Case Summary (G.R. No. 222711)
Petitioner’s Claim
Petitioner alleged that it leased the property from PNCC on January 14, 2005 and subleased a 14,659.80‑sq.m. portion to respondent by a notarized lease contract dated September 11, 2006, for a ten‑year term beginning November 15, 2005, at a monthly rent of P1,174,780.00 with annual increases. Petitioner sued for collection of unpaid rent for August to December 2011, asserting arrears totaling P8,828,025.46 and seeking damages.
Respondent’s Position and Counterclaims
Respondent answered and filed a third‑party complaint against PNCC. He asserted he had been paying rent to petitioner until PNCC demanded direct payment to it after petitioner’s eviction from the premises pursuant to a court order; consequently, he remitted rent payments to PNCC for August–December 2011. He argued, if held liable to petitioner, PNCC should reimburse him for those payments. Respondent additionally pleaded that he had advanced deposits and overpayments to petitioner totaling P3,518,352.00 (deposit and advance rentals) plus P400,000.00 overpayment, and he interposed a counterclaim for reimbursement and for moral and exemplary damages and litigation expenses.
PNCC’s Position
PNCC’s answer to the third‑party complaint contended respondent had no cause of action against it, noting respondent acknowledged PNCC’s right to receive rent and had entered into a lease with PNCC after petitioner’s eviction. PNCC therefore denied liability to respondent for reimbursement.
Procedural History
Petitioner filed its complaint in the Regional Trial Court (RTC), Valenzuela City, Branch 75 (Civil Case No. 40‑V‑12). Respondent raised improper venue as an affirmative defense, citing Section 21 of the lease contract, which provided that “All actions or case[s] filed in connection with this lease shall be filed with the Regional Trial Court of Pasay City, exclusive of all others.” The Valenzuela‑RTC, by order dated June 15, 2015, dismissed petitioner’s complaint for improper venue and denied reconsideration by order dated January 27, 2016. Petitioner appealed to the Supreme Court by petition for review on certiorari.
Applicable Law (1987 Constitution; Rules and Jurisdictional Thresholds)
The 1987 Constitution is the operative constitution for the decision. Procedurally, Rule 4 of the Rules of Court governs venue of civil actions: generally venue for personal actions lies where the plaintiff or any principal plaintiff resides or where the defendant resides or may be found at the election of the plaintiff, but parties may, by written agreement entered before filing, validly agree on exclusive venue (Rule 4, Section 4(b)). Jurisdictional thresholds distinguishing Metropolitan/municipal trial courts from RTCs derive from Batas Pambansa Blg. 129 as amended (and RA 7691), with the RTC exercising exclusive original jurisdiction where the demand exceeds statutory thresholds (the complaint here involved an amount in excess of P8,000,000, thus within RTC jurisdiction).
Issue Presented
Whether the Valenzuela‑RTC erred in ruling that venue was improperly laid in Civil Case No. 40‑V‑12 because the contract stipulated exclusive venue in the Regional Trial Court of Pasay City.
RTC’s Ruling on Venue
The Valenzuela‑RTC held that Section 21 of the lease contract was void insofar as it would limit filing of cases that fall within the exclusive original jurisdiction of municipal trial courts (for example, forcible entry and detainer). However, the RTC found the stipulation valid as to matters within RTC jurisdiction. Because petitioner’s action for collection of sum of money exceeded the jurisdictional threshold for the RTC, the Valenzuela court ruled that the dispute should have been filed in the RTC of Pasay City pursuant to the contractual venue clause, and therefore dismissed the complaint for improper venue. The RTC also ruled that respondent did not waive the venue defense by filing motions for extensions, counterclaims, or impleading PNCC, since improper venue was timely asserted in his answer.
Supreme Court’s Analysis and Rationale
The Supreme Court affirmed the Valenzuela‑RTC. It reiterated the controlling principles: parties may validly agree in writing, before suit is filed, on exclusive venue (Rule 4(4)(b)), and an exclusive venue clause is valid when (a) the stipulation is exclusive in intent, (b) expressed in writing, and (c) agreed upon before filing, as discussed in cases such as Pilipino Telephone Corp. v. Tecson and Briones v. Court of Appeals. The lease’s Section 21 plainly satisfied these elements: it is written, predates the suit, designates Pasay City and states “exclusive of all others,” demonstrating exclusive intent. The Court emphasized that such a stipulation is a matter of venue, not jurisdiction: jurisdiction is conferred by law and cannot be contracted away, and the law is deemed written into every contract. Because petitioner’s cause—collection of rent in an amount exceeding the RTC threshold—fell squarely
...continue readingCase Syllabus (G.R. No. 222711)
Parties and Case Caption
- Petitioner: Ley Construction and Development Corporation, represented by its President, Janet C. Ley.
- Respondent / Third-Party Plaintiff: Marvin Medel Sedano, doing business under the name and style "Lola Taba Lolo Pato Palengke at Paluto sa Seaside."
- Third-Party Defendant: Philippine National Construction Corporation (PNCC).
- Forum below: Regional Trial Court (RTC) of Valenzuela City, Branch 75 (Civil Case No. 40-V-12).
- Case before the Supreme Court: G.R. No. 222711, decided August 23, 2017, Second Division; Decision penned by Justice Perlas-Bernabe; Acting Chief Justice Carpio (Chairperson), Justices Peralta and Reyes, Jr., concur; Justice Caguioa on leave.
Factual Background
- Original lease: On or about January 14, 2005, petitioner leased a 50,000-square meter parcel located at Financial Center Area, Pasay City (now Lot 5-A Diosdado Macapagal Boulevard, Pasay City) from PNCC (third-party defendant).
- Sublease to respondent: On September 11, 2006, petitioner subleased 14,659.80 sq.m. of that parcel to respondent for a ten (10) year term beginning November 15, 2005, at a monthly rent of P1,174,780.00, subject to a ten percent (10%) increase beginning the third year and every year thereafter (lease contract).
- Alleged non-payment: Petitioner alleged respondent failed to pay rent for the period August 2011 to December 2011, aggregating P8,828,025.46; petitioner issued demand(s) and respondent allegedly refused to pay, prompting the complaint for collection of sum of money and damages.
- Respondent's position on payments: Respondent countered that he had been paying rent to petitioner until PNCC demanded that rentals be paid directly to PNCC due to petitioner’s eviction by court order; consequently, respondent remitted rentals to PNCC for the disputed period (with official receipts).
- Additional financial assertions by respondent: Respondent alleged he had paid petitioner P3,518,352.00 as deposit and advance rentals and made a P400,000.00 overpayment which were not liquidated or credited; respondent counterclaimed for reimbursement of these amounts and for moral and exemplary damages and litigation expenses for the filing of a baseless suit.
- Documentary basis noted in the record: Contract of Lease dated January 5, 2005; lease contract notarized September 11, 2006; demand letters (August 10, 2011; October 27, 2011); Decision in Civil Case No. M-PSY-08-07675-CV dated July 4, 2011; official receipts for rental payments.
Procedural History in Trial Court
- Filing of complaint: Petitioner filed a Complaint for Collection of Sum of Money and Damages before the Valenzuela-RTC (docketed Civil Case No. 40-V-12); the main text states filing on March 13, 2012 (with footnote indicating complaint dated February 24, 2012).
- Respondent’s Answer and Third-Party Complaint: Respondent filed an Answer with Third-Party Complaint (dated June 22, 2012) impleading PNCC and asserting affirmative defenses including improper venue; respondent also set up counterclaims.
- PNCC’s pleadings: PNCC filed an Answer to Third-Party Complaint with Counterclaim (dated January 16, 2013), contending respondent has no cause of action against PNCC and asserting effectivity of its right to receive rent and that respondent entered into a lease with PNCC after petitioner’s eviction.
- Valenzuela-RTC disposition below: In an Order dated June 15, 2015, the Valenzuela-RTC granted respondent’s motion and dismissed petitioner’s complaint for improper venue (without prejudice); petitioner’s motion for reconsideration was denied in an Order dated January 27, 2016. Those Orders are the subject of the present petition for review on certiorari.
Legal Issue Presented to the Supreme Court
- Single issue: Whether the Regional Trial Court of Valenzuela City erred in ruling that venue was improperly laid and dismissing petitioner’s complaint on that ground.
Governing Law and Legal Principles Applied
- Rule 4, Rules of Court (Venue of Actions):
- Section 1 (Venue of real actions): Actions affecting title or possession of real property shall be commenced and tried in the court with jurisdiction over the area where the property is situated; forcible entry and detainer actions in municipal trial court of the municipality or city where the property is situated.
- Section 2 (Venue of personal actions): All other actions may be commenced and tried where the plaintiff or any principal plaintiff resides, or where the defendant or any principal defendant resides, or where a non-resident defendant may be found, at the election of the plaintiff.
- Section 3 (Venue of actions against nonreside