Philippine Banking Corporation v. Tensuan
ABANDONMENTFacts
The Antecedents: Petitioner Philippine Banking Corporation (Bank) filed a complaint for collection of a sum of money, with a prayer for preliminary attachment, against respondent Circle Financial Corporation (Circle) and eight (8) individual sureties. The dispute arose from several loans obtained by Circle from the Bank, aggregating P1,000,000.00, evidenced by four (4) promissory notes. These notes contained a stipulation that the parties expressly submit to the jurisdiction of the courts of Valenzuela for any legal action. The eight individual sureties executed a Continuing Surety Agreement, jointly and severally undertaking to pay Circle's obligations. Upon Circle's failure to pay on the due dates, the Bank demanded payment from the sureties, who also failed to pay. The Bank alleged Circle's insolvency and receivership by the Central Bank. Procedural History: The Bank instituted its complaint in the Regional Trial Court of Makati. A writ of preliminary attachment was issued, but the sheriff's return indicated no properties of the respondents could be found. Summons was served on five of the eight individual sureties and Circle. However, summons could not be served on one surety who had died, two whose whereabouts were unknown, and Circle, which had ceased operations. The respondents who were served with summons filed a motion to dismiss, arguing that the venue was improperly laid due to the stipulation in the promissory notes fixing the venue in Valenzuela. The trial court granted the motion and dismissed the case. The Bank's motion for reconsideration was denied. The Petition: Petitioner Philippine Banking Corporation filed this Petition for Review on Certiorari seeking to set aside the trial court's order dismissing the complaint. The Bank contends that the stipulation in the promissory notes, "I/We hereby expressly submit to the jurisdiction of the courts of Valenzuela any legal action which may arise out of this promissory note," was merely permissive, authorizing suit in Valenzuela but not exclusively limiting it there. The Bank argues that venue was properly laid in Makati, where its principal office is located, as permitted by the Rules of Court. The private respondents, conversely, assert that the stipulation clearly and unambiguously fixed the venue exclusively in Valenzuela, to the exclusion of other courts.
Issue(s)
Whether the stipulation "I/We hereby expressly submit to the jurisdiction of the courts of Valenzuela any legal action which may arise out of this promissory note" exclusively fixes the venue of actions arising from the promissory notes to the courts of Valenzuela. Whether the venue was properly laid in Makati, Metropolitan Manila.
Ruling
The Petition is granted due course. The Orders dated 3 August 1992 and 28 August 1992 of public respondent Judge Salvador S. Tensuan are REVERSED and SET ASIDE. The case is REMANDED to the court of origin for resolution on the merits.
Ratio Decidendi
On the issue of venue stipulation exclusivity: The Supreme Court held that the stipulation "I/We hereby expressly submit to the jurisdiction of the courts of Valenzuela any legal action which may arise out of this promissory note" is merely permissive and does not exclusively fix the venue of actions arising from the promissory notes to the courts of Valenzuela. The Court reasoned that the plain or ordinary import of the stipulation is merely an authorization or permission to bring suit in Valenzuela; there is no indication of an intent to bar suit in other competent courts. Permissive stipulations of this nature have invariably received judicial approval, allowing parties to lay venue in the court named in the stipulation or in other courts permitted by the Rules of Court. The stipulation does not purport to deprive either party of their right to elect recourse to another competent court as expressly permitted by Section 2(b) of Rule 4 of the Rules of Court. The Court emphasized that for a venue stipulation to be exclusive, it must clearly indicate, through qualifying and restrictive words such as "must," "only," or "exclusively," that the parties deliberately intended to exclude causes of action from the operation of the ordinary permissive rules on venue and to designate a specific venue to the exclusion of any other competent court. The phrase "any legal action" does not necessarily imply an agreement to bar actions before any court other than a Valenzuela court, as there is no customary connection between these words and an intent to strictly limit permissible venue. The Court reiterated the doctrine established in Polytrade Corporation v. Blanco and subsequent cases, which hold that venue stipulations are generally permissive unless clearly and unequivocally restrictive. On the propriety of venue in Makati: Based on the interpretation that the venue stipulation was permissive, the Supreme Court found that venue was properly laid by the petitioner Bank in Makati, Metropolitan Manila, where its principal office is located, as authorized by the Rules of Court. The Court noted that venue relates to the convenience of the parties and that no private respondent claimed to have been put to undue hardship or inconvenience by the institution of the action in Makati. Therefore, the dismissal of the case by the trial court on the ground of improper venue was erroneous.
Main Doctrine
A stipulation in a promissory note that parties "expressly submit to the jurisdiction of the courts of Valenzuela" is merely permissive and does not exclusively fix the venue of actions arising from the note to the courts of Valenzuela, to the exclusion of other competent courts as permitted by the Rules of Court, unless qualifying or restrictive words indicating exclusivity are present.