United Alloy Philippines Corporation, Sps.

Chua v United Coconut Planters Bank

Doctrine of the Case

Rule 4 of the Rules of Civil Procedure provides the rules on venue in filing an action, to wit:  

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 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 filing of the action on the
exclusive venue thereof.

In the instant case, there is an identical stipulation in the real estate mortgages executed by the parties,
pertaining to venue. It reads as follows: In the event of suit arising from out of or in connection with this
mortgage and/or the promissory note/s secured by this mortgage,  the parties hereto agree to bring their
causes of action exclusively in the proper court/s of  Makati, Metro Manila, the MORTGAGOR waiving for this
purpose any other venue.

Facts:

In 2012, Spouses Victoriano and Melanie Ramos (Spouses Ramos) applied for several credit lines with
Planters Development Bank (PDB) for the construction of a warehouse in Barangay Santo Tomas, Nueva Ecija.
The said application was approved and was secured by Real Estate Mortgage over properties owned by the
spouses. Due to financial woes, Spouses Ramos were not able to pay their obligations as they fell due. They
appealed to PDB for the deferment of debt servicing and requested for a restructuring scheme, but the parties
failed to reach an agreement. 

PDB filed a Petition for Extra-judicial Foreclosure of Real Estate Mortgage under Act 3135, as amended,
before the RTC of San Jose City, Nueva Ecija. The Spouses Ramos filed a Complaint for Annulment of Real
Estate Mortgages against PDB and its officers also before the RTC of San Jose City, Nueva Ecija. Instead of
filing an Answer, PDB filed an Urgent Motion to Dismiss, alleging that the venue of the action was improperly
laid considering that the real estate mortgages signed by the parties contained a stipulation that any suit
arising therefrom shall be filed in Makati City only. The RTC denied the Motion to Dismiss, ruling that
pursuant to autonomy of contract, Venue can be waived. Rule 5, Section 4(d) of the 1997 Rules of Civil
Procedure allows parties to validly agree in writing before the filing of the action on the exclusive venue
thereof. Indeed, on the defendants they have the contract where the venue allegedly agreed upon by them
with the plaintiffs is Makati City. However, one of the contentions of the plaintiffs is that the contracts
between them and the defendants take the form of an adhesion contract. As such, this Court has to apply
Section 1, Rule 4 of the 1997 Rules of Civil Procedure regarding the venue of real actions to avoid ruling on
the merits without any evidence that would sufficiently support the same. 
Unyielding, PDB filed a motion for reconsideration of the Order, instead of filing an answer to the complaint.
This prompted Spouses Ramos to file a motion to declare PDB in default.   Aggrieved, PDB filed a petition for
certiorari with the CA, imputing grave abuse of discretion on the RTC for denying its motion to dismiss, even
though the venue was clearly improperly laid. The CA denied the petition. 

Issue: Whether the stipulation on venue should govern the parties. 

Ruling:

YES. Rule 4 of the Rules of Civil Procedure provides the rules on venue in filing an action, to wit:  

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 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 filing of the action
on the exclusive venue thereof 

Based on the foregoing, the general rules on venue admit of exceptions in Section 4 thereof, i.e., where a
specific rule or law provides otherwise, or when the parties agreed in writing before the filing of the action on
the exclusive venue thereof. Stipulations on venue, however, may either be permissive or restrictive. "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…” 

Further, in Unimasters Conglomeration, Inc. v. Court of Appeals, the Court elaborated, thus:  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 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. x x x. 

In view of the predilection to view a stipulation on venue as merely permissive, the parties must therefore
employ words in the contract that would clearly evince a contrary intention.  In Spouses Lantin v. Judge
Lantion, the Court emphasized that "the mere stipulation on the venue of an action is not enough to preclude
parties from bringing a case in other venues.  The parties must be able to show that such stipulation is
exclusive. In the absence of qualifying or restrictive words, the stipulation should be deemed as merely an
agreement on an additional forum, not as limiting venue to the specified place."  

In the instant case, there is an identical stipulation in the real estate mortgages executed by the parties,
pertaining to venue. It reads as follows: In the event of suit arising from out of or in connection with this
mortgage and/or the promissory note/s secured by this mortgage, the parties hereto agree to bring
their causes of action exclusively in the proper court/s of Makati, Metro Manila, the MORTGAGOR
waiving for this purpose any other venue.
In Spouses Lantin, the Court ruled that "the words exclusively and waiving for this purpose any other venue
is restrictive." Therefore, the employment of the same language in the subject mortgages signifies the clear
intention of the parties to restrict the venue of any action or suit that may arise out of the mortgage to a
particular place, to the exclusion of all other jurisdictions.