Philippine Banking Corp. v.

Judge Tenuso
DOCTRINE:
POLYTRADE DOCTRINE ON VENUE - In Polytrade Corporation v. Blanco, the stipulation
on venue there involved read:
"The parties agree to sue and be sued in the courts of Manila"
The Court, in upholding that stipulation and ruling that venue had been properly laid in the
then Court of First Instance of Bulacan (the place of defendant's residence), speaking through
Mr. Justice Sanchez, said:
"x x x. An accurate reading, however, of the stipulation, 'The parties agree to sue and be sued
in the Courts of Manila, does not preclude the filing of suits in the residence of plaintiff or
defendant. The plain meaning is that the parties merely consented to be sued in Manila.
Qualifying or restrictive words which would indicate that Manila and Manila alone is the
venue are totally absent therefrom. We cannot read into that clause that plaintiff and defendant
bound themselves to file suits with respect to the last two transactions in question only or
exclusively in Manila. For, that agreement did not change or transfer venue. It simply is
permissive. The parties solely agreed to add the courts of Manila as tribunals to which they
may resort. They did not waive their right to pursue remedy in the courts specifically
mentioned in Section 2 (b) of Rule 4. Renuntiatio non praesumitur.." (Underscoring supplied)
FACTS:

Philippine Banking Corporation is commercial bank with address in Makati City

instituted a complaint for collection of sum of money, with prayer for preliminary
attachment at RTC of MAKATI. Such complaint was lodged against Circle Financial Co
for failing to pay its P 1,000,000 debt as evidence by 4 PNs.
o Also important to take note that in PNs, it stated Valenzuela as palce for
lititagation - "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 the re-payment by respondent Circle of the sums loaned by petitioner
Bank, eight (8) individuals, who were impleaded as defendants in the complaint -namely, 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 respondent Circle's
obligations. Only five (5) out of the eight (8) individual obligors are respondents in
present case, namely: Domingo Santiago, Hilario Lopez, Avelino Deato, Benjamin P.
Santiago and Socorro Gomez.
Thereupon, petitioner Bank demanded payment from the eight (8) individual sureties
conformably with their promises contained in the Continuing Surety Agreement; the
individual obligors, however, also failed to pay.
Petitioner moved for issuance of a writ of preliminary attachment, alleging that
respondent Circle had become insolvent and had been placed under receivership by the
Central Bank. The trial judge granted the motion and issued a writ of preliminary
attachment. The sheriff's return indicated, however, that no properties belonging to the
respondent Circle and the individual obligors could be found. Per sheriff's return,
summons was served upon Domingo Santiago, Hilario P. Lopez, Avelino Deato,
Benjamin P. Santiago and Socorro Gomez. The sheriff failed to serve summons on (a)
Miguel Violago, who had died; (b) Nerissa T. Gloria and Filemon Marquez, 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.

A motion to dismiss was filed by the respondents (Circle and the five [5] individual
sureties served with summons) and averred that the venue of the action was improperly
laid since an agreement had fixed the venue of actions arising from the promissory notes
in Valenzuela, Metro Manila, only. Respondents called the trial court's attention to the
stipulation contained in the promissory note, quoted in limine.
Judge Tenusan dismissed the complaint stating that Bank should have fild case in
Valenzuela and not in Makati. Finding said motion to be impressed with merit consistent
with Sec. 13, Rule 14 of the Rules of Court as well as in line with the doctrinal rule in
Bautista vs. Hon. Juan de Borja, et al. (18 SCRA 474) that the proper venue for an action
is that stipulated in a document in case of any litigation herefrom or in connection
herewith
Hence this petition.

ISSUE:
WON Judge Tenusan erred in dimissing the case for improper venue. (YES)
HELD:

Supreme Court held that Bautista Doctrinal ruling is inconsistent with the long line of
Supreme Court decisions upholding the Polytrade Doctrine with regard contractual
stipulations on venue for litigation.

It is held that Supreme Court accepts stipulations of providing venue for litigation. But
they should always take not the true intent of parties by careful reading of stipulations
wording whether it may be for strict compliance or merely permissive.

Petitioner Bank contends that wording only merely adds Vlenzuela as a possible venue
for litigation given the wording of the undertaking. No restriction or limitation was
provided to exclude all other possible venues for litigation. Thus, venue was properly laid
by petitioner Bank in the place where its principal offices are located: i.e., Makati,
Metropolitan Manila.

Circle et al contends that that words were clear and unambiguous in providing Valenzuela
as the sole venue in case of litigation.

A careful reading of the terms of the stipulation -- "I/We hereby expressly submit to the
jurisdiction of the courts of Valenzuela any legal action which may arise out of this
promissory note" -- shows that that 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.

Permissive stipulations like the one here considered have invariably received judicial
approval and we have declared that either of the parties is authorized to lay venue of an
action in the court named in the stipulation. The stipulation here does not purport to
deprive either party of its 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.
SEE DOCTRINE for Ploytrade.
It is not necessary to pretend that the decisions of the Supreme Court have been absolutely
consistent in this regard. There have been a few decisions -- notably Bautista v. de Borja[23] and
Hoechst Philippines v. Torres -- which are not easy to reconcile with the line of cases
beginning with Polytrade discussed above. It is useful therefore to make clear that to the extent
Bautista and Hoechst Philippines are inconsistent with Polytrade (an en banc decision later in

time than Bautista) and subsequent cases reiterating Polytrade, Bautista and Hoechst
Philippines have been rendered obsolete by the Polytrade line of cases.
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.

WHEREFORE, the Petition for Review on Certiorari is hereby GRANTED DUE COURSE
and the Orders dated 3 August 1992 and 28 August 1992 of public respondent Judge Salvador
S. Tensuan are hereby REVERSED and SET ASIDE. The case is hereby REMANDED to the
court of origin for resolution on the merits, with all deliberate dispatch. No pronouncement as
to costs.