viennese court,
and to those courts only. There is nothing exclusive in the language used. They do
agree to submit to the Viennese jurisdiction, but they say not a word in restriction of
the jurisdiction of courts elsewhere; and whatever may be said on the subject of the
legality of contracts to submit controversies to courts of certain jurisdictions
exclusively, it is entirely plain that such agreements should be strictly construed, and
should not be extended by implication."
Venue here was properly laid.
2. Defendant next challenges the lower court's grant to plaintiff of interest at
the rate of one per centum per month. Defendant says that no such stipulation as to
right of interest appears in the sales confirmation orders which provided: "TERMS
60 days after delivery with interest accruing on postdated cheques beyond 30 days."
The flaw in this argument lies in that the interest and the rate thereof are expressly
covenanted in the covering trust receipts executed by defendant in favor of plaintiff,
as follows: "All obligations of the undersigned under this agreement of trust shall bear
interest at the rate of one per centum (1%) per month from the date due until paid."
On this score, we find no error.
3. Defendant protests the award of attorneys' fees which totals P51,961.63, i.e.,
25% of the total principal indebtedness of P207,846.51 (exclusive of interest).
Defendant's thesis is that the foregoing sum is "exorbitant and unconscionable."
To be borne in mind is that the attorneys' fees here provided is not, strictly speaking,
the attorneys' fees recoverable as between attorney and client spoken of and regulated
by the Rules of Court. Rather, the attorneys' fees here are in the nature of liquidated
damages and the stipulation therefor is aptly called a penal clause. 4 It has been said
that so long as such stipulation does not contravene law, morals, or public order, it
is strictly binding upon defendant. 5 The attorneys' fees so provided are awarded in
favor of the litigant, not his counsel. It is the litigant, not counsel, who is the
judgment creditor entitled to enforce the judgment by execution. 6
The governing law then is Article 2227 of the Civil Code, viz.: "Liquidated damages,
whether intended as an indemnity or a penalty, shall be equitably reduced if they are
iniquitous or unconscionable." For this reason, we do not really have to strictly view
the reasonableness of the attorneys' fees in the light of such factors as the amount and
character of the services rendered, the nature and importance of the litigation, and
the professional character and the social standing of the attorney. We do concede,
however, that these factors may be an aid in the determination of the iniquity or
unconscionableness of attorneys' fees as liquidated damages.
19
May the attorneys' fees (P51,961.63) here granted be tagged as iniquitous or
unconscionable? Upon the circumstances, our answer is in the negative. Plaintiff's
lawyers concededly are of high standing. More important is that this case should not
have gone to court. It could have been easily avoided had defendant been faithful in
complying with his obligations. It is not denied that the rawhide was converted into
leather and sold by defendant. He raises no defense. In fact, he did not even answer
the complaint in the lower court, and was thus declared in default. Nor does he deny
the principal liability. Add to all these the fact that the writ of attachment issued
below upon defendant's properties yielded no more than P400 and the picture is
complete. The continued maintenance by defendant of the suit is plainly intended for
delay. The attorneys' fees awarded cannot be called iniquitous or unconscionable.

In the very recent case of Universal Motor Corporation vs. Dy Hian Tat (1969), 28
SCRA 161, 170, we allowed attorneys' fees in the form of liquidated damages at the
rate of 25% of the total amount of the indebtedness. Here, the trial court has already
reduced the attorneys' fees from the stipulated 25% "of the total amount involved,
principal and interest, then unpaid" to only 25% of the principal amount due. There is
no reason why such judgment should be disturbed.

FOR THE REASON GIVEN, the appealed judgment is hereby affirmed, except that
interest granted, in reference to the fourth cause of action, should start from March
24, 1965.

Costs against defendant-appellant. So ordered.

Concepcion, C .J ., Reyes, J .B .L ., Dizon, Makalintal, Zaldivar, Castro, Fernando,

Teehankee and Barredo, JJ ., concur.

20
[G.R. No. L-28742. April 30, 1982.]
VIRGILIO CAPATI, plaintiff-appellant, vs. DR. JESUS P. OCAMPO, defendant-
appellee.
Filemon Catajor for plaintiff-appellant.
Jose R. Garcia for defendant-appellee.
SYNOPSIS
.Appellant, a resident of Pampanga and a contractor, entered into a sub-contract with
appellee for the construction of vault walls, exterior walls and columns of the Feati
Bank building in Iriga, Camarines Sur. The parties agreed that the same should be
completed on or before June 5, 1967. The subcontract also contained a stipulation
that all actions arising out or relating to the contract "may" be instituted in the Court
of First Instance of Naga City. Since appellee finished the construction only in June
20, 1967, appellant filed an action against the former for recovery of consequential
damages for the delay with the Court of First Instance of Pampanga. Appellee filed a
motion to dismiss on the ground of improper venue contending that the case can only
be filed in Naga City as stipulated in their agreement. Appellant opposed the motion
claiming that their agreement to hold the venue in Naga City was merely optional.
Upholding the appellee, the lower court dismissed the complaint. Hence, this appeal.
The Supreme Court held that the stipulation of the parties as to venue is only
permissive for they did not agree to file their suits solely and exclusively with the
Court of First Instance of Naga, and that since the action was filed in the court where
the plaintiff resides, the venue was properly laid.
Order appealed from set aside.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; VENUE OF PERSONAL ACTIONS;
RULE THEREON. The rule on venue of personal actions cognizable by the courts of
first instance is found in Section 2(b), Rule 4 of the Rules of Court, which provides
that such "actions may be commenced and tried 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." The said section is qualified by the following
provisions of Section 3 of the same rule: "By agreement of the parties the venue of an
action may he changed or transferred from one province to another."
2. ID.; ID.; ID.; ID.; STIPULATION REGARDING THERE TO PERMISSIVE
WHERE PARTIES DO NOT EXCLUDE ALL OTHER COURTS; CASE AT BAR. The
stipulation as to venue in the contract between the parties providing that "all actions
arising out of this contract may be instituted in the Court of First Instance of Naga
City, "is simply permissive. By the said stipulation, 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.
3. STATUTORY CONSTRUCTION; WORD "MAY" IS MERELY PERMISSIVE.
It is well settled that the word "may" is merely permissive and operates to confer
discretion upon a party. Under ordinary circumstances, the term "may be" connotes
possibility; it does not connote certainty. "May" is an auxiliary verb indicating liberty,
opportunity, permission or possibility.
4. REMEDIAL LAW; CIVIL PROCEDURE; VENUE OF PERSONAL ACTIONS;
PROPERLY LAID IN CASE AT BAR. Since the complaint has been filed in the
Court of First Instance of Pampanga, where the plaintiff resides, the venue of action is
properly laid in accordance with Section 2(b), Rule 4 of the Rules of Court.
DECISION
ESCOLIN, J p:
We set aside the order of the Court of First Instance of Pampanga in Civil Case No.
3188 which dismissed the plaintiff's complaint on ground of improper venue.
Plaintiff Virgilio Capati, a resident of Bacolor, Pampanga was the contractor of the
Feati Bank for the construction of its building in Iriga, Camarines Sur. On May 23,
1967, plaintiff entered into a sub-contract with the defendant Dr. Jesus Ocampo, a
resident of Naga City, whereby the latter, in consideration of the amount of P2,200.00,
undertook to construct the vault walls, exterior walls and columns of the said Feati
building in accordance with the specifications indicated therein. Defendant further
bound himself to complete said construction on or before June 5, 1967 and, to
emphasize this time frame for the completion of the construction job, defendant
affixed his signature below the following stipulation written in bold letters in the sub-
contract: "TIME IS ESSENTIAL, TO BE FINISHED 5 JUNE '67."
Claiming that defendant finished the construction in question only on June 20, 1967,
plaintiff filed in the Court of First Instance of Pampanga an action for recovery of
consequential damages in the sum of P85,000.00 with interest, plus attorney's fees
and costs. The complaint alleged inter alia that "due to the long unjustified delay
committed by defendant, in open violation of his express written agreement with
plaintiff, the latter has suffered great irreparable loss and damage . . ."
Defendant filed a motion to dismiss the complaint on the ground that venue of action
was improperly laid. The motion was premised on the stipulation printed at the back
of the contract which reads: "14. That all actions arising out, or relating to this
contract may be instituted in the Court of First Instance of the City of Naga."
21
Plaintiff filed an opposition to the motion, claiming that their agreement to hold the
venue in the Court of the First Instance of Naga City was merely optional to both
contracting parties. In support thereof, plaintiff cited the use of the word "may" in
relation with the institution of any action arising out of the contract.
The lower court, in resolving the motion to dismiss, ruled that "there was no sense in
providing the aforequoted stipulation, pursuant to Sec. 3 of Rule 4 of the Revised
Rules of Court, if after all, the parties are given the discretion or option of filing the
action in their respective residences," and thereby ordered the dismissal of the
complaint. cdll
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. LibLex
Since the complaint has been filed in the Court of First Instance of Pampanga, where
the plaintiff resides, the venue of action is properly laid in accordance with Section
2(b), Rule 4 of the Rules of Court.
WHEREFORE, the order appealed from is hereby set aside. Let the records be
returned to the court of origin for further proceedings. Costs against defendant-
appellee.

Hence, this appeal. SO ORDERED.

The rule on venue of personal actions cognizable by the courts of first instance is Barredo (Chairman), Aquino, De Castro and Ericta, JJ., concur.
found in Section 2(b), Rule 4 of the Rules of Court, which provides that such "actions
Concepcion Jr., and Abad Santos, JJ., are on leave.
may be commenced and tried 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." The said section is qualified by the following provisions of Section 3 of
the same rule:

"By written agreement of the parties the venue of an action may be changed or
transferred from one province to another."

Defendant stands firm on his contention that because of the aforequoted covenant
contained in par. 14 of the contract, he cannot be sued in any court except the Court of
First Instance of Naga City. We are thus called upon to rule on the issue as to whether
the stipulation of the parties on venue is restrictive in the sense that any litigation
arising from the contract can be filed only in the court of Naga City, or merely
permissive in that the parties may submit their disputes not only in Naga City but also
in the court where the defendant or the plaintiffs resides, at the election of the
plaintiff, as provided for by Section 2(b), Rule 4 of the Rules of Court.

It is well settled that the word "may" is merely permissive and operates to confer
discretion upon a party. Under ordinary circumstances, the term "may be" connotes
possibility; it does not connote certainty. "May" is an auxiliary verb indicating liberty,
opportunity, permission or possibility. 1

In Nicolas vs. Reparations Commission, 2 a case involving the interpretation of a

stipulation as to venue along lines similar to the present one, it was held that the
agreement of the parties which provided that "all legal actions arising out of this
contract . . . may be brought in and submitted to the jurisdiction of the proper courts
in the City of Manila," is not mandatory.

We hold that the stipulation as to venue in the contract in question is simply

permissive. By the said stipulation, the parties did not agree to file their suits solely
and exclusively with the Court of First Instance of Naga. They merely agreed to

22
[G.R. No. 119657. February 7, 1997.]
UNIMASTERS CONGLOMERATION, INC., petitioner, vs. COURT OF APPEALS and
KUBOTA AGRI-MACHINERY PHILIPPINES, INC., respondents.
Sebastian Liganor Galinato and Tierra for petitioner.
Farcon, Gabriel, Farcon and Associates for private respondent.
SYLLABUS
1. REMEDIAL LAW; ACTION; VENUE; AGREEMENTS THEREON ARE
EXPLICITLY ALLOWED; RULE. Rule 4 of the Rules of Court sets forth the
principles generally governing the venue of actions, whether real or personal, or
involving persons who neither reside nor are found in the Philippines or otherwise.
Agreements on venue are explicitly allowed. "By written agreement of the parties the
venue of an action may be changed or transferred from one province to another." Sec.
3, Rule 4, Rules of Court. Parties may by stipulation waive the legal venue and such
waiver is valid and effective being merely a personal privilege, which is not contrary to
public policy or prejudicial to the third persons. It is a general principle that a person
may renounce any right which the law gives unless such renunciation would be
against public policy.
2. ID.; ID.; ID.; STIPULATION; RESTRICTIVE OR PERMISSIVE;
RATIONALE. Written stipulations as to venue may be 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 suit not only in the place agreed upon but also in the places fixed
by law (Rule 4 specifically). As in any other agreement, what is essential is the
ascertainment of the intention of the parties respecting the matter. Since convenience
is the raison d'etre of the rules of venue, it is easy to accept the proposition that
normally, venue stipulations should be deemed permissive merely, and that
interpretation should be adopted which most serves the parties' convenience. In other
words, stipulations designating venues other than those assigned by Rule 4 should be
interpreted as designed to make it more convenient for the parties to institute actions
arising from or in relation to their agreements; that is to say, as simply adding to or
expounding the venues indicated in said Rule 4.
3. ID.; ID.; ID.; ID.; GENERALLY REGARDED AS PERMISSIVE OR
COMPLIMENTARY TO RULE 4 OF THE RULES OF COURT; EXCEPTION. 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 the 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 prescription 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 venue 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, E.G.
"only," "solely," "exclusively in this court," "in no other court save ," "particularly,"
"nowhere else but/except ," etc. 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.
4. ID.; ID.; VENUE AS DISTINGUISHED FROM JURISDICTION, CASE AT
BAR. One last word, respecting KUBOTA's theory that the Regional Trial Court had
"no jurisdiction to take cognizance of . . . (UNIMASTER'S) 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. The action at bar, for the recovery of
damages in an amount considerably in excess of P20,000.00 is assuredly without the
jurisdiction of a Regional Trial Court. Sec. 19 (8), B.P. 129, The Judiciary
Reorganization Act of 1980. 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, Sec. 4, Rule 4, 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" were commenced in a province or city
other than that "where the property or any part thereof lies," 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.
DECISION
NARVASA, C .J p:
The appellate proceeding at bar turns upon the interpretation of a stipulation in a
contract governing venue of actions thereunder arising.
23
On October 28, 1988 Kubota Agri-Machinery Philippines, Inc. (hereafter, simply
KUBOTA) and Unimasters Conglomeration, Inc. (hereafter, simply UNIMASTERS)
entered into a "Dealership Agreement for Sales and Services" of the former's products
in Samar and Leyte Provinces. 1 The contract contained, among others:
1) a stipulation reading: " . . . All suits arising out of this Agreement shall be
filed with / in the proper Courts of Quezon City," and
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.
Some 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.
On the same day the Trial Court issued a restraining order enjoining METROBANK
from "authorizing or effecting payment of any alleged obligation of . . .
(UNIMASTERS) to defendant . . . KUBOTA arising out of or in connection with
purchases made by defendant Go against the credit line caused to be established by . . .
(UNIMASTERS) for and in the amount of P2 million covered by defendant
METROBANK . . . or by way of charging . . . (UNIMASTERS) for any amount paid and
released to defendant . . . (KUBOTA) by the Head Office of METROBANK in Makati,
Metro-Manila . . ." The Court also set the application for preliminary injunction for
hearing on January 10, 1994 at 8:30 o'clock in the morning.
On January 4, 1994 KUBOTA filed two motions. One prayed for dismissal of the case
on the ground of improper venue (said motion being set for hearing on January 11,
1994). The other prayed for the transfer of the injunction hearing to January 11, 1994
because its counsel was not available on January 10 due to a prior commitment before
another court.
KUBOTA claims that notwithstanding that its motion to transfer hearing had been
granted, the Trial Court went ahead with the hearing on the injunction incident on
January 10, 1994 during which it received the direct testimony of UNIMASTERS'
general manager, Wilford Chan; that KUBOTA's counsel was "shocked" when he
learned of this on the morning of the 11th, but was nonetheless instructed to proceed
to cross-examine the witness; that when said counsel remonstrated that this was
unfair, the Court reset the hearing to the afternoon of that same day, at which time
Wilford Chan was recalled to the stand to repeat his direct testimony. It appears that
cross-examination of Chan was then undertaken by KUBOTA's lawyer with the
"express reservation that . . . (KUBOTA was) not (thereby) waiving and/or
abandoning its motion to dismiss;" and that in the course of the cross-examination,
exhibits (numbered from 1 to 20) were presented by said attorney who afterwards
submitted a memorandum in lieu of testimonial evidence. 2
On January 13, 1994, the Trial Court handed down an Order authorizing the issuance
of the preliminary injunction prayed for, upon a bond of P2,000,000.00. 3 And on
February 3, 1994, the same Court promulgated an Order denying KUBOTA's motion
to dismiss. Said the Court:
"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
The Appellate Court agreed with KUBOTA that in line with the Rules of Court 5 and
this Court's relevant rulings 6 the stipulation respecting venue in its Dealership
Agreement with UNIMASTERS did in truth limit the venue of all suits arising
thereunder only and exclusively to "the proper courts of Quezon City." 7 The Court
also held that the participation of KUBOTA's counsel at the hearing on the injunction
incident did not in the premises operate as a waiver or abandonment of its objection
to venue; that assuming that KUBOTA's standard printed invoices provided that the
venue of actions thereunder should be laid at the Court of the City of Manila, this was
inconsequential since such provision would govern "suits or legal actions between
petitioner and its buyers" but not actions under the Dealership Agreement between
KUBOTA and UNIMASTERS, the venue of which was controlled by paragraph No. 7
thereof; and that no impediment precludes issuance of a TRO or injunctive writ by the
Quezon City RTC against METROBANK-Tacloban since the same "may be served on
the principal office of METROBANK in Makati and would be binding on and
enforceable against, METROBANK branch in Tacloban." cdasia
After its motion for reconsideration of that decision was turned down by the Court of
Appeals, UNIMASTERS appealed to this Court. Here, it ascribes to the Court of
Appeals several errors which it believes warrant reversal of the verdict, namely: 8
24
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);"
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."
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.
The essential question really is that posed in the first and second assigned errors, i.e.,
what construction should be placed on the stipulation in the Dealership Agreement
that "(a)ll suits arising out of this Agreement shall be filed with/in the proper Courts
of Quezon City."
Rule 4 of the Rules of Court sets forth the principles generally governing the venue of
actions, whether real or personal, or involving persons who neither reside nor are
found in the Philippines or otherwise. Agreements on venue are explicitly allowed.
"By written agreement of the parties the venue of an action may be changed or
transferred from one province to another." 11 Parties may by stipulation waive the
legal venue and such waiver is valid and effective being merely a personal privilege,
which is not contrary to public policy or prejudicial to third persons. It is a general
principle that a person may renounce any right which the law gives unless such
renunciation would be against public policy. 12
Written stipulations as to venue may be 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 suit not only in the place agreed upon but also in the places fixed by law (Rule 4,
specifically). As in any other agreement, what is essential is the ascertainment of the
intention of the parties respecting the matter.
Since convenience is the raison d'etre of the rules of venue, 13 it is easy to accept the
proposition that normally, venue stipulations should be deemed permissive merely,
and that interpretation should be adopted which most serves the parties' convenience.
In other words, stipulations designating venues other than those assigned by Rule 4
should be interpreted as designed to make it more convenient for the parties to
institute actions arising from or in relation to their agreements; that is to say, as
simply adding to or expanding the venues indicated in said Rule 4.
On the other hand, because restrictive stipulations are in derogation of this general
policy, the language of the parties must be so clear and categorical as to leave no
doubt of their intention to limit the place or places, or to fix places other than those
indicated in Rule 4, for their actions. This is easier said than done, however, as an
examination of precedents involving venue covenants will immediately disclose.
In at least thirteen (13) cases, this Court construed the venue stipulations involved as
merely permissive. These are:
1. Polytrade Corporation v. Blanco, decided in 1969. 14 In this case, the venue
stipulation was as follows:
"The parties agree to sue and be sued in the Courts of Manila."
This Court ruled that such a provision "does not preclude the filing of suits in the
residence of the plaintiff or the 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. 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."
The Polytrade doctrine was reiterated expressly or implicitly in subsequent cases,
numbering at least ten (10).
2. Nicolas v. Reparations Commission, decided in 1975. 15 In this case, the
stipulation on venue read:
" . . . (A)ll legal actions arising out of this contract . . . may be brought in and
submitted to the jurisdiction of the proper courts in the City of Manila."
25
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 specified 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."
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."
5. Western Minolco v. Court of Appeals, decided in 1988. 18 Here, the
provision governing venue read:
"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.
6. Moles v. Intermediate Appellate Court, decided in 1989. 19 In this
proceeding, the Sales Invoice of a linotype machine stated that the proper venue
should be Iloilo.
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 . . . ."
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.
8. Nasser v. Court of Appeals, decided in 1990, 21 in which the venue
stipulation in the promissory notes in question read:
" . . . (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.
9. Surigao Century Sawmill Co., Inc. v. Court of Appeals, decided in 1993. 22 In
this case, the provision concerning venue was contained in a contract of lease of a
barge, and read as follows:
" . . . (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
26
plaintiff where no qualifying or restrictive words indicate that the agreed place alone
was the chosen venue.
10. Philippine Banking Corporation v. Hon. Salvador Tensuan, etc., Circle
Financial Corporation, et al., decided in 1993. 23 Here, the stipulation on venue was
contained in promissory notes and read as follows:
"I/We hereby expressly submit to the jurisdiction of the courts of Valenzuela any legal
action which may arise out of this promissory note."
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."
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:
"I/we expressly submit to the jurisdiction of the courts of Manila, any legal action
which may arise out of this promissory note."
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 740 [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."
Still other precedents adhered to the same principle.
12. Tantoco v. Court of Appeals, decided in 1977. 25 Here, the parties agreed in
their sales contracts that the courts of Manila shall have jurisdiction over any legal
action arising out of their transaction. This Court held that the parties agreed merely
to add the courts of Manila as tribunals to which they may resort in the event of suit,
to those indicated by the law: the courts either of Rizal, of which private respondent
was a resident, or of Bulacan, where petitioner resided.
13. Sweet Lines, Inc. v. Teves, promulgated in 1987. 26 In this case, a similar
stipulation on venue, contained in the shipping ticket issued by Sweet Lines, Inc. (as
Condition 14)
". . . 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"
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.
On the other hand, in the cases hereunder mentioned, stipulations on venue were
held to be restrictive, or mandatory.
1. Bautista vs. De Borja, decided in 1966. 27 In this case, the contract provided
that in case of any litigation arising therefrom or in connection therewith, the venue of
the action shall be in the City of Manila. This Court held that without either party
reserving the right to choose the venue of action as fixed by law, it can reasonably be
inferred that the parties intended to definitely fix the venue of the action, in
connection with the contract sued upon in the proper courts of the City of Manila only,
notwithstanding that neither party is a resident of Manila.
2. Gesmundo v. JRB Realty Corporation, decided in 1994. 28 Here the lease
contract declared that
27
" . . . (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. . ."
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)."
3. Hoechst Philippines, Inc. v. Torres, 29 decided much earlier, in 1978,
involved a strikingly similar stipulation, which read:
" . . . (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."
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
28
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

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.

SO ORDERED.

Padilla, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza,
Francisco, Hermosisima, Jr., Panganiban and Torres, Jr., JJ., concur.

29
[G.R. No. L-44351. May 18, 1978.]
HOECHST PHILIPPINES, INC., petitioner, vs. FRANCISCO TORRES and the
Honorable PROCORO J. DONATO, Judge of the Court of First Instance of Isabela,
respondents.
Manuel S. Fornacier, Jr. for petitioner.
Melanio T. Singson for private respondent.
SYNOPSIS
The Court of First Instance of Isabela took cognizance of private respondent's
complaint for breach of a distributorship contract on the part of the petitioner, despite
a stipulation in the said contract that venue in case of any litigation arising out of the
agreement "shall be in the competent courts of the Province of Rizal." Petitioner
questions the court's authority to take cognizance of the case on the ground of
improper venue. Respondents argue that the word "shall" in the stipulation in
question should be construed to be merely permissive and not mandatory inasmuch
as the stipulations in the contract are standard and pre-made giving the distributors
no option except to take it or leave it, and that to give effect to the stipulation in
controversy would be against public policy because it serves the convenience and
purpose of petitioner only to the prejudice of small-time distributors.
The Supreme Court ruled that a written agreement as to venue made before the filing
of an action is not only binding between the parties but also enforceable by the court
and may not be declared to be against public policy where it is shown that the party
concerned is in a position to carry on a litigation in the stipulated place.
Petition granted
SYLLABUS
1. ID.; ID.; ID.; JUDGE CANNOT ORDER RETURN OF PERSONAL
PROPERTY ATTACHED. A property levied upon pursuant to a valid order of
attachment issued by a judge of one branch is in custodia legis and cannot be ordered
delivered or returned by the judge of another branch of the same court in an action for
replevin in view of Rule 60, Section 2, par. (c) of the Rules of Court. The words "or
attachment" were added to the new provision for the purpose of precluding the
occurrence of a dismissal situation whereby a judge of one branch can revoke the
order issued by a judge of another branch of the same court, to the great prejudice of
the orderly administration of justice.
2. CONTEMPT; INDIRECT CONTEMPT; WHEN NOT PROPER. A sheriff
cannot be held for indirect contempt by the judge of one branch for disobeying his
order to take possession of and deliver a personal property that had been previously
attached pursuant to a valid order of the judge of another branch of the same court.
DECISION
BARREDO, J p:
Petition for certiorari and prohibition to declare respondent court without authority
to take cognizance of private respondent's action for "Breach of Contract with
Preliminary Injunction" and to enjoin said court from further taking any action in said
case upon the ground of improper laying of the venue.
On April 8, 1976, private respondent, Francisco Torres, filed with respondent Court of
First Instance of Isabela complaint in Civil Case No. V-296 alleging breach of a
distributorship contract on the part of petitioner, Hoechst Philippines, Inc. On April
14, 1976, petitioner filed a motion to dismiss said complaint based on the ground that
as the contract, the very actionable document invoked in the complaint, provides that
"(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", venue has been improperly laid
in respondent court, petitioner citing in his said motion principally the ruling of this
Supreme Court in Bautista vs. De Borja, 18 SCRA 474. Respondent court nevertheless
denied the said motion to dismiss as well as the motion for reconsideration of that
denial, hence the present petition.
Respondent do not deny in their respective answers the clear tenor of the above-
quoted stipulation as to venue in the contract in dispute. It is the position of
respondent judge, however, that inasmuch as the contract was "a prepared standard
form for the defendant-company, wherein blanks were merely filled up after the
party-distributor agreed on the valuation of products which he may order from the
company for one year" and "all stipulations were standard and pre-made by the
company, prepared by, as your Respondent can safely and rightly assume, its legal
department" and "it (only) remains upon party-distributor to stamp his approval to
the whole contract", hence "plaintiff distributor was given no option whatsoever
except `to take it or leave it' ", the word "shall" in the stipulation in question should be
construed to be merely permissive and not mandatory. It is argued that this
construction serves not only the exclusive interests of petitioner but also that of
private respondent.
It is further contended in said answer that reading the terms of the contract, it can be
gathered that most likely, it would be petitioner who would have to sue private
respondent, and, therefore, the stipulation as to venue was meant to apply only to
suits to be filed by petitioner. Finally, it is maintained that there are no words in the
contract expressly restricting the venue to the courts of Rizal. prLL
Upon the other hand, in the answer of private respondent, he capitalizes on the theory
that inasmuch as petitioner is a multinational company, it is against public policy for
it to stipulate in any contract that the venue of actions thereunder should be in any
particular place, much less its place of residence, to the prejudice of small-time
distributors, the private respondent. It is urged that to give effect to the stipulation in
30
controversy "is to serve the convenience and the purpose of the petitioner only; its
effect is to discourage, to deter, to render expensive and uneconomical the filing of
suits by small-time company distributors against the petitioner even for extremely
meritorious cases of latter's breach or violation of such distribution agreement."
The pose taken by respondents does evoke sympathy, but it can hardly carry the day
for them. Change or transfer of venue from that fixed in the rules may be effected
upon written agreement of the parties not only before the actual filing of the action
but even after the same has been filed. The settled rule of jurisprudence in this
jurisdiction is that a written agreement of the parties as to venue, as authorized by
Section 3, Rule 4, is not only binding between the parties but also enforceable by the
courts. 1 It is only after the action has been filed already that change or transfer of
venue by agreement of the parties is understandably controllable in the discretion of
the court. 2
The agreement in this case was entered into long before the petitioner's action was
filed. It is clear and unequivocal. The parties therein stipulated that "(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." 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.
Respondent judge rather vehemently argues, however, that under the circumstances
obtaining between the parties, as earlier stated in this decision, it is permissible,
notwithstanding Our ruling in Bautista, supra, that the word " shall" in the agreement
in question be construed as "may", hence not strictly obligatory. Private respondent
points out that he had no choice but to sign the "Distributorship Agreement" in
question, he being practically at the mercy of petitioner company which is allegedly a
multinational corporation. He maintains that to enforce the agreement literally would
amount to a denial to him, and to other distributors similarly situated, of the
opportunity to file any suit against petitioner.
But a cursory inquiry into the respective economic conditions of the parties herein as
reflected in the record before Us does not show that private respondent Francisco
Torres is really in no position to carry on a litigation in the Province of Rizal,
because of his residence or place of business being in Isabela province. The volume of
business covered by the Distributorship Agreement in question, Annex C of the
Petition, and to be handled by private respondent Torres is P700,000. The amount
sought to be recovered by said respondent in his complaint, Annex A of the Petition,
totals more than P300,000. These circumstances preclude, in Our view, the need to
apply equitable considerations to the case of respondent Torres. It is quite obvious
that his economic condition does not warrant non-enforcement of the stipulation as to
venue that he has agreed to. We are persuaded that his pretension that he had no
alternative but to agree, even if true, does not merit relief. Considering the nature and
volume of the business he has with petitioner, there is nothing oppressive in his being
required to litigate out of his province. After all, for practical reasons, there seems to
be justification also for petitioner to see to it that all suits against it be concentrated in
the Province of Rizal, as otherwise, considering the nationwide extent of its business,
it would be greatly inconvenienced if it has to appear in so many provinces everytime
an action is filed against it. We are convinced both parties agreed to the venue in
controversy with eyes wide open.
IN VIEW OF ALL THE FOREGOING, the petition is granted, the orders of
respondent judge of May 13, 1976 and July 12, 1976 are hereby set aside, and
petitioner's motion to dismiss private respondent's complaint in question is granted.
Costs against private respondent Francisco Torres.
Fernando, Antonio, Aquino, Concepcion Jr., and Santos, JJ., concur.

We have given due attention to this posture of respondents. Indeed, there may be
instances when an agreement as to venue may be so oppressive as to effectively deny
to the party concerned access to the courts by reason of poverty. The difficulties
pictured by respondents that a poor plaintiff from a distant province may have to
encounter in filing suit in a particular place can indeed happen. In such an
eventuality and depending on the peculiar circumstances of the case, the Court may
declare the agreement as to venue to be in effect contrary to public policy, despite
that in general, changes and transfers of venue by written agreement of the parties
is allowable whenever it is shown that a stipulation as to venue works injustice by
practically denying to the party concerned a fair opportunity to file suit in the place
designated by the rules. prcd

31
SWEET LINE, INC., petitioner, vs. HON. BERNARDO TEVES, Presiding Judge, CFI
of Misamis Oriental, Branch VII, LEOVIGILDO TANDOG, JR., and ROGELIO TIRO,
respondents.
Filiberto Leonardo, Abelardo C. Almario & Samuel B. Abadiano for petitioner.
Leovigildo Vallar for private respondents.
SYNOPSIS
Two passengers of an inter-island vessel sued petitioner company in the Court o First
Instance of Misamis Oriental for breach of contract of carriage. Petitioner moved to
dismiss the complaint on the ground of improper venue. The motion was premised on
the condition printed att he back of the tickets that actions arising from "the
provisions of this ticket shall be filed in the competent courts in the City oif Cebu.
The trial court denied the motion to dismiss as well as the motion for reconsideration.
The Supreme Court sustained the trial court and declared the condition void and
unenforceable as contrary to public policy which is to make the courts accessible to all
who may have need of their services.
SYLLABUS
1. CONTRACT; CONTRACTS OF ADHESION, VALIDITY OF. The validity or
enforceability of contracts of adhesion are to be determined by the peculiar
circumstances obtaining in each case and the nature and conditions or terms sought
to be enforced. For, while generally, stipulations in a contract come about after
deliberate drafting by the parties thereto, in a contract of adhesion, however, all its
provisions have been drafted only by one party, usually a corporation, and the only
participation of the other party is the signing of his signature or his adhesion thereto.
2. CIVIL ACTIONS; VENUE; SUBJECT TO PARTIES' AGREEMENT. A
written agreement of the parties as to venue, as authorized by Section 3, Rule 4, is not
only binding between the parties but also enforceable by the courts. After an action
has been filed, change or transfer of venue by agreement of the parties is controllable
in the discretion of the court.
3. ID.; ID.; ID.; WHEN CONTRARY TO PUBLIC POLICY. The Court may
declare the agreement as to venue to be in effect contrary to public policy, despite
that in general, changes and transfers of venue by written agreement of the parties are
allowable whenever it is shown that a stipulation as to venue works injustice by
practically denying to the party concerned designated by the rules.
DECISION
SANTOS, J p:
This is an original action for Prohibition with Preliminary Injunction filed October 3,
1973 to restrain respondent Judge from proceeding further with Civil Case No. 4091,
entitled "Leovigildo D. Tandog, Jr. and Rogelio Tiro v. Sweet Lines, Inc." after he
denied petitioner's Motion to Dismiss the complaint, and the Motion for
Reconsideration of said order. 1
Briefly, the facts of record follow. Private respondents Atty. Leovigildo Tandog and
Rogelio Tiro, a contractor by professions, bought tickets Nos. 0011736 and 011737 for
Voyage 90 on December 31, 1971 at the branch office of petitioner, a shipping
company transporting inter-island passengers and cargoes, at Cagayan de Oro City.
Respondents were to board petitioner's vessel, M/S "Sweet Hope" bound for
Tagbilaran City via the port of Cebu. Upon learning that the vessel was not proceeding
to Bohol, since many passengers were bound for Surigao, private respondents per
advice, went to the branch office for proper relocation to M/S "Sweet Town". Because
the said vessel was already filed to capacity, they were forced to agree "to hide at the
cargo section to avoid inspection of the officers of the Philippine Coastguard." Private
respondents alleged that they were, during the trip," "exposed to the scorching heat of
the sun and the dust coming from the ship's cargo of corn grits," and that the tickets
they bought at Cagayan de Oro City for Tagbilaran were not honored and they were
constrained to pay for other tickets. In view thereof, private respondents sued
petitioner for damages and for breach of contract of carriage in the alleged sum of
P110,000.00 before respondents Court of First Instance of Misamis Oriental. 2
Petitioner moved to dismiss the complaint on the ground of improper venue. This
motion was premised on the condition printed at the back of the tickets, i.e.,
Condition No. 14, which reads: cdrep
"14. It is hereby agreed and understood that any and all actions arising out of the
conditions and provisions of this ticket, irrespective of where it is issued, shall be filed
in the competent courts in the City of Cebu." 3
The motion was denied by the trial court. 4 Petitioner moved to reconsider the order
of denial, but to no avail. 5 Hence, this instant petition for prohibition with
preliminary injunction, alleging that the respondent judge had departed from the
"accepted and usual course of judicial proceeding" and "had acted without or in excess
or in error of his jurisdiction or in gross abuse of discretion." 6
In Our resolution of November 20, 1973, We restrained respondent Judge from
proceeding further with the case and required respondents to comment. 7 On January
18, 1974, We gave due course to the petition and required respondents to answer. 8
Thereafter, the parties submitted their respective memoranda in support of their
respective contentions. 9
Presented thus for Our resolution is a question which, to all appearances, is one of
first impression, to wit Is Condition No. 14 printed at the back of the petitioner's
passage tickets purchased by private respondents, which limits the venue of actions
32
arising from the contract of carriage to the Court of First Instance of Cebu, valid and
enforceable? Otherwise stated, may a common carrier engaged in inter-island
shipping stipulate thru a condition printed at the back of passage tickets to its vessels
that any and all actions arising out of the contract of carriage should be filed only in a
particular province or city, in this case the City of Cebu, to the exclusion of all others?
Petitioner contends that Condition No. 14 is valid and enforceable, since private
respondents acceded to it when they purchased passage tickets at its Cagayan de Oro
branch office and took its vessel M/S "Sweet Town" for passage to Tagbilaran, Bohol;
that the condition fixing the venue of actions in the City of Cebu is proper since venue
may be validly waived, citing cases; 10 that is an effective waiver of venue, valid and
binding as such, since it is printed in bold and capital letters and not in fine print and
merely assigns the place where the action arising from the contract is instituted,
likewise citing cases; 11 and that condition No. 14 is unequivocal and mandatory, the
words and phrases "any and all", "irrespective of where it is issued," and "shall" leave
no doubt that the intention of Condition No. 14 is to fix the venue in the City of Cebu,
to the exclusion of all other places; that the orders of the respondent Judge are an
unwarranted departure from established jurisprudence governing the case, and that
he acted without or in excess of his jurisdiction in issuing the orders complained of. 12
On the other hand, private respondents claim that Condition No. 14 is not valid; that
the same is not an essential element of the contract of carriage, being in itself a
different agreement which requires the mutual consent of the parties to it; that they
had no say in its preparation, the existence of which they could not refuse, hence, they
had no choice but to pay for the tickets and to avail of petitioner's shipping facilities
out of necessity; that the carrier "has been exacting too much from the public by
inserting impositions in the passage tickets too burdensome to bear;" that the
condition which was printed in fine letters is an imposition on the riding public and
does not bind respondents, citing cases; 13 that while venue of actions may be
transferred from one province to another, such arrangement requires the "written
agreement of the parties", not to be imposed unilaterally; and that assuming that the
condition is valid, it is not exclusive and does not, therefore, exclude the filing of the
action in Misamis Oriental, 14
There is no question that there was a valid contract of carriage entered into by
petitioner and private respondents and that the passage tickets, upon which the latter
based their complaint, are the best evidence thereof. All the essential elements of a
valid contract, i.e., consent, cause or consideration and object, are present. As held in
Peralta de Guerrero, et al. v. Madrigal Shipping Co., Inc., 15
"It is a matter of common knowledge that whenever a passenger boards a ship for
transportation from one place to another he is issued a ticket by the shipper which has
all the elements of a written contract, Namely: (1) the consent of the contracting
parties manifested by the fact that the passenger boards the ship and the shipper
consents or accepts him in the ship for transportation; (2) cause or consideration
which is the fare paid by the passenger as stated in the ticket; (3) object, which is the
transportation of the passenger from the place of departure to the place of destination
which are stated in the ticket."
It should be borne in mind, however, that with respect to the fourteen (14) conditions
one of which is "Condition No. 14" which is in issue in this case printed at the
back of the passage tickets, these are commonly known as "contracts of adhesion," the
validly and/or enforceability of which will have to be determined by the peculiar
circumstances obtaining in each case and the nature of the conditions or terms sought
to be enforced. For, "(W)hile generally, stipulations in a contract come about after
deliberate drafting by the parties thereto, . . . there are certain contracts almost all the
provisions of which have been drafted only by one party, usually a corporation. Such
contracts are called contracts of adhesion, because the only participation of the party
is the signing of his signature or his 'adhesion' thereto. Insurance contracts, bills of
lading, contracts of sale of lots on the installment plan fall into this category." 16
By the peculiar circumstances under which contracts of adhesion are entered into
namely, that it is drafted only by one party, usually the corporation, and is sought to
be accepted or adhered to by the other party, in this instance the passengers, private
respondents, who cannot change the same and who are thus made to adhere thereto
on the "take it or leave it" basis - certain guidelines in the determination of their
validity and/or enforceability have been formulated in order to insure that justice and
fair play characterize the relationship of the contracting parties. Thus, this Court
speaking through Justice J.B.L. Reyes in Qua Chee Gan v. Law Union and Rock
Insurance Co., 17 and later through Justice Fernando in Fieldman Insurance v. Vargas,
18 held
"The courts cannot ignore that nowadays, monopolies, cartels and concentration 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 since Raymond Saleilles 'contracts by adherence'
(contracts d' adhesion) in contrast to those entered into by parties bargaining on an
equal footing. Such contracts (of which policies of insurance and international bill of
lading are prime examples) obviously call for greater strictness and vigilance on the
part of the courts of justice with a view to protecting the weaker party from abuses
and imposition, and prevent their becoming traps for the unwary."
To the same effect and import, and, in recognition of the peculiar character of
contracts of this kind, the protection of the disadvantaged is expressly enjoined by the
New Civil Code
"In all contractual, property or other relations, when one of the parties is at a
disadvantage on account of his moral dependence, is ignorance, indigence, mental
33
weakness, tender age and other handicap, the courts must be vigilant for his
protection." 19
Considered in the light of the foregoing norms and in the context of circumstances
prevailing in the inter-island shipping industry in the country today, We find and hold
that Condition No. 14 printed at the back of the passage tickets should be held as void
and unenforceable for the following reasons first, under circumstances obtaining in
the inter-island shipping industry, it is not just and fair to bind passengers to the
terms of the conditions printed at the back of the passage tickets, on which Condition
No. 14 is printed in fine letters, and second, Condition No. 14 subverts the public
policy on transfer of venue of proceedings of this nature, since the same will prejudice
rights and interests of innumerable passengers in different parts of the country who,
under Condition No. 14, will have to file suits against petitioner only in the City of
Cebu.
1. It is a matter of public knowledge, of which We can take judicial notice, that
there is a dearth of and acute shortage in inter-island vessels plying between the
country's several islands, and the facilities they offer leave much to be desired. Thus,
even under ordinary circumstances, the piers are congested with passengers and their
cargo waiting to be transported, The conditions are even worse at peak and/or the
rainy seasons, when passengers literally scramble to secure whatever
accommodations may be availed of, even through circuitous routes, and/or at the risk
of their safety their immediate concern, for the moment, being to be able to board
vessels with the hope of reaching their destinations. The schedules are as often as
not if not more so delayed or altered. This was precisely the experience of private
respondents when they were relocated to M/S "Sweet Town" from M/S "Sweet Hope"
and then allegedly "exposed to the scorching heat of the sun and the dust coming from
the ship's cargo of corn grits," because even the latter vessel was filled to capacity.
Under these circumstances, it is hardly just and proper to expect the passengers to
examine their tickets received from crowded/congested counters, more often than not
during rush hours, for conditions that may be printed thereon, much less charge them
with having consented to the conditioner so printed, especially if there are a number
of such conditions in fine print, as in this case. 20
Again, it should be noted that Condition No. 14 was prepared solely at the instance of
the petitioner; respondents had no say in its preparation. Neither did the latter have
the opportunity to take the same into account prior to the purchase of their tickets.
For, unlike the small print provisions of insurance contracts the common example
of contracts of adherence which are entered into by the insured in full awareness of
said conditions, since the insured is afforded the opportunity to examine and consider
the same, passengers of inter-island vessels do not have the same chance, since their
alleged adhesion is presumed only from the fact that they purchased the passage
tickets.
It should also be stressed that shipping companies are franchise holders of certificates
of public convenience and, therefore, possess a virtual monopoly over the business of
transporting passengers between the ports covered by their franchise. This being so,
shipping companies, like petitioner, engaged in inter-island shipping, have a virtual
monopoly of the business of transporting passengers and may thus dictate their terms
of passage, leaving passengers with no choice but to buy their tickets and avail of their
vessels and facilities. Finally, judicial notice may be taken of the fact that the bulk of
those who board these inter-island vessels come from the low-income groups and are
less literate, and who have little or no choice but to avail of petitioner's vessels. cdphil
2. Condition No. 14 is subversive of public policy on transfers of venue of
actions. For, although venue may be changed or transferred from one province to
another by agreement of the parties in writing pursuant to Rule 4, Section 3, of the
Rules of Court, such an agreement will not be held valid where it practically negates
the action of the claimants, such as the private respondents herein. The philosophy
underlying the provisions on transfer of venue of actions is the convenience of the
plaintiffs as well as his witnesses and to promote the ends of justice. 21 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. The condition will thus defeat, instead of enhance, the ends of justice.
Upon the other hand, petitioner has branches or offices in the respective ports of call
of its vessels and can afford to litigate in any of these places. Hence, the filing of the
suit in the CFI of Misamis Oriental, as was done in the instant case, will not cause
inconvenience to, much less prejudice, petitioner.
Public policy is ". . . that principle of the law which holds that no subject or citizen can
lawfully do that which has a tendency to be injurious to the public or against the
public good . . .". 22 Under this principle ". . . freedom of contract or private dealing is
restricted by law for the good of the public." 23 Clearly, Condition No. 14, if enforced,
will be subversive of the public good or interest, since it will frustrate in meritorious
cases, actions of passenger claimants outside of Cebu City, thus placing petitioner
company at a decided advantage over said persons, who may have perfectly legitimate
claims against it. The said condition should, therefore, be declared void and
unenforceable, as contrary to public policy to make the courts accessible to all who
may have need of their services.
WHEREFORE, the petition for prohibition is DISMISSED. The restraining order
issued on November 20, 1973, is hereby LIFTED and SET ASIDE. Costs against
petitioner.
34
G.R. No. 156966, May 07, 2004
PILIPINO TELEPHONE CORPORATION, petitioner, vs. DELFINO
TECSON, respondent.
DECISION
VITUG, J.:
The facts, by and large, are undisputed.
On various dates in 1996, Delfino C. Tecson applied for six (6) cellular phone
subscriptions with petitioner Pilipino Telephone Corporation (PILTEL), a company
engaged in the telecommunications business, which applications were each approved
and covered, respectively, by six mobiline service agreements.
On 05 April 2001, respondent filed with the Regional Trial Court of Iligan City, Lanao
Del Norte, a complaint against petitioner for a Sum of Money and Damages.
Petitioner moved for the dismissal of the complaint on the ground of improper venue,
citing a common provision in the mobiline service agreements to the effect that -
Venue of all suits arising from this Agreement or any other suit directly or indirectly
arising from the relationship between PILTEL and subscriber shall be in the proper
courts of Makati, Metro Manila. Subscriber hereby expressly waives any other
venues.[1]
In an order, dated 15 August 2001, the Regional Trial Court of Iligan City, Lanao del
Norte, denied petitioners motion to dismiss and required it to file an answer within
15 days from receipt thereof.
Petitioner PILTEL filed a motion for the reconsideration, through registered mail, of
the order of the trial court. In its subsequent order, dated 08 October 2001, the trial
court denied the motion for reconsideration.
Petitioner filed a petition for certiorari under Rule 65 of the Revised Rules of Civil
Procedure before the Court of Appeals.
The Court of Appeals, in its decision of 30 April 2002, saw no merit in the petition
and affirmed the assailed orders of the trial court. Petitioner moved for a
reconsideration, but the appellate court, in its order of 21 January 2003, denied the
motion.
There is merit in the instant petition.
Section 4, Rule 4, of the Revised Rules of Civil Procedure[2] allows the parties to agree
and stipulate in writing, before the filing of an action, on the exclusive venue of any
litigation between them. Such an agreement would be valid and binding provided that
the stipulation on the chosen venue is exclusive in nature or in intent, that it is
expressed in writing by the parties thereto, and that it is entered into before the filing
of the suit. The provision contained in paragraph 22 of the Mobile Service
Agreement, a standard contract made out by petitioner PILTEL to its subscribers,
apparently accepted and signed by respondent, states that the venue of all suits
arising from the agreement, or any other suit directly or indirectly arising from the
relationship between PILTEL and subscriber, shall be in the proper courts of Makati,
Metro Manila. The added stipulation that the subscriber expressly waives any other
venue[3] should indicate, clearly enough, the intent of the parties to consider the
venue stipulation as being preclusive in character.
The appellate court, however, would appear to anchor its decision on the thesis that
the subscription agreement, being a mere contract of adhesion, does not bind
respondent on the venue stipulation.
Indeed, the contract herein involved is a contract of adhesion. But such an agreement
is not per se inefficacious. The rule instead is that, should there be ambiguities in a
contract of adhesion, such ambiguities are to be construed against the party that
prepared it. If, however, the stipulations are not obscure, but are clear and leave no
doubt on the intention of the parties, the literal meaning of its stipulations must be
held controlling.[4]
A contract of adhesion is just as binding as ordinary contracts. It is true that this
Court has, on occasion, struck down such contracts as being assailable when the
weaker party is left with no choice by the dominant bargaining party and is thus
completely deprived of an opportunity to bargain effectively. Nevertheless, contracts
of adhesion are not prohibited even as the courts remain careful in scrutinizing the
factual circumstances underlying each case to determine the respective claims of
contending parties on their efficacy.
In the case at bar, respondent secured six (6) subscription contracts for cellular
phones on various dates. It would be difficult to assume that, during each of those
times, respondent had no sufficient opportunity to read and go over the terms and
conditions embodied in the agreements. Respondent continued, in fact, to acquire in
the pursuit of his business subsequent subscriptions and remained a subscriber of
petitioner for quite sometime.
In Development Bank of the Philippines vs. National Merchandising Corporation,[5]
the contracting parties, being of age and businessmen of experience, were presumed
to have acted with due care and to have signed the assailed documents with full
knowledge of their import. The situation would be no less true than that which
obtains in the instant suit. The circumstances in Sweet Lines, Inc. vs. Teves,[6]
wherein this Court invalidated the venue stipulation contained in the passage ticket,
would appear to be rather peculiar to that case. There, the Court took note of an acute
shortage in inter-island vessels that left passengers literally scrambling to secure
35
accommodations and tickets from crowded and congested counters. Hardly, therefore,
were the passengers accorded a real opportunity to examine the fine prints contained
in the tickets, let alone reject them.

A contract duly executed is the law between the parties, and they are obliged to
comply fully and not selectively with its terms. A contract of adhesion is no
exception.[7]

WHEREFORE, the instant petition is GRANTED, and the questioned decision and
resolution of the Court of Appeals in CA-G.R. SP No. 68104 are REVERSED and SET
ASIDE. Civil Case No. 5572 pending before the Regional Trial Court of Iligan City,
Branch 4, is DISMISSED without prejudice to the filing of an appropriate complaint
by respondent against petitioner with the court of proper venue. No costs.

SO ORDERED.

Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.

36
[G.R. No. 74854. April 2, 1991.]
JESUS DACOYCOY, petitioner, vs. HON. INTERMEDIATE APPELLATE COURT,
HON. ANTONIO V. BENEDICTO, Executive Judge, Regional Trial Court, Branch
LXXI, Antipolo, Rizal, and RUFINO DE GUZMAN, respondents.
Ramon V . Sison for petitioner.
Public Attorney's Office for private respondent.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; ACTIONS; VENUE;
DISTINCTIONS BETWEEN JURISDICTION AND VENUE, CITED. The motu
proprio dismissal of petitioner's complaint by respondent trial court on the ground of
improper venue is plain error, obviously attributable to its inability to distinguish
between jurisdiction and venue. Questions or issues relating to venue of actions are
basically governed by Rule 4 of the Revised Rules of Court. It is said that the laying of
venue is procedural rather than substantive. It relates to the jurisdiction of the court
over the person rather than the subject matter. Provisions relating to venue establish
a relation between the plaintiff and the defendant and not between the court and the
subject matter. Venue relates to trial not to jurisdiction, touches more of the
convenience of the parties rather than the substance of the case. Jurisdiction treats of
the power of the court to decide a case on the merits; while venue deals on the locality,
the place where the suit may be had.
2. ID.; ID.; ID.; ID.; EFFECT IF DEFENDANT FAILS TO CHALLENGE
VENUE IN A MOTION TO DISMISS. Dismissing the complaint on the ground of
improper venue is certainly not the appropriate course of action at this stage of the
proceeding, particularly as venue, in inferior courts as well as in the courts of first
instance (now RTC), may be waived expressly or impliedly. Where defendant fails to
challenge timely the venue in a motion to dismiss as provided by Section 4 of Rule 4 of
the Rules of Court, and allows the trial to be held and a decision to be rendered, he
cannot on appeal or in a special action be permitted to challenge belatedly the wrong
venue, which is deemed waived.
3. ID.; ID.; ID.; ID.; NOT IMPROPERLY LAID UNLESS AND UNTIL
DEFENDANT OBJECTS TO IT IN A MOTION TO DISMISS; REASON. Unless and
until the defendant objects to the venue in a motion to dismiss, the venue cannot be
truly said to have been improperly laid, as for all practical intents and purposes, the
venue, though technically wrong, may be acceptable to the parties for whose
convenience the rules on venue had been devised. The trial court cannot pre-empt the
defendant's prerogative to object to the improper laying of the venue by motu proprio
dismissing the case.
4. ID.; COURTS; JURISDICTION; OVER DEFENDANT, HOW ACQUIRED.
In the instant case, even granting for a moment that the action of petitioner is a real
action, respondent trial court would still have jurisdiction over the case, it being a
regional trial court vested with the exclusive original jurisdiction over "all civil actions
which involve the title to, or possession of, real property, or any interest therein . . ."
in accordance with Section 19 (2) of Batas Pambansa Blg. 129. With respect to the
parties, there is no dispute that it acquired jurisdiction over the plaintiff Jesus
Dacoycoy, now petitioner, the moment he filed his complaint for annulment and
damages. Respondent trial court could have acquired jurisdiction over the defendant,
now private respondent, either by his voluntary appearance in court and his
submission to its authority, or by the coercive power of legal process exercised over
his person.
5. CONSTITUTIONAL LAW; BILL OF RIGHTS; RIGHT TO BE HEARD;
RULES OF PROCEDURE SHOULD BE ADHERED TO BY TRIAL COURT IN CASE
AT BAR TO AFFORD THE PARTIES SUCH RIGHT. It was grossly erroneous for
the trial court to have taken a procedural short-cut by dismissing motu proprio the
complaint on the ground of improper venue without first allowing the procedure
outlined in the Rules of Court to take its proper course. Although we are for the
speedy and expeditious resolution of cases, justice and fairness take primary
importance. The ends of justice require that respondent trial court faithfully adhere to
the rules of procedure to afford not only the defendant, but the plaintiff as well, the
right to be heard on his cause.
DECISION
FERNAN, C. J p:
May the trial court motu proprio dismiss a complaint on the ground of improper
venue? This is the issue confronting the Court in the case at bar.
On March 22, 1983, petitioner Jesus Dacoycoy, a resident of Balanti, Cainta, Rizal,
filed before the Regional Trial Court, Branch LXXI, Antipolo, Rizal, a complaint
against private respondent Rufino de Guzman praying for the annulment of two (2)
deeds of sale involving a parcel of riceland situated in Barrio Estanza, Lingayen,
Pangasinan, the surrender of the produce thereof and damages for private
respondent's refusal to have said deeds of sale set aside upon petitioner's demand.
On May 25, 1983, before summons could be served on private respondent as
defendant therein, the RTC Executive Judge issued an order requiring counsel for
petitioner to confer with respondent trial judge on the matter of venue. After said
conference, the trial court dismissed the complaint on the ground of improper venue.
It found, based on the allegations of the complaint, that petitioner's action is a real
action as it sought not only the annulment of the aforestated deeds of sale but also the
recovery of ownership of the subject parcel of riceland located in Estanza, Lingayen,
Pangasinan, which is outside the territorial jurisdiction of the trial court.
37
Petitioner appealed to the Intermediate Appellate Court, now Court of Appeals, which
in its decision of April 11, 1986, 1 affirmed the order of dismissal of his complaint.
In this petition for review, petitioner faults the appellate court in affirming what he
calls an equally erroneous finding of the trial court that the venue was improperly laid
when the defendant, now private respondent, has not even answered the complaint
nor waived the venue. 2
Petitioner claims that the right to question the venue of an action belongs solely to the
defendant and that the court or its magistrate does not possess the authority to
confront the plaintiff and tell him that the venue was improperly laid, as venue is
waivable. In other words, petitioner asserts, without the defendant objecting that the
venue was improperly laid, the trial court is powerless to dismiss the case motu
proprio.
Private respondent, on the other hand, maintains that the dismissal of petitioner's
complaint is proper because the same can "readily be assessed as (a) real action." He
asserts that "every court of justice before whom a civil case is lodged is not even
obliged to wait for the defendant to raise that venue was improperly laid. The court
can take judicial notice and motu proprio dismiss a suit clearly denominated as real
action and improperly filed before it. . . . the location of the subject parcel of land is
controlling pursuant to Sec. 2, par. (a), Rule 4 of the New Rules of Court . . ." 3
We grant the petition.
The motu proprio dismissal of petitioner's complaint by respondent trial court on the
ground of improper venue is plain error, obviously attributable to its inability to
distinguish between jurisdiction and venue. llcd
Questions or issues relating to venue of actions are basically governed by Rule 4 of the
Revised Rules of Court. It is said that the laying of venue is procedural rather than
substantive. It relates to the jurisdiction of the court over the person rather than the
subject matter. Provisions relating to venue establish a relation between the plaintiff
and the defendant and not between the court and the subject matter. Venue relates to
trial not to jurisdiction, touches more of the convenience of the parties rather than the
substance of the case. 4
Jurisdiction treats of the power of the court to decide a case on the merits; while
venue deals on the locality, the place where the suit may be had. 5
In Luna vs. Carandang, 6 involving an action instituted before the then Court of First
Instance of Batangas for rescission of a lease contract over a parcel of agricultural
land located in Calapan, Oriental Mindoro, which complaint said trial court dismissed
for lack of jurisdiction over the leased land, we emphasized:
"(1) A Court of First Instance has jurisdiction over suits involving title to, or
possession of, real estate wherever situated in the Philippines, subject to the rules on
venue of actions (Manila Railroad Company vs. Attorney-General, etc., et al., 20 Phil.
523; Central Azucarera de Tarlac vs. De Leon, et al., 56 Phil. 169; Navarro vs. Aguila,
et al., 66 Phil. 604; Lim Cay, et al. vs. Del Rosario, etc., et al., 55 Phil. 692);
"(2) Rule 4, Section 2, of the Rules of Court requiring that an action involving real
property shall be brought in the Court of First Instance of the province where the land
lies is a rule on venue of actions, which may be waived expressly or by implication."
In the instant case, even granting for a moment that the action of petitioner is a real
action, respondent trial court would still have jurisdiction over the case, it being a
regional trial court vested with the exclusive original jurisdiction over "all civil actions
which involve the title to, or possession of, real property, or any interest therein . . ."
in accordance with Section 19 (2) of Batas Pambansa Blg. 129. With respect to the
parties, there is no dispute that it acquired jurisdiction over the plaintiff Jesus
Dacoycoy, now petitioner, the moment he filed his complaint for annulment and
damages. Respondent trial court could have acquired jurisdiction over the defendant,
now private respondent, either by his voluntary appearance in court and his
submission to its authority, or by the coercive power of legal process exercised over
his person. 7
Although petitioner contends that on April 28, 1963, he requested the City Sheriff of
Olongapo City or his deputy to serve the summons on defendant Rufino de Guzman at
his residence at 117 Irving St., Tapinac, Olongapo City, 8 it does not appear that said
service had been properly effected or that private respondent had appeared
voluntarily in court 9 or filed his answer to the complaint. 10 At this stage, respondent
trial court should have required petitioner to exhaust the various alternative modes of
service of summons under Rule 14 of the Rules of Court, i.e., personal service under
Section 7, substituted service under Section 8, or service by publication under Section
16 when the address of the defendant is unknown and cannot be ascertained by
diligent inquiry. cdphil
Dismissing the complaint on the ground of improper venue is certainly not the
appropriate course of action at this stage of the proceeding, particularly as venue, in
inferior courts as well as in the courts of first instance (now RTC), may be waived
expressly or impliedly. Where defendant fails to challenge timely the venue in a
motion to dismiss as provided by Section 4 of Rule 4 of the Rules of Court, and allows
the trial to be held and a decision to be rendered, he cannot on appeal or in a special
action be permitted to challenge belatedly the wrong venue, which is deemed waived.
11
Thus, unless and until the defendant objects to the venue in a motion to dismiss, the
venue cannot be truly said to have been improperly laid, as for all practical intents
and purposes, the venue, though technically wrong, may be acceptable to the parties
for whose convenience the rules on venue had been devised. The trial court cannot
38
pre-empt the defendant's prerogative to object to the improper laying of the venue by
motu proprio dismissing the case.

Indeed, it was grossly erroneous for the trial court to have taken a procedural short-
cut by dismissing motu proprio the complaint on the ground of improper venue
without first allowing the procedure outlined in the Rules of Court to take its proper
course. Although we are for the speedy and expeditious resolution of cases, justice and
fairness take primary importance. The ends of justice require that respondent trial
court faithfully adhere to the rules of procedure to afford not only the defendant, but
the plaintiff as well, the right to be heard on his cause.

WHEREFORE, in view of the foregoing, the decision of the Intermediate Appellate

Court, now Court of Appeals, dated April 11, 1986, is hereby nullified and set aside.
The complaint filed by petitioner before the Regional Trial Court of Antipolo, Branch
LXXI is revived and reinstated. Respondent court is enjoined to proceed therein in
accordance with law.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.

39