Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 104649 February 28, 1994

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.;
SPS. JOSE & NALLY ANG, respondents.
Abelardo G. Luzano for petitioner.
Samson Law Offices for private respondents.

NOCON, J.:
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 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 plaintiffs 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 plaintiffs 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 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:
. . . 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 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. . . .
Subsequently, in Polytrade Corporation v. 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:
. . . 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 of 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 jurisdiction 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:
. . . venue in personal 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 respondent 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
21
Court; 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 technicality 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.