SECOND DIVISION

[G.R. No. 222711. August 23, 2017.]

LEY CONSTRUCTION AND DEVELOPMENT CORPORATION,

represented by its President, JANET C. LEY , petitioner, vs. MARVIN
MEDEL SEDANO, doing business under the name and style "LOLA
TABA LOLO PATO PALENGKE AT PALUTO SA SEASIDE" , respondent.

MARVIN MEDEL SEDANO, doing business under the name and style
"LOLA TABA LOLO PATO PALENGKE AT PALUTO SA SEASIDE" ,
respondent (third-party plaintiff), vs. PHILIPPINE NATIONAL
CONSTRUCTION CORPORATION , respondent (third-party defendant).

DECISION

PERLAS-BERNABE , J : p

Assailed in this petition for review on certiorari 1 are the Orders dated June 15,
2015 2 and January 27, 2016 3 of the Regional Trial Court (RTC) of Valenzuela City,
Branch 75 (Valenzuela-RTC) in Civil Case No. 40-V-12, which dismissed petitioner Ley
Construction and Development Corporation's (as represented by its President, Janet C.
Ley; petitioner) complaint for collection of sum of money and damages, without
prejudice, on the ground of improper venue. HTcADC

The Facts
On March 13, 2012, petitioner led a Complaint for Collection of Sum of Money
and Damages 4 against respondent Marvin Medel Sedano (respondent), doing business
under the name and style "Lola Taba Lolo Pato Palengke at Paluto sa Seaside," before
the Valenzuela-RTC, docketed as Civil Case No. 40-V-12. In its complaint, petitioner
alleged that on January 14, 2005, it leased 5 a 50,000-square meter (sq.m.) parcel of
land located at Financial Center Area, Pasay City (now, Lot 5-A Diosdado Macapagal
Boulevard, Pasay City) from respondent third-party defendant, the Philippine National
Construction Corporation (PNCC). 6 On September 11, 2006, petitioner subleased 7 the
14,659.80-sq.m. portion thereof to respondent for a term of ten (10) years beginning
November 15, 2005, for a monthly rent of P1,174,780.00, subject to a ten percent (10%)
increase beginning on the third year and every year thereafter (lease contract). 8
Respondent allegedly failed to pay the rent due for the period August 2011 to
December 2011, amounting to a total of P8,828,025.46, and despite demands, 9
refused to settle his obligations; 1 0 hence, the complaint.
In his Answer with Third-Party Complaint, 1 1 respondent countered that he
religiously paid rent to petitioner until PNCC demanded 1 2 that the rent be paid directly
to it, in view of the petitioner's eviction from the subject property by virtue of a court
order. 1 3 Thus, during the period from August 2011 until December 2011, he remitted
the rentals to PNCC. 1 4 Should he be found liable to petitioner, respondent maintained
that the RTC should hold PNCC liable to reimburse to him the amounts he paid as
rentals; hence, the third-party complaint. 1 5
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 Respondent likewise pointed out that the venue was improperly laid since
Section 21 1 6 of the lease contract provides that "[a]ll actions or case[s] led in
connection with this case shall be led with the Regional Trial Court of Pasay City,
exclusive of all others." 1 7 Hence, the complaint should be dismissed on the ground of
improper venue.
Finally, respondent argued that he paid petitioner the amounts of P3,518,352.00
as deposit and advance rentals under the lease contract, and that he made a
P400,000.00 overpayment, all of which amounts were not liquidated or credited to
respondent during the subsistence of the lease contract. Thus, respondent interposed
a counterclaim, seeking petitioner to reimburse the said amounts to him, and to pay
him moral and exemplary damages, including litigation expenses, in view of petitioner's
filing of such baseless suit. 1 8
In its Comment/Opposition 1 9 to respondent's a rmative defense of improper
venue, petitioner argued that Section 21 of the lease contract is not a stipulation as to
venue, but a stipulation on jurisdiction which is void. 2 0 This is because such stipulation
deprives other courts, i.e., the Municipal Trial Courts, of jurisdiction over cases which,
under the law, are within its exclusive original jurisdiction, such as an action for unlawful
detainer. 2 1 Petitioner further posited that respondent had already submitted himself to
the jurisdiction of the Valenzuela-RTC and had waived any objections on venue, since he
sought a rmative reliefs from the said court when he asked several times for
additional time to le his responsive pleading, set-up counterclaims against petitioner,
and impleaded PNCC as a third-party defendant. 2 2
Meanwhile, in its Answer to Third Party Complaint with Counterclaim, 2 3 PNCC
contended that respondent has no cause of action against it, since he acknowledged
PNCC's right to receive rent, as evidenced by his direct payment thereof to PNCC. 2 4
Respondent also entered into a contract of lease with PNCC after learning that
petitioner had been evicted from the premises by virtue of a court ruling. 2 5
The Valenzuela-RTC Ruling
In an Order 2 6 dated June 15, 2015, the Valenzuela-RTC granted respondent's
motion and dismissed the complaint on the ground of improper venue. It held that
Section 21 of the lease contract between petitioner and respondent is void insofar as it
limits the ling of cases with the RTC of Pasay City, even when the subject matter
jurisdiction over the case is with the Metropolitan Trial Courts. 2 7 However, with respect
to the ling of cases cognizable by the RTCs, the stipulation validly limits the venue to
the RTC of Pasay City. 2 8 Since petitioner's complaint is one for collection of sum of
money in an amount that is within the jurisdiction of the RTC, petitioner should have
filed the case with the RTC of Pasay City. 2 9
The Valenzuela-RTC also found no merit in petitioner's claim that respondent
waived his right to question the venue when he led several motions for extension of
time to le his answer. It pointed out that improper venue was among the defenses
raised in respondent's Answer. As such, it was timely raised and, therefore, not waived.
30

Aggrieved, petitioner moved for reconsideration 3 1 which was, however, denied

by the Valenzuela-RTC in its Order 3 2 dated January 27, 2016; hence, the present
petition. aScITE

The Issue Before the Court

The sole issue for the Court's resolution is whether or not the Valenzuela-RTC
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 erred in ruling that venue was improperly laid.
The Court's Ruling
The petition has no merit.
Rule 4 of the Rules of Court governs the rules on venue of civil actions, to wit:
Rule 4
VENUE OF ACTIONS
Section 1. Venue of real actions. — Actions affecting title to or
possession of real property, or interest therein, shall be commenced and tried in
the proper court which has jurisdiction over the area wherein the real property
involved, or a portion thereof, is situated.
Forcible entry and detainer actions shall be commenced and tried in the
municipal trial court of the municipality or city wherein the real property
involved, or a portion thereof, is situated.
Section 2. Venue of personal actions. — All other actions may be
commenced and tried 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 .
Section 3. Venue of actions against nonresidents. — If any of the
defendants does not reside and is not found in the Philippines, and the action
affects the personal status of the plaintiff, or any property of said defendant
located in the Philippines, the action may be commenced and tried in the court
of the place where the plaintiff resides, or where the property or any portion
thereof is situated or found.
Section 4. When Rule not applicable. — This Rule shall not apply —
(a) In those cases where a specific rule or law provides otherwise; or
(b) Where the parties have validly agreed in writing before
the ling of the action on the exclusive venue thereof . (Emphases
supplied)
Based on these provisions, the venue for personal actions shall — as a general
rule — lie with the court which has jurisdiction where the plaintiff or the defendant
resides, at the election of the plaintiff. 3 3 As an exception, parties may, through a written
instrument, restrict the ling of said actions in a certain exclusive venue. 3 4 In Briones v.
Court of Appeals, 3 5 the Court explained:
Written stipulations as to venue may be restrictive in the sense that the suit may
be led only in the place agreed upon, or merely permissive in that the parties
may le their suit not only in the place agreed upon but also in the places xed
by law. As in any other agreement, what is essential is the ascertainment of the
intention of the parties respecting the matter.
As regards restrictive stipulations on venue, jurisprudence instructs that it
must be shown that such stipulation is exclusive. In the absence of qualifying or
restrictive words, such as "exclusively," "waiving for this purpose any other
venue," "shall only" preceding the designation of venue, "to the exclusion of the
other courts," or words of similar import, the stipulation should be deemed as
merely an agreement on an additional forum, not as limiting venue to the
specified place. 3 6
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 In Pilipino Telephone Corporation v. Tecson , 3 7 the Court held that an exclusive
venue stipulation is valid and binding, provided that: (a) the stipulation on the chosen
venue is exclusive in nature or in intent; (b ) it is expressed in writing by the parties
thereto; and (c) it is entered into before the filing of the suit. 3 8
After a thorough study of the case, the Court is convinced that all these elements
are present and that the questioned stipulation in the lease contract, i.e., Section 21
thereof, is a valid venue stipulation that limits the venue of the cases to the courts of
Pasay City. It states:
21. Should any of the party (sic) renege or violate any terms and
conditions of this lease contract , it shall be liable for damages.
All actions or case[s] led in connection with this lease shall be
led with the Regional Trial Court of Pasay City, exclusive of all
others . 3 9 (Emphases and underscoring supplied)
The above provision clearly shows the parties' intention to limit the place where
actions or cases arising from a violation of the terms and conditions of the
contract of lease may be instituted. This is evident from the use of the phrase
"exclusive of all others" and the speci cation of the locality of Pasay City as the place
where such cases may be filed. HEITAD

Notably, the fact that this stipulation generalizes that all actions or cases of the
aforementioned kind shall be led with the RTC of Pasay City, to the exclusion of all
other courts, does not mean that the same is a stipulation which attempts to curtail the
jurisdiction of all other courts. It is fundamental that jurisdiction is conferred by law and
not subject to stipulation of the parties. 4 0 Hence, following the rule that the law is
deemed written into every contract, 4 1 the said stipulation should not be construed as a
stipulation on jurisdiction but rather, one which merely limits venue. Moreover, "[t]he
parties are charged with knowledge of the existing law at the time they enter into the
contract and at the time it is to become operative." 4 2 Thus, without any clear showing
in the contract that the parties intended otherwise, the questioned stipulation should be
considered as a stipulation on venue (and not on jurisdiction), consistent with the basic
principles of procedural law.
In this case, it is undisputed that petitioner's action was one for collection of sum
of money in an amount 4 3 that falls within the exclusive jurisdiction of the RTC. 4 4 Since
the lease contract already provided that all actions or cases involving the breach
thereof should be led with the RTC of Pasay City, and that petitioner's complaint
purporting the said breach fell within the RTC's exclusive original jurisdiction, the latter
should have then followed the contractual stipulation and led its complaint before the
RTC of Pasay City. However, it is undeniable that petitioner led its complaint with the
Valenzuela-RTC; hence, the same is clearly dismissible on the ground of improper
venue, without prejudice, however, to its refiling in the proper court.
That respondent had led several motions for extension of time to le a
responsive pleading, or that he interposed a counterclaim or third-party complaint in his
answer does not necessarily mean that he waived the a rmative defense of improper
venue. The prevailing rule on objections to improper venue is that the same must be
raised at the earliest opportunity, as in an answer or a motion to dismiss; otherwise, it
is deemed waived. 4 5 Here, respondent timely raised the ground of improper venue
since it was one of the a rmative defenses raised in his Answer with Third-Party
Complaint. 4 6 As such, it cannot be said that he had waived the same.
Further, it should be pointed out that the case of Pangasinan Transportation Co.,
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 Inc. v. Yatco (Pantranco) 4 7 cited in the instant petition 4 8 should not apply to this case,
considering that the invocation of the ground of improper venue therein was not based
on a contractual stipulation, but rather on respondent Elpidio O. Dizon's alleged
violation of the Rules of Court, as he filed his case for damages before the Court of First
Instance of Rizal, Branch IV (Quezon City), despite testifying that he was actually a
resident of Dagupan City. In that case, the Court ruled that the ling of a counterclaim
and third party-complaint, and additionally, the introduction of evidence of petitioner
Pantranco (respondent in the case for damages) after the denial of its motion to
dismiss on the ground of improper venue, "necessarily implied a submission to the
jurisdiction of [the trial court therein], and, accordingly, a waiver of such right as
Pantranco may have had to object to the venue, upon the ground that it had been
improperly laid." 4 9 The rationale for the Pantranco ruling is that a party cannot invoke a
violation of a rule on venue against his counter-party, when he himself is bound by the
same rule, but nonetheless, seeks his own relief and in so doing, violates it. aDSIHc

In contrast, the counterclaim of respondent was alleged to be a compulsory

counterclaim, 5 0 which he was prompted to le only because of petitioner's complaint
for collection of sum of money, else the same would be barred. 5 1 In fact, his
counterclaim only sought reimbursement of his overpayment to petitioner in the
amount of P400,000.00, as well as damages for the ling of a purported baseless suit.
Thus, his counterclaim is not covered by the venue stipulation, since he is not asserting
a violation of the terms and conditions of the lease contract, but rather an independent
right which arose only because of the complaint. The same goes for his third-party
complaint, whereby he only pleaded that the rental payments remitted to PNCC for the
period August 2011 to December 2011 be reimbursed to him in the event that
petitioner's complaint is found to be meritorious. Since his counterclaim and third-party
complaint are not covered by the venue stipulation, respondent had, therefore, every
right to invoke the same whilst raising the ground of improper venue against
petitioner's complaint, which action was, on the contrary, covered by the stipulation.
Thus, there is no inconsistency in respondent's posturing, which perforce precludes the
application of the Pantranco ruling, as well as negates the supposition that he had
waived the defense of improper venue.
WHEREFORE , the petition is DENIED . Accordingly, the Orders dated June 15,
2015 and January 27, 2016 of the Regional Trial Court of Valenzuela City, Branch 75 in
Civil Case No. 40-V-12 are hereby AFFIRMED .
SO ORDERED.
Carpio, * Peralta and Reyes, Jr., JJ., concur.
Caguioa, ** J., is on leave.
Footnotes
* Acting Chief Justice per Special Order No. 2469 dated August 22, 2017.

** On leave.
1. Rollo, pp. 20-44.
2. Id. at 54-61. Penned by Presiding Judge Lilia Mercedes Encarnacion A. Gepty.

3. Id. at 62-63.
4. Dated February 24, 2012. Id. at 68-77.
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 5. See Contract of Lease dated January 5, 2005; id. at 80-83.

6. See id. at 80.

7. See Contract of Lease notarized on September 11, 2006 (lease contract); id. at 64-67.
8. Id. at 64. See also id. at 69-70.

9. See demand letter dated October 27, 2011; id. at 91-92.

10. See id. at 70-71.

11. Dated June 22, 2012. Id. at 111-117.

12. See demand letter dated August 10, 2011; id. at 120.
13. See id. at 112. See also Decision in Civil Case No. M-PSY-08-07675-CV dated July 4, 2011;
id. at 121-131.
14. See official receipts for rental payments; id. at 132-135.
15. See id. at 115-116.

16. Id. at 66.

17. See id. at 66. See also id. at 114.
18. See id. at 114-115.
19. Dated December 13, 2013. Id. at 191-198.

20. See id. at 192-193.

21. Id.
22. See id. at 194-196.
23. Dated January 16, 2013. Id. at 138-142B.
24. Id. at 141.

25. Id.
26. Id. at 54-61.
27. Id. at 57.
28. Id.
29. Id. at 59.

30. See id. 59-60.

31. Not attached to the rollo.
32. Rollo, pp. 62-63.
33. Section 2, Rule 4, RULES OF COURT.

34. Section 4 (b), Rule 4, RULES OF COURT.

35. G.R. No. 204444, January 14, 2015, 746 SCRA 240.

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 36. Id. at 247, citing Legaspi v. Rep. of the Phils., 581 Phil. 381, 386 (2008).

37. 472 Phil. 411 (2004).

38. Id. at 414.
39. Rollo, p. 66.
40. See Radiowealth Finance Company, Inc. v. Nolasco, G.R. No. 227146, November 4, 2016.
41. Heirs of San Miguel v. Court of Appeals, 416 Phil. 943, 954 (2001).

42. Communication Materials and Design, Inc. v. Court of Appeals , 329 Phil. 487, 508 (1996),
citing Topweld Manufacturing, Inc. v. ECED, S.A., 222 Phil. 424, 435 (1985).

43. More than P8,000,000.00.

44. Section 19 (8) of Batas Pambansa Bilang 129, entitled "AN ACT REORGANIZING THE
JUDICIARY, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES,"
otherwise known as "THE JUDICIARY REORGANIZATION ACT of 1980" (August 14,
1981), as amended by Republic Act No. (RA) RA 7691, entitled "AN ACT EXPANDING THE
JURISDICTION OF THE METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS,
AND MUNICIPAL CIRCUIT TRIAL COURTS, AMENDING FOR THE PURPOSE BATAS
PAMBANSA BLG. 129, OTHERWISE KNOWN AS THE 'JUDICIARY REORGANIZATION ACT
OF 1980,'" approved on March 25, 1994), provides:
  Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary
Reorganization Act of 1980," is hereby amended to read as follows:
  Section 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise exclusive
original jurisdiction.
xxx xxx xxx
  (8) In all other cases in which the demand, exclusive of interest, damages of whatever
kind, attorney's fees, litigation expenses, and costs or the value of the property in
controversy exceeds One hundred thousand pesos (P100,000.00) or, in such other cases
in Metro Manila, where the demand exclusive of the abovementioned items exceeds Two
Hundred thousand pesos (P200,000.00).
  This had been amended by Section 5 of RA 7691 which reads:
  Section 5. After ve (5) years from the effectivity of this Act, the jurisdictional amounts
mentioned in Sec. 19 (3), (4), and (8); and Sec. 33 (1) of Batas Pambansa Blg. 129 as
amended by this Act, shall be adjusted to Two hundred thousand pesos (P200,000.00).
Five (5) years thereafter, such jurisdictional amounts shall be adjusted further to Three
hundred thousand pesos (P300,000.00): Provided, however, That in the case of Metro
Manila, the abovementioned jurisdictional amounts shall be adjusted after ve (5) years
from the effectivity of this Act to Four hundred thousand pesos (P400,000.00).
45. City of Lapu-Lapu v. Philippine Economic Zone Authority , 748 Phil. 473, 523 (2014).
46. Rollo, pp. 114 and 116.
47. 128 Phil. 767 (1967).

48. See rollo, pp. 41-42.

49. Id. at 769.
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 50. See rollo, p. 114.
51. "A compulsory counterclaim is any claim for money or other relief, which a defending party
may have against an opposing party, which at the time of suit arises out of, or is
necessarily connected with, the same transaction or occurrence that is the subject matter
of plaintiff's complaint. It is compulsory in the sense that it is within the jurisdiction of
the court, does not require for its adjudication the presence of third parties over whom
the court cannot acquire jurisdiction, and will be barred in the future if not set up
in the answer to the complaint in the same case. " (Cruz-Agana v. Santiago-
Lagman, 495 Phil. 188, 193-194 [2005], emphasis and underscoring supplied.)

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