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Unimaster Conglomeration Inc. vs.

Court of Appeals

FACTS: 1. 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. 2. The Dealership Agreement contained a stipulation that “ All suits arising out of this Agreement

shall be filed with / in the proper Courts of Quezon City”
3. Five years later, Umimasters filed an action in the RTC of Tacloban against Kubota, Reynaldo Go and Metrobank for damages and breach of contracts, and injunction with prayer for temporary restraining order. 4. Kubota filed two motions One for the dismissal of the case on the ground of improper venue .The other prayed for the transfer of the injunction hearing its counsel was not available. 5. The court issued an order allowing the issuance of preliminary injunction and a motion denying the motion to dismiss on the reason that Umimasters’ place of business is in Tacloban City while Kubota’s principal place of business is in Quezon City. In accord with the the Rules of Court, the proper venue would either be Quezon City or Tacloban City at the election of the plaintiff. Hence, the filing in the RTC of Tacloban is proper. 6. Kubota appealed both orders on the grounds they were issued with grave abuse of discretion in a special action for certiorari and prohibition filed with the CA. Kubota asserted that RTC of Tacloban had no jurisdiction was improperly laid. 7. The Court of Appeals decided in favor of Kubota and it held 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” 8. Subsequently, Unimasters filed a motion for reconsideration but was turned down by the appellate court. ISSUE: WON the venue stipulations in a contract has the effect of limiting the venue to a specified place. RULING: NO. The Polytrade doctrine was applied in the case at bar. This doctrine enunciated that as long as the stipulation does not set forth qualifying or restrictive words to indicate that the agreed place alone and none other is the venue of the action, the parties do not lose the option of choosing the venue Absence of qualifying or restrictive words, venue stipulations in a contract should be considered merely as agreement on additional forum, not as limiting venue to the specified place. Unless the

referred the case to the Court of Appeals for proper determination and disposition pursuant to Section 9.the stipulation should be construed. Aggrieved. the said dismissal does not constitute a bar to the filing of the later complaint. or complementary of said rule. and damages. Spouses Lydia Meliton and Virgilio Meliton filed a complaint against Ziga for recovery of the same amounts involved and alleged in their counterclaims in the previous case and assigned to Branch 27 of the same trial court. not as confining suits between the parties only to that one place. and for this reason. and for the improvements. Ziga filed a petition for certiorari filed a petition for certiorari with the SC. and to disregard the prescriptions of Rule 4. 3. 5. Blg. Quezon City. Nelia Ziga filed a complaint against Lydia Meliton for rescission of a contract of lease over a parcel of land with RTC of Naga City.P.or other contractual provisions clearly evincing the same desire and intention -. Then. The trial court said that it had not acquired jurisdiction because of the non-payment of the docket fees. She also filed a motion for reconsideration but the same was subsequently denied. that they wish the venue of actions between them to be laid only and exclusively at a definite place.Meliton’s counterclaim s were also dismissed for non-payment of docket fees. Lydia Meliton denied the material avernments of the complaint and setting up 3 counterclaims for the recovery of the value of her demolished kitchenette in leased land. The court dismissed the complaint based on the motion of Ziga contending that the cause of action had already been moot and academic by the expiration of the leased contract. by employing categorical and suitably limiting language.Ziga filed a motion to dismiss the complaint on the ground that the cause of action was barred by a prior judgment in the previous case. Court of Appeals FACTS: 1. 2. 129. agreements on venue are not to be regarded as mandatory or restrictive.parties make very clear. but merely permissive. Meliton vs. 7. paragraph 1. 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. the higher court. in its resolution. . but as allowing suits either in Quezon City or Tacloban City. Quezon City -. But the court denied her motion to dismiss on the ground that the dismissal of the Meliton's counterclaims in the previous case is not an adjudication on the merits because the court did not acquire jurisdiction over the counterclaims for failure of Meliton to pay the docket fees. In her answer. 4. 6. at the option of the plaintiff (UNIMASTERS in this case). of B.

as where they involve many of the same factual and/or legal issues.8. In the case at bar. The Melitons challenged the judgment of the CA and praying for its annulment. and (c) the court has jurisdiction to entertain the claim. It has been postulated that while a number of criteria have been advanced for the determination of whether the counterclaim is compulsory or permissive. that a counterclaim not set up shall be barred if it arises out of or is necessarily connected with the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.i. or is necessarily connected with. to wit. where conducting separate trials of the respective claims of the parties would entail a substantial duplication of effort and time. e.i. The failure of the Melitons to seek a reconsideration of the dismissal of their counterclaim or to take an appeal rendered the dismissal final. The petitioner’s are not barred from asserting claims in a separate suit. The counterclaims of the petitioners are compulsory in nature. 2. Private respondent Ziga’s complaint was for rescission of the contract of lease due to petitioner Lydia Meliton's breach of her obligations under the said contract. WON the counterclaims of the petitioners are compulsory in nature.(a) it arises out of.. To state it diffently. 9. the transaction or occurrence which is the subject matter of the opposing party's claim. While it is true. the right of either to the possession of the property. petitioner's counterclaims were for damages for unlawful demolition of the improvements. e. ISSUES: 1. Section 4 of Rule 9 of the Rules of Court enumerates the requisites compulsory counterclaim. all the requisites of a compulsory counterclaim are present. (b) it does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. it having arisen out of or being necessarily connected with the transaction or occurrence subject matter of Ziga’s complaint. 2. Both the claims of petitioners and private respondent arose from the same contract of lease. NO. On the other hand. . the one compelling test of compulsoriness is the logical relationship between the claim alleged in the complaint and that in the counterclaim. The counterclaimsare logically related to the complaint. and such dismissal barred the prosecution of their counterclaim by another action. cannot be applied to the case at bar. RULING: 1.as stated in Section 4. They are offshoots of the same basic controversy between the parties. YES. WON the petioners are barred from asserting their counterclaims having failed to seek reconsideration or to take an appeal from the order of dismissal of the same. Rule 9 of the Rules of Court.. The CA found that Meliton’s counterclaim The Melitons' counterclaim against the Ziga is a compulsory counterclaim.

Also. petitioners could have objected to the dismissal sought by private respondent on the ground that said counterclaims could not remain pending for independent adjudication . nor on the ground of res judicata. depending on the stage or status of the other suit.Firstly. a reading of the order of dismissal will show that the trial court. the dismissal of the counterclaims of the petitioners because of failure to pay docket fees does not constitute does not constitute res judicata. The action in the case at bar cannot be dismissed either on the ground of litis pendentia since there is no other pending action between the same parties and for the same cause. The failure of petitioners to seek reconsideration of or to take an appeal from the order of dismissal of the counterclaim should not prejudice their right to file their claims in a separate action because they were thereby made to understand and believe that their counterclaims were merely permissive and could be the subject of a separate and independent action. did not intend to prejudice the claims of petitioners by barring the subsequent judicial enforcement thereof. Secondly. in dismissing the complaint of private respondent. there having been no consideration and adjudication of the case on the merits. where a compulsory counterclaim is made the subject of a separate suit. it may be abated upon a plea of auter action pendant or litis pendentia and/or dismissed on the ground of res judicata. Had the trial court correctly specified that petitioners' counterclaims were compulsory.