G.R. No. L-18797, December 27, 1963
Republic of the Philippines, plaintiff-appellant, vs. Clarita Cuaycong and Eulalio Lacson, Jr., defendants-appellees.

FACTS

The Republic of the Philippines, having taken over the assets of the former Bank of Taiwan, filed a collection suit against Clarita Cuaycong to recover a loan evidenced by eight promissory notes and a chattel mortgage on standing crops, all executed in 1943-1944. The complaint was filed in the Justice of the Peace Court of Victorias, Negros Occidental, on February 9, 1960. The defendants moved to dismiss on grounds of improper venue and prescription, arguing the documents were executed in Bacolod City, making that the proper venue, and that the 10-year prescriptive period for written contracts had lapsed.
The trial court dismissed the complaint, finding venue improper. It examined the promissory notes and chattel mortgage, concluding they constituted the cause of action and were dated in Bacolod City, not Victorias. On appeal, the Court of First Instance affirmed the dismissal. The Republic then appealed directly to the Supreme Court, contending that since the place of execution was not stated on the promissory notes, the action was properly filed in Victorias where the defendant resided.

ISSUE

Whether the Court of First Instance correctly dismissed the complaint on the ground of improper venue.

RULING

Yes, the dismissal was correct. The Supreme Court upheld the lower court’s factual finding that the chattel mortgage and promissory notes together formed the basis of the cause of action. While the promissory notes were silent on the place of execution, the chattel mortgage—executed simultaneously with the first note and containing the principal loan stipulations—expressly stated it was executed in Bacolod City. Therefore, the entire contract was deemed executed in Bacolod.
Crucially, the plaintiff’s own complaint alleged that the loans were obtained from the bank’s offices in Bacolod City and that the notes were executed, signed, and delivered to the bank there. This judicial admission conclusively established Bacolod City as the place of execution. Under the Rules of Court then in force (Section 2[b], Rule 4), an action upon a written contract must be filed in the province where it was executed or where the defendant resides. Since the contract was executed in Bacolod City, Negros Occidental, and the defendant resided in Victorias, Negros Occidental, the plaintiff could choose either venue. However, by filing in Victorias, the plaintiff effectively submitted to that venue. The trial court in Bacolod, upon finding the contract was executed there, correctly held that the venue in Victorias was improperly laid, as the action was not filed in the province of execution (Bacolod) or the defendant’s residence (Victorias was correct, but the court misinterpreted the rule). The Supreme Court found no reason to disturb this conclusion and affirmed the order of dismissal.