Case Digest: UNIWIDE HOLDINGS, INC., v. ALEXANDER M. CRUZ

UNIWIDE HOLDINGS, INC., v. ALEXANDER M. CRUZ

529 SCRA 664 (2007)

Where there is a joinder of causes of action between the same parties one of which does not arise out of the contract where the exclusive venue was stipulated upon, the complain may be brought before other venues.

Uniwide Holdings, Inc. entered into a franchise agreement with Alexander M. Cruz granting the latter a five-year franchise to adopt and use the ―Uniwide Family Store System‖ for the establishment and operation of a ―Uniwide Family Store‖ in Marikina City.

The contract stipulated that Cruz will pay a monthly service fee of P50,000.00 or three percent of gross monthly purchases, whichever is higher to UHI, payable within five days after the end of each month without need of formal billing or demand from UHI. In case of any delay in the payment of the monthly service fee, Cruz would, under Article 10.3 of the agreement, be liable to pay an interest charge of three percent per month. Cruz thereafter purchased goods from UHI’s affiliated companies First Paragon Corporation (FPC) and Uniwide Sales Warehouse Club, Inc. (USWCI).

FPC and USWCI subsequently executed Deeds of Assignment in favor of UHI assigning all their rights and interests over Cruz‘s accounts payable to them. Cruz had outstanding obligations with UHI, FPC and USWCI in the amount of P1, 358, 531.89.00. UHI sent a letter demanding for the payment of such amount but it was not settled.

Thus, UHI filed a complaint for collection of sum of money before the Regional Trial Court of Parañaque against Cruz praying for payment of service fee, accounts payable to FPC and USWCI and attorney‘s fees and litigation expenses.

Cruz filed a Motion to Dismiss on the ground of improper venue. He invokes Article 27.5 of the agreement which provides that exclusive jurisdiction is vested with the courts f Quezon City. The trial court granted the Motion to Dismiss.

ISSUE:

Whether or not a case based on several causes of action is dismissible on the ground of improper venue where only one of the causes of action arises from a contract with exclusive venue stipulation

HELD:

In this case, UHI contended that nowhere in the agreement is there a mention of FPC and USWCI, and neither are the two parties thereto, hence, they cannot be bound to the stipulation on ―exclusive venue.‖ The Court found merit in this contention.

The Supreme Court cited Section 2, Rule 4 of the Rules of Court which provides that 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 nonresident defendant, where he may be found, at the election of the plaintiff.

The forging of a written agreement on an exclusive venue of an action does not, however, exclude parties from bringing a case to other venues.

Where there is a joinder of causes of action between the same parties one of which does not arise out of the contract where the exclusive venue was stipulated upon, the complaint, as in the one at bar, may be brought before other venues provided that such other cause of action falls within the jurisdiction of the court and the venue lies therein.

It bears emphasis that the causes of action on the assigned accounts are not based on a breach of the agreement between UHI and Cruz. They are based on separate, distinct and independent contracts-deeds of assignment in which UHI is the assignee of Cruz‘s obligations to the assignors FPC and USWCI. Thus, any action arising from the deeds of assignment cannot be subjected to the exclusive venue stipulation embodied in the agreement.