Nicolas v. Reparations Commission
REITERATIONFacts
1. The Antecedents: Francisco J. Nicolas entered into a contract with the Reparations Commission for the purchase of a fishing boat, the M/V "NICFUR," financed through Japanese Reparations. The contract stipulated that all legal actions arising from it could be brought in the proper courts in the City of Manila. Subsequently, the Commission, citing an alleged unauthorized sale of the vessel by Nicolas, passed resolutions to repossess the boat and re-award it to Pedro Pastoral. 2. Procedural History: Nicolas filed a civil case against the Reparations Commission and Pedro Pastoral in the Court of First Instance of Rizal, seeking to prevent the repossession and re-award of the fishing vessel. The defendants moved to dismiss the case, arguing that the venue was improperly laid due to the stipulation in the contract designating Manila courts. The Court of First Instance granted the motion to dismiss, finding the venue to be improperly laid. Nicolas moved for reconsideration, which was denied. 3. The Petition: This case is an appeal on certiorari to the Supreme Court. The petitioner, Francisco J. Nicolas, argues that the venue stipulation in the contract, stating that actions "may be brought in and submitted to the jurisdiction of the proper courts in the City of Manila," is permissive and not restrictive. He contends that the word "may" does not mandate that suits can only be filed in Manila, especially when doing so would inconvenience the parties and not serve the ends of justice, as the residences and offices of the parties are located outside Manila. The Supreme Court is asked to determine if the venue stipulation is mandatory or permissive.
Issue(s)
Whether the stipulation on venue, stating that "all 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," is restrictive or merely permissive. Whether the Court of First Instance of Rizal committed an error in dismissing the case on the ground of improper venue.
Ruling
The Court set aside the appealed Orders of April 14 and July 14, 1967, and remanded the records to the court a quo for further proceedings. Costs were against the defendants-appellees.
Ratio Decidendi
On the issue of venue stipulation: The Court held that statutes on venue regulate procedure, not jurisdiction, and are waivable. While a written agreement on venue is authorized, the interpretation of such stipulations must be reasonable. The use of the word "may" in the stipulation does not automatically render it mandatory. The Court found no clear intention in the language of the stipulation to exclusively limit the venue to the City of Manila. The Court emphasized that venue is fixed for the convenience of the plaintiff and witnesses and to promote the ends of justice. Confining the situs of the action to Manila, when the parties' residences and offices, as well as the subject matter, were outside Manila, would not serve the interests of justice. The Court cited Polytrade Corporation v. Blanco, which held that a stipulation to "sue and be sued in the Courts of Manila" does not preclude filing suits in the residence of the plaintiff or defendant, as it merely consents to be sued in Manila and does not exclusively restrict venue. On the dismissal by the Court a quo: Based on the interpretation of the venue stipulation as permissive, the Court found that the dismissal of the case by the Court of First Instance of Rizal on the ground of improper venue was erroneous. The Court reasoned that the parties did not waive their right to pursue remedies in other proper venues, and the stipulation merely added Manila courts as an available option, not the sole option. Therefore, the case should proceed in the Court of First Instance of Rizal, where it was originally filed.
Main Doctrine
A stipulation on venue in a contract, even if using the word "may," is not necessarily restrictive and may be considered permissive if no clear intention to exclude other venues is manifest, especially if confining the action to the stipulated venue would work more to the inconvenience of the parties without promoting the ends of justice.