Pillars Property Corporation vs. Century Communities Corporation

An order dismissing an action based on improper venue under Section 1(c), Rule 16 is a dismissal without prejudice under Section 5 of Rule 16 and Section 1(g), Rule 41, which is not subject to appeal but is reviewable by certiorari under Rule 65; furthermore, an exclusive venue stipulation under Section 4(b), Rule 4 applies between the contracting parties notwithstanding the inclusion of a non-party defendant, and the trial court's application thereof does not constitute grave abuse of discretion absent manifest disregard of established rules.

Pillars Property Corporation (PPC) entered into a construction contract with Century Communities Corporation (CCC) for the delivery of 210 housing units at "Canyon Ranch" in Cavite for a total consideration of P77.5 million. The contract contained an exclusive venue stipulation designating the courts of Makati as the proper venue for any litigation "to the exclusion of others." People's General Insurance Corporation (PGIC) issued performance bonds in favor of CCC to guarantee PPC's obligations under the contract. When disputes arose regarding unpaid progress billings, PPC filed a complaint in Parañaque City, where it resided, impleading both CCC and PGIC.

• December 1, 2009: PPC filed a Complaint for sum of money amounting to P6.7 million against CCC for unpaid progress billings before the Regional Trial Court of Parañaque City (Civil Case No. 09-0450), where PPC resided.
• PPC also impleaded PGIC as a defendant to exculpate itself from liability under the performance bonds issued by PGIC in favor of CCC.
• The construction contract between PPC and CCC contained a stipulation under "Special Provisions" stating: "In case of litigation, the Parties hereby agree that the venue of each action as the Proper Court of Makati to the exclusion of others."
• December 17, 2009: CCC filed a Motion to Dismiss on the ground of improper venue under Section 1(c), Rule 16, arguing that the case should have been filed in Makati pursuant to the exclusive venue agreement.
• March 1, 2010: PPC filed an Opposition arguing that the inclusion of PGIC, which was not a party to the contract, took the case outside the exclusive venue stipulation and brought it under the general rule on venue under Section 2, Rule 4.
• February 8, 2010: PGIC filed its Answer alleging that PPC had no cause of action against it and asserting rights of subrogation and indemnity.
• The RTC granted CCC's Motion to Dismiss on March 9, 2011, ruling that Section 4(b), Rule 4 on exclusive venue applied, not the general rule under Section 2, Rule 4.
• PPC filed a Motion for Reconsideration on April 29, 2011, which was denied by the RTC on August 22, 2011.

• The CA erred in concluding that the remedy availed of was erroneous; certiorari under Rule 65 is the proper remedy to question an order of dismissal based on improper venue.
• The exclusive venue stipulation in the contract applied only to PPC and CCC, and did not cover PGIC, which was not a party to the contract.
• PGIC is an indispensable party, and PPC had separate and independent causes of action against PGIC.
• Even assuming venue was improperly laid as to CCC, the case should not have been dismissed as to PGIC.
• The RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction in failing to consider that the inclusion of PGIC removed the case from the exclusive venue stipulation.

• The CA correctly dismissed the Rule 65 petition because an order of dismissal is a final order and the proper remedy is an appeal.
• The exclusive venue stipulation is valid and enforceable as between PPC and CCC.
• The inclusion of PGIC as a defendant does not defeat the exclusive venue stipulation agreed upon by the principal parties to the contract.

• Procedural Issues:
  • Whether the Court of Appeals erred in dismissing outright the petitioner's Rule 65 certiorari petition and ruling that appeal was the proper remedy to question the RTC's order of dismissal.
• Substantive Issues:
  • Whether the Regional Trial Court committed grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing the complaint for improper venue based on the exclusive venue stipulation in the construction contract.

• Procedural:
  • The Supreme Court reversed the CA resolutions. An order dismissing an action based on improper venue under Section 1(c), Rule 16 is a dismissal without prejudice under Section 5 of Rule 16, which is not appealable under Section 1(g), Rule 41. Consequently, the proper remedy is a special civil action for certiorari under Rule 65. The Court cited Development Bank of the Philippines v. Carpio and Strongworld Construction Corporation v. Perello to establish that dismissals for improper venue do not bar refiling and are therefore without prejudice and non-appealable.
• Substantive:
  • The Supreme Court sustained the RTC's dismissal. The exclusive venue stipulation under Section 4(b), Rule 4 was valid and applicable between the contracting parties. The inclusion of PGIC, a non-party to the contract, did not negate the stipulation as between PPC and CCC. The RTC's application of Section 4(b), Rule 4 instead of Section 2, Rule 4 did not constitute grave abuse of discretion, as grave abuse implies a manifest disregard of basic rules or obstinate disregard of established law, not merely an error of judgment. The RTC had sufficient legal basis to apply the exclusive venue provision.

• Dismissal without prejudice vs. dismissal with prejudice — A dismissal based on improper venue under Section 1(c), Rule 16 is without prejudice because it does not bar the refiling of the same action, unlike dismissals under paragraphs (f), (h), and (i) of Section 1, Rule 16 which are with prejudice. As a dismissal without prejudice, it is not appealable under Section 1(g), Rule 41.
• Exclusive venue stipulation — Under Section 4(b), Rule 4 of the Rules of Court, parties may validly agree in writing before the filing of the action on the exclusive venue thereof, which takes precedence over the general rule on venue under Section 2, Rule 4.
• Grave abuse of discretion — Grave abuse of discretion implies a manifest disregard of basic and established rules or an obstinate disregard of basic and established rule of law or procedure, constituting an evasion of positive duty or virtual refusal to perform a duty enjoined by law; it does not include mere errors of judgment or mistakes in the interpretation of law.

• "An order dismissing an action without prejudice is, thus, not subject to appeal but is reviewable by a Rule 65 certiorari petition."
• "Even on the assumption that the RTC erred in its determination of the proper venue in this case, the Court is not persuaded that the RTC manifestly disregarded the basic rules and procedures or acted with obstinate disregard of basic and established rule of law or procedure. If at all, the error of the RTC, assuming there was any, was a mere error of judgment which did not constitute grave abuse of discretion."
• "Needless to say, judges are expected to exhibit more than just a cursory acquaintance with statutes and procedural laws. They must know the laws and apply them properly in good faith as judicial competence requires no less."

• Development Bank of the Philippines v. Carpio — Cited for the principle that an order of dismissal based on improper venue is a dismissal without prejudice and the proper remedy is certiorari under Rule 65, not appeal.
• Strongworld Construction Corporation v. Perello — Cited for the distinction between dismissal with prejudice and dismissal without prejudice, and for establishing that dismissals for improper venue are without prejudice and non-appealable.
• United Alloy Philippines Corp. v. United Coconut Planters Bank — Cited for the rule that dismissal based on improper venue is without prejudice and the remedy available is Rule 65 certiorari.
• Sps. Crisologo v. JEWM Agro-Industrial Corporation — Cited for the standard of grave abuse of discretion as manifest disregard of basic rules and procedures.
• State Prosecutors II Comilang and Lagman v. Judge Medel Belen — Cited for the definition of grave abuse of discretion as inexcusable abuse of authority or obstinate disregard of basic and established rule of law or procedure.

• Rule 41, Section 1(g) — Provides that no appeal may be taken from an order dismissing an action without prejudice, but the aggrieved party may file an appropriate special civil action under Rule 65.
• Rule 65 — Provides for the remedy of certiorari to question orders not subject to appeal.
• Rule 4, Section 2 — General rule on venue of personal actions.
• Rule 4, Section 4(b) — Exception to general venue rule allowing parties to validly agree in writing on exclusive venue before filing of the action.
• Rule 16, Section 1(c) — Ground for motion to dismiss based on improper venue.
• Rule 16, Section 5 — Effect of dismissal; provides that only dismissals under paragraphs (f), (h), and (i) of Section 1 bar refiling (with prejudice).