88 SUPREME COURT REPORTS ANNOTATED

San Miguel Corporation vs. Monasterio

*
G.R. No. 151037. June 23, 2005.

SAN MIGUEL CORPORATION, petitioner, vs. TROY

FRANCIS L. MONASTERIO, respondent.

Actions; Venues; Contracts; Where the Exclusive Warehouse

Agreement (EWA) stipulation on venue is clear and unequivocal, it
ought to be respected.—On disputes relating to the enforcement of
the rights and duties of the contracting parties, the venue
stipulation in the EWA should be construed as mandatory.
Nothing therein being contrary to law, morals, good custom or
public policy, this provision is binding upon the parties. The EWA
stipulation on venue is clear and unequivocal, thus it ought to be
respected.
Same; Same; Same; Where the exclusivity clause does not
make it necessarily all encompassing, such that even those not
related to the enforcement of the contract should be subject to the
exclusive venue, the stipulation designating exclusive venues
should be strictly confined to the specific undertaking or
agreement.—Exclusive venue stipulation embodied in a contract
restricts or confines parties thereto when the suit relates to
breach of the said contract. But where the exclusivity clause does
not make it necessarily all encompassing, such that even those
not related to the enforcement of the contract should be subject to
the exclusive venue, the stipulation designating exclusive venues
should be strictly confined to the specific undertaking or
agreement. Otherwise, the basic principles of freedom to contract
might work to the great disadvantage of a weak party-suitor who
ought to be allowed free access to courts of justice. Restrictive
stipulations are in derogation of the general policy of making it
more convenient for the parties to institute actions arising from or
in relation to their agreements. Thus, the restriction should be
strictly construed as relating solely to the agreement for which
the exclusive venue stipulation is embodied. Expanding the scope
of such limitation on a contracting party will create unwarranted
restrictions which the parties might find unintended or worse,
arbitrary and oppressive.
_______________

* FIRST DIVISION.

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San Miguel Corporation vs. Monasterio

Same; Same; Same; Since convenience is the raison d’être of

the rules on venue, venue stipulation should be deemed merely
permissive, and that interpretation should be adopted which most
serves the parties’ convenience.—Since convenience is the raison
d’être of the rules on venue, venue stipulation should be deemed
merely permissive, and that interpretation should be adopted
which most serves the parties’ convenience. Contrawise, the rules
mandated by the Rules of Court should govern. Accordingly, since
the present case for the collection of sum of money filed by herein
respondent is a personal action, we find no compelling reason why
it could not be instituted in the RTC of Naga City, the place where
plaintiff resides.

PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.

The facts are stated in the resolution of the Court.

     Martin T. Menez for SMC.
     Avelino Sales for respondent.

RESOLUTION

QUISUMBING, J.:

This appeal
1
by certiorari seeks to reverse and set aside
2
the
Decision dated July 16, 2001, and the Resolution dated
November 27, 2001, of the Court of Appeals in CA-G.R. SP
No. 52622. The Court of Appeals dismissed the special civil3
action for certiorari filed
4
by San Miguel Corporation (SMC)
assailing the Orders of the Regional Trial Court of Naga
City, Branch 20, which denied its Motion to Dismiss on the
ground

_______________

1 Rollo, pp. 25-35. Penned by Associate Justice Josefina Guevara-

Salonga, with Associate Justices Delilah Vidallon-Magtolis, and Teodoro
P. Regino concurring.
2 Id., at p. 37.
3 Also referred to as “San Miguel Brewing Philippines” in the pleadings
before the RTC of Naga.
4 Rollo, pp. 78-79, 96.

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90 SUPREME COURT REPORTS ANNOTATED

San Miguel Corporation vs. Monasterio

of improper venue and the subsequent Motion for

Reconsideration in Civil Case No. RTC’98-4150.
The facts are as follows:
On August 1, 1993, petitioner 5 SMC entered into an
Exclusive Warehouse Agreement (hereafter EWA for
brevity) with SMB Warehousing Services (SMB),
represented by its manager, respondent Troy Francis L.
Monasterio. SMB undertook to provide land, physical
structures, equipment and personnel for storage,
warehousing and related services such as, but not limited
to, segregation of empty bottles, stock handling, and
receiving SMC products for its route operations at
Sorsogon, Sorsogon and Daet, Camarines Norte.
The agreement likewise contained a stipulation on
venue of actions, to wit:

26. GENERAL PROVISIONS

...
b. Should it be necessary that an action be brought in court to
enforce the terms of this Agreement or the duties or rights of the
parties herein, it is agreed that the proper court should be in the
courts of Makati or Pasig, Metro Manila, 6to the exclusion of the
other courts at the option of the COMPANY. [Italics supplied.]
...

On November 3, 1998, respondent Monasterio, a resident of

Naga City, filed a complaint docketed as Civil Case No.
RTC’98-4150 for collection of sum of money against
petitioner before the Regional Trial Court of Naga City,
Branch 20. 7
In his Complaint, Monasterio claimed P900,600 for
unpaid cashiering fees. He alleged that from September
1993 to September 1997 and May 1995 to November 1997,
aside from rendering service as warehouseman, he was
given the addi-
_______________

5 Id., at pp. 38-46.

6 Id., at p. 44.
7 Id., at pp. 56-60.

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San Miguel Corporation vs. Monasterio

tional task of cashiering in SMC’s Sorsogon and Camarines

Norte sales offices for which he was promised a separate
fee. He claims that of approximately 290 million pesos in
cash and checks of the sales office and the risks of
pilferage, theft, robbery and hold-up, he had assumed what
amounted to approximately 35 million pesos per annum for
Sorsogon, Sorsogon, and 60 million pesos for Daet,
Camarines Norte. He also said that he hired personnel for
the job. Respondent added that it was only on December 1,
1997, that petitioner SMC started paying him P11,400 per
month for his cashiering services.
Monasterio demanded P82,959.32 for warehousing fees,
P11,400 for cashiering fees for the month of September,
1998, as well as exemplary damages, and attorney’s8 fees in
the amount of P500,000 and P300,000, respectively. 9
On November 19, 1998, SMC filed a Motion to Dismiss
on the ground of improper venue. SMC contended that
respondent’s money claim for alleged unpaid cashiering
services arose from respondent’s function as warehouse
contractor thus the EWA should be followed and thus, the
exclusive venue of courts of Makati or Pasig, Metro Manila
is the proper venue as provided under paragraph 26(b) of
the Exclusive Warehouse Agreement. SMC cites 10
in its favor
Section 4(b) in relation to Section 2 of Rule 4 of the Rules
of Court allowing agreement of parties on exclusive venue
of actions.

_______________

8 Id., at p. 59.
9 Id., at pp. 61-68.
10 SEC. 2. Venue of personal actions.—All other actions may be
commenced and tried where the plaintiff or any of the principal plaintiffs
resides, or where the defendant or any of the principal defendants resides,
or in the case of a non-resident defendant where he may be found, at the
election of the plaintiff.
...
 Sec. 4. When Rule not applicable.—This Rule shall not apply—
...

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San Miguel Corporation vs. Monasterio

11
Respondent filed an Opposition contending that the
cashiering service he rendered for the petitioner was
separate and distinct from the services under the EWA.
Hence, the provision on venue in the EWA was not
applicable to said services. Hence, respondent insists that
in accordance with Section 2 of Rule 4 of the Rules of Court
the venue should be in Naga City, his place of residence.
On February 22, 1999, the Regional12
Trial Court of Naga
City, Branch 20 issued an Order denying petitioner’s
motion to dismiss. The court held that the services agreed
upon in said contract is limited to warehousing services
and the claim of plaintiff in his suit pertains to the
cashiering services rendered to the defendant, a
relationship which was not documented, and is certainly a
contract separate and independent
13
from the exclusive
warehousing agreements.
SMC’s subsequent
14
Motion for Reconsideration was
likewise denied. While the motion was15 pending, the
respondent filed an Amended Complaint deleting his
claim for unpaid warehousing and cashiering fees but
increasing 16the exemplary damages from P500,000 to
P1,500,000.
Petitioner elevated the controversy to the Court of
Appeals by way of a special civil action for certiorari with a
prayer for the issuance of a Temporary Restraining Order
and/or Writ of Preliminary Injunction, imputing grave
abuse of discretion on the RTC Naga City for denying its
motion to dismiss and subsequent motion for
reconsideration.
On June 11, 1999, during the pendency of the certiorari
petition SMC filed before the trial court an answer ex
abundanti

_______________

(b) Where the parties have validly agreed in writing before the filing of
the action on the exclusive venue thereof.
11 Rollo, pp. 69-70.
12 Id., at pp. 78-79.
13 Ibid.
 14 Id., at pp. 80-82.
15 Id., at pp. 89-92.
16 Id., at p. 91.

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San Miguel Corporation vs. Monasterio

17
cautela with a compulsory counterclaim for moral and
exemplary damages and attorney’s fees. SMC averred lack
of cause of action, payment, waiver, abandonment and
extinguishment.
In its decision dated July 16, 2001, the Court of Appeals
found respondent’s claim for cashiering services
inseparable from his claim for warehousing services, thus,
the venue stipulated in the EWA is the proper venue.
However, the Court of Appeals noted that prior to the filing
of SMC’s petition, respondent Monasterio filed an amended
complaint to which SMC filed an answer. Thus, the Court
of Appeals dismissed San Miguel’s petition for certiorari,
stating that the case was already moot and academic.
Petitioner filed a motion for reconsideration which was
denied by the Court of Appeals. Hence, this 18
petition
wherein petitioner raises the following as issues:

1. Whether or not this Honorable Court may review

the finding of the Court of Appeals that the
Complaint and Amended Complaint were filed in
the wrong venue.
2. Assuming arguendo that this Honorable Court may
review the finding of the Court of Appeals that the
Complaint and Amended Complaint were filed in
the wrong venue, whether or not such finding
should be reversed.
3. Whether or not the Court of Appeals gravely erred
in ruling that SMC’s Petition For Certiorari has
become moot and academic in view of the filing of
Monasterio’s Amended Complaint 19
and SMC’s
Answer (Ex Abundanti Cautela).

In our view, two issues only require resolution: (1) Did the
RTC of Naga City err in denying the motion to dismiss filed
by SMC alleging improper venue? (2) Did the CA gravely
err in ruling that SMC’s petition for certiorari has become
moot?
_______________

17 Id., at pp. 120-131.

18 Id., at pp. 299-300.
19 Out of abundant caution.

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94 SUPREME COURT REPORTS ANNOTATED

San Miguel Corporation vs. Monasterio

On disputes relating to the enforcement of the rights and

duties of the contracting parties, the venue stipulation in
the EWA should be construed as mandatory. Nothing
therein being contrary to law, morals, good custom or 20
public policy, this provision is binding upon the parties.
The EWA stipulation on venue is clear and unequivocal,
thus it ought to be respected.
However, we note that the cause of action in the
complaint filed by the respondent before the RTC of Naga
was not based on the EWA, but concern services not
enumerated in the EWA. Records show also that
previously, respondent received a separate consideration of
P11,400 for the cashiering service he rendered to SMC.
Moreover, in the amended complaint, the respondent’s
cause of action was specifically limited to the collection of
the sum owing to him for his cashiering service in favor of
SMC. He already omitted petitioner’s non-payment of
warehousing fees. As previously ruled, allegations in the
complaint21 determines the cause of action or the nature of
the case. Thus, given the circumstances of this case now
before us, we are constrained to hold that it would be
erroneous to rule, as the CA did, that the collection suit of
the respondent did not pertain solely to the unpaid
cashiering
22
services but pertain likewise to the warehousing
services.
Exclusive venue stipulation embodied in a contract
restricts or confines parties thereto when the suit relates to
breach of the said contract. But where the exclusivity
clause does not make it necessarily all encompassing, such
that even those not related to the enforcement of the
contract should be

_______________

20 See Unimasters Conglomeration, Inc. v. Court of Appeals, G.R. No.

119657, 7 February 1997, 267 SCRA 759, 767 citing Bautista v. De Borja,
No. L-20600, 28 October 1966, 18 SCRA 474, 480 and Central Azucarera
de Tarlac v. De Leon and Fernandez, No. 35246, 22 September 1931, 56
Phil. 169, 173.
21 Peltan Development, Inc. v. Court of Appeals, G.R. No. 117029, 19
March 1997, 270 SCRA 82, 91.
22 CA Rollo, p. 160.

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San Miguel Corporation vs. Monasterio

subject to the exclusive venue, the stipulation designating

exclusive venues should be strictly confined to the specific
undertaking or agreement. Otherwise, the basic principles
of freedom to contract might work to the great
disadvantage of a weak party-suitor who ought to be
allowed free access to courts of justice.
Restrictive stipulations are in derogation of the general
policy of making it more convenient for the parties to
institute actions
23
arising from or in relation to their
agreements. Thus, the restriction should be strictly
construed as relating solely to the agreement for which the
exclusive venue stipulation is embodied. Expanding the
scope of such limitation on a contracting party will create
unwarranted restrictions which the parties might find
unintended or worse, arbitrary and oppressive.
Moreover, since 24
convenience is the raison d’être of the
rules on venue, venue stipulation should be deemed
merely permissive, and that interpretation should be 25
adopted which most serves the parties’ convenience.
Contrawise, the 26
rules mandated by the Rules of Court
should govern. Accordingly, since the present case for the
collection of sum 27
of money filed by herein respondent is a
personal action, we find no compel-

_______________

23 Supra, note 20 at p. 768.

24 Uy v. Contreras, G.R. Nos. 111416-17, 26 September 1994, 237 SCRA
167, 178; Sweet Lines, Inc. v. Teves, No. L-37750, 19 May 1978, 83 SCRA
361, 372; See Nicolas v. Reparations Commission, No. L-28649, 21 May
1975, 64 SCRA 110, 116.
25 Supra, note 20 at pp. 767-768.
26 Rules of Court, Rule 4.

SEC. 2. Venue of personal actions.—All other actions may be commenced and tried
where the plaintiff or any of the principal plaintiffs resides, or where the
defendant or any of the principal defendants resides, or in the case of a non-
resident defendant where he may be found, at the election of the plaintiff.

27 Ruiz v. Court of Appeals, G.R. No. 116909, 25 February 1999, 303

SCRA 637, 645.

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San Miguel Corporation vs. Monasterio

ling reason why it could not be instituted in the RTC of

Naga City, the place where plaintiff resides.
Having settled the issue on venue, we need not belabor
the issue of whether SMC’s petition has become moot.
WHEREFORE, it is hereby ruled that no reversible
error was committed by the Regional Trial Court of Naga
City, Branch 20, in denying petitioner’s motion to dismiss.
Said RTC is the proper venue of the amended complaint for
a sum of money filed by respondent against petitioner San
Miguel Corporation, in connection with his cashiering
services. The case is hereby REMANDED to the RTC of
Naga City, Branch 20, for further proceedings on
respondent’s amended complaint, without further delay.
Costs against petitioner.
SO ORDERED.

          Davide, Jr. (C.J., Chairman), Ynares-Santiago,

Carpio and Azcuna, JJ., concur.

Case remanded to trial court for further proceedings on

respondent’s amended complaint.

Notes.—Art. 28 (1) of the Warsaw Convention limiting

venue in actions for damages to courts at (a) the domicile of
the carrier, (b) carrier’s principal place of business, (c)
carrier’s place of business through which the contract has
been made, or (d) place of destination is a jurisdiction and
not a venue provision. (Santos III vs. Northwest Orient
Airlines, 210 SCRA 256 [1992])
The question of venue relates to the principal action and
is prejudicial to the ancillary issue of receivership.
(Commodities Storage & Ice Plant Corporation vs. Court of
Appeals, 274 SCRA 439 [1997])

——o0o——

97
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