Unimasters Conglomeration, Inc. vs. Court of Appeals

The Court held that absent qualifying or restrictive words clearly and categorically expressing the parties' intent to limit venue exclusively to a specified place, a stipulation fixing venue is merely permissive and construed as an agreement on an additional forum, not as a restriction superseding the general rules of venue. Because the stipulation "All suits arising out of this Agreement shall be filed with/in the proper Courts of Quezon City" lacked restrictive language, it did not preclude Unimasters from filing suit in Tacloban City, the plaintiff's residence under Rule 4.

Kubota Agri-Machinery Philippines, Inc. and Unimasters Conglomeration, Inc. entered into a Dealership Agreement for Sales and Services in Samar and Leyte. The contract contained a stipulation that "[a]ll suits arising out of this Agreement shall be filed with/in the proper Courts of Quezon City." Unimasters maintained its principal place of business in Tacloban City, while Kubota's was in Quezon City. Five years after executing the agreement, Unimasters filed an action for damages and injunction against Kubota and other defendants in the Regional Trial Court of Tacloban City.

• The Dealership Agreement: On October 28, 1988, Kubota and Unimasters executed a Dealership Agreement for the sale and servicing of Kubota products in Samar and Leyte. The agreement contained a venue stipulation reading: "All suits arising out of this Agreement shall be filed with / in the proper Courts of Quezon City." Unimasters also obtained a P2,000,000.00 credit line with Metrobank-Tacloban to secure its obligations to Kubota.
• The Tacloban Suit: On December 24, 1993, Unimasters filed an action for damages for breach of contract and injunction in the RTC of Tacloban City against Kubota, Reynaldo Go, and Metrobank-Tacloban. The RTC issued a temporary restraining order enjoining Metrobank from authorizing payment of Unimasters' obligations to Kubota.
• The Injunction Hearing and Motion to Dismiss: Kubota filed a motion to dismiss based on improper venue and a motion to transfer the injunction hearing. The RTC granted the motion to transfer but proceeded with the hearing on the original date, receiving the direct testimony of Unimasters' general manager. When Kubota's counsel learned of this, he insisted on arguing the motion to dismiss and, when directed to cross-examine the witness, did so with the express reservation that he was not waiving or abandoning the motion to dismiss.
• RTC Rulings: The RTC issued the preliminary injunction on January 13, 1994. On February 3, 1994, the RTC denied the motion to dismiss, holding that Quezon City was merely an additional venue and that Tacloban City remained a proper venue under the Rules of Court.
• Appellate Court Reversal: Kubota challenged the RTC orders via certiorari in the Court of Appeals. The CA reversed the RTC, holding that the venue stipulation restricted suits exclusively to Quezon City and that Kubota's participation in the injunction hearing did not waive its venue objection.

• Petitioner Unimasters argued that the Court of Appeals erred in concluding that the venue stipulation limited suits exclusively to Quezon City. Petitioner maintained that, pursuant to Philippine Banking Corporation v. Tensuan, venue stipulations absent qualifying or restrictive words should be considered merely as agreements on additional forums, not as limiting venue to the specified place.
• Petitioner contended that the CA erred in distinguishing the Gesmundo case and applying it as controlling precedent.
• Petitioner asserted that the CA erred in concluding that Kubota's participation in the injunction hearing, despite an express reservation, did not constitute a waiver of its venue objection.

• Respondent Kubota argued that the venue stipulation restricted the filing of suits exclusively to the proper courts of Quezon City, thereby rendering the Tacloban City RTC an improper venue.
• Respondent contended that the RTC lacked jurisdiction to take cognizance of the action because venue was improperly laid.
• Respondent maintained that its participation in the injunction hearing did not constitute a waiver of its venue objection, as its counsel had expressly reserved the right to pursue the motion to dismiss.

• Procedural Issues: Whether respondent Kubota's participation in the injunction hearing, with an express reservation of its motion to dismiss, constituted a waiver of its objection to improper venue.
• Substantive Issues: Whether the stipulation "All suits arising out of this Agreement shall be filed with/in the proper Courts of Quezon City" restricts venue exclusively to Quezon City or merely adds Quezon City as a permissive forum alongside those provided by the Rules of Court.

• Procedural: The Court ruled that Kubota did not waive its objection to venue. When Kubota's counsel appeared and participated in the injunction hearing, he expressly informed the trial court that he was not waiving the right to submit the motion to dismiss based on improper venue. Accordingly, no waiver or abandonment could be imputed to Kubota.
• Substantive: The Court held that the venue stipulation was merely permissive, not restrictive. Because convenience is the foundation of venue rules, stipulations designating venues other than those assigned by Rule 4 should be interpreted as expanding, rather than limiting, the available forums. Restrictive stipulations, being in derogation of this general policy, require language that is clear, categorical, and suitably limiting—such as "only," "solely," or "exclusively." Absent such qualifying words, the stipulation is construed as merely adding to the venues provided by the Rules of Court. The Court also clarified that improper venue is a procedural, not a jurisdictional, impediment (except in criminal cases), and an objection to venue must be raised in a motion to dismiss or it is waived.

• Permissive vs. Restrictive Venue Stipulations — Written stipulations as to venue may be restrictive (suit may be filed only in the place agreed upon) or merely permissive (suit may be filed in the place agreed upon and in the places fixed by law). Because convenience is the foundation of venue regulations, the invariable construction is that venue stipulations do not negate but merely complement or add to the codal standards of Rule 4. Unless the parties employ categorical and suitably limiting language clearly expressing their intent to limit venue exclusively to a definite place and disregard Rule 4, the agreement is merely permissive. Any doubt or uncertainty must be resolved against a restrictive or mandatory interpretation.
• Venue vs. Jurisdiction — Venue is a procedural, not a jurisdictional, matter, except in criminal actions where venue is jurisdictional. An objection to improper venue must be raised in a motion to dismiss; otherwise, the objection is deemed waived. However, improper venue does not deprive a court of its jurisdiction over the subject matter.

• "Unless the parties make very clear, by employing categorical and suitably limiting language, that they wish the venue of actions between them to be laid only and exclusively at a definite place, and to disregard the prescriptions of Rule 4, agreements on venue are not to be regarded as mandatory or restrictive, but merely permissive, or complementary of said rule." — This passage articulates the controlling standard for interpreting venue stipulations, emphasizing the necessity of explicit limiting language for a restrictive construction.
• "Venue has nothing to do with jurisdiction, except in criminal actions. This is fundamental." — This underscores the distinction between a procedural objection to venue and a court's jurisdiction over the subject matter.

• Polytrade Corporation v. Blanco, 30 SCRA 187 (1969) — Followed as the controlling precedent establishing the doctrine that absent qualifying or restrictive words, venue stipulations are merely permissive and add to the venues provided by the Rules of Court.
• Gesmundo v. JRB Realty Corporation, 234 SCRA 153 (1994) — Distinguished. The Court noted that in Gesmundo, the language used clearly evinced an intent to limit venue exclusively to Pasay City, unlike the stipulation in the present case.
• Philippine Banking Corporation v. Hon. Salvador Tensuan, 230 SCRA 413 (1993) — Followed. Reiterated the Polytrade doctrine that stipulations fixing venue without qualifying words are merely permissive.
• Bautista v. De Borja, 18 SCRA 474 (1966) — Discussed. Held restrictive venue in its time, but the Court noted that the later line of cases following Polytrade rendered older, inconsistent precedents obsolete or modificatory of the old ones.

• Rule 4, Section 2(b), Rules of Court — Governs the venue of personal actions, providing that they may be commenced where the defendant or plaintiff resides, at the election of the plaintiff. The Court applied this provision to affirm that Unimasters could file suit in Tacloban City, its place of residence, because the contractual stipulation did not restrictively limit venue to Quezon City.
• Rule 4, Section 3, Rules of Court — Allows parties to change or transfer venue by written agreement. The Court cited this provision as the basis for permitting venue stipulations, subject to the rule that they are construed as permissive unless explicitly restrictive.
• Rule 4, Section 4, Rules of Court — Provides that an objection to improper venue must be raised in a motion to dismiss. The Court cited this to emphasize that improper venue is a procedural, not jurisdictional, ground that is waived if not seasonably raised.

Padilla, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco, Hermosisima, Jr., Panganiban, and Torres, Jr. Regalado, J., filed a concurring opinion.