THE CASE OF MARCOS-ARANETA V. COURT OF APPEALS - 50 PJP 21
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This is the case of Marcos-Araneta v. Court of Appeals (2008).[1]
Sometime in 1968 and 1972, the late Roberto S. Benedicto and his business associates (Benedicto Group) organized Far East Managers and Investors, Inc. (FEMII) and Universal Equity Corporation (UEC), respectively. As petitioner Irene Marcos-Araneta alleged in her action, both corporations were organized pursuant to a contract or arrangement whereby Benedicto, as trustor, placed in his name and in the name of his associates, as trustees, the shares of stocks of FEMII and UEC with the obligation to hold those shares and their fruits in trust and for the benefit of Irene to the extent of 65% of such shares. Several years after, Irene, through her trustee-husband, Gregorio Ma. Araneta III, demanded the reconveyance of said 65% stockholdings, but the Benedicto Group refused to oblige.
In March 2000, Irene instituted before the RTC two similar complaints for conveyance of shares of stock, accounting and receivership against the Benedicto Group with prayer for the issuance of a temporary restraining order (“TRO”). The first, docketed as Civil Case No. 3341-17, covered the UEC shares and named Benedicto, his daughter, and at least 20 other individuals as defendants. The second, docketed as Civil Case No. 3342-17, sought the recovery to the extent of 65% of FEMII shares held by Benedicto and the other defendants named therein.
Respondent Francisca Benedicto-Paulino, Benedicto’s daughter, filed a motion to dismiss and, later, an amended motion to dismiss against Civil Case No. 3341-17. Benedicto, on the other hand, moved to dismiss Civil Case No. 3342-17, adopting in toto the five grounds raised by Francisca in her amended motion to dismiss. Among these were that: (a) the cases involved an intra-corporate dispute jurisdiction over which was conferred by law to the Securities and Exchange Commission (“SEC”), not the RTC; (b) venue was improperly laid; and, (c) the complaint failed to state a cause of action, as there was no allegation therein that plaintiff, as beneficiary of the purported trust, has accepted the trust created in her favor. Note that, under the present state of the rules, only (a) above is a proper ground for a motion to dismiss.
During the preliminary proceedings on their motions to dismiss, Benedicto and Francisca, bolstering their contentions on improper venue, presented the joint affidavit of Gilmia B. Valdez, Catalino A. Bactat, and Conchita R. Rasco who all attested being employed as household staff at the Marcos’ Mansion in Barangay Lacub, Batac, Ilocos Norte and that Irene did not maintain residence in said place as she in fact only visited the mansion twice in 1999; that she did not vote in Batac in the 1998 national elections; and that she was staying at her husband’s house in Makati City.
Against the aforesaid unrebutted joint affidavit, Irene presented her community tax certificate (CTC) issued on “11/07/99” in Curimao, Ilocos Norte to support her claimed residency in Batac, Ilocos Norte. Despite Irene’s CTC, the RTC dismissed both complaints, stating that they partly constituted a “real action” and that Irene did not actually reside in Ilocos Norte, concluding thus that venue was improperly laid.
Immediately thereafter, Irene’s filed an amended complaint to which the RTC gave due course. In said amendment, Irene included additional plaintiffs, one of whom was a resident of Batac, Ilocos Norte. The court ratiocinated that plaintiff had the right to amend her complaint and such inclusion cured the defects on venue.
Julita and Francisca, who substituted Benedicto who died during the pendency of the case, moved to dismiss the amended complaint as there was no complaint to amend as a result of the dismissal of the original complaint. Countering this, the RTC argued that the dismissal order had not yet attained finality when the amended complaint was filed and, thus, it superseded the original complaint earlier filed.
Anent the admission of the amended complaint, the Supreme Court agreed with the RTC. The finality of the dismissal order had not yet set in when Irene filed the amended complaint, as she, in fact, seasonably sought reconsideration thereof. Thus, when Irene filed the amended complaint, the order of dismissal was not yet final, implying that there was strictly no legal impediment to her amending her original complaints.
However, the Court disagreed with the RTC that the civil action partook of the nature of a real action because they involved pieces of real property located outside the territorial jurisdiction of the RTC in Batac.
In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a contract, or the recovery of damages.[2] Real actions, on the other hand, are those affecting title to or possession of real property, or interest therein.
In accordance with the wordings of the Rules of Court, the venue of real actions shall be the proper court which has territorial jurisdiction over the area wherein the real property involved, or a portion thereof, 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 s/he may be found, at the election of the plaintiff.[3]
In the instant case, petitioners were basically asking Benedicto and his group, as defendants a quo, to acknowledge holding in trust Irene’s purported 65% stockownership of UEC and FEMII, inclusive of the fruits of the trust, and to execute in Irene’s favor the necessary conveying deed over the said 65% shareholdings. In other words, Irene sought to compel recognition of the trust arrangement she had with the Benedicto Group.
The fact that FEMII’s assets included pieces of real property did not materially change the nature of the action because the ownership interest of a stockholder over corporate assets is only inchoate as the corporation, as a juridical person, solely owns such assets. It is only upon the liquidation of the corporation that the stockholders, depending on the type and nature of their stockownership, may have a real inchoate right over the corporate assets, but then only to the extent of their stockownership.
The amended complaint filed by Irene was an action in personam, it being a suit against Francisca and the late Benedicto, substituted by Julita and Francisca, on the basis of their alleged personal liability to Irene upon an alleged trust constituted in 1968 and/or 1972. They were not actions in rem where the actions are against the real properties instead of against persons.[4] In this connection, the Court particularly noted that possession or title to the real properties of FEMII and UEC was not being disputed, albeit part of the assets of the corporation happens to be real properties.
This author noticed that the Supreme Court took time to mention the concepts of in personam and in rem actions. However, it is humbly submitted that these concepts have nothing to do with personal actions and real actions. Students may be confused and may think that personal actions are acciones in personam and real actions are acciones in rem. This is not true. For example, an action for declaration of nullity of marriage is a personal action because it does not mainly involve title to, possession of, or interest in real property but it is an action in rem because it attacks the res, the thing, which is the status of marriage between the parties.
Anent the venue laid in Batac, the Supreme Court ruled that it was improper. Irene, as categorically found by the RTC after summary hearing, was actually not a resident of Batac, Ilocos Norte, as she claimed. The inclusion of additional plaintiffs, one of whom was a resident of Batac, did not cure this defect.
As self-styled beneficiary of the disputed trust, she stood to be benefited or entitled to the avails of the suit. Petitioners Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin, all from Ilocos Norte, were later included as co-plaintiffs in the amended complaint as Irene’s new designated trustees. As trustees, they could only serve as mere representatives of Irene. Hence, they are not “principal parties.”
Note that, under the Rules of Court, the venue of a personal action is based on the residence of the “principal plaintiff” or that of the “principal defendant,” at the election of the plaintiff. According to the late Justice Jose Y. Feria, the word “principal” has been added in the uniform procedure rule in order to prevent the plaintiff from choosing the residence of a minor plaintiff or of a minor defendant as the venue.[5] Justice Regalado has also opined that the purpose of convenience inherent in venue rules would be defeated where a nominal or formal party is impleaded in the action since the latter would not have the degree of interest in the subject of the action which would warrant and entail the desirably active participation expected of litigants in a case.[6]
In the above discussion, the Supreme Court appears to have mixed the concept of “real party-in-interest” into the concept of “principal party.”
In sum, Irene was, at the time of the commencement of the action, a resident of Forbes Park, Makati City. She was not a resident of Barangay Lacub, Batac, Ilocos Norte. Although jurisprudence[7] has it that one can have several residences, if such were the established fact, the meaning of “residence” for venue purposes cannot loosely be used to mean “where a person is found.” Also, the reason why petitioner Irene, for all the inconvenience and expenses she and her adversaries would have to endure by a Batac trial, preferred that her case be heard and decided by the RTC in Batac is a question that can only be speculated upon. On the heels of the dismissal of the original complaints on the ground of improper venue, three new personalities were added to the complaint doubtless to insure, but in vain as it turned out, that the case stayed with the RTC in Batac.
The meaning of “residence” for venue and election purposes will be discussed in other parts of this book.
[1] 585 Phil. 38 [ G.R. No. 154096. August 22, 2008 ] IRENE MARCOS-ARANETA, DANIEL RUBIO, ORLANDO G. RESLIN, AND JOSE G. RESLIN, PETITIONERS, VS. COURT OF APPEALS, JULITA C. BENEDICTO, AND FRANCISCA BENEDICTO-PAULINO, RESPONDENTS.
[2] Regner v. Logarta, G.R. No. 168747, October 19, 2007, 537 SCRA 277, 293; citing Hernandez v. Rural Bank of Lucena, Inc., No. L-29791, January 10, 1978, 81 SCRA 75, 84.
[3] Rules of Court
[4] Asiavest Limited v. Court of Appeals, G.R. No. 128803, September 25, 1998, 296 SCRA 539, 552.
[5] 1 CIVIL PROCEDURE ANNOTATED 261 (2001).
[6] 1 REMEDIAL LAW COMPENDIUM 108 (8th ed., 2002).
[7] Romualdez-Marcos v. Commission on Elections, G.R. No. 119976, September 18, 1995.