Pacific Consultants v.
Schonfeld The settled rule on stipulations regarding venue, as held by this Court in the
Callejo, 2007, Third
Respondent Klaus Schonfeld, a Canadian citizen, had been a consultant in
the field of environmental engineering and water supply and sanitation.
Pacicon Philippines Inc., a subsidiary of Pacific Consultants International of
Japan, is a corporation with the primary purpose to engage in the business
of providing specialty and technical services both in and out of the
Philippines. The president of PPI, Jens Peter Henrichsen, who was also the
director of PCIJ, was based in Tokyo, Japan. Respondent was employed by
PCIJ, through Henrichsen, as Sector Manager of PPI in its Water and
Sanitation Department. However, PCIJ assigned him as PPI sector manager
in the Philippines. Respondent arrived in the Philippines and assumed his
position as PPI Sector Manager. He was accorded the status of a resident
alien.
PPI applied for an Alien Employment Permit for respondent before the
DOLE and the DOLE granted the application and issued the Permit to
respondent. Respondent later received a letter from Henrichsen informing
him that his employment had been terminated for the reason that PCIJ and
PPI had not been successful in the water and sanitation sector in the
Philippines. Respondent filed with PPI several money claims. PPI partially
settled some of his claims, but refused to pay the rest. Respondent filed a
Complaint for Illegal Dismissal.
Petitioners aver that since respondent is a Canadian citizen, the CA erred in
ignoring their claim that the principles of forum non conveniens and lex loci
contractus are applicable. They also point out that the contract of
employment of respondent was executed in Tokyo. Moreover, under
Section 21 of the General Conditions for Employment incorporated in
respondent’s letter of employment, the dispute between respondent and
PCIJ should be settled by the court of arbitration of London. Petitioners
insist that the U.S. Labor-Management Act applies only to U.S. workers and
employers, while the Labor Code applies only to Filipino employers and
Philippine-based employers and their employees, not to PCIJ. In fine, the
jurisdictions of the NLRC and Labor Arbiter do not extend to foreign
workers who executed employment agreements with foreign employers
abroad, although "seconded" to the Philippines.
SC: The petition is denied for lack of merit.
vintage case of Philippine Banking Corporation v. Tensuan, is that while
they are considered valid and enforceable, venue stipulations in a contract
do not, as a rule, supersede the general rule set forth in Rule 4 of the
Revised Rules of Court in the absence of qualifying or restrictive words.
They should be considered merely as an agreement or additional forum, not
as limiting venue to the specified place. They are not exclusive but, rather
permissive. If the intention of the parties were to restrict venue, there must
be accompanying language clearly and categorically expressing their
purpose and design that actions between them be litigated only at the place
named by them.
Petitioners’ insistence on the application of the principle of forum non
conveniens must be rejected. The bare fact that respondent is a Canadian
citizen and was a repatriate does not warrant the application of the principle
for the following reasons: First. The Labor Code of the Philippines does not
include forum non conveniens as a ground for the dismissal of the
complaint. Second. The propriety of dismissing a case based on this
principle requires a factual determination; hence, it is properly considered
as defense. Third. In Bank of America, NT&SA, Bank of America
International, Ltd. v. Court of Appeals, this Court held that: [a] Philippine
Court may assume jurisdiction over the case if it chooses to do so; provided,
that the following requisites are met: (1) that the Philippine Court is one to
which the parties may conveniently resort to; (2) that the Philippine Court is
in a position to make an intelligent decision as to the law and the facts; and,
(3) that the Philippine Court has or is likely to have power to enforce its
decision.
TERESA CHAVES BIACO,Petitioner, acquires jurisdiction over the res. Jurisdiction over the res is acquired either
vs. (1) by the seizure of the property under legal process, whereby it is brought
PHILIPPINE COUNTRYSIDE RURAL BANK, Respondent. into actual custody of the law; or (2) as a result of the institution of legal
proceedings, in which the power of the court is recognized and made
FACTS: effective.

Ernesto Biaco is the husband of petitioner Ma. Teresa Chaves Biaco. While
employed in the Philippine Countryside Rural Bank (PCRB) as branch
manager, Ernesto obtained several loans from the respondent bank.
As security for the payment of the said loans, Ernesto executed a real estate
mortgage in favor of the bank covering the parcel of land which the real
estate mortgages bore the signatures of the spouses Biaco.
In this case, the judicial foreclosure proceeding instituted by respondent
PCRB undoubtedly vested the trial court with jurisdiction over the res. A
judicial foreclosure proceeding is an action quasi in rem. As such,
jurisdiction over the person of petitioner is not required, it being sufficient
that the trial court is vested with jurisdiction over the subject matter.

When Ernesto failed to settle the above-mentioned loans on its due date,
respondent bank through counsel sent him a written demand,however,
proved futile.

Respondent bank filed a complaint for foreclosure of mortgage against the

spouses Ernesto and Teresa Biaco before the RTC of Misamis Oriental.
Summons was served to the spouses Biaco through Ernesto at his office
(Export and Industry Bank). The RTC ruled against them; a writ of
execution was served on the spouses.

Petitioner sought the annulment of the Regional Trial Court decision

contending, among others, that the trial court failed to acquire jurisdiction
because summons were served on her through her husband without any
explanation as to why personal service could not be made. The CA affirmed
RTC decision invoking that judicial foreclosure proceedings are actions
quasi in rem. As such, jurisdiction over the person of the defendant is not
essential as long as the court acquires jurisdiction over the res.

ISSUE: Whether or not the case should be dismissed for lack of jurisdiction
over the person of petitioner?

RULING:

No. The Court ruled that validly try and decide the case. In a proceeding in
rem or quasi in rem, jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court provided that the court
BPI FAMILY SAVINGS BANK INC. vs. SPOUSES BENEDICTO &
TERESITA YUJUICO
G.R. No. 175796 July 22, 2015
FACTS: City of Manila filed a complaint against the respondents for the
expropriation of five parcels of land located in Tondo, Manila and
registered in the name of respondent Teresita Yujuico. Two of the
parcels of land were previously mortgaged to City trust Banking
Corporation, the petitioner's predecessor-in-interest, under a First Real
Estate Mortgage Contract. Manila RTC rendered its judgment declaring
the five parcels of land expropriated for public use. The judgment
became final and executory and was entered in the book of entries of
judgment. The petitioner subsequently filed a Motion to Intervene in
Execution with Partial Opposition to Defendant's Request to Release,
but the RTC denied the motion for having been "filed out of time."
Hence, the petitioner decided to extrajudicially foreclose the mortgage
constituted on the two parcels of land subject of the respondents' loan.
After holding the public auction, the sheriff awarded the two lots to the
petitioner as the highest bidder.
Claiming a deficiency, the petitioner sued the respondents to recover
such deficiency in the Makati RTC. The respondents moved to dismiss
the complaint on several grounds, namely: that the suit was barred by
res judicata; that the complaint stated no cause of action; and that the
plaintiffs claim had been waived, abandoned, or extinguished. RTC
denied the respondents' motion to dismiss. Respondent moved for
reconsideration, reiterating their grounds earlier made in their motion
to dismiss. In turn, the petitioner adopted its comment/opposition to
the motion to dismiss.
The respondents then filed their reply, in which they raised for the first
time their objection on the ground of improper venue. They contended
that the action for the recovery of the deficiency, being a
supplementary action of the extrajudicial foreclosure proceedings, was
a real action that should have been brought in the Manila RTC because
Manila was the place where the properties were located.
ISSUE: Whether or not the venue was improperly laid.
RULING: No. It is basic that the venue of an action depends on whether
it is a real or a personal action. The determinants of whether an action
is of a real or a personal nature have been fixed by the Rules of Court
and relevant jurisprudence. According to Section 1, Rule 4 of the Rules
of Court, a real action is one that affects title to or possession of real
property, or an interest therein. Thus, an action for partition or
condemnation of, or foreclosure of mortgage on, real property is a real
action. The real action is to be commenced and tried in the proper court
having jurisdiction over the area wherein the real property involved, or
a portion thereof, is situated, which explains why the action is also
referred to as a local action. In contrast, the Rules of Court declares all
other actions as personal actions, such actions may include those
brought for the recovery of personal property, or for the enforcement
of some contract or recovery of damages for its breach, or for the
recovery of damages for the commission of an injury to the person or
property. The venue of a personal action is the place where the plaintiff
or any of the principal plaintiffs resides, or where the defendant or any
of the principal defendants resides, or in the case of a non-resident
defendant where he may be found, at the election of the plaintiff, for
which reason the action is considered a transitory one.
Based on the distinctions between real and personal actions, an action
to recover the deficiency after the extrajudicial foreclosure of the real
property mortgage is a personal action, for it does not affect title to or
possession of real property, or any interest therein.
The petitioner correctly brought the case in the Makati RTC because
Makati was the place where the main office of the petitioner was
located.
 G.R. No. 228617, September 20, 2017
PLANTERS DEVELOPMENT
BANK, Petitioner, v. SPOUSES VICTORIANO AND
MELANIE RAMOS, Respondents.
DECISION
REYES, JR., J.:
Before the Court is a Petition for Review on Certiorari under
Rule 45 of the Rules of Court, assailing the Decision 1 dated
July 5, 2016 and Resolution2 dated December 7, 2016 of the
Court of Appeals (CA) in CA-G.R. SP No. 140264.
Antecedent Facts
The facts show that in July 2012, Spouses Victoriano and
Melanie Ramos (Spouses Ramos) applied for several credit
lines with Planters Development Bank (PDB) for the
construction of a warehouse in Barangay Santo Tomas,
Nueva Ecija.3 The said application was approved for
P40,000,000.00, secured by Real Estate Mortgage4 dated
July 25, 2012 over properties owned by the spouses,
particularly covered by Transfer Certificate of Title (TCT)
Nos. 048-2011000874 and 048-2011000875.
Subsequently, Spouses Ramos requested for additional loan
and PDB allegedly promised to extend them a further loan
of P140,000,000.00, the amount they supposed was
necessary for the completion of the construction of the
warehouse with a capacity of 250,000 cavans of
palay.5 Despite the assurance of the bank, only
P25,000,000.00 in additional loan was approved and
released by PDB, which was secured by a Real Estate
Mortgage6 over four (4) real properties covered by TCT Nos.
048-2012000909, 048-2012000443, 048-2012000445, and
048-2012000446.
Due to financial woes, Spouses Ramos were not able to pay
their obligations as they fell due. They appealed to PDB for
the deferment of debt servicing and requested for a
restructuring scheme but the parties failed to reach an
agreement.
On April 23, 2014, PDB filed a Petition for Extra-judicial
Foreclosure of Real Estate Mortgage under Act 3135, as
amended, before the Regional Trial Court of San Jose City,
Nueva Ecija, which was docketed as EJF-2014-112-SJC. A
Notice to Parties of Sheriff's Public Auction Sale dated May
7, 2014 was thereafter issued.7
On June 18, 2014, Spouses Ramos filed a Complaint8 for
Annulment of Real Estate Mortgages and Promissory Notes,
Accounting and Application of Payments, Injunction with
Preliminary Injunction and Temporary Restraining Order
against PDB and its officers, namely, Ma. Agnes J. Angeles,
Virgilio I. Libunao, Carmina S. Magallanes and Norberto P.
Siega, also before the RTC of San Jose City, Nueva Ecija,
which was docketed as Civil Case No. 2014-485-SJC.
Instead of filing an Answer, PDB filed an Urgent Motion9 to
Dismiss, alleging that the venue of the action was
improperly laid considering that the real estate mortgages
signed by the parties contained a stipulation that any suit
arising therefrom shall be filed in Makati City only.10 It
further noted that the complaint failed to state a cause of
action and must therefore be dismissed.11
Ruling of the RTC
In an Omnibus Order12 dated November 17, 2014, the RTC
denied the Urgent Motion to Dismiss, the pertinent portions
of which read as follows:
I. The Venue is Improperly Laid
Pursuant to autonomy of contract, Venue can be waived.
Rule 5, Section 4(d) of the 1997 Rules of Civil Procedure
allows parties to validly agree in writing before the filing of
the action on the exclusive venue thereof. Indeed, on the
defendants they have the contract where the venue
allegedly agreed upon by them with the plaintiffs is Makati
City. However, one of the contentions of the plaintiffs is that
the contracts between them and the defendants take the
form of an adhesion contract (par. 20, Complaint). As such,
this Court has to apply Section 1, Rule 4 of the 1997 Rules
of Civil Procedure regarding the venue of real actions to
avoid ruling on the merits without any evidence that would
sufficiently support the same.
II. The Complaint Fails to State a Cause of Action.
With such an issue raised, the Court examined the records
and it has to tell the defendants that in civil cases before
the Court orders the issuance of summons, it looks on
whether or not the facts alleged on the Complaint are
sufficient to constitute a cause of action and not whether
the allegations of fact are true. Hence, as summons were
issued in this case, the Court had already found that the
allegations in the Complaint are sufficient to constitute a
cause of action.
xxxx
FOREGOING CONSIDERED, the Motion to Dismiss is hereby
DENIED.
xxxx
SO ORDERED.13
Unyielding, PDB filed a motion for reconsideration of the
Omnibus Order dated November 17, 2014, instead of filing
an answer to the complaint. This prompted Spouses Ramos
to file a motion to declare PDB in default. Subsequently, in
an Order14 dated February 20, 2015, the RTC denied both
motions, ratiocinating thus:
Necessarily, the defendants were allowed to Isle Motion to
Dismiss before filing an Answer or responsive pleading. As a
consequence of the Motion to Dismiss that the defendants
filed, the running of the period during which the rules
required her to file her Answer was deemed suspended.
When the Court denied the Motion to Dismiss, therefore the
defendants had the balance of the period for filing an
Answer under Section 4, Rule 16 within which to file the
same but in no case less than five days, computed from the
receipt of the notice of denial of the Motion to Dismiss. x x x
x
xxxx
However, after the Court denied the Motion to Dismiss, the
defendants filed Motion for Reconsideration which is not
precluded by the rules. Only after this Court shall have
denied it would the defendants become bound to file the
Answer to the Complaint. It is only if the defendants failed
to file Answer after the period given by the foregoing rules
would the plaintiff be entitled to have the defendants be
declared in default. This was the same ruling of the
Supreme Court in the case of Narciso v. Garcia, G.R. No.
196877, November 12, 2012.
With regard to the Motion for Reconsideration of the
Omnibus Order dated November 17, 2014, there being no
new arguments presented, the Court finds no cogent reason
to reconsider and reverse the said Omnibus Order.
WHEREFORE, the Motion to Declare Defendants in Default
and the Motion for Reconsideration are hereby DENIED.
SO ORDERED.15
Aggrieved, PDB filed a petition for certiorari with the CA,
imputing grave abuse of discretion on the RTC for denying
its motion to dismiss, despite the fact that the venue was
clearly improperly laid.
Ruling of the CA
In a Decision16 dated July 5, 2016, the CA denied the
petition, the pertinent portion of which reads as follows:
The order of the public respondent in denying the motion to
dismiss and the consequent denial of the motion for
reconsideration is correct and judicious. Petitioner anchors
its claim on the validity of the mortgage, and thereby the
provisional therein on venue must be upheld. On the other
hand, respondents anchor its claim on the invalidity of the
mortgage, and thereby the complaint is filed in the proper
venue. Clearly, no valid judgment can be passed upon the
allegations of both parties.17
Thus, having found no grave abuse on the part of the public
respondent in denying the motion to dismiss and the
resulting denial of the motion for reconsideration, We find
no cogent reason to disturb or modify the assailed Decision.
What the petitioners should have done was to file an answer
to the petition filed in the trial court, proceed to the hearing
and appeal the decision of the court if adverse to them. 18
WHEREFORE, premises considered, the petition
is DENIED. The Omnibus Order dated 17 November 2014
and the Order dated 20 February 2015 is
hereby AFFIRMED in TOTO.
IT IS SO ORDERED.19
PDB filed a motion for reconsideration but the CA denied the
same in its Resolution dated December 7, 2016, the
dispositive portion of which reads, thus:
WHEREFORE, in view of the foregoing, the motion for
reconsideration is hereby DENIED.
IT IS SO ORDERED.20
Unyielding, PDB filed the present petition with this Court,
reiterating its claim that the CA erred in affirming the order
of the RTC, which denied the motion to dismiss despite the
improper venue of the case. It argues that since there is a
stipulation on venue, the same should govern the parties.
Ruling of this Court
The petition is meritorious.
Rule 4 of the Rules of Civil Procedure provides the rules on
venue in filing an action, to wit:
RULE 4
Venue of Actions
Section 1. Venue of real actions. — Actions affecting title to
or possession of real property, or interest therein, shall be
commenced and tried in the proper court which has
jurisdiction over the area wherein the real property
involved, or a portion thereof, is situated.
Forcible entry and detainer actions shall be commenced and
tried in the municipal trial court of the municipality or city
wherein the real property involved, or a portion thereof, is
situated.
Section 2. Venue of personal actions. — All other actions
may be commenced and tried where the plaintiff or any of
the principal plaintiffs resides, or where the defendant or
any of the principal defendants resides, or in the case of a
non-resident defendant where he may be found, at the
election of the plaintiff.
xxxx
Section 4. When Rule not applicable. — This Rule shall not
apply.
(a) In those cases where a specific rule or law provides
otherwise; or
(b) Where the parties have validly agreed in writing before
the filing of the action on the exclusive venue thereof
Based on the foregoing, the general rules on venue admit of
exceptions in Section 4 thereof, i.e., where a specific rule or
law provides otherwise, or when the parties agreed in
writing before the filing of the action on the exclusive venue
thereof.
Stipulations on venue, however, may either be permissive
or restrictive. "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. As in any other agreement, what
is essential is the ascertainment of the intention of the
parties respecting the matter."21
Further, in Unimasters Conglomeration, Inc. v. Court of
Appeals,22 the Court elaborated, thus:
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. In other words, stipulations
designating venues other than those assigned by Rule 4
should be interpreted as designed to make it more
convenient for the parties to institute actions arising from or
in relation to their agreements; that is to say, as simply
adding to or expanding the venues indicated in said Rule 4.
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. x x
x.23
In view of the predilection to view a stipulation on venue as
merely permissive, the parties must therefore employ words
in the contract that would clearly evince a contrary
intention. In Spouses Lantin v. Judge Lantion,24 the Court
emphasized that "the mere stipulation on the venue of an
action is not enough to preclude parties from bringing a
case in other venues. The parties must be able to show that
such stipulation is exclusive. In the absence of qualifying or
restrictive words, the stipulation should be deemed as
merely an agreement on an additional forum, not as limiting
venue to the specified place."25
In the instant case, there is an identical stipulation in the
real estate mortgages executed by the parties, pertaining to
venue. It reads as follows:
18. In the event of suit arising from out of or in connection
with this mortgage and/or the promissory note/s secured by
this mortgage, the parties hereto agree to bring their
causes of action exclusively in the proper court/s of
Makati, Metro Manila, the MORTGAGOR waiving for this
purpose any other venue.26 (Emphasis ours)
In Spouses Lantin, the Court ruled that "the
words exclusively and waiving for this purpose any other
venue are restrictive."27 Therefore, the employment of the
same language in the subject mortgages signifies the clear
intention of the parties to restrict the venue of any action or
suit that may arise out of the mortgage to a particular
place, to the exclusion of all other jurisdictions.
In view of the foregoing, the RTC should have granted the
Urgent Motion to Dismiss filed by PDB on the ground that
the venue was improperly laid. The complaint being one for
annulment of real estate mortgages and promissory notes is
in the nature of a personal action, the venue of which may
be fixed by the parties to the contract. In this case, it was
agreed that any suit or action that may arise from the
mortgage contracts or the promissory notes must be filed
and tried in Makati only. Not being contrary to law or public
policy, the stipulation on venue, which PDB and Spouses
Ramos freely and willingly agreed upon, has the force of law
between them, and thus, should be complied with in good
faith.28
The CA, however, ruled that the RTC correctly denied the
motion to dismiss in view of the contradicting claim of the
parties on the validity of the mortgage contracts, which, in
turn, affects the enforceability of the stipulation on venue.
The CA agreed with the RTC that the ruling on the validity
of the stipulation on venue depends on whether the
mortgage is valid which means there has to be full-blown
hearing and presentation of evidence. It added that what
PDB should have done was to file an answer to the
complaint, proceed to trial and appeal the decision, if
adverse to them.29
The ruling of the CA renders meaningless the very purpose
of the stipulation on venue. In Unimasters, the Court
emphasized:
Parties may by stipulation waive the legal venue and such
waiver is valid and effective being merely a personal
privilege, which is not contrary to public policy or prejudicial
to third persons. It is a general principle that a person may
renounce any right which the law gives unless such
renunciation would be against public policy.30
In the present case, Spouses Ramos had validly waived
their right to choose the venue for any suit or action arising
from the mortgages or promissory notes when they agreed
to the limit the same to Makati City only and nowhere else.
True enough, the stipulation on the venue was couched in a
language showing the intention of the parties to restrict the
filing of any suit or action to the designated place only. It is
crystal clear that the intention was not just to make the said
place an additional forum or venue but the only jurisdiction
where any suit or action pertaining to the mortgage
contracts may be filed. There being no showing that such
waiver was invalid or that the stipulation on venue was
against public policy, the agreement of the parties should
be upheld. It is therefore a grave abuse of discretion on the
part of the RTC to deny the motion to dismiss filed by PDB
on the ground of improper venue, especially when the said
issue had been raised at the most opportune time, that is,
within the time for but before the filing of an answer. The
CA should have given this matter a more serious
consideration and not simply brushed it aside.
Moreover, Spouses Ramos never really assailed the validity
of the mortgage contracts and promissory notes.
Apparently, what they were only claiming was that the said
contracts contain stipulations which are illegal, immoral and
otherwise contrary to customs or public policy.31 For
instance, they alleged that the interest was pegged at an
excessive rate of 8% which the bank unilaterally increased
to 9%. They likewise claimed that the penalty interest rate
of 3% was unconscionable. Further, they claimed that the
escalation clause provided in the mortgage contracts was
violative of Presidential Decree No. 1684. 32 These matters,
however, do not affect the validity of the mortgage
contracts. Thus, with all the more reason that the
stipulation on venue should have been upheld pursuant to
the ruling of the Court in Briones v. Court of Appeals,33viz.:
[I]n cases where the complaint assails only the terms,
conditions, and/or coverage of a written instrument and not
its validity, the exclusive venue stipulation contained therein
shall still be binding on the parties, and thus, the complaint
may be properly dismissed on the ground of improper
venue. Conversely, therefore, a complaint directly assailing
the validity of the written instrument itself should not be
bound by the exclusive venue stipulation contained therein
and should be filed in accordance with the general rules on
venue. To be sure, it would be inherently consistent for a
complaint of this nature to recognize the exclusive venue
stipulation when it, in fact, precisely assails the validity of
the instrument in which such stipulation is contained.34
Spouses Ramos impliedly admitted the authenticity and due
execution of the mortgage contracts. They do not claim to
have been duped into signing the mortgage contracts or
that the same was not their free and voluntary act. While
they may have qualms over some of the terms stated
therein, the same do not pertain to the lack of any of the
essential elements of a contract that would render it void
altogether. Such being the case, the stipulation on venue
stands and should have been upheld by RTC and the CA.

WHEREFORE, the Decision dated July 5, 2016 and

Resolution dated December 7, 2016 of the Court of Appeals
in CA-G.R. SP No. 140264 are REVERSED and SET ASIDE.
Civil Case No. 2014-485-SJC is hereby DISMISSED on the
ground of improper venue.

SO ORDERED.