PHILIPPINE BANKING CORPORATION, PETITIONER, VS. HON. SALVADOR S. TENSUAN, JUDGE OF THE REGIONAL TRIAL COURT, NATIONAL CAPITAL REGION, BRANCH 146 MAKATI; BRINELL METAL WORKS CORP…

On the strength of the provision in the promissory notes sued
upon that Manila shall be the venue of any action which may arise out of the
promissory notes, the Regional Trial Court of Makati, Metro Manila granted the
motion to dismiss the complaint in Civil Case No. 91-3366 entitled “Philippine
Banking Corporation v. Brinell Metal Works Corp., et al.” for improper
venue. Supported by a plethora of
decisions evincing a view contrary to that of the trial court, petitioner comes
to us on a petition for review on certiorari.

Briefly, the facts show that petitioner, Philippine Banking
Corporation, filed a complaint below with prayer for preliminary attachment on
December 5, 1991 against private respondents herein, Brinell Metal Works
Corporation and Spouses Jose and Nally Ang, for collection of a loan evidenced
by two (2) promissory notes.

On December 16, 1991, respondent Court issued an order granting
the petitioner’s prayer for the issuance of writ of preliminary attachment.

On January 28, 1992, private respondents filed with the
respondent court a motion to dismiss on the grounds of (a) lack of jurisdiction
over the persons of the defendants; and (b) improper venue. They claim that summons was served on
defendant corporation’s customer who was not authorized to receive the same for
and in behalf of the corporation. They
likewise object to the venue claiming that the plaintiff’s complaint is based
on two promissory notes which commonly declare, among others:

“I/WE HEREBY EXPRESSLY SUBMIT TO THE
JURISDICTION OF THE COURTS OF MANILA, ANY LEGAL ACTION WHICH MAY ARISE OUT OF
THIS PROMISSORY NOTE.”^[1]

On February 28, 1992 respondent Court issued the following
questioned order, to wit:

“Acting on defendants’ Motion to Dismiss dated January 28, 1992, on
grounds of a) lack of jurisdiction over the corporate defendant insofar as service
of summons upon it was effected on a person not authorized in law to receive
the same; and b) improper venue; and plaintiff having failed to appear for
today’s hearing and/or to formally oppose the same notwithstanding a showing of
receipt of the subject motion as early as January 31, 1992.

“Finding the motion to be studiously well-taken particularly in
connection with the dismissal of this action on grounds of improper venue
consistent with the provisions of Sec. 13, Rule 14 of the Rules of Court, it
appearing on the face of the actionable document sued upon that venue had been
by agreement of the parties laid in Manila.

“WHEREFORE, said motion to dismiss is hereby granted forthwith on
grounds of impropriety of venue. The
above-entitled case is accordingly dismissed without pronouncement as to costs.

“SO ORDERED.”^[2]

On March 2, 1992, petitioner moved for reconsideration of the
aforesaid order granting the motion to dismiss anchored on the ground that in
view of the absence of qualifying or restrictive words in the agreement which
would indicate that Manila alone is the venue agreed upon by the parties, the
plaintiff still has the choice to file the action in the place of his residence
citing the case of Polytrade
Corporation v. Blanco^[3]

On March 11, 1992, respondent court denied petitioner’s motion
for reconsideration and remained steadfast in its position explaining that its
dismissal order is predicated on the doctrinal rule enunciated in Bautista v.
Hon. Juan de Borja, et al.^[4] that
the proper court of Manila is the venue for an action upon a document
stipulating such “in case of any litigation herefrom, or in connection
herewith,” on a rationale that neither party reserved the right to choose venue
as provided for in Section 2(b), Rule 4 of the Rules of Court, as would have
been done had the parties intended to retain such right of election.

Respondent court brushed aside Polytrade v. Blanco^[5]
stating that Bautista and Polytrade appear not to square with each other and
that perhaps, the clear parameters on the rule vis-a-vis proper venue should be
defined.

Thus, the sole issue to be resolved in this petition is whether
or not the respondent court erred in holding that the venue of the action was
improperly laid.

Under Section 1(c), Rule 16 of the Revised Rules of Court, a
motion to dismiss an action may be made within the time for pleading on the
ground that venue is improperly laid. Venue relates to the place of trial or geographical location in which an
action or proceeding should be brought and not to the jurisdiction of the
court. The matter of venue is regulated
by the Rules of Court, so that the choice of venue is not left to the caprices
of plaintiff.^[6]

As a general rule, all personal 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.^[7]
However, by written agreement of the parties, the venue of an action may be
changed or transferred from one province to another.^[8]
Besides, when improper venue is not objected to in a motion to dismiss it is
deemed waived.^[9]
In other words, venue is waivable. It
is procedural, not a jurisdictional matter. It is intended to provide convenience to the parties, rather than
restrict their access to the courts. The rules on venue simply arrange for the convenient and effective
transaction of business in the courts and do not relate to their power,
authority or jurisdiction over the subject matter of the action.

As early as the case of Central Azucarera de Tarlac v. De Leon,^[10]
this Court ruled that an agreement in a contract fixing the venue of actions
arising therefrom is a valid waiver of the venue as fixed by law.

Interpreting a stipulation in the written contracts sued upon
that “in case of any litigation arising (t)herefrom or in connection
(t)herewith, the venue of action shall be in the City of Manila, Philippines,”
this Court held in Bautista v. De Borja,^[11] that
the parties must reserve their right of election if they want to file in a
place other than the venue agreed upon, thus:

x x x. We note that neither
party to the contracts reserved the right to choose the venue of action as
fixed by law (i.e., where the plaintiff or defendant resides, at the election
of the plaintiff (par. [b], Section 2, Rule 4, Revised Rules of Court), as is
usually done if the parties purported to retain that right of election granted by the Rules. Such being the case, it can reasonably be
inferred that the parties intended to definitely fix the venue of action, in
connection with the written contracts sued upon in the proper courts of the
City of Manila only, notwithstanding that neither party is a resident of
Manila. x x x”

Subsequently, in Polytrade Corporation vs. Blanco,^[12]
this Court expostulated a contrary doctrine that as long as the stipulation
does not set forth qualifying or restrictive words to indicate that the agreed
place alone and none other is the venue of the action, the parties do not lose
the option of choosing the venue, to wit:

“x x x. 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.”

The latter case made reference to Engel v. Shubert Theatrical
Co.^[13]
where an analogous stipulation which read: “In case of dispute, both contracting parties agree to submit to the
jurisdiction of the Vienna courts” was interpreted as follows: “By the clause in question the parties do
not agree to submit their dispute 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.”

The doctrine in Polytrade
was reiterated in Nicolas v. Reparations
Commission^[14] where the issue posed was also whether the
stipulation on venue is restrictive or merely permissive. The Court therein held:

“x x x 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 interests 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.

“While the parties have agreed to submit their dispute to the
jurisdiction of the Manila courts, there is nothing in the language used in the
aforecited stipulation which clearly shows that the intention of the parties
was to limit the venue of the action to the City of Manila only. 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.”

Without reference to
Polytrade nor to Nicolas cases, this Court enunciated the same doctrine in Tantoco
v. Court of Appeals,^[15] to wit:

“It is elementary that venue is waivable, since it is a procedural,
not a jurisdictional, matter. The
record shows that the parties agreed that the courts of Manila shall have
jurisdiction to try this case. The
agreement is evidenced by sales contracts duly presented at the ex parte hearing of March 25, 1966, whereby the parties submitted
themselves to the jurisdiction of the courts of Manila for any legal action
arising out of their transaction. In
short, the parties agreed to add the courts of Manila as tribunals to which
they may resort in the event of suit, and not only to the courts either of
Rizal, of which private respondent is a resident, or of Bulacan, where
petitioner resides, pursuant to Section 2(b) of Rule 4 of the Revised Rules of
Court.”

On the other hand, private
respondents cite the case of Hoechst Philippines, Inc. v. Torres^[16] in support of the trial court’s
decision. The stipulation: “In case of litigation arising out of this
agreement, the venue of any action shall be in the competent courts of the
Province of Rizal” was interpreted therein that any action by either of the
parties would have to be filed only in the competent courts of Rizal
province exclusively. Noteworthy,
however, is the fact that on May 19, 1978, or the day following the
promulgation of the Hoechst case in May 18, 1978, this Court
interpreted a similar stipulation on venue as unenforceable in Sweet Lines,
Inc. v. Teves.^[17]
Condition 14 of the shipping ticket issued by Sweet Lines, Inc. which provides
“that any and all actions arising out of 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 held subversive of public policy on transfers
of venue of actions. The Court therein explained
that 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 end of justice. 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 Court said.

The later cases of Lamis Ents. v. Lagamon^[18]
Capati v. Ocampo;^[19]
Western Minolco v. Court of Appeals;^[20]
Moles v. Intermediate Appellate Court;^[21]
Hongkong and Shanghai Banking Corporation v. Sherman;^[22]
Nasser v. Court of Appeals;^[23] and
just recently, Surigao Century Sawmill Co. v. Court of Appeals,^[24]
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. Restating the rule, venue stipulations in a
contract, while considered valid and enforceable, do not as rule supersede the
general rule set forth in Rule 4 of the Revised Rules of Court. In the absence of qualifying or restrictive
words, they should be considered merely as an agreement on additional forum,
not as 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 techicality which, on the contrary,
should be liberally construed. Thus, we
hold that the petitioner in this case is not barred nor proscribed from filing
its case against private respondents in Makati where petitioner holds its
residence, pursuant to Section 2(b) of Rule 4 of the Revised Rules of Court.

WHEREFORE, the petition in this case is GRANTED and the
orders of respondent Presiding Judge of the Regional Trial Court Branch 146, at
Makati, dated February 28, 1992 and March 11, 1992 dismissing the complaint and
denying the motion for reconsideration are hereby REVERSED and the complaint in
the captioned civil case is REINSTATED.

SO ORDERED.

Narvasa, C.J., (Chairman), Regalado, and Puno, JJ., concur.

Padilla, J., see dissenting
opinion.

^[1]
Rollo, pp. 21 and 28.

^[2]
Rollo, p. 39.

^[3]
G.R. No. 27033, 30 SCRA 187 (1969).

^[4]
G.R. No. L-20600, 18 SCRA 474 (1966).

^[5]
Supra.

^[6]
Clavecilla Radio System v.
Antillon, G.R. No. L-22238, 19 SCRA 379 (1967).

^[7]
Sec. 2(b), Rule 4 of the Revised Rules
of Court.

^[8]
Sec. 3, Rule 4 of the Revised Rules of
Court.

^[9]
Sec. 4, Rule 4 of the Revised Rules of
Court.

^[10]
56 Phil. 169.

^[11]
Supra.

^[12]
Supra.

^[13]
151 N.Y.S. 593, 594.

^[14]
G.R. No. L-28649, 64 SCRA 110.

^[15]
G.R. No. L-29345, 77 SCRA 225 (1977).

^[16]
G.R. No. L-44351, 83 SCRA 297.

^[17]
G.R. No. L-37750, 83 SCRA 361 (1978);

^[18]
G.R. No. 57250, 108 SCRA 740 (1981);

^[19]
G.R. No. 28742, 113 SCRA 794 (1982);

^[20]
G.R. No. 51996, 167 SCRA 592 (1988);

^[21]
G.R. No. 73913, 169 SCRA 777 (1989);

^[22]
G.R. No. 72494, 176 SCRA 331 (1989);

^[23]
G.R. No. 32945-46, 191 SCRA 783 (1990)

^[24]
G.R. No. 83889, 218 SCRA 619 (1993)

350

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