Monday, December 5, 2016

Proper venue in civil cases where the plaintiff is a single proprietorship business - Mangila vs CA : 125027 : August 12, 2002 : J. Carpio : Third Division

"x x x.

Improper Venue

Petitioner assails the filing of this case in the RTC of Pasay and points to a provision in private respondents invoice which contains the following:

3. If court litigation becomes necessary to enforce collection, an additional equivalent (sic) to 25% of the principal amount will be charged. The agreed venue for such action is Makati, Metro Manila, Philippines.[28]

Based on this provision, petitioner contends that the action should have been instituted in the RTC of Makati and to do otherwise would be a ground for the dismissal of the case.

We resolve to dismiss the case on the ground of improper venue but not for the reason stated by petitioner.

The Rules of Court provide that parties to an action may agree in writing on the venue on which an action should be brought.[29] However, a mere stipulation on the venue of an action is not enough to preclude parties from bringing a case in other venues.[30] The parties must be able to show that such stipulation is exclusive. Thus, absent words that show the parties intention to restrict the filing of a suit in a particular place, courts will allow the filing of a case in any venue, as long as jurisdictional requirements are followed. Venue stipulations in a contract, while considered valid and enforceable, do not as a rule supersede the general rule set forth in Rule 4 of the Revised Rules of Court.[31] In the absence of qualifying or restrictive words, they should be considered merely as an agreement on additional forum, not as limiting venue to the specified place.[32]

In the instant case, the stipulation does not limit the venue exclusively to Makati. There are no qualifying or restrictive words in the invoice that would evince the intention of the parties that Makati is the only or exclusive venue where the action could be instituted. We therefore agree with private respondent that Makati is not the only venue where this case could be filed.

Nevertheless, we hold that Pasay is not the proper venue for this case.

Under the 1997 Rules of Civil Procedure, the general rule is venue in personal actions is 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.[33] The exception to this rule is when the parties agree on an exclusive venue other than the places mentioned in the rules. But, as we have discussed, this exception is not applicable in this case. Hence, following the general rule, the instant case may be brought in the place of residence of the plaintiff or defendant, at the election of the plaintiff (private respondent herein).

In the instant case, the residence of private respondent (plaintiff in the lower court) was not alleged in the complaint. Rather, what was alleged was the postal address of her sole proprietorship, Air Swift International. It was only when private respondent testified in court, after petitioner was declared in default, that she mentioned her residence to be in Better Living Subdivision, Paraaque City.

In the earlier case of Sy v. Tyson Enterprises, Inc.,[34] the reverse happened. The plaintiff in that case was Tyson Enterprises, Inc., a corporation owned and managed by Dominador Ti. The complaint, however, did not allege the office or place of business of the corporation, which was in Binondo, Manila. What was alleged was the residence of Dominador Ti, who lived in San Juan, Rizal. The case was filed in the Court of First Instance of Rizal, Pasig. The Court there held that the evident purpose of alleging the address of the corporations president and manager was to justify the filing of the suit in Rizal, Pasig instead of in Manila. Thus, the Court ruled that there was no question that venue was improperly laid in that case and held that the place of business of Tyson Enterpises, Inc. is considered as its residence for purposes of venue. Furthermore, the Court held that the residence of its president is not the residence of the corporation because a corporation has a personality separate and distinct from that of its officers and stockholders.

In the instant case, it was established in the lower court that petitioner resides in San Fernando, Pampanga[35] while private respondent resides in Paraaque City.[36] However, this case was brought in Pasay City, where the business of private respondent is found. This would have been permissible had private respondents business been a corporation, just like the case in Sy v. Tyson Enterprises, Inc. However, as admitted by private respondent in her Complaint[37] in the lower court, her business is a sole proprietorship, and as such, does not have a separate juridical personality that could enable it to file a suit in court.[38] In fact, there is no law authorizing sole proprietorships to file a suit in court.[39]

A sole proprietorship does not possess a juridical personality separate and distinct from the personality of the owner of the enterprise.[40] The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by a single individual and requires its proprietor or owner to secure licenses and permits, register its business name, and pay taxes to the national government.[41] The law does not vest a separate legal personality on the sole proprietorship or empower it to file or defend an action in court.[42]

Thus, not being vested with legal personality to file this case, the sole proprietorship is not the plaintiff in this case but rather Loreta Guina in her personal capacity. In fact, the complaint in the lower court acknowledges in its caption that the plaintiff and defendant are Loreta Guina and Anita Mangila, respectively. The title of the petition before us does not state, and rightly so, Anita Mangila v. Air Swift International, but rather Anita Mangila v. Loreta Guina. Logically then, it is the residence of private respondent Guina, the proprietor with the juridical personality, which should be considered as one of the proper venues for this case.

All these considered, private respondent should have filed this case either in San Fernando, Pampanga (petitioners residence) or Paraaque (private respondents residence). Since private respondent (complainant below) filed this case in Pasay, we hold that the case should be dismissed on the ground of improper venue.

Although petitioner filed an Urgent Motion to Discharge Attachment in the lower court, petitioner expressly stated that she was filing the motion without submitting to the jurisdiction of the court. At that time, petitioner had not been served the summons and a copy of the complaint.[43] Thereafter, petitioner timely filed a Motion to Dismiss[44] on the ground of improper venue. Rule 16, Section 1 of the Rules of Court provides that a motion to dismiss may be filed [W]ithin the time for but before filing the answer to the complaint or pleading asserting a claim. Petitioner even raised the issue of improper venue in his Answer[45] as a special and affirmative defense. Petitioner also continued to raise the issue of improper venue in her Petition for Review[46] before this Court. We thus hold that the dismissal of this case on the ground of improper venue is warranted.

The rules on venue, like other procedural rules, are designed to insure a just and orderly administration of justice or the impartial and evenhanded determination of every action and proceeding. Obviously, this objective will not be attained if the plaintiff is given unrestricted freedom to choose where to file the complaint or petition.[47]

x x x."

[G.R. No. 125027. August 12, 2002]
ANITA MANGILA, petitioner, vs. COURT OF APPEALS and LORETA GUINA, respondents.