The Supreme Court ruled that venue stipulations in contracts of adhesion are enforceable, provided the agreement to the venue is exclusive, in writing, and made before the suit. This means that even if a contract is presented on a “take it or leave it” basis, its terms, including where lawsuits must be filed, are binding if they are clear and the weaker party understood and agreed to them. Parties entering into contracts, even standard form contracts, are expected to comply with the agreed-upon venue for legal disputes.

The Case of the Roaming Venue: Can Fine Print Confine a Lawsuit’s Location?

This case revolves around a dispute between Pilipino Telephone Corporation (PILTEL) and Delfino Tecson. Tecson, a subscriber, filed a complaint against PILTEL in Iligan City. PILTEL sought to dismiss the case, arguing that the mobiline service agreements signed by Tecson contained a provision specifying that any legal action must be brought in Makati City. The trial court denied PILTEL’s motion, a decision upheld by the Court of Appeals. This brought the case to the Supreme Court to determine the validity and enforceability of the venue stipulation in PILTEL’s service agreement.

The core issue before the Supreme Court was whether the venue stipulation in the mobiline service agreement was binding on Tecson, considering that the agreement was a contract of adhesion. A contract of adhesion is one where one party prepares the contract and the other party merely affixes their signature or “adheres” to it, often without the opportunity to negotiate the terms. While contracts of adhesion are not automatically invalid, courts scrutinize them carefully to ensure fairness, particularly when one party is in a significantly weaker bargaining position.

The Supreme Court referred to Section 4, Rule 4 of the Revised Rules of Civil Procedure, which allows parties to agree in writing on an exclusive venue for litigation before a lawsuit is filed. To be valid and binding, the venue stipulation must be exclusive in nature, expressed in writing, and entered into before the suit. In PILTEL’s mobiline service agreement, paragraph 22 stipulated that suits arising from the agreement “shall be in the proper courts of Makati, Metro Manila,” and that the subscriber “expressly waives any other venue.”

The Court acknowledged that the mobiline service agreement was a contract of adhesion. However, it emphasized that such contracts are not inherently invalid. The rule is that ambiguities in contracts of adhesion are construed against the drafter. However, if the terms are clear and leave no doubt about the parties’ intentions, the literal meaning prevails. The Supreme Court has consistently held that contracts of adhesion are binding unless the weaker party is left with no choice and is deprived of an opportunity to bargain effectively.

In this instance, Tecson entered into six subscription contracts on different dates. The Court presumed that Tecson had the opportunity to read the terms and conditions of the agreements each time. The Court distinguished this case from Sweet Lines, Inc. vs. Teves, where the venue stipulation on a passage ticket was invalidated due to the passengers’ limited opportunity to examine the terms amid crowded conditions. Here, Tecson had multiple opportunities to review and even reject the terms of the service agreements.

The Supreme Court emphasized the principle that a duly executed contract is the law between the parties, obligating them to comply fully and not selectively with its terms, and that this principle applies to contracts of adhesion. Therefore, the Court held that the venue stipulation in PILTEL’s mobiline service agreement was binding on Tecson. Consequently, the Court granted the petition, reversed the Court of Appeals’ decision, and dismissed the case filed in the Regional Trial Court of Iligan City, without prejudice to Tecson filing a new complaint in the proper venue (Makati City).

FAQs

What was the key issue in this case?	The central issue was whether a venue stipulation in a contract of adhesion is enforceable, compelling the parties to litigate only in the agreed-upon location.
What is a contract of adhesion?	A contract of adhesion is a standard-form contract drafted by one party, typically a business, and presented to the other party on a “take it or leave it” basis, with no room for negotiation.
Is a contract of adhesion automatically invalid?	No, a contract of adhesion is not automatically invalid; however, courts carefully scrutinize them for fairness and to ensure the weaker party had a reasonable opportunity to understand the terms.
What is a venue stipulation?	A venue stipulation is a contractual provision specifying the particular court or location where any legal disputes arising from the contract must be filed and litigated.
Under what conditions is a venue stipulation valid?	A venue stipulation is valid if it is exclusive, in writing, agreed upon by the parties before the filing of a lawsuit, and the terms are clear and unambiguous.
What did the Supreme Court decide in this case?	The Supreme Court ruled that the venue stipulation in PILTEL’s mobiline service agreement was enforceable, requiring Tecson to file his complaint in Makati City, as stipulated in the contract.
What happens if a contract of adhesion is ambiguous?	If a contract of adhesion contains ambiguities, those ambiguities are typically construed against the party that drafted the contract (the stronger party).
What does this case mean for consumers entering into contracts?	This case highlights the importance of reading and understanding the terms of contracts, including venue stipulations, as they can be binding even in contracts of adhesion.

This case underscores the importance of understanding contract terms, even in standardized agreements. While contracts of adhesion are scrutinized, clear and unambiguous venue stipulations are generally enforceable, impacting where legal disputes can be pursued.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: PILIPINO TELEPHONE CORPORATION vs. DELFINO TECSON, G.R. No. 156966, May 07, 2004