Atlas Developer & Steel Industries, Inc. v. Sarmiento Enterprises, Inc.

Case Title and Citation

Atlas Developer & Steel Industries, Inc., petitioner, vs. Sarmiento Enterprises, Inc., Hon. Cicero C. Jurado, Regional Trial Judge, Pasig, Metro Manila, respondents.
G.R. No. L-64735, April 5, 1990
Supreme Court - First Division
Ponente: Justice Griño-Aquino

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Facts

• On August 25, 1982, Sarmiento Enterprises, Inc. filed in the Court of First Instance of Pasig, Metro Manila, a complaint for collection of P8,076 representing the cost of steel bars and MS plates purchased from Atlas Developer and Steel Industries, Inc.
• Atlas filed on November 2, 1982 a motion to dismiss for improper venue, arguing a sales invoice clause stated: If legal action is resorted to for enforcing collection of this account, parties expressly submit to the jurisdiction of the Court of the City of Manila. (Annex B-2, p. 19, Rollo.)
• Atlas alleged the stipulation is valid, binding, and enforceable; the motion to dismiss was denied by Judge Gregorio Pineda, Presiding Judge of the CFI Pasig.
• Atlas’s motion for reconsideration was denied on March 4, 1983 by Judge Cicero Jurado, who held that the stipulation, speaking as it does of jurisdiction and not venue, is void and of no legal effect.
• Atlas filed a second motion for reconsideration, which was also denied. Thereafter, Atlas filed a petition for certiorari directly in this Court.
• The trial court’s interpretation treated the clause as creating a jurisdictional submission rather than fixing venue, and thus erred, since jurisdiction over an action is conferred by law and may not be changed by mere agreement (Calimlim, et al. vs. Ramirez, et al.; De Jesus, et al. vs. Garcia, et al.).
• Sections 19 and B-3 of BP 129 (Batas Pambansa Blg. 129) provide:
  • MTC/Municipal Trial Courts have exclusive original jurisdiction over civil actions where the amount does not exceed P20,000.
  • RTC shall exercise exclusive original jurisdiction in all other cases exceeding P20,000.
• The venue rule states: The venue of an action in the inferior court is the place specified by the parties by written agreement, whenever the court shall have jurisdiction to try the action by reason of its nature or the amount involved.
• The petition for certiorari was granted; the RTC case was dismissed without prejudice to filing in the proper inferior court.

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Issues

1. Was the venue of the action properly laid in the Court of First Instance at Pasig, Metro Manila?
2. Did the sales invoice clause fix venue in the City Court of Manila, or was it void for fixing jurisdiction rather than venue?

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Ruling

1. No — The venue was not properly laid in the Court of First Instance at Pasig, Metro Manila.
2. No — The sales invoice clause did not validly fix venue; it concerns jurisdiction and is void as to venue.

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Reasoning / Ratio Decidendi

• Venue and jurisdiction are distinct concepts; a stipulation attempting to fix jurisdiction does not necessarily fix venue and may be void if it purports to alter venue by agreement.
• Jurisdiction over the subject matter and amount determines the proper court; in this case, the claim for P8,076 falls within the jurisdictional threshold of Metropolitan Trial Courts (not RTC) under BP 129 Sec. 33 and Sec. 19.
• Rule 4, Sec. 1-b of the Rules of Court allows the venue of an action in an inferior court to be fixed by the written agreement of the parties only if the court has jurisdiction by reason of the action’s nature or the amount involved; however, a stipulation that refers to jurisdiction cannot validly fix venue where the proper forum is determined by the amount and the statute.
• The clause stating that the action is subject to the City Court of Manila refers to jurisdiction, not merely to venue; such language is void as to altering the venue from the correct inferior court.
• The explicit jurisdictional limits in BP 129 (Sec. 33) and the general rule distinguishing venue (Sec. 1-b, Rule 4) lead to the conclusion that the case should have been filed in the proper inferior court (i.e., an MTC/MCT, appropriate to the amount) rather than the Pasig RTC.

Cited or referenced principles include Calimlim, et al. vs. Ramirez, et al., 118 SCRA 399; De Jesus, et al. vs. Garcia, et al., 19 SCRA 554; and BP 129 Sec. 33; Sec. 19; and Rule 4, Sec. 1-b of the Rules of Court.

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Doctrine / Legal Principle

• Distinction between venue and jurisdiction; agreements purporting to fix jurisdiction do not necessarily fix venue.
• Jurisdiction cannot be conferred or altered by mere contractual stipulation.
• For civil actions with an amount not exceeding P20,000, the Metropolitan Trial Courts have exclusive original jurisdiction; actions above that amount belong to the RTC.
• Venue is determined by the place specified by the parties in writing only to the extent the court has jurisdiction by law.

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Disposition

• The petition for certiorari is granted.
• The complaint in the Regional Trial Court at Pasig, Civil Case No. 47451, entitled “Sarmiento Enterprises, Inc. vs. Atlas Developer and Steel Industries, Inc.,” is dismissed without prejudice to filing it in the proper inferior court.

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Concurring / Dissenting Opinions

• Concurring justices: Narvasa, Cruz, Gancayco, and Medialdea, JJ., concur.
• No separate concurring or dissenting opinions noted.

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Significance / Notes

• Clarifies that venue clauses attempting to fix forum must be evaluated in light of the court’s jurisdiction; a mere invocation of “jurisdiction” in a contract does not bind the parties to a particular venue if the action falls within a lower court’s jurisdiction.
• Reinforces the principle that improper venue actions should be dismissed with leave to refile in the proper inferior court, preventing improper expansion of a case into courts with higher jurisdiction.
• Practical implication: Ensure that contractual venue clauses align with statutory jurisdiction limits to avoid misfiling in courts with no proper jurisdiction.