Planters Development Bank v. Ramos
REITERATIONFacts
The Antecedents: Spouses Victoriano and Melanie Ramos (Spouses Ramos) applied for and were granted credit lines by Planters Development Bank (PDB) for the construction of a warehouse. Initially, they secured a P40,000,000.00 loan, secured by a mortgage over certain properties. Subsequently, Spouses Ramos requested additional funds, and PDB allegedly promised a further P140,000,000.00 loan. However, only P25,000,000.00 was approved and released, also secured by a mortgage over other properties. Due to financial difficulties, Spouses Ramos were unable to meet their debt obligations and failed to reach an agreement with PDB for debt restructuring. Procedural History: On April 23, 2014, PDB initiated extra-judicial foreclosure proceedings. In response, on June 18, 2014, Spouses Ramos filed a complaint for annulment of real estate mortgages and promissory notes, accounting, application of payments, and injunction. PDB moved to dismiss the complaint, citing improper venue due to a stipulation in the mortgages designating Makati City as the exclusive venue. The Regional Trial Court (RTC) denied PDB's motion to dismiss, finding that the venue issue could not be resolved without evidence and that the complaint sufficiently stated a cause of action. PDB's subsequent motion for reconsideration and motion to declare Spouses Ramos in default were also denied by the RTC. PDB then filed a petition for certiorari with the Court of Appeals (CA), arguing that the RTC committed grave abuse of discretion in denying the motion to dismiss. The CA affirmed the RTC's orders, holding that PDB should have filed an answer and proceeded to trial. PDB's motion for reconsideration of the CA's decision was also denied. The Petition: Planters Development Bank filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision and Resolution of the Court of Appeals. The petitioner argues that the CA erred in affirming the RTC's denial of its motion to dismiss, contending that the stipulation in the real estate mortgages clearly and exclusively designated Makati City as the venue for any suits arising from the agreements. PDB asserts that the venue stipulation, being restrictive and explicitly waiving any other venue, should have been upheld, leading to the dismissal of the complaint on the ground of improper venue, as the action was a personal one and the parties had validly agreed on the exclusive venue.
Issue(s)
Whether the RTC committed grave abuse of discretion in denying PDB's Urgent Motion to Dismiss on the ground of improper venue. Whether the stipulation on venue in the Real Estate Mortgages, requiring suits to be filed exclusively in Makati City, is binding on the parties.
Ruling
The Supreme Court reversed and set aside the Decision and Resolution of the Court of Appeals, and dismissed Civil Case No. 2014-485-SJC on the ground of improper venue.
Ratio Decidendi
On the issue of improper venue and the binding nature of the stipulation on venue: The Court held that the petition is meritorious. Rule 4 of the Rules of Civil Procedure provides for the rules on venue, but Section 4(b) allows for exceptions where parties have validly agreed in writing before the filing of the action on the exclusive venue thereof. Stipulations on venue can be permissive or restrictive, and the intention of the parties must be ascertained. Restrictive stipulations, which are in derogation of the general policy, require clear and categorical language to leave no doubt of the intention to limit the venue. The Court noted that in Spouses Lantin v. Judge Lantion, the words "exclusively" and "waiving for this purpose any other venue" were deemed restrictive. The stipulation in the present case reads: "In the event of suit arising from out of or in connection with this mortgage and/or the promissory note/s secured by this mortgage, the parties hereto agree to bring their causes of action exclusively in the proper court/s of Makati, Metro Manila, the MORTGAGOR waiving for this purpose any other venue. " The Court found that the employment of the same language signifies the clear intention of the parties to restrict the venue of any action or suit arising from the mortgage to Makati City only, to the exclusion of all other jurisdictions. This stipulation, not being contrary to law or public policy, has the force of law between the parties and should be complied with in good faith. The CA's ruling that the validity of the stipulation on venue depends on the validity of the mortgage contracts, thus requiring a full-blown hearing, renders meaningless the purpose of such stipulations. Parties may validly waive their right to choose the venue, and such waiver is effective as it is a personal privilege not contrary to public policy. The Court emphasized that Spouses Ramos never assailed the validity of the mortgage contracts and promissory notes themselves, but rather certain terms like excessive interest rates and penalty clauses, which do not affect the validity of the contracts or the stipulation on venue. Therefore, the RTC should have granted the motion to dismiss on the ground of improper venue, and the CA committed a reversible error in affirming the RTC's denial.
Main Doctrine
A stipulation on venue in a contract, couched in clear and categorical language indicating exclusivity, is binding and must be upheld, even if the complaint assails certain terms of the contract, as long as the validity of the contract itself is not directly challenged.