Unimasters Conglomeration, Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Unimasters Conglomeration, Inc. (UNIMASTERS) and Kubota Agri-Machinery Philippines, Inc. (KUBOTA) entered into a Dealership Agreement. The agreement contained a stipulation that "All suits arising out of this Agreement shall be filed with / in the proper Courts of Quezon City." UNIMASTERS also obtained a credit line from Metropolitan Bank and Trust Co.-Tacloban Branch (METROBANK) to answer for its obligations to KUBOTA. Procedural History: UNIMASTERS filed an action for damages and injunction against KUBOTA and others in the Regional Trial Court (RTC) of Tacloban City. The RTC issued a restraining order against METROBANK. KUBOTA filed a motion to dismiss based on improper venue. Despite KUBOTA's motion to transfer the hearing, the RTC proceeded with the injunction hearing and later issued a preliminary injunction. The RTC subsequently denied KUBOTA's motion to dismiss, ruling that the filing in Tacloban City was proper as UNIMASTERS had its principal place of business there, and Quezon City was an additional venue agreed upon. The Petition: KUBOTA filed a special civil action for certiorari and prohibition with the Court of Appeals (CA), arguing that the RTC committed grave abuse of discretion in taking cognizance of the action due to improper venue, in issuing the injunction, and in denying the motion to dismiss. The CA reversed the RTC, holding that the venue stipulation in the Dealership Agreement exclusively limited suits to the proper courts of Quezon City. UNIMASTERS appealed to the Supreme Court.
Issue(s)
Whether the venue stipulation in the Dealership Agreement limiting suits to the proper Courts of Quezon City was restrictive or merely permissive. Whether KUBOTA waived its objection to venue by participating in the injunction hearing. Whether the RTC had jurisdiction to take cognizance of the action considering the venue stipulation.
Ruling
The Supreme Court reversed the Court of Appeals, reinstated the Order of the RTC denying the motion to dismiss, and directed the RTC to proceed with the case. The Court held that the venue stipulation was merely permissive and did not divest the RTC of jurisdiction. The Court also found that KUBOTA did not waive its objection to venue.
Ratio Decidendi
On the venue stipulation: The Court reiterated that venue stipulations are generally permissive, not restrictive, unless the language clearly indicates intent to limit venue exclusively. The stipulation lacked restrictive words, so it added Quezon City as an additional venue, complementing Rule 4 of the Rules of Court. UNIMASTERS could file suit in either Tacloban City or Quezon City. Convenience is the raison d'être of venue rules, and restrictive interpretations require unmistakably clear intention. On waiver of objection to venue: The Court found that KUBOTA did not waive its objection to venue. KUBOTA's counsel explicitly stated they were not waiving their right to submit the Motion to Dismiss when compelled to participate in the injunction hearing. The counsel's participation was under protest and with express reservation of the motion to dismiss. For a waiver to be effective, it must be voluntary and intentional, which was not the case here. On jurisdiction: The Court clarified that venue is distinct from jurisdiction, except in criminal actions. The RTC of Tacloban City had jurisdiction over the subject matter. Even if venue were improperly laid, it would be a procedural impediment, not a jurisdictional defect, and could be waived by failure to object properly. In this case, the objection was timely raised, and the Court ultimately found the venue to be proper.
Main Doctrine
Venue stipulations in contracts are generally considered permissive, not restrictive, unless the language used clearly and unequivocally indicates the parties' intent to limit venue exclusively to the specified place. Absent such restrictive language, the stipulation merely adds to the venues provided by the Rules of Court.