AREEJ

CASE NO. 93
VENUE | JURISDICTION
Unimasters Conglomeration, Inc. v. CA and Kubota Agri Machinery Philippines, Inc.

FACTS: Kubota Agri-Machinery Philippines, Inc. and Unimasters Conglomeration, Inc. entered into a "Dealership Agreement for
Sales and Services" of the former's products in Samar and Leyte Provinces. The contract contained a stipulation reading: ". . . All
suits arising out of this Agreement shall be filed with/in the proper Courts of Quezon City.”

Some five years later, UNIMASTERS filed an action in the RTC of Tacloban City against KUBOTA, a certain Reynaldo Go, and
Metrobank for damages for breach of contract, and injunction with prayer for temporary restraining order. KUBOTA prayed for
dismissal of the case on the ground of improper venue. The RTC ruled in favor of UNIMASTERS and issued an order authorizing the
issuance of the preliminary injunction. KUBOTA appealed to the CA, alleging that RTC had no jurisdiction to take cognizance of
UNIMASTERS’ action considering that venue was improperly laid *take note of this little detail*. CA reversed RTC’s decision and
ruled that the stipulation respecting venue in its Dealership Agreement with UNIMASTERS did in truth limit the venue of all suits
arising thereunder only and exclusively to the proper courts of Quezon City. UNIMASTERS’ MR was denied. Hence, the petition.

ISSUE: Whether or not the stipulation in the Dealership Agreement that “all suits arising out of this Agreement shall be filed with/in
the proper Courts of Quezon City” is mandatory.

RULING: NO. The Court here gave a permissive construction of the questioned stipulation. Rule 4 of the Rules of Court sets forth the
principles generally governing the venue of actions, whether real or personal, or involving persons who neither reside nor are found
in the Philippines or otherwise. Agreements on venue are explicitly allowed. "By written agreement of the parties the venue of an
action may be changed or transferred from one province to another." 

Written stipulations as to venue may be restrictive in the sense that the suit may be filed only in the place agreed upon, or merely
permissive in that the parties may file their suit not only in the place agreed upon but also in the places fixed by law (Rule 4,
specifically). As in any other agreement, what is essential is the ascertainment of the intention of the parties respecting the matter.
Since convenience is the raison d'etre of the rules of venue, it is easy to accept the proposition that normally, venue stipulations
should be deemed permissive merely, and that interpretation should be adopted which most serves the parties' convenience.

On the other hand, because restrictive stipulations are in derogation of this general policy, the language of the parties must be so
clear and categorical as to leave no doubt of their intention to limit the place or places, or to fix places other than those indicated in
Rule 4, for their actions. This is easier said than done, however, as an examination of precedents involving venue covenants will
immediately disclose.

Absent additional words and expressions definitely and unmistakably denoting the parties' desire and intention that actions
between them should be ventilated only at the place selected by them, Quezon City — or other contractual provisions clearly
evincing the same desire and intention — the stipulation should be construed, not as confining suits between the parties only to that
one place, Quezon City, but as allowing suits either in Quezon City or Tacloban City, at the option of the plaintiff (UNIMASTERS in this
case). Hence, the judgment of CA was reversed.

Anent the little detail: KUBOTA's theory that the Regional Trial Court had "no jurisdiction to take cognizance of UNIMASTERS’ action
considering that venue was improperly laid” is NOT an accurate statement of legal principle. It equates venue with jurisdiction; but
venue has nothing to do with jurisdiction, except in criminal actions. Assuming that venue was improperly laid in the Court where
the action was instituted, the Tacloban City RTC, that would be a procedural, not a jurisdictional impediment — precluding
ventilation of the case before that Court of wrong venue notwithstanding that the subject matter is within its jurisdiction. However,
if the objection to venue is waived by the failure to set it up in a motion to dismiss,  the RTC would proceed in perfectly regular
fashion if it then tried and decided the action.