Sy vs. Tyson Enterprises, Inc.

An objection to improper venue is not waived by the filing of a motion for a bill of particulars prior to the motion to dismiss, provided the motion to dismiss on the ground of improper venue is seasonably filed under Section 4, Rule 4 of the Rules of Court.

Tyson Enterprises, Inc., a corporation doing business at 1024 Magdalena (now G. Masangkay) Street, Binondo, Manila, transacted with John Sy, doing business under the trade name Universal Parts Supply, a resident of Bacolod City, and with Universal Parts Supply Corporation, allegedly controlled by Sy and also doing business in Bacolod City. The sales invoices issued in connection with their transaction contained a stipulation that the parties expressly submit to the jurisdiction of the courts of the City of Manila for any legal action arising out of the transaction. When a collection suit was filed, the proper venue became the central dispute.

On August 29, 1979, Tyson Enterprises, Inc. filed a complaint for collection of ₱288,534.58 plus interest, attorney's fees, and litigation expenses against John Sy and Universal Parts Supply Corporation in the Court of First Instance of Rizal, Pasig Branch XXI, docketed as Civil Case No. 34302. The complaint alleged that John Sy, doing business under the trade name Universal Parts Supply, is a resident of Fuentebella Subdivision, Bacolod City, and that his co-defendant, Universal Parts Supply Corporation, allegedly controlled by Sy, is doing business in Bacolod City. Notably, the complaint contained no allegation as to the office or place of business of plaintiff Tyson Enterprises, Inc., a firm actually doing business at 1024 Magdalena, now G. Masangkay Street, Binondo, Manila. Instead, the complaint alleged the postal address and residence of Dominador Ti, the president and general manager of the plaintiff firm, at 26 Xavier Street, Greenhills Subdivision, San Juan, Rizal. The evident purpose of alleging that address and omitting the plaintiff's place of business was to justify filing the suit in Pasig, Rizal rather than in Manila.

The sales invoices issued in connection with the transaction contained a stipulation, quoted in paragraph 4 of the complaint, that "the parties expressly submit to the jurisdiction of the Courts of the City of Manila for any legal action arising out of" the transaction. Defendants Sy and Universal Parts Supply Corporation first filed a motion for extension of time to file their answer, and later a motion for a bill of particulars, which was denied. Thereafter, they filed a motion to dismiss on the ground of improper venue, invoking Section 2(b), Rule 4 of the Rules of Court, which provides that personal actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. They also cited the sales invoice stipulation designating Manila courts to strengthen their position.

The plaintiff opposed the motion to dismiss, arguing that the defendants had waived the objection based on improper venue by previously filing a motion for a bill of particulars. The trial court denied the motion to dismiss on that ground. That denial order was assailed in a petition for certiorari and prohibition before the Court of Appeals, which issued a restraining order on July 29, 1980, enjoining the respondent judge from acting on the case; the judge disregarded the restraining order. The Court of Appeals, in its decision of October 6, 1980, dismissed the petition, ruling that the parties did not intend Manila as the exclusive venue and that since the action was filed in Pasig, which is near Manila, no useful purpose would be served by dismissing and requiring refiling in Manila. That decision was elevated to the Supreme Court.

• Improper Venue: Petitioners argued that venue was improperly laid, invoking Section 2(b), Rule 4 of the Rules of Court, which provides that personal actions may be commenced where the defendant or any defendant resides or may be found, or where the plaintiff or any plaintiff resides, at the election of the plaintiff. They contended that the suit should have been filed either in Manila, where plaintiff corporation's place of business is located, or in Bacolod City, where defendant Sy resides.
• Stipulated Venue: Petitioners relied on the stipulation in the sales invoices that the parties expressly submit to the jurisdiction of the courts of the City of Manila for any legal action arising out of the transaction, which was quoted in the complaint itself.
• No Waiver: Petitioners maintained that their prior motion for a bill of particulars did not constitute a waiver of their objection to improper venue, since they filed a motion to dismiss on that ground before filing their answer, as required by Section 4, Rule 4 of the Rules of Court.

• Waiver of Venue Objection: Respondent argued that the defendants had waived the objection based on improper venue because they had previously filed a motion for a bill of particulars before filing the motion to dismiss.
• Non-Exclusive Venue: Respondent contended, as upheld by the Court of Appeals, that the parties did not intend Manila as the exclusive venue of actions arising under their transactions, and that since the action was filed in Pasig, which is near Manila, no useful purpose would be served by dismissing and ordering refiling in Manila.

• Improper Venue: Whether venue was improperly laid in the collection suit filed in the Court of First Instance of Rizal, Pasig.
• Waiver of Venue Objection: Whether the filing of a motion for a bill of particulars prior to a motion to dismiss constitutes a waiver of the objection to improper venue under the Rules of Court.

• Improper Venue: Yes. Venue was improperly laid. The collection suit should have been filed in Manila, where plaintiff corporation's place of business is located and which is considered its residence for venue purposes, or in Bacolod City, where defendant Sy resides.
• Waiver of Venue Objection: No. The filing of a motion for a bill of particulars before the motion to dismiss did not constitute a waiver of the objection to improper venue. Section 4, Rule 4 requires only that the objection be raised in a motion to dismiss seasonably filed; it does not require that the objection be interposed before any other pleading is filed.

• Improper Venue: A corporation has a personality separate and distinct from that of its officers and stockholders. Consequently, the place of business of plaintiff Tyson Enterprises, Inc. — Manila — is considered its residence for venue purposes. The complaint deliberately omitted any allegation of the plaintiff's place of business and instead alleged the residence of its president in San Juan, Rizal, evidently to justify filing in Pasig. The collection suit should therefore have been filed either in Manila, the residence of the plaintiff corporation and the place designated in the sales invoice stipulation, or in Bacolod City, the residence of defendant Sy. The Court of Appeals erred in ruling that the parties did not intend Manila as exclusive venue and that proximity of Pasig to Manila made dismissal unnecessary.

• Waiver of Venue Objection: Section 4, Rule 4 of the Rules of Court provides that when improper venue is not objected to in a motion to dismiss, it is deemed waived. The provision requires that the objection to improper venue be raised in a motion to dismiss seasonably filed; it does not provide that the objection must be interposed by means of a special appearance or before any pleading is filed. The earlier provisions of Section 377 of the Code of Civil Procedure and Section 4, Rule 5 of the 1940 Rules of Court — which required objection at the time of entering appearance or prior to trial — are not found in the present Rules. The case of Marquez Lim Cay vs. Del Rosario was distinguished, because in that case the defendants had interposed a demurrer, posted a bond for dissolution of attachment, and sought assessment of damages — all constituting submission to the court's jurisdiction under the old Code of Civil Procedure. In the instant case, petitioners filed a motion to dismiss based on improper venue before filing their answer, which was seasonably filed. The rules on venue are designed to insure a just and orderly administration of justice; the choice of venue should not be left to the plaintiff's whim or caprice. As the trial court proceeded in defiance of the Rules of Court in not dismissing the case, prohibition lies to restrain it from acting.

• Corporate Residence for Venue Purposes — A corporation's place of business is considered its residence for purposes of venue, because a corporation has a personality separate and distinct from that of its officers and stockholders. The Court applied this by holding that Tyson Enterprises, Inc.'s place of business in Manila, not its president's residence in San Juan, Rizal, determines the proper venue.
• Waiver of Objection to Improper Venue — Under Section 4, Rule 4 of the Rules of Court, an objection to improper venue is deemed waived only if it is not raised in a motion to dismiss. The filing of other motions prior to the motion to dismiss — such as a motion for a bill of particulars — does not constitute waiver, provided the motion to dismiss on the ground of improper venue is seasonably filed before the answer. The present Rules do not require that the venue objection be made at the time of entering appearance or before any pleading is filed, unlike the former Code of Civil Procedure (Section 377) and the 1940 Rules of Court (Section 4, Rule 5).
• Purpose of Venue Rules — The rules on venue are designed to insure a just and orderly administration of justice and the impartial and evenhanded determination of every action and proceeding. The choice of venue should not be left to the plaintiff's whim or caprice, as a plaintiff may be impelled by ulterior motivation in choosing a particular court.

• "There is no question that the venue was improperly laid in this case. The place of business of plaintiff Tyson Enterprises, Inc., which for purposes of venue is considered as its residence ... because a corporation has a personality separate and distinct from that of its officers and stockholders." — This passage establishes the ratio decidendi on the improper venue issue, applying the doctrine of corporate personality to venue determination.
• "The fact that they filed a motion for a bill of particulars before they filed their motion to dismiss did not constitute a waiver of their objection to the venue." — This is the canonical formulation of the Court's holding on waiver, directly answering the central procedural question.
• "Section 4 does not provide that the objection based on improper venue should be interposed by means of a special appearance or before any pleading is filed." — This passage clarifies the scope of Section 4, Rule 4, distinguishing it from the earlier, stricter provisions of the Code of Civil Procedure and the 1940 Rules.
• "The choice of venue should not be left to the plaintiff's whim or caprice. He may be impelled by some ulterior motivation in choosing to file a case in a particular court even if not allowed by the rules on venue." — This articulates the policy rationale underlying the Court's strict enforcement of venue rules.

• Clavecilla Radio System vs. Antillon, L-22238, February 18, 1967, 19 SCRA 379 — Cited as authority for the proposition that a corporation's place of business is its residence for venue purposes.
• Enriquez vs. Macadaeg, 84 Phil. 674 — Cited for the rule that where a trial court proceeds in defiance of the Rules of Court, prohibition lies to restrain it from acting.
• Republic vs. Court of First Instance of Manila, L-30839, November 28, 1975, 68 SCRA 231 — Cited to support the holding that the motion to dismiss on the ground of improper venue was seasonably filed.
• Marquez Lim Cay vs. Del Rosario, 55 Phil. 962 — Distinguished. In that case, the defendants filed a demurrer, posted a bond for dissolution of attachment, and sought assessment of damages before moving to dismiss — all constituting submission to jurisdiction and waiver under the old Code of Civil Procedure. The instant case involved only a motion for bill of particulars, which did not constitute such submission.
• Evangelista vs. Santos, 86 Phil. 387 — Followed. The Court sustained dismissal on the ground of improper venue where the defendant was actually a resident of Iloilo City, not Pasay City as the plaintiff assumed.
• Portillo vs. Judge Reyes and Ramirez, 113 Phil. 288 — Followed. The Court issued a writ of prohibition to restrain a trial court from proceeding where venue was improperly laid.

• Section 2(b), Rule 4, Rules of Court — Provides that personal actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. Applied to determine that the collection suit should have been filed in Manila (plaintiff's residence) or Bacolod City (defendant's residence).
• Section 4, Rule 4, Rules of Court — Provides that when improper venue is not objected to in a motion to dismiss, it is deemed waived. Applied to hold that the objection was properly raised and not waived, since petitioners filed a motion to dismiss on that ground before answering.
• Section 5, Rule 16, Rules of Court — Referenced for the rule that if improper venue is not raised in a motion to dismiss, it can no longer be pleaded as an affirmative defense in the answer.

Makasiar (Chairman), Concepcion, Jr., Guerrero, and Abad Santos, JJ., concurred. De Castro, J., concurred separately, noting that the residence of the plaintiff was not alleged in the complaint, so the fact of improper venue was not manifest on the face of the complaint; had it been manifest, De Castro would have agreed with Justice Escolin that filing a motion for a bill of particulars constituted waiver.

• Escolin, J. — Dissented on the ground that petitioners, by filing a motion for a bill of particulars, had submitted themselves to the jurisdiction of the respondent court and thus waived their objection to the venue of the action.