Marcos-Araneta v. Benedicto
REITERATIONFacts
The Antecedents: Petitioners Irene Marcos-Araneta (Irene) alleged that Ambassador Roberto S. Benedicto and his associates organized Far East Managers and Investors, Inc. (FEMII) and Universal Equity Corporation (UEC) in trust for her benefit, holding 65% of the shares. When Irene demanded reconveyance, the Benedicto Group refused. Procedural History: Irene filed two complaints for conveyance of shares, accounting, and receivership. The defendants moved to dismiss, raising issues of jurisdiction, venue, and failure to state a cause of action. The RTC dismissed the complaints due to improper venue, finding Irene was not a resident of Batac, Ilocos Norte. Irene filed a motion for reconsideration and an amended complaint, adding new trustees from Ilocos Norte. The RTC admitted the amended complaint, finding that the inclusion of a local resident cured the venue defect and that amendments before a responsive pleading are a matter of right. The RTC denied motions to dismiss the amended complaint. The defendants filed a petition for certiorari with the Court of Appeals (CA), which annulled the RTC orders and dismissed the amended complaints, ruling that venue was improper and the amended complaint should not have been admitted. The CA denied reconsideration. The Petition: Petitioners (Irene and her new trustees) seek to annul the CA decision and resolution, arguing the CA erred in allowing the submission of an affidavit by one respondent to comply with verification and certification requirements, ruling on the merits of the trust issue in a certiorari proceeding, admitting the amended complaint, ruling that venue was not waived, and ruling that Irene was not a resident of Batac, Ilocos Norte.
Issue(s)
Whether the Court of Appeals erred in allowing the submission of an affidavit by Julita C. Benedicto as sufficient compliance with the requirement on verification and certification of non-forum shopping. Whether the Court of Appeals erred in ruling on the merits of the trust issue, which involves factual and evidentiary determination, in a petition for certiorari under Rule 65. Whether the Court of Appeals erred in ruling that the amended complaints should be dismissed because, at the time it was filed, there was no more original complaint to amend. Whether the Court of Appeals erred in ruling that the respondents did not waive improper venue. Whether the Court of Appeals erred in ruling that petitioner Irene was not a resident of Batac, Ilocos Norte and that none of the principal parties are residents of Ilocos Norte.
Ruling
The Supreme Court affirmed the Court of Appeals' decision to dismiss the cases on the ground of improper venue, but not for all the reasons stated by the CA. The Court held that the venue was indeed improperly laid because the principal plaintiff, Irene Marcos-Araneta, was not a resident of Batac, Ilocos Norte, and the inclusion of trustees as co-plaintiffs did not cure this defect as they were not the principal parties in interest.
Ratio Decidendi
On the issue of verification and certification of non-forum shopping: The Court held that verification is a formal, not jurisdictional, requirement and may be corrected. The signature of a principal petitioner, like Francisca Benedicto-Paulino, constitutes substantial compliance with the certification of non-forum shopping, especially when the parties share a common interest and cause of action. The CA acted within its discretion in allowing the submission of proof of authority for Francisca to represent Julita. On the issue of ruling on the merits in a certiorari proceeding: The Court agreed with the petitioners that the CA, in a Rule 65 certiorari proceeding, is limited to reviewing errors of jurisdiction and grave abuse of discretion, and should not delve into factual issues like the existence and enforceability of a trust. Such matters require the presentation of evidence and are best determined by the trial court. The CA overstepped its bounds by resolving the substantive merits of the trust claim before evidence was adduced. On the admission of the amended complaint: The Court found that the RTC correctly admitted the amended complaint. Under Section 2 of Rule 10 of the Rules of Court, a party may amend a pleading once as a matter of right before a responsive pleading is served. A motion to dismiss is not a responsive pleading. Furthermore, at the time the amended complaint was filed, the motion for reconsideration of the dismissal of the original complaints was pending, meaning the dismissal order had not yet become final, thus there was no legal impediment to amending the complaint. On the waiver of improper venue: The Court held that the respondents did not waive the issue of improper venue. The objection was raised at the earliest opportunity through a motion to dismiss. The respondents consistently pursued this objection in subsequent pleadings and in their petition for certiorari before the CA. Therefore, any suggestion of waiver was rejected. On the issue of venue and residency: The Court affirmed the RTC's finding that Irene Marcos-Araneta was not a resident of Batac, Ilocos Norte. As the principal plaintiff and real party in interest, her residence determines the proper venue for a personal action. The inclusion of new trustees as co-plaintiffs, who were residents of Ilocos Norte, did not cure the defect in venue because these trustees were merely representatives and not the principal parties. The Court emphasized that the word 'principal' in the rule on venue for personal actions is crucial to prevent the manipulation of venue by impleading nominal parties. Therefore, the venue was improperly laid, and the cases should be dismissed.
Main Doctrine
The venue of personal actions is determined by the residence of the principal party, not merely nominal or representative parties, and the inclusion of trustees as co-plaintiffs does not alter the venue if the beneficiary, who is the real party in interest, does not reside in the chosen venue.