TOPIC: PARTIES TO A CIVIL ACTION
that, NPC presented no evidence that it had ceased to operate its power plants in
G.R. No. 180654 April 21, 2014
NATIONAL POWER CORPORATION, Petitioner,
vs.
PROVINCIAL GOVERNMENT OF BATAAN, SANGGUNIANG PANLALAWIGAN
OF BATAAN, PASTOR B. VICHUACO (IN HIS OFFICIAL CAPACITY AS
PROVINCIAL TREASURER OF BATAAN) and THE REGISTER OF DEEDS OF
THE PROVINCE OF BATAAN, Respondents.
PETITION: (not indicated) petition of the National Power Corporation to set
aside the Resolution of the Court of Appeals
Facts:
On March 28, 2003 petitioner National Power Corporation (NPC) received a
notice of franchise tax delinquency from the respondent Provincial Government
of Bataan (the Province). The NPC replied, however, that it had ceased to be liable
for the payment of that tax after Congress enacted Republic Act (R.A.) 9136, also
known as the Electric Power Industry Reform Act (EPIRA) that took effect on June
26, 2001. The new law relieved the NPC of the function of generating and
supplying electricity beginning that year. Consequently, the Province has no right
to further assess it for the 2001, 2002, and 2003 local franchise tax.
Ignoring the NPC’s view, the Province issued a "Warrant of Levy" on the
properties of NPC. The Province caused their sale at public auction with itself as
the winning bidder. Consequently, the NPC filed with the Regional Trial Court
(RTC) of Mariveles, Bataan, a petition for declaration of nullity of the foreclosure
sale with prayer for preliminary mandatory injunction against the Province.
The NPC alleged that the foreclosure had no legal basis since R.A. 7160 which
authorized the collection of local franchise tax had been modified by the EPIRA.
As it happened, NPC had ceased by operation of the EPIRA in 2001 to engage in
power transmission, given that all its facilities for this function, including its
nationwide franchise, had been transferred to the National Transmission
Corporation (TRANSCO).
Thus, the NPC asked the RTC to issue a preliminary injunction, enjoining the
transfer of title and the sale of the foreclosed lands to Bataan and, after trial, to
make the injunction permanent, declare NPC exempt from the local franchise tax
and annul the foreclosure sale.
On November 3, 2005 the RTC dismissed the NPC’s petition stating, among others
that jurisdiction.
The NPC appealed the RTC Decision to the Court of Appeals (CA) but the Province
moved to dismiss the same on the ground that the case was essentially a local tax
case and should therefore be lodged with the Court of Tax Appeals (CTA).
The CA granted the Province’s motion and dismissed the petition.
Issue: Whether or not NPC no longer owned or operated the business subject to
local franchise tax
Ruling: Yes.
The Republic Act (R.A.) 9136 created the TRANSCO and transferred to it the
NPC’s electrical transmission function with effect on June 26, 2001. The NPC,
therefore, ceased to operate that business in Bataan by operation of law. Since
the local franchise tax is imposed on the privilege of operating a franchise, not a
tax on the ownership of the transmission facilities, it is clear that such tax is not
a liability of the NPC.
Nor could the Province levy on the transmission facilities to satisfy the tax
assessment against the NPC since the latter ceased to own those facilities six
months from the effectivity of the EPIRA. Those facilities have since belonged to
TRANSCO.
An indispensable party is one who has an interest in the controversy or subject
matter and in whose absence there cannot be a determination between the
parties already before the court which is effective, complete or equitable. Here,
since the subject properties belong to PSALM Corp. and TRANSCO, they are
certainly indispensable parties to the case that must be necessarily
included before it may properly go forward. For this reason, the proceedings
below that held the NPC liable for the local franchise tax is a nullity. It did
not matter where the RTC Decision was appealed, whether before the CA or the
CTA.
WHEREFORE, the Court GRANTS the petition of the National Power Corporation
and SETS ASIDE the Resolution of the Court of Appeals in CA-G.R. CV 87218 dated
November 27, 2007. It further REMANDS the case to the Regional Trial Court so
that the Power Sector Assets and Liabilities Management Corporation and the
National Transmission Corporation may be impleaded as proper parties.
 G.R. No. 208343
SPOUSES CEFERINO C. LAUS and MONINA P. LAUS, and SPOUSES ANTONIO
O. KOH and ELISA T. KOH, Petitioners
vs.
OPTIMUM SECURITY SERVICES, INC., Respondent.
PETITION: Petition for review on certiorari assailing the Decision and the
Resolution of the Court of Appeals.
Facts:
Petitioners filed for a Temporary Restraining Order [(TRO)] and WPI, against
respondent, several security guards employed by it, including Ronnie Marivalles
(Marivalles) and Rodrigo Olivette, and TIPCO Estate Corporation (TIPCO;
collectively, other defendants).
Petitioners alleged that on three separate occasions, they were prevented by
armed security guards working for respondent and TIPCO from entering the
parcels of land in Mabalacat, Pampanga belonging to them. Thus, petitioners
prayed that damages be awarded to them; a TRO and WPI be issued; and after
trial, the injunction be made permanent.
Respondent and Marivalles countered that petitioners are not entitled to the TRO
and WPI prayed for because they do not own the subject properties. Respondent
and Marivalles further insisted that they were merely complying with a
contractual obligation. On the other hand, TIPCO denied preventing petitioners
from entering the subject properties. It pointed out that it did not claim
ownership or possession thereof, and, as such, did not hire the armed security
guards who prevented petitioners from entering the subject properties.
RTC granted the application for WPI. Accordingly, it enjoined respondent and the
other defendants from interfering with petitioners' exercise of acts of ownership
over the same.
Dissatisfied, respondent and TIPCO separately moved for reconsideration, but
were denied. Consequently, respondent elevated the case to the CA via a petition
for certiorari and prohibition.
The CA reversed the RTC ruling and thereby, lifted the WPI and ordered the
dismissal of petitioners' complaint. CA held that respondent was not a real
party in interest as it was merely contracted to secure the subject properties
under the Security Service Contract. In this relation, it opined that the alleged real
owners of the subject properties are the real parties in interest, without whom
there can be no final determination of the issues involved. Thus, the CA ordered
the dismissal of petitioners' complaint.
Aggrieved, petitioners filed a motion for reconsideration, which was, however,
denied in a Resolution; hence, the present petition.
Issue: Whether or not the non-joinder of indispensable parties is a ground for
the dismissal of the suit.
Ruling: No.
The error springs from the CA's misconception that the alleged real owners of the
subject properties, while real parties in interest, are indispensable parties to the
case. The distinction between the two and the operational parameters as to each
are well-settled in jurisprudence.
As held in Carandang v. Heirs of de Guzman, the Court clarified that:
A real party in interest is the party who stands to be
benefited or injured by the judgment of the suit, or the
party entitled to the avails of the suit. On the other hand, an
indispensable party is a party in interest without whom no
final determination can be had of an action, in contrast to a
necessary party, which is one who is not indispensable but who
ought to be joined as a party if complete relief is to be accorded
as to those already parties, or for a complete determination or
settlement of the claim subject of the action.
x x x "[I]f a suit is not brought in the name of or against the
real party in interest, a motion to dismiss may be filed on
the ground that the complaint states no cause of action."
Meanwhile, in Plasabas v. CA, it was held that
"the non-joinder of indispensable parties is not a ground
for the dismissal of an action. The remedy is to implead the
non-party claimed to be indispensable. Parties may be added by
order of the court on motion of the party or on its own initiative
at any stage of the action and/or at such times as are just. If
petitioner refuses to implead an indispensable party
despite the order of the court, the latter may dismiss the
complaint/getition for the plaintiff's/petitioner's failure to
comply therewith."
In this case, while the alleged real owners of the subject properties may be
considered as real parties in interest for the reason that their supposed rights
over these properties stand to be prejudiced, they are not indispensable
parties to the instant suit. Despite its denomination as an action for "damages'
in the complaint's caption,53 the action, as may be gleaned from the pleading's
allegations,54 is really one for injunction as it ultimately seeks to permanently
enjoin respondent and the other defendants, from restricting petitioners' access
to the subject properties. The crux of the main case, therefore, is whether or not
respondent and said defendants were justified in preventing petitioners
from conducting the relocation survey on the subject properties. Damages
are also sought as ancillary relief for the acts complained of. These issues can be
resolved independent of the participation of the alleged real owners of the
subject properties. Hence, they are not indispensable parties, without whom no
final determination can be had.
In any event, even on the assumption that they are indispensable parties, the
non-joinder of indispensable parties is, as above-discussed, still not a
ground for the dismissal of the suit. The proper course of action is for the
court to order that they be impleaded. Only upon refusal of or non-compliance
with such directive, may the complaint be dismissed.
In view of the nature of the case as above-explained, respondent and the other
defendants are real parties in interest. Clearly, they stand to be directly injured
by an adverse judgment. They are the parties against whom the prayed for
injunction is directed and are also alleged to be liable for the resultant damage.
In fine, the petition is partially granted. While the CA's lifting of the WPI is
affirmed, its order dismissing the complaint is reversed. As a consequence, the
complaint should be reinstated and the main case should be remanded to the RTC
for further proceedings. With this pronouncement, there is no need to delve on
the ancillary issues raised herein.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated March
25, 2013 and the Resolution dated July 22, 2013 of the Court of Appeals in CA-
G.R. SP No. 122258 are hereby AFFIRIMED with MODIFICATION in that the
complaint is REINSTATED. The main case is REMANDED to the Regional Trial
Court of Angeles City, Branch 62 for further proceedings.
G.R. No. 198124, September 12, 2018
JOHN CARY TUMAGAN, ALAM HALIL, AND BOT
PADILLA, Petitioners, v. MARIAM K. KAIRUZ, Respondent.
PETITION: This is a petition for review on certiorari seeking to set aside the
Decision and Resolution of the Court of Appeals (CA)
Facts:
In her complaint for ejectment filed before the MCTC, respondent Mariam K.
Kairuz (Mariam) alleged that she had been in actual and physical possession of a
5.2-hectare property located at Tadiangan, Tuba, Benguet (property) until May
28, 2007. She alleged that in the afternoon of May 28, 2007, petitioners John
Cary Tumagan (John), Alam Halil (Alam), and Bot Padilla (Bot) conspired with
each other and took possession of the property by means of force, intimidation,
strategy, threat, and stealth with the aid of armed men. After forcibly gaining
entry into the property, petitioners then padlocked its three gates, posted
armed men, and excluded Mariam from the property.6 Mariam likewise sought
the issuance of a temporary restraining order (TRO) and/or a writ of
preliminary injunction (WPI) against petitioners.7
In their answer, petitioners averred that Mariam could not bring the present
action for forcible entry because she was never the sole owner or possessor of
the property.8 They alleged that Mariam is the spouse of the late Laurence
Ramzy Kairuz (Laurence), who co-owned the property with his sisters, Vivien
Kairuz (Vivien) and Elizabeth D' Alessandri (Elizabeth). Petitioners claimed that
the property is a good source of potable water and is publicly known as Kairuz
Spring. During his lifetime, Laurence, in his own capacity and as attorney-in-fact
for his sisters, entered into a Memorandum of Agreement9 (MOA) with Balibago
Waterworks System Incorporated (BWSI) and its affiliate company, PASUDECO,
to establish a new corporation, Bali Irisan Resources, Inc. (BIRI). As stipulated
in the MOA, Laurence and his two sisters will sell the property containing
Kairuz Spring and other improvements to BIRI for P115,000,000.00. Eventually,
the Kairuz family sold the property, including the bottling building, Kairuz
Spring, machineries, equipment, and other facilities following the terms of the
MOA. BIRI took full possession over the property and caused new certificates of
title10 to be issued. BIRI is 30% owned by the Kairuz family and 70% owned by
BWSI and its allied company, PASUDECO. Its Board of Directors is composed of
seven members, with a three-person Management Committee (ManCom)
handling its day-to-day operations. The one seat accorded to the Kairuz family
in the ManCom was initially occupied by Laurence, while the two other seats in
the ManCom were occupied by John and one Victor Hontiveros. Petitioners
alleged that Mariam was aware of the MOA, the ManCom, and of the operations
of the BIRI properties precisely because she succeeded Laurence's seat in the
Board of Directors and ManCom after his death.11
Petitioners also asserted that under the MOA, the Kairuz family assigned their
Baguio Spring Mineral Water Corporation (BSMWC) shares and water rights
through the BSMWC water permit. The MOA also stipulated the continued
operation of the truck water business by the Kairuzes and this was honored by
BIRI. However, this privilege enjoyed by the Kairuzes is contingent on their
compliance with their own obligations and conditions as set forth in the MOA.
Unfortunately, upon Mariam's assumption of the truck water business as well as
Lexber Subdivision water service, she started to commit actions in conflict with
the best interest of BIRI, such as: (a) she opposed the required transfer of the
BSMWC water permit to BIRI before the National Water Resources Board; (b)
she intervened in the case filed by Baguio Water District against BIRI,
weakening BIRI's position; (c) she filed a complaint before the RTC of Angeles
City questioning the Deed of Assignment of the BSMWC shares executed by the
Kairuz family in favor of BIRI; and (d) she asked the barangay officials at
Tadiangan, Tuba and Sangguniang Bayan Members of Tuba to deny BIRI's offer
to service the water requirements of Tuba residents.12 This prompted BIRI's
shareholders to write Mariam regarding her default on the provisions of the
MOA, warning her that unless appropriate remedies are fulfilled, the MOA will
be terminated.13 Mariam refused to receive the registered mail sent by
BIRI14 and ignored their official communications, choosing instead to file the
present ejectment complaint against petitioners.15
Furthermore, petitioners claimed that contrary to Mariam's allegations, on May
28, 2007, BIRI, as a corporation and owner of the spring property, merely
exercised its legal right to prevent unauthorized persons from entering its
property. The deployment of licensed security guards was intended to secure its
property and prevent forcible entry into the area, specifically by people who
are "persona non-grata" to the company.16
Petitioners claim that the MCTC has no jurisdiction over the action filed by
Mariam because the same is an intra-corporate dispute which falls under the
jurisdiction of the appropriate RTC. They further assert that BIRI's actions in
terminating the MOA, disallowing entry of unauthorized persons, and the
continuance of Mariam's truck water business are all pursuant to the MOA,
which is the law between the parties. Thus, petitioners prayed for the dismissal
of the complaint.17
On March 9, 2009, the MCTC dismissed the case due to Mariam's failure to
implead BIRI, an indispensable party.18 It ruled that the joinder of all
indispensable parties must be made under any and all conditions, their
presence being sine qua non to the exercise of judicial power. Thus, although it
made a finding on Mariam's prior physical possession of the property,
ultimately, the MCTC ruled that if an indispensable party is not impleaded, as in
this case, there can be no final determination of the action.19
On appeal, the RTC upheld the MCTC's dismissal of the case. It ruled that since
petitioners were able to establish that they acted as mere employees or agents
of BIRI, the issue of possession cannot be resolved without the court first
acquiring jurisdiction over BIRI. The defendants in the complaint for ejectment
are John, the branch manager of BIRI who carried out BIRI 's order to secure the
property with the assistance of security guards, Alam, and Bot, who are both
licensed geodetic engineers hired by BIRI to conduct a location survey of the
property. The facts clearly show that they all acted in behalf of BIRI which was,
in tum, allegedly exercising its right of possession as the owner of the property
that would be benefited or injured by the judgment.20
Aggrieved, Mariam filed a petition for review before the CA.
On December 21, 2010, the CA granted the petition and reversed the RTC
Decision. It ruled that the MCTC and the RTC should have limited the issue to
who had prior physical possession of the disputed land. It ruled that the MCTC
erred in dismissing Mariam's complaint because of a technical rule of failure to
implead an indispensable party, BIRI. It pointed out that Rule 3, Section 11 of
the Rules of Court provides that neither misjoinder nor non-joinder of parties is
a ground for the dismissal of an action. The remedy is to implead the non-party
claimed to be indispensable either by order of the court on motion of the party
or on its own initiative at any stage of the action. If the party refuses to implead
the indispensable party despite order of the court, then the latter may dismiss
the complaint/petition for the plaintiffs failure to comply therewith. Here, the
CA held that the records do not disclose that there was such an order for
petitioners to implead the supposed indispensable party, thus, dismissal of the
case for failure to implead BIRI is improper.21 Furthermore, since BIRI owns the
property and pursuant to the MOA, the Kairuzes own 30% of BIRI, then Mariam,
who was unlawfully ousted from the property by mere employees of BIRI, may
file the case for ejectment. Furthermore, under Article 487 of the Civil Code, any
one of the co-owners may bring an action for ejectment without necessarily
joining all other co-owners. The CA, thus, upheld Mariam's right to possess the
property concurrently with her co-owners.22 The dispositive portion of the CA
Decision reads:
WHEREFORE, the Decision of the Regional Tr[ia]l Court dated December 11,
2009 is REVERSED and SET ASIDE. In lieu thereof, judgment is hereby
rendered, ordering:
a) Respondents, their agents, deputies and employees and all persons
under them, to allow petitioner's entry to the subject premises; and
 subject property. This is not correct. The Decision and Resolution of the CA in
this case is, therefore, null and void for want of jurisdiction, having been
rendered in the absence of an indispensable party, BIRI.31
b) Respondents to pay petitioner the amount of P25,000.00 as attorney's
fees.
Nonetheless, while a remand of the case to the MCTC for the inclusion of BIRI,
the non-party claimed to be indispensable, seems to be a possible solution, a
review of the records reveals that the remand to the MCTC is not warranted
SO ORDERED.23 considering that the MCTC itself did not acquire jurisdiction over Mariam's
complaint for forcible entry.

From the beginning, petitioners were consistent in their position that the MCTC
Hence, this petition for review where petitioners argue that the CA gravely
has no jurisdiction over the action filed by Mariam. They claim that Mariam is
erred in: (1) reversing the Decisions of the MCTC and the RTC dismissing the
not only a shareholder of BIRI, she is also the successor of her late husband,
complaint for failure to implead BIRI, an indispensable party; (2) agreeing with
Laurence, and the case involves management of corporate property, an intra-
Mariam's baseless claim of possession; and (3) not finding that the issues are
corporate dispute which falls under the jurisdiction of the appropriate
intra-corporate in nature which should be best resolved before the RTC in
commercial court. Thus, pursuant to Article XII of the MOA,32 Mariam should
Angeles City.24
have brought the case before the RTC of Angeles, Pampanga.33 Petitioners also
argue that Mariam has already filed a case earlier against BIRI for annulment of
The petition is meritorious.
the Deed of Assignment before the RTC of Angeles City, that this case is merely
an attempt to split causes of action, and that Mariam purposely did not mention
An indispensable party is a party in interest without whom no final
material facts in order to obtain a favorable judgment. Petitioners likewise point
determination can be had of an action and who shall be joined either as
out that Mariam cannot feign ignorance that petitioners were merely acting on
plaintiffs or defendants. The presence of indispensable parties is necessary to
the orders of BIRI considering that both Mariam and John are members of the
vest the court with jurisdiction.25
same ManCom which oversaw the day-to-day business operations of BIRI.34
Here, as correctly held by the MCTC and the RTC, it is indisputable that BIRI is
In Matling Industrial and Commercial Corporation v. Coros, 35 the Court
an indispensable party, being the registered owner of the property and at
summarized the guidelines for determining whether a dispute constitutes an
whose behest the petitioner-employees acted.26 Thus, without the participation
intra-corporate controversy or not. There, we held that in order that the SEC
of BIRI, there could be no full determination of the issues in this case
(now the RTC)36 can take cognizance of a case, the controversy must pertain to
considering that it was sufficiently established that petitioners did not take
any of the following relationships: (a) between the corporation, partnership, or
possession of the property for their own use but for that of BIRI's. Contrary to
association and the public; (b) between the corporation, partnership, or
the CA's opinion, the joinder of indispensable parties is not a mere technicality.
association and its stockholders, partners, members, or officers; (c) between the
We have ruled that the joinder of indispensable parties is mandatory and the
corporation, partnership, or association and the State as far as its franchise,
responsibility of impleading all the indispensable parties rests on the
permit, or license to operate is concerned; and (d) among the stockholders,
plaintiff.27 In Domingo v. Scheer,28 we ruled that without the presence of
partners, or associates themselves. However, not every conflict between a
indispensable parties to the suit, the judgment of the court cannot attain real
corporation and its stockholders involves corporate matters. Concurrent
finality. Otherwise stated, the absence of an indispensable party renders all
factors, such as the status or relationship of the parties, or the nature of the
subsequent actions of the court null and void for want of authority to act not
question that is the subject of their controversy, must be considered in
only as to the absent party but even as to those present.29
determining whether the SEC (now the RTC) has jurisdiction over the
controversy.37
In this case, while the CA correctly pointed out that under Rule 3, Section 11 of
the Rules of Court, failure to implead an indispensable party is not a ground for
Here, the Court considers two elements in determining the existence of an intra-
the dismissal of an action, it failed to take into account that it remains essential
corporate controversy, namely: (a) the status or relationship of the parties; and
that any indispensable party be impleaded in the proceedings before the court
(b) the nature of the question that is the subject of their controversy.38
renders judgment.30 Here, the CA simply proceeded to discuss the merits of the
case and rule in Mariam's favor, recognizing her prior physical possession of the
As discussed earlier, the parties involved in the controversy are respondent
Mariam (a shareholder of BIRI and successor to her late husband's position on
the ManCom), petitioner John (then the branch manager, shareholder, and part
of the BIRI ManCom), and petitioners Bot and Alam (licensed geodetic engineers
engaged by BIRI for a contract to survey the property subject of the dispute).
The controversy also involves BIRI itself, the corporation of which Mariam is a
shareholder, and which through Board Resolutions No. 2006-0001,39 2007-
000440 and 2007-000541 authorized John, its branch manager, to do all acts fit
and necessary to enforce its corporate rights against the Kairuz family,
including the posting of guards to secure the property. The controversy is thus
one between corporation and one of its shareholders.
Moreover, the CA erred in characterizing the action as an ejectment case filed by
a co-owner who was illegally deprived of her right to possess the property by
the presence of armed men.
TheCA ruled that since the Kairuzes own 30% of the shares of stocks of BIRI,
Mariam, as a co-owner who was unlawfully ousted from BIRI property by its
employees, may bring an action for ejectment against the employees. This is not
correct.
Here, it is undisputed that the property has already been transferred to BIRI
and registered in its name.42 It is likewise undisputed that based on the MOA,
the Kairuzes own 30% of the outstanding capital stock of BIRI. This, however,
does not make Mariam a co-owner of the property of BIRI, including the
property subject of this case. Shareholders are in no legal sense the owners of
corporate property, which is owned by the corporation as a distinct legal
person.43 At most, Mariam's interest as a shareholder is purely inchoate, or in
sheer expectancy of a right, in the management of the corporation and to share
in its profits, and in its properties and assets on dissolution after payment of the
corporate debts and obligations.44
While Mariam insists that the case is one for forcible entry where the only issue
is the physical possession and not ownership of the property, her prior physical
possession has not been established in the courts below. In fact, the MCTC found
that prior to the events of May 28, 2007, both petitioners and respondent were
in actual possession of the property: petitioners, on behalf of BIRI as the owner
of the property, and respondent Mariam, by virtue of the accommodation
granted to her by BIRI under the MOA allowing her to continue her water
reloading business on the property even after the transfer of its ownership to
BIRI.45
In sum, what appears on record as the true nature of the controversy is that of a
shareholder seeking relief from the court to contest the management's decision
to: (1) post guards to secure the premises of the corporate property; (2)
padlock the premises; and (3) deny her access to the same on May 28, 2007 due
to her alleged default on the provisions of the MOA.
Thus, we agree with petitioners that while the case purports to be one for
forcible entry filed by Mariam against BIRI's employees and contractors in their
individual capacities, the true nature of the controversy is an intra-corporate
dispute between BIRI and its shareholder, Mariam, regarding the management
of, and access to, the corporate property subject of the MOA. We therefore find
that the MCTC never acquired jurisdiction over the ejectment case filed by
Mariam.
WHEREFORE, the petition is GRANTED. The Decision dated December 21,
2010 and Resolution dated July 22, 2011 of the Court of Appeals in CA-G.R. SP
No. 112613 are REVERSED and SET ASIDE. The complaint for ejectment in Civil
Case No. 272 filed before the 5th Municipal Circuit Trial Court, Tuba-Sablan,
Benguet, is DISMISSED for lack of jurisdiction.
SO ORDERED.
Leonardo-De Castro, C.J., (Chairperson), Bersamin, and Del Castillo, JJ., concur.
Tijam, J., on official business.
G.R. No. L-58028 April 18, 1989
CHIANG KAI SHEK SCHOOL, petitioner,
vs.
COURT OF APPEALS and FAUSTINA FRANCO OH, respondents.
CRUZ, J.:
An unpleasant surprise awaited Fausta F. Oh when she reported for work at the
Chiang Kai Shek School in Sorsogon on the first week of July, 1968. She was told
she had no assignment for the next semester. Oh was shocked. She had been
teaching in the school since 1932 for a continuous period of almost 33 years.
And now, out of the blue, and for no apparent or given reason, this abrupt
dismissal.
Oh sued. She demanded separation pay, social security benefits, salary
differentials, maternity benefits and moral and exemplary damages. 1 The
original defendant was the Chiang Kai Shek School but when it filed a motion to
dismiss on the ground that it could not be sued, the complaint was
amended. 2 Certain officials of the school were also impleaded to make them
solidarily liable with the school.
The Court of First Instance of Sorsogon dismissed the complaint. 3 On appeal,
its decision was set aside by the respondent court, which held the school suable
and liable while absolving the other defendants. 4 The motion for
reconsideration having been denied, 5 the school then came to this Court in this
petition for review on certiorari.
The issues raised in the petition are:
1. Whether or not a school that has not been incorporated may be sued by
reason alone of its long continued existence and recognition by the government,
2. Whether or not a complaint filed against persons associated under a common
name will justify a judgment against the association itself and not its individual
members.
3. Whether or not the collection of tuition fees and book rentals will make a
school profit-making and not charitable.
4. Whether or not the Termination Pay Law then in force was available to the
private respondent who was employed on a year-to-year basis.
5. Whether or not the awards made by the respondent court were warranted.
We hold against the petitioner on the first question. It is true that Rule 3, Section
1, of the Rules of Court clearly provides that "only natural or juridical persons
may be parties in a civil action." It is also not denied that the school has not been
incorporated. However, this omission should not prejudice the private
respondent in the assertion of her claims against the school.
As a school, the petitioner was governed by Act No. 2706 as amended by C.A.
No. 180, which provided as follows:
Unless exempted for special reasons by the Secretary of Public
Instruction, any private school or college recognized by the
government shall be incorporated under the provisions of Act
No. 1459 known as the Corporation Law, within 90 days after
the date of recognition, and shall file with the Secretary of
Public Instruction a copy of its incorporation papers and by-
laws.
Having been recognized by the government, it was under obligation to
incorporate under the Corporation Law within 90 days from such recognition. It
appears that it had not done so at the time the complaint was filed
notwithstanding that it had been in existence even earlier than 1932. The
petitioner cannot now invoke its own non-compliance with the law to immunize
it from the private respondent's complaint.
There should also be no question that having contracted with the private
respondent every year for thirty two years and thus represented itself as
possessed of juridical personality to do so, the petitioner is now estopped from
denying such personality to defeat her claim against it. According to Article
1431 of the Civil Code, "through estoppel an admission or representation is
rendered conclusive upon the person making it and cannot be denied or
disproved as against the person relying on it."
As the school itself may be sued in its own name, there is no need to apply Rule
3, Section 15, under which the persons joined in an association without any
juridical personality may be sued with such association. Besides, it has been
shown that the individual members of the board of trustees are not liable,
having been appointed only after the private respondent's dismissal. 6
It is clear now that a charitable institution is covered by the labor
laws 7 although the question was still unsettled when this case arose in 1968.
At any rate, there was no law even then exempting such institutions from the
operation of the labor laws (although they were exempted by the Constitution
from ad valorem taxes). Hence, even assuming that the petitioner was a
charitable institution as it claims, the private respondent was nonetheless still
entitled to the protection of the Termination Pay Law, which was then in force.
While it may be that the petitioner was engaged in charitable works, it would
not necessarily follow that those in its employ were as generously motivated.
Obviously, most of them would not have the means for such charity. The private
respondent herself was only a humble school teacher receiving a meager salary
of Pl80. 00 per month.
At that, it has not been established that the petitioner is a charitable institution,
considering especially that it charges tuition fees and collects book rentals from
its students. 8 While this alone may not indicate that it is profit-making, it does
weaken its claim that it is a non-profit entity.
The petitioner says the private respondent had not been illegally dismissed
because her teaching contract was on a yearly basis and the school was not
required to rehire her in 1968. The argument is that her services were
terminable at the end of each year at the discretion of the school. Significantly,
no explanation was given by the petitioner, and no advance notice either, of her
relief after teaching year in and year out for all of thirty-two years, the private
respondent was simply told she could not teach any more.
The Court holds, after considering the particular circumstance of Oh's
employment, that she had become a permanent employee of the school and
entitled to security of tenure at the time of her dismissal. Since no cause was
shown and established at an appropriate hearing, and the notice then required
by law had not been given, such dismissal was invalid.
The private respondent's position is no different from that of the rank-and-file
employees involved in Gregorio Araneta University Foundation v. NLRC, 9 of
whom the Court had the following to say:
Undoubtedly, the private respondents' positions as deans and
department heads of the petitioner university are necessary in
its usual business. Moreover, all the private respondents have
been serving the university from 18 to 28 years. All of them
rose from the ranks starting as instructors until they became
deans and department heads of the university. A person who
has served the University for 28 years and who occupies a high
administrative position in addition to teaching duties could not
possibly be a temporary employee or a casual.
The applicable law is the Termination Pay Law, which provided:
SECTION 1. In cases of employment, without a definite period,
in a commercial, industrial, or agricultural establishment or
enterprise, the employer or the employee may terminate at
any time the employment with just cause; or without just cause
in the case of an employee by serving written notice on the
employer at least one month in advance, or in the case of an
employer, by serving such notice to the employee at least one
month in advance or one-half month for every year of service
of the employee, whichever, is longer, a fraction of at least six
months being considered as one whole year.
The employer, upon whom no such notice was served in case
of termination of employment without just cause may hold the
employee liable for damages.
The employee, upon whom no such notice was served in case
of termination of employment without just cause shall be
entitled to compensation from the date of termination of his
employment in an I amount equivalent to his salaries or wages
correspond to the required period of notice. ... .
The respondent court erred, however, in awarding her one month pay instead
of only one-half month salary for every year of service. The law is quite clear on
this matter. Accordingly, the separation pay should be computed at P90.00
times 32 months, for a total of P2,880.00.
Parenthetically, R.A. No. 4670, otherwise known as the Magna Carta for Public
School Teachers, confers security of tenure on the teacher upon appointment as
long as he possesses the required qualification. 10 And under the present policy
of the Department of Education, Culture and Sports, a teacher becomes
permanent and automatically acquires security of tenure upon completion of
three years in the service. 11
While admittedly not applicable to the case at bar, these I rules nevertheless
reflect the attitude of the government on the protection of the worker's security
of tenure, which is now guaranteed by no less than the Constitution itself. 12
We find that the private respondent was arbitrarily treated by the petitioner,
which has shown no cause for her removal nor had it given her the notice
required by the Termination Pay Law. As the respondent court said, the
contention that she could not report one week before the start of classes is a
flimsy justification for replacing her. 13 She had been in its employ for all of
thirty-two years. Her record was apparently unblemished. There is no showing
of any previous strained relations between her and the petitioner. Oh had every
reason to assume, as she had done in previous years, that she would continue
teaching as usual.
It is easy to imagine the astonishment and hurt she felt when she was flatly and
without warning told she was dismissed. There was not even the amenity of a
formal notice of her replacement, with perhaps a graceful expression of thanks
for her past services. She was simply informed she was no longer in the teaching
staff. To put it bluntly, she was fired.
For the wrongful act of the petitioner, the private respondent is entitled to
moral damages. 14 As a proximate result of her illegal dismissal, she suffered
mental anguish, serious anxiety, wounded feelings and even besmirched
reputation as an experienced teacher for more than three decades. We also find
that the respondent court did not err in awarding her exemplary damages
because the petitioner acted in a wanton and oppressive manner when it
dismissed her. 15
The Court takes this opportunity to pay a sincere tribute to the grade school
teachers, who are always at the forefront in the battle against illiteracy and
ignorance. If only because it is they who open the minds of their pupils to an
unexplored world awash with the magic of letters and numbers, which is an
extraordinary feat indeed, these humble mentors deserve all our respect and
appreciation.
filing of an action is not only binding between the parties but also enforceable
by the court and may not be declared to be against public policy where it is
shown that the party concerned is in a position to carry on a litigation in the
stipulated place.
Petition granted

WHEREFORE, the petition is DENIED. The appealed decision is AFFIRMED

except for the award of separation pay, which is reduced to P2,880.00. All the SYLLABUS
other awards are approved. Costs against the petitioner.

This decision is immediately executory. 1. ID.; ID.; ID.; JUDGE CANNOT ORDER RETURN OF PERSONAL PROPERTY
ATTACHED. — A property levied upon pursuant to a valid order of attachment
issued by a judge of one branch is in custodia legis and cannot be ordered
SO ORDERED.
delivered or returned by the judge of another branch of the same court in an
action for replevin in view of Rule 60, Section 2, par. (c) of the Rules of Court.
TOPIC: VENUE The words "or attachment" were added to the new provision for the purpose of
precluding the occurrence of a dismissal situation whereby a judge of one
SECOND DIVISION
branch can revoke the order issued by a judge of another branch of the same
court, to the great prejudice of the orderly administration of justice.
[G.R. No. L-44351. May 18, 1978.]
2. CONTEMPT; INDIRECT CONTEMPT; WHEN NOT PROPER. — A sheriff cannot
HOECHST PHILIPPINES, INC., Petitioner, v. FRANCISCO TORRES and the
be held for indirect contempt by the judge of one branch for disobeying his
Honorable PROCORO J. DONATO, Judge of the Court of First Instance of
order to take possession of and deliver a personal property that had been
Isabela, Respondents.
previously attached pursuant to a valid order of the judge of another branch of
the same court.
Manuel S. Fornacier, Jr. for Petitioner.

Melanio T. Singson for Private Respondent.

DECISION
SYNOPSIS
BARREDO, J.:
The Court of First Instance of Isabela took cognizance of private respondent’s
complaint for breach of a distributorship contract on the part of the petitioner,
despite a stipulation in the said contract that venue in case of any litigation
Petition for certiorari and prohibition to declare respondent court without
arising out of the agreement "shall be in the competent courts of the Province of
authority to take cognizance of private respondent’s action for "Breach of
Rizal." Petitioner questions the court’s authority to take cognizance of the case
Contract with Preliminary Injunction" and to enjoin said court from further
on the ground of improper venue. Respondents argue that the word "shall" in
taking any action in said case upon the ground of improper laying of the venue.
the stipulation in question should be construed to be merely permissive and not
mandatory inasmuch as the stipulations in the contract are standard and pre-
On April 8, 1976, private respondent, Francisco Torres, filed with respondent
made giving the distributors no option except to take it or leave it, and that to
Court of First Instance of Isabela complaint in Civil Case No. V-296 alleging
give effect to the stipulation in controversy would be against public policy
breach of a distributorship contract on the part of petitioner, Hoechst
because it serves the convenience and purpose of petitioner only to the
Philippines, Inc. On April 14, 1976, petitioner filed a motion to dismiss said
prejudice of small-time distributors.
complaint based on the ground that as the contract, the very actionable
document invoked in the complaint, provides that" (I)n case of any litigation
The Suprme Court ruled that a written agreement as to venue made before the
arising out of this agreement, the venue of any action shall be in the competent
courts of the Province of Rizal", venue has been improperly laid in respondent
court, petitioner citing in his said motion principally the ruling of this Supreme
Court in Bautista v. De Borja, 18 SCRA 474. Respondent court nevertheless
denied the said motion to dismiss as well as the motion for reconsideration of
that denial, hence the present petition.
Respondent do not deny in their respective answers the clear tenor of the
above-quoted stipulation as to venue in the contract in dispute. It is the position
of respondent judge, however, that inasmuch as the contract was "a prepared
standard form for the defendant-company, wherein blanks were merely filled
up after the party-distributor agreed on the valuation of products which he may
order from the company for one year" and "all stipulations were standard and
pre-made by the company, prepared by, as your Respondent can safely and
rightly assume, its legal department" and "it (only) remains upon party-
distributor to stamp his approval to the whole contract", hence "plaintiff
distributor was given no option whatsoever except `to take it or leave it’", the
word "shall" in the stipulation in question should be construed to be merely
permissive and not mandatory. It is argued that this construction serves not
only the exclusive interests of petitioner but also that of private Respondent.
It is further contended in said answer that reading the terms of the contract, it
can be gathered that most likely, it would be petitioner who would have to sue
private respondent, and, therefore, the stipulation as to venue was meant to
apply only to suits to be filed by petitioner. Finally, it is maintained that there
are no words in the contract expressly restricting the venue to the courts of
Rizal.chanrobles.com.ph : virtual law library
Upon the other hand, in the answer of private respondent, he capitalizes on the
theory that inasmuch as petitioner is a multinational company, it is against
public policy for it to stipulate in any contract that the venue of actions
thereunder should be in any particular place, much less its place of residence, to
the prejudice of small-time distributors, the private Respondent. It is urged that
to give effect to the stipulation in controversy "is to serve the convenience and
the purpose of the petitioner only; its effect is to discourage, to deter, to render
expensive and uneconomical the filing of suits by small-time company
distributors against the petitioner even for extremely meritorious cases of
latter’s breach or violation of such distribution agreement."cralaw virtua1aw
library
The pose taken by respondents does evoke sympathy, but it can hardly carry
the day for them. Change or transfer of venue from that fixed in the rules may be
effected upon written agreement of the parties not only before the actual filing
of the action but even after the same has been filed. The settled rule of
jurisprudence in this jurisdiction is that a written agreement of the parties as to
venue, as authorized by Section 3, Rule 4, is not only binding between the
parties but also enforceable by the courts. 1 It is only after the action has been
filed already that change or transfer of venue by agreement of the parties is
understandably controllable in the discretion of the court. 2
The agreement in this case was entered into long before the petitioner’s action
was filed. It is clear and unequivocal. The parties therein stipulated that" (I)n
case of any litigation arising out of this agreement, the venue of any action shall
be in the competent courts of the Province of Rizal." No further stipulations are
necessary to elicit the thought that both parties agreed that any action by either
of them would be filed only in the competent courts of Rizal province
exclusively.
Respondent judge rather vehemently argues, however, that under the
circumstances obtaining between the parties, as earlier stated in this decision, it
is permissible, notwithstanding Our ruling in Bautista, supra, that the word"
shall" in the agreement in question be construed as "may", hence not strictly
obligatory. Private respondent points out that he had no choice but to sign the
"Distributorship Agreement" in question, he being practically at the mercy of
petitioner company which is allegedly a multinational corporation. He
maintains that to enforce the agreement literally would amount to a denial to
him, and to other distributors similarly situated, of the opportunity to file any
suit against petitioner.
We have given due attention to this posture of respondents. Indeed, there may
be instances when an agreement as to venue may be so oppressive as to
effectively deny to the party concerned access to the courts by reason of
poverty. The difficulties pictured by respondents that a poor plaintiff from a
distant province may have to encounter in filing suit in a particular place can
indeed happen. In such an eventuality and depending on the peculiar
circumstances of the case, the Court may declare the agreement as to venue to
be in effect contrary to public policy, — despite that in general, changes and
transfers of venue by written agreement of the parties is allowable — whenever
it is shown that a stipulation as to venue works injustice by practically denying
to the party concerned a fair opportunity to file suit in the place designated by
the rules.chanrobles.com : virtual law library
But a cursory inquiry into the respective economic conditions of the parties
herein as reflected in the record before Us does not show that private
respondent Francisco Torres is really in no position to carry on a litigation in
the Province of Rizal, because of his residence or place of business being in
Isabela province. The volume of business covered by the Distributorship
Agreement in question, Annex C of the Petition, and to be handled by private
respondent Torres is P700,000. The amount sought to be recovered by said
respondent in his complaint, Annex A of the Petition, totals more than P300,000.
These circumstances preclude, in Our view, the need to apply equitable
considerations to the case of respondent Torres. It is quite obvious that his
economic condition does not warrant non-enforcement of the stipulation as to
venue that he has agreed to. We are persuaded that his pretension that he had
no alternative but to agree, even if true, does not merit relief. Considering the
nature and volume of the business he has with petitioner, there is nothing
oppressive in his being required to litigate out of his province. After all, for
practical reasons, there seems to be justification also for petitioner to see to it
that all suits against it be concentrated in the Province of Rizal, as otherwise,
considering the nationwide extent of its business, it would be greatly
inconvenienced if it has to appear in so many provinces everytime an action is
filed against it. We are convinced both parties agreed to the venue in
controversy with eyes wide open.
IN VIEW OF ALL THE FOREGOING, the petition is granted, the orders of
respondent judge of May 13, 1976 and July 12, 1976 are hereby set aside, and
petitioner’s motion to dismiss private respondent’s complaint in question is
granted. Costs against private respondent Francisco Torres.
Fernando, Antonio, Aquino, Concepcion Jr., and Santos, JJ., concur.
FIRST DIVISION
G.R. No. 204444, January 14, 2015
VIRGILIO C. BRIONES, Petitioner, v. COURT OF APPEALS AND CASH ASIA
CREDIT CORPORATION, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for certiorari1 are the Decision2 dated March 5, 2012
and the Resolution3 dated October 4, 2012 of the Court of Appeals(CA) in CA-
G.R. SP No. 117474, which annulled the Orders dated September 20, 20104 and
October 22, 20105 of the Regional Trial Court of Manila, Branch 173 (RTC) in
Civil Case No. 10-124040, denying private respondent Cash Asia Credit
Corporation’s (Cash Asia) motion to dismiss on the ground of improper
venue.cralawred
The Facts
The instant case arose from a Complaint6 dated August 2, 2010 filed by Virgilio
C. Briones (Briones) for Nullity of Mortgage Contract, Promissory Note, Loan
Agreement, Foreclosure of Mortgage, Cancellation of Transfer Certificate of Title
(TCT) No.290846, and Damages against Cash Asia before the RTC.7 In his
complaint, Briones alleged that he is the owner of a property covered by TCT
No. 160689 (subject property),and that, on July 15, 2010, his sister informed
him that his property had been foreclosed and a writ of possession had already
been issued in favor of Cash Asia.8 Upon investigation, Briones discovered that:
(a) on December 6, 2007, he purportedly executed a promissory note,9 loan
agreement,10 and deed of real estate mortgage11covering the subject property
(subject contracts) in favor of Cash Asia in order to obtain a loan in the amount
of P3,500,000.00 from the latter;12 and (b) since the said loan was left unpaid,
Cash Asia proceeded to foreclose his property.13 In this relation, Briones
claimed that he never contracted any loans from Cash Asia as he has been living
and working in Vietnam since October 31, 2007. He further claimed that he only
went back to the Philippines on December 28, 2007 until January 3, 2008 to
spend the holidays with his family, and that during his brief stay in the
Philippines, nobody informed him of any loan agreement entered into with Cash
Asia. Essentially, Briones assailed the validity of the foregoing contracts
claiming his signature to be forged.14chanRoblesvirtualLawlibrary
For its part, Cash Asia filed a Motion to Dismiss15 dated August 25, 2010,
praying for the outright dismissal of Briones’s complaint on the ground of
improper venue.16 In this regard, Cash Asia pointed out the venue stipulation in
the subject contracts stating that “all legal actions arising out of this notice in
connection with the Real Estate Mortgage subject hereof shall only be brought
in or submitted to the jurisdiction of the proper court of Makati City.”17 In view
thereof, it contended that all actions arising out of the subject contracts may
only be exclusively brought in the courts of Makati City, and as such, Briones’s
complaint should be dismissed for having been filed in the City of
Manila.18chanRoblesvirtualLawlibrary
In response, Briones filed an opposition,19 asserting, inter alia, that he should
not be covered by the venue stipulation in the subject contracts as he was never
a party therein. He also reiterated that his signatures on the said contracts were
forgeries.20chanRoblesvirtualLawlibrary
The RTC Ruling
In an Order21 dated September 20, 2010, the RTC denied Cash Asia’s motion to
dismiss for lack of merit. In denying the motion, the RTC opined that the parties
must be afforded the right to be heard in view of the substance of Briones’s
cause of action against Cash Asia as stated in the
complaint.22chanRoblesvirtualLawlibrary
Cash Asia moved for reconsideration23 which was, however, denied in an
Order24 dated October 22, 2010. Aggrieved, it filed a petition
for certiorari25 before the CA.cralawred
 The CA Ruling
In a Decision26 dated March 5, 2012, the CA annulled the RTC Orders, and
accordingly, dismissed Briones’s complaint without prejudice to the filing of the
same before the proper court in Makati City.27 It held that the RTC gravely
abused its discretion in denying Cash Asia’s motion to dismiss, considering that
the subject contracts clearly provide that actions arising therefrom should be
exclusively filed before the courts of Makati City only.28 As such, the CA
concluded that Briones’s complaint should have been dismissed outright on the
ground of improper venue,29 this, notwithstanding Briones’s claim of forgery.
Dissatisfied, Briones moved for reconsideration,30 which was, however, denied
in a Resolution31 dated October 4, 2012, hence, this petition.
The Issue Before the Court
The primordial issue for the Court’s resolution is whether or not the CA gravely
abused its discretion in ordering the outright dismissal of Briones’s complaint
on the ground of improper venue.
The Court’s Ruling
The petition is meritorious.
At the outset, the Court stresses that “[t]o justify the grant of the extraordinary
remedy of certiorari, [the petitioner] must satisfactorily show that the court or
quasi-judicial authority gravely abused the discretion conferred upon it. Grave
abuse of discretion connotes judgment exercised in a capricious and whimsical
manner that is tantamount to lack of jurisdiction. To be considered ‘grave,’
discretion must be exercised in a despotic manner by reason of passion or
personal hostility, and must be so patent and gross as to amount to an evasion
of positive duty or to a virtual refusal to perform the duty enjoined by or to act
at all in contemplation of law.”32chanRoblesvirtualLawlibrary
Guided by the foregoing considerations, the Court finds that the CA gravely
abused its discretion in ordering the outright dismissal of Briones’s complaint
against Cash Asia, without prejudice to its re-filing before the proper court in
Makati City.
Rule 4 of the Rules of Court governs the rules on venue of civil actions, to
wit:chanroblesvirtuallawlibrary
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.
SEC. 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.
SEC. 3. Venue of actions against nonresidents. — If any of the defendants does
not reside and is not found in the Philippines, and the action affects the personal
status of the plaintiff, or any property of said defendant located in the
Philippines, the action may be commenced and tried in the court of the place
where the plaintiff resides, or where the property or any portion thereof is
situated or found.
SEC. 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 therefrom, the general rule is that the venue of real actions is the court
which has jurisdiction over the area wherein the real property involved, or a
portion thereof, is situated; while the venue of personal actions is the court
which has jurisdiction where the plaintiff or the defendant resides, at the
election of the plaintiff. As an exception, jurisprudence in Legaspi v. Rep. of the
Phils.33 instructs that the parties, thru a written instrument, may either
introduce another venue where actions arising from such instrument may be
filed, or restrict the filing of said actions in a certain exclusive
venue, viz.:chanroblesvirtuallawlibrary
The parties, however, are not precluded from agreeing in writing on an
exclusive venue, as qualified by Section 4 of the same rule. 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.

As regards restrictive stipulations on venue, jurisprudence instructs that

it must be shown that such stipulation is exclusive. In the absence of
qualifying or restrictive words, such as “exclusively,” “waiving for this
purpose any other venue,” “shall only” preceding the designation of venue, “to
the exclusion of the other courts,” or words of similar import, the stipulation
should be deemed as merely an agreement on an additional forum, not as
limiting venue to the specified place.34 (Emphases and underscoring
supplied)

In this relation, case law likewise provides that in 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.35 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.

In this case, the venue stipulation found in the subject contracts is indeed
restrictive in nature, considering that it effectively limits the venue of the
actions arising therefrom to the courts of Makati City. However, it must be
emphasized that Briones’s complaint directly assails the validity of the subject
contracts, claiming forgery in their execution. Given this circumstance, Briones
cannot be expected to comply with the aforesaid venue stipulation, as his
compliance therewith would mean an implicit recognition of their validity.
Hence, pursuant to the general rules on venue, Briones properly filed his
complaint before a court in the City of Manila where the subject property is
located.

In conclusion, the CA patently erred and hence committed grave abuse of

discretion in dismissing Briones’s complaint on the ground of improper
venue.chanrobleslaw

WHEREFORE, the petition is GRANTED. Accordingly, the Decision dated March

5, 2012 and the Resolution dated October 4, 2012 of the Court of Appeals in CA-
G.R. SP No. 117474 are hereby ANNULLED and SET ASIDE. The Orders dated
September 20, 2010 and October 22, 2010 of the Regional Trial Court of Manila,
Branch 173 in Civil Case No. 10-124040 are REINSTATED.

SO ORDERED.cralawlawlibrary