The Supreme Court’s decision in Universal Robina Corporation v. Albert Lim emphasizes the importance of adhering to venue stipulations agreed upon by parties in a contract. The Court ruled that if parties have validly agreed in writing to an exclusive venue before filing an action, that agreement should be respected. This decision reinforces the principle of freedom of contract and provides clarity on when a court can dismiss a case motu proprio (on its own initiative) based on improper venue.

Contractual Promises: Can Courts Override Venue Agreements?

The case arose from a contract of sale between Universal Robina Corporation (URC) and Albert Lim, doing business as “New H-R Grocery.” URC sold grocery products to Lim, who failed to fully settle his obligation. URC filed a complaint in Quezon City, alleging it was the agreed venue for disputes. The trial court initially dismissed the case motu proprio for lack of jurisdiction and improper venue, but later admitted an amended complaint asserting the venue agreement. After Lim failed to answer and was declared in default, the trial court again dismissed the case, questioning the venue’s propriety. This dismissal was based on the absence of a direct connection between Quezon City and the parties and on doubts about the validity of the venue stipulation on the delivery receipt. URC appealed to the Court of Appeals, which dismissed the petition due to procedural lapses. This prompted URC to elevate the issue to the Supreme Court.

The central question before the Supreme Court was whether the trial court acted correctly in dismissing URC’s complaint motu proprio on the ground of improper venue, especially when the parties had allegedly agreed to a specific venue in their contract. The resolution of this issue required an examination of the relevant provisions of the Rules of Civil Procedure concerning venue in personal actions and the circumstances under which a court can dismiss a case without a motion from the defendant.

To address the issue, the Supreme Court turned to the Rules of Civil Procedure, specifically Rule 4, Sections 2 and 4, which govern venue in personal actions. Section 2 generally allows actions to be commenced where the plaintiff or defendant resides. However, Section 4(b) provides an exception:

(b) Where the parties have validly agreed in writing before the filing of the action on the exclusive venue thereof.

This provision clearly states that if parties have a written agreement specifying an exclusive venue, that agreement prevails over the general venue rules. The Court also considered Rule 9, Section 1, which lists the grounds for motu proprio dismissal:

Section 1. Defenses and objections not pleaded. – Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.

The Supreme Court emphasized that **improper venue is not one of the grounds for motu proprio dismissal**. By failing to raise the issue of improper venue in a motion to dismiss or answer, the defendant waives this defense. In this case, Albert Lim was declared in default for failing to file an answer, thus losing his right to question the venue.

The Court cited the case of Dacoycoy v. Intermediate Appellate Court, where it held that dismissing a complaint motu proprio on the ground of improper venue is inappropriate, especially when the defendant has not timely challenged the venue. Similarly, in Rudolf Lietz Holdings Inc. v. Registry of Deeds of Parañaque, the Court reiterated that a trial court errs when it dismisses a petition motu proprio based on improper venue, and should instead await a motion to dismiss or responsive pleading from the respondent.

Grounds for Motu Proprio Dismissal	Improper Venue
Lack of jurisdiction over the subject matter	Waivable defense if not raised in a motion to dismiss or answer
Litis pendentia (another action pending)	Not a ground for motu proprio dismissal
Res judicata (prior judgment)	Loses standing in court and right to adduce evidence by being declared in default
Prescription (statute of limitations)	Valid venue agreements, when established in writing, should be upheld by the courts.

The Supreme Court found that the trial court erred in dismissing the case motu proprio. The Court emphasized that Lim, having been declared in default, had lost his standing in court and his right to challenge the venue. The presence of a venue stipulation in the contract, which designated Quezon City as the venue for disputes, further solidified URC’s position. The Supreme Court thus reversed the Court of Appeals’ resolutions and ordered the trial court to reinstate the case and conduct an ex parte hearing for the reception of URC’s evidence.

FAQs

What was the key issue in this case?	The key issue was whether a trial court could dismiss a complaint motu proprio (on its own initiative) based on improper venue when the parties had allegedly agreed to a specific venue in their contract.
What does “motu proprio” mean?	“Motu proprio” is a Latin term meaning “of his own accord.” In legal terms, it refers to a court taking action on its own initiative, without a motion or request from any party.
What happens when a defendant is declared in default?	When a defendant is declared in default, they lose their right to participate in the proceedings, including the right to present evidence and raise defenses.
What is a venue stipulation?	A venue stipulation is a clause in a contract where the parties agree on the specific location (venue) where any legal disputes arising from the contract will be resolved.
Can parties agree on a venue that is not their residence or principal place of business?	Yes, parties can validly agree in writing to an exclusive venue, even if it is not the place of their residence or principal place of business, as long as the agreement is made before the filing of the action.
What should a defendant do if they believe the venue is improper?	A defendant who believes the venue is improper must raise this objection in a motion to dismiss or in their answer to the complaint. Failure to do so constitutes a waiver of the objection.
What are the grounds for motu proprio dismissal of a case?	The grounds for motu proprio dismissal are lack of jurisdiction over the subject matter, litis pendentia (another action pending), res judicata (prior judgment), and prescription (statute of limitations). Improper venue is not one of them.
What was the ruling of the Supreme Court in this case?	The Supreme Court ruled that the trial court erred in dismissing the case motu proprio on the ground of improper venue, as improper venue is a waivable defense and the defendant had been declared in default. The Court ordered the case reinstated.

This case clarifies the importance of honoring contractual agreements regarding venue and underscores the limitations on a court’s power to dismiss a case motu proprio based on improper venue. It reinforces the principle that parties are bound by the terms they agree to in a contract, and that procedural rules must be followed to ensure fairness and due process.

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: Universal Robina Corporation v. Albert Lim, G.R. No. 154338, October 5, 2007