So, it is possible that A and B will enter into contract providing for suits involving the violation of the contract, the venue shall be in this particular place. Take note that the stipulation must be in writing and it is there even before the filing of the action. Alright…
EXAMPLE: Contracts of banks and other financing companies. Sometimes it says there that in case of suits arising out of these contract, the action shall be filed in the City of Makati or Manila which is neither the residence of the parties.
Q: Now, can we agree to file a case other that were the parties reside?
A: YES because the law says, we can agree on a place where the action will be filed provided it is in writing and it is stipulated even before the filing of the action.
POLYTRADE CORP. vs. BLANCO
30 SCRA 187
FACTS: Charles and Joshua are both residing here in Davao City. Joshua borrowed money from Charles, and Joshua executed a promissory note in favor of Charles which says, “I promise to pay Charles the sum of P200,000 one year from today. In case of a suit arising from this promissory note, the parties agree to sue and be sued in the City of Manila.”
When the note matured, Joshua did not pay. Charles filed a case to collect the unpaid loan here in Davao City. Charles challenged the venue. According to Charles, the venue is correct because both of us are residing here in Davao City and under Rule 4, the venue is where I reside or you reside, at my option. Both of us are residing here so I sued you here.
Defendant Joshua says, no since there is a stipulation we both agreed upon that in cases of litigation, the parties agree to sue and be sued in the City of Manila. So Manila is the correct venue.
ISSUE: Who is correct in this case? A the plaintiff or B the defendant?
HELD: Plaintiff is correct notwithstanding the stipulation. Why? When the parties stipulated on the venue of the civil action, other that those found in the Rule of Court, the stipulated venue is considered merely as an ADDITIONAL venue in addition to where the parties reside. Unless the stipulation contains RESTRICTIVE words which shows the intention of the parties to limit the place stipulated as the exclusive venue.
In other words, the parties agree to sue and be sued in the City of Manila, even if so, the venue of the action is where the plaintiff resides or where the defendant resides in accordance with Rule 4, and the third venue is according to the stipulation of the parties. So, the case here has three (3) venues of action. Mamili ka sa tatlong venues because there is nothing in the agreement that the parties intended that Manila is the only exclusive venue. There is no restrictive word.
I will change the PROBLEM: Suppose the stipulation contains this statement, “in case of suit arising out of this promissory note or contract, the parties agree to sue and be sued exclusively in the City of Manila,” yaan! Or, “to sue and be sued in the City of Manila only.” The addition of the words “exclusively” or “only” shows the intention of the parties to limit venue of the action only in that place. Therefore you cannot apply Rule 4, Sections 1-3. So, in this case, Joshua can move to dismiss the case because the venue is exclusive.
So in the second exception where there is an agreement in writing on the exclusive venue, the word exclusive is very important as taken in the ruling in POLYTRADE vs. BLANCO. So if the venue is not exclusive, Rule 4 still applies and the stipulated venue is just an additional one.
Of course, there are stipulations which you can see clearly the intention of the parties to limit the venue only in that place. But sometimes, there are stipulations in which it is difficult to decipher the real intention of the parties whether exclusive or not. Examples of clear stipulations which calls for the application of the POLYTRADE ruling: in the City of Manila only or the suit shall be filed in the City of Manila and in no other place.
However, there are cases in which you cannot find the word exclusive or the word only, and yet the SC said it seems the intention of the parties to limit the venue as exclusive as what happened in the 1994 case of
GESMUNDO vs. JRB REALTY CORP
234 SCRA 153
FACTS: This involves a lease contract which contain a stipulation on venue. Here is the language of the lease contract: “venue for all suits, whether for breach hereof or damages or any cause between the LESSOR and the LESSEE, and persons claiming under each, being the courts of appropriate jurisdiction in Pasay City…”
In other words, if there is a case, they agreed to file it in the court of Pasay City. ISSUE: Is this intention of the parties to make Pasay City an exclusive venue?
HELD: Pasay City is the exclusive venue. “It is true that in Polytrade Corporation v. Blanco, a stipulation that ‘The parties agree to sue and be sued in the City of Manila’ was held to merely provide an additional forum in the absence of any qualifying or restrictive words. But here, by laying in Pasay City the venue for all suits, the parties made it plain that in no other place may they bring suit against each other for breach contract or damages or any other cause between them and persons claiming under each of them.” In other words, the intention of the parties is to make Pasay City the exclusive venue.
There are some cases in the SCRA where there is no restrictive word but the SC interpreted it as restrictive. So it is in conflict with the POLYTRADE ruling because in POLYTRADE, the stipulated place must be exclusive. Among the cases which seems to conflict with the ruling in POLYTRADE are the following:
BAUTISTA vs. DE BORJA (18 SCRA 476) HOECHST vs. TORRES (83 SCRA 297)
This conflict was resolved in the case of PHIL. BANKING vs. TENSUAN (228 SCRA 385) where the SC ruled that the ruling in BAUTISTA vs. DE BORJA and HOECHST PHILS. vs. TORRES has been rendered obsolete by the POLYTRADE ruling and subsequent cases reiterated it. So the ruling in POLYTRADE is the correct ruling. Forget what the SC said in the abovementioned two cases.
SWEET LINES vs. TEVES
83 SCRA 361
FACTS: This is a Cagayan de Oro case which involves Sweet Lines, a shipping company with the head office in Cebu. The respondent Teves is the former City Fiscal of Davao City, former Mayor and became judge of CFI of Cagayan de Oro City.
There was a group of passenger who rode on the Sweet Lines bound for Cebu City. During the trip, they were given a crude treatment by the officers of the vessel. When they came back in Cagayan de Oro City, they filed a suit for damages against Sweet Lines. They file dht ecase in the former CFI, now RTC, of Cagayan de Oro City because the plaintiffs are residents of Cagayan de Oro City.
Sweet Lines filed a motion to dismiss questioning the venue of the action because in the ticket issued by Sweet Lines, it is stipulated that “…in case of a civil action arising from the contract of carriage, the venue of the action shall be the City of Cebu ONLY and in no other place.” So there is a restrictive word. Obviously the lawyers of Sweet Lines knew about Polytrade because they moved to dismiss the case citing this case.
Judge Teves denied the motion to dismiss the case despite the stipulation. According to him, it is unfair. If I will dismiss the case based on this stipulation, the aggrieved parties will be discouraged in going to Cebu. It is very expensive and they will be inconvenienced. But, if the case will go on in Cagayan de Oro, it will not inconvenienced Sweet Lines because they have their branch office, their manage and their own lawyer.
ISSUE: Whether or not Cagayan de Oro is the proper venue. HELD: YES. Judge Teves was correct in not dismissing the case.
First of all, the stipulation is placed in the ticket. These people never even bothered to read this. Nakalagay na iyan diyan eh. So either you take it or you leave it. Therefore, the passengers did not have a hand in preparing that stipulation. So the contract is a contract of adhesion.
Second, again for the sake of equity, to be fair that these poor people will be compelled to go to Cebu to file a case there. They will be discouraged. It is very expensive to go back and forth to Cebu. Whereas, Sweet Lines has the resources, the means, the lawyers here in Cagayan to litigate. Therefore, it would be inequitable to compel them or to apply the stipulation there.
The ruling in SWEET LINES is an exception to POLYTRADE despite the exclusive stipulation. The SC said that the refusal of the court to apply it is correct. There is no grave abuse of discretion on the part of Judge Teves.
ARQUERO vs. FLOJO
168 SCRA 540
FACTS: Arquero here is lawyer and the municipal mayor of the municipality of Sta. Teresita, Cagayan Valley. He sent a telegram through the RCPI branch in Cagayan addressed to Manila. Meron siyang pabor na hihingi-in sa Congressman: I will go there to Manila, I will see you in your office on this particular date. So pinadala niya iyong telegrama.
When he went to the office of the congressman after the few days, nagalit pa yung congressman sa kanya, “So you are here to ask for a favor for your own. Ikaw na ang nangangailangan, pati telegrama ako pa ang pabayarin mo?! Collect pa!” Arquero was stunned eh because he paid the telegram. How come naging collect? In effect, he was embarrased.
Pagbalik niya sa Cagayan, f-in-ile-an niya ng damages ang RCPI. But in the RCPI telegraph form, there is a stipulation that “venue of any action shall be the court of Quezon City alone and in no other courts.” So the venue is restrictive. With that, Arquero filed an action for damages in the RTC of Aparri Cagayan and RCPI moved to dismiss for improper venue, stipulation according to the POLYTRADE case eh.
The trial court moved to dismiss the case because of this restrictive stipulation. Arquero went to the SC citing the case of SWEET LINES where despite the fact of a restrictive stipulation, SC refused to apply the POLYTRADE ruling.
HELD. The ruling in Sweet Lines vs. Teves does not apply. You are bound by the stipulation. Why? You are a lawyer eh. Tarantado ka, bakit ka pumirma?! You are a lawyer. You know all these things. Why did you sign?
So nayari siya. That was taken against him ha! As a matter of fact, it is there you can read it. It is in the front, pumirma ka pa sa ilalim. In the case of Teves, you cannot read it. Nasa likod, very small. In other words, you agree to be bound. As a lawyer, you should know what you are signing.
Now, he last point to remember about venue is the difference between venue and jurisdiction. In criminal cases, there is no distinction between jurisdiction and venue. The place of the filing of the case is where the crime is committed or where the essential elements were committed. Therefore, when the cases is committed in Davao City, you cannot file a case in Cotabato City. Cotabato has no territorial jurisdiction over the case.
But in civil cases, if you violate Rule 4, do not say that the court has no jurisdiction. You only say, venue was improperly laid. Yaan! So, if I will file an ejectment case against you in Davao City before the MTC but I am ejecting you from your apartment in Tagum, do not make the mistake. If I move to dismiss on the ground that the MTC has no jurisdiction, you are crazy. The MTC has jurisdiction over all unlawful detainer cases. Ang walang jurisdiction is the RTC. The correct ground is: venue is improperly laid. But if you file the unlawful detainer case in the RTC, you question the jurisdiction of the court, not the place.
So then, what is the main distinction?
Q: Distinguish JURISDICTION from VENUE. A: The following are the distinctions:
3.) JURISDICTION refers to the authority the court to hear the case, whereas VENUE refers only to the place where the action is brought or tried;
4.) JURISDICTION over the subject matter cannot he waived; whereas VENUE is waivable and can be subject of agreement;
5.) JURISDICTION is governed by substantive law – Judiciary Law, BP 129; whereas VENUE is governed by procedural law – Rule 4 of the Rules of Court;
6.) JURISDICTION refers to the relation of the parties to the court; whereas VENUE refers to the relation between the parties; and
7.) JURISDICTION limits the court’s authority; whereas VENUE limits plaintiff’s rights.
BAR QUESTION: State in what instance the jurisdiction and venue coincide.
A: In CRIMINAL CASES because in criminal cases, venue is territorial jurisdiction. But in civil cases, jurisdiction and venue are two different things. They do not coincide.