THIRD DIVISION
G.R. No. 201302, January 23, 2019
HYGIENIC PACKAGING CORPORATION, Petitioner, v. NUTRI-ASIA, INC., DOING BUSINESS UNDER THE NAME AND STYLE OF UFC PHILIPPINES (FORMERLY NUTRI-ASIA, INC.), Respondent.
D E C I S I O N
LEONEN, J.:
The venue for the collection of sum of money case is governed by Rule 4, Section 2 of the Rules of Court. Unless the parties enter into a written agreement on their preferred venue before an action is instituted, the plaintiff may commence his or her action before the trial court of the province or city either where he or she resides, or where the defendant resides. If the party is a corporation, its residence is the province or city where its principal place of business is situated as recorded in its Articles of Incorporation.1
This is a Petition for Review on Certiorari2 assailing the January 13, 2012 Decision3 and March 28, 2012 Resolution4 of the Court of Appeals in CA-G.R. SP No. 119511. The Court of Appeals granted Nutri-Asia, Inc.'s (Nutri-Asia) Petition for Certiorari,5 and reversed and set aside the May 24, 2010 Order6 of the Regional Trial Court Branch 46, Manila and the March 14, 2011 Joint Order7 of the Regional Trial Court Branch 24, Manila in Civil Case No. 09-121849. The trial courts denied Nutri-Asia's Omnibus Motion to Set for Hearing the Affirmative Defenses Pleaded in the Answer and to Refer the Parties to Arbitration in a collection of sum of money case.8
Hygienic Packaging Corporation (Hygienic) is a domestic corporation that manufactures, markets, and sells packaging materials such as plastic bottles and ratchet caps.9 Meanwhile, Nutri-Asia is a domestic corporation that manufactures, sells, and distributes food products such as banana-based and tomato-based condiments, fish sauce, vinegar, soy sauce, and other sauces.10
From 1998 to 2009, Hygienic supplied Nutri-Asia with KG Orange Bottles and Ratchet Caps with Liners (plastic containers) for its banana catsup products.11 Every transaction was covered by a Purchase Order issued by Nutri-Asia.12 The Terms and Conditions on the Purchase Order provided:
From December 29, 2007 to January 22, 2009, Nutri-Asia purchased from Hygienic 457,128 plastic containers, for a total consideration of P9,737,674.62.14 Hygienic issued Sales Invoices15 and Delivery Receipts16 to cover these transactions.17TERMS AND CONDITIONS
The following terms and conditions and any of the specifications, drawings, samples and additional terms and conditions which may be incorporated herein by reference or appended hereto are part of this Purchase Order. By accepting this Purchase Order or any part thereof the Seller agrees to and accepts all terms and conditions.
- The number of this Purchase Order must appear on the corresponding Sales Invoice, Shipping papers and other pertinent documents and the Seller's VAT No., when applicable, must be on all Invoices/Delivery receipts.
- NO Payment will be made unless original sales invoice received by Buyer's accounting Department.
....
- The Seller warrants that the Goods delivered to the Buyer will be merchantable, of commercial standard and that the Goods will conform with (sic) the written specifications and requirements of the Buyer. The Buyer shall have the right to reject or return any or all items found not in conformity with such standards[,] [s]pecifications or requirements. The Seller shall likewise indemnify and hold the Buyer free and harmless from any and all damages incurred by the Buyer as a result of the violation of these warranties.
The above warranties by the Seller shall also apply in case o[f] Goods consisting of packaging materials or foodstuffs to be used as raw materials or ingredients in the manufacture or processing of foodstuff in ensuring that they shall be fit for human consumption and free from adulteration or foreign materials and shall comply with all the relevant food and hygiene statutes and regulations both in the Buyer's Country and in any other such relevant country as to composition, processing (if any), packaging and description.
....
- Arbitration [of] all disputes arising in connection with this Contract shall be referred to an Arbitration Committee, in accordance with the Philippine Arbitration Law, composed of three members: one (1) member to be chosen by the Buyer; another member to be chosen by . the Seller[;] and the third member to be chosen by the other two members. The decision of the Arbitration Committee shall be binding upon the parties.13
Due to compensation, Hygienic's unpaid obligation was reduced to Pl6,667,879.83.39 Nutri-Asia added that Hygienic's cause of action against it had yet to accrue, and that Nutri-Asia was merely holding the payment of P9,737,674.12 as a lien to ensure that Hygienic would pay the losses and damages it incurred.40
10.47 In the instant case, both plaintiff and defendant are bound principally and at the same time a principal creditor of the other; both debts consist in a sum of money; both debts are due, liquidated and demandable; and neither plaintiff [n]or defendant there be any retention or controversy, commenced by third persons and communicated in due time to the debtor. 10.48 By virtue of compensation, the plaintiff's obligation to defendant for the said losses and damages in the sum of P26,405,553.95 is set off to the extent of P9,737,674.12 with the defendant's alleged obligation to plaintiff in the sum of P9,737,674.12 resulting to the extinguishment of defendant's alleged obligation to plaintiff.38
It is the view of the court that the arguments presented are factual in nature. Trial therefore is essential for the court to best appreciate the facts presented. It cannot be done by mere reading, study and evaluation of the documents attached to the complaint and the arguments presented in their respective motions and comments to prevent miscarriage of justice.The trial court ruled that Nutri-Asia's Counter-Claim was permissive in nature; thus, it could not acquire jurisdiction over the Counter-Claim unless the filing fees were paid.58
....
[Rule 16, Section 6 of the Rules of Civil Procedure] provides that it is discretionary upon the court to conduct a preliminary hearing on the affirmative defenses as a ground for dismissal.
Considering therefore that it is discretionary upon the court to allow the hearing on special and affirmative defenses[,] this court would rather conduct a full blown trial so it could evaluate the respective issues raised by the parties.57
Considering the above premises, the Omnibus Motion is hereby denied.Nutri-Asia filed a Motion for Reconsideration.60 However, in its March 14, 2011 Joint Order,61 the Regional Trial Court Branch 24, Manila denied the Motion. It also endorsed the case for mediation to the Philippine Mediation Center and set a pre-trial conference on May 11, 2011, in case mediation was unsuccessful.62
Defendant is directed to pay the appropriate docket fees on its permissive counterclaim within thirty (30) days from receipt of this order.
Let the pre-trial of the above case be set on July 28, 2010 at 8:30 A.M.
Notify Attys. Malinao and Po of this order.
SO ORDERED.59
Here, the trial courts rendered the assailed Orders deferring a ruling on the issues of venue· and compliance with a condition precedent, which is the arbitration clause. No trial was necessary to resolve them. All the trial courts ought to know could be determined from the documents on record, namely, the sales invoices, the purchase orders, the respective places of business of petitioner and private respondent, and the jurisprudence on these issues. We cannot envision any factual question, and the trial courts did not mention any, to be threshed out before they can rule on these affirmative defenses. The error in refusing to resolve them violates so basic and elemental precepts on what and how discretion is to be exercised. We have to set aside and reverse these Orders.66 (Emphasis in the original)The Court of Appeals also found that "the trial courts committed grave abuse of discretion in allowing the complaint to stand and stay in Manila."67 It held that since the signature of Nutri-Asia's employee in the Sales Invoices was only for the receipt of goods, Nutri-Asia did not agree to be bound by the venue stipulation in the Sales Invoices. Meanwhile, Hygienic did not deny that an arbitration clause was written on the Purchase Orders.68 Its representative even "acknowledged its conformity to the purchase orders."69 Since Hygienic "availed of the advantages and benefits of the purchase orders when it acted on them[,]"70 it is thus estopped from rebuffing the arbitration clause.71
ACCORDINGLY, the petition is GRANTED. The Orders dated May 24, 2010 and March 14, 2011 of the Regional Trial Court, Branches 46 and 24, in Civil Case No. 09-121849, are REVERSED AND SET ASIDE. The complaint and the counterclaim in Civil Case No. 09-121849 are DISMISSED WITHOUT PREJUDICE to referral of the disputes between petitioner Nutri-Asia, Inc. and private respondent Hygienic Packaging Corporation to arbitration, as stipulated in the purchase orders. No costs.Hygienic filed a Motion for Reconsideration,74 but it was denied by the Court of Appeals in its March 28, 2012 Resolution.75
SO ORDERED.73 (Emphasis in the original)
The main contention of the petitioner is that the alleged arbitration agreement between the parties of this case did not comply with the requisites provided in the Rules. This is certainly not a question of fact but rather, a question of law, as it necessitates the interpretation and application of Section 4 of [Republic Act No.] 876 to the attendant facts of the case.Lastly, assuming that petitioner raised factual issues, it argues that these issues fall under the exceptions provided by law and jurisprudence;93 specifically, when the Court of Appeals rendered its Decision: (1) "based on a misapprehension of facts";94 and (2) its findings were "contrary to those of the trial court[.]"95
....
Contrary to the position of the respondent, the specific issue on whether or not the messenger-signatory had the authority to bind petitioner Nutri-Asia with respect to the Arbitration Clause is not at all a question of fact. [Neither the] identity nor the rank of the signatory was not disputed or put in question so as to require further reception of evidence and conduction of trial. The truth or falsehood of the incidents related to the act of signing of the mere messenger is not disputed by the respondent. The issue is only with respect to his very authority to bind petitioner Hygienic as to the alleged agreement on arbitration. In short, the issue is limited to whether or not the messenger acted as a lawful agent of the petitioner - and this is undeniably a pure question of law.
The same rationale applies on the issue raised by the petitioner as to whether or not the document pe1iaining to the arbitration clause was properly subscribed.
... This specific issue merely concerns the correct application of law or jurisprudence as to the construction of the term "subscribed" and does not require the examination of the probative value of evidence pertaining to the document containing the arbitration clause.92 (Emphasis in the original)
Respondent adds that the conflicting findings of the trial court and the Court of Appeals on the issue of arbitration do not suffice to allow the Petition.102 It highlights that in resolving the case, the question is "whether the Court of Appeals correctly determined the presence of grave abuse of discretion in the ruling of RTC-Manila[.]"103
(a) The identities of the persons who signed the Purchase Orders and the Sales Invoices; (b) The positions of the persons in HYGIENIC [NUTRI-ASIA never stipulated on the positions of the said persons] who signed the Purchase Orders; (c) The positions of the persons who ostensibly signed the Sales Invoices; (d) The duties and functions of the persons who signed the Purchase Orders and the Sales Invoices; (e) Whether the persons who signed the Purchase Orders had the authority to act on behalf of HYGIENIC [To be clear, NUTRI-ASIA never admitted that the persons were not authorized to act on behalf of HYGIENIC]; (f) Whether the persons who signed the Sales Invoices had the authority to act on behalf of NUTRI-ASIA [Again, NUTRI-ASIA never admitted the alleged authority of the persons who signed the Sales Invoices]; and [g] The circumstances surrounding the signing of the Purchase Orders and the Sales Invoices.101
ARTICLE 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.Here, however, the records lack any written contract of sale containing the specific terms and conditions agreed upon by the parties. The parties failed to provide evidence of any contract, which could have contained stipulations on the venue of dispute resolution. Nonetheless, petitioner and respondent both claim that the Sales Invoices and the Purchase Orders, respectively, contained a stipulation on where to raise issues on any conflict regarding the sale of plastic containers. Each party also insists that the other party accepted the venue stipulation in the Sales Invoices or the Purchase Orders when its representative signed them.
In City of Lapu-Lapu v. Philippine Economic Zone Authority:118RULE 4
Venue of Actions
SECTION 1. Venue of Real Actions. - Actions affecting title to or possession of real property, or interest therein, shall be commenced and tried in the proper court which has jurisdiction over the area wherein the real property involved, or a portion thereof, is situated.
Forcible entry and detainer actions shall be commenced and tried in the Municipal Trial Court of the municipality or city wherein the real property involved, or a portion thereof, is situated.
SECTION 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.
SECTION 3. Venue of Actions Against Nonresidents. - If any of the defendants does not reside and is not found in the Philippines, and the action affects the personal status of the plaintiff, or any property of said defendant located in the Philippines, the action may be commenced and tried in the court of the place where the plaintiff resides, or where the property or any portion thereof is situated or found.
SECTION 4. When Rule not Applicable. - This Rule shall not apply -
(a) In those cases where a specific rule or law provides otherwise; or
(b) Where the parties have validly agreed in writing before the filing of the action on the exclusive venue thereof.
[V]enue is "the place of trial or geographical location in which an action or proceeding should be brought." In civil cases, venue is a matter of procedural law. A party's objections to venue must be brought at the earliest opportunity either in a motion to dismiss or in the answer; otherwise the objection shall be deemed waived. When the venue of a civil action is improperly laid, the court cannot motu proprio dismiss the case.It has been consistently held that an action for collection of sum of money is a personal action.120 Taking into account that no exception can be applied in this case, the venue, then, is "where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, ... at the election of the plaintiff."121 For a corporation, its residence is considered "the place where its principal office is located as stated in its Articles of Incorporation."122
The venue of an action depends on whether the action is a real or personal action. Should the action affect title to or possession of real property, or interest therein, it is a real action. The action should be filed in the proper court which has jurisdiction over the area wherein the real property involved, or a portion thereof, is situated. If the action is a personal action, the action shall be filed with the proper court 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.119 (Emphasis supplied, citations omitted)
9. The venue of the instant complaint is improperly laid.This Court finds that the Court of Appeals is partly correct in ruling that the trial court committed grave abuse of discretion in denying respondent's Omnibus Motion. The assailed Court of Appeals January 13, 2012 Decision held:
9.1 The instant complaint for collection of a sum of money, a personal action was filed before the Regional Trial Court of the City of Manila which is not the proper venue for the instant complaint. .... 9.3 In paragraphs 1 and 2 of the instant complaint, the plaintiff had made an admission on the pleading that its principal place of business is located at San Vicente Road beside South Superhighway, San Pedro, [Laguna,] while the principal place of business of defendant is located at 12/F The Centerpoint Building, Garnet Road corner Julia Vargas Avenue, Ortigas Center, Pasig City. With this admission on the pleading, it is clear that the instant complaint should have been filed before the Regional Trial Court of San Pedro, Laguna, where the plaintiff has its principal place of business or before the Regional Trial Court of Pasig City, Laguna where the defendant has its principal place of business. 9.4 The parties did not validly agree in writing before the filing of the action that the Courts of the City of Manila shall be the exclusive venue thereof. 9.5 The alleged stipulation in the Sales Invoice that the parties submit themselves to jurisdiction of the Courts of the City of Manila in any legal action out of the transaction between the parties cannot and should not bind defendant in the absence of the express conformity by the defendant. The defendant has never signed the said Sales Invoice to signify its conformity to the said stipulation regarding venue of actions.128 (Emphasis in the original)
On the issue of venue, the trial courts committed grave abuse of discretion in allowing the complaint to stand and stay in Manila. The sales invoices, if viewed to be a contract on venue stipulation, were not signed by petitioner's agent to be bound by such stipulation. The signature has to do with the receipt of the purchased goods "in good order and condition." Petitioner did not, therefore, agree to be restricted to a venue in Manila and was never obliged to observe this unilateral statement in the sales invoices.129 (Citation omitted)However, contrary to the Court of Appeals' finding on the validity of the arbitration clause, this Court cannot give the stipulation any effect as discussed earlier.
[T]he rules on venue, like the other procedural rules, are designed to insure a just and orderly administration of justice or the impartial and even-handed determination of every action and proceeding. Obviously, this objective will not be attained if the plaintiff is given unrestricted freedom to choose the court where he may file his complaint or petition. The choice of venue should not be left to the plaintiff's whim or caprice. He [or she] may be impelled by some ulterior motivation in choosing to file a case in a particular court even if not allowed by the rules on venue.131 (Citation omitted)WHEREFORE, premises considered, the Court of Appeals January 13, 2012 Decision and March 28, 2012 Resolution in CA-G.R. SP No. 119511 are AFFIRMED insofar as they reversed and set aside the May 24, 2010 Order and March 14, 2011 Joint Order of the Regional Trial Court, Branches 46 and 24, in Civil Case No. 09-121849.
Very truly yours, (SGD) WILFREDO V. LAPITAN Division Clerk of Court |
Endnotes:
* Designated additional member per Special Order No. 2624 dated November 28, 2018.
1See Pilipinas Shell Petroleum Corporation v. Royal Ferry Services, Inc. , G.R. No. 188146, February 1, 2017, 816 SCRA 379, 381 [Per J. Leonen, Second Division].
2Rollo, pp. 19-68.
3 Id. at 1022-1035. The Decision was penned by Associate Justice Amy C. Lazaro-Javier and concurred in by Associate Justices Remedios A. Salazar-Fernando and Sesinando E. Villon of the Second Division, Court of Appeals, Manila.
4 Id. at 1103. The Resolution was penned by Associate Justice Amy C. Lazaro-Javier and concurred in by Associate Justices Remedios A. Salazar-Fernando and Sesinando E. Villon of the Second Division, Court of Appeals, Manila.
5 Id. at 884-915.
6 Id. at 759-769. The Order was issued by Judge Aida E. Layug of Branch 46, Regional Trial Court, Manila.
7 Id. at 883. The Joint Order was issued by Judge Antonio M. Eugenio, Jr. of Branch 24, Regional Trial Court, Manila.
8 Id. at 769.
9 Id. at 71 and 73.
10 Id. at 72 and 418.
11 Id. at 73 and 1023.
12 Id. at 1023.
13 Id. at 98-114.
14 Id. at 73 and 1024.
15 Id. at 115-228.
16 Id. at 229-348.
17 Id. at 74 and 1024.
18 Id. at 71-80.
19 Id. at 72-73.
20 Id. at 74-75.
21 Id. at 76-77.
22 Id. at 417-459.
23 Id. at 420.
24 Id. at 420-423.
25 Id. at 423-424.
26 Id. at419.
27 Id. at 448.
28 Id. at 432.
29 Id. at 431.
30 Id.
31 Id. at 432.
32 Id. at 433.
33 Id. at 433-434.
34 Id . at 434-435.
35 Id. at 437-439.
36 Id. at 440-443.
37 Id. at 443-447-A.
38 Id. at 450.
39 Id. at 450-451.
40 Id. at 451-454.
41 Id. at 454-458.
42 Id. at 458-459.
43 Id. at 594-618.
44 Id. at 625-671.
45 Id. at 760.
46 Id. at 704-728.
47 Id. at 760.
48 Id.
49 Id. at 761.
50 Id.
51 Id. at 759-769.
52 Id. at 769.
53 Id. at 762.
54 Id. at 762-764.
55 Id. at 764-765.
56 Id. at 767.
57 Id. at 767.
58 Id. at 768-769.
59 Id. at 769.
60 Id. at 770-791.
61 Id. at 883.
62 Id.
63 Id. at 884-915.
64 Id. at 1022-1035.
65 Id. at 1034-1035.
66 Id. at 1032.
67 Id.
68 Id. at 1032-1033.
69 Id. at 1033.
70 Id.
71 Id. at 1033-1034.
72 Id. at 1034.
73 Id. at 1034-1035.
74 Id. at 1060-1087.
75 Id. at 1103.
76 Id. at 19-68.
77 Id. at 63.
78 Id. at 1109-1129.
79 Id. at 1139-1154.
80 Id. at 1171-1174.
81 Id. at 1171.
82 Id. at 1186-1238.
83 Id. at 1242-1268.
84 Id. at 1201-1206.
85 Id. at 1203.
86 Id. at 1206-1211.
87 Id. at 1211-1213.
88 Id. at 1213.
89 Id. at 1218-1220.
90 Id. at 1220-1225.
91 Id. at 1225-1228.
92 Id. at 1226-1227.
93 Id. at 1228-1231.
94 Id. at 1229.
95 Id.
96 Id. at 1249-1251.
97 Id. at 1250.
98 Id. at 1251-1253.
99 Id. at 1254-1 256.
100 Id. at 1254.
101 Id. at 1254-1255.
102 Id. at 1255.
103 Id.
104 Id. at 1256-1257.
105 Id. at 1257.
106 Id.
107 Id. at 1258-1261.
108 Id. at 1261.
109 Id.
110 Id. at 1262.
111 Id. at 1261-1262.
112 Id. at 1262.
113 Id. at 117-120, 122-168, 170-176, and 183-228.
114 Id. at 98-114.
115 Id.
116 738 Phil. 37 (2014) [Per J. Leonen, Third Division].
117 Id. at 66.
118 748 Phil. 473 (2014) [Per J. Leonen, Second Division].
119 Id. at 523.
120See Consolidated Plywood Industries, Inc. v. Hon. Breva, 248 Phil. 819, 823 (1988) [Per J. Narvasa, First Division]; San Miguel Corp. v. Monasterio, 499 Phil. 702, 709 (2005) [Per J. Quisumbing, First Division]; Ang v. Sps. Ang, 693 Phil. 106, 113 (2012) [Per J. Reyes, Second Division]; Gagoomal v. Sps. Villacorta, 679 Phil. 441, 453 (2012) [Per J. Perlas-Bernabe, Third Division]; Ang v. Sps. Ang, 693 Phil. 106, 113 (2012) [Per J. Reyes, Second Division].
121 RULES OF COURT, Rule 4, sec. 2.
122Pilipinas Shell Petroleum Corporation v. Royal Ferry Services, Inc., G.R. No. 188146, February 1, 2017, 816 SCRA 379, 381 [Per J. Leonen, Second Division]. See also Mangila v. Court of Appeals, 435 Phil. 870, 885 (2002) [Per J. Carpio, Third Division].
123Rollo, p. 71.
124 Id. at 72 and 418.
125 Petitioner claims the amount of P9,737,674.62. In Pajares v. Remarkable Laundry and Dry Cleaning (G.R. No. 212690, February 20, 2017, 818 SCRA 144, 162-164 [Per J. Del Castillo, First Division]), this Court held:
Paragraph 8, Section 19 of [Batas Pambansa Blg.] 129, as amended by Republic Act No. 7691, provides that where the amount of the demand exceeds P100,000.00, exclusive of interest damages of whatever kind, attorney's fees, litigation expenses, and costs, exclusive jurisdiction is lodged with the [Regional Trial Court]. Otherwise, jurisdiction belongs to the Municipal Trial Court.
The above jurisdictional amount had been increased to P200,000.00 on March 20, 1999 and further raised to P300,000.00 on February 22, 2004 pursuant to Section 5 of [Republic Act No.] 7691. (Citations omitted)
126 RULES OF COURT, Rule 16, sec. 1(c) provides:
SECTION 1. Grounds. - Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made on any of the following grounds:
....
(c) That venue is improperly laid[.]
127Rollo, pp. 423-424. See City of Lapu-Lapu v. Philippine Economic Zone Authority, 748 Phil. 473, 523 (2014) [Per J. Leonen, Second Division]: "A party's objections to venue must be brought at the earliest opportunity either in a motion to dismiss or in the answer; otherwise the objection shall be deemed waived. When the venue of a civil action is improperly laid, the court cannot motu proprio dismiss the case." (Citation omitted)
128Rollo, pp. 423-424.
129 Id. at 1032-1033.
130Mangila v. Court of Appeals, 435 Phil. 870, 887 (2002) [Per J. Carpio, Third Division]; Ang v. Spouses Ang, 693 Phil. 106, 113 and 115 (2012) [Per J. Reyes, Second Division].
131Ang v. Sps. Ang, 693 Phil. 106, 117 (2012) [Per J. Reyes, Second Division].