G.R. No. L-25082 November 23, 1971
UNIVERSAL INSURANCE AND INDEMNITY COMPANY, petitioner-appellant, vs. THE HON. ROMAN CANSINO JR., and AGE CONSTRUCTION CO., INC., respondents-appellees.

FACTS

Age Construction Co., Inc. (Age Construction) filed a complaint in the City Court of Manila against Beatriz Tengsico and her husband for breach of a lease contract, seeking recovery of the value of an unreturned vibrator and damages. The lease contract was executed in Manila. Subsequently, Age Construction filed an amended complaint, impleading Universal Insurance and Indemnity Company (Universal Insurance) as an alternative defendant. The amended complaint alleged that the leased equipment was insured under a policy issued by Universal Insurance and that the company had failed to pay the insurance claim despite demand. The insurance policy explicitly stated it was executed in Makati, Rizal.
Universal Insurance moved to dismiss the amended complaint, arguing improper venue. It contended that as the action against it was based on the insurance policy, and the policy was executed in Makati, venue was improperly laid in the City Court of Manila. The respondent judge denied the motion to dismiss, prompting Universal Insurance to file a petition for prohibition with the Court of First Instance of Manila to restrain the city court from proceeding against it. The Court of First Instance sustained the respondent judge’s order and dismissed the prohibition petition, leading to this appeal.

ISSUE

Was venue properly laid in the City Court of Manila for the action against Universal Insurance based on the insurance contract?

RULING

No. The Supreme Court reversed the judgment and granted the writ of prohibition. The legal logic centers on the rules of venue for proper (non-indispensable) parties and the specific venue rule for contracts. The Court first determined that Universal Insurance was not an indispensable party to the main action for breach of lease against the Tengsicos, as a complete judgment could be rendered without it. It was merely a proper party under Rule 3, Section 8 of the Rules of Court. The rule for joining such parties requires that they be subject to the court’s jurisdiction concerning both service of process and venue.
Since the insurance policy contained no stipulation on venue, the governing rule was Rule 4, Section 1(b)(2), which required actions on contracts in inferior courts to be filed in the place of execution of the contract as it appears on the document. The insurance policy clearly stated it was executed in Makati, Rizal. The Court held that this facial recital was controlling; no extrinsic evidence to prove a different place of execution could be considered, as the rule’s purpose is to preclude such inquiry. Therefore, the proper venue for the action against Universal Insurance was Makati, not Manila. Consequently, the respondent judge acted without jurisdiction or with grave abuse of discretion in refusing to dismiss the case against Universal Insurance for improper venue, making prohibition the appropriate remedy.