The Supreme Court’s decision in Radiowealth Finance Company, Inc. v. Romeo T. Nolasco and Reynaldo T. Nolasco emphasizes the enforceability of venue stipulations in contracts, clarifying that such agreements are generally binding unless they cause undue inconvenience to the parties. The Court held that the Regional Trial Court (RTC) erred in dismissing the case motu proprio (on its own initiative) based on improper venue, as the parties had validly agreed to a specific venue in their promissory note. This ruling affirms the principle that parties can stipulate on venue, provided it does not defeat the purpose of the Rules of Court, which is to ensure the convenience of the parties.

Contractual Agreements: Can Parties Choose Where to Sue?

In this case, Radiowealth Finance Company, Inc. (petitioner) sought to collect a debt from Romeo and Reynaldo Nolasco (respondents) arising from a loan secured by a chattel mortgage. When the respondents defaulted, the petitioner filed a complaint for Sum of Money and Damages with Application for Writ of Replevin with the RTC of San Mateo, Rizal. The RTC, however, dismissed the case motu proprio for lack of jurisdiction, stating that neither the petitioner nor the respondents resided within the court’s jurisdiction. The petitioner argued that the RTC had jurisdiction over the case and that the venue was proper based on a provision in the promissory note allowing the action to be brought in the National Capital Judicial Region or where the petitioner has a branch or office. This disagreement brought to light the interplay between jurisdiction, venue, and the contractual freedom of parties to determine the forum for resolving disputes.

The Supreme Court clarified the distinction between **jurisdiction** and **venue**. Jurisdiction is the court’s authority to hear and determine a case, conferred by law and relating to the nature and subject matter of the action. Venue, on the other hand, pertains to the place where the case may be filed and is generally waivable by the parties. The Court emphasized that the RTC confused these concepts, as the amount involved in the case fell within the RTC’s jurisdiction. The dismissal based on the belief that the case should have been filed in Mandaluyong City, where the respondents resided, was therefore erroneous.

Building on this clarification, the Court highlighted the permissive nature of Section 2, Rule 4 of the 1997 Rules of Civil Procedure, which states that personal actions “may” be commenced and tried where the plaintiff or defendant resides. This provision, according to the Court, is not restrictive and does not preclude parties from agreeing on a specific venue. Section 4 of the same rule expressly allows parties to stipulate on the exclusive venue of actions, provided that the agreement is in writing and made before the filing of the action.

This principle is rooted in the concept of **contractual autonomy**, which allows parties to freely agree on the terms and conditions of their agreements, including the venue for resolving disputes. The Supreme Court has consistently recognized the validity and enforceability of venue stipulations, as long as they do not contravene public policy or prejudice third persons. In Unimasters Conglomeration, Inc. v. CA, the Court emphasized that “[p]arties may by stipulation waive the legal venue and such waiver is valid and effective being merely a personal privilege, which is not contrary to public policy or prejudicial to third persons.”

The Court then examined the venue stipulation in the promissory note, which stated that “[a]ny action to enforce payment of any sums due under this Note shall exclusively be brought in the proper court within the National Capital Judicial Region or in any place where [the petitioner] has a branch/office, at its sole option.” The Court found that the petitioner’s choice to file the case in San Mateo, Rizal, where it maintained a branch, was in accordance with the venue stipulation and should have been respected by the RTC.

Furthermore, the Supreme Court reiterated that a court cannot motu proprio dismiss a case on the ground of improper venue. The issue of venue is personal to the parties, and unless the defendant objects to the venue at the earliest opportunity, such as in a motion to dismiss or in the answer, the objection is deemed waived. As stated in Dacoycoy v. Intermediate Appellate Court, “Dismissing the complaint on the ground of improper venue is certainly not the appropriate course of action at this stage of the proceeding…”

The Court noted that the RTC’s interference with the parties’ agreement on venue disrupted the proceedings and potentially caused unnecessary delays. The choice of venue is a matter of convenience for the parties, and absent any objection, the court should not interfere with their mutually agreed-upon terms. The Supreme Court ultimately granted the petition, reversed the RTC’s orders, and reinstated the civil case.

FAQs

What was the key issue in this case?	The primary issue was whether the Regional Trial Court (RTC) erred in dismissing a case motu proprio for improper venue when the parties had a written agreement stipulating the venue.
What is the difference between jurisdiction and venue?	Jurisdiction is the court’s authority to hear a case, conferred by law, while venue is the place where the case may be filed, which can be stipulated by the parties.
Can parties agree on a specific venue for lawsuits?	Yes, parties can agree in writing before filing a lawsuit to an exclusive venue, as long as it does not violate public policy or unduly inconvenience the parties.
What happens if a case is filed in the wrong venue?	The defendant must object to the venue at the earliest opportunity; otherwise, the objection is deemed waived, and the case can proceed in that venue.
Can a court dismiss a case on its own due to improper venue?	No, a court cannot dismiss a case motu proprio (on its own initiative) based on improper venue; it is up to the parties to raise the issue.
What did the Supreme Court decide in this case?	The Supreme Court ruled that the RTC erred in dismissing the case motu proprio and reinstated the civil case, emphasizing the enforceability of the venue stipulation.
What is the significance of a venue stipulation in a contract?	A venue stipulation provides certainty and predictability, allowing parties to choose a forum that is convenient for them, potentially reducing costs and facilitating dispute resolution.
Does a venue stipulation override the general rules of venue?	Yes, if the venue stipulation is valid and exclusive, it overrides the general rules of venue, directing where the case must be filed.

The Supreme Court’s resolution reinforces the importance of honoring contractual agreements, particularly venue stipulations, which provide parties with the autonomy to choose the forum for resolving disputes. This decision serves as a reminder that courts should not interfere with mutually agreed-upon terms unless there is a clear showing of public policy violation or undue inconvenience. The ruling underscores the need for parties to carefully consider venue stipulations in their contracts and to raise any objections to improper venue promptly.

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: Radiowealth Finance Company, Inc. v. Romeo T. Nolasco and Reynaldo T. Nolasco, G.R. No. 227146, November 14, 2016