Case Summary (G.R. No. 237938)
Factual Background
Theodore and Nancy Ang granted a loan of US$300,000.00 to Spouses Alan and Em Ang and received a promissory note dated September 2, 1992 in which the borrowers promised to pay that amount with interest at the rate of ten percent (10%) per annum upon demand. The respondents failed to pay despite repeated demands. The petitioners sent a demand letter on August 28, 2006 claiming an outstanding balance of US$719,671.23 inclusive of accumulated interest. The petitioners executed Special Powers of Attorney on August 6, 2006 in favor of Eldrige Marvin B. Aceron to institute and prosecute the action in the Philippines. Acting under those powers, Atty. Aceron filed the complaint for collection of sum of money in the RTC of Quezon City on September 15, 2006.
Trial Court Proceedings
Spouses Alan and Em Ang moved to dismiss on November 21, 2006 on the grounds of improper venue and prescription. The RTC of Quezon City denied the motion in its Order dated April 12, 2007 and reiterated that denial in its Order dated August 27, 2007. The trial court relied on the Special Powers of Attorney and the Quezon City address of Atty. Aceron to conclude that venue was proper in Quezon City pursuant to Section 2, Rule 4 of the 1997 Rules of Civil Procedure.
Court of Appeals Proceedings and Ruling
The respondents filed a petition for certiorari with the Court of Appeals challenging the RTC orders. The CA, in its Decision dated August 28, 2008, annulled and set aside the RTC Orders and dismissed the complaint for improper venue. The CA held that the residence of the plaintiffs’ attorney-in-fact was immaterial to venue determination and that because the petitioners resided in Los Angeles, California, U.S.A., beyond the territorial jurisdiction of Philippine courts, the action could only be instituted in the province where the defendants resided, namely the RTC of Bacolod City. The CA denied reconsideration in its Resolution dated February 20, 2009.
Issue Presented
The sole issue presented to the Supreme Court was whether the Court of Appeals committed reversible error when it ruled that the complaint must be dismissed on the ground that venue was not properly laid.
Supreme Court's Disposition
The Supreme Court denied the petition. The Court affirmed the Decision dated August 28, 2008 and the Resolution dated February 20, 2009 of the Court of Appeals, thereby upholding the dismissal of the complaint for improper venue.
Legal Reasoning
The Court reasoned that actions for collection of a sum of money constitute personal actions governed by the Rules of Court and that venue rules are fixed for the convenience of litigants and witnesses and to prevent plaintiffs from selecting venue by caprice. The Court applied the settled rule, as articulated in Cohen and Cohen v. Benguet Commercial Co., Ltd., 34 Phil. 526 (1916), that where the plaintiff has no residence in the Philippines the plaintiff lacks the election afforded by the rules and the complaint may only be filed in the court of the place where the defendant resides. Because the petitioners resided in Los Angeles, California, U.S.A., the Court held that the petitioners had no local residence for purposes of venue and that the action could only be brought in the province where the respondents resided, namely Bacolod City. The Court further held that Eldrige Marvin B. Aceron, although an attorney-in-fact, was not a real party in interest for venue purposes. The Court construed Section 2, Rule 3 of the Rules of Court to mean that a real party in interest is the party who stands to be benefited or injured by the judgment. The Court interpreted Section 3, Rule 3 to require inclusion of the beneficiary in the title and to deem the beneficiary the real party in interest, but not to transform the representative into the real party in interest. The Court applied the plain meaning rule (verba legis) and concluded that the residence requirement in the rules on venue pertains to the real party in interest and not to a repre
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Case Syllabus (G.R. No. 237938)
Parties and Procedural Posture
- THEODORE AND NANCY ANG, REPRESENTED BY ELDRIGE MARVIN B. ACERON, PETITIONERS are lenders who brought a civil action for collection of sum of money against the respondents.
- SPOUSES ALAN AND EM ANG, RESPONDENTS are the borrowers who executed the promissory note and opposed venue in Quezon City.
- The petitioners filed a Rule 45 petition to annul the Court of Appeals Decision dated August 28, 2008 and Resolution dated February 20, 2009 in CA-G.R. SP No. 101159.
- The petition below sought review of the Regional Trial Court, Quezon City, Branch 81 Orders dated April 12, 2007 and August 27, 2007 which denied the respondents' motion to dismiss for improper venue and prescription.
- The Supreme Court resolved the petition by judgment dated August 22, 2012 affirming the Court of Appeals.
Key Factual Allegations
- The respondents obtained a loan in the amount of US$300,000.00 from the petitioners on September 2, 1992, and executed a promissory note promising payment with interest at ten percent (10%) per annum upon demand.
- The petitioners made repeated demands and on August 28, 2006 sent a demand letter claiming unpaid principal and interest amounting to US$719,671.23.
- The petitioners executed Special Powers of Attorney in favor of Atty. Eldrige Marvin B. Aceron on August 6, 2006 while residing in Los Angeles, California, USA.
- Atty. Aceron filed the Complaint for collection of sum of money in the RTC of Quezon City on September 15, 2006.
Motion to Dismiss and RTC Orders
- The respondents moved to dismiss on November 21, 2006 contending that venue was improperly laid in Quezon City and that the complaint was prescribed.
- The RTC denied the respondents' motion to dismiss in its Order dated April 12, 2007 by relying on the address of Atty. Aceron as the plaintiff's representative and deeming venue proper under Section 2, Rule 4 of the 1997 Rules of Civil Procedure.
- The RTC denied reconsideration in its Order dated August 27, 2007 and thus sustained venue in Quezon City.
Court of Appeals Decision
- The Court of Appeals annulled and set aside the RTC Orders dated April 12, 2007 and August 27, 2007 and directed dismissal of the complaint for improper venue in its Decision dated August 28, 2008.
- The CA held that the residence of the plaintiffs' attorney-in-fact was immaterial to venue and that venue must be determined by the residence of the real parties in interest, namely the petitioners or the respondents.
- The CA ruled that because the petitioners resided in Los Angeles, California, U.S.A., the complaint could only hav