JESUSITO D.

LEGASPI

vs

REPUBLIC OF THE PHILIPPINES, represented by Social

Security System (SSS)

GR 160653, July 23, 2008

AUSTRIA-MARTINEZ, J.

FACTS:

A Construction Agreement was entered upon by Legaspi and

SSS for the construction of a four storey building branch office of
SSS in Baguio City. An economic crisis in 1997, however, resulted
in a collapse of peso and an increase of the price of the imported
materials to be used in the project. Hence, the cost exceeded the
original contract price and Legaspi informed SSS of his difficulty
in meeting his obligations. He requested for an adjustment in the
contract price which was denied by respondent. Thus, petitioner
filed a complaint for payment of sum of money plus damages with
RTC Makati. SSS through OSG, filed a motion to dismiss claiming
that venue was improperly laid because the Construction
Agreement provided that all actions may be brought before the
proper court in Quezon City and that petitioner waived any other
venue.

The Regional Trial Court denied the Motion to Dismiss. It

held that venue was properly laid since petitioner’s action was not
based on the Construction Agreement but that it was a collection
suit for the increase in the price of imported materials and
equipment furnished and installed to complete the construction.

ISSUE:

Whether or not venue was properly laid.

RULING:

No. The Court ruled that venue was improperly laid. As

a general rule, venue of personal actions is governed by
Rule 4 Sec 2 of the Rules of Court. However, parties are not
precluded from agreeing in writing on an exclusive venue.
Written stipulations as to venue may either be restrictive or
permissive, and determined by the intent of the parties. In
the absence of qualifying or restrictive words such as
“exclusively,” “waiving for this purpose any other venue,” “shall
only” preceding the designation of venue, “to the exclusion of the
other courts,” or words of similar import, the stipulation should be
deemed as merely an agreement on an additional forum, not as
limiting venue to the specified place.

The Construction Agreement provides that ” All actions and

controversies that may arise from this Agreement may be brought
by the parties before the proper courts in Quezon City where the
main office of the CLIENT is located, the CONTRACTOR hereby
expressly waiving any other venue.” As such, venue is specific.
The action must be filed in Quezon City only. The Court also held
that the action, although anchored on Art. 1267, clearly originates
from the Construction Agreement. Petitioner is requesting for a
price adjustment; he is assailing the no escalation clause. Resort
to the Construction Agreement will be made to determine whether
or not he is entitled to such price adjustment. Therefore, the
provision on venue applies. As to the argument on cause of
action, the Court agrees with the CA that petitioner has cause of
action against respondent. The complaint filed by petitioner sets
forth the ultimate facts upon which his claim for price adjustment
is based.  The complaint does not have to establish or allege facts
proving the existence of a cause of action at the outset, as this
will have to be done at the trial on the merits of the case