After working for 25 years in the Middle East, Evan returned to the Philippines to retire in Manila, the place of his birth and childhood. Ten years before his retirement, he bought for cash in his name a house and lot in Malate, Manila. Six months after his return, he learned that his house and lot were the subject of foreclosure proceedings commenced by ABC Bank on the basis of a promissory note and a deed of real estate mortgage he had allegedly executed in favor of ABC Bank five years earlier.
Knowing that he was not in the country at the time the promissory note and deed of mortgage were supposedly executed, Evan forthwith initiated a complaint in the RTC of Manila praying that the subject documents be declared null and void.
ABC Bank filed a motion to dismiss Evan’s complaint on the ground of improper venue on the basis of a stipulation in both documents designating Quezon City as the exclusive venue in the event of litigation between the parties arising out of the loan and mortgage.
Should the motion to dismiss of ABC Bank be granted? Explain your answer. (5%)
Suggested answer only. Not an official answer and not legal advice.
No, ABC Bank's motion to dismiss should not be granted.
Under settled jurisprudence (Briones v. Court of Appeals), an exclusive venue stipulation in a contract does not bind a party who directly assails the validity or existence of the contract itself on the ground of forgery. One cannot enforce a venue clause in a contract whose execution is repudiated, as that would presuppose the validity of the forged document.
Here, Evan filed an action in RTC Manila to declare the promissory note and mortgage null and void, alleging his signatures were forged while he was abroad. Since Evan directly assails the validity of the contract, he is not bound by its exclusive Quezon City venue clause. Venue was thus properly laid in Manila.
Therefore, ABC Bank's motion to dismiss on the ground of improper venue must be denied.
This is not an official scoring system and carries no weight with the Supreme Court or any bar review provider. It measures how much of the suggested answer's wording your response covers, not whether your reasoning is correct. For practice only.
Quick check
Does an exclusive venue stipulation bind a party who files an action to annul a contract on the ground of forgery?
An exclusive venue clause cannot be enforced against a party who directly assails the contract as a forgery.
According to Briones v. Court of Appeals, why can a party disavow an exclusive venue clause in a forged mortgage?
Enforcing a venue stipulation against a party claiming forgery would prematurely presuppose the contract's validity.
What language is required to make a venue stipulation in a written contract exclusive and restrictive?
To be exclusive, a venue stipulation must use clear, restrictive words like 'exclusively' or 'only'.
Where should a personal action be filed under Rule 4 of the Rules of Civil Procedure in the absence of a valid venue agreement?
Personal actions are filed where the plaintiff or defendant resides, at the plaintiff's election.
What is the proper ruling on a defendant bank's motion to dismiss based on an exclusive venue clause if the plaintiff alleges forgery?
The motion to dismiss based on improper venue should be denied when the validity of the contract is directly assailed.
Learn more about these topics
1. Exclusive Venue Stipulations
Under Rule 4 of the Rules of Court, parties may agree in writing on an exclusive venue for litigation arising from a contract. However, for a venue stipulation to be restrictive and binding, it must use clear and qualifying words such as 'exclusively', 'only', or 'solely'. An exclusive venue clause limits the place of filing to the specified court and precludes the general rules on venue in personal or real actions, provided that the underlying contract containing the clause is valid, enforceable, and not directly repudiated by the plaintiff.
2. Unenforceability in Forgery
An exclusive venue stipulation cannot be enforced against a party who assails the contract itself on the ground of forgery. As established in Briones v. Court of Appeals, enforcing a venue clause in a contract whose execution is completely denied would prematurely presuppose the validity of the forged document. When a complaint directly attacks the authenticity and existence of a contract, the plaintiff is not bound by the venue provision contained therein, and venue is properly determined under the general rules of civil procedure.
3. Personal Action Venue
Venue depends on whether an action is classified as a real action or a personal action. Real actions affect title to, or possession of, real property, and must be commenced in the court having jurisdiction over the area where the real property is situated. Personal actions may be filed where the plaintiff or defendant resides, at the election of the plaintiff. Where a property owner seeks to nullify a forged mortgage and promissory note to prevent foreclosure, venue is properly laid in the place where the property or plaintiff resides.