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IRENE MARCOS-ARANETA v. CA

FACTS:

Facts:

Ambassador Roberto S. Benedicto and his business associates organized Far East Managers and Investors, Inc. (FEMII) and Universal Equity Corporation (UEC) in 1968 and 1972, respectively. According to petitioner Irene Marcos-Araneta, both corporations were organized under a trust agreement where Benedicto held the shares of stocks in his name and in the name of his associates as trustees for Irene's benefit. When Irene demanded the reconveyance of the 65% stockholdings, the Benedicto Group refused. Irene then filed two similar complaints for conveyance of shares of stock, accounting, and receivership against the Benedicto Group. The first complaint covered the UEC shares, while the second complaint sought recovery of 65% of FEMII shares. Francisca Benedicto-Paulino, Benedicto's daughter, filed a motion to dismiss the first complaint, while Benedicto filed a motion to dismiss the second complaint. Irene filed a consolidated opposition to the motions to dismiss. Benedicto and Francisca presented a joint affidavit of household staff attesting that Irene did not maintain residence in Batac, Ilocos Norte, where the complaints were filed. Irene presented her community tax certificate issued in Ilocos Norte to support her claimed residency. Benedicto passed away, and his wife and Francisca were substituted as defendants. The RTC dismissed both complaints, stating that they were real actions and venue was improperly laid because Irene did not actually reside in Ilocos Norte. Irene filed a motion for reconsideration and a motion to admit amended complaint. The RTC denied the motion for reconsideration but granted the motion to admit the amended complaint, stating that the inclusion of additional plaintiffs cured the defect of improper venue. Julita and Francisca moved to dismiss the amended complaint.

Julita and Francisca, co-plaintiffs with Irene as the original plaintiff, moved to dismiss the amended complaint filed by Irene. The RTC denied the motion to dismiss, stating that Irene had the right to amend her complaints without any responsive pleading. The RTC also held that the filing of the amended complaint superseded the original complaints, which were dismissed earlier but had not yet become final. Julita and Francisca filed an Answer to the amended complaint in order to avoid being declared in default. However, they also filed a petition for certiorari with the CA, seeking to nullify the RTC's orders admitting the amended complaint and denying their motion to dismiss. The CA required Julita to submit a written authority authorizing Francisca to represent her. The CA eventually issued a TRO and a writ of preliminary injunction against the RTC. The CA later set aside the RTC's orders and dismissed the amended complaints. Irene and her new trustees filed a motion for reconsideration, which was denied. Hence, this petition for review before the Supreme Court. The issues raised by petitioners include the sufficiency of Julita's affidavit as compliance with the verification and non-forum shopping requirements, the propriety of the CA ruling on the trust issue, the dismissal of the amended complaints, the waiver of improper venue, and the determination of residency of the parties.

ISSUES:

  1. Whether there was substantial compliance with the Rule on Verification and Certification of Non-Forum Shopping.

  2. Whether the Court of Appeals exceeded its jurisdiction in resolving the merits of the case on certiorari.

  3. Whether the appellate court can pass judgment on the issue of trust without evidence

  4. Whether the admission of the amended complaint was proper

  5. Whether private respondents waived the objection on improper venue

  6. Whether the RTC has jurisdiction on the ground of improper venue in a personal action

  7. Whether the amended complaint filed by the petitioners is an action in personam or an action in rem.

  8. Whether the venue of the case was properly laid.

  9. Whether or not the residence of the principal plaintiff should be the basis for determining proper venue in a personal action case.

RULING:

  1. The Court ruled that there was substantial compliance with the Rule on Verification and Certification of Non-Forum Shopping. The Court stated that verification is not a jurisdictional but merely a formal requirement which the court may direct a party to comply with or correct. The Court held that the Court of Appeals acted within its discretion in ordering the submission of proof of authority for a petitioner who failed to sign the verification and certification. Additionally, the Court stated that the signature of any of the principal petitioners or parties would constitute substantial compliance with the rule.

  2. The Court ruled that the Court of Appeals exceeded its jurisdiction in resolving the merits of the case on certiorari. The Court emphasized that the Court of Appeals, in exercising its certiorari jurisdiction, is limited to reviewing and correcting errors of jurisdiction only. It cannot delve into issues of trust or resolve questions of fact. The Court stated that the determination of the existence and enforceability of the asserted trust should be made by the trial court.

  3. The appellate court cannot pass judgment on the issue of trust without evidence.

  4. The admission of the amended complaint was proper.

  5. Private respondents did not waive the objection on improper venue.

  6. The RTC has jurisdiction on the ground of improper venue in a personal action.

  7. The amended complaint is an action in personam, not an action in rem. The action is based on the personal liability of the defendants upon an alleged trust constituted in 1968 and/or 1972. The fact that the assets of the corporation involved in the case include real properties does not change the nature of the action.

  8. The venue of the case was not properly laid. The plaintiff, Irene, who is the real party in interest, is not a resident of Batac, Ilocos Norte, as she claimed. Batac, Ilocos Norte is not the place "where the plaintiff or any of the principal plaintiffs resides" as required by the rules. Irene's co-plaintiffs were included in the case as her designated trustees and therefore can only serve as representatives of Irene.

  9. Yes. The residences of the principal parties should be the basis for determining proper venue in a personal action case. The word "principal" has been added in the rule to prevent the plaintiff from choosing the residence of a minor plaintiff or defendant as the venue. The purpose of the rule would be defeated if a nominal or formal party is impleaded in the action, as this party would not have the degree of interest in the subject of the action that would warrant active participation. In this case, the principal plaintiff, Irene, was not a resident of the venue of the action, rendering it an improper venue for her conveyance action. The residences of Irene's co-plaintiffs cannot be made the basis for determining venue, as they are included in the case as trustees of the principal plaintiff and do not have the same level of interest in the case.

PRINCIPLES:

  • Verification is a formal, not a jurisdictional requisite, and the court may order its correction or act on an unverified pleading if the circumstances warrant.

  • The signature of any of the principal petitioners or parties constitutes substantial compliance with the Rule on Verification and Certification of Non-Forum Shopping.

  • The Court of Appeals, in exercising its certiorari jurisdiction, is limited to reviewing and correcting errors of jurisdiction only and cannot delve into issues of trust or resolve questions of fact.

  • The trial court, not the appellate court, has the authority to determine the existence of a trust agreement based on evidence.

  • A party may amend their pleading as a matter of right before a responsive pleading is served, and a motion to dismiss is not considered a responsive pleading.

  • The ground of improperly laid venue must be raised seasonably, or else it is deemed waived, and it is the plaintiff's prerogative to choose the venue for personal actions.

  • The RTC has jurisdiction to hear cases where the venue is improperly laid, as long as it is a personal action and the defendant fails to raise the objection in a timely manner.

  • Personal actions include the recovery of personal property, the enforcement of a contract, or the recovery of damages, while real actions affect title to or possession of real property.

  • The venue of real actions shall be the proper court with territorial jurisdiction over the area where the real property involved is situated.

  • The venue of personal actions is the 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.

  • The determination of the status of co-plaintiffs is important in determining the proper venue of a case.

  • The real party in interest is the party who stands to be benefited or injured by the judgment or the party entitled to the avails of the suit.

  • Representatives or fiduciaries who act on behalf of the real party in interest may be included in the title of the case and deemed to be the real party in interest.

  • In personal action cases with multiple plaintiffs, the residence of the principal plaintiff should be the basis for determining proper venue. (Sec. 2, Rule 4)

  • Adding the term "principal" in the rule prevents the plaintiff from choosing the residence of a minor plaintiff or defendant as the venue.