G.R. No. 171456 , August 9, 2007
Uniwide Holdings, Inc. vs. Alexander M. Cruz

FACTS

Petitioner Uniwide Holdings, Inc. (UHI) entered into a Franchise Agreement with respondent Alexander M. Cruz, which contained an exclusive venue stipulation designating the courts of Quezon City. Cruz incurred obligations to UHI’s affiliated companies, First Paragon Corporation (FPC) and Uniwide Sales Warehouse Club, Inc. (USWCI). These two companies subsequently executed Deeds of Assignment in favor of UHI, transferring all their rights and interests over Cruz’s unpaid accounts.
UHI filed a complaint for collection of sum of money against Cruz before the Regional Trial Court (RTC) of Parañaque. The complaint contained four causes of action: the first was for unpaid monthly service fees under the Franchise Agreement; the second and third were for the assigned receivables from FPC and USWCI, respectively; and the fourth was for attorney’s fees. Cruz moved to dismiss the entire complaint on the ground of improper venue, invoking the exclusive venue clause in the Franchise Agreement. The Parañaque RTC granted the motion to dismiss.

ISSUE

Whether a complaint based on several causes of action is dismissible on the ground of improper venue where only one of the causes of action arises from a contract containing an exclusive venue stipulation.

RULING

The Supreme Court granted the petition and set aside the RTC’s order of dismissal. The Court explained that the general rule on venue for personal actions allows the plaintiff to file the case where he or the defendant resides. This rule is qualified by Section 4, Rule 4 of the Rules of Court, which permits parties to agree in writing on an exclusive venue before the filing of the action. However, such a stipulation is restrictive and must be strictly construed.
The Court held that the exclusive venue clause in the Franchise Agreement applies only to causes of action arising from a breach of that specific contract. Here, the second and third causes of action were based on the separate and distinct Deeds of Assignment executed by FPC and USWCI. These deeds contained no exclusive venue stipulation. Consequently, these assigned claims are not subject to the venue restriction in the Franchise Agreement. Following the precedent in San Miguel Corporation v. Monasterio, restrictive venue stipulations are in derogation of the policy of convenience and should be confined solely to the specific agreement in which they are embodied. Since the complaint contained multiple causes of action, not all of which arose from the contract with the venue clause, the joinder was proper under Rule 2, Section 5 of the Rules of Court. The case was remanded to the Parañaque RTC for reinstatement and further proceedings.