Overview

Disputes over promissory notes (PNs)—e.g., non-payment, acceleration after default, or disputes over indorsement—are personal actions for recovery of a sum of money. Because parties to a PN often live or do business in different provinces, questions arise about where a lawsuit should be filed. This article consolidates the venue rules, jurisdictional thresholds, contract-based venue stipulations, and strategic considerations under Philippine procedural law (as updated by the 2019 Amendments to the Rules of Civil Procedure and subsequent jurisdictional statutes).

Venue vs. Jurisdiction: Don’t Mix Them Up

Jurisdiction answers which level of court may hear the case (e.g., first-level courts vs. Regional Trial Courts), usually based on the amount involved or the nature of the action.
Venue answers which geographic branch of that court is the proper place to file.

Improper venue is waivable; lack of jurisdiction is not. A case filed in the wrong venue may proceed if the defendant fails to timely object.

The Default Venue Rule for Personal Actions

Under Rule 4 (Venue of Actions), actions that are personal—like collection on a promissory note—may be filed at the plaintiff’s option:

Where the plaintiff resides, or
Where the defendant resides,
If there are multiple defendants, where any one of them resides.

What counts as “residence”?

Natural persons: Their actual place of residence (not necessarily hometown or place of birth).
Juridical persons (corporations/partnerships): The location of their principal office as stated in their registration documents is treated as their residence for venue purposes.

Practical tip: Attach documentary proof of residence (e.g., government ID, barangay certificate, SEC GIS/Articles for corporations) to preempt venue challenges.

When the Provinces Differ: Common Scenarios

1) Maker in Province A; Payee in Province B

The payee (plaintiff) may file in Province B (their residence) or in Province A (defendant’s residence).

2) Multiple Defendants in Different Provinces

Venue is proper in any province where at least one defendant resides, or the plaintiff’s province.

3) Defendant is a Corporation with Branches

Venue is proper in the province where the corporation’s principal office is located, or the plaintiff’s residence—unless the PN (or a related master agreement) has a valid exclusive venue stipulation.

4) Place of Payment Named in the PN (e.g., “Payable at Cebu”)

This does not control venue by itself. The place of payment is relevant to demand and default, but venue follows Rule 4 unless there is a written, exclusive venue stipulation.

Contractual Venue Stipulations in Promissory Notes

Parties can agree in writing to a specific venue. Philippine jurisprudence recognizes such stipulations if:

The stipulation is in writing and forms part of the contract (or is clearly incorporated by reference).
The language is clearly exclusive (e.g., “only in the courts of Quezon City,” “to the exclusion of all other venues”).
It is not contrary to public policy (e.g., it does not effectively deprive a party of a day in court).

If the clause is merely permissive (“may be filed in Makati”), the plaintiff still retains the default options under Rule 4.

Drafting pointer: Use unequivocal wording—“exclusive venue in the courts of ___”—and ensure both parties sign the PN or master agreement containing the clause.

Small Claims vs. Ordinary Civil Action

Promissory note cases often qualify for Small Claims procedure, which is designed for speed and simplicity.

Small Claims

Nature: Purely for sum of money claims (e.g., unpaid PN).
Monetary ceiling: (As amended in recent years) ₱1,000,000 including interests and penalties but excluding attorney’s fees and costs.
Venue: Where the plaintiff resides or where the defendant resides (similar to Rule 4).
Counsel: Generally no lawyers appear for parties during the hearing.
Attachments: Original/duplicate of the PN, proof of demand (e.g., demand letter and registry receipts), and computation of claim.

Ordinary Civil Action (Collection of Sum of Money)

Used when the amount exceeds the Small Claims ceiling or when counterclaims/complex issues make small claims impractical.

Court Level by Amount Involved (Jurisdiction)

(Subject to current statutory thresholds)

First-Level Courts (MTC/MCTC/MeTC): Exclusive original jurisdiction over money claims not exceeding ₱2,000,000.
Regional Trial Courts (RTC): Original jurisdiction when the principal amount exceeds ₱2,000,000.

Include principal, interest accrued at filing, and penalties in your calculation of the amount in controversy for jurisdictional purposes (but check the latest statutory wording; some thresholds treat interest/penalties differently).

How to Raise (or Defend Against) the Venue Issue

Under the 2019 Amended Rules, improper venue is raised as an affirmative defense in the Answer (or through a motion only if the complaint itself shows on its face that venue is improper and the court acts motu proprio).
Failure to raise improper venue timely = waiver.

For plaintiffs:

Plead your (or defendant’s) residence with specificity and attach proof.
If relying on a contractual exclusive venue, quote the clause in the complaint and attach the PN/master agreement.

For defendants:

If sued in an improper venue, squarely allege the defect in the Answer’s affirmative defenses and attach proofs (e.g., your actual residence, corporation’s principal office).
If there is a valid exclusive venue clause elsewhere, cite and attach it.

Effects of Defective or Disputed Venue Clauses

Ambiguous or permissive wording → courts do not treat it as exclusive; Rule 4 applies.
Venue clause found in a separate document (e.g., terms & conditions) → enforceable if incorporated by reference and assented to, but expect factual scrutiny (delivery, assent, integration).
Adhesion concerns → courts can refuse enforcement when the clause is oppressive or effectively denies a party access to courts.

Venue in Actions Against Indorsers or Multiple Obligors

When suing maker and indorsers together, the action remains personal. Venue can be laid where any defendant resides or where the plaintiff resides, subject to any exclusive venue stipulation binding those defendants. If defendants reside in different provinces, suing where one resides is enough to anchor proper venue for all, provided joinder is proper.

Interaction with Demand and Accrual

Written demand (if required by the PN or by law due to a “payable on demand” instrument) is typically made at the address stated in the PN or last known address.
The cause of action accrues upon maturity (or upon valid acceleration after default).
The place of demand does not set the venue; it only supports default and accrual allegations.

Evidence Pack: What to Prepare for Venue

Identity of the parties and residence (IDs, barangay or utility proofs; SEC documents for companies).
The PN (original or duplicate original).
Proof of default (maturity, dishonor, acceleration notice).
Proof of demand (letters, emails, courier/registry receipts).
Contractual venue clause (with clear exclusive wording) and proof of assent.
Amount computation (principal, interest, penalties, less payments), also to establish jurisdictional level.

Tactical Considerations

Plaintiff’s choice: If there is no exclusive clause, choosing your home province reduces travel and witness costs.
Defendant’s response: If sued outside a valid venue, don’t delay—raise improper venue in the Answer; otherwise, it’s waived.
Multiple defendants: Filing where any defendant resides may be advantageous (e.g., perceived docket speed, accessibility).
Small Claims leverage: If within the ceiling, small claims can yield a quicker enforceable judgment with fewer technical pitfalls.
Forum selection vs. enforceability: An overly restrictive venue clause may invite challenges; make it clear, reasonable, and mutual.

Quick Decision Tree (Textual)

Is there an exclusive venue clause?
- Yes → File only in the specified courts.
- No → Go to 2.
Where to file under Rule 4?
- Plaintiff’s residence, or
- Any defendant’s residence.
Which level of court?
- ≤ ₱2,000,000 → First-Level Court (MTC/MCTC/MeTC).
- > ₱2,000,000 → RTC.
- ≤ ₱1,000,000 & purely sum of money → consider Small Claims.
Multiple defendants?
- Choose any proper venue tied to one defendant (or plaintiff), absent an exclusive clause.
Was venue objected to?
- If no timely objection, venue is deemed waived and the case proceeds.

Model Clauses & Pleadings Snippets

A. Exclusive Venue Clause (for inclusion in PNs or Master Agreements)

“The parties agree that any action or proceeding arising from or relating to this Promissory Note shall be filed exclusively in the courts of [City/Province], to the exclusion of all other venues.”

B. Complaint Allegation (Plaintiff’s Residence)

“Plaintiff is a resident of [City/Province], as shown by the attached [ID/Barangay Certificate]; hence venue is proper under Rule 4.”

C. Answer – Affirmative Defense (Improper Venue)

“Venue is improper. Defendant is a resident of [City/Province], while Plaintiff resides in [City/Province]. The complaint was filed in [City/Province], which is neither the residence of the plaintiff nor of any defendant and no exclusive venue stipulation exists. Dismissal is warranted.”

Frequently Asked Questions

Q1: The PN says “payable in Iloilo.” Must I sue only in Iloilo? A: No. Unless the PN also contains a clear exclusive venue clause, you can sue where the plaintiff or any defendant resides.

Q2: The corporation I’m suing has a branch in my province. Is that enough? A: Not by itself. Venue is tied to the corporation’s principal office (its juridical residence) or the plaintiff’s residence, unless an exclusive clause applies.

Q3: If the defendant doesn’t object to venue, can the case continue? A: Yes. Improper venue is waivable if not timely raised.

Q4: Can we agree on arbitration instead of courts? A: Yes. An arbitration clause in the PN or related agreement may divert the dispute from courts to arbitration. Court filings would then relate to interim measures or confirmation/vacatur of awards, which have their own venue rules.

Bottom Line

For disputes on promissory notes across different Philippine provinces:

Treat the case as a personal action.
Default venue: plaintiff’s residence or any defendant’s residence (Rule 4).
A written, clearly exclusive venue clause will control.
Observe jurisdictional thresholds to choose the proper court level; consider Small Claims when eligible.
Raise venue objections early—or they are waived.

Use these rules at filing to avoid costly resets and to position your case in the most efficient, defensible forum.