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LEY CONSTRUCTION v. MARVIN MEDEL SEDANO

FACTS:

Petitioner Ley Construction and Development Corporation (represented by its President, Janet C. Ley) filed a Complaint for Collection of Sum of Money and Damages against respondent Marvin Medel Sedano. Petitioner alleged that it leased a parcel of land from the Philippine National Construction Corporation (PNCC) and subleased a portion of it to respondent. Respondent failed to pay the rent due and petitioner filed the complaint. Respondent argued that venue was improperly laid as stipulated in the lease contract. The Regional Trial Court (RTC) of Valenzuela City dismissed the complaint on the ground of improper venue. Petitioner moved for reconsideration but was denied. Hence, the present petition. The issue is whether or not the RTC erred in ruling that venue was improperly laid.

ISSUES:

  1. Whether the venue stipulation in the lease contract is valid and binding.

  2. Whether the complaint filed in the Valenzuela-RTC should be dismissed on the ground of improper venue.

  3. Whether or not the respondent waived the defense of improper venue.

  4. Whether or not the principle in the case of Pangasinan Transportation Co., Inc. v. Yatco applies to this case.

RULING:

  1. The venue stipulation in the lease contract is valid and binding because it meets the requirements of a valid exclusive venue stipulation - it is expressed in writing by the parties before the filing of the suit and it clearly shows the intention to limit the place where actions or cases arising from a violation of the terms and conditions of the contract may be instituted.

  2. The complaint filed in the Valenzuela-RTC should be dismissed on the ground of improper venue since the lease contract specified that all actions or cases involving breach should be filed with the RTC of Pasay City, and the complaint fell within the exclusive jurisdiction of the RTC.

  3. The Court ruled that the respondent did not waive the defense of improper venue. The prevailing rule on objections to improper venue is that it must be raised at the earliest opportunity, such as in an answer or a motion to dismiss. In this case, the respondent timely raised the ground of improper venue as one of his affirmative defenses in his Answer with Third-Party Complaint. Thus, it cannot be said that he had waived the defense of improper venue.

  4. The Court held that the principle in the case of Pangasinan Transportation Co., Inc. v. Yatco does not apply to this case. In the Pangasinan case, the invocation of the ground of improper venue was not based on a contractual stipulation but on the respondent's alleged violation of the Rules of Court. The Court ruled that when a party files a counterclaim and third-party complaint, and introduces evidence after the denial of its motion to dismiss on the ground of improper venue, it necessarily implies a submission to the jurisdiction of the trial court and a waiver of the right to object to improper venue. However, in this case, the respondent's counterclaim and third-party complaint were not covered by the venue stipulation in the lease contract. Thus, the respondent had every right to invoke the defense of improper venue against the petitioner's complaint while raising the same defense for his counterclaim and third-party complaint.

PRINCIPLES:

  • Rule 4 of the Rules of Court governs the rules on venue of civil actions.

  • As a general rule, the venue for personal actions lies with the court where the plaintiff or the defendant resides, at the election of the plaintiff.

  • Parties may restrict the filing of personal actions to a certain exclusive venue through a written instrument.

  • Restrictive stipulations on venue must be shown to be exclusive and must contain qualifying or restrictive words that indicate the limitation to the specified place.

  • An exclusive venue stipulation is valid and binding if it is exclusive in nature or intent, expressed in writing by the parties before the filing of the suit, and entered into before the filing of the suit.

  • The stipulation on venue should not be construed as a stipulation on jurisdiction but as one that limits venue, consistent with the basic principles of procedural law.

  • Jurisdiction is conferred by law and not subject to stipulation of the parties.

  • Objections to improper venue must be raised at the earliest opportunity, such as in an answer or a motion to dismiss.

  • Waiver of the defense of improper venue occurs when a party files a counterclaim and third-party complaint, and introduces evidence after the denial of its motion to dismiss on the ground of improper venue.