CAPATI vs. OCAMPO G.R. No. L-28742 April 30, 1982 Directory statute.

It is permissive or
discretionary in nature and merely outlines the act to be done in such a way that no injury can result from
ignoring it or that its purpose can be accomplished in a manner other than that prescribed and
substantially the same result can be obtained.

Facts: Plaintiff Virgilio Capati, a resident of Bacolor, Pampanga, was the contractor of the Feati Bank for
the construction of its building in Iriga, Camarines Sur. He entered into a sub-contract with the defendant
Jesus Ocampo, a resident of Naga City where he undertook to construct the vault walls, exterior walls and
columns of the said Feati building in accordance with the specifications indicated therein. Defendant
further bound himself to complete said construction on or before June 5, 1967. To emphasize this time
frame Ocampo affixed his signature below the following stipulation in bold letters: “TIME IS ESSENTIAL,
TO BE FINISHED 5 JUNE’ 67.” At the back of the contract which reads: “14. That all actions arising out, or
relating to this contract may be instituted in the Court of First Instance of the City of Naga.” Claiming that
defendant finished the construction in question only on June 20, 1967, plaintiff filed in the Court of First
Instance of Pampanga an action for recovery of consequential damages. Ocampo (defendant) filed a
motion to dismiss the complaint on the ground that venue of action was improperly laid. Capati (plaintiff)
filed an opposition to the motion, claiming that their agreement to hold the venue in the Court of First
Instance of Naga City was merely optional to both contracting parties. CFI of Pampanga decided that it is
an improper venue.

Issue: WON the venue of action was improper (CFI of Pampanga)?

NO, it made use of the word “may”, hence only directory.

Held: It is well settled that the word “may” is merely permissive and operates to confer discretion upon a
party. Under ordinary circumstances, the term “may be” connotes possibility; it does not connote
certainty. “May” is an auxillary verb indicating liberty, opportunity, permission or possibility. The
stipulation as to venue in the contract in question is simply permissive. By the said stipulation, the parties
did not agree to file their suits solely and exclusively with the Court of First Instance of Naga. They merely
agreed to submit their disputes to the said court, without waiving their right to seek recourse in the court
specifically indicated in Section 2 (b), Rule 4 of the Rules of Court. Since the complaint has been filed in
the Court of First Instance of Pampanga, where the plaintiff resides, the venue of action is properly laid in
accordance with Section 2 (b), Rule 4 of the Rules of Court.
 G.R. No. L-28742 April 30, 1982

VIRGILIO CAPATI, plaintiff-appellant,

ESCOLIN, J.:

We set aside the order of the Court of First Instance of Pampanga in Civil Case No. 3188 which dismissed
the plaintiff's complaint on ground of improper venue.

Plaintiff Virgilio Capati a resident of Bacolor, Pampanga, was the contractor of the Feati Bank for the
construction of its building in Iriga, Camarines Sur. On May 23, 1967, plaintiff entered into a sub-contract
with the defendant Dr. Jesus Ocampo, a resident of Naga City, whereby the latter, in consideration of the
amount of P2,200.00, undertook to construct the vault walls, exterior walls and columns of the said Feati
building in accordance with the specifications indicated therein. Defendant further bound himself to
complete said construction on or before June 5, 1967 and, to emphasize this time frame for the
completion of the construction job, defendant affixed his signature below the following stipulation written
in bold letters in the sub-contract: "TIME IS ESSENTIAL, TO BE FINISHED 5 JUNE' 67.

Claiming that defendant finished the construction in question only on June 20, 1967, plaintiff filed in the
Court of First Instance of Pampanga an action for recovery of consequential damages in the sum of
P85,000.00 with interest, plus attorney's fees and costs. The complaint alleged inter alia that "due to the
long unjustified delay committed by defendant, in open violation of his express written agreement with
plaintiff, the latter has suffered great irreparable loss and damage ... "

Defendant filed a motion to dismiss the complaint on the ground that venue of action was improperly
laid. The motion was premised on the stipulation printed at the back of the contract which reads:

14. That all actions arising out, or relating to this contract may be instituted in the Court of First Instance
of the City of Naga.

Plaintiff filed an opposition to the motion, claiming that their agreement to hold the venue in the Court
of First Instance of Naga City was merely optional to both contracting parties. In support thereof, plaintiff
cited the use of the word "may " in relation with the institution of any action arising out of the contract.
The lower court, in resolving the motion to dismiss, ruled that "there was no sense in providing the
aforequoted stipulation, pursuant to Sec. 3 of Rule 4 of the Revised Rules of Court, if after all, the parties
are given the discretion or option of filing the action in their respective residences," and thereby ordered
the dismissal of the complaint.

Hence, this appeal.

The rule on venue of personal actions cognizable by the courts of first instance is found in Section 2 (b),
Rule 4 of the Rules of Court, which provides that such "actions may be commenced and tried where the
defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs
resides, at the election of the plaintiff." The said section is qualified by the following provisions of Section
3 of the same rule:

By written agreement of the parties the venue of an action may be changed or transferred from one
province to another.

Defendant stands firm on his contention that because of the aforequoted covenant contained in par. 14
of the contract, he cannot be sued in any court except the Court of First Instance of Naga City. We are
thus called upon to rule on the issue as to whether the stipulation of the parties on venue is restrictive in
the sense that any litigation arising from the contract can be filed only in the court of Naga City, or merely
permissive in that the parties may submit their disputes not only in Naga City but also in the court where
the defendant or the plaintiff resides, at the election of the plaintiff, as provided for by Section 2 (b) Rule
4 of the Rules of Court.

It is well settled that the word "may" is merely permissive and operates to confer discretion upon a party.
Under ordinary circumstances, the term "may be" connotes possibility; it does not connote certainty.
"May" is an auxillary verb indicating liberty, opportunity, permission or possibility. 1

In Nicolas vs. Reparations Commission 2, a case involving the interpretation of a stipulation as to venue
along lines similar to the present one, it was held that the agreement of the parties which provided that
"all legal actions arising out of this contract ... may be brought in and submitted to the jurisdiction of the
proper courts in the City of Manila," is not mandatory.

We hold that the stipulation as to venue in the contract in question is simply permissive. By the said
stipulation, the parties did not agree to file teir suits solely and exclusively with the Court of First Instance
of Naga. They merely agreed to submit their disputes to the said court, without waiving their right to seek
recourse in the court specifically indicated in Section 2 (b), Rule 4 of the Rules of Court.

Since the complaint has been filed in the Court of First Instance of Pampanga, where the plaintiff resides,
the venue of action is properly laid in accordance with Section 2 (b), Rule 4 of the Rules of Court.

WHEREFORE, the order appealed from is hereby set aside. Let the records be returned to the court of
origin for further proceedings. Costs against defendant-appellee.

SO ORDERED.

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. (1[a], 2[a]a)

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. (2[b]a)

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.
(2[c]a)

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. (3a, 5a)