Case Summary (G.R. No. 118843)
Core Facts and Subject Matter of the Dispute
Petitioner Irene alleged that, pursuant to arrangements in 1968 and 1972, Ambassador Roberto S. Benedicto and associates (the Benedicto Group) held shares of Far East Managers and Investors, Inc. (FEMII) and Universal Equity Corporation (UEC) in trust for her to the extent of 65% of such shares. After demands for reconveyance were refused, Irene filed two civil complaints in the RTC in Batac in March 2000 seeking reconveyance of the disputed stockholdings, accounting and receivership, and a TRO. The two cases were Civil Case Nos. 3341‑17 (UEC shares) and 3342‑17 (FEMII shares).
Motions to Dismiss, Venue Dispute and Evidentiary Proffers
Respondent Francisca filed motions to dismiss Civil Case No. 3341‑17 (later amended) and Benedicto (later substituted by his heirs) moved to dismiss Civil Case No. 3342‑17, asserting among other defenses that (a) the dispute was intra‑corporate and within SEC jurisdiction, (b) venue was improperly laid in Batac, Ilocos Norte, and (c) the complaint failed to state a cause of action because there was no allegation of acceptance of the purported trust by the beneficiary. To support the venue defense, respondents submitted a joint affidavit of household staff of the Marcos mansion asserting that Irene did not maintain residence in Batac and had only visited twice in 1999. Irene relied on a community tax certificate (CTC) indicating an Ilocos Norte address.
RTC Proceedings: Dismissal, Amended Complaint, and Subsequent Orders
The RTC initially dismissed both complaints on June 29, 2000 on grounds that they partly constituted “real action” and because venue was improperly laid, declaring other issues moot. Irene moved for reconsideration and on July 17, 2000 filed a motion to admit an amended complaint (with three trustees — Rubio, Orlando Reslin, Jose Reslin — added as plaintiffs). The RTC denied the motion for reconsideration on August 25, 2000 but later, on October 9, 2000, ordered admission of the amended complaint, reasoning that under Sec. 2, Rule 10 a party may amend as of right before a responsive pleading, and that inclusion of a Batac resident co‑plaintiff cured the venue defect under Rules 3 and 4. The RTC denied subsequent motions to dismiss the amended complaint (Dec. 18, 2000) and denied a motion for reconsideration (Mar. 15, 2001). Respondents then answered the amended complaint and filed a certiorari petition with the CA.
CA Proceedings and Relief Granted
The CA required proof that Julita had authorized Francisca to represent her because the petition’s verification bore only Francisca’s signature; Julita submitted an authorizing affidavit. The CA issued a TRO and preliminary injunction enjoining further RTC proceedings. On October 17, 2001 the CA set aside the RTC orders admitting the amended complaints and dismissed the amended complaints, concluding the admission was null and void. A June 20, 2002 CA resolution denied petitioners’ motion for reconsideration. Petitioners sought review in the Supreme Court under Rule 45.
Issues Framed on Review
Petitioners raised five principal errors in the CA decision: (1) the CA erred in accepting Julita’s affidavit as sufficient compliance with verification and certification against forum shopping; (2) the CA improperly resolved factual trust issues in a Rule 65 certiorari proceeding; (3) the CA erred in holding the amended complaints should be dismissed because there was no complaint left to amend when the amendment was filed; (4) the CA improperly found that respondents did not waive the venue defense; and (5) the CA erred in finding Irene was not a resident of Batac and that neither principal party was a Batac resident.
Supreme Court’s General Disposition and Approach
The Supreme Court dismissed the petition (i.e., denied relief to petitioners) and affirmed the CA decision and resolution insofar as they nullified and set aside the RTC’s orders on the ground of lack of jurisdiction due to improperly laid venue. The Court affirmed the CA’s ultimate result, but not entirely for the CA’s reasoning: it found error in the CA’s exceeding its certiorari jurisdiction by resolving factual issues on the trust, and it held that the RTC had properly admitted the amended complaint as a matter of right; nonetheless, the Supreme Court concluded the RTC lacked jurisdiction because venue was improperly laid.
Verification and Certification Against Forum Shopping: Substantial Compliance
The Court held that verification is a formal requirement not jurisdictional and may be corrected; the CA acted within discretion in requiring proof of authorization for Francisca to represent Julita. Regarding the certification against forum shopping, the Court recognized the general rule that all petitioners should sign but reiterated that substantial compliance will suffice where circumstances justify it; the signature of any principal petitioner may suffice where petitioners share a common interest and file collectively. Francisca’s signature was therefore substantial compliance because she was a principal party and represented shared interests with Julita.
Limits of Certiorari (Rule 65) and CA’s Overreach on Merits
The Court reiterated the settled rule that certiorari under Rule 65 is limited to correcting jurisdictional errors and grave abuse of discretion and is not the proper vehicle to resolve factual, evidentiary and credibility issues. The CA overstepped by adjudicating the existence and enforceability of the asserted trust — issues requiring evidence and credibility determinations — and by resolving substantive questions that properly belong to the trial court. A determination whether the alleged trust was express or implied, or whether the trust was accepted by the beneficiary, depends on factual evidence and is for the trial court.
Admission of the Amended Complaint: Plaintiff’s Right under Rule 10 Sec. 2
The Supreme Court held that Section 2, Rule 10 allows a party to amend a pleading once as a matter of right before a responsive pleading is served. A motion to dismiss is not a responsive pleading for this purpose. At the time Irene filed her amended complaint (July 17, 2000) no answer had been served by respondents; the June 29, 2000 dismissal order had not yet become final because Irene had timely filed a motion for reconsideration. Consequently, the RTC did not err in admitting the amended complaint: the right to amend was exercisable and the trial court’s duty to accept the amendment was ministerial. The Court noted the RTC nonetheless did not explain why it granted the motion to admit when the amendment was in any event a matter of right.
Waiver of Venue Defense: No Waiver Found
Venue is a procedural rule; a defendant must raise improper venue seasonably or it is waived. The Court found that respondents raised venue at the earliest appropriate time — within the period for but before filing an answer — and continued to pursue the defense through subsequent pleadings and to the CA. The Court rejected petitioners’ contention that respondents waived the venue defense by later filing other pleadings.
Nature of the Action: Personal Not Real — Proper Test for Venue
The Court analyzed the character of the action and concluded that the suits are in personam (personal actions) seeking reconveyance in the sense of compelling recognition of a trust-based personal liability by named defendants to the beneficiary, rather than actions in rem affecting title or possession of real property. The fact that the corporations’ assets include real properties does not transform the action into a real action. Venue for personal actions is governed by Rule 4, Sec. 2 and depends on
...continue readingCase Syllabus (G.R. No. 118843)
The Nature of the Petition
- The petition is a Petition for Review on Certiorari under Rule 45 assailing and seeking to nullify the Court of Appeals (CA) Decision dated October 17, 2001 in CA-G.R. SP No. 64246 and the CA Resolution of June 20, 2002 denying motion for reconsideration.
- The CA decision had annulled and set aside the Regional Trial Court (RTC), Branch 17 (Batac, Ilocos Norte) Orders dated October 9, 2000; December 18, 2000; and March 15, 2001 that admitted petitioners’ amended complaint in Civil Case Nos. 3341-17 and 3342-17.
- The Supreme Court states at the outset that it affirms the CA decision, but not for all the reasons set out by the CA.
Factual Background
- In 1968 and 1972 Ambassador Roberto S. Benedicto and associates organized Far East Managers and Investors, Inc. (FEMII) and Universal Equity Corporation (UEC).
- Petitioner Irene Marcos-Araneta (Irene) later alleged that both corporations were organized pursuant to a contract or arrangement whereby Benedicto, as trustor, placed in his name and the names of his associates, as trustees, shares of FEMII and UEC with the obligation to hold those shares and their fruits in trust and for Irene’s benefit to the extent of 65% of such shares.
- Irene, through her trustee-husband Gregorio Ma. Araneta III, demanded reconveyance of the 65% stockholdings but the Benedicto Group refused.
- In March 2000 Irene filed two complaints in the RTC:
- Civil Case No. 3341-17: concerned UEC shares; defendants included Benedicto, his daughter, and at least 20 others; prayed for conveyance of shares, accounting, receivership, and a TRO.
- Civil Case No. 3342-17: sought recovery to the extent of 65% of FEMII shares held by Benedicto and others.
- Respondent Francisca Benedicto-Paulino filed a Motion to Dismiss Civil Case No. 3341-17 and later an Amended Motion to Dismiss; Benedicto filed a Motion to Dismiss Civil Case No. 3342-17 adopting Francisca’s five grounds.
- Among the grounds in the motions to dismiss were:
- That the disputes involved intra-corporate matters within the Securities and Exchange Commission’s jurisdiction, not the RTC;
- Improper venue;
- Failure to state a cause of action because the complaint did not allege that the beneficiary (Irene) had accepted the trust created in her favor.
- To the motions to dismiss, Irene filed a Consolidated Opposition; Benedicto and Francisca filed a Joint Reply to Opposition.
- The cases were consolidated upon Benedicto’s motion.
Evidence on Residency and Related Preliminary Matters
- To support the contention of improper venue, Benedicto and Francisca presented a Joint Affidavit of household employees Gilmia B. Valdez, Catalino A. Bactat, and Conchita R. Rasco stating:
- They were employed as household staff at the Marcos’ Mansion in Brgy. Lacub, Batac, Ilocos Norte;
- Irene did not maintain residence there, only visited the mansion twice in 1999;
- Irene did not vote in Batac in the 1998 national elections;
- Irene was staying at her husband’s house in Makati City.
- Irene presented a PhP 5 community tax certificate (CTC), CTC No. 12308513, issued on "11/07/99" in Curimao, Ilocos Norte to support her claimed residency in Batac.
- The record later referenced another CTC (No. 17019451) allegedly issued sometime in June 2000 in Batac, Ilocos Norte that petitioners used in subsequent arguments.
RTC Dismissal of Original Complaints and Petitioners’ Actions Thereafter
- On June 29, 2000, the RTC dismissed both complaints stating they partly constituted “real action” and that Irene did not actually reside in Ilocos Norte; thus venue was improperly laid.
- The RTC’s dismissal order declared other issues raised in the Motions to Dismiss “moot and academic.”
- Irene filed a Motion for Reconsideration of the June 29, 2000 dismissal; Julita and Francisca opposed the motion.
- While the motion for reconsideration was pending, Irene filed on July 17, 2000 a Motion to Admit Amended Complaint attaching an Amended Complaint dated July 14, 2000 adding Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin as additional plaintiffs (described as Irene’s new trustees and residents of Ilocos Norte).
- The Amended Complaint, as couched, sought reconveyance of FEMII shares only and stated practically the same cause of action.
- On August 25, 2000 the RTC, in open court, dictated an order denying Irene’s motion for reconsideration but deferred action on the motion to admit the amended complaint.
- On October 9, 2000 the RTC issued an Order admitting the amended complaint, ordering defendants to answer within the reglementary period.
- The RTC predicated its admission of the amended complaint on:
- Section 2, Rule 10 of the Rules of Court permitting a party to amend pleadings once as a matter of right before a responsive pleading;
- The inclusion of an additional plaintiff who was a Batac resident cured the venue defect; and
- Sections 2 and 3, Rule 3 in relation to Section 2, Rule 4 allowed filing in the place of residence of any co-plaintiff.
- Julita and Francisca moved to dismiss the amended complaint; the RTC denied the motion by Order dated December 18, 2000 and reiterated the directive to answer.
- The RTC observed that the filing of the amended complaint on July 17, 2000 “ipso facto superseded the original complaints” which had not become final at that time because Irene’s motion for reconsideration was still pending.
- On March 15, 2001 the RTC denied a motion to reconsider its December 18, 2000 order. On April 10, 2001 Julita and Francisca filed their Answer to the amended complaint but on the same day filed a petition for certiorari with the CA (CA-G.R. SP No. 64246) to nullify the RTC orders admitting the amended complaint and denying motions to dismiss and for reconsideration.
CA Proceedings and Reliefs Sought Therein
- The CA required the joint petitioners to submit either written authority from Julita to Francisca to represent her or a supplemental verification and certification signed by Julita, because the verification and non-forum-shopping certification bore only Francisca’s signature.
- Records show submission of an authorizing Affidavit executed by Julita in favor of Francisca.
- The CA issued a Temporary Restraining Order and subsequently a writ of preliminary injunction enjoining the RTC from conducting further proceedings on the civil cases.
- On October 17, 2001 the CA rendered a Decision granting the petition, setting aside the RTC orders admitting the amended complaints and dismissing the amended complaints in Civil Case Nos. 3341-17 and 3342-17. The fallo stated: the petition is GRANTED; the assailed Orders admitting the amended complaints are SET ASIDE for being null and void, and the amended complaints are DISMISSED.
- Petitioners moved for reconsideration of the CA decision; the CA denied the motion by Resolution dated June 20, 2002.
- The present Rule 45 Petition for Review on Certiorari to the Supreme Court followed.
Issues Raised by Petitioners in the Supreme Court
- Petitioners urged annulment of the CA Decision and Resolution on the following grounds:
- That the CA erred in allowing submission of Julita’s affidavit as sufficient compliance with verification and certification of non-forum shopping requirements.
- That the CA improperly ruled on the merits of the trust issue — a factual and evidentiary question not proper in a Rule 65 certiorari petition.
- That the CA erred in ruling the amended complaints should be dismissed because, at the time the amended complaint was filed, there was no original complaint to amend (the originals having been dismissed).
- That the CA erred in ruling respondents did not waive improper venue.
- That the CA erred in ruling Irene was not a resident of Batac, Ilocos Norte and that none of the principal parties were residents of Ilocos Norte.
Supreme Court’s General Disposition
- The Supreme Court dismissed the petition and