GESMUNDO v JRB

G.R. 111077 July 14, 1994

Mendoza, J.
FACTS: On April 7, 1980Petitioner Virgilio Gesmundo and respondent JRB Realty (represented by Jaime
Blanco, president), entered into a lease contract covering Room 116, Blanco Suites, at 246 Villaruel St.
Pasay City. They stipulated that xxx the venue for all suits, whether for breach 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. xxx
On March 19, 1993, petitioners filed a complaint in the RTC of Makati for damages against respondents.
They allege the following:

they had been in possession of the leased premises since the perfection of the contract until
November 1992;
on November 2, 1992 they received a letter from Jaime Blanco terminating their lease effective
November 30, 1992 with no other tenant receiving a similar letter;
in one conversation over the phone, Blanco told Virgilio that he did not want petitioners in any
of his appartments as the company that Virgilio works for did not pay Blanco his retainer fees;
they asked for reconsideration, however, the respondent only reiterated his statements in the
first letter;
they were forced to vacate on November 28, 1992 and leased another apartment at Php 2,500
monthly; and
respondents action was unwarranted, unjustified, malicious, abusive and capricious.

Thus, they prayed for actual damages, moral damages, attorneys fees and costs.
Respondents on the other hand moved to dismiss on the ground of improper venue pursuant to their
lease contract stating that the venue of action was in a court of competent jurisdiction in Pasay City.
Petitioners, in their opposition to the motion to dismiss alleged that their cause of action is not based on
the lease contract and it follows that the case is not covered by the venue stipulation. They contend that
it is governed by the general rule as to venue stated in Rule 4, Sec 2 (b). They also alleged that assuming
arguendo that the stipulation applies, it cannot operate as a limit to venue but merely provides for an
additional forum.
Issue RTC: Whether the suit was filed in the proper venue.
RTC Ruling: No. Dismissed.
MR: Dismissed.
Issue SC: Whether the venue was properly laid in the RTC of Makati.
SC Ruling: No.
Venue by agreement, waiver of right under Rule 4, Sec 2 (b)

It has been held that stipulations limiting venue is valid and binding on the contracting parties based on
Rule 4 Sec.3 which 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 present case, it is manifest 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.
It can clearly be inferred that the parties intend to limit to the courts of appropriate jurisdiction in Pasay
City as venue between them and those claiming under them. This acts as waiver of their right to
institute action in the courts provided for in Rule 4, Sec. 2 (b).
When stipulation is merely provision of additional forum
This case differs from previous cases an example of which is Polytrade v. Blanco where there was a
stipulation that the parties agree to sue and be sued in the city of Manila in which the court held that
such statement only provided for an additional forum in the absence of any qualifying or restrictive
words.
On the other hand, in this present case, the stipulation was like that in Hoechst v Torres where the
parties agreed that in case of any litigation arising out of the agreement, the venue of any action shall
be in the competent courts of the Province of Rizal in which the court held that no further stipulations
were necessary to elicit the thought that both parties agreed to sue and be sued ONLY in the province of
Rizal.
The fact that neither of the parties reside in Pasay City is of no moment in this case since the parties
stipulated the venue without regard to their residence.