The Supreme Court clarified the proper venue in personal actions involving multiple plaintiffs, emphasizing that the residence of the principal plaintiff, the real party in interest, determines the correct venue. The Court dismissed the case because the principal plaintiff, Irene Marcos-Araneta, was not a resident of the chosen venue, Batac, Ilocos Norte, despite the inclusion of co-plaintiffs who were residents there. This ruling underscores the importance of establishing the principal plaintiff’s residence to avoid improper venue and potential dismissal of the case, ultimately saving time and resources for all parties involved.

Trust, Venue, and Residency: When Can You Choose Your Battlefield?

The case of Irene Marcos-Araneta, et al. v. Court of Appeals, et al., G.R. No. 154096, decided on August 22, 2008, revolves around a dispute over shares of stock allegedly held in trust by the Benedicto Group for Irene Marcos-Araneta. Irene Marcos-Araneta filed a complaint for conveyance of shares of stock, accounting, and receivership against the Benedicto Group, claiming a 65% beneficial ownership of shares in Far East Managers and Investors, Inc. (FEMII) and Universal Equity Corporation (UEC). The legal question at the heart of this case is whether the Regional Trial Court (RTC) of Batac, Ilocos Norte had proper venue over the case, considering Irene Marcos-Araneta’s residency and the inclusion of additional plaintiffs.

The lawsuit was initially filed in Ilocos Norte, where Irene claimed residence. However, the defendants challenged the venue, asserting that Irene was not a resident of Ilocos Norte, and therefore, the case was improperly filed. To address this challenge, Irene amended her complaint to include additional plaintiffs who were residents of Ilocos Norte, arguing that this cured the defect in venue. The RTC initially admitted the amended complaint, but the Court of Appeals (CA) reversed this decision, leading to the Supreme Court appeal.

The Supreme Court addressed several key issues, starting with the procedural question of whether the CA erred in allowing Julita Benedicto to submit an affidavit to comply with verification and certification requirements. The Court acknowledged that while all petitioners generally must sign the certificate of non-forum shopping, substantial compliance is sufficient. Quoting Kimberly Independent Labor Union for Solidarity, Activism and Nationalism (KILUSAN)-Organized Labor Associations in Line Industries and Agriculture (OLALIA) v. Court of Appeals, the Court emphasized that “verification is a formal, not a jurisdictional requisite” and the appellate court acted within its discretion.

Building on this procedural aspect, the Court then addressed the CA’s decision to rule on the merits of the trust issue. The Court agreed with the petitioners that the CA overstepped its authority. A petition for certiorari under Rule 65 is limited to reviewing errors of jurisdiction or grave abuse of discretion. The CA delved into the factual issue of whether a trust existed without allowing for proper evidentiary proceedings. This was deemed inappropriate, as the determination of the existence and nature of the trust (whether implied or express) is a factual matter that should be determined by the trial court.

Regarding the admission of the amended complaint, the Supreme Court referred to Sec. 2 of Rule 10 of the Rules of Court, stating:

SEC. 2. Amendments as a matter of right. — A party may amend his pleading once as a matter of right at any time before a responsive pleading is served or in the case of a reply, at any time within ten (10) days after it is served.

The Court clarified that since the defendants had not yet filed a responsive pleading (such as an answer) to the original complaint, Irene had the right to amend her complaint. In Alpine Lending Investors v. Corpuz, the Court highlighted that motion to dismiss is not a responsive pleading, therefore, the plaintiff could amend her complaint as a matter of right, and it is the duty of the trial court to accept the amended complaint.

However, the central issue remained: whether the venue was properly laid in Ilocos Norte. The Court differentiated between real and personal actions. Personal actions, such as the case at hand, seek recovery of personal property or enforcement of a contract. In contrast, real actions affect title to or possession of real property. Venue for personal actions lies where the plaintiff or any of the principal plaintiffs reside, or where the defendant resides. The Court emphasized that the inclusion of additional plaintiffs did not automatically establish proper venue.

The court underscored that the amended complaint is an action in personam, as it relates to the Benedicto’s alleged personal liability to Irene based on the trust agreement. This is different from actions in rem, which are directed against the properties instead of people. The Court then focused on the critical detail of Irene’s residency, referencing the RTC’s finding that Irene was not a resident of Batac, Ilocos Norte. This finding was based on evidence presented by the defendants, which the court deemed credible. Despite Irene’s presentation of a community tax certificate indicating her address in Ilocos Norte, the Court found this insufficient to establish residency, especially given the circumstances of its procurement.

Sec. 2 of Rule 4 is crucial for a proper understanding of venue rules:

SEC. 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.

The Supreme Court emphasized the word “principal” in Rule 4, Section 2 of the Rules of Court, explaining that the residence of the principal parties determines proper venue. In this case, the principal plaintiff was Irene Marcos-Araneta. The additional plaintiffs, included as trustees, were not considered principal parties for the purpose of determining venue. Therefore, their residency in Ilocos Norte did not cure the improper venue.

Because Irene, the principal plaintiff, was not a resident of Batac, Ilocos Norte, the RTC lacked jurisdiction over the case due to improper venue. The Court held that the residences of Irene’s co-plaintiffs could not be the basis for determining venue, as they were merely representatives of the principal plaintiff. The Court further noted that Irene initiated and actively prosecuted the claim, rendering the inclusion of the trustees somewhat unnecessary.

FAQs

What was the key issue in this case?	The central issue was whether the Regional Trial Court (RTC) of Batac, Ilocos Norte had proper venue over the case, given that Irene Marcos-Araneta, the principal plaintiff, was not a resident of that location. The inclusion of co-plaintiffs who were residents of Ilocos Norte was also considered in determining the proper venue.
What is the difference between a real action and a personal action?	A real action affects title to or possession of real property, while a personal action seeks recovery of personal property, enforcement of a contract, or damages. Venue rules differ for each type of action.
What does “principal plaintiff” mean in the context of venue?	The “principal plaintiff” is the real party in interest who stands to be benefited or injured by the judgment in the suit. Their residence is a primary factor in determining the proper venue for personal actions involving multiple plaintiffs.
Can a plaintiff amend their complaint as a matter of right?	Yes, a plaintiff can amend their complaint once as a matter of right before a responsive pleading, like an answer, is filed. A motion to dismiss is not considered a responsive pleading.
What is the significance of the certificate of non-forum shopping?	The certificate of non-forum shopping is a sworn statement by the plaintiff that they have not filed any other action involving the same issues in any court. Substantial compliance, such as signature by a principal party, is often sufficient.
What happens if venue is improperly laid?	If venue is improperly laid and the defendant raises a timely objection, the court may dismiss the case for lack of jurisdiction. Failing to object can result in a waiver of the right to challenge the improper venue.
Why was Irene Marcos-Araneta’s residency important in this case?	As the principal plaintiff in a personal action, Irene Marcos-Araneta’s residency determined the proper venue. The RTC’s finding that she was not a resident of Batac, Ilocos Norte, led to the dismissal of the case due to improper venue.
Can trustees be considered principal plaintiffs for venue purposes?	Generally, no. Trustees, acting as representatives of the beneficiary, are not considered principal plaintiffs for determining venue. The beneficiary, as the real party in interest, is the principal plaintiff.

This case serves as a reminder of the importance of carefully assessing venue requirements before filing a lawsuit. Establishing the correct venue is crucial for ensuring that a case proceeds smoothly and avoids potential dismissal. This includes accurately determining the residency of the principal plaintiff and understanding the distinction between real and personal actions. Choosing a court based on legal correctness, rather than perceived advantage, protects the judicial system and upholds principles of fairness.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Irene Marcos-Araneta, et al. v. Court of Appeals, et al., G.R. No. 154096, August 22, 2008