G.R. No.

201302

HYGIENIC PACKAGING CORPORATION, Petitioner

vs.
NUTRI-ASIA, INC., DOING BUSINESS UNDER THE NAME AND STYLE OF UFC
PHILIPPINES (FORMERLY NUTRI-ASIA, INC.), Respondent

DECISION

LEONEN, J.:

The venue for the collection of sum of money case is governed by Rule 4, Section 2 of the
Rules of Court. Unless the parties enter into a written agreement on their preferred venue
before an action is instituted, the plaintiff may commence his or her action before the trial
court of the province or city either where he or she resides, or where the defendant resides.
If the party is a corporation, its residence is the province or city where its principal place of
business is situated as recorded in its Articles ofIncorporation.1

This is a Petition for Review on Certiorari  assailing the January 13, 2012 Decision  and
2 3

March 28, 2012 Resolution  of the Court of Appeals in CA-G.R. SP No. 119511. The Court of
4

Appeals granted Nutri-Asia, Inc.'s (Nutri-Asia) Petition for Certiorari,  and reversed and set
5

aside the May 24, 2010 Order  of the Regional Trial Court Branch 46, Manila and the March
6

14, 2011 Joint Order  of the Regional Trial Court Branch 24, Manila in Civil Case No. 09-
7

121849. The trial courts denied Nutri-Asia's Omnibus Motion to Set for Hearing the
Affirmative Defenses Pleaded in the Answer and to ·Refer the Parties to Arbitration in a
collection of sum of money case. 8

Hygienic Packaging Corporation (Hygienic) is a domestic corporation that manufactures,

markets, and sells packaging materials such as plastic bottles and ratchet caps.  Meanwhile,
9

Nutri-Asia is a domestic corporation that manufactures, sells, and distributes food products
such as banana-based and tomato-based condiments, fish sauce, vinegar, soy sauce, and
other sauces. 10

From 1998 to 2009, Hygienic supplied Nutri-Asia with KG Orange Bottles and Ratchet Caps
with Liners (plastic containers) for its banana catsup products.  Every transaction was
11

covered by a Purchase Order issued by Nutri-Asia.  The Terms and Conditions on the
12

Purchase Order provided:

TERMS AND CONDITIONS

The following terms and conditions and any of the specifications, drawings, samples and
additional terms and conditions which may be incorporated herein by reference or appended
hereto are part of this Purchase Order. By accepting this Purchase Order or any part thereof
the Seller agrees to and accepts all terms and conditions.

1. The number of this Purchase Order must appear on the corresponding Sales Invoice,
Shipping papers and other pertinent documents and the Seller's VAT No., when applicable,
must be on all Invoices/Delivery receipts.

2. NO Payment will be made unless original sales invoice received by Buyer's accounting
Department.

....

8. The Seller warrants that the Goods delivered to the Buyer will be merchantable, of
commercial standard and that the Goods will conform with (sic) the written specifications and
requirements of the Buyer. The Buyer shall have the right to reject or return any or all items
found not in conformity with such standards[,] [s]pecifications or requirements. The Seller
shall likewise indemnify and hold the· Buyer free and harmless from any and all damages
incurred by the Buyer as a result of the violation of these warranties.

The above warranties by the Seller shall also apply in case o[f] Goods consisting of
packaging materials or foodstuffs to be used as raw materials or ingredients in the
manufacture or processing of foodstuff in ensuring that they shall be fit for human
consumption and free from adulteration or foreign materials and shall comply with all the
relevant food and hygiene statutes and regulations both in the Buyer's Country and in any
other such relevant country as to composition, processing (if any), packaging and
description.
....

13. Arbitration [of] all disputes arising in connection with this Contract shall be referred to an
Arbitration Committee, in accordance with the Philippine Arbitration Law, composed of three
members: one (1) member to be chosen by the Buyer; another member to be chosen by the
Seller[;] and the third member to be chosen by the other two members. The decision of the
Arbitration Committee shall be binding upon the parties. 13

From December 29, 2007 to January 22, 2009, Nutri-Asia purchased from Hygienic 457,128
plastic containers, for a total consideration of ₱9,737,674.62.  Hygienic issued Sales
14

Invoices  and Delivery Receipts  to cover these transactions.

15 16 17

On July 29, 2009, Hygienic filed a Complaint  for sum of money against Nutri-Asia. It
18

instituted the case before the Regional Trial Court of Manila "pursuant to the stipulation of
the parties as stated in the Sales Invoices submitting themselves to the jurisdiction of the
Courts of the City of Manila in any legal action arising out of their transaction[.]"19

In its Complaint, Hygienic alleged that based on the Purchase Orders and Sales Invoices,
Nutri-Asia agreed to pay Hygienic 30 days after every delivery of plastic containers.
However, Nutri-Asia refused to pay for the goods delivered from December 29, 2007 to
January 22, 2009 after their payment became due, despite oral and written demands from
Hygienic. 20

Hygienic prayed that Nutri-Asia be ordered to pay it the sum of: (1) ₱9,737,674.62 plus 12%
interest per annum as the total unpaid cost of the plastic containers; (2) 25% of
₱9,737,674.62 or the amount to be collected from Nutri-Asia as attorney's fees; (3)
₱300,000.00 as their counsel's acceptance fee; (4) ₱4,000.00 as their counsel's appearance
fee for each and every appearance of its counsel in court; and (5) costs of suit. 21

In its Answer with Compulsory Counter-Claim,  Nutri-Asia argued that the case should be
22

dismissed as Hygienic failed to comply with a condition precedent prior to its filing of the
Complaint.  It claimed that under the Terms and Conditions of the Purchase Orders,
23

Hygienic should have first referred the matter to the Arbitration Committee.  24

Nutri-Asia alleged that the venue was also improperly laid since the Regional Trial Court of
Manila was not the proper venue for the institution of Hygienic's personal action. The
Complaint should have been filed either before the trial courts of San Pedro, Laguna or
Pasig City, where the principal places of business of Hygienic and Nutri-Asia are located,
respectively. The venue of actions as stated in the Sales Invoices could not bind Nutri-Asia
since it did not give its express conformity to that stipulation.  25

Nutri-Asia admitted purchasing the plastic containers, and receiving Hygienic's Demand
Letter and Final Demand Letter.  However, it countered that Hygienic's claim "has been
26

extinguished on the ground of compensation." 27

Nutri-Asia claimed that of the 457,128 plastic containers, it only used 327,046 for its
products, while the 130,082 pieces were unused.  It narrated that since January 21, 2009, it
28

received numerous customer complaints on its UFC Banana Catsup products. Consumers
complained that the catsup smelled like detergent and soap and tasted like chemical, soap,
plastic, and rubber.  After investigation, Nutri-Asia discovered that "the contaminated
29

products were all manufactured on December 15, 2008 and they [were] limited to UFC
Banana Catsup in 2 kg. plastic containers supplied by [Hygienic]."  It was compelled to recall
30

the contaminated products. 31

Nutri-Asia stated that in the meetings held on January 22 and 23, 2009, the officers of
Hygienic admitted and confirmed that it "used a different colorant which has a poor Low
Density Polyethylene (LDPE) carrier grade or poor bonding of the die/powder (sic) with the
carrier."  The colorant bleeding in the containers contaminated Nutri-Asia's banana catsup.
32

Hygienic's officers allegedly assured Nutri-Asia representatives that Hygienic will shoulder
the expenses that would be incurred in the recall of the contaminated products. Its Sales and
Marketing Manager, Judith B. Lim, allegedly reassured the same in an electronic mail. 33

Nutri-Asia further stated that it sent a Letter dated May 6, 2009 to Hygienic, requesting for
the reimbursement of ₱36,304,451.27, representing the recall expenses, product and
container costs, freight and rental charges, and brand damage. This amount excludes Nutri-
Asia's unrealized income. 34
Nutri-Asia disclosed that Hygienic, in its June 9, 2009 letter, stated that it could not assess
Nutri-Asia's claims as they were not accompanied by any supporting document. It also said
that it would consider the case closed if Nutri-Asia failed to provide supporting documents by
the end of June 11, 2009 office hours. Nutri-Asia replied that Hygienic had no basis to
consider the matter closed since the former did not abandon or waive its reimbursement
claim. Nutri-Asia requested for a meeting to further discuss the matter.[[35]]

Nutri-Asia alleged that it sent Hygienic the supporting documents on June 15, 2009.
However, Hygienic stated that the documents it received were insufficient to support Nutri-
Asia's reimbursement claim. Nutri-Asia insisted that the documents were sufficient, and
again suggested a meeting between the parties. 36

After a re-computation of its claims, Nutri-Asia informed Hygienic that its request for
reimbursement decreased to ₱25,850, 759.31. The new amount was due to the reduction of
the number of rejects and the reduction in freight charges, rental charges, and additional
manpower charges. The parties exchanged several correspondences, until Nutri-Asia
received a copy of the Complaint. As of September 4, 2009, Nutri-Asia's expenses increased
to ₱26,405,553.95.  37

In arguing that its obligation was extinguished by compensation, Nutri-Asia contended:

10.47 In the instant case, both plaintiff and defendant are bound principally and at the same
time a principal creditor of the other; both debts consist in a sum of money; both debts are
due, liquidated and demandable; and neither plaintiff [n]or defendant there be any retention
or controversy, commenced by third persons and communicated in due time to the debtor.

10.48 By virtue of compensation, the plaintiffs obligation to defendant for the said losses and
damages in the sum of P26,405,553.95 is set off to the extent of P9,737,674.12 with the
defendant's alleged obligation to plaintiff in the sum of P9,737,674.12 resulting to the
extinguishment of defendant's alleged obligation to plaintiff.38

Due to compensation, Hygienic' s unpaid obligation was reduced to Pl6,667,879.83.  Nutri-

39

Asia added that Hygienic's cause of action against it had yet to accrue, and that Nutri-Asia
was merely holding the payment of P9,737,674.12 as a lien to ensure that Hygienic would
pay the losses and damages it incurred. 40

Lastly, Nutri-Asia alleged that Hygienic did not come to court with clean hands, and that it
acted in bad faith when it filed the Complaint.  It claimed that the amount charged by
41

Hygienic was "excessive, iniquitious[,] and unconscionable." 42

After Hygienic filed its Reply,  Nutri-Asia filed an Omnibus Motion.  Nutri-Asia reiterated its
43 44

arguments in its Answer, adding that its affirmative defenses could "be resolved on the basis
of the pleadings and the documents attached to the complaint without the need of further
hearing." 45

Hygienic opposed Nutri-Asia's Omnibus Motion in its Consolidated or Joint Comment.  It 46

countered that the allegation of noncompliance with a condition precedent was

incorrect.  Moreover, its cause of action was anchored on ''the sales invoices and delivery
47

receipts duly acknowledged by [Nutri-Asia] through its authorized representative and that
these deliveries made by [Hygienic] were not properly paid by [Nutri-Asia]." 48

Hygienic claimed that even if the cause of action was based on all attached documents in
the Complaint, which included the Purchase Orders, the arbitration clause was "inoperative
or incapable of being performed."  This is because of the conflict between the arbitration
49

clause in the Purchase Orders and the submission of parties to the Manila courts' jurisdiction
in the Sales Invoices. The arbitration clause was merely an offer from Nutri-Asia, which
Hygienic rejected in its Sales Invoices. To submit the dispute to arbitration, there should
have been an unequivocal agreement between the parties. This agreement was lacking in
their case. 50

In its May 24, 2010 Order,  the Regional Trial Court Branch 46, Manila denied the Omnibus
51

Motion.  It held that the venue was properly laid. It considered the signatures of Nutri-Asia's
52

representatives in the Sales Invoices as the company's concurrence that any dispute would
be raised before the courts of Manila. 53

The trial court also found that the elements of compensation under the Civil Code were
absent. It held that Hygienic and Nutri-Asia were not creditors and debtors of each other.
Only Hygienic was the creditor, and only Nutri-Asia was the debtor. Nutri-Asia's Counter-
Claim for damages still had to be proven. 54

The trial court likewise did not give credence to Nutri-Asia's allegation that Hygienic had no
cause of action against it.  As to the allegation that Nutri-Asia's affirmative defenses could
55

already be resolved without going through trial, the trial court held that the issues Nutri-Asia
raised "must be heard in a full blown trial. "  It held:
56

It is the view of the court that the arguments presented are factual in nature. Trial therefore is
essential for the court to best appreciate the facts presented. It cannot be done by mere
reading, study and evaluation of the documents attached to the complaint and the arguments
presented in their respective motions and comments to prevent miscarriage of justice.

....

[Rule 16, Section 6 of the Rules of Civil Procedure] provides that it is discretionary upon the
court to conduct a preliminary hearing on the affirmative defenses as a ground for dismissal.

Considering therefore that it is discretionary upon the court to allow the hearing on special
and affirmative defenses[,] this court would rather conduct a full blown trial so it could
evaluate the respective issues raised by the parties. 57

The trial court ruled that Nutri-Asia's Counter-Claim was permissive in nature; thus, it could
not acquire jurisdiction over the Counter-Claim unless the filing fees were paid. 58

The dispositive portion of the trial court's May 24, 2010 Order read:

Considering the above premises, the Omnibus Motion is hereby denied.

Defendant is directed to pay the appropriate docket fees on its permissive counterclaim
within thirty (30) days from receipt of this order.

Let the pre-trial of the above case be set on July 28, 2010 at 8:30 A.M.

Notify Attys. Malinao and Po of this order.

SO ORDERED. 59

Nutri-Asia filed a Motion for Reconsideration.  However, in its March 14, 2011 Joint
60

Order,  the Regional Trial Court Branch 24, Manila denied the Motion. It also endorsed the
61

case for mediation to the Philippine Mediation Center and set a pre-trial conference on May
11, 2011, in case mediation was unsuccessful. 62

Thus, Nutri-Asia filed a Petition for Certiorari  before the Court of Appeals.

63

In its January 13, 2012 Decision,  the Court of Appeals granted the Petition.  It held:
64 65

Here, the trial courts rendered the assailed Orders deferring a ruling on the issues of venue
and compliance with a condition precedent, which is the arbitration clause. No trial was
necessary to resolve them. All the trial courts ought to know could be determined from the
documents on record, namely, the sales invoices, the purchase orders, the respective places
of business of petitioner and private respondent, and the jurisprudence on these issues. We
cannot envision any factual question, and the trial courts did not mention any, to be threshed
out before they can rule on these affirmative defenses. The error in refusing to resolve them
violates so basic and elemental precepts on what and how discretion is to be exercised. We
have to set aside and reverse these Orders.  (Emphasis in the original)
66

The Court of Appeals also found that "the trial courts committed grave abuse of discretion in
allowing the complaint to stand and stay in Manila."  It held that since the signature of Nutri-
67

Asia's employee in the Sales Invoices was only for the receipt of goods, Nutri-Asia did not
agree to be bound by the venue stipulation in the Sales Invoices. Meanwhile, Hygienic did
not deny that an arbitration clause was written on the Purchase Orders.   Its representative
68

even "acknowledged its conformity to the purchase orders."  Since Hygienic "availed of the
69

advantages and benefits of the purchase orders when it acted on them[,]"  it is thus
70

estopped from rebuffing the arbitration clause. 71

The Court of Appeals held that Nutri-Asia should have submitted its Counter-Claim to
arbitration for resolution. Thus, whether the Counter-Claim was permissive or compulsory
was irrelevant. 72

The dispositive portion of the Court of Appeals January 13, 2012 Decision read:

ACCORDINGLY, the petition is GRANTED. The Orders dated May 24, 2010 and March 14,
2011 of the Regional Trial Court, Branches 46 and 24, in Civil Case No. 09-121849,
are REVERSED AND SET ASIDE. The complaint and the counterclaim in Civil Case No. 09-
121849 are DISMISSED WITHOUT PREJUDICE to referral of the disputes between
petitioner Nutri-Asia, lnc. and private respondent Hygienic Packaging Corporation to
arbitration, as stipulated in the purchase orders. No costs.

SO ORDERED.  (Emphasis in the original)

73

Hygienic filed a Motion for Reconsideration,  but it was denied by the Court of Appeals in its
74

March 28, 2012 Resolution. 75

On May 14, 2012, Hygienic filed a Petition for Review on Certiorari  against Nutri-Asia before
76

this Court. It prayed that the Court of Appeals January 13, 2012 Decision and March 28,
2012 Resolution be reversed and set aside, and the trial court's May 24, 2010 Order and
March 14, 2011 Joint Order be reinstated.  Respondent filed its Comment  on August 22,
77 78

2012, while petitioner filed its Reply  on September 4, 2013.

79

In its October 7, 2013 Resolution,  this Court gave due course to the Petition and required
80

the parties to submit their respective memoranda.  Petitioner filed its Memorandum of
81

Arguments  on December 12, 2013, while respondent filed its Memorandum  on December
82 83

19, 2013.

Petitioner argues that the decision of the Court of Appeals to dismiss the Complaint and
deny its Motion for Reconsideration is improper. It claims that the Court of Appeals did not
discuss the issues it raised in its pleadings.  Moreover, if the arbitration clause was found to
84

be valid, the Court of Appeals should have "referred the matter to arbitration and suspended
the proceedings of the case." 85

Petitioner maintains that the arbitration clause lacks the elements of a valid arbitration
agreement. Although present in writing, it was not properly subscribed, and the person who
signed the Purchase Orders was only a messenger, not petitioner's authorized agent. Thus,
the arbitration clause cannot bind petitioner. 86

Petitioner reiterates that the Purchase Orders constitute respondent's offer to petitioner to
enter into a contract with it. Meanwhile, the Sales Invoices constitute petitioner's counter-
offer rejecting the stipulation clause.  Since the parties did not agree on the arbitration
87

agreement, the arbitration clause is "inoperative and incapable of being performed, if not
totally null and void." 88

Petitioner also insists that the venue was properly laid when it filed the Complaint before the
trial court in Manila. It claims that when respondent accepted the Sales Invoices without
protest, it adhered to the contract, which included the venue stipulation. Petitioner points out
that the person who signed the Sales Invoices was a high-ranking officer of respondent, not
a mere messenger. By signing the Sales Invoices, respondent's representative bound the
company to the venue stipulation. 89

Petitioner asserts that its Motion for Reconsideration and Petition are not prohibited
pleadings. It filed the Motion to question both its Complaint's dismissal and the case's
supposed referral to arbitration. Thus, the Motion does not fall under Rule 4.6 of the Special
Rules of Court on Alternative Dispute Resolution. There is no basis for this Court to deny
outright the Petition, which assails the Court of Appeals Resolution denying the Motion. 90

Petitioner also argues it raised purely questions of law: 91

The main contention of the petitioner is that the alleged arbitration agreement between the
parties of this case did not comply with the requisites provided in the Rules. This is certainly
not a question of fact but rather, a question of law, as it necessitates the interpretation and
application of Section 4 of [Republic Act No.] 876 to the attendant facts of the case.

....
Contrary to the position of the respondent, the specific issue on whether or not the
messenger-signatory had the authority to bind petitioner Nutri-Asia with respect to the
Arbitration Clause is not at all a question of fact. [Neither the] identity nor the rank of the
signatory was not disputedor put in question so as to require further reception of evidence
and conduction of trial. The truth or falsehood of the incidents related to the act of signing of
the mere messenger is not disputed by the respondent. The issue is only with respect to his
very authority to bind petitioner Hygienic as to the alleged agreement on arbitration. In short,
the issue is limited to whether or not the messenger acted as a lawful agent of the petitioner -
and this is undeniably a pure question of law.

The same rationale applies on the issue raised by the petitioner as to whether or not the
document pertaining to the arbitration clause was properly subscribed.

. . . This specific issue merely concerns the correct application of law or jurisprudence as to
the construction of the term "subscribed" and does not require the examination of the
probative value of evidence pertaining to the document containing the arbitration
clause.  (Emphasis in the original)
92

Lastly, assuming that petitioner raised factual issues, it argues that these issues fall under
the exceptions provided by law and jurisprudence;  specifically, when the Court of Appeals
93

rendered its Decision: (1) "based on a misapprehension of facts";  and (2) its findings were
94

"contrary to those of the trial court[.]"

95

Respondent counters that petitioner's Motion for Reconsideration and Petition for Review
should have been dismissed outright under Rule 4.6 of the Special Rules of Court on
Alternative Dispute Resolution.  Since the Court of Appeals referred the dispute to
96

arbitration, it is "immediately executory-not subject to a motion for reconsideration, appeal[,]

or petition for certiorari [.] "
97

Respondent argues that the Court of Appeals correctly dismissed the case since the parties
failed to submit the case to arbitration. In any case, since it already found that the venue was
improperly laid, the Court of Appeals did not err in dismissing the case. 98

Respondent further claims that the Petition raises questions of fact.  It states that petitioner,
99

in filing the Petition, wants this Court "to review the evidence on record and ascertain the
authority of the persons who signed the Purchase Orders, as well as the Sales
Invoices."  This Court will then have to examine these facts:
100

(a) The identities of the persons who signed the Purchase Orders and the Sales Invoices;

(b) The positions of the persons in HYGIENIC [NUTRI-ASIA never stipulated on the positions
of the said persons] who signed the Purchase Orders;

(c) The positions of the persons who ostensibly signed the Sales Invoices;

(d) The duties and functions of the persons who signed the Purchase Orders and the Sales
Invoices;

(e) Whether the persons who signed the Purchase Orders had the authority to act on behalf
of HYGIENIC [To be clear, NUTRI-ASIA never admitted that the persons were not authorized
to act on behalf of

HYGIENIC];

(f) Whether the persons who signed the Sales Invoices had the authority to act on behalf of
NUTRI-ASIA [Again, NUTRI-ASIA never admitted the alleged authority of the persons who
signed the Sales

Invoices]; and

[g] The circumstances surrounding the signing of the Purchase Orders and the Sales
Invoices. 101

Respondent adds that the conflicting findings of the trial court and the Court of Appeals on
the issue of arbitration do not suffice to allow the Petition.  It highlights that in resolving the
102

case, the question is "whether the Court of Appeals correctly determined the presence of
grave abuse of discretion in the ruling of RTC-Manila[.]" 103
Contrary to petitioner's assertion, respondent contends that the arbitration clause is
operative and capable of being performed. Aside from being in writing, both parties
subscribed to the Terms and Conditions of the Purchase Orders.  Petitioner's acceptance of
104

the Terms and Conditions, which included the arbitration clause, is "manifested by its
issuance of the corresponding Sales Invoices, which made reference to the relevant
Purchase Orders."  By reflecting in its Sales Invoices the serial numbers of respondent's
105

Purchase Orders, petitioner "effectively incorporated the Purchase Order and its contents
into the Sales Invoice, including the arbitration clause."  For failing to refer the case to
106

arbitration-a condition precedent before taking judicial action-the Court of Appeals correctly
dismissed the case. 107

Finally, respondent maintains that "the Sales Invoices and the venue stipulation therein did
not constitute a rejection of the arbitration clause in the Purchase Orders."  It claims that the
108

persons who signed the Sales Invoices were not respondent's employees, but of a third party
contractor for their logistics operations.  It notes that above the signature line of the Sales
109

Invoices, the phrase "[r]eceived the above goods in good order and condition"  is written.
110

The contractor's employees only signed the Sales Invoices to signify that they received the
deliveries. Their signatures cannot bind respondent to the venue stipulation. Assuming that
they were authorized by respondent, the venue stipulation cannot supersede the arbitration
clause in the Purchase Orders.  The Sales Invoices' venue stipulation "does not authorize
111

either party to do away with arbitration before proceeding to the courts to seek relief." 112

The sole issue for this Court's resolution is whether or not the action for collection of sum of
money was properly filed.

Petitioner and respondent differ as to where their dispute should be brought for resolution.
On the one hand, petitioner contends that the venue stipulation in the Sales Invoices should
be enforced. On the other hand, respondent asserts that the arbitration clause in the
Purchase Orders should be carried out.

This Court cannot subscribe to either contention.

Parties are allowed to constitute any stipulation on the venue or mode of dispute resolution
as part of their freedom to contract under Article 1306 of the Civil Code of the Philippines,
which provides:

ARTICLE 1306. The contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.

Here, however, the records lack any written contract of sale containing the specific terms and
conditions agreed upon by the parties.  The parties failed to provide evidence of any
1âшphi1

contract, which could have contained stipulations on the venue of dispute resolution.
Nonetheless, petitioner and respondent both claim that the Sales Invoices and the Purchase
Orders, respectively, contained a stipulation on where to raise issues on any conflict
regarding the sale of plastic containers. Each party also insists that the other party accepted
the venue stipulation in the Sales Invoices or the Purchase Orders when its representative
signed them.

Upon examination of the Sales Invoices and the Purchase Orders, this Court cannot
consider the documents as contracts that would bind the parties as to the venue of dispute
resolution.

A closer look at the Sales Invoices issued by petitioner reveals that above the signature of
respondent's representative is the phrase, "Received the above goods in good order and
condition."  Clearly, the purpose of respondent's representative in signing the Sales Invoices
113

is merely to acknowledge that he or she has received the plastic containers in good
condition. He or she did not affix his or her signature in any other capacity except as the
recipient of the goods. To extend the effect of the signature by including the venue
stipulation would be to stretch the intention of the signatory beyond his or her objective. This
Court, then, cannot bind respondent to the other stipulations in the Sales Invoices.

A scrutiny of the Purchase Orders issued by respondent also reveals that above the
signature of petitioner's representative is the phrase "Acknowledged By (Supplier)."  Since 114

the Purchase Orders indicated how many pieces of plastic containers respondent wanted to
order from petitioner, the signatory merely affixed his or her signature to acknowledge
respondent's order. Moreover, the Purchase Orders included a note stating that the
"[Purchase Order] must be DULY acknowledged to facilitate payment." 115
Thus, it was necessary for petitioner's representative to sign the document for the processing
of payment. The act of signing the Purchase Orders, then, was limited to acknowledging
respondent's order and facilitating the payment of the goods to be delivered. It did not bind
petitioner to the terms and conditions in the Purchase Orders, which included the arbitration
clause.

Petitioner and respondent may have entered into a contract of sale with respect to
petitioner's merchandise. However, the case records do not show that they have a contract
in relation to the venue of any civil action arising from their business transaction.

Cathay Metal Corporation v. Laguna West Multi-Purpose Cooperative, Inc.  provides, "[f]or
116

there to be a contract, there must be a meeting of the minds between the parties."  Here, no
117

evidence shows that petitioner and respondent had a meeting of minds and agreed to submit
any future issue either to the trial court or to arbitration.

Since there is no contractual stipulation that can be enforced on the venue of dispute
resolution, the venue of petitioner's personal action will be governed by the 1997 Revised
Rules of Civil Procedure. Rule 4 provides:

RULE 4

Venue of Actions

SECTION 1. Venue of Real Actions. - Actions affecting title to or possession of real property,
or interest therein, shall be commenced and tried in the proper court which has jurisdiction
over the area wherein the real property involved, or a portion thereof, is situated.

Forcible entry and detainer actions shall be commenced and tried in the Municipal Trial Court
of the municipality or city wherein the real property involved, or a portion thereof, is situated.

SECTION 2. Venue of Personal Actions. - All other actions may be commenced and tried
where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of
the principal defendants resides, or in the case of a non-resident defendant where he may
be found, at the election of the plaintiff.

SECTION 3. Venue of Actions Against Nonresidents. - If any of the defendants does not
reside and is not found in the Philippines, and the action affects the personal status of the
plaintiff, or any property of said defendant located in the Philippines, the action may be
commenced and tried in the court of the place where the plaintiff resides, or where the
property or any portion thereof is situated or found.

SECTION 4. When Rule not Applicable. - This Rule shall not apply—

(a) In those cases where a specific rule or law provides otherwise; or

(b) Where the parties have validly agreed in writing before the filing of the action on the
exclusive venue thereof.

In City of Lapu-Lapu v. Philippine Economic Zone Authority: 118

[V]enue is "the place of trial or geographical location in which an action or proceeding should
be brought." In civil cases, venue is a matter of procedural law. A party's objections to venue
must be brought at the earliest opportunity either in a motion to dismiss or in the answer;
otherwise the objection shall be deemed waived. When the venue of a civil action is
improperly laid, the court cannot motu proprio dismiss the case.

The venue of an action depends on whether the action is a real or personal action. Should
the action affect title to or possession of real property, or interest therein, it is a real action.
The action should be filed in the proper court which has jurisdiction over the area wherein
the real property involved, or a portion thereof, is situated. If the action is a personal action,
the action shall be filed with the proper court where the plaintiff or any of the principal
plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the
case of a non-resident defendant where he may be found, at the election of the
plaintiff.  (Emphasis supplied, citations omitted)
119

It has been consistently held that an action for collection of sum of money is a personal
action.  Taking into account that no exception can be applied in this case, the venue, then,
120
is "where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any
of the principal defendants resides, . . . at the election of the plaintiff."  For a corporation, its
121

residence is considered "the place where its principal office is located as stated in its Articles
of Incorporation." 122

In its Complaint, petitioner stated that its principal place of business is on San Vicente Road
beside South Superhighway, San Pedro, Laguna.  Meanwhile, respondent admitted in its
123

Answer that its principal office is at 12/F Centerpoint Building, Gamet Road comer Julia
Vargas Avenue, Ortigas Center, Pasig City.  Considering that the amount petitioner claims
124

falls within the jurisdiction of the Regional Trial Court,  petitioner may file its Complaint for
125

sum of money either in the Regional Trial Court of San Pedro, Laguna or in the Regional
Trial Court of Pasig City.

Petitioner's erroneous belief on the applicability of the venue stipulation in the Sales Invoices
led it to file an action before the Regional Trial Court of Manila. This error is fatal to
petitioner's case.

One (1) of the grounds for dismissal of an action under Rule 16, Section 1  of the 1997
126

Revised Rules of Civil Procedure is when the venue is improperly laid. Although respondent
did not file a Motion to Dismiss on this ground, it cited the improper venue as one (1)of the
affirmative defenses in its Answer: 127

9. The venue of the instant complaint is improperly laid.

9.1 The instant complaint for collection of a sum of money, a personal action was filed before
the Regional Trial Court of the City of Manila which is not the proper venue for the instant
complaint.

....

9.3 In paragraphs 1 and 2 of the instant complaint, the plaintiff had made an admission on
the pleading that its principal place of business is located at San Vicente Road beside South
Superhighway, San Pedro, [Laguna,] while the principal place of business of defendant is
located at 12/F The Centerpoint Building, Gamet Road comer Julia Vargas Avenue, Ortigas
Center, Pasig City. With this admission on the pleading, it is clear that the instant complaint
should have been filed before the Regional Trial Court of San Pedro, Laguna, where the
plaintiff has its principal place of business or before the Regional Trial Court of Pasig City,
Laguna where the defendant has its principal place of business.

9.4 The parties did not validly agree in writing before the filing of the action that the Courts of
the City of Manila shall be the exclusive venue thereof.

9.5 The alleged stipulation in the Sales Invoice that the parties submit themselves to
jurisdiction of the Courts of the City of Manila in any legal action out of the transaction
between the parties cannot and should not bind defendant in the absence of the express
conformity by the defendant. The defendant has never signed the said Sales Invoice to
signify its conformity to the said stipulation regarding venue of

actions.  (Emphasis in the original)

128

This Court finds that the Court of Appeals is partly correct in ruling that the trial court
committed grave abuse of discretion in denying respondent's Omnibus Motion. The assailed
Court of Appeals January 13, 2012 Decision held:

On the issue of venue, the trial courts committed grave abuse of discretion in allowing the
complaint to stand and stay in Manila. The sales invoices, if viewed to be a contract on
venue stipulation, were not signed by petitioner's agent to be bound by such stipulation. The
signature has to do with the receipt of the purchased goods "in good order and condition."
Petitioner did not, therefore, agree to be restricted to a venue in Manila and was never
obliged to observe this unilateral statement in the sales invoices.  (Citation omitted)
129

However, contrary to the Court of Appeals' finding on the validity of the arbitration clause,
this Court cannot give the stipulation any effect as discussed earlier.

This Court reminds litigants that while the rules on venue are for the convenience of
plaintiffs, these rules do not give them unbounded freedom to file their cases wherever they
may please: 130
[T]he rules on venue, like the other procedural rules, are designed to insure a just and
orderly administration of justice or the impartial and even-handed determination of every
action and proceeding. Obviously, this objective will not be attained if the plaintiff is given
unrestricted freedom to choose the court where he may file his complaint or petition. The
choice of venue should not be left to the plaintiffs whim or caprice. He [or she] may be
impelled by some ulterior motivation in choosing to file a case in a particular court even if not
allowed by the rules on venue.  (Citation omitted)
131

WHEREFORE, premises considered, the Court of Appeals January 13, 2012 Decision and
March 28, 2012 Resolution in CA-G.R. SP No. 119511 are AFFIRMED insofar as they
reversed and set aside the May 24, 2010 Order and March 14, 2011 Joint Order of the
Regional Trial Court, Branches 46 and 24, in Civil Case No. 09-121849.

However, the rulings of the Court of Appeals dismissing the· Complaint and the Counter-
Claim in Civil Case No. 09-121849 without prejudice to referral of the disputes to arbitration
are REVERSED and SET ASIDE.

The Complaint and the Counter-Claim in Civil Case No. 09-121849 are DISMISSED
WITHOUT PREJUDICE to the refiling of the same claims before the proper court.

SO ORDERED.