CHAPTER IV. VENUEG.R. No. L-6287 December 1, 1911

THE MANILA RAILROAD COMPANY, plaintiff-appellee, vs.THE ATTORNEY-GENERAL, representing the Insular Government, et al., defendants-appellants.

W. A. Kincaid and Thomas L. Hartigan, for appellant.Antonio Constantino, for appellee.

 

MORELAND, J.:

This is an appeal from a judgment of the Court of First Instance of the Province of Tarlac dismissing the action before it on motion of the plaintiff upon the ground that the court had no jurisdiction of the subject matter of the controversy.

The question for our consideration and decision is the power and authority of a Court of First Instance of one province to take cognizance of an action by a railroad company for the condemnation of real estate located in another province.

In the month of December, 1907, the plaintiff began an action in the Court of First Instance of the Province of Tarlac for the condemnation of certain real estate, stated by the plaintiff in his complaint to be located in the Province of Tarlac. It is alleged in the complaint that the plaintiff is authorized by law to construct a railroad line "from Paniqui to Tayug in the Province of Tarlac," and it is for the purpose of condemning lands for the construction of such line that this action is brought. The land sought to be condemned is 69,910 square meters in area. The complaint states that before beginning the action the plaintiff had caused to be made a thorough search in the office of the registry of property and of the tax where the lands sought to be condemned were located and to whom they belonged. As a result of such investigations the plaintiff alleged that the lands in question were located in the Province of Tarlac. The defendants in one action all of the different owners of or persons otherwise interested in the 69,910 square meters of land to be condemned. After filing and duly serving the complaint the plaintiff, pursuant to law and pending final determination of the action, took possession of and occupied the lands described in the complaint, building its line and putting the same in operation. During the progress of the action a commission to appraise the value of the lands was duly appointed, which, after taking oral testimony, amounting to 140 typewritten pages when transcribed, and after much labor and prolonged consideration, made a report consisting of about 55 typewritten pages, resolving the question submitted to it. On the coming in of this report the

court, by order entered the 27th of September, 1909, set the 11th day of October following for the hearing thereon.

On the 4th day of October the plaintiff gave notice to the defendants that on the 9th day of October a motion would be made to the court to dismiss the action upon the ground that the court had no jurisdiction of the subject matter, it having just been ascertained by the plaintiff that the land sought to be condemned was situated in the Province of Nueva Ecija, instead of the Province of Tarlac, as alleged in the complaint. This motion was heard and, after due consideration, the trial court dismissed the action upon the ground presented by the plaintiff. This appeal is taken from said judgment of dismissal.

The decision of the learned trial court was based entirely upon the proposition, already referred to, that in condemnation proceedings, and in all other proceedings affecting title to land, the Court of First Instance of a given province has no jurisdiction, power or authority where the land is located in another province, and that no such power, authority, or jurisdiction can be conferred by the parties.

Sections 55 and 56 of Act No. 136 of the Philippine Commission confer jurisdiction upon the Courts of First Instance of these Islands with respect to real estate in the following words: 1awphi1.net

SEC. 55. Jurisdiction of Courts of First Instance. — The jurisdiction of Courts of First Instance shall be of two kinds:

1. Original; and

2. Appellate.

SEC. 56. Its original jurisdiction. — Courts of First Instance shall have original jurisdiction: .

2. In all civil actions which involve the title to or possession of real property, or any interest therein, or the legality of any tax, impost, or assessment, except actions of forcible entry into, and detainer of lands or buildings, original jurisdiction of which is by this Act conferred upon courts of justice of the peace.

It is apparent from the wording of these sections that it was the intention of the Philippine Commission to give to the Courts of First Instance the most perfect and complete jurisdiction possible over the subject matters mentioned in connection therewith. Such jurisdiction is not made to depend upon locality. There is no suggestion of limitation. The jurisdiction is universal. Nor do the provisions of sections 48, 49, 50, 51, and 52 at all militate against the universality of that jurisdiction. Those provisions 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. While it is provided in these sections that a particular court shall hold its sessions in any other province (except under certain specified conditions), the assertions is nevertheless true that the jurisdiction of a particular court is in no wise and in no sense limited; and it is nowhere suggested, much less provided, that a Court of First Instance of one province, regularly sitting in said province, may not under certain conditions take cognizance of an action arising in another province or of an action relating to real estate located outside of the boundaries of the province to which it may at the time be assigned.

Certain statutes confer jurisdiction, power, or authority. Other provide for the procedure by which that power or authority is projected into judgment. The one class deals with the powers of the Court in the real and substantive sense; the other with the procedure by which such powers are put into action. The one is the thing itself; the other is the vehicle by which the thing is transferred from the court to the parties. The whole purpose and object of procedure is to make the powers of the court fully and completely available for justice. The most perfect procedure that can be devised is that which gives opportunity for the most complete and perfect exercise of the powers of the court within the limitations set by natural justice. It is that one which, in other words, gives the most perfect opportunity for the powers of the courts to transmute themselves into concrete acts of justice between the parties before it. The purpose of such a procedure is not to restrict the jurisdiction of the court over the subject matter, but to give it effective facility in righteous action. It may be said in passing that the most salient objection which can be urged against procedure to-day is that it so restricts the exercise of the court's powers by technicalities that the part of its authority effective for justice between the parties is many times an inconsiderable portion of the whole. The purpose of procedure is not to thwart justice. Its proper aim is to facilitate the application of justice to the rival claims of contending parties. It was created not to hinder and delay but to facilitate and promote the administration of justice. It does not constitute the thing itself which courts are always striving to secure to litigants. It is designed as the means best adopted to obtain that thing. In other words, it is a means to an end. It is the means by which the powers of the court are made effective in just judgments. When it loses the character of the one and takes on that of the other the administration of justice becomes incomplete and unsatisfactory and lays itself open to grave criticism.

The proper result of a system of procedure is to insure a fair and convenient hearing to the parties with complete justice between them as a result. While a fair hearing is as essential as the substantive power of the court to administer justice in the premises, and while the one is the natural result o the other, it is different in its nature and relates to a different thing. The power or authority of the court over the subject matter existed and was fixed before procedure in a given cause began. Procedure does not alter or change that power or authority; it simply directs the manner in which it shall be fully and justly exercised. To be sure, in certain cases, if that power is not exercised in conformity with the provisions of the procedural law, purely, the court attempting to exercise it loses the power to exercise it legally. This does not mean that it loses jurisdiction of the subject matter. It means simply that he may thereby lose jurisdiction of the person or that the judgment may thereby be rendered defective for lack of something essential to sustain it. There is, of course, an important distinction between person and subject matter are both conferred by law. As to the subject matter, nothing can change the jurisdiction of the court over diminish it or dictate when it shall attach or when it shall be removed. That is a matter of legislative enactment which none but the legislature may change. On the other hand, the jurisdiction of the court over the person is, in some instances, made to defend on the consent or objection, on the acts or omissions of the parties or any of them. Jurisdiction over the person, however, may be conferred by consent, expressly or impliedly given, or it may, by an objection, be prevented from attaching or removed after it has attached.

In the light of these observations, we proceed to a consideration of those provisions of the law which the plaintiff claims are decisive of his contention that a Court of First Instance of one province has no jurisdiction of the subject matter of an action by a railroad company to condemn lands located in another province. The plaintiff relies for the success of its cause upon section 377 of the Code of Civil Procedure and upon the special laws relating to the condemnation of lands railroad corporations. We take up first the section of the Code of Civil Procedure referred to.

The fact that such a provision appears in the procedural law at once raises a strong presumption that it has nothing to do with the jurisdiction of the court over the subject matter. It becomes merely a matter of method, of convenience to the parties litigant. If their interests are best subserved by bringing in the Court Instance of the city of Manila an action affecting lands in the Province of Ilocos Norte, there is no controlling reason why such a course should not be followed. The matter is, under

the law, entirely within the control of either party. The plaintiff's interests select the venue. If such selection is not in accordance with section 377, the defendant may make timely objection and, as a result, the venue is changed to meet the requirements of the law. It is true that this court has more than once held than an agreement to submit a controversy to a court which, under the procedural law, has not been selected as the appropriate court, generally speaking, to hear such controversy, can not be enforced. This means simply that either party to such a contract may ignore it at pleasure. The law will not compel the fulfillment of an agreement which deprives one of the parties to it of the right to present his cause to that court which the law designates as the most appropriate. But the principle asserted in the cases which hold thus is no authority for the proposition that two persons having a controversy which they desire to have decided by a competent tribunal may not, by appropriate procedure, submit it t any court having jurisdiction in the premises. In the one case the relation is contractual to be enforced over the objection of one of the contracting parties. In the other relation is not contractual because not between the parties; but, rather, between the parties and the court. In the one case it is a contract to be enforced; in the other, a condition to be met.

This being so, we say again, even though it be repetition, that after jurisdiction over real property in the Islands has been conferred so generally and fully by Act No. 136, it is not to be presumed or construed that the legislature intended to modify or restrict that jurisdiction when it came to frame a Code of Civil Procedure the object of which is to make that jurisdiction effective. Such modification or restriction should be held only by virtue of the clearest and most express provisions.

The wording of that section should be carefully examined. It reads as follows:

SEC. 377. Venue of actions. — Actions to confirm title to real estate, or to secure a partition of real estate, or to cancel clouds, or remove doubts from the title to real estate, or to obtain possession of real estate, or to recover damages for injuries to real estate, or to establish any interest, right, or title in or to real estate, or actions for the condemnation of real estate for public use, shall be brought in the province were the lands, or some part thereof, is situated; actions against executors, administrators, and guardians touching the performance of their official duties, and actions for account and settlement by them, and actions for the distribution of the estates of deceased persons among the heirs and distributes, and actions for the payment of legacies, shall be brought in the province in which the will was admitted to probate, or letters of administration were granted, or the guardian was appointed. And all actions not herein otherwise provided for may be brought in any province where the defendant or any necessary party defendant may reside or be found, or in any province where the plaintiff, except in cases were other special provision is made in this Code. In case neither the plaintiff nor the defendant resides within the Philippine Islands and the action is brought to seize or obtain title to property of the defendant within the Philippine Islands and the action is brought to seize or obtain title to property of the defendant within the Philippine Islands, the action shall be brought in the province where the property which the plaintiff seeks to seize or to obtain title to is situated or is found: Provided, that in an action for the foreclosure of a mortgage upon real estate, when the service upon the defendant is not personal, but is by publication, in accordance with law, the action must be brought in the province where the land lies. And in all cases process may issue from the court in which an action or special proceeding is pending, to be enforced in any province to bring in defendants and to enforce all orders and decrees of the court. The failure of a defendant to object t the venue of the action at the time of entering his appearance in the action shall be deemed a waiver on his part of all objection to the place or tribunal in which the action is brought, except in the actions referred to in the first sixteen lines of this section relating to real estate, and actions against executors, administrators, and guardians, and for the distribution of estates and payment of legacies.

Leaving out of discussion for the moment actions and proceedings affecting estates of deceased persons, they resting upon a different footing being governed by special laws, it is to be observed that the section contains no express inhibition against the court. It provides simply that certain actions affecting real estate "shall be brought in the province where the land, or some part thereof, is situated." The prohibition here is clearly directed against the one who begins the action and lays the venue. The court, before the action is commenced, has nothing to do with either. The plaintiff does both. Only when that is done does the section begin to operate effectively so far as the court is concerned. The prohibition is nor a limitation on the power of the court but on the rights of the plaintiff. It is not to take something from the court but to grant something to the defendant. Its wording clearly deprives the court of nothing which it had, but gives the defendant, as against the plaintiff, certain rights which he did not have. It establishes a relation not between the court and the subject ,after, but between the plaintiff and the defendant. It relates not to jurisdiction but to trial. It touches convenience, not substance. It simply gives to defendant the unqualified right, if he desires it, to have the trial take place where his land lies and where, probably, all of his witnesses live. Its object is to secure to him a convenient trial. If it had been the intention of the law-makers by section 377 to put a limitation to the jurisdiction of the court, how easy it would have been to say so squarely. "No Court of First Instance shall have or take jurisdiction of an action touching title to or interest in real property lying wholly in a province other than that in which such court is authorized to hold sessions," or a similar provision, would have been sufficient. This would have been clearly a limitation on the court rather than the party. There would have been no room for doubt. The legislature, however, did not do so. It, rather, chose to use language which imposes a limitation on the rights of the plaintiff.

In saying this we do not desire to force construction. 1awphil.net Courts should give to language its plain meaning, leaving the legislature to take care of the consequences. The Philippine Commission having, in fullest phrase, given the Courts of First Instance unrestricted jurisdiction over real estate in the Islands by Act No. 136, we are of the opinion that the jurisdiction ought not to be held to be withdrawn except by virtue of an Act equally express, or so clearly inconsistent as to amount to the same thing. The fact that section 377 is not such Act, that it is found in code of Procedure rather than in the substantive law, that it deals with the relative procedural rights of parties rather than the power of the court, that it relates to the place rather than to the thing, that it composes the whole of a chapter headed simply "Venue," lead us to hold that the Court of First Instance of Tarlac had full jurisdiction of the subject matter of this action at the time when it was dismissed.

That it had jurisdiction of the persons of all the parties is indisputable. That jurisdiction was obtained not only by the usual course of practice — that is, by the process of the court — but also by consent expressly given, is apparent. The plaintiff submitted itself to the jurisdiction by beginning the action. (Ayers vs. Watson, 113 U.S., 594; Fisher vs. Shropshire, 147 U.S., 133.) The defendants are now in this court asking that the action be not dismissed but continued. They are not only nor objecting to the jurisdiction of the court but, rather, are here on this appeal for the purpose of maintaining that very jurisdiction over them.

Nor is the plaintiff in any position to asked for favors. It is clearly guilty of gross negligence in the allegations of its complaint, if the land does not lie in Tarlac as it now asserts. It alleged in its complaint:

4. That, according to the information secured after a minute investigation in the offices of the land registry and of the land-tax record of the municipalities within whose jurisdiction lie all the parcels composing the tract of land in question, the owners and occupants of the same, with their names as they appear on the plan, are as follows.

At the time it commenced the action it was possessed of every fact which a complete knowledge of the location of the lands sought to be condemned required. It had the map of its entire line from Paniqui to Tayug, showing theprovinces and the various municipalities through which it runs. Not only that: Before beginning its action it had to know the name of every necessary defendant, the land he owned, and the extent of that portion to be condemned. The investigation required to ascertain these facts would of necessity force into plaintiff's mind the knowledge required to bring the action in the proper court. That the plaintiff at the time it commenced this action did not know in what province its proposed stations and terminals were is difficult to believe. That it did not know in what province the land lay which it was about to make the subject of so important a proceeding is still more difficult to believe. In spite of all this, however, it deliberately laid the venue in a province where no part of the land lay, took possession of the land in controversy, constructed its line, switches, and stations, and after nearly two years of litigation, accompanied with great trouble to the court and trouble and expense to the parties, calmly asks the dismissal of the case for the reason that it did not know where its own railroad was located. Under such circumstances a dismissal of the action over the objection of the defendants ought not to be permitted expect upon absolute necessity and then only on payment of the costs and expenses of the defendants and of the actin. (Ayers vs. Watson and Fisher vs. Shropshire, supra.)

There is no equitable ground, then, upon which the plaintiff may claim that it has not yielded itself to the jurisdiction of the court. Nor, as we have seen, is there a legal ground. As we have already said, the plaintiff, having brought the action, of necessity submitted itself to the jurisdiction of the court. It took advantage of the situation it itself created to take possession of the lands described in the complaint, construct its lines, switches, stations, yards and terminals, and to carry the cause through two years of expensive litigation. It now attempts to make all this go for naught alleging its own negligence as a reason for such attempt. (Ayers vs. Watson and Fisher vs. Shropshire,supra.)

While the latter part of section 377 provides that "the failure of a defendant to object to the venue of the action at the time of entering his appearance in the action shall be deemed a waiver on his part of all objection to the place or tribunal in which the action is brought," except, a month other things, in actions affecting real estate, we apprehend that it was not intended that a defendant can not waive such objection in such excepted cases. Nor we do believe that such provision is controlling in this case. In the first place, the application is restricted to "the time of entering his appearance in the action." It might well have been in the mind of the lawmakers that, at the time of entering his appearance in the action, the defendant would not ordinarily be fully informed of all the facts of the case, at least not sufficiently to warrant his being held to a waiver of important rights; whereas, later in the cause, as when he files his answer or goes to trial, being fully informed, he might justly be held to have waived his right to make such objection. for this reason it might well be that the Legislature purposely refrained from extending the time for his protection beyond the "time of entering his appearance in the action." Moreover, there is, in said clause, no prohibition against an express waiver of his rights by the defendant. The general rule of law is that a person may renounce any right which the law gives unless such renunciation is expressly prohibited or the right conferred is of such a nature that its renunciation would be against public policy. This right of renunciation is so thoroughly established, and was at the time of the enactment of the Code of Civil Procedure, that its exercise by a defendant in relation to the venue of the action will not be held to have been abridged by section 377 without very clear provision therein to that effect. There is no part of that section clear enough to warrant such a holding. Even though the terms of said section were much clearer than they are in this respect, we should still hold, if they were much short of express, that the right of renunciation is not abridged, founding ourselves not only upon the principles already laid down but also upon the proposition of general law embodied in section 294 of the code of Civil Procedure which provides that:

When a statute or instrument is equally susceptible of two interpretations, one in favor of natural right and the other against it, the former is to be adopted. itc-alf

Moreover, it should be noted that this prohibition, if it be such, against waiver refers exclusively to the defendant. The plaintiff is given no rights respecting it. Yet it is the plaintiff who is here calling for the application of the provision even against the declared will of the person who is expressly named as the sole beneficiary. We will not by interpretation extend this provision so as to contravene the principles of natural rights. We will not construed it so as to included in its terms nor named as its beneficiary. But even if the plaintiff were entitled to invoke the aid of the provision he is estopped from so doing. (Wanzer vs. Howland, 10 Wis., 7; Babcock vs. Farewell, 146 Ill. App., 307; White vs. Conn. Mutual Life Ins. Co., 4 Dill (U.S.), 183; Shuttle vs. Thompson, 15 Wall., 159; Beecher vs. Mill Co., 45 Mich., 103; Tomb vs. Rochester R. R. Co., 18 Barb., 585; Ferguson vs. Landram, 5 Bush (Ky.), 230; Statevs. Mitchell, 31 Ohio State, 592; Counterman vs. Dublin, 38 Ohio State, 515; McCarthy vs. Lavasche, 89 Ill., 270; Ricketts vs. Spraker, 77 Ind., 371; Strosser vs. City of Fort Wayne, 100 Ind., 443). Section 333 of the Code of Civil Procedure reads:

Conclusive presumptions. — The following presumptions or deductions, which the law expressly directs to be made from particular facts, are deemed conclusive:

1. Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he can not, in any litigation arising out of such declaration, act, or omission, be permitted to falsity it.

(Rodriguez vs. Martinez, 5 Phil. Rep., 67; 69; Municipality of Oas vs. Roa, 7 Phil. Rep., 20, 22; Trinidad vs. Ricafort et al., 7 Phil. Rep., 449, 453; Macke et al vs. Camps, 7 Phil. Rep., 553, 555.)

The fact is, there are very few rights which may not be renounced, expressly or impliedly. (Christenson vs.Charleton, 34 Atl., 226, 227, 69 Vt., 91; Donahue vs. Windsor County Ins. Co., 56 Vt., 91; Donahaue vs. Windsor Ins. co., 33 Atl., 902, 904, 66 Conn., 21, 40; Fitzpatrick vs. Hartford Life & Annuity Ins. Co., 56 Conn., 116, 134, 17 Atl., 411, 7 Am. St. Rep., 288; Lewis vs. Phoenix Mut. Life Ins. Co., 44 Conn., 72, 91; State vs. Hartley, 52 Atl., 615, 617, 75 Conn., 104; First Nat. Bank vs. Hartford L. & A. Ins. Co., 45 Conn., 22, 44; Johnson vs. Schar, 70 N.W., 838, 839, 9 S. D., 536; Corey vs. Bolton, 63 N.Y., Supp., 915, 917, 31 Misc. Rep., 138; Mason's Supply Co. vs.Jones, 68 N. Y. Supp., 806, 809, 58 App. Div., 231; Monroe Waterworks Co. vs. City of Monroe, 85 N.W., 685, 688, 100 Wis., 11; Fraser vs. Aetna Life Ins. Co., 90 N.W., 476, 481, 114 Wis., 510; Cedar Rapids Water Co. vs. Cedat Rapids, 90 N.W., 746, 749, 117 Iowa, 250; Kennedy vs. Roberts, 75 N.W., 363, 366, 105 Iowa, 521; Shaw vs.Spencer, 100 Mass., 382, 395, 97 Am. Dec., 107, 1 Am. Rep., 115; West vs. Platt, 127 Mass., 367, 367, 372; Fulkerson vs. Lynn, 64 Mo. App., 649, 653; Michigan Savings & Loan Ass'n. vs. Missouri, K & T. Trust Co., 73 Mo. App., 161, 165; Perin vs. Parker, 18 N. E., 747, 748, 126 Ill., 201, 2 L.R.A., 336, 9 Am. St. Rep., 571; Keller vs.Robinson & Co., 38 N. E., 1072, 1075, 152 Ull. 458; Star Brewery Co. vs. Primas, 45 N.E., 145, 148, 163 Ill., 652; United Firemen's Ins. Co. vs. Thomas (U.S.), 82 Fed., 406, 408, 27 C.C. A., 42, 47 L.R.A., 450; Rice vs. Fidelity & Deposit Co. (U.S.), 103 Fed., 427, 43 C.C.A., 270; Sidway vs. Missouri Land & Live Stock Co. (U.S.), 116 Fed., 381, 395; able vs. United States Life Ins. Co. (U.S.), 111 Fed., 19, 31, 49 C.C.A., 216L Peninsular Land Transp., etc., Co. vs. Franklin Ins. Co., 35 W. Va., 666, 676, 14 S.E., 237; Dey vs. Martin, 78 Va., 1, 7; Liverpool & L.& G. Ins. Co. vs. T.M. Richardson Lumber Co., 69 Pac., 938, 951, 11 Okl., 585; Livesey vs. Omaha Hotel, 5 Neb., 50, 69; Cutler vs. Roberts, 7 Nebr., 4, 14, 29 Am. Rep., 371; Warren vs. Crane, 50 Mich., 300, 301, 15 N.W., 465; Portland & R.R. Co. vs. Spillman, 23 Oreg., 587, 592, 32 Pac., 688, 689; First Nat. Bank vs. Maxwell, 55 Pac., 980, 982, 123 Cal., 360, 69 Am. St. Rep., 64; Robinson vs. Pennsylvania Fire Ins. Co., 38 Atl., 320, 322, 90 Me., 385; Reed vs. Union Cent. Life Ins. Co., 61 Pac., 21, 21 Utah, 295; Dale vs. Continental Ins. Co., 31 S.W., 266, 269, 95 Tenn., 38; Supreme Lodge K.P. vs. Quinn, 29 South., 826, 829, 95 Tenn., 38; Supreme Lodge K.P. vs. Quinn, 29 South., 826, 827, 78 Miss., 525; Bucklen vs. Johnson, 49 N.E., 612, 617, 19 Ind. App., 406.)

We have delayed until this moment the citation of authorities relative to the proposition that venue is not jurisdictional as to subject matter and that defendant's rights in respect thereto are such that they may be waived, expressly or by implication, for the reason that we desired that the principles which rule the case should first be discussed and presented in the abstract form. In the case of First National Bank of Charlotte vs. Morgan (132 U.S., 141), it was held that the exemption of national banks from suits in State courts in counties other than the county or city in which the association was located was a personal privilege which could be waived was located was a personal privilege which could be waived by appearing in such brought in another county, but in a court of the same dignity, and making a defense without claiming the immunity granted by Congress. the court said:

This exemption of national banking associations from suits in State courts, established elsewhere than in the county or city in which such associations were located, was, we do not doubt, prescribed for the convenience of those institutions, and prevent interruption in their business that might result from their books being sent to distant counties in obedience to process from State courts. (First Nat. Bank of Bethelvs. National Pahquioque Bank, 14 Wall., 383, 394; Croker vs. Marine Nat. Bank, 101 Mass., 240.) But, without indulging in conjecture as to the object of the exemption in question, it is sufficient that it was granted by Congress, and, if it had been claimed by the defendant when appearing in the superior court of Cleveland County, must have been recognized. The defendant did not, however, choose to claim immunity from suit in that court. It made defense upon the merits, and, having been unsuccessful, prosecuted a writ of error to the supreme court of the State, and in the latter tribunal, for the first time, claimed the immunity granted to it by Congress. This was too late. Considering the object as well as the words of the statute authorizing suit against a national banking association to be brought in the proper State court of the county where it is located, we are of opinion that its exemption from suits in other courts of the same State was a personal privilege that it would waive, and, which, in this case, the defendant did waive, and, which, in this case, the defendant did waive, by appearing and making defense without claiming the immunity granted by Congress. No reason can be suggested why one court of a State, rather than another, both being of the same dignity, should take cognizance of a suit against a national bank, except the convenience of the bank. And this consideration supports the view that the exemption of a national bank from suit in any State court except one of the county or city in which it is located is a personal privilege, which it could claim or not, as it deemed necessary.

In the case of Ex parte Schollenberger (96 U.S., 369), the court said:

The Act of Congress prescribing the place where a person may be sued is not one affecting the general jurisdiction of the courts. It is rather in the nature of a personal exemption in favor of a defendant, and it is one which he may waive. If the citizenship of the parties is sufficient, a defendant may consent to be sued anywhere he pleases, and certainly jurisdiction will not be ousted because he has consented. Here, the defendant companies have provided that they can be found in a district other than that in which they reside, if a particular mode of proceeding is adopted, and they have been so found. In our opinion, therefore, the circuit court has jurisdiction of the causes, and should proceed to hear and decide them.

In the case of St. Louis and San Francisco Railway Co. vs. McBride (141 U.S., 127), the court used the following language:

The first part of section 1 of the Act of 1887, as amended in 1888, gives, generally, to the circuit courts of the United States jurisdiction of controversies between citizens of different States where the matter in dispute exceeds the sum of two thousand dollars exclusive of

interest and costs. Such a controversy was presented in this complaint. It was therefore a controversy of which the circuit courts of the United States have jurisdiction. Assume that it is true as defendant alleges, that this is not a case in which jurisdiction is founded only on the fact that the controversy is between citizens of different States, but that it comes within the scope of that other clause, which provides that "no civil sit shall be brought before either of said courts, against any person, by any original process or proceeding, in any other district than that whereof he is inhabitant," still the right to insist upon suit only in the one district is a personal privilege which he may waive, and he does waive it by pleading to the merits. In Ex parte Schollenberger (96 U.S., 369, 378), Chief Justice Waite said: "The Act of Congress prescribing the place where a person may be sued is not one affecting the general jurisdiction of the courts. It is rather in the nature of a personal exemption in favor of a defendant, and it is one which he may waive." The Judiciary Act of 1789 (sec. 11, Stat., 79), besides giving general jurisdiction to circuit courts over suits between citizens of different States, further provided, generally, that no civil suit should be brought before either of said courts, against an inhabitant of the United States, by any original process, in any other district than that of which he was an inhabitant, or in which he should be found. In the case of Toland vs. Sprague (12 Pet., 300, 330), it appeared that the defendant was not an inhabitant of the State in which the suit was brought, nor found therein. In that case the court observed: "It appears that the party appeared and pleaded to issue. Now, if the case were one of the want of jurisdiction in the court, it would not, according to well-established principles, be competent for the parties by any acts of theirs to give it. But that is not the case. The court had jurisdiction over the parties and the matter in dispute; the objection was that the party defendant, not being an inhabitant of Pennsylvania, nor found therein, personal privilege or exemption, which it was competent for the party to waive. The cases ofPollard vs. Dwight (4 Cranch., 421) and Barry vs. Foyles (1 Pt., 311) are decisive to show that, after appearance and plea, the case stands as if the suit were brought that exemption from liability to process and that in case of foreign attachment, too, is a personal privilege, which may be waived, and that appearing and pleading will produce that waiver." In (14 Wal., 282), the jurisdiction of the circuit court over a controversy between citizens of different States was sustained in a case removed from the State court, although it was conceded that the suit could not have been commenced in the first instance in the circuit court. See also Claflin vs. Commonwealth Ins. Co. (110 U.S., 81 [28:76].) Without multiplying authorities on this question, it is obvious that the party who in the first instance appears and pleads to the merits waives any right to challenge thereafter the jurisdiction of the court on the ground that the suit has been brought in the wrong district. (Charlotte Nat. Bank vs. Morgan, 132 U.S., 141; Fitzgerald E. M. Const. Co. vs.Fitzergerald, 137 U.S., 98.)

In the case of the Interior Construction and Improvement Co. vs. Gibney (160 U.S., 217), the court held as follows:

The circuit courts of the United States are thus vested with general jurisdiction of civil actions, involving the requisite pecuniary value, between citizens of different States. Diversity of citizenship is a condition of jurisdiction, and, when that does not appear upon the record, the court, of its own motion, will order the action to be dismissed. But The provision as to the particular district in which the action shall be brought does not touch the general jurisdiction of the court over such a cause between such parties; but affects only the proceedings taken to bring the defendant within such jurisdiction, and is matter of personal privilege, which the defendant may insist upon, or may waive, at his election; and the defendant's right to object that an action within the general jurisdiction of the court is brought in the wrong district, is waived by entering a general appearance, without taking the objection. (Gracie vs. Palmer, 8 Wheat, 699; Toland vs. Sprague, 12 Pet., 300, 330; Ex parte Schollenberger, 96 U.S., 369, 378; St. Louis & S. F. R. Co. vs. McBride, 141 U.S., 127; Southern Pacific Co. vs. Dento, 146

U.S., 202, 206; Texas & Pacific Railway Co. vs. Saunders, 151 U.S., 105; Central Trust Co. vs. McGeorge, 151 U.S., 129; Southern Express Co. vs. Todd, 12 U.S. app., 351.)

In the case of Central Trust Co. vs. McGeorge (151 U.S., 129), the court disposed of the case as follows:

The court below, in holding that it did not have jurisdiction of the cause, and in dismissing the bill of complaint for the reason, acted in view of that clause of the Act of March 3, 1887, as amended in August, 1888, which provides that "no suit shall be brought in the circuit courts of the United States against any person, by any original process or proceeding, in any other district than that whereof he is an inhabitant;" and, undoubtedly, if the defendant company, which was sued in another district than that in which it had its domicile, had, by a proper plea or motion, sought to avail itself of the statutory exemption, the action of the court would have been right.

But the defendant company did not choose to plead that provision of the statute, but entered a general appearance, and joined with the complainant in its prayer for the appointment of a receiver, and thus was brought within the ruling of this court, so frequently made, that the exemption from being such out of the district of its domicile is a personal privilege which may be waive and which is waived by pleading to the merits.

(Improvement Co. vs. Gibney, 16 Sup. Ct., 272, 160 U.S., 217; 40 L. ed., 401; Walker vs. Windsor Nat. Bank, 5 C. C. A., 421, 56 Fed., 76, 5 U.S. App., 423; Von Auw. vs. Chicago Toy & Fancy Goods Co., 69 Fed., 448 McBride vs.Grand de Tour Plow Co., 40 Fed., 162; Black vs. Thorne, Fed. Cas. No. 1, 495 (10 Blatchf., 66, 5 Fish. Pat. Cas., 550); Norris vs. Atlas Steamship Co., 37 Fed., 279; Hoover & Allen Co. vs. Columbia Straw Paper Co., 68 Fed., 945; Blackburn vs. Railroad Co., Fed., Fed., Cas. No. 1, 467 (2 Flip., 525); Vermont Farm Mach. Co. vs. Gibson, 50 Fed., 423.)

In the case of Security Loan and Trust Co. vs. Kauffman (108 Cal., 214), the court said:

The constitution, Article VI, section 5, declares that, "All actions for the enforcement of liens" shall becommenced in the county in which the real estate or some portion thereof is situated; and at the time this action was "commenced" the property was situate within the boundaries of San Diego. The constitution does not, however, require property is situated, and the statutory provision in section 392 of the Code of Civil Procedure, that actions 'for the foreclosure of liens and mortgages on real property' must be tried in the county in which the subject of the action, or some part thereof, is situated, "subject to the power of the court to change the place of trial," shows that "the place of trial" is not an element going to the jurisdiction of the court, but is a matter of legislative regulation. The provision for the transfer of certain actions to the superior court of the county of Riverside, which is contained in section 12 of the act providing for the organization of that county, shows the extent of this regulation which the legislature deemed necessary, and implies that only the actions there designated were to be transferred for trial.

In the case of Chouteau vs. Allen (70 Mo., 290), the court held as follows:

The statutory provision in respect to personal actions is more emphatic, requiring that "suits instituted by summons, shall, except as otherwise provided by law, be brought: First, when the defendant is a resident of the State, either in the county within which the defendant resides, or in the county within which the plaintiff resides, and the defendant may be found," and yet it was held in reference to this statute in the case ofHembree vs. Campbell (8 Mo., 572), that though the suit was brought in the county in which the plaintiff resided, and service

had upon the defendant in the county of his residence, unless a plea in abatement to the jurisdiction of the court over the person of the defendant, was interposed in the first instance, the objection on the score of lack of jurisdiction could not subsequently be successfully raised. And this, upon the generally recognized ground that the court had jurisdiction over the subject matter of the suit, and that the defendant's plea to the merits acknowledged jurisdiction over his person, and precluded objection on account of absence of regularity in the instituting of the action. So also, in Ulrici vs. Papin (11 Mo.., 42), where the then existing statute required "suits in equity concerning real estate, or whereby the same may be affected, shall be brought in the county within which such real estate or greater part thereof is situate," and by demurrer to the bill it was objected that the suit was not brought in the proper county in conformity with the statutory provision, Judge Scott remarked: "That it does not clearly appear where the greater part of the lands lie. This objection, if tenable, should have been raised by a plea to the jurisdiction." And the same learned judge remarks, in Hembree vs. Campbell, supra, "No principle is better established than that a plea in bar is a waiver of all dilatory matter of defense. That the matter of abatement was apparent upon the writ can make no difference. Such matters are and should be pleaded." And pleas to the jurisdiction are as necessary in local as in transitory actions. (1 Tidd. Prac., 630.)

It is not meant to convey the idea that the mere failure to plead to the jurisdiction of the court would have the effect to confer jurisdiction where none existed before; for it is well settled that even consent of parties can not confer jurisdiction. (Stone vs. Corbett, 20 Mo., 350.) But all circuit courts have a general jurisdiction over the foreclosure of mortgages.

In the case of Armendiaz vs. Stillman (54 Texas, 623), the court disposed of the question involved in the following words:

In our opinion, however, these common law rules respecting local and transitory actions have no more to do in determining with us where a suit can be brought and maintained, than the like rules in respect to the form and names of actions; but this is solely regulated by and dependent upon the proper construction of the constitution and statutes of the State. In the first, it is emphatically declared in the bill of rights as a fundamental principle of government, "All courts shall be open, and every person for an injury done him in his lands, goods, person or reputation, shall have remedy by due course of law." Now a party may not have an action in rem for or concerning land in foreign jurisdiction, because redress can not be given or had by such proceeding in due course of law; but personal damages may be given for such injury and enforced by due process of law within the State. "And it would seem if the State failed to give to one of its citizens a remedy against others for injuries of this kind, it would fail in the pledge made in the constitution as plainly as if the injury had been in a foreign jurisdiction to one's goods or person."

There is, as Judge Marshall himself says, no difference in principle in giving redress for injuries to land in the jurisdiction where the defendant is found, which may not be equally applicable in other cases. He says, speaking of the fiction upon which transitory actions are sustained, where the cause of action occurred out of the jurisdiction where they are brought: "They have" (i. e., the courts), "without legislative aid, applied this fiction to all personal torts, wherever the wrong may have been committed, and to all contracts wherever executed. To this general rule contracts respecting lands from no exception. It is admitted that on a contract respecting lands, an action is sustainable wherever the defendant may be found. Yet in such case every difficulty may occur that present itself in an action of trespass. An investigation of title may become necessary, a question of boundary may arise, and a survey may be essential to the full merits of the case. Yet these difficulties have not prevailed against the jurisdiction of the court. They are countervailed by the opposing consideration,

that if the action be disallowed, the injured party may have a clear right without a remedy in a case where a person who has done the wrong, and who ought to make the compensation, is within the power of the court. That this consideration loses its influence where the action pursues anything not in the reach of the court is inevitably necessary, but for the loss of its influence, where the remedy is against the person, and is within the power of the court, I have not yet discovered a reason, other than a technical one, which can satisfy my judgment.'

In the case of De La Vega vs. Keague (64 Texas, 205), the court said:

Our statutes in force at the time the reconvention was filed provided that suits for the recovery of land should be brought in the county where the land or a part thereof is situated. This is one of the exceptions to the general rule requiring suits to be brought in the county of the defendant's residence. This requirement is not a matter that affects the jurisdiction of the district courts over the subject matter of controversies about the title or possession of lands. Every district court in the State has cognizance of such suits; the requirement as to the county in which the suit may be brought is a mere personal privilege granted to the parties, which may be waived like any other privilege of this character. (Ryan vs. Jackson, 11 Tex., 391; Morris vs. Runnells, 12 Tex., 176.) A judgment rendered by the district court of Galveston County, when the parties had submitted to the jurisdiction, would settle the title to land in McLennan County as effectually as if rendered in its own district curt. Jurisdiction of causes may be obtained by defendants in counties other than those in which the statute requires them to be brought, in other ways than by express consent or by failure to claim the personal privilege accorded by law. A suit upon a monied demand, brought in the county of a defendant's residence by a resident of another county, may be met with a counter demand against the plaintiff, and a recovery may be had upon the counter demand, though if suit had been originally commenced upon it, the county of the plaintiff's residence would have had exclusive jurisdiction. And so with other cases that might be supposed. A plaintiff calling a defendant into court for the purpose of obtaining relief against him invites him to set up all defenses which may defeat the cause of action sued on, or any other appropriate and germane to the subject matter of the suit, which should be settled between the parties before a proper adjudication of the merits of the cause can be obtained. He grants him the privilege of setting up all such counterclaims and cross actions as he holds against the plaintiff which may legally be pleaded in such a suit.

This is particularly the case in our State, where a multiplicity of suit is abhorred, and a leading object is to settle all disputes between the parties pertinent to the cause of action in the same suit. The question of the original right to bring the cross action in the county where the suit is pending can not be raised; otherwise this design would, in a large number of cases, be defeated, and the various matters which could well be settled in the cause might have to seek a number of different counties, and be asserted in a number of different suits, before the controversy between the parties could be settled. The plaintiff must be considered as waiving any privilege to plead to the jurisdiction in such cross actions, and as consenting that the defendant may assert in the suit any demands which he could plead were it commenced in the county where such demands were properly usable. The question then is, La Vega have set up the matters pleaded in his answer in reconvention had the land sought to be partitioned been situated in Galveston County? This question must be determined by the solution of another, viz, can a defendant to a partition suit who claims through the title under which the partition is sought set up a superior title to the whole land? "It is doubtless true that, in a partition suit, a court of equity will not entertain any controversy as to the legal title, whether it arises between the part owners as to their respective interests, or by reason of a claim set up by one or more of them to the entire land by title superior to the one under which the partition is asked to be decreed. In our State, where there is no distinction

between law and equity in the determination of causes, an action to settle disputed titles, whether legal or equitable, may be combined with one to partition the land between the plaintiff and defendant. Hence there can be no objection to determining any questions as to title between the coowners in a partition suit in our State, and the strict rules of chancery do not prevail.

In the case of Kipp vs. Cook (46 Minn., 535), the court made use of the following language:

1. The appellant contends that the district court for the county of Sibley, and of the eighth judicial district, was without jurisdiction, and could not properly determine the rights or interests of either litigant to lands located in Sherburne County, which is in the seventh judicial district; but this question was passed upon many years since, in the case of Gill vs. Bradley (21 Minn., 15), wherein it was held that, although the proper place for the trial of an action to recover real property, or for the determination, in any form, of a right or interest therein, was, by virtue of an existing statute — now found as Gen. St. 1878, c. 66, par. 47 — in the county wherein the lands were situated, the district court of the county designated in the complaint had jurisdiction over the subject matter, and had power to before the time for answering expired, in accordance with the express provisions of another section — now section 51 — of the same chapter, and the place of trial had actually been changed by order of the court or by consent of parties.

In the case of the west Point Iron Co. vs. Reymert (45 N.Y., 703), the court said:

The action was tried in the county of Dutches, and by the court without a jury, without objection on the part of the defendants. If the trial should have been in Putnam, and by a jury, it was for the defendants to assert their rights at the trial; and by not them claiming them, they waived them, and must be regarded as having assented to the place and mode of trial.

We transcribe the following from decisions of the supreme court of Spain:

Considering, further, that Pedrosa, instead of immediately objecting to the jurisdiction of the court and asking for a change of venue, sued for recovery of title, thereby submitting himself to the jurisdiction of the court of first instance, which reserved its decision thereon until plaintiff had presented the petition in due form. (Judgment of May 30, 1860, 5 Civ. Jur., 465.)

Considering that although other proceedings were had in the first court (Salvador de Granada) and in the courts of first instance of Sagrario and Guerra of said city subsequent to the death of the count, the truth of the matter is that his daughter, the countess, the only party now claiming relief, not only had the proceedings taken in the first of said courts dismissed but asked the court of first instance of Castilla de la Nueva to accept, and the court accepted, her express submission to its jurisdiction:

Considering that far from objecting, as she might have objected, to the jurisdiction of the court, the countess acknowledged such jurisdiction as did the other coheirs when thru asked the court to proceed with the testamentary proceedings, thus creating a jurisdictional situation perfectly in harmony with the respective claims of the parties and so binding upon them that they are now absolutely estopped from denying its importance or legal force. (Judgment of May 30, 1860, 5 Civ. Jur., 465.)

He who by his own acts submits himself to the jurisdiction of a court shall not thereafter be permitted to question such jurisdiction. (Judgment of December 30, 1893, 29 Civ. Jur., 64.)

According to article 305 (of the Ley de Enjuiciamiento Civil) the plaintiff shall be presumed to have tacitly submitted himself to the jurisdiction of the court by the mere act of filing his complaint therein, and in the case of the defendant where the latter after appearing in the action takes any step therein other than to object to such jurisdiction. (Judgment of September 21, 1878, 40 Civ. Jur., 232.)

Plaintiff and defendant are presumed to have submitted themselves to the jurisdiction of the court, the former by the mere act of filing his complaint therein and the latter by his answering the same and taking any step other than demurring to such jurisdiction as provided in articles 56 to 58 of the Ley de Enjuiciamiento Civil. (Judgment of July 27, 1883, 52 Civ. Jur., 511.)

In order that a tacit submission based upon the mere act filing the complaint may be valid the court must be one of ordinary jurisdiction as provided in article 4 of the Ley de Ebjuiciamiento Civil. (Judgment of August 27, 1864, 10 Civ. Jur., 14.)

The following language is taken from The Earl of Halsbury's Laws of England (vol. 1, p. 50):

The old distinction between 'local' and 'transitory' actions, though of far less importance than it was before the passing of the judicature acts, must still be borne in mind in connection with actions relating to land situate outside the local jurisdiction of our courts. 'Transitory' actions were those in which the facts in issue between the parties had no necessary connection with a particular locality, e.g., contract, etc.; whilst "local" actions were those in which there was such a connection, e.g., disputes as to the title to, or trespasses to, land.

One importance of this distinction lay in the fact that in the case of local actions the plaintiff was bound to lay the venue truly, i.e., in the county (originally in the actual hundred) in which the land in question lay. In the case, however of a transitory action, he might lay it wherever he pleased, subject to the power of the court to alter it in a proper case. Local venues have now been abolished, and, therefore, so far as actions relating to land in England are concerned, the distinction may be disregarded.

It is, however, important from another point of view, viz, that of jurisdiction as distinct from procedure. In the case of real actions relating to land in the colonies or foreign countries the English relating courts had, even before the judicature acts, no jurisdiction; and, therefore, the removal by those acts of a difficulty of procedure — viz, the rule as to local venue — which might have stood in the way, if they had and wished to exercise jurisdiction, did not in any way confer jurisdiction in such cases. The lack of jurisdiction still exists, and our courts refuse to adjudicate upon claims of title to foreign land in proceedings founded on an alleged invasion of the proprietary rights attached thereto, and to award damages founded on that adjudication; in other words, an action for trespass to, or for recovery of, foreign land can not be maintained in England, at any rate if the defendant chooses to put in issue the ownership of such land.

There is no decision of the Supreme Court of the Philippine Islands in conflict with the principles laid down in this opinion. In the case of Serrano vs. Chanco (5 Phil. Rep., 431), the matter before the court was the jurisdiction of the Court of First Instance over the actions and proceedings relating to the settlement of the estates of deceased persons. The determination of that question required the consideration of section 602 of the code of Civil Procedure rather than section 377 of that code. The argument of the court touching the last-named section, is inapplicable to the case at bar and would not affect it if it were. The reference to the jurisdiction of the court made in that argument based on section 377 was unnecessary to a decision of the case.

The case of Molina vs. De la Riva (6 Phil. Rep., 12), presented simply the question whether or not an agreement between parties to submit themselves to the jurisdiction of a particular court to the exclusion of the court provided by law as the appropriate court in the premises could be enforced. As we have before intimated, it touched no question involved in the litigation at bar.

In the case of Molina vs. De la Riva (7 Phil. Rep., 302), the action was one to foreclose a mortgage upon a real and personal property. In discussing the matter before it the court said:

The demurrer was also based upon the ground that this was an action to foreclose a mortgage and by the provisions of sections 254 and 377 of the Code of Civil Procedure it should have been brought in the Province of Albay where the property was situated. The action is clearly an action to foreclose a mortgage, lien, or incumbrance upon property, but it will be noticed that section 254 relates only to mortgages on real estate. This contract covered both real and personal property, and while, perhaps, an action could not be maintained in the Court of First Instance of Manila for the foreclosure of the alleged mortgage upon the real estate situated in Albay, yet so far as the personal property was concerned, we know of no law which would deprive that court of jurisdiction.

As will readily be observed, the court in the remarks above quoted was not discussing or deciding the question whether or not an action could be maintained in the Court of First Instance of the city of Manila to foreclose a mortgage on real estate located in Albay; but, rather, whether or not an action could be maintained in the Court of First Instance of the city of Manila to foreclose a mortgate on personal property located in the Province of Albay. The remark of the court that perhaps the former action could not be maintained was not intended to be decisive and was not thought at the time to be an indication of what the decision of the court might be if that precise case were presented to it with full argument and citation of authorities.

The case of Castano vs. Lobingier (9 Phil. Rep., 310), involved the jurisdiction of the Court of First Instance to issue a writ of prohibition against a justice of the peace holding his court outside the province in which the Court of First Instance was sitting at the time of issuing the writ. The determination of the question presented different considerations and different provisions of law from those which rule the decision of the case at bar.

We, therefore, hold that the terms of section 377 providing that actions affecting real property shall be brought in the province where the land involved in the suit, or some part thereof, is located, do not affect the jurisdiction of Courts of First Instance over the land itself but relate simply to the personal rights of parties as to the place of trial.

We come, now, to a consideration of the special laws relating to the condemnation of land by railroad companies upon which also plaintiff relies. Of those laws only one is of importance in the decision of this case. That is Act No. 1258. In it are found these provisions:

SECTION 1. In addition to the method of procedure authorized for the exercise of the power of eminent domain by sections two hundred and forty-one to two hundred and fifty-three, inclusive, of Act Numbered One hundred and ninety, entitled "An Act providing a Code of Procedure in civil actions and special proceedings in the Philippine Islands," the procedure in this Act provided may be adopted whenever a railroad corporation seeks to appropriate land for the construction, extension, or operation of its railroad line.

SEC. 3. Whenever a railroad corporation is authorized by its charter, or by general law, to exercise the power of eminent domain in the city of Manila or in any province, and has not obtained by agreement with the owners thereof the lands necessary for its purposes as authorized by law, it may in its complaint, which in each case shall be instituted in the Court of First Instance of the city of Manila if the land is situated in the city of Manila, or in the Court of First Instance of the province where the lands is situated, join as defendants all persons owing or claiming to own, or occupying, any of the lands sought to be condemned, or any interest therein, within the city or province, respectively, showing, so far as practicable, the interest of each defendant and stating with certainty the right of condemnation, and describing the property sought to be condemned. Process requiring the defendants to appear in answer to the complaint shall be served upon all occupants of the lands sought to be condemned, and upon the owners and all persons claiming interest therein, so far as known. If the title to ant lands sought to be condemned appears to be in the Insular Government, although the lands are occupied by private individuals, or if it is uncertain whether the title is in the Insular Government or in private individuals, or if the title is otherwise so obscure or doubtful that the company can not with accuracy or certainty specify who are the real owners, averment may be made by the company in its complaint to that effect. Process shall be served upon resident and no residents in the same manner as provided therefor in Act Numbered One hundred and ninety, and the rights of minors and persons of unsound mind shall be safeguarded in the manner in such cases provided in said Act. The court may order additional and special notice in any case where such additional or special notice is, in its opinion, required.

SEC. 4. Commissioners appointed in pursuance of such complaint, in accordance with section two hundred and forty-three of Act Numbered One hundred ad ninety, shall have jurisdiction over all the lands included in the complaint, situated within the city of Manila or within the province, as the case may be, and shall be governed in the performance of their duties by the provisions of sections two hundred and forty-four and two hundred and forty-five, and the action of the court upon the report of the commissioners shall be governed by section two hundred and forty-six of Act Numbered One hundred and ninety.

The provisions of the Code of Civil Procedure referred to in these sections are, so far as material here, the following:

SEC. 241. How the right of eminent domain may be exercised. — The Government of the Philippine Islands, or of any province or department thereof, or of any municipality, and any person, or public or private corporation having by law the right to condemn private property for public use, shall exercise that right in the manner hereinafter prescribed.

SEC. 242. The complaint. — The complaint in condemnation proceedings shall state with certainty the right of condemnation, and describe the property sought to be condemned, showing the interest of each defendant separately.

SEC. 243. Appointment of Commissioners. — If the defendant concede that the right of condemnation exists on the part of the plaintiff, or if, upon trial, the court finds that such right exists, the court shall appoint three judicious and disinterested landowners of the province in which the land to be condemned, or some portion of the same, is situated, to be commissioners to hear the parties and view the premises, and assess damages to be paid for the condemnation, and to report their proceedings in full to the court, and shall issue a commission under the seal of the court to the commissioners authorizing the performance of the duties herein prescribed.

We are of the opinion that what we have said in the discussion of the effect of section 377 relative to the jurisdiction of Courts of First Instance over lands is applicable generally to the sections of law just quoted. The provisions regarding the place and method of trial are procedural. They touched not the authority of the court over the land but, rather, the powers which it may exercise over the parties. They relate not to the jurisdictional power of the court over the subject matter but to the place where that jurisdiction is to be exercised. In other words, the jurisdiction is assured, whatever the place of its exercise. The jurisdiction is the thing; the place of exercise itsincident.

These special laws contain nothing which in any way indicates an intention of the legislature to alter the nature or extent of the jurisdiction of Courts of First Instance granted by Act No. 136. As we said in discussing the provisions of section 277 of the Code of Civil Procedure, we can not hold that jurisdiction to be limited unless by express provision or clear intendment.

We have thus far drawn an analogy between section 377 of the code of Civil Procedure and section 3 of Act No. 1258, asserting that neither the one nor the other was intended to restrict, much less deprive, the Courts of First Instance of the jurisdiction over lands in the Philippine Islands conferred upon them by Act No. 136. We have extended that analogy to include the proposition that the question of venue as presented in the Acts mentioned does not relate to jurisdiction of the court over the subject matter, it simply granting to the defendant certain rights and privileges as against the plaintiff relative to the place of trial, which rights and privileges he might waive expressly or by implication. We do not, however, extend that analogy further. On reading and comparing section 377 of the Code of Civil Procedure with section 3 of Act No. 1258. both of which are hearing set forth, a difference is at once apparent in the wording of the provisions relating to the place of trial. Section 277 stipulates that all actions affecting real estate "shall be brought in the province where the land, or some part thereof, is situated." Section 3 of Act No. 1258 provides that in an action brought by a railroad corporation to condemn land for its uses the plaintiff "may in its complaint, which in each case shall be instituted . . . in the Court of First Instance of the province where the land is situated, join as defendants all persons owning, etc . . . land within the city or province . . ." Section 1 of that Act, as we have already seen, says that: "In addition to the method of procedure authorized for the exercise of the power of eminent domain by sections two hundred and forty-one to two hundred and fifty-three" of the Code of Civil Procedure, "the procedure in this Act may be adopted whenever a railroad corporation seeks to appropriate land . . . ."

From these provisions we note, first, that the procedure expressly made applicable to actions for the condemnation of land by railroad corporations is not that contained in section 377 but that found in sections 241 to 253 of the Code of Civil Procedure. Section 377 is nowhere expressly mentioned in Act No. 1258 nor is it anywhere touched or referred to by implication. The procedure embodied in that Act to consummate the purposes of its creation is complete of itself, rendered so either by provisions contained in the Act itself, rendered so either by provisions contained in the Act itself or by reference to specific sections of the Code of Civil Procedure which by such reference are made a part thereof.

In the second place, we observe that, so far as venue is concerned, Act No. 1258 and section 377 are quite different in their wording. While the latter provides that the actions of which it treats shall be commenced in the province where the land, or some part thereof, lies, Act No. 1258, section 3, stipulates that the actions embraced in its terms shall be brought only in the province where the land lies. This does not mean, of course, that if a single parcel of land under the same ownership, lying party in one province and partly in another, is the subject of condemnation proceedings begun by a railroad corporation, a separate action must be commenced in each province. Nor does it mean that the aid of section 377 is required to obviate such necessity. The situation would be met and solved by the general principles of law and application of which to every situation is an inherent or implied power of every court. Such, for example, are the prohibition against multiplicity of actions, the rules

against division of actions into parts, and the general principle that jurisdiction over a subject matter singly owned will not be divided among different courts, the one in which the action is first brought having exclusive jurisdiction of the whole. The provisions of these two laws, section 377 and Act No. 1258, differ in the manner indicated because they refer to subjects requiring inherently different treatment, so different, in fact, as to be in some respects quite opposite. While it is true that section 377 speaks of action for the condemnation of real estate, nevertheless it was intended to cover simply the ordinary action affecting title to or interest in real estate, where the land involved is comparatively speaking, compact together. Its provisions were not intended to meet a situation presented by an action to condemn lands extending contiguously from one end of the country to the other. Act No. 1258 is a special law, enacted for a particular purpose, and to meet a particular exigency. The conditions found in an action for the condemnation of real estate by a railroad company might and generally would be so different that the application of the provisions of section 377 permitting the venue to be laid in any province where any part of the land lies would work a very great hardship to many defendants in such an action. To hold that a railroad company desiring to build a line from Ilocos Norte to Batangas, through substantially the whole of the Island of Luzon, might lay the venue in Batangas, it being a province in which a part of the land described in the complaint was located, would be to require all the parties defendant in Ilocos Norte and intervening provinces, with their witnesses, to go to Batangas, with all the inconvenience and expense which the journey would entail, and submit the valuation of their lands into only to the Court of First Instance of Batangas but to a commission appointed in that province. The hardship to such defendants under such a holding is so manifest that we are of the opinion that it was not intended that section 377 of the code of Civil Procedure should apply to actions for condemnation. Under the provisions of that section, the defendant has no right to ask for a change of venue if the land involved in the litigation, or any part thereof, is located in the province where the court sits before which the action has been commenced. When, therefore, an action such as is detailed above is begun by a railroad company in Batangas against persons whose lands lie in Ilocos Norte, there being also involved lands lying in Batangas, such defendants would have no right under section 377, if it were applicable, to demand that the trial as to their lands take place in the Province of Ilocos Norte. We do not believe that this was intended. We believe, rather, that under the provisions of the special laws relating to the condemnation of real estate by railroad companies, the defendants in the various provinces through which the line runs may compel, if they wish, a separate action to be commenced in each province in order that they may have a fair and convenient trial not only before the court but also before commissioner of their province who are not only before commissioners of their province who are not only conveniently at hand, but who are best able to judge of the weight of testimony relative to the value of land in that province.

We, therefore, hold that section 377 of the Code of Civil Procedure is not applicable to actions by railroad corporations to condemn lands; and that, while with the consent of defendants express or implied the venue may be laid and the action tried in any province selected by the plaintiff nevertheless the defendants whose lands lie in one province, or any one of such defendants, may, by timely application to the court, require the venue as to their, or, if one defendant, his, lands to be changed to the province where their or his lands lie. In such case the action as to all of the defendants not objecting would continue in the province where originally begun. It would be severed as to the objecting defendants and ordered continued before the court of the appropriate province or provinces. While we are of that opinion and so hold it can not affect the decision in the case before us for the reason that the defendants are not objecting to the venue and are not asking for a change thereof. They have not only expressly submitted themselves to the jurisdiction of the court but are here asking that that jurisdiction be maintained against the efforts of the plaintiff to remove it.

The principles which we have herein laid down we do not apply to criminal cases. They seem to rest on a different footing. There the people of the state is a party. The interests of the public require that, to secure the best results and effects in the punishment of crime, it is necessary to prosecute and punish the criminal in the very place, as near as may be, where he committed his crime. As a result

it has been the uniform legislation, both in statutes and in constitutions, that the venue of a criminal action must be laid in the place where the crime was committed. While the laws here do not specifically and in terms require it, we believe it is the established custom and the uniform holding that criminal prosecutions must be brought and conducted, except in cases especially provided by law, in the province where the crime is committed.

For these reasons the judgment below must be reversed and the cause remanded to the trial court with direction to proceed with the action according to law. So ordered.

Torres, Johnson, Carson and Trent, JJ., concur.

G.R. No. L-55729 March 28, 1983

ANTONIO PUNSALAN, JR., petitioner, vs.REMEDIOS VDA. DE LACSAMANA and THE HONORABLE JUDGE RODOLFO A. ORTIZ, respondents.

Benjamin S. Benito & Associates for petitioner.

Expedito Yummul for private respondent.

MELENCIO-HERRERA, J.:

The sole issue presented by petitioner for resolution is whether or not respondent Court erred in denying the Motion to Set Case for Pre-trial with respect to respondent Remedios Vda. de Lacsamana as the case had been dismissed on the ground of improper venue upon motion of co-respondent Philippine National Bank (PNB).

It appears that petitioner, Antonio Punsalan, Jr., was the former registered owner of a parcel of land consisting of 340 square meters situated in Bamban, Tarlac. In 1963, petitioner mortgaged said land to respondent PNB (Tarlac Branch) in the amount of P10,000.00, but for failure to pay said amount, the property was foreclosed on December 16, 1970. Respondent PNB (Tarlac Branch) was the highest bidder in said foreclosure proceedings. However, the bank secured title thereto only on December 14, 1977.

In the meantime, in 1974, while the properly was still in the alleged possession of petitioner and with the alleged acquiescence of respondent PNB (Tarlac Branch), and upon securing a permit from the Municipal Mayor, petitioner constructed a warehouse on said property. Petitioner declared said warehouse for tax purposes for which he was

issued Tax Declaration No. 5619. Petitioner then leased the warehouse to one Hermogenes Sibal for a period of 10 years starting January 1975.

On July 26, 1978, a Deed of Sale was executed between respondent PNB (Tarlac Branch) and respondent Lacsamana over the property. This contract was amended on July 31, 1978, particularly to include in the sale, the building and improvement thereon. By virtue of said instruments, respondent - Lacsamana secured title over the property in her name (TCT No. 173744) as well as separate tax declarations for the land and building. 1

On November 22, 1979, petitioner commenced suit for "Annulment of Deed of Sale with Damages" against herein respondents PNB and Lacsamana before respondent Court of First Instance of Rizal, Branch XXXI, Quezon City, essentially impugning the validity of the sale of the building as embodied in the Amended Deed of Sale. In this connection, petitioner alleged:

xxx xxx xxx

22. That defendant, Philippine National Bank, through its Branch Manager ... by virtue of the request of defendant ... executed a document dated July 31, 1978, entitled Amendment to Deed of Absolute Sale ... wherein said defendant bank as Vendor sold to defendant Lacsamana the building owned by the plaintiff under Tax Declaration No. 5619, notwithstanding the fact that said building is not owned by the bank either by virtue of the public auction sale conducted by the Sheriff and sold to the Philippine National Bank or by virtue of the Deed of Sale executed by the bank itself in its favor on September 21, 1977 ...;

23. That said defendant bank fraudulently mentioned ... that the sale in its favor should likewise have included the building, notwithstanding no legal basis for the same and despite full knowledge that the Certificate of Sale executed by the sheriff in its favor ... only limited the sale to the land, hence, by selling the building which never became the property of defendant, they have violated the principle against 'pactum commisorium'.

Petitioner prayed that the Deed of Sale of the building in favor of respondent Lacsamana be declared null and void and that damages in the total sum of P230,000.00, more or less, be awarded to him. 2

In her Answer filed on March 4, 1980,-respondent Lacsamana averred the affirmative defense of lack of cause of action in that she was a purchaser for value and invoked the principle in Civil Law that the "accessory follows the principal". 3

On March 14, 1980, respondent PNB filed a Motion to Dismiss on the ground that venue was improperly laid considering that the building was real property under article 415 (1) of the New Civil Code and therefore section 2(a) of Rule 4 should apply. 4

Opposing said Motion to Dismiss, petitioner contended that the action for annulment of deed of sale with damages is in the nature of a personal action, which seeks to recover not the title nor possession of the property but to compel payment of damages, which is not an action affecting title to real property.

On April 25, 1980, respondent Court granted respondent PNB's Motion to Dismiss as follows:

Acting upon the 'Motion to Dismiss' of the defendant Philippine National Bank dated March 13, 1980, considered against the plaintiff's opposition thereto dated April 1, 1980, including the reply therewith of said defendant, this Court resolves to DISMISS the plaintiff's complaint for improper venue considering that the plaintiff's complaint which seeks for the declaration as null and void, the amendment to Deed of Absolute Sale executed by the defendant Philippine National Bank in favor of the defendant Remedios T. Vda. de Lacsamana, on July 31, 1978, involves a warehouse allegedly owned and constructed by the plaintiff on the land of the defendant Philippine National Bank situated in the Municipality of Bamban, Province of Tarlac, which warehouse is an immovable property pursuant to Article 415, No. 1 of the New Civil Code; and, as such the action of the plaintiff is a real action affecting title to real property which, under Section 2, Rule 4 of the New Rules of Court, must be tried in the province where the property or any part thereof lies. 5

In his Motion for Reconsideration of the aforestated Order, petitioner reiterated the argument that the action to annul does not involve ownership or title to property but is limited to the validity of the deed of sale and emphasized that the case should proceed with or without respondent PNB as respondent Lacsamana had already filed her Answer to the Complaint and no issue on venue had been raised by the latter.

On September 1, 1980,.respondent Court denied reconsideration for lack of merit.

Petitioner then filed a Motion to Set Case for Pre-trial, in so far as respondent Lacsamana was concerned, as the issues had already been joined with the filing of respondent Lacsamana's Answer.

In the Order of November 10, 1980 respondent Court denied said Motion to Set Case for Pre-trial as the case was already dismissed in the previous Orders of April 25, 1980 and September 1, 1980.

Hence, this Petition for Certiorari, to which we gave due course.

We affirm respondent Court's Order denying the setting for pre-trial.

The warehouse claimed to be owned by petitioner is an immovable or real property as provided in article 415(l) of the Civil Code. 6 Buildings are always immovable under the

Code. 7 A building treated separately from the land on which it stood is immovable property and the mere fact that the parties to a contract seem to have dealt with it separate and apart from the land on which it stood in no wise changed its character as immovable property. 8

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. 9

Respondent Court, therefore, did not err in dismissing the case on the ground of improper venue (Section 2, Rule 4) 10, which was timely raised (Section 1, Rule 16) 11.

Petitioner's other contention that the case should proceed in so far as respondent Lacsamana is concerned as she had already filed an Answer, which did not allege improper venue and, therefore, issues had already been joined, is likewise untenable. Respondent PNB is an indispensable party as the validity of the Amended Contract of Sale between the former and respondent Lacsamana is in issue. It would, indeed, be futile to proceed with the case against respondent Lacsamana alone.

WHEREFORE, the petition is hereby denied without prejudice to the refiling of the case by petitioner Antonio Punsalan, Jr. in the proper forum.

Costs against petitioner.

SO ORDERED.

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.

Ramon C. Aquino for petitioner.Paulino Carreon for respondents.

CONCEPCION, J.:

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 downpayment 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. 1äwphï1.ñët

WHEREFORE, the decision appealed from is hereby reversed and another one shall be entered directing respondent Judge to desist from taking further cognizance of 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.De Leon, J., took no part.

[G.R. No. L-9340.  October 24, 1956.]

PAULINO NAVARRO, Petitioner, vs. THE HONORABLE ANTONIO G. LUCERO, Judge of the Court of First Instance of Manila, MANUEL H.

BARREDO, THE TREASURER OF THE PHILIPPINES, IGNACIO DE GUZMAN and ALFREDO EDWARD FAWCETT, Respondents.

D E C I S I O N

CONCEPCION, J.:

Petitioner Paulino Navarro seeks a writ of prohibition, to enjoin the Respondent, Hon. Antonio G. Lucero, as Judge of the Court of First Instance of Manila, from hearing and deciding Civil Case No. 17061 of said court.

Said case was instituted by Manuel H. Barredo against (originally) the Treasurer of the Philippines, and Ignacio de Guzman and Alfredo Edward Fawcett, all of whom are Respondentsin the case at bar. In an amended complaint, dated April 30, 1955, which likewise, includedPetitioner herein, as Defendant, it was alleged, that on September 16, 1944, Barredo purchased from Ana Brodeck a lot situated in the municipality of Pasay, province of Rizal, and covered by Transfer Certificate of Title No. 16372 of the Office of the Register of Deeds of Rizal, subject to redemption within two (2) years; chan roblesvirtualawlibrarythat upon the filing of the corresponding deed of conditional sale with the Office of the Register of Deeds of the City of Manila (of which the municipality of Pasay formed part during the Japanese occupation), said TCT No. 16372 was cancelled, and, in lieu thereof, TCT No. 76578 of said office was issued, on September 18, 1944, in Barredo’s name, with an annotation of said option to repurchase, which was not exercised within the period aforementioned; chan roblesvirtualawlibrarythat, claiming to be the only child and legal heir of Brodek, on January 20, 1946, Defendant Ignacio de Guzman (one Respondents herein) filed a petition with the Court of First Instance of Rizal for the reconstitution of said TCT No. 16372, alleging that its original and the owner’s duplicate had been destroyed or lost and could no longer be found although he knew that this was not true and that said TCT No. 16372 had been cancelled on account of the aforementioned conditional sale to Barredo; chan roblesvirtualawlibrarythat, on February 1, 1946, said court declared said TCT No. 16372 reconstituted, and ordered the Register of Deeds of Rizal to issue its corresponding owner’s duplicate; chan roblesvirtualawlibrarythat, soon thereafter, or on July 22, 1946, De Guzman executed an affidavit adjucating said land to himself as the only child and sole heir of Ana Brodek; chan roblesvirtualawlibrarythat, based upon said affidavit, de Guzman obtained from said court order, dated July 25, 1946, directing the Register of Deeds of Rizal to cancel the “reconstituted” TCT No. 16372 and to issue, in lieu thereof, another certificate of title to his name; chan roblesvirtualawlibrarythat, accordingly, said Register of Deeds issued TCT No. 380-A 49002 in De Guzman’s name, in lieu of TCT No. 16372; chan roblesvirtualawlibrarythat, acting in connivance with Alfredo Edward Fawcett (one of the Defendants in said case and Respondent herein), who was aware of the aforementioned conditional sale by Ana Brodek (his wife), to Barredo, De Guzman executed in favor of Fawcett, a deed of conditional sale of the lot in question, which deed was filed with the office of the Register of Deeds of Rizal, and annotated on said TCT No. 380-A 49002; chan roblesvirtualawlibrarythat, upon expiration of the period of redemption stipulated with de Guzman, November 23, 1948, said Fawcett fraudulently consolidated his ownership upon said lot and caused TCT No. 862 to be issued in his name, free from liens and encumbrances, in lieu of said TCT No. 380 — A 49002; chan roblesvirtualawlibrarythat Fawcett also, conveyed the property to Amado Acayan, and, as a consequence, said TCT No. 862, was cancelled, and another one, bearing No. 863, was issued on the date last mentioned, in favor of Acayan, free from all liens and encumbrances; chan roblesvirtualawlibrarythat, thereafter Acayan assigned the property to herein Petitioner, Paulino Navarro, in whose name TCT No. 1371 was issued on September 21, 1949,

free from all liens and encumbrances upon cancellation of said TCT No. 863; chan roblesvirtualawlibrarythat, owing to the fraudulent reconstitution of TCT No. 16372, and the subsequent conveyances of the lot in dispute, there are now two (2) certificates of title thereon, namely, TCT No. 76578, in Barredo’s name, and TCT No. 1371 in Navarro’s name; chan roblesvirtualawlibrarythat TCT No. 1371 is null and void, it being derived from transfer certificate of title which are, also, null and void, for the latter were issued in consequence of the fraudulent reconstitution of another certificates of title (No. 16372), that, the existence of said TCT No. 1371 jeopardizes Barredo’s title to the aforementioned property, which is worth P3,000; chan roblesvirtualawlibraryand that, Barredo has suffered damages in the sum of P1,000.00 representing attorney’s fees, in view of the action he has thus constrained to file. His prayer is:chanroblesvirtuallawlibrary

“(a)  That Transfer Certificate of Title No. 1371 issued by the Register of Deeds of Rizal City in the name of Paulino Navarro, be declared null and void, and Transfer Certificate No. 76578 in the name of Plaintiff Manuel H. Barredo, as valid certificate of title over the land in question;

“(b)  In the event that Plaintiff is deprived of, or has lost his title or ownership of the land in question by virtue of the operation of the provisions of Act 496, that Defendant Ignacio de Guzman and Alfredo E. Fawcett be ordered to pay, joint]y and severally, to the Plaintiff the sum of P6,000.00;

(c)  That Defendants Ignacio de Guzman and Alfredo Fawcett be ordered to pay, jointly and severally, to the Plaintiff the sum of P1,000.00 as attorney’s fees, plus costs;

“(d)  In the alternative paragraphs (b) and (c) above, that Defendant Treasurer of the Philippines be ordered to pay to the Plaintiff the sum of P6,000.00, in case Defendants Ignacio de Guzman and Alfredo F. Fawcett are unable to pay the said amount, or such portion thereof as may remain unpaid, in the case Defendants may partially satisfy the same, plus costs, pursuant to the provisions of Act 496.

“Plaintiff further prays that he be granted such other relief as may be just and equitable in the premises.”

Paulino Navarro, as one of the Defendants in said Civil Case No. 17061, moved to dismiss Barredo’s amended complaint therein, upon the ground “that venue is improperly laid.” Upon denial of this motion, Navarro sought a reconsideration, with the same result. Hence, the present action, in which Petitioner assails the jurisdiction of the Court of First Instance of Manila to hear and decide said Civil Case No. 17061, the property in question being located in Pasay City.

In his answer to the petition, the Treasurer of the Philippines expressed no interest in the subject matter thereof. Upon the other hand, Respondent Manuel H. Barredo asserted, in his answer, that said Civil Case No. 17061 was originally one for damages against de Guzman, Fawcett and the Treasurer of the Philippines; chan roblesvirtualawlibrarythat the latter was sued under section 101 and 102 of the Act No. 496, for recovery of damages from the assurance fund; chan roblesvirtualawlibraryand that Navarro was later included as party-Defendant, since the determination of the validity or nullity of his title is “indispensable” to Barredo’s claim for damages. De

Guzman and Fawcett have not been served with summons in the case at bar, for neither could be located. However, the main party Respondent in the present case is Respondent Manuel H. Barredo, and, accordingly, we may proceed to pass upon the issue raised by the pleadings, to wit:chanroblesvirtuallawlibrary May the Court of First Instance of Manila entertain Civil Case No. 17061, considering that the property in dispute is located in Pasay City, or outside Manila? Respondent Barredo maintains the affirmative, relying upon the following authorities:chanroblesvirtuallawlibrary

“Under the Land Registration Act, actions may be brought in any court of competent jurisdiction against the Treasurer of the Philippines Islands for the recovery of damages to be paid out of the assurance fund. As the indemnity here claimed is for alleged damages caused to the mortgages by the refusal of the register of deeds to note his mortgage lien, the provisions of section 377 of the Code of Civil Procedure to the effect that, in order, to obtain indemnity for damages caused to real property, the action must be brought in the province where the land is situated is not applicable; chan roblesvirtualawlibrarybut that which says that all actions not therein otherwise provided may be brought in the province where the Defendant or the Plaintiffresides at the election of the latter. (Hodges vs. Treasurer of the Philippines, 50 Phil., 16)

“A statutes providing that the actions for the recovery of real property or for the determination of any right or interest therein must be tried in the country where the real property is situated is effective only when the real property or title thereto is the exclusive subject matter of the action  cralaw.’ (Turlock Theatre vs. Laws, 120 ALR 786.)”

“Statutes which made local action involving title to real estate do not apply to action in which the question of title is merely incidental to the main controversy.” (Hewitt vs. Price, 102 S.W. 647.)”

These cases are not in point. The first involved exclusively a personal action, unlike the case at bar, which mainly seeks to quiet the title to an immovable property, and, hence, it is a real action. The principal relief prayed for in Barredo’s amended complaint is “that TCT No. 1371 issued by the Register of Deeds of Rizal  cralaw in the name of Paulino Navarro be declared null and void.”

The complaint in the Turlock case alleged three separate causes of action, one of which was personal and the others real. Moreover, the question of the venue raised therein hinged on the meaning of sections 392 and 395 of the Code of Civil Procedure of California. Pursuant to section 392, actions for the recovery of real property, or all for the determinations of any right or interest therein, shall be tried in the country where the real property, is situated, whereas section 395, declares that “in all other cases, the action must be tried in the county in which the Defendants, or some of them, reside at the commencement of the action.” Construing both provisions, the Supreme Court of California held that the first applied “only when the real property or the title thereto is the exclusive subject matter of the action” and that “all the cases” — including those involving a personal action, in addition to the real action — shall be governed by sections 395.

Said case has no parity with the one at bar. To begin with, only one cause of action is involved in the latter. Again, Rule 5, sections 1 and 3, of our rules of Court provides:chanroblesvirtuallawlibrary

“SECTION 1.  General Rule. — Civil action in Courts of First Instance may be commenced and tried where the Defendant or any of the Defendants resides or may be found, or where thePlaintiff or any of the Plaintiffs resides, at the election of the Plaintiff.

“SEC. 3.  Real action. — Actions affecting title to, or for recovery of possession, or for partition or condemnation of, foreclosure of mortgage on, real property shall be commenced and tried in the province where the property or any part thereof lies.”

Pursuant thereto, actions in personam are transitory. However, if besides said actions, the complaint sets up a real action, or even an action quasi in rem, such as foreclosure of a real estate mortgage (in which Plaintiff seeks principally the recovery of a sum of money, the foreclosure are to take place only in the event of failure of the Defendant to voluntarily pay said sum), the case “shall be commenced and tried in the province where the property or any part thereof lies.” Thus, the principle under our Rules of Court is opposite to that obtaining in California. In the languages of the editors of the American Law Reports Annotated:chanroblesvirtuallawlibrary

“ cralaw in some jurisdictions, as subsequently appears herein, the rule is that the venue of an action relating to real property must be laid in, or changed to, the county in which the property is located, although personal causes of action or personal relief are included which may be tried in another county, upon the theory that the purpose of the legislature in enacting the mandatory statute as to the venue of actions relating to land is to have the records of the county in which the land involved is situated show all matters that in any way affect the title of such land.” (120 A. L. R. 791.) (Emphasis supplied)

The Hewit case was an action to recover the balance of a promisory note, after deducting the price at which an immovable, given as security therefor, had been sold to the Plaintiff in extrajudicial foreclosure proceedings, the legality of which was assailed by the Defendant in his answer, upon the ground of inadequacy of the price, lack of notice and fraud or misrepresentation of Plaintiff’s part. Although the suit was instituted in a county other than that of the situs of the immovable, and Defendant’s answer questioned Plaintiff’s title thereto, it was held that the court had the jurisdiction to decide the case, said issue of title being merely incidental to the personal action for recovery of a sum of money. Such is not the case before us, for the title to a real property is the main point for determination therein. In the words of Plaintiff, it is “indispensable” to his cause of action. The rule is set forth in the American Law Reports Annonated as follows:chanroblesvirtuallawlibrary

“There was an ancient right to have an action brought against one in the county of residence so as to protect him from the trouble and expenses of traveling a long distance to defend the action, and in some jurisdictions, as subsequently shown herein, to safeguard this right the venue statute have prescribed the general rule as to venue that an action must be brought in the county of the Defendant’s residence, and have made the provisions for venue in another county an exception to such rule. In such jurisdictions, where a personal cause of action is joined, or personal relief is prayed, in a

complaint in action relating to real property whose venue is laid in the county of the location of such property, the Defendant is generally entitled to have the venue changed to another county in which he resides. There appears to be, however, an exception to this rule where the cause of action as to the real property is the primary object of the action, and the personal cause of action, or the prayer for personal relief, is merely incidental to such object.

“There is another pertinent principle, subsequently applied herein to the question under annotation, to the effect that where two causes of action are properly joined, which require different places of trial, the venue, as against a motion for its change, may be retained of the entire action in the county in which it is laid, if that is the proper venue for one of the causes of action, under the general policy of the law to avoid multiplicity of suits. This principle appears, however, to be made dependent in some cases upon the question whether the statutory designation of the place of trial of the other cause of action in another country uses the word ‘may’ or ‘must’ .” (120 A. L. R. 790-791.) (Emphasis supplied.)

As indicated above, whenever a case involves a real action or an action quasi in rem it “shall”, and, therefore, must — “be commenced and tried in the province where the property or any part thereof lies,” pursuant to Rule 5, section 3, of the Rules of Court. Independently of the foregoing, the primary object of the present case — in the light of the allegations of the amended complaint — is to nullify the title of Petitioner herein. The alternative relief sought in said amended complaint, to the effect.

“ cralaw that Defendant Treasurer of the Philippines be ordered to pay to the Plaintiff the sum of P6,000.00 in case Defendants Ignacio de Guzman and Alfredo E. Fawcett are unable to pay the said amount, or such portion thereof as may be remain unpaid, in case Defendants may partially satisfy the same, plus the costs, pursuant to the provisions of Act 496.”

cannot affect the application of said section of the Rules of Court, inasmuch as Barredo could not possibly recover damages unless Navarro’s title is declared valid, and the venue therefor, is, according to said rules, in the Court of First Instance of Rizal.

Wherefore, the petition is granted, and the Court of First Instance of Manila is hereby enjoined from hearing and deciding the aforementioned Civil Case No. 17061 thereof, with costs against Respondent Manuel H. Barredo, without prejudice to the institution by the latter of the corresponding action before the proper court. It is SO ORDERED.

G.R. No. L-29791 January 10, 1978

FRANCISCO S. HERNANDEZ and JOSEFA U. ATIENZA, plaintiffs-appellees, vs.RURAL BANK OF LUCENA, INC., CENTRAL BANK OF THE PHILIPPINES, in its capacity as Liquidator of Rural Bank of Lucena, and JOSE S. MARTINEZ in his capacity as Receiver of Rural Bank of

Lucena,defendants-appellants.

Ciceron B. Angeles & Fabian S. Lombos for appellants.

Tomas Yumol and Felipe Dimaculangan for appellees.

 AQUINO, J.:

This case is about the propriety of a separate action to compel a distress rural bank. which is under Judicial liquidation, to accept a check in payment of a mortgage debt. The fact are as follows:

On March 21, 1961 the spouses Francisco S. Hernandez and Josefa U. Atienza obtained from the Rural Bank of Lucena, Inc. a loan of P6,000 which was payable on March 21, 1962. The loan was cured by a mortgage on their two lots situated in Cubao, Quezon City with a total area of 600 square meters. The interest for one year was paid in advance.

About three months after that loan was obtained, the Lucena Bank became a distress bank. In a letter dated June 6, 1961 the Acting Governor of the Central Bank apprised the stockholders of the Lucena bank that the Monetary Board in its Resolution No. 928, which was approved on June 13, 1961 allegedly after hearing the Lucena bank. found that its officers, directors and employees had committed certain anomalies or had resorted to unsound and unsafe banking practices which were prejudicial to the government, its depositors and creditors.

The Monetary Board advised the stockholders to reorganize the Lucena bank by electing a new board of directors and directed that bank (a) not to grant new loans or renewals; (b) not to accept deposits from new depositors; (c) to service only the existing deposit accounts and (d) not to issue drafts or make any disbursements without the prior approval of Central Bank examiners.

The Monetary Board gave the warning that, if its directives were not obeyed, the Central Bank. would take over the management of the Lucena bank.

The Central Bank Governor informed the Lucena bank that the chief examiner of the department of rural banks would oversee the operations of the Lucena bank.

That letter of the Central Bank Governor was construed as a directive to the Lucena bank to suspend operations. The Manila times in its issue of June 21, 1961 carried a news story with the heading "Bank told to suspend operations". The story was accompanied by a picture of depositors who jammed the lobby of the bank trying to withdraw their money.

Instead of bowing to the will of the Monetary Board, the Lucena bank and its board of directors filed with the Court of First Instance of Manila a complaint dated June 21, 1961 seeking to restrain the implementation of Resolution No. 928 (Civil Case No. 47345).

Before the expiration of the one-year term of the loan, or on August 22, 1961, Hernandez went to the Lucena bank and offered to pay the loan by means of a check for P6,000 dated August 8, 1961 which was drawn against the bank by a depositor, the San Pablo Colleges, and which was payable to Fernandez As the bank's executive vice president was not available, the payment was not consummated.

At the time that the check was issued, the San Pablo Colleges, had a deposit in the Lucena bank amounting to P11,890.16 (27 tsn April 25, 1966). Instead of withdrawing P6,000 from that deposit, the San Pablo Colleges chose to issue a check for that amount w Hernandez. It is not clear whether in August, 1961 the San Pablo Colleges could make a withdrawal from its deposit in the Lucena bank.

On the following day, August 23, Hernandez sent to the bank by registered mail a photostat of the check and a letter inquiring whether the bank would honor the check and when he should go personally to the bank for that purpose. That letter was received by the bank on August 29.

On August 30, the executive vice-president wrote to Hernandez and informed him that the check could not be honored for the time being because of adverse events that had disrupted the bank's operations. What the vice-president meant was that by reason of the letter of the Central Bank Governor dated June 16. 1961 the operations of the Lucena bank were suspended (6 tsn August 15, 1966).

The vice-president explained that because there was a run the bank its assets were exhausted, and so the check sent by Hernandez, which check was drawn against the Lucena bank, could not be accepted (16, 21-24 tsn August 15, 1966).

The vice-president said that when Hernandez presented the check, the Lucena bank was no longer in a position to honor withdrawals and that had Hernandez paid cash, his payment would have been accepted. To honor the check would have been tantamount to allowing a depositor (San Pablo Colleges) to make a withdrawal but the Lucena bank could not entertain withdrawals without the consent of the Central Bank examiners (26-28 tsn). Payment by check was a disbursement (31 tsn).

Apparently, the vice-president did not take the trouble of asking the Central Bank examiners whether the payment by check made by Hernandez could be accepted. Hernandez himself who should have known that the bank was a distressed bank which had suspended operations and which was under the supervision of Central Bank examiners, did not bother to take up his problem with the said examiners.

Hernandez, in his letter of October 18, 1961, again asked the bank when he could deliver the check. The executive vice-president, in his reply of October 24, told

Hernandez that the bank could not yet honor the check because it had not resumed its banking operations; that it was awaiting the outcome of a case filed by the bank against the Central Bank; that it might reopen in January, 1962, and that, anyway, the loan would not be due until March 21, 1962.

Hernandez sent another letter dated February 1, 1962. Finally, he enclosed the original check (duly endorsed) with his letter to the bank dated March 7, 1962, which was sent by registered mail and special delivery. That letter of March 7, together with the check, was returned to Hernandez because the bank's manager was allegedly in Manila. Undeterred, Hernandez again mailed the check to the bank on April 25, with the request that his mortgage be cancelled.

In the meantime, the Monetary Board had decided to liquidate the Lucena Bank. The Governor of the Central Bank in a letter dated February 8, 1962 enjoined the Lucena bank from transacting business and advised it to turn over its assets, documents and records to the chief bank examiner. The bank building was sealed.

The following notice was posted at the entrance of the building:

This bank is temporarily closed pending final decision of the courts as to its status. Payments of loans would be accepted; meanwhile, no payments of withdrawals against deposits can be made. Please transact business with the Central Bank's representatives only.

To head off the liquidation, the Lucena Bank filed with the Court of First Instance of Lucena City a complaint dated February 12, 1962, praying that the Central Bank be enjoined from liquidating the said bank. On February 14, the court issued an ex parte preliminary injunction which it dissolved ten days later (civil Case No. 6471; Rural Bank of Lucena, Inc. vs. Arca, L-21146, September 20, 1965, 15 SCRA 66).

On February 14, 1962, the Manila court rendered a decision in Civil Case No. 47345, restraining the enforcement of the Monetary Board resolution, which required the Lucena bank to undertake a reorganization and to curtail its operations. The Central Bank appealed. (This Court reversed that decision and dismissed the complaint for injunction. Rural Bank of Lucena, Inc. vs. Central Bank, L-19621, November 29, 1969, 30 SCRA 628).

To implement the resolution of the Monetary Board for the Liquidation of the Lucena bank, the Central Bank, pursuant to section 29 of its charter and on the assumption that the Lucena bank was insolvent, filed with the Court of first Instance of Manila a petition dated March 27, 1962 for assistance and supervision in the liquidation of the Lucena bank (Civil Case No. 50019).

Acting on that petition, the Court of First Instance of Manila issued an order dated march 28, 1963, directing the Lucena bank to turn over its assets to the Central Bank's authorized representative.

The Monetary Board in its Resolution No. 426 dated April 2, 1963 designated the Superintendent of Banks or his duly authorized representative to take charge of the assets of the Lucena bank.

The Board in its resolution of November 27, 1963 ordered the Superintendent of Banks to convert the assets of the Lucena bank to money. The Lucena bank, by means of certiorari sought to annul the liquidation proceeding . This Court denied its petition (Rural Bank of Lucena, Inc. vs. Arca, L-21146, September 20, 1965, 15 SCRA 66).

Among the accounts receivable of the Lucena bank inventoried by the Central Bank's representative was the account of Hernandez- In a letter dated October 29, 1963 Hernandez informed the Central Bank that he had sent to the Lucena bank on April 25, 1962 the chock for P6,000. He again requested that his mortgage be cancelled.

The Associate Superintendent of Banks in his answer dated December 9, 1963 returned the chock to Hernandez and informed him that, according to the Lucena bank's executive vice-president, the check could not be applied to the payment of Hernandez' loan because the bank was already closed when he received the check. Moreover, the chock was drawn against the current deposits of the San Pablo Colleges in the Lucena bank which was in the process of liquidation. Hernandez was advised to settle his account by paying cash or by means of a chock drawn against a bank other than the Lucena bank.

Disregarding that suggestion, Hernandez announced to the Associate Superintendent of Banks in his letter of December 16, 1963 that he was going to deposit the said check in the court of First Instance of Lipa City on or before December 26, 1963.

Instead of filing a consignation complaint, Hernandez enclosed the check with his letter dated January 2, 1964 to the clerk of court of the Court of First Instance at Lipa City. That letter was received in court on January 6, 1964. Hernandez wrote a letter dated January 11, 1964 informing the Associate Superintendent of Banks of the judicial deposit of the check. Copies of that letter were furnished the Lucena bank and the San Pablo Colleges.

It was only on October 12, 1964 when Hernandez and his wife filed an action in the Court of First Instance at Lipa City to compel the Rural Bank of Lucena, Inc., the Central Bank as liquidator, and Jose S. Martinez as receiver, to accept the check and to execute the cancellation of the real estate mortgage. The Hernandez spouses also asked for moral damages in the amount of P10.000 and attorney's fees of P3,000 (Civil Case No. 1615).

On October 20, 1964 the Central Bank filed a motion to dismiss. It contended that there was improper venue because, as the action allegedly involved title to real property, it should have been instituted in Quezon City where the encumbered lots are situated. It Mother contended that since the Lucena bank is under liquidation and is in the hands of a receiver, its properties and assets are in custodia legis and may, therefore, be

reached only by motion or petition in Civil Case No. 50019 of the Court of First Instance of Manila. The motion was denied.

To complete the facts, it should be stated that the counsel for the Lucena bank on January 30, 1967 offered to compromise the case by stipulating that the Central Bank would apply the check in question to the mortgage debt of Hernandez if the balance of the deposit of the San Pablo Colleges would be enough to cover the amount of the check of P6,000 and that, by virtue of that compromise, the complaint and counterclaim would be dismissed.

That conditional and equivocal compromise offer fizzled out, because the lawyers of Hernandez and the Central Bank did not assent to it.

After trial, the lower court rendered an amended decision dated October 31, 1967, ordering the Lucena Bank or the Central Bank, as liquidator, to accept the honor the check, to cancel the mortage, and to pay Hernandez spouses (P25,000 as moral damages (not P10,000 as prayed for the complaint) plus P1,000 as attorney's fees.

The Lucena bank, the Central Bank and its employee, the receiver, appealed to this Court.

The Central Bank contends that the trial court erred (1) in not holding that the venue was improperly laid; (2) in not holding that it had no jurisdiction because the Hernandez spouses should have ventilated their claim in the liquidation proceeding pending in the Court of First Instance of Manila. instead of filing a separate action in the Court of First Instance at Lipa City; (3) in not holding that there was no valid consignation, (4) in awarding moral damages and attorney's fees, and (5) in ordering execution pending appeal in spite of the tact that the assets of the Lucena bank are in custodia legis or in the custody of the liquidation court and the receiver appointed by it.

On the issue of venue, defendants-appellants contend that the action of the Hernandez spouses to compel them to honor the check in question and to cancel the mortgage on their two lots is a real action affecting title to real property which should have been filed in the Court of First Instance of Rizal at Quezon City where the mortgaged lots are situated.

Section 2(a), Rule 4 of the Rules of Court provides that "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".

Note that the rule mentions an action for foreclosure of a real estate mortgage but does not mention an action for the cancellation of a real mortgage. In the instant case, the action is primarily to compel the mortgagee to accept payment of the mortgage debt and to release the mortgage.

That action, which is not expressive included in the enumeration found in section 2(a) of Rule 4, does not involve the title to the mortgage lots. It is a personal action and not a real action. The mortgagee has, not foreclosure the mortgage, Plaintiffs' title is not in question. They are in possession of the mortgaged lots.

Hence, the venue of plaintiffs' personal action is the place 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. 2[b], Rule 4).

The plaintiffs in their brief confound a real action with an action in rem and a personal action with an action in personam. They argue that their action is not an action in rem and, therefore, it could be brought in a place other than the place where the mortgaged lots are located.

A real action is not the same as an action in rem and a personal action is not the same as an action in personam.

In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a contract or the recovery of damages. In a real action, the plaintiff seeks the recovery of real property. or, as indicated in section 2(a) of Rule 4, a real action Is an action affecting tithe to real property or for the recovery of possession. or for partition or condemnation of, or foreclosure of a mortage on, real property.

An action in personam is an action against a person on the basis of his personal liability, while an action in rem is an action against the thing itself, instead of against the person (1 C. J. S. 943-4), Hence, a real action may at the same time be an action in personam and not necessary an action in rem.

In this case, the plaintiffs alleged in their complaint that they were residents of San Juan, Batangas, which in their brief (They characterize as their legal residence and which appears to be their domicile of origin. On the other hand, it is indicated in the promissory note and mortgage signed by them and in the Torrens title covering the mortgaged lots that their residence is at 11 Chicago Street, Cubao, Quezon City, which apparently is the place where the said lots are located, The plaintiffs did not testify during the trial. So, they have no testimony in the records as to their actual residence.

We hold that the trial court should have dismissed the action because the venue thereof was improperly laid in Batangas. The term "resides" in section 2[b] of Rule 4 refers to the place of actual residence or domicile.)

San Juan, Batangas might be the place where the plaintiffs have their domicile or legal residence but there is no question that 11 Chicago Street, Cubao, Quezon City is their place of abode or the place where they actually reside. So, the action in this case, which is a personal action to compel the defendants to honor the check in question and to Cancel the mortgage, should have been filed in Quezon City if the plaintiffs intended to use their residence as the basis for their choice of venue.

Thus, it was held that venue was improperly laid in a case where plaintiff Jose Coloma filed a complaint in the Court of First Instance of Ilocos Norte, because he was allegedly a resident of San Nicolas, Ilocos Norte, where he was born and reared, but his actual residence was at 57 K-6th Kamias, 486 Barangka Drive, Mandaluyong, Rizal (Koh vs. Court of Appeals, L-40428, December 17, 1975; 70 SCRA 298).

In Gracia Fule vs. Court of Appeals, L-404502, November 29, 1976, 74 SCRA 189, it was held that an intestate proceedings 9 for the settlement of the estate of the deceased Amado G. Garcia was improperly filed in the Court of First Instance of Laguna. The deceased was allegedly domiciled in Calamba, Laguna. He was a delegate of the first district of Laguna to the constitutional convention. However, at the time of his death he was actually a resident of Quezon City. Hence. the proper venue of the intestate proceeding was Quezon City.

In the foregoing discussion. it is assumed that the plaintiff could bring a separate action to compel the defendants honor the check in question in spite of the fact that the Lucena bank is under liquidation in Civil Case No. 50019 of the Court of First Instance of Manila.

The Central Bank contends that such a separate action was not maintainable and that the Hernandez spouse should have ventilated in the liquidation proceeding their claim that they had already paid their mortgage debt by means of the check issued by the San Pablo Colleges and that their mortgage should be cancelled.

The Central Bank points out that the redemption action the Hernandez spouses would ultimately affect the funds and property of the Lucena Bank. Hence, the liquidation court is the competent tribunal to pass upon the issue as to whether the Hernandez spouses could validly pay their mortage debt by means of the check of the San Pablo Colleges.

On the other hand, the Hernandez spouses argue that their action in the Court of First Instance at Lipa City "deals with a sum of money which is still not in the possession, custody, and administration" of the Central Bank and the receiver; that their action had "nothing to do with the funds and property" held by the receiver; that the Lucena bank had not lost its juridical personality after it was placed under liquidation, and that the issue as to whether the Lucena bank should have accepted the chock in question was "not in anyway connected with the causes and grounds under which the liquidation proceedings were instituted nor with the administration of the property and funds under liquidation"

Those contentions of the Hernandez spouse are untenable. The trial court did not rule squarely on the Jurisdictional issue raised by the Central Bank and the receiver

We hold that the liquidation court or the Manila court has exclusive jurisdiction to entertain the claim of the Hernandez spouses that their mortgage obligation had already been extinguished by means of their tender of the check issued by the San Pablo Colleges.

At the time the Hernandez spouses filed in 1964 their consignation complaint the Lucena bank was already under liquidation. The Manila court in its order of March 28,1963 had ordered the officers of the Lucena bank to turn over to the Central Bank or to the receiver, the Superintendent of Banks, all of its assets, properties and papers. Among the assets turned over to the receiver was the outstanding or unpaid account of the Hernandez spouses which appears in the inventory as: "393. Hernandez, Francisco St., 11 Chicago St., Cubao, Q.C. TCT-34262 — 3/21/61, P6,000.00" (Exh. 4-CB).

And among the papers or obligations turned over to the receiver was Ledger No. 056 evidencing the deposit of the San Pablo Colleges in the Lucena bank in the sum of P11,890.16. against which the check for P6,000 was drawn. It was that check which the Hernandez spouses had issued to pay the mortgage debt to the Lucena bank.

Under the section 29 of the Central Bank Act, republic Act No. 265, when the Monetary Board, upon information submitted by the Superintendent of the Bank, finds a bank to be insolvent, it shall be forbid the bank to do the business and it shall take care of its assets according to law.

In that case, if the Monetary Board finds out that the insolvent bank cannot resume business with safety to its creditors, it shall through the Solicitor General, file a petition in the Court of First Instance, praying for the assistance and supervision of the court in the liquidation of the bank's affairs. Thereafter, the Superintendent of Banks, upon order of the Monetary Board and under the supervision of the court, shall convert to money the bank's assets. "Subido es que uno de los deberes primordiales de un depositario es hacerse cargo immediatemente de todol el activo y pasivo de un banco" (Luy Lam & Co. vs. Mercantile Bank of China, 71 Phil. 573, 576).

The fact the insolvent bank is forbidden to do business, that its assets are turn over to the Superintendent of Banks, as a receiver, for conversation into cash, and that its liquidation is undertaken with judicial intervention means that, as far as lawful and practicable, all claims against the insolvent bank and that the liquidation court should be filed in the liquidation proceeding.

The judicial liquidation is intended to prevent multiplicity of actions against the insolvent bank. The lawmaking body contemplated that for convenience only one court, if possible, should pass upon the claims against the insolvent bank and that the liquidation court should assist the Superintended of Banks and control his operations.

In the course of the liquidation, contentious cases might arise wherein a full-dress hearing would be required and legal issues would have to be resolved. Hence, it would be necessary in justice to all concerned that a Court of First Instance should assist and supervise the liquidation and should act umpire and arbitrator in the allowance and disallowance of claims.

The judicial liquidation is a pragmatic arrangement designed to establish due process and orderliness in the liquidation of the bank, to obviate the proliferation of litigations and to avoid injustice and arbitrariness.

Thus, in the liquidation before the war of the insolvement Mercantile Bank of china, various claims were adjudicated by the liquidation Court, which was the court of First Instance of Manila, pursuant to section 1639 of the Revised Administrative Code, from which section 29 pf the Central Bank Law was taken. (See In re Liquidation of Mercantile Bank of China: Tan Tiong Tick vs. American Apothecaries Co., 65 Phil. 414; Pacific Coast Biscuit Co. vs Chinese Grocers Association, 65 Phil. 375; Fletcher American National Bank vs. Ang cheng Lian, 65 Phil. 385; Pacific Commercial Co. vs. American Apothecaries Co., 65 Phil. 429; Gopoco Grocery vs. Pacific Coast Biscuit co., 65 Phil. 443; Chinese Grocers' Association vs. American Apothecaries Co., 65 Phil. 395; and Yu Ping Kun, 65 Phil. 410).

There is a ruling that, although the taking over of a bank by state officials for liquidation does not dissolve the bank, a court has no jurisdiction (after such takeover) to entertain an action or to render a judgment against the bank (9 C.J.S. 852, note 38 citing Bushnell vs. F.W. Woolworth co., 241 Pac. 738. 112 Okl. 297; State vs. Quigley, 220 Pac. 918, 93 Okl. 296).

It has been held that an insolvent bank, which was under the control of the finance commissioner for liquidation, was without power or capacity to sue or be sued, prosecute or defend or otherwise function except through the finance commissioner or liquidator (Wauer vs. Bank of Pendleton, 65 S.W. 2nd 167 228 Mo. App. 1150).

Suits brought against a bank after the issuance of a notice that the finance commissioner has taken possession of the bank should be dismissed or are barred for want of jurisdiction (Rouse vs. Bank of Darlington, 41 S.W. 2nd 159; Bartlett vs. Mc Callister, 289 S.W. 814, 316 Mo. 129).

This Court has already held that after a savings bank was declared insolvent by the Monetary Board, a depositor could not bring a separate action against it for the recovery of his time deposit. His remedy is to intervene in the liquidation proceeding (Central Bank of the Philippines vs. Morfe, L-38427, March 12, 1975, 63 SCRA 144). *

In the instant case, the Hernandez spouses, after having become cognizant of the fact that the Lucena bank was under liquidation, chose to file a separate action against that bank for redemption and damages. Although residents of Cubao, Quezon City, where the mortgage lots are located and which was the address used by them in dealing with the Lucena bank, they chose Lipa City as the venue of their action.

They ignored the liquidation court. Evidently, one of their objectives was to obtain against the Lucena bank a judgment for moral damages which they surmised would not be granted by the Manila liquidation court. They attained more than what they had

originally desired because, instead of the moral damages of P10,00 indicated in their complaint, the trial court generously awarded them P25,000.

Not only that. The trial court granted execution pending appeal although it was aware that eventually the claim of the Hernandez spouses would have to be submitted to the liquidation court for allowance. The sheriff could not enforce the writ of execution because the Lucena bank was under liquidation (p. 92, Rollo). Hence, the Hernandez spouses had to file a claim with the liquidation court. That court has been pending since September, 1968.

Thus, much time, money and effort would have been saved if at the outset the Hernandez spouse filed their claim in the liquidation court.

WHEREFORE, the trial court judgment is reversed and set aside. The case is dismissed without prejudice to the right of the Hernandez spouses to take up with the liquidation court the settlement of their mortgage obligation. Costs against the plaintiffs-appellees.

SO ORDERED.

G.R. No. L-22795 January 31, 1977

DANGWA TRANSPORTATION CO., INC. (DANGWA BUS COMPANY), and JAMES G. GAYOT, petitioners, vs.HON. MALCOLM G. SARMIENTO, Judge, Court of First Instance of Pampanga, and LAWRENCE HELLER,respondents.

Reyes & Cabato for petitioner.

Juanito O. Velasco for private respondent.

ANTONIO, J.:

The sole issue in this petition for prohibition is whether or not the Court of First Instance of Pampanga, Branch I, San Fernando, in civil Case No. 2515, gravely abused its discretion in denying petitioner's motion to dismiss on the ground of improper venue.

On March 16, 1964, private respondent Lawrence Heller, as a consequence of the injuries sustained by him when his motorcycle was bumped by a bus of the Dangwa

Transportation Co., Inc., filed an action with the Court of First Instance of Pampanga, 1 against petitioners James G. Gayot, the bus driver, and Dangwa Transportation Co., Inc., owner of the bus, and docketed therein as Civil Case No. 2515 2 for damages (actual and conpensatory P30,000.00, moral and exemplary — P14,000.00). In his complaint, private respondent alleges, amongs others, (1) that he is of legal age, single, American citizen, an Airman First Class of the United States Air Force, and presently assigned and stationed at Clark Air Base Pampanga, Philippines; while the defendant James G. Gayot is also of legal age, Filipino, married, and a resident of Engineer's Hill, Baguio City and the other defendant Dangwa Bus Company 3 is a juridical person or corporation organized and existing in accordance with the laws of the Republic of the Philippines, with business address at Trinidad Valley, Banquet Mountain Province, where summons and other lawful processes of the court may be served; (2) that James G. Gayot is a driver and employee of said Bus Company, a common carrier and registered owner of Dangwa bus bearing Plate No. PUB-1986; (3) that on December 30, 1963, at Twin Peaks, Kennon Road, Tuba, Banquet Mountain Province, this Dangwa bus was driven by James G. Gayot with such reckless imprudence and at a greater speed than was reasonable and proper, that the bus collided with Lawrence Heller who was then riding on his motorcycle; (4) that, its a result of the collision, the latter sustained serious physical injuries, namely, a closed fracture of the left femur and a compound fracture of the left tibia, and his motorcycle was totally wrecked; (5) that, thereafter, he was confined at the USAF Hospital, Clark Air Base, Angeles, Pampanga; and (6) that as Airman First Class in the USAF assigned to the 1st Mobile Communication Group, Clark AFB, he received a monthly pay of $234.00.

On March 25, 1964, the petitioners filed a motion to dismiss 4 on the ground that venue was improperly laid with the Court of First Instance of Pampanga under Section 1(c) of Rule 16 of the Revised Rules of Court, for private respondent, an American citizen, is not a resident of Clark Air Base, Pampanga, as the first paragraph of his complaint alleges that he is "presently assigned and stationed at Clark Air Base, Pampanga, Philippines", and, as such, his assignment in the Philippines is temporary since members of the United States Air Force may be assigned any time to any station under the exclusive control and decision of the Commanding Officer; and that, pursuant to Section 2(b), Rule 4, of the Revised Rules of Court, the venue of private respondent's action should not be Pampanga but the City of Baguio or Benguet, Mountain Province.

On April 8, 1964, the private respondent filed an Opposition 5 to the aforesaid motion to dismiss alleging, among others, (1) that the residence required by the rule (Section 2[b], Rule 4, Revised Rules of Court) need not necessarily be permanent, it being sufficient that the plaintiff had his actual residence at the place where the action was brought 6 (2) that he has the privilege to elect which court to file his action and he had chosen the Court of First Instance of Pampanga, because he is a resident of Clark Air Base, Pampanga, not only at the time of the commencement of the present action, but also even before the accident happened; and (3) that when he alleged in his complaint that he is stationed in Clark Air Base, Pampanga, Philippines, he meant to convey that, as long as he stays in the Philippines, his residence is in Clark Air Base, Pampanga.

On the same day, April 8,1964, respondent Judge Malcolm G. Sarmiento issued an Order denying petitioners' motion to dismiss, 7 and stating that private respondent's actual residence is in Clark Air Base, Pampanga, and his action, therefore, was properly instituted in said province, for "residence under this action need not be continuous, it being sufficient that a party, though a foreign subject, has his actual residence in the place when the action was brought." 8

We find the petition without merit.

There is no question that respondent Lawrence Heller has his fixed place of abode at Clark Air Base, Pampanga. There is no showing in the record that Heller has not resided consistently and with continuity in his place of abode at Clark Air Base at the time he filed this action.

In Koh v. Court of Appeals, 9 We explained that the term "resides" as employed in the rule on venue on personal actions filed with courts of first instance 10 means the place of abode, whether permanent or temporary, of the plaintiff or the defendant, as distinguished from "domicile" which denotes a fixed permanent residence to which, when absent, one has the intention of returning.

It is fundamental in the law governing venue of actions (Rule 4 of the Rules of Court) that the situs for bringing real and personal civil actions are fixed by the rules to attain the greatest convenience possible to the parties litigants by taking into consideration the exit in accessibility to them of the courts of justice. It is likewise undeniable that the term domicile is not exactly synonymous in legal contemplation with the term residence, for it is an established principle in Conflict of Laws thatdomicile refers to the relatively ore permanent abode of a person while residence applies to a temporary stay of a person in a given place. In fact this distinction is very well emphasized in those cases where the Domiciliary Theory must necessarily supplant the Nationality Theory in cases involving stateless persons.

This Court held in case of Uytengsu vs. republic, 50 O.G. 4781 October, 1954, reversing its previous stand in Larena v. Ferrer, 61 Phil 36 and Nuval v. Guray, 52 Phil. 645, that —

There is a difference between domicide and residence. residence is used to indicate a place of abode, whether permanent or temporary: domicile denotes a fixed permanent residence to which when absent, one has the intention of returning. A man may have a residence in one place and a domicile in another. Residence is not domicile, but domicile is residence coupled with the intention to remain for an unlimited time. A man can have but one domicile for one and the same purpose at any time, but he may have

numerous places of residence. His place of residence generally is his place of domicile, but is not any means, necessarily so since no length of residence without intention of remaining will constitute domicile. (Emphasis Supplied)

We note that the law on venue in Courts of First Instance (Section 2, of Rule 4, Rules of Court) in referring to the parties utilizes the words "resides or may be found," and not "is domiciled," thus:

Sec. 2(b) Personal actions — 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.' (Emphasis Supplied)

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, 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. if 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. (Koh v. Court of Appeals, supra, pp. 304-305.)

The same construction of the word "resides" as used in Section 1, Rule 73, of the Revised Rules of Court, was enunciated in Fule v. Court of Appeals, et. al. (G.R. No. L-40502) and Fule v. Hon. Ernani C. Paño, et al.(G. R. No. L-42670), decided on November 29, 1976. Thus, this Court, in the aforecited cases, stated:

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 purposes of the statute or 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 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 at 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. No particular length of time of residence is required though; however, the residence must be more than temporary.

Respondent court having found that private respondent Lawrence Heller had his actual residence at Clark Air Base, Angeles (now a City), Pampanga, at the time he filed his personal action against the petitioners, it did not, therefore, gravely abuse its discretion in refusing to dismiss the case.

WHEREFORE, the petition for prohibition is hereby DISMISSED, with costs against the petitioners.

IRENE MARCOS-ARANETA, DANIEL RUBIO, ORLANDO G. RESLIN, and JOSE G. RESLIN,                      Petitioners,

         - versus -

COURT OF APPEALS, JULITA C. BENEDICTO, and FRANCISCABENEDICTO-PAULINO,                      Respondents.

G.R. No. 154096

Present:

QUISUMBING, J., Chairperson,CARPIO MORALES,TINGA,VELASCO, JR., andBRION, JJ.

Promulgated:

August 22, 2008

x-----------------------------------------------------------------------------------------x 

D E C I S I O N VELASCO, JR., J.: 

The Case 

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. 

 

 

 

The Facts

 

Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now deceased,

and his business associates (Benedicto Group) organized Far East Managers and

Investors, Inc. (FEMII) and Universal Equity Corporation (UEC), respectively. As

petitioner Irene Marcos-Araneta would later allege, both corporations were organized

pursuant 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 the obligation to hold those shares and their fruits in trust and for the benefit

of Irene to the extent of 65% of such shares. Several years after, Irene, through her

trustee-husband, Gregorio Ma. Araneta III, demanded the reconveyance of said 65%

stockholdings, but the Benedicto Group refused to oblige. 

 

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

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 Securities

and Exchange Commission, not the RTC, has jurisdiction; (2) venue was improperly

laid; and (3) the complaint failed to state a cause of action, as there was no allegation

therein that plaintiff, as beneficiary of the purported trust, has accepted the trust created

in her favor.

 

To the motions to dismiss, Irene filed a Consolidated Opposition, which

Benedicto and Francisca countered with a Joint Reply to Opposition.

 

Upon Benedicto’s motion, both cases were consolidated.

 

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.

 

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 claimed residency in Batac, Ilocos Norte.

 

In the meantime, on May 15, 2000, Benedicto died and was substituted by his

wife, Julita C. Benedicto, and Francisca.

 

On June 29, 2000, the RTC dismissed both complaints, stating that these partly

constituted “real action,” and that Irene did not actually reside in Ilocos Norte, and,

therefore, venue was improperly laid. In its dismissal order,[7] the court also declared “all

the other issues raised in the different Motions to Dismiss x x x moot and academic.”

  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.    

 

During the August 25, 2000 hearing, the RTC dictated in open court an order

denying Irene’s motion for reconsideration aforementioned, but deferred action on her

motion to admit amended complaint and the opposition thereto.[11]   

 

On October 9, 2000, the RTC issued an Order[12] entertaining the amended

complaint, dispositively stating:

 WHEREFORE, the admission of the Amended Complaint being

tenable and legal, the same is GRANTED. Let copies of the Amended Complaint be served to the defendants

who are ordered to answer within the reglementary period provided by the rules.

  

The RTC predicated its order on the following premises:

 

(1) Pursuant to Section 2, Rule 10 of the Rules of Court, [13] Irene may opt to file,

as a matter of right, an amended complaint.

(2) The inclusion of additional plaintiffs, one of whom was a Batac, an Ilocos

Norte resident, in the amended complaint setting out the same cause of action cured

the defect of improper venue.

 

(3) Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4 allow the filing of the

amended complaint in question in the place of residence of any of Irene’s co-plaintiffs.

 

          In time, Julita and Francisca moved to dismiss the amended complaint, but the

RTC, by Order[14] dated December 18, 2000, denied the motion and reiterated its

directive for the two to answer the amended complaint.

 

          In said order, the RTC stood pat on its holding on the rule on amendments of

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 the

original complaints were dismissed with finality earlier, i.e., on August 25, 2000 when

the court denied Irene’s motion for reconsideration of the June 29, 2000 order

dismissing the original complaints, the court stated thusly: there was actually no need to

act on Irene’s motion to admit, it being her right as plaintiff to amend her complaints

absent any responsive pleading thereto. Pushing its point, the RTC added the

observation that the filing of the amended complaint on July 17, 2000 ipso

facto superseded the original complaints, the dismissal of which, per the June 29, 2000

Order, had not yet become final at the time of the filing of the amended complaint.

 

Following the denial on March 15, 2001 of their motion for the RTC to reconsider

its 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]  But on the same day, they went to the CA via a petition for certiorari, docketed as

CA-G.R. SP No. 64246, seeking to nullify the following RTC orders: the first, admitting

the amended complaint; the second, denying their motion to dismiss the amended

complaint; and the third, denying their motion for reconsideration of the second

issuance.

 

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 “to submit x x x either the written authority of Julita C. Benedicto to Francisca

B. Paulino authorizing the latter to represent her in these proceedings, or a

supplemental verification and certification duly signed by x x x Julita C.

Benedicto.”[16] Records show the submission of the corresponding authorizing

Affidavit[17] executed by Julita in favor of Francisca.    

 

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 civil

cases.

 

On October 17, 2001, the CA rendered a Decision, setting aside the assailed

RTC orders and dismissing the amended complaints in Civil Case Nos. 3341-17 and

3342-17. The fallo of the CA decision reads: WHEREFORE, based on the foregoing premises, the petition is

hereby GRANTED.  The assailed Orders admitting the amended complaints are SET ASIDE for being null and void, and the amended complaints a quo are, accordingly, DISMISSED.[20]

 

Irene and her new trustees’ motion for reconsideration of the assailed decision

was denied through the equally assailed June 20, 2002 CA Resolution.  Hence, this

petition for review is before us.

 

The Issues

 

Petitioners urge the setting aside and annulment of the assailed CA decision and

resolution on the following submissions that the appellate court erred in: (1) allowing the

submission of an affidavit by Julita as sufficient compliance with the requirement on

verification and certification of non-forum shopping; (2) ruling on the merits of the trust

issue which involves factual and evidentiary determination, processes not proper in a

petition for certiorari under Rule 65 of the Rules of Court; (3) ruling that the amended

complaints in the lower court should be dismissed because, at the time it was filed,

there was no more original complaint to amend; (4) ruling that the 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 residents of Ilocos Norte.[21]

 

The Court’s Ruling

 

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 ofAppeals:

 [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 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 dismissis 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

 

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 3PARTIES 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 SEC. 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.

  

Venue is Improperly Laid

 

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 the

avails of the present suit.  It is undisputed too that petitioners Daniel Rubio, Orlando G.

Reslin, and Jose G. Reslin, all from Ilocos Norte, were included as co-plaintiffs in the

amended complaint as Irene’s new designated trustees. As trustees, they can only

serve as mere representatives of Irene. 

 

Upon the foregoing consideration, the resolution of the crucial issue of whether or

not venue had properly been laid should not be difficult.

 

Sec. 2 of Rule 4 indicates quite clearly that when there is more than one plaintiff

in a personal action case, the residences of theprincipal parties should be the basis for

determining proper venue. According to the late Justice Jose Y. Feria, “the word

‘principal’ has been added [in the uniform procedure rule] in order to prevent the plaintiff

from choosing the residence of a minor plaintiff or defendant as the 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 party is impleaded in the action since

the latter would not have the degree of interest in the subject of the action which would

warrant and entail the desirably active participation expected of litigants in a case.”[43]

   Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-17, Irene stands

undisputedly as the principal plaintiff, the real party-in-interest.  Following Sec. 2 of Rule 4, the subject civil cases ought to be commenced and prosecuted at the place where Irene resides. 

 

Principal Plaintiff not a Resident in Venue of Action

 

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

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.   As trustees, they may be accorded, by virtue of Sec. 3 of Rule 3, the right to

prosecute a suit, but only on behalf of the beneficiary who must be included in the title

of the case and shall be deemed to be the real party-in-interest. In the final analysis, the

residences of Irene’s co-plaintiffs cannot be made the basis in determining the venue 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 heirs,

assigns, or associates, virtually rendering the impleading of the trustees unnecessary.

 

And this brings us to the final point. Irene was a resident during the period

material of Forbes Park, Makati City. She was not a resident of Brgy. Lacub, Batac,

Ilocos Norte, although jurisprudence[44] has it that one can have several residences, if

such were the established fact. The Court will not speculate on the reason why

petitioner Irene, for 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 heels of the dismissal of the original complaints on the ground of

improper venue, 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.

 

Litigants ought to bank on the righteousness of their causes, the superiority of

their cases, and the persuasiveness of arguments to secure a favorable verdict.  It is

high time that courts, judges, and those who come to court for redress keep this ideal in

mind.

 

  WHEREFORE, the instant petition is hereby DISMISSED. The Decision and

Resolution dated October 17, 2001 and June 20, 2002, respectively, of the CA in CA-G.R. SP No. 64246, insofar as they nullified the assailed orders of the RTC, Branch 17 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 herebyAFFIRMED. The Orders dated October 9, 2000, December 18, 2000, and March 15, 2001 of the RTC in Civil Case Nos. 3341-17 and 3342-17 are accordingly ANNULLED and SET ASIDE and said civil cases are DISMISSED.

 Costs against petitioners. 

SO ORDERED.  G.R. No. L-54452 July 20, l981

EASTERN ASSURANCE & SURETY CORPORATION, petitioner, vs.HON. EMETERIO C. CUI (in his official capacity as Judge, Court of First Instance of Manila, Branch XXV) and LORETA B. PAN, respondents.

ABAD SANTOS, J.:

This is a petition to review on certiorari the order, dated October 30, 1978, of the respondent judge in Civil Case No. 115385, Court of First Instance of Manila.

The facts of the case, briefly, are the following:

On April 21, 1977, Transunion Corporation and Rey M. Pan doing business under the name of Pan Phil. Trading entered into a dealership agreement for the sale of merchandise. Pursuant thereto Pan Phil. Trading had to file a P 20,000 surety bond and it complied by presenting a surety bond of Eastern Assurance & Surety Corporation.

On May 15, 1978, Transunion filed a complaint (Civil Case No. 115385, CFI, Manila) against Rey M. Pan, Pan Phil. Trading and Eastern Assurance & Surety Corporation for the full payment of merchandise delivered in the amount of P 10,841.54.

After Eastern Assurance & Surety Corporation had filed its Answer with cross-claim, it filed a motion to file a third-party complaint against Loreta B. Pan, wife of Rey M. Pan. The reason given in the motion is that movant has a legal right against Loreta B. Pan. It appears that in consideration of the surety bond, the Pan spouses executed an Indemnity Agreement in favor of Eastern Assurance & Surety Corporation.

On July 24, 1978, the respondent judge granted the motion and admitted the third- party complaint.

Subsequently, Loreta B. Pan filed a motion to dismiss the third-party complaint on the ground that venue was improperly laid. She invoked paragraph 7 of the Indemnity Agreement which reads:

7. WAIVER OF VENUE OF ACTION:—We [meaning Rey M. Pan and Loreta B. Pan] hereby agree that any question whichmay arise between the Company and the undersigned by reason of this document and which has to be submitted to the court of justice, shall be brought before the court of competent jurisdiction of Quezon City, waiving for this purpose any other proper venue.

Notwithstanding the opposition of Eastern Assurance & Surety Corporation, the respondent judge in his order dated October 30, 1978, peremptorily dismissed the third-party complaint on the ground that the motion to dismiss was "well-taken." The respondent judge, may his tribe vanish, did not elaborate. A motion to reconsider the order of dismissal was denied in a similar fashion.

We have to grant the petition despite the comment of the respondent judge to the petition for review that in dismissing the third-party complaint he had to uphold the policy of upholding the sanctity of contracts in preference to the policy against multiplicity of suits. He even cites Roscoe Pound's Scope and Purpose of Sociological Jurisprudence in 24 Harvard Law Review 607.

What the respondent judge and even petitioner's counsel failed to perceive is that paragraph 7 of the Indemnity Agreement was imposed on the Pan spouses by the petitioner surety company for its benefit and convenience and therefore the latter could waive the provision by filing its complaint, not in Quezon City, but in Manila. There is, therefore, no sanctity of contract to hold.

But even if we assume that paragraph 7 of the Indemnity Agreement created a reciprocal obligation, it does not necessarily follow that it is applicable to the present situation.

It has to be remembered that a third-party complaint is but ancillary to the main action and is a procedural device to avoid multiplicity of suits. Because of its nature the prescriptions on jurisdiction and venue applicable to ordinary suits may not apply. Thus a third-party complaint has to yield to the jurisdiction and venue of the main action. This view is supported by our decision in Republic vs. Central Surety & Insurance Co., G.R. L-27802, Oct. 26, 1968, 25 SCRA 641, where we said:

3. Upon the third issue, the Surety takes the position that if the trial court acquired jurisdiction over the main case, 'it follows that it should also take cognizance of the third-party complaint which derives its life from the complaint.'

The Surety has a point here. It is true that the third-party complaint was filed after the effectivity date of Republic Act 3828. It is likewise true that the demand therein made does not exceed P 10,000, and, therefore, is not within the jurisdiction of the Court of First Instance if it were an independent action. But the third-party complaint is an ancillary suit which depends on the jurisdiction of the court over the main action. Since the trial court had acquired jurisdiction over the complaint, it necessarily follows that it likewise had jurisdiction over the third-party complaint which is but an incident thereof. This must be so because jurisdiction over the main case embraces all incidental matters arising therefrom and connected therewith. A contrary rule would result in 'split jurisdiction which is not favored, and in multiplicity of suits, a situation obnoxious to the orderly administration of justice. The court acquired jurisdiction over the third-party complaint, provided it had jurisdiction over the main case, for the reason that the third-party complaint is but a continuation thereof, its purpose being to seek 'contribution, indemnity, subrogation or any other relief, in respect to his opponent's claim.' (At pp. 648-649. See also Talisay-Silay Milling Co., Inc., and J. Amado Araneta vs. The Court of Industrial Relations and Central Azucarera del Danao, L- 21582 No. 29, 1966, 18 SCRA 894.)

WHEREFORE, finding the petition to be well-taken, the same is hereby granted; the order of the respondent judge dismissing the third-party complaint is rescinded. Cost against respondents.

SO ORDERED.

G.R. NO. 156596               August 24, 2007

ADELAIDA INFANTE, Petitioner, vs.ARAN BUILDERS, INC., Respondent.*

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking the reversal of the Decision1 of the Court of Appeals (CA) promulgated on August 12, 2002, which upheld the Order dated September 4, 2001, issued by the Regional Trial Court of Muntinlupa City (RTC).

The undisputed facts and issues raised in the lower courts are accurately summarized by the CA as follows:

Before the Regional Trial Court of Muntinlupa City (or "Muntinlupa RTC"; Branch 276), presided over by Hon. Norma C. Perello (or "respondent judge"), was an action for revival of judgment filed on June 6, 2001 by Aran Builders, Inc. (or "private respondent") against Adelaida Infante (or "petitioner"), docketed as Civil Case No. 01-164.

The judgment sought to be revived was rendered by the Regional Trial Court of Makati City (or "Makati RTC"; Branch 60) in an action for specific performance and damages, docketed as Civil Case No. 15563.

The Makati RTC judgment, which became final and executory on November 16, 1994, decreed as follows:

26. WHEREFORE, the Court hereby renders judgment as follows:

26.1 The defendant ADELAIDA B. INFANTE is ordered to do the following within thirty (30) days from finality hereof:

26.1.1. To deliver to the plaintiff ARAN BUILDERS, INC. the following: (a) the complete plans (lot plan, location map and vicinity map); (b) Irrevocable Power of Attorney; (c ) Real Estate Tax clearance; (d) tax receipts; (e) proof of up to date payment of Subdivision Association dues referred to in the "CONTRACT TO SELL" dated November 10, 1986 (Exh. A or Exh. 1);

26.1.2. To execute the deed of sale of Lot No. 11, Block 9, Phase 3-A1, Ayala Alabang Subdivision covered by TCT No. 114015 for P500,000.00 in favor of the plaintiff;

26.1.3. To pay the capital gains tax, documentary stamp taxes and other taxes which the Bureau of Internal Revenue may assess in connection with the sale mentioned in the preceding paragraph and to submit to the plaintiff proof of such payment;

26.1.4. To secure the written conformity of AYALA CORPORATION to the said sale and to give such written conformity to the plaintiff;

26.1.5. To register the deed of sale with the Registry of Deeds and deliver to AYALA CORPORATION the certificate of title issued in the name of plaintiff pursuant to such registration;

26.2 Upon the compliance of the defendant with the preceding directives, the plaintiff must immediately pay to the defendant the sum of P321,918.25;

26.3 The defendant is ordered to pay plaintiff P10,000.00 as attorney’s fees;

26.4 The Complaint for moral and exemplary damages is DISMISSED;

26.5 The COUNTERCLAIM is DISMISSED; and

26.6 Cost is taxed against the defendant.

Petitioner filed a motion to dismiss the action (for revival of judgment) on the grounds that the Muntinlupa RTC has no jurisdiction over the persons of the parties and that venue was improperly laid. Private respondent opposed the motion.

On September 4, 2001, the Muntinlupa RTC issued an order which reads:

The MOTION TO DISMISS is denied.

Admittedly, the Decision was rendered by the Makati Regional Trial Court, but it must be emphasized that at that time there was still no Regional Trial Court in Muntinlupa City, then under the territorial jurisdiction of the Makati Courts, so that cases from this City were tried and heard at Makati City. With the creation of the Regional Trial Courts of Muntinlupa City, matters involving properties located in this City, and cases involving Muntinlupa City residents were all ordered to be litigated before these Courts.

The case at bar is a revival of a judgment which declared the plaintiff as the owner of a parcel of land located in Muntinlupa City. It is this judgment which is sought to be enforced thru this action which necessarily involves the interest, possession, title, and ownership of the parcel of land located in Muntinlupa city and adjudged to Plaintiff. It

goes without saying that the complaint should be filed in the latter City where the property is located, as there are now Regional Trial Courts hereat.

Defendant may answer the complaint within the remaining period, but no less than five (5) days, otherwise a default judgment might be taken against her.

It is SO ORDERED.

Her motion for reconsideration having been denied per order dated September 28, 2001, petitioner came to this Court [CA] via the instant special civil action for certiorari. She ascribes grave abuse of discretion amounting to lack or excess of jurisdiction on the part of respondent judge for "erroneously holding that Civil Case No. 01-164 is a revival of judgment which declared private respondent as the owner of a parcel of land located in Muntinlupa City and (that) the judgment rendered by the (Makati RTC) in Civil Case No. 15563 sought to be enforced necessarily involves the interest, possession, title and ownership of the parcel of land located in Muntinlupa City."

Petitioner asserts that the complaint for specific performance and damages before the Makati RTC is a personal action and, therefore, the suit to revive the judgment therein is also personal in nature; and that, consequently, the venue of the action for revival of judgment is either Makati City or Parañaque City where private respondent and petitioner respectively reside, at the election of private respondent.

On the other hand, private respondent maintains that the subject action for revival judgment is "quasi in rem because it involves and affects vested or adjudged right on a real property"; and that, consequently, venue lies in Muntinlupa City where the property is situated.2

On August 12, 2002, the CA promulgated its Decision ruling in favor of herein private respondent. The CA held that since the judgment sought to be revived was rendered in an action involving title to or possession of real property, or interest therein, the action for revival of judgment is then an action in rem which should be filed with the Regional Trial Court of the place where the real property is located. Petitioner moved for reconsideration of the CA Decision but the motion was denied per Resolution dated January 7, 2003.

Hence, herein petition. Petitioner claims that the CA erred in finding that the complaint for revival of judgment is an action in rem which was correctly filed with the RTC of the place where the disputed real property is located.

The petition is unmeritorious.

Petitioner insists that the action for revival of judgment is an action in personam; therefore, the complaint should be filed with the RTC of the place where either petitioner or private respondent resides. Petitioner then concludes that the filing of the action for

revival of judgment with the RTC of Muntinlupa City, the place where the disputed property is located, should be dismissed on the ground of improper venue.

Private respondent is of the opinion that the judgment it is seeking to revive involves interest over real property. As such, the present action for revival is a real action, and venue was properly laid with the court of the place where the realty is located.

Thus, the question that must be answered is: where is the proper venue of the present action for revival of judgment?

Section 6, Rule 39 of the 1997 Rules of Civil Procedure provides that after the lapse of five (5) years from entry of judgment and before it is barred by the statute of limitations, a final and executory judgment or order may be enforced by action. The Rule does not specify in which court the action for revival of judgment should be filed.

In Aldeguer v. Gemelo,3 the Court held that:

x x x an action upon a judgment must be brought either in the same court where said judgment was rendered or in the place where the plaintiff or defendant resides, or in any other place designated by the statutes which treat of the venue of actions in general. (Emphasis supplied)4

but emphasized that other provisions in the rules of procedure which fix the venue of actions in general must be considered.5

Under the present Rules of Court, Sections 1 and 2 of Rule 4 provide:

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.

x x x x

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.

Thus, the proper venue depends on the determination of whether the present action for revival of judgment is a real action or a personal action. Applying the afore-quoted rules on venue, if the action for revival of judgment affects title to or possession of real property, or interest therein, then it is a real action that must be filed with the court of the place where the real property is located. If such action does not fall under the category of real actions, it is then a personal action that may be filed with the court of the place where the plaintiff or defendant resides.

In support of her contention that the action for revival of judgment is a personal action and should be filed in the court of the place where either the plaintiff or defendant resides, petitioner cites the statements made by the Court in Aldeguer v. Gemelo6 and Donnelly v. Court of First Instance of Manila7 . Petitioner, however, seriously misunderstood the Court's rulings in said cases.

In Aldeguer, what the Court stated was that "[t]he action for the execution of a judgment for damages is a personal one, and under section 377 [of the Code of Civil Procedure], it should be brought in any province where the plaintiff or the defendant resides, at the election of the plaintiff"8 (Emphasis and underscoring supplied). Petitioner apparently took such statement to mean that any action for revival of judgment should be considered as a personal one. This thinking is incorrect. The Court specified that the judgment sought to be revived in said case was a judgment for damages. The judgment subject of the action for revival did not involve or affect any title to or possession of real property or any interest therein. The complaint filed in the revival case did not fall under the category of real actions and, thus, the action necessarily fell under the category of personal actions.

In Donnelly, the portion of the Decision being relied upon by petitioner stated thus:

Petitioner raises before this Court two (2) issues, namely: (a) whether an action for revival of judgment is one quasi in rem and, therefore, service of summons may be effected thru publication; and (b) whether the second action for revival of judgment (Civil Case No. 76166) has already prescribed. To our mind, the first is not a proper and justiciable issue in the present proceedings x x x. Nevertheless, let it be said that an action to revive a judgment is a personal one. (Emphasis supplied)9

The Court clearly pointed out that in said case, the issue on whether an action for revival of judgment is quasi in rem was not yet proper and justiciable. Therefore, the foregoing statement cannot be used as a precedent,as it was merely an obiter dictum. Moreover, as in Aldeguer, the judgment sought to be revived in Donnellyinvolved judgment for a certain sum of money. Again, no title or interest in real property was involved. It is then understandable that the action for revival in said case was categorized as a personal one.

Clearly, the Court's classification in Aldeguer and Donnelly of the actions for revival of judgment as being personal in character does not apply to the present case.

The allegations in the complaint for revival of judgment determine whether it is a real action or a personal action.

The complaint for revival of judgment alleges that a final and executory judgment has ordered herein petitioner to execute a deed of sale over a parcel of land in Ayala Alabang Subdivision in favor of herein private respondent; pay all pertinent taxes in connection with said sale; register the deed of sale with the Registry of Deeds and deliver to Ayala Corporation the certificate of title issued in the name of private

respondent. The same judgment ordered private respondent to pay petitioner the sum of P321,918.25 upon petitioner's compliance with the aforementioned order. It is further alleged that petitioner refused to comply with her judgment obligations despite private respondent's repeated requests and demands, and that the latter was compelled to file the action for revival of judgment. Private respondent then prayed that the judgment be revived and a writ of execution be issued to enforce said judgment.

The previous judgment has conclusively declared private respondent's right to have the title over the disputed property conveyed to it. It is, therefore, undeniable that private respondent has an established interest over the lot in question; and to protect such right or interest, private respondent brought suit to revive the previous judgment. The sole reason for the present action to revive is the enforcement of private respondent's adjudged rights over a piece of realty. Verily, the action falls under the category of a real action, for it affects private respondent's interest over real property.1avvphi1

The present case for revival of judgment being a real action, the complaint should indeed be filed with the Regional Trial Court of the place where the realty is located.

Section 18 of Batas Pambansa Bilang 129 provides:

Sec. 18. Authority to define territory appurtenant to each branch. - The Supreme Court shall define the territory over which a branch of the Regional Trial Court shall exercise its authority. The territory thus defined shall be deemed to be the territorial area of the branch concerned for purposes of determining the venue of all suits, proceedings or actions, whether civil or criminal, as well as determining the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts over which the said branch may exercise appellate jurisdiction. The power herein granted shall be exercised with a view to making the courts readily accessible to the people of the different parts of the region and making the attendance of litigants and witnesses as inexpensive as possible. (Emphasis supplied)1avvphi1

From the foregoing, it is quite clear that a branch of the Regional Trial Court shall exercise its authority only over a particular territory defined by the Supreme Court. Originally, Muntinlupa City was under the territorial jurisdiction of the Makati Courts. However, Section 4 of Republic Act No. 7154, entitled An Act to Amend Section Fourteen of Batas Pambansa Bilang 129, Otherwise Known As The Judiciary Reorganization Act of 1981, took effect on September 4, 1991. Said law provided for the creation of a branch of the Regional Trial Court in Muntinlupa. Thus, it is now the Regional Trial Court in Muntinlupa City which has territorial jurisdiction or authority to validly issue orders and processes concerning real property within Muntinlupa City.

Thus, there was no grave abuse of discretion committed by the Regional Trial Court of Muntinlupa City, Branch 276 when it denied petitioner's motion to dismiss; and the CA did not commit any error in affirming the same.

WHEREFORE, the petition is DENIED. The Decision dated August 12, 2002 and Resolution dated January 7, 2003 of the Court of Appeals are AFFIRMED.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZAssociate Justice

G.R. No. L-27033            October 31, 1969

POLYTRADE CORPORATION, plaintiff-appellee, vs.VICTORIANO BLANCO, defendant-appellant.

Paredes, Poblador, Cruz and Nazareno for plaintiff-appellee.Isidro T. Almeda and Mario T. Banzuela for defendant-appellant.

SANCHEZ, J.:

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.

Fourth Cause of Action

— P41,075.22, with interest thereon at 1% a month2 until the full amount is paid.

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. Shubert 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.

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 Motors 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.

G.R. No. 119657 February 7, 1997

UNIMASTERS CONGLOMERATION, INC., petitioner, vs.COURT OF APPEALS and KUBOTA AGRI MACHINERY PHILIPPINES, INC., respondents.

 

NARVASA, C.J.:

The appellate proceeding at bar turns upon the interpretation of a stipulation in a contract governing venue of actions thereunder arising.

On October 8, 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 rulings6 — 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."

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

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.

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 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, at 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 reiteratingPolytrade, 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 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

. . (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 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 before that Court of wrong venue notwitstanding 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.

 

 

 

 

 

Separate Opinions

 

REGALADO, J., concurring:

I find no plausible reason to withhold concurrence from the opinion meticulously crafted by the Chief Justice which provides a taxonomy of cases for future decisions. It has figuratively parted the jurisprudential waves, laying on one side a catalogue of holdings on the strict binding effect of a venue stipulation and, on the other, those rulings on when it may be disregarded. This concurring opinion merely suggests, therefore, some parametric qualifications on the applicability of the first type, that is, the agreement which demands literal compliance by the parties.

Summarized, the rule is that if the parties to a contract merely agree on the venue of any case arising therefrom, in addition to or aside from the legal venue provided therefor by the Rules of Court or the law, that stipulation is merely permissive and the parties may choose to observe the same or insist on the alternative venues in the Rules or the law.

If, on the other hand, such venue stipulation contains qualifying, restrictive, mandatory or exclusionary terms indicating that the additional forum shall be the unalterable venue of prospective suits ex contractu between them, then such agreement shall necessarily be observed to the exclusion of and shall bar resort to another forum which would otherwise have been the reglementary prescription of venue for the case.

Of the latter genre are the use of such qualifying words like exclusively, only, solely, limited to, in no other place, to the exclusion of, or other terms indicative of a clear and categorical intent to lay the venue at a specific place and thereby waiving the general provisions of the Rules or the law on venue or proscribing the filing of suit in any other competent court.

These guidelines should accordingly be drawn from the decision in this case, viz.: (1) the agreement on venue shall, in the first instance, be normally considered as merely permissive; (2) to be restrictive, the language or terminology employed in the stipulation must be unequivocal and admit of no contrary or doubtful interpretation; (3) in case of irreconcilable doubt, the venue provision shall be deemed to be permissive; and (4) in ascertaining the intent in that provision which reasonably admits of more than one meaning, the construction should be adopted which most conduces to the convenience of the parties.

In addition to the foregoing, the writer suggests, by way of caveat, the matter of adhesion contracts and restrictions of public policy as qualifying or delimiting the application of the mandatory effect of restrictive venue stipulations.

Implicit in an agreement on venue, as in any contract or its terms, is the legal imperative that the consent of the parties thereto were voluntarily, freely and intelligently given. Now, as explained by a commentator, a contract of adhesion is one in which a party imposes a ready-made form of contract which the other party may accept or reject, but which the latter cannot modify. These are the contracts where all the terms are fixed by one party and the other has merely "to take it or leave it."

It is there admitted that these contracts usually contain a series of stipulations which tend to increase the obligations of the adherent, and to reduce the responsibilities of the offeror. There is such economic inequality between the parties to these contracts that the independence of one of them is entirely paralyzed. Yet, although other writers believe that there is no true contract in such cases because the will of one of the parties is suppressed, our commentator says that this is not juridically true, His view is that the one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent. 1

This conclusion would not seem to square with what this Court stated in Qua Chee Gan vs. Law Union and Rock Insurance Co., Ltd 2 It was there pointed out that by reason of the exclusive control by one party in a contract of adhesion over the terms and phraseology of the contract, any ambiguity must be held strictly against the one who caused it to be prepared and liberally in favor of the other party. In fact, this rule has since become a statutory provision. 3

By analogy, these pronouncements in the aforestated case would inveigh against a rigid application of an exclusive venue stipulation where what is involved is a contract of adhesion, to wit:

. . . The courts cannot ignore that nowadays monopolies, cartels and concentrations 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 with, his participation in the "agreement" being reduced to the alternative to take it or leave it, labelled . . . "contracts by adherence" (contracts d'adhesion), in contrast to those entered into by parties bargaining on an equal footing, such contracts . . . obviously call for greater strictness and vigilance on the part of courts of justice with a view to protecting the weaker party from abuses and imposition, and prevent their becoming traps for the unwa(r)y (authorities omitted).

I respectfully submit, therefore, that while the enunciated rule on restrictive venue stipulations should ordinarily be respected, a greater caution on case-to-case basis must be adopted by the courts where such stipulation is contained in a contract of adhesion. Not only should they consider the disadvantaged position of the adherent but, more importantly, the fact that the raison d'etre for rules of venue is to afford due process, greater convenience and more ready access to the court in favor of the adhering contracting party.

I also submit that the rule on restrictive venue stipulations should not apply where it would be violative of a settled and important policy of the State. Thus, for instance, in the cited case of Hongkong and Shanghai Banking Corporation vs. Sherman, 4 aside from the agreement that the contract should be determined in accordance with the laws of Singapore, that contract also contained this provision: "We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under this guarantee . . ."

While it is true that in civil cases venue is a procedural, and not a jurisdictional, matter and the former may be the subject of stipulation, the quoted portion of the contract not only refers to the venue of prospective suits but actually trenches on the jurisdiction of our courts. Of course, in that case this Court did not enforce the quoted portion of the agreement but on the theory that a literal interpretation shows that the parties did not thereby stipulate that only the courts of Singapore, to the exclusion of all others, had

jurisdiction. In other words, that agreement was not enforced because it was not a restrictive or mandatory provision.

Suppose, however, that stipulation had been couched in an exclusive and mandatory form? Since the ostensible venue aspect was interlinked with the jurisdiction of the foreign court, it would oust Philippine courts of jurisdiction and violate a fundamental national policy. Although in a different setting and on laws then obtaining but nonetheless upon a rationale applicable hereto, this Court has long declared as null and void any agreement which would deprive a court of its jurisdiction. 5 In fact, the matter of the jurisdiction of courts cannot be the subject of a compromise. 6 For that matter, the agreement in question, even on the issue of venue alone, would also greatly inconvenience the Philippine litigant or even altogether deny him access to the foreign court, for financial or other valid reasons, as to amount to denial of due process.

Exclusive jurisdiction of foreign courts over causes of action arising in the Philippines may be the subject of a treaty, international convention, or a statute permitting and implementing the same. Definitely, however, such jurisdiction and venue designation cannot and should not be conferred on a foreign court through a contractual stipulation even if restrictive in nature.

 

Separate Opinions

REGALADO, J., concurring:

I find no plausible reason to withhold concurrence from the opinion meticulously crafted by the Chief Justice which provides a taxonomy of cases for future decisions. It has figuratively parted the jurisprudential waves, laying on one side a catalogue of holdings on the strict binding effect of a venue stipulation and, on the other, those rulings on when it may be disregarded. This concurring opinion merely suggests, therefore, some parametric qualifications on the applicability of the first type, that is, the agreement which demands literal compliance by the parties.

Summarized, the rule is that if the parties to a contract merely agree on the venue of any case arising therefrom, in addition to or aside from the legal venue provided therefor by the Rules of Court or the law, that stipulation is merely permissive and the parties may choose to observe the same or insist on the alternative venues in the Rules or the law.

If, on the other hand, such venue stipulation contains qualifying, restrictive, mandatory or exclusionary terms indicating that the additional forum shall be the unalterable venue of prospective suits ex contractu between them, then such agreement shall necessarily be observed to the exclusion of and shall bar resort to another forum which would otherwise have been the reglementary prescription of venue for the case.

Of the latter genre are the use of such qualifying words like exclusively, only, solely, limited to, in no other place, to the exclusion of, or other terms indicative of a clear and categorical intent to lay the venue at a specific place and thereby waiving the general provisions of the Rules or the law on venue or proscribing the filing of suit in any other competent court.

These guidelines should accordingly be drawn from the decision in this case, viz.: (1) the agreement on venue shall, in the first instance, be normally considered as merely permissive; (2) to be restrictive, the language or terminology employed in the stipulation must be unequivocal and admit of no contrary or doubtful interpretation; (3) in case of irreconcilable doubt, the venue provision shall be deemed to be permissive; and (4) in ascertaining the intent in that provision which reasonably admits of more than one meaning, the construction should be adopted which most conduces to the convenience of the parties.

In addition to the foregoing, the writer suggests, by way of caveat, the matter of adhesion contracts and restrictions of public policy as qualifying or delimiting the application of the mandatory effect of restrictive venue stipulations.

Implicit in an agreement on venue, as in any contract or its terms, is the legal imperative that the consent of the parties thereto were voluntarily, freely and intelligently given. Now, as explained by a commentator, a contract of adhesion is one in which a party imposes a ready-made form of contract which the other party may accept or reject, but which the latter cannot modify. These are the contracts where all the terms are fixed by one party and the other has merely "to take it or leave it."

It is there admitted that these contracts usually contain a series of stipulations which tend to increase the obligations of the adherent, and to reduce the responsibilities of the offeror. There is such economic inequality between the parties to these contracts that the independence of one of them is entirely paralyzed. Yet, although other writers believe that there is no true contract in such cases because the will of one of the parties is suppressed, our commentator says that this is not juridically true, His view is that the one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent. 1

This conclusion would not seem to square with what this Court stated in Qua Chee Gan vs. Law Union and Rock Insurance Co., Ltd 2 It was there pointed out that by reason of the exclusive control by one party in a contract of adhesion over the terms and phraseology of the contract, any ambiguity must be held strictly against the one who caused it to be prepared and liberally in favor of the other party. In fact, this rule has since become a statutory provision. 3

By analogy, these pronouncements in the aforestated case would inveigh against a rigid application of an exclusive venue stipulation where what is involved is a contract of adhesion, to wit:

. . . The courts cannot ignore that nowadays monopolies, cartels and concentrations 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 with, his participation in the "agreement" being reduced to the alternative to take it or leave it, labelled . . . "contracts by adherence" (contracts d'adhesion), in contrast to those entered into by parties bargaining on an equal footing, such contracts . . . obviously call for greater strictness and vigilance on the part of courts of justice with a view to protecting the weaker party from abuses and imposition, and prevent their becoming traps for the unwa(r)y (authorities omitted).

I respectfully submit, therefore, that while the enunciated rule on restrictive venue stipulations should ordinarily be respected, a greater caution on case-to-case basis must be adopted by the courts where such stipulation is contained in a contract of adhesion. Not only should they consider the disadvantaged position of the adherent but, more importantly, the fact that the raison d'etre for rules of venue is to afford due process, greater convenience and more ready access to the court in favor of the adhering contracting party.

I also submit that the rule on restrictive venue stipulations should not apply where it would be violative of a settled and important policy of the State. Thus, for instance, in the cited case of Hongkong and Shanghai Banking Corporation vs. Sherman, 4 aside from the agreement that the contract should be determined in accordance with the laws of Singapore, that contract also contained this provision: "We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under this guarantee . . ."

While it is true that in civil cases venue is a procedural, and not a jurisdictional, matter and the former may be the subject of stipulation, the quoted portion of the contract not only refers to the venue of prospective suits but actually trenches on the jurisdiction of our courts. Of course, in that case this Court did not enforce the quoted portion of the agreement but on the theory that a literal interpretation shows that the parties did not thereby stipulate that only the courts of Singapore, to the exclusion of all others, had jurisdiction. In other words, that agreement was not enforced because it was not a restrictive or mandatory provision.

Suppose, however, that stipulation had been couched in an exclusive and mandatory form? Since the ostensible venue aspect was interlinked with the jurisdiction of the foreign court, it would oust Philippine courts of jurisdiction and violate a fundamental national policy. Although in a different setting and on laws then obtaining but nonetheless upon a rationale applicable hereto, this Court has long declared as null and void any agreement which would deprive a court of its jurisdiction. 5 In fact, the matter of the jurisdiction of courts cannot be the subject of a compromise. 6 For that matter, the agreement in question, even on the issue of venue alone, would also greatly

inconvenience the Philippine litigant or even altogether deny him access to the foreign court, for financial or other valid reasons, as to amount to denial of due process.

Exclusive jurisdiction of foreign courts over causes of action arising in the Philippines may be the subject of a treaty, international convention, or a statute permitting and implementing the same. Definitely, however, such jurisdiction and venue designation cannot and should not be conferred on a foreign court through a contractual stipulation even if restrictive in nature.

G.R. No. 173979             February 12, 2007

AUCTION IN MALINTA, INC., Petitioner, vs.WARREN EMBES LUYABEN, Respondent.

D E C I S I O N

YNARES-SANTIAGO, J.:

Assailed in this petition for review under Rule 45 of the Rules of Court is the May 31, 2005 Decision1 of the Court of Appeals in CA-G.R. CV No. 78456, which held that venue was properly laid before the Regional Trial Court of Bulanao, Tabuk, Kalinga (Kalinga RTC), and reversed the trial court’s September 3, 2002 Resolution2 dismissing the complaint of respondent Warren Embes Lubayen in Civil Case No. 511, on the ground of improper venue.

The facts show that on October 24, 2001, respondent, a resident of Magsaysay, Tabuk, Kalinga, filed with the Kalinga RTC a complaint3 for damages against petitioner Auction in Malinta, Inc., a corporation with business address at Malinta, Valenzuela City, and engaged in public auction of heavy equipments, trucks, and assorted machineries. Respondent alleged that in an auction conducted by petitioner on May 29, 2001, he was declared the highest bidder for a wheel loader T.C.M. 75B, series no. 3309. On June 7, 2001, respondent tendered the payment for the said item but petitioner could no longer produce the loader. It offered a replacement but failed to deliver the same up to the filing of the complaint. Hence, respondent instituted this case to recover actual, moral, and exemplary damages plus attorney’s fees.

Petitioner filed a motion to dismiss on the ground of improper venue. It argued that the correct venue is the RTC of Valenzuela City pursuant to the stipulation in the Bidders Application and Registration Bidding Agreement which states that:

All Court litigation procedures shall be conducted in the appropriate Courts of Valenzuela City, Metro Manila.4

In a Resolution dated September 3, 2002, the Kalinga RTC held that the clear intention of the parties was to limit the venue to the proper court of Valenzuela City and thus dismissed respondent’s complaint on the ground of improper venue.5

Aggrieved, respondent appealed to the Court of Appeals which reversed the Resolution of the Kalinga RTC and reinstated the complaint. The dispositive portion thereof, reads:

WHEREFORE, the Resolution appealed from is hereby REVERSED and SET ASIDE. The case is remanded to the RTC which is ordered to reinstate plaintiff’s complaint for damages.

SO ORDERED.6

Petitioner’s motion for reconsideration was denied; hence, the instant petition.

The sole issue is whether the stipulation in the parties’ Bidders Application and Registration Bidding Agreement effectively limited the venue of the instant case exclusively to the proper court of Valenzuela City.

The Court rules in the negative.

The general rule on the venue of personal actions, as in the instant case for damages7 filed by respondent, is embodied in Section 2, Rule 4 of the Rules of Court. It provides:

Sec. 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 nonresident defendant, where he may be found, at the election of the plaintiff.

The aforequoted rule, however, finds no application where the parties, before the filing of the action, have validly agreed in writing on an exclusive venue.8 But the mere stipulation on the venue of an action is not enough to preclude parties from bringing a case in other venues. It must be shown that such stipulation is exclusive. In the absence of qualifying or restrictive words, such as "exclusively" and "waiving for this purpose any other venue,"9"shall only" preceding the designation of venue,10 "to the exclusion of the other courts,"11 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.12

This has been the rule since the 1969 case of Polytrade Corporation v. Blanco.13 It was held therein that the clause – "[t]he parties agree to sue and be sued in the Courts of Manila," does not preclude the filing of suits in the court which has jurisdiction over the place of residence of the plaintiff or the defendant. The plain meaning of the said provision is that the parties merely consented to be sued in Manila considering that there are no qualifying or restrictive words which would indicate that Manila, and Manila alone, is the agreed venue. It simply is permissive and the parties did not waive their

right to pursue remedy in the courts specifically mentioned in Section 2 of Rule 4 of the Rules of Court.14

The Polytrade doctrine was further applied in the case of Unimasters Conglomeration, Inc. v. Court of Appeals,15which analyzed the various jurisprudence rendered after the Polytrade case. In Unimasters, we held that a stipulation stating that "[a]ll suits arising out of this Agreement shall be filed with/in the proper Courts of Quezon City,"16 is only permissive and does not limit the venue to the Quezon City courts. As explained in the said case:

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, 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.17

The rule enunciated in Unimasters and Polytrade was reiterated in subsequent cases where the following agreements on venue were likewise declared to be merely permissive and do not limit the venue to the place specified therein, to wit:

1. "If court litigation becomes necessary to enforce collection, an additional equivalent (sic) to 25% of the principal amount will be charged. The agreed venue for such action is Makati, Metro Manila, Philippines."18

2. "In case of litigation hereunder, venue shall be in the City Court or Court of First Instance of Manila as the case may be for determination of any and all questions arising thereunder."19

Then too, the doctrine that absent qualifying or restrictive words, the venue shall either be that stated in the law or rule governing the action or the one agreed in the contract, was applied to an extra-judicial foreclosure sale under Act No. 3135.20 In Langkaan Realty Development, Inc. v. United Coconut Planters Bank1awphi1.net,21 where the provision on the venue employed the word "shall" to refer to the place where the foreclosure will be held, the Court ruled that said provision "lack(s) qualifying or restrictive words to indicate the exclusivity of the agreed forum," and therefore "the stipulated place is considered only as an additional, not a limiting venue."22 The said stipulation reads:

It is hereby agreed that in case of foreclosure of this mortgage under Act 3135, as amended, and Presidential Decree No. 385, the auction sale shall be held at the capital of the province, if the property is within the territorial jurisdiction of the province concerned, or shall be held in the city, if the property is within the territorial jurisdiction of the city concerned.23

In the instant case, the stipulation in the parties’ agreement, i.e., "all Court litigation procedures shall be conducted in the appropriate Courts of Valenzuela City, Metro Manila," evidently lacks the restrictive and qualifying words that will limit venue exclusively to the RTC of Valenzuela City. Hence, the Valenzuela courts should only be considered as an additional choice of venue to those mentioned under Section 2, Rule 4 of the Rules of Court. Accordingly, the present case for damages may be filed with the (a) RTC of Valenzuela City as stipulated in the bidding agreement; (b) RTC of Bulanao, Tabuk, Kalinga which has jurisdiction over the residence of respondent (plaintiff); or with the (c) RTC of Valenzuela City which has jurisdiction over the business address of petitioner (defendant). The filing of the complaint in the RTC of Bulanao, Tabuk, Kalinga, is therefore proper, respondent being a resident of Tabuk, Kalinga.

The case of Hoechst Philippines, Inc. v. Torres,24 promulgated in 1978, and invoked by petitioner in its motion to dismiss, had already been superseded by current decisions on venue. In the said case, the Court construed the proviso: "[i]n case of any litigation arising out of this agreement, the venue of action shall be in the competent courts of the Province of Rizal,"25 as sufficient to limit the venue to the proper court of Rizal. However, in Supena v. De la Rosa,26 we ruled that Hoechst had been rendered obsolete by recent jurisprudence applying the doctrine enunciated in Polytrade.

In sum, we find that the Court of Appeals correctly declared that venue in the instant case was properly laid with the RTC of Bulanao, Tabuk, Kalinga.1awphi1.net

WHEREFORE, the petition is DENIED. The May 31, 2005 Decision of the Court of Appeals in CA-G.R. CV No. 78456 which reversed the September 3, 2002 Resolution of the Regional Trial Court of Bulanao, Tabuk, Kalinga; reinstated the complaint in Civil Case No. 511; and remanded the case to the said court, is AFFIRMED.

Costs against petitioner.

SO ORDERED.

G.R. No. L-37750 May 19, 1978

SWEET LINES, 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.

 

SANTOS, J.:

This is an original action for Prohibition with Pre 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 filled 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 P10,000.00 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:

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 reconnsider the order of denial, but no avail. 5Hence, this instant petition for prohibition for preliminary injunction, 'alleging that the respondent judge has departed from the accepted and usual course of

judicial preoceeding" and "had acted without or in excess or in error of his jurisdicton 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 respondent to comment. 7 On January 18, 1974, We gave due course to the petition and required respondent to answer. 8 Thereafter, the parties submitted their respesctive memoranda in support of their respective contentions. 9

Presented thus for Our resolution is a question is aquestion 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 arising from the contract of carriage to theCourt of First Instance of Cebu, valid and enforceable? Otherwise stated, may a common carrier engaged in inter-island shipping stipulate thru condition printed at the back of passage tickets to its vessels that any and all actions arising out of the ocntract 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 thaty Condition No. 14 is valid and enforceable, since private respndents acceded to tit 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 of 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 sing from the contract is institution 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 "shag" leave no doubt that the intention of Condition No. 14 is to fix the venue in the City of Cebu, to the exclusion of 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 is 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 6f 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 inPeralta 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 validity 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 make 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 that justice and fan 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 overwhelm economic power, manage to impose upon parties d with them y 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 cap 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 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, ignorance indigence, mental 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 ship. ping 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 obligation in the inter-island ship. ping 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 s 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 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 any to the scorching heat of the sun and the dust coming from the ship's cargo of corn grits, " because even the latter was filed 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 much charge them with having consented to the conditions, so printed, especially if there are a number of such conditions m fine print, as in this case. 20

Again, it should be noted that Condition No. 14 was prepared solely at the ms of the petitioner, respondents had no say in its preparation. Neither did the latter have the opportunity to take the into account prior to the purpose chase of their tickets. For, unlike the small print provisions of contracts — the common example of contracts of adherence — which are entered into by the insured in his awareness of said conditions, since the insured is afforded the op to and co the same, passengers of inter-island v do not have the same chance, since their alleged adhesion is presumed only from the fact that they purpose chased the tickets.

It should also be stressed that slapping companies are franchise holders of certificates of public convenience and therefore, posses 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 vested come from the low-income groups and are less literate, and who have little or no choice but to avail of petitioner's vessels.

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 t 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 21 the ends 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 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 cants 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 DISMISS. ED. The restraining order issued on November 20, 1973, is hereby LIFTED and SET ASIDE. Costs against petitioner.

Fernando (Chairman), Aquino, Concepcion, Jr., JJ., concur.

Antonio, J., reserves his vote.

 

Separate Opinions

 

BARREDO, J., concurring:

I concur in the dismissal of the instant petition.

Only a few days ago, in Hoechst Philippines, Inc. vs. Francisco Torres, et al., G. R. No. L-44351, promulgated May 18, 1978, We made it clear that although generally, agreements regarding change of venue are enforceable, there may be instances where for equitable considerations and in the better interest of justice, a court may justify the laying of, the venue in the place fixed by the rules instead of following written stipulation of the parties.

In the particular case at bar, there is actually no written agreement as to venue between the parties in the sense contemplated in Section 3 of Rule 4, which governs the matter. I take it that the importance that a stipulation regarding change of the venue fixed by law entails is such that nothing less than mutually conscious agreement as to it must be what the rule means. In the instant case, as well pointed out in the main opinion, the ticket issued to private respondents by petitioner constitutes at best a "contract of adhesion". In other words, it is not that kind of a contract where the parties sit down to deliberate, discuss and agree specifically on all its terms, but rather, one which respondents took no part at all in preparing, since it was just imposed upon them when they paid for the fare for the freight they wanted to ship. It is common knowledge that individuals who avail of common carriers hardly read the fine prints on such tickets to note anything more than the price thereof and the destination designated therein.

Under these circumstances, it would seem that, since this case is already in respondent court and there is no showing that, with its more or less known resources as owner of several inter-island vessels plying between the different ports of the Philippines for sometime already, petitioner would be greatly inconvenienced by submitting to the jurisdiction of said respondent court, it is best to allow the proceedings therein to continue. I cannot conceive of any juridical injury such a step can cause to anyone concerned. I vote to dismiss the petition.

 

 

Separate Opinions

BARREDO, J., concurring:

I concur in the dismissal of the instant petition.

Only a few days ago, in Hoechst Philippines, Inc. vs. Francisco Torres, et al., G. R. No. L-44351, promulgated May 18, 1978, We made it clear that although generally, agreements regarding change of venue are enforceable, there may be instances where for equitable considerations and in the better interest of justice, a court may justify the laying of, the venue in the place fixed by the rules instead of following written stipulation of the parties.

In the particular case at bar, there is actually no written agreement as to venue between the parties in the sense contemplated in Section 3 of Rule 4, which governs the matter. I take it that the importance that a stipulation regarding change of the venue fixed by law entails is such that nothing less than mutually conscious agreement as to it must be what the rule means. In the instant case, as well pointed out in the main opinion, the ticket issued to private respondents by petitioner constitutes at best a "contract of adhesion". In other words, it is not that kind of a contract where the parties sit down to deliberate, discuss and agree specifically on all its terms, but rather, one which respondents took no part at all in preparing, since it was just imposed upon them when they paid for the fare for the freight they wanted to ship. It is common knowledge that individuals who avail of common carriers hardly read the fine prints on such tickets to note anything more than the price thereof and the destination designated therein.

Under these circumstances, it would seem that, since this case is already in respondent court and there is no showing that, with its more or less known resources as owner of several inter-island vessels plying between the different ports of the Philippines for sometime already, petitioner would be greatly inconvenienced by submitting to the jurisdiction of said respondent court, it is best to allow the proceedings therein to continue. I cannot conceive of any juridical injury such a step can cause to anyone concerned. I vote to dismiss the petition.

G. R. No. 156966             May 7, 2004

PILIPINO TELEPHONE CORPORATION, petitioner, vs.DELFINO TECSON, respondent.

D E C I S I O N

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 petitioner’s 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 Procedure2 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 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.

G.R. No. 171456             August 9, 2007

UNIWIDE HOLDINGS, INC., petitioner, vs.ALEXANDER M. CRUZ, respondent.

D E C I S I O N

CARPIO MORALES, J.:

Petitioner, Uniwide Holdings, Inc. (UHI), whose principal office is located in Parañaque City, entered into a Franchise Agreement1 (the agreement) granting respondent, Alexander M. Cruz (Cruz), a five-year franchise to adopt and use the "Uniwide Family Store System" for the establishment and operation of a "Uniwide Family Store" along Marcos Highway, Sta. Cruz, Cogeo, Marikina City.

Article 10.22 of the agreement called for Cruz as franchisee to pay UHI a monthly service fee of P50,000 or three percent of gross monthly purchases, whichever is higher, payable within five days after the end of each month without need of formal billing or demand from UHI. In case of any delay in the payment of the monthly service fee, Cruz would, under Article 10.33 of the agreement, be liable to pay an interest charge of three percent per month.

It appears that Cruz had purchased goods from UHI’s affiliated companies First Paragon Corporation (FPC) and Uniwide Sales Warehouse Club, Inc. (USWCI).

In August 2002, FPC and USWCI executed Deeds of Assignment4 in favor of UHI assigning all their rights and interests over Cruz’s accounts payable to them.

As of August 13, 2002, Cruz had outstanding obligations with UHI, FPC, and USWCI in the total amount ofP1,358,531.89, drawing UHI to send him a letter of even date for the settlement thereof in five days. His receipt of the letter notwithstanding, Cruz’s accounts remained unsettled.

Thus UHI filed a complaint5 for collection of sum of money before the Regional Trial Court (RTC) of Parañaque docketed as Civil Case No. 04-0278 against Cruz on the following causes of action:

First Cause of Action

10. Being entitled to the payment of monthly service fee pursuant to the FA, which defendant failed to pay despite demand, plaintiff suffered actual damages in the amount of Phil. Peso: One Million Three Hundred Twenty Seven Thousand Six Hundred Sixty Nine & 83/100 (P1,327,669.83), computed as of 05 April 2004, for which defendant should be held liable together with legal interest thereon from the date of filing of this Complaint, until fully paid.

Second Cause of Action

11. Being the assignee of the receivable of FPC, which receivable defendant failed to pay despite demand, plaintiff suffered actual damages in the amount of Phil. Peso: Sixty Four Thousand One Hundred Sixty Five & 96/100 (P64,165.96) for which defendant should be held liable together with the legal interest thereon computed from date of receipt of plaintiff’s demand letter, or on August 16, 2002 to be exact, until fully paid.

Third Cause of Action

12. Being the assignee of the receivable of USWCI, which receivable defendant failed to pay despite demand, plaintiff suffered actual damages in the total amount of Phil. Peso: One Million Five Hundred Seventy Nine Thousand Sixty One & 36/100 (P1,579,061.36), computed as of 05 April 2004, inclusive of the two and a half percent (2.5%) monthly interest, as and by way of penalty, and the three (3%) annual interest on the unpaid amount, for which defendant should be held liable, with legal interest thereon from the date of filing of this Complaint, until fully paid.

Fourth Cause of Action

13. By reason of defendant’s obstinate refusal or failure to pay his indebtedness, plaintiff was constrained to file this Complaint and in the process incur expenses by way of attorney’s fees, which could be reasonably estimated to reach at least Phil. Peso: Two Hundred Fifty Thousand (P250,000.00) and for which defendant should be held answerable for.6 (Emphasis and underscoring supplied)

To the complaint Cruz filed a motion to dismiss7 on the ground of improper venue, he invoking Article 27.5 of the agreement which reads:

27.5 Venue Stipulation – The Franchisee consents to the exclusive jurisdiction of the courts of Quezon City, the Franchisee waiving any other venue.8 (Emphasis supplied)

Branch 258 of the Parañaque RTC, by Order9 of December 12, 2005, granted Cruz’s motion to dismiss.

Hence, the present petition before this Court, raising the sole legal issue of:

WHETHER A CASE BASED ON SEVERAL CAUSES OF ACTION IS DISMISSIBLE ON THE GROUND OF IMPROPER VENUE WHERE ONLY ONE OF THE CAUSES OF ACTION ARISES FROM A CONTRACT WITH EXCLUSIVE VENUE STIPULATION.10 (Underscoring supplied)

Petitioner contends that nowhere in the agreement is there a mention of FPC and USWCI, and neither are the two parties thereto, hence, they cannot be bound to the stipulation on "exclusive venue."

The petition is impressed with merit.

The general rule on venue of personal actions, as in petitioner’s complaint for collection of sum of money, is embodied in Section 2, Rule 4 of the Rules of Court which provides:

Sec. 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 nonresident defendant, where he may be found, at the election of the plaintiff. (Emphasis and underscoring supplied)

The afore-quoted provision is, however, qualified by Section 4 of the same rule which allows parties, before the filing of the action, to validly agree in writing on an exclusive venue.11

The forging of a written agreement on an exclusive venue of an action does not, however, preclude parties from bringing a case to other venues.

Where there is a joinder of causes of action between the same parties one of which does not arise out of the contract where the exclusive venue was stipulated upon, the complaint, as in the one at bar, may be brought before other venues provided that such other cause of action falls within the jurisdiction of the court and the venue lies therein.12

Based on the allegations in petitioner’s complaint, the second and third causes of action are based on the deeds of assignment executed in its favor by FPC and USWCI. The deeds bear no exclusive venue stipulation with respect to the causes of action thereunder. Hence, the general rule on venue applies – that the complaint may be filed in the place where the plaintiff or defendant resides.13

It bears emphasis that the causes of action on the assigned accounts are not based on a breach of the agreement between UHI and Cruz. They are based on separate, distinct and independent contracts-deeds of assignment in which UHI is the assignee of Cruz’s obligations to the assignors FPC and USWCI. Thus, any action arising from the deeds of assignment cannot be subjected to the exclusive venue stipulation embodied in the agreement. So San Miguel Corporation v. Monasterio14 enlightens:

Exclusive venue stipulation embodied in a contract restricts or confines parties thereto when the suit relates to breach of said contract. But where the exclusivity clause does not make it necessarily encompassing, such that even those not related to the enforcement of the contract should be subject to the exclusive venue, the stipulation designating exclusive venues should be strictly confined to the specific undertaking or agreement. Otherwise, the basic principles of freedom to contract might work to the great disadvantage of a weak party-suitor who ought to be allowed free access to courts of justice.15 (Emphasis and underscoring supplied)

In fine, since the other causes of action in petitioner’s complaint do not relate to a breach of the agreement it forged with Cruz embodying the exclusive venue stipulation, they should not be subjected thereto. As San Miguel further enlightens:

Restrictive stipulations are in derogation of the general policy of making it more convenient for the parties to institute actions arising from or in relation to their agreements. Thus, the restriction should be strictly construed as relating solely to the agreement for which the exclusive venue stipulation is embodied. Expanding the scope of such limitation on a contracting party will create unwarranted restrictions which the parties might find unintended or worse, arbitrary and oppressive.16 (Underscoring supplied)

WHEREFORE, the petition is GRANTED. The December 12, 2005 Order of Regional Trial Court of Parañaque City, Branch 258 in Civil Case No. 04-0278 is SET ASIDE. The case is REMANDED to said court which is directed to reinstate the case to its docket and conduct further proceedings thereon with dispatch.

SO ORDERED.

[G.R. No. 158138.  April 12, 2005]

PHILIPPINE BANK OF, COMMUNICATIONS, petitioner, vs. ELENA LIM, RAMON CALDERON, and TRI-ORO INTERNATIONAL TRADING & MANUFACTURING

CORPORATION, respondents

D E C I S I O N

PANGANIBAN, J.:

A restrictive stipulation on the venue of actions contained in a promissory note applies to the surety agreement supporting it, because the nature of the two contracts and the factual circumstances surrounding their execution are intertwined or interconnected.  The surety agreement is merely an accessory to the principal loan agreement embodied in the promissory note.  Hence, the enforcement of the former depends upon the latter.

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, assailing the April 29, 2003 Decision[2] of the Court of Appeals (CA) in CA-GR SP No. 69786.  The challenged Decision disposed as follows:

“WHEREFORE, based on the foregoing, the instant petition is hereby GRANTED.  The assailed Orders dated June 9, 2000 and January 9, 2002 are herebyANNULED and SET ASIDE.  Civil Case No. 99-94976 is hereby ordered DISMISSED without prejudice to the filing thereof in the venue exclusively stipulated by the parties.”[3]

The Facts

The facts are related by the CA as follows:

“On September 3, 1999, the Philippine Bank of Communications (hereinafter ‘[petitioner’]) filed a complaint against [Respondents Elena Lim, Ramon Calderon and Tri-Oro International Trading & Manufacturing Corporation (‘Tri-Oro’ for brevity)] with the Regional Trial Court of Manila for the collection of a deficiency amounting to P4,014,297.23 exclusive of interest.  [Petitioner] alleged therein that [respondents] obtained a loan from it and executed a continuing surety agreement dated November 16, 1995 in favor of [petitioner] for all loans, credits, etc., that were extended or may be extended in the future to [respondents].  [Petitioner] granted a renewal of said loan upon [respondent’s] request, the most recent being on January 21, 1998 as evidenced by Promissory Note Renewal BD-Variable No. 8298021001 in the amount of P3,000,000.00.  It was expressly stipulated therein that the venue for any legal action that may arise out of said promissory note shall be Makati City, ‘to the exclusion of all other courts’ x x x.  [Respondents allegedly] failed to pay said obligation upon maturity.  Thus, [petitioner] foreclosed the real estate mortgage executed by [respondents] valued at P1,081,600.00 leaving a deficiency balance of P4,014,297.23 as of August 31, 1999.

“[Respondents] moved to dismiss the complaint on the ground of improper venue, invoking the stipulation contained in the last paragraph of the promissory note with respect to the restrictive/exclusive venue.  [The trial court] denied said motion asseverating that [petitioner] ha[d] separate causes of action arising from the

promissory note and the continuing surety agreement.  Thus, [under] Rule 4, Section 2, of the 1997 Rules of Civil Procedure, as amended, x x x venue was properly laid in Manila.  [The trial court] supported [its] order with cases where venue was held to be merely permissive.  A motion for reconsideration of said order was likewise denied.”[4]

Ruling of the Court of Appeals

On appeal, the CA ruled that respondents’ alleged debt was based on the Promissory Note, which had provided an exclusionary stipulation on venue “to the exclusion of all other courts.”[5] The parties’ Surety Agreement, though silent as to venue, was an accessory contract that should have been interpreted in consonance with the Promissory Note.[6]

Hence, this Petition.[7]

The Issue

Petitioner raises the following issue for our consideration:

“Whether or not the Honorable Court of Appeals had decided the issue of venue in a way not in accord with law and applicable decisions of this Honorable Court and had thereby departed from the accepted and usual course of judicial proceedings, as to call for this Honorable Supreme Court’s power of supervision and appellate review.”[8]

The Court’s Ruling

The Petition is unmeritorious.

Sole Issue:Venue

At the outset, this Court observes that petitioner took liberties with the stipulated facts to suit its allegations in the present Petition.  In its Complaint, petitioner bank averred that respondents had entered into the Surety Agreement (SA) to guarantee existing and future credit facilities, and that they had executed the Promissory Note (PN) to document their loan.[9] Now, the bank is claiming that Tri-Oro issued the PN on which the other respondents should be made liable as sureties.[10]

This strategy is obviously intended to disconnect the SA from the PN and to support the claim of petitioner that the stipulation on venue does not apply to the SA.  However, as will be discussed below, the cause of action to recover on the basis of the SA is inseparable from that which is based on the PN.

Rule on Venue

Section 2 of Rule 4 of the Rules of Court provides that personal actions[11] must be commenced and tried (1) in the place where the plaintiff resides, or (2) where the defendant resides, or (3) in case of non-resident defendants, where they may be found, at the choice of the plaintiff.[12]This rule on venue does not apply when the law specifically provides otherwise, or when -- before the filing of the action -- the contracting parties agree in writing on the exclusive venue thereof.[13]  Venue is not jurisdictional and may be waived by the parties.[14]

A stipulation as to venue does not preclude the filing of the action in other places, unless qualifying or restrictive words are used in the agreement.[15]

In the instant case, the stipulation on the exclusivity of the venue as stated in the PN is not at issue.  What petitioner claims is that there was no restriction on the venue, because none was stipulated in the SA on which petitioner had allegedly based its suit.[16] Accordingly, the action on the SA may be filed in Manila, petitioner’s place of residence.

Petitioner adds that its Complaint filed in the trial court had two causes of action: the first was founded on a breach of the PN; and the second, on a violation of the SA.[17] Consequently, it was allegedly correct to join the causes of action and to file the case in Manila, per Section 5 of Rule 2 of the Rules of Court, which reads:[18]

“Section 5. Joinder of Causes of Action. –A party may in one pleading assert, in the alternative or otherwise, as many causes of action as he may have against an opposing party, subject to the following conditions:

x x x                            x x x                             x x x

(c)       Where the causes of action are between the same parties but pertain to different venue or jurisdictions, the joinder may be allowed in the Regional Trial Court provided one of the causes of action falls within the jurisdiction of the said court and venue lies therein.”[19]

Surety Agreement

Suretyship arises upon the solidary binding of a person -- deemed the surety -- with the principal debtor, for the purpose of fulfilling an obligation.[20] The prestation is not an original and direct obligation for the performance of the surety’s own act, but merely accessory or collateral to the obligation contracted by the principal. [21] Although the surety contract is secondary to the principal obligation, the surety assumes liability as a regular party to the undertaking.[22]

In enforcing a surety contract, the “complementary-contracts-construed-together” doctrine finds application.[23] According to this principle, an accessory contract must be

read in its entirety and together with the principal agreement.[24] This principle is used in construing contractual stipulations in order to arrive at their true meaning; certain stipulations cannot be segregated and then made to control.[25] This no-segregation principle is based on Article 1374 of the Civil Code, which we quote:

“Art. 1374. The various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly.”

The aforementioned doctrine is applicable to the present case. Incapable of standing by itself, the SA can be enforced only in conjunction with the PN.  The latter documents the debt that is sought to be collected in the action against the sureties.

The factual milieu of the present case shows that the SA was entered into to facilitate existing and future loan agreements.  Petitioner approved the loan covered by the PN, partly because of the SA that assured the payment of the principal obligation.  The circumstances that related to the issuance of the PN and the SA are so intertwined that neither one could be separated from the other.  It makes no sense to argue that the parties to the SA were not bound by the stipulations in the PN.

Notably, the PN was a contract of adhesion that petitioner required the principal debtor to execute as a condition of the approval of the loan.  It was made in the form and language prepared by the bank.  By inserting the provision that Makati City would be “the venue for any legal action [that] may arise out of [the] Promissory Note,”[26] petitioner also restricted the venue of actions against the sureties.  The legal action against the sureties arose not only from the SA, but also from the PN.

Cause of Action

Petitioner correctly argues that there are two causes of action contained in its Complaint.  A cause of action is a party’s act or omission that violates the rights of the other.[27] Only one suit may be commenced for a single cause of action. [28] If two or more suits are instituted on the basis of the same cause of action, only one case should remain and the others must be dismissed.[29]

As against Tri-Oro International Trading & Manufacturing Corporation, petitioner’s cause of action is the alleged failure to pay the debt in violation of the PN; as against Elena Lim and Ramon Calderon, in violation of the SA.

Because of the variance between the causes of action, petitioner could have filed separate actions against respondents to recover the debt, on condition that it could not recover twice from the same cause.  It could have proceeded against only one or all of them,[30] as full payment by any one of them would have extinguished the obligation.[31] By the same token, respondents could have been joined as defendants in one suit, because petitioner’s alleged right of relief arose from the same transaction or series of transactions that had common questions of fact.[32] To avoid a multiplicity of suits, joinder of parties is encouraged by the law.

The cause of action, however, does not affect the venue of the action.  The vital issue in the present case is whether the action against the sureties is covered by the restriction on venue stipulated in the PN.  As earlier stated, the answer is in the affirmative.  Since the cases pertaining to both causes of action are restricted to Makati City as the proper venue, petitioner cannot rely on Section 5 of Rule 2 of the Rules of Court.

Liberal Construction

Petitioner’s final plea for liberality in applying the rules on venue must be rejected.  As earlier discussed, the PN was a contract of adhesion.  Ambiguities therein are to be construed against the party that prepared the contract.[33] On the same principle, petitioner can no longer disavow the stipulation on venue, considering that it drafted the Surety Agreement.  Besides, this alleged technicality caused no miscarriage of substantial justice, as petitioner may refile the case.[34] The inconveniences brought about by its failure to observe the rules on venue sprang from its own acts.  Hence, it cannot blame the courts or anyone else for the resulting delay in the adjudication of the merits of its cause.

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED.

Costs against petitioner.

SO ORDERED.

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

[G.R. No. 192877, March 23 : 2011] BR> SPOUSES HERMES P. OCHOA AND ARACELI D. OCHOA, PETITIONERS, VS.

CHINA BANKING CORPORATION, RESPONDENT.

R E S O L U T I O N 

NACHURA, J.:

For resolution is petitioners' motion for reconsideration[1] of our January 17, 2011 Resolution[2]denying their petition for review on certiorari[3] for failing to sufficiently show any reversible error in the assailed judgment[4] of the Court of Appeals (CA).

Petitioners insist that it was error for the CA to rule that the stipulated exclusive venue of Makati City is binding only on petitioners' complaint for Annulment of Foreclosure, Sale, and Damages filed before the Regional Trial Court of Parañaque City, but not on respondent bank's Petition for Extrajudicial Foreclosure of Mortgage, which was filed with the same court.

We disagree.

The extrajudicial foreclosure sale of a real estate mortgage is governed by Act No. 3135, as amended by Act No. 4118, otherwise known as "An Act to Regulate the Sale of Property Under Special Powers Inserted In or Annexed to Real-Estate Mortgages." Sections 1 and 2 thereof clearly state:

Section 1. When a sale is made under a special power inserted in or attached to any real-estate mortgage hereafter made as security for the payment of money or the fulfillment of any other obligation, the provisions of the following sections shall govern as to the manner in which the sale and redemption shall be effected, whether or not provision for the same is made in the power.

Sec. 2. Said sale cannot be made legally outside of the province in which the property sold is situated; and in case the place within said province in which the sale is to be made is the subject of stipulation, such sale shall be made in said place or in the municipal building of the municipality in which the property or part thereof is situated.[5]

The case at bar involves petitioners' mortgaged real property located in Parañaque City over which respondent bank was granted a special power to foreclose extra-judicially. Thus, by express provision of Section 2, the sale can only be made in Parañaque City.

The exclusive venue of Makati City,  as stipulated by the parties[6] and sanctioned by Section 4, Rule 4 of the Rules of Court,[7] cannot be made to apply to the Petition for Extrajudicial Foreclosure filed by respondent bank because the provisions of Rule 4 pertain to venue of actions, which an extrajudicial foreclosure is not.

Pertinent are the following disquisitions in Supena v. De la Rosa:[8]

Section 1, Rule 2 [of the Rules of Court] defines an action in this wise:

"Action means an ordinary suit in a court of justice, by which one party prosecutes another for the enforcement or protection of a right, or the prevention or redress of a wrong."

Hagans v. Wislizenus does not depart from this definition when it states that "[A]n action is a formal demand of one's legal rights in a court of justice in the manner prescribed by the court or by the law. x x x." It is clear that the determinative or operative fact which converts a claim into an "action or suit" is the filing of the same with a "court of justice." Filed elsewhere, as with some other body or office not a court of justice, the claim may not be categorized under either term. Unlike an action, an extrajudicial foreclosure of real estate mortgage is initiated by filing a petition not with any court of justice but with the office of the sheriff of the province where the sale is to be made. By no stretch of the imagination can the office of the sheriff come under the category of a court of justice. And as aptly observed by the complainant, if ever the executive judge comes into the picture, it is only because he exercises administrative supervision over the sheriff. But

this administrative supervision, however, does not change the fact that extrajudicial foreclosures are not judicial proceedings, actions or suits.[9]

These pronouncements were confirmed on August 7, 2001 through A.M. No. 99-10-05-0, entitled "Procedure in Extra-Judicial Foreclosure of Mortgage," the significant portions of which provide:

In line with the responsibility of an Executive Judge under Administrative Order No. 6, date[d] June 30, 1975, for the management of courts within his administrative area, included in which is the task of supervising directly the work of the Clerk of Court, who is also the Ex-Office Sheriff, and his staff, and the issuance of commissions to notaries public and enforcement of their duties under the law, the following procedures are hereby prescribed in extra-judicial foreclosure of mortgages:

1.  All applications for extrajudicial foreclosure of mortgage whether under the direction of the sheriff or a notary public, pursuant to Act 3135, as amended by Act 4118, and Act 1508, as amended, shall be filed with the Executive Judge, through the Clerk of Court who is also the Ex-Officio Sheriff.

Verily then, with respect to the venue of extrajudicial foreclosure sales, Act No. 3135, as amended, applies, it being a special law dealing particularly with extrajudicial foreclosure sales of real estate mortgages, and not the general provisions of the Rules of Court on Venue of Actions.

Consequently, the stipulated exclusive venue of Makati City is relevant only to actions arising from or related to the mortgage, such as petitioners' complaint for Annulment of Foreclosure, Sale, and Damages.

The other arguments raised in the motion are a mere reiteration of those already raised in the petition for review. As declared in this Court's Resolution on January 17, 2011, the same failed to show any sufficient ground to warrant the exercise of our appellate jurisdiction.

WHEREFORE, premises considered, the motion for reconsideration is hereby DENIED.

SO ORDERED.