PHILIPPINE BANKING CORPORATION, petitioner,

vs.
HON. SALVADOR S. TENSUAN, Judge of Regional Trial Court of Makati, National Capital
Judicial Region, Branch 146; CIRCLE FINANCIAL CORPORATION, AVELINO E. DEATO,
JR., MIGUEL F. VIOLAGO, BENJAMIN F. SANTIAGO, SOCORRO R. GOMEZ, NERISSA T.
GLORIA, FILEMON C. MARQUEZ, DOMINGO SANTIAGO AND HILARIO P.
LOPEZ, respondents.

Petitioner Bank instituted a complaint for collection of a sum of money, with a

prayer for preliminary attachment, at the Regional Trial Court of Makati. It
appears from the allegations of the Bank's complaint that respondent Circle
Financial Co., sometime in 1983 and 1984, through its representatives, obtained
several loans aggregating P1,000,000.00 from petitioner. Respondent Circle, for
value received, delivered to petitioner Bank four (4) promissory notes, each of
which contained the stipulation that:
I/We hereby expressly submit to the jurisdiction of the courts of
Valenzuela any legal action which may arise out of this promissory
note.
As security for re-payment, eight individuals including Avelino Deato, Miguel Violago,
Benjamin Santiago, Socorro Gomez, Nerissa Gloria, Filemon Marquez, Domingo Santiago and
Hilario Lopez executed a Continuing Surety Agreement and undertook to pay JOINTLY AND
SEVERALLY (SOLIDARILY) Circles obligations.
Circle failed to pay under the promissory notes. Petitioner bank thereafter demanded payment
from the right individuals. Individuals also failed to pay.
Petitioner moved for issuance of writ of preliminary attachment, alleging that Circle had become
insolvent and placed under receivership by the Central Bank. RTC Makati granted writ of
attachment. No property from Circle and individuals could be found by sheriff. Thus, summons
were served upon Domingo Santiago, 1 Hilario P. Lopez, 2 Avelino Deato, 3 Benjamin P.
Santiago, 4 and Socorro Gomez. The sheriff failed to serve summons on (a) Miguel Violago, who had
died; (b) Nerissa T. Gloria 6 and Filemon Marquez, 7 whose whereabouts were unknown; and (c)
Circle, which had ceased to engage in business at the address given by petitioner and could not be
located.
Respondents filed motion to dismiss, averred that venue was improperly laid since parties had
agreed to fix venue of actions arising from the promissory notes in Valenzuela.
RTC Judge Tensuan granted the motion. Petitioner moved for reconsideration in the RTC,
denied.
ISSUE: WON venue was restricted to the courts of Venezuela pursuant to the agreement by the
parties
RULING: No.
It is settled in this jurisdiction that the parties, by written agreement, may change or transfer the
venue of an action from one province to another.

Petitioner Bank contends that the stipulation contained in the promissory notes is merely an
agreement to add the courts of Valenzuela to the tribunals to which the parties may resort.
Petitioner thus insists that the venue stipulation set out in the notes did not restrict or limit the
permissible venue of actions arising out of those notes to the courts of Valenzuela, to the
exclusion of all the other courts. Private respondents, in opposition, aver that the words used in
the stipulation here involved are clear and unambiguous.
A careful reading of the terms of the stipulation shows that the stipulation does not require the
laying of venue in Valenzuela exclusively or mandatorily. The plain or ordinary import of the
stipulation is the authorizing of, or permission to bring, suit in Valenzuela; there is not the
slightest indication of an intent to bar suit in other competent courts.
The stipulation her does not purport to deprive either party of it right to elect, or option to have
resort to, another competent court as expressly permitted by Section 2(b) of Rule 4 of the Rules
of Court, should such party choose to initiate a suit. The stipulation here merely operated to
confer or confirm a right upon a party to elect recourse to the courts of Valenzuela.
In principle, the stipulation on venue here involved must be distinguished from stipulations which
purport torequire or compel the parties to lay venue of an action in a specified place, and in that
particular place only. The latter type of venue stipulation must clearly indicate, through qualifying
and restrictive words, that the parties deliberately intended to exclude causes or actions from the
operation of the ordinary permissive rules on venue, 11 and that they intended contractually to
designate a specific venue to the exclusion of any other court also competent and accessible to the
parties under the ordinary rules on the venue of actions.
In the case at bar, neither qualifying nor restrictive words (e.g., "must," "only" or "exclusively")
were employed which could yield an intent on the part of the parties mandatorily to restrict the
venue of actions arising out of the promissory notes to the courts of Valenzuela only.
The initial action was commenced in the Court of First Instance of Baguio and Benguet. This
Court took the occasion to reiterate once more the Polytrade doctrine:
. . . In any event, it is not entirely amiss to restate the doctrine that stipulations in a
contract, which specify a definite place for the institution of an action arising in connection
therewith, do not, as a rule, supersede the general rules on the matter set out in Rule 4 of the
Rules of Court, but should be construed merely as an agreement on an additional forum, not as
limiting venue to the specified place.
We note, finally, that no one of the private respondents has claimed to have been put to undue
hardship or inconvenience as a result of the institution of the action in Makati. Venue relates to
the trial and touches more upon the convenience of the parties rather than upon the substance
or merits of the
case.
Petition granted. RTC ruling reversed and set aside.

G.R. No. 111077 July 14, 1994

VIRGILIO B. GESMUNDO and EDNA C. GESMUNDO, petitioners,
vs.
JRB REALTY CORPORATION, JAIME R. BLANCO, and HON. OSCAR B. PIMENTEL, in his
capacity as Presiding Judge of Branch 148 of the Regional Trial Court of
Makati, respondents.
On April 7, 1980, petitioner Virgilio B. Gesmundo, as lessee, and respondent JRB Realty
Corporation, represented by its president, respondent Jaime R. Blanco, as lessor, entered into a
lease contract covering Room 116, Blanco Suites, at 246 Villaruel St., Pasay City, the parties
stipulating that the
venue for all suits, whether for branch hereof or damages or any cause between
the LESSOR and the LESSEE, and persons claiming under each, being the
courts of appropriate jurisdiction in Pasay City. . .
On March 19, 1993, petitioners filed the complaint below for damages against respondents. They
alleged that from April 8, 1980 to Nov. 1992, they had been in posession of the leased property,
and where shocked to receive respondents letter on Nov. 9, 1992 terminating their lease
effective Nov. 30, 1992. No other tenant in the building received a similar letter. During a phone
convo, respondent Blanco told petitioner Virgilio Gesmundo that since JRB did not pay him
(Blanco) his retainer fees, he did not want petitioners in his apartment units.
Petitioners sent respondents letter asking for reconsideration of the termination of the lease. On
Nov. 28, petitioners were forced to vacate. Respondents actions were unwarranted, unjustified,
malicious, abusive, and capricious.
Respondents moved to dismiss the case on the ground that venue of action had been improperly
laid in RTC Makati. They contend that pursuant to lease contract venue of action was Pasay City.
RTC Makati dismissed petitioners action on the ground of improper venue.
ISSUE: WON the venue was properly laid in the RTC of Makati
Ruling. NO. Rule 4, Sec 3 provides:
Venue by agreement. By written agreement of the parties, the venue of an
action may be changed or transferred from one province to another.
In the case at bar, it is clear from the parties' contract that the venue of any action which they
might bring are the courts of competent jurisdiction in Pasay City, whether the action is for
"breach [of the lease agreement] or damages or any other cause between the LESSOR and
LESSEE and persons claiming under each."
The language used leaves no room for interpretation. It clearly evinces the parties' intent to limit
to the "courts of appropriate jurisdiction of Pasay City" the venue of all suits between the lessor
and lessee and those between parties claiming under them. This means a waiver of their right to
institute action in the courts provided for in Rule 4, sec. 2(b).

This case, therefore, differs from the cases 5 cited by petitioner. It is true that in Polytrade

Corporation v. Blanco, 6 a stipulation that "The agree to sue and be sued in the City
of Manila" was held to merely provide an additional forum in the absence of any
qualifying or restrictive words. But here, by laying in Pasay City the venue for all
suits, the parties made it plain that in no other place may they bring suit against each
other for "breach [of their lease contract] or damages or any other cause between
[them] and persons claiming under each [of them]."
Petitioners contend that neither they nor the private respondent Jaime Blanco reside in Pasay
City. This fact is, however, irrelevant to the resolution of the issue in this case since parties do
stipulate concerning the venue of an action without regard to their residence.
Petitioners claim that their cause of action is not based on the lease contract because it seeks
neither its implementation nor its the cancellation. The contention is also without merit.
Petitioners' action is for alleged breach of the lease contract which, it is contended, was
terminated to spite them. 11 Petitioners view this act of respondents as an abuse of right

under arts. 19, 20, and 21 of the Civil Code, warranting an award of damages. Their
cause of action is ultimately anchored on their right under the lease contract and,
therefore, they cannot avoid the limitation as to the venue in that contract.
Petition is denied, RTC order affirmed.

G.R. No. L-49475 September 28, 1993

JORGE C. PADERANGA, petitioner,
vs.
Hon. DIMALANES B. BUISSAN, Presiding Judge, Court of First Instance of Zamboanga del
Norte, Branch III and ELUMBA INDUSTRIES COMPANY, represented by its General
Manager, JOSE J. ELUMBA,respondents.
Sometime in 1973, petitioner JORGE C. PADERANGA and private respondent ELUMBA
INDUSTRIES COMPANY, a partnership represented by its General Manager JOSE J. ELUMBA,
entered into an oral contract of lease for the use of a commercial space within a building owned
by petitioner in Ozamiz City.
On 4 April 1977, PADERANGA subdivided the leased premises into two (2) by constructing a
partition wall in between. He then took possession of the other half, which repossession was said
to have been undertaken with the acquiescence of the local manager of ELUMBA.
On 18 July 1977, private respondent instituted an action for damages in the court of first instance
of Zamboanga del Norte and at the same time prayed for the fixing of the period to at least five
years. Petitioner moved to dismiss, contending that since it was a real action it shouldve been
filed in the CFI of Misamis Oriental where the property was located.
On 6 November 1978, respondent Judge Dimalanes B. Buissan denied the Motion to Dismiss
and held that Civil Case No. 2901 merely involved the enforcement of the contract of lease, and
while affecting a portion of real property, there was no question of ownership raised.
Petitioner moved for reconsideration, contending that the action was one for recovery.
Respondent judge denied reconsideration.
ISSUE: WON the venue was properly laid in the CFI of ZDN.
RULING:
PADERANGA argues that inasmuch as ELUMBA seeks to recover possession of the portion
surrendered to him by the local manager of private respondent, as well as to fix the period of
lease at five (5) years, Dipolog City could not be the proper venue of the action. it being a real
action, venue is laid in the court having jurisdiction over the territory in which the property lies.
ELUMBA counters that the present action is chiefly for damages arising from an alleged breach
in the lease contract; hence, the issue of recovery of possession is merely incidental.
Private respondent appears to be confused over the difference between personal and real
actions vis-a-visactions in personam and in rem. The former determines venue; the latter, the
binding effect of a decision the court may render over the party, whether impleaded or not.
In the case before us, it is indubitable that the action instituted by private respondent against
petitioner affects the parties alone, not the whole world. Hence, it is an action in personam, i.e.,
any judgment therein is binding only upon the parties properly impleaded.
It is imperative to find out if the action filed is a personal action or real action. After all, personal
actions may be instituted in the Regional Trial Court (then Court of First Instance) where the
defendant or any of the defendants resides or may be found, or where the plaintiff or any of the

plaintiffs resides, at the election of the plaintiff. 11 On the other hand, real actions should be brought
before the Regional Trial Court having jurisdiction over the territory in which the subject property or
part thereof lies.
While the instant action is for damages arising from alleged breach of the lease contract, it
likewise prays for the fixing of the period of lease at five (5) years. If found meritorious, private
respondent will be entitled to remain not only as lessee for another five (5) years but also to the
recovery of the portion earlier taken from him as well. This is because the leased premises under
the original contract was the whole commercial space itself and not just the subdivided portion
thereof.