G. R. No.

76431 October 16, 1989

FORTUNE MOTORS, (PHILS.) INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, METROPOLITAN BANK and TRUST COMPANY, respondents.
Quirante & Associates Law Office for petitioner.
Bautista, Cruz & Associates Law Offices for private respondent.
PARAS, J.:
This is a petition for review on certiorari seeking the reversal of: (a) the July 30, 1986 decision of the Court of Appeals
in AC-G.R. SP No. 09255 entitled "Metropolitan Bank & Trust Co. v. Hon. Herminio C. Mariano, et al."dismissing Civil
Case No. 8533218 entitled "Fortune Motors (Phils.) Inc. v. Metropolitan Bank & Trust Co." filed in the Regional Trial
Court of Manila, Branch IV for improper venue and (b) the resolution dated October 30, 1986 denying petitioner's
motion for reconsideration.
The undisputed facts of the case are as follows:
On March 29,1982 up to January 6,1984, private respondent Metropolitan Bank extended various loans to petitioner
Fortune Motors in the total sum of P32,500,000.00 (according to the borrower; or P34,150,000.00 according to the
Bank) which loan was secured by a real estate mortgage on the Fortune building and lot in Makati, Rizal. (Rollo, pp. 6062)
Due to financial difficulties and the onslaught of economic recession, the petitioner was not able to pay the loan which
became due. (Rollo, p. 62)
For failure of the petitioner to pay the loans, the respondent bank initiated extrajudicial foreclosure proceedings. After
notices were served, posted, and published, the mortgaged property was sold at public auction for the price of
P47,899,264.91 to mortgagee Bank as the highest bidder. (Rollo, p. 11)
The sheriff's certificate of sale was registered on October 24, 1984 with the one-year redemption period to expire on
October 24,1985. (Rollo, p. 12)
On October 21, 1985, three days before the expiration of the redemption period, petitioner Fortune Motors filed a
complaint for annulment of the extrajudicial foreclosure sale alleging that the foreclosure was premature because its
obligation to the Bank was not yet due, the publication of the notice of sale was incomplete, there was no public
auction, and the price for which the property was sold was "shockingly low". (Rollo, pp. 60-68)
Before summons could be served private respondent Bank filed a motion to dismiss the complaint on the ground that
the venue of the action was improperly laid in Manila for the realty covered by the real estate mortgage is situated in
Makati, therefore the action to annul the foreclosure sale should be filed in the Regional Trial Court of Makati. (Rollo,
pp. 67-71-A )
The motion was opposed by petitioner Fortune Motors alleging that its action "is a personal action" and that "the issue
is the validity of the extrajudicial foreclosure proceedings" so that it may have a new one year period to redeem.
(Rollo, pp. 72-73)
On January 8, 1986 an order was issued by the lower court reserving the resolution of the Bank's motion to dismiss
until after the trial on the merits as the grounds relied upon by the defendant were not clear and indubitable. (Rollo, p.
81)
The Bank filed a motion for reconsideration of the order dated January 8, 1986 but it was denied by the lower court in
its order dated May 28, 1986. (Rollo, Annex "L" pp. 93-96; Annex "N" p. 99)

On June 11, 1986 the respondent Bank filed a petition for certiorari and prohibition in the Court of Appeals. (Rollo,
Annex "O" pp. 100-115)
And on July 30, 1986, a decision was issued by the Court of Appeals, the dispositive part of which reads as follows:
WHEREFORE, the petition for certiorari and prohibition is granted. The complaint in the Civil Case No.
85-33218 is dismissed without prejudice to its being filed in the proper venue. Costs against the
private respondent.
SO ORDERED. (Rollo, p. 15)
A motion for reconsideration was filed on August 11, 1986 on the said decision and on October 30, 1986 a resolution
was issued denying such motion for reconsideration. (Rollo, Annex "O" pp. 121-123; Annex "S" p. 129)
Hence, the petition for review on certiorari.
On June 10, 1987 the Court gave due course to the petition, required the parties to file their respective memoranda
within twenty (20) days from the notice hereof, and pay deposit for costs in the amount of P80.40.
Both parties have filed their respective memoranda, and the case was submitted for Court's resolution in the resolution
dated December 14, 1987. (Rollo,Metrobank's Memorandum pp. 45-59; petitioner's memorandum pp.130-136; Res. p.
138)
The only issue in this case is whether petitioner's action for annulment of the real estate mortgage extrajudicial
foreclosure sale of Fortune Building is a personal action or a real action for venue purposes.
In a real action, the plaintiff seeks the recovery of real property, or as indicated in Sec. 2 (a) of Rule 4, a real action is
an action affecting title to real property, or for the recovery of possession, or for the partition or condemnation of, or
foreclosure of a mortgage on real property. (Comments on the Rules of Court by Moran, Vol. 1, p. 122)
Real actions or actions affecting title to, or for the recovery of possession, or for the partition or condemnation of, or
foreclosure of mortgage on real property, must be instituted in the Court of First Instance of the province where the
property or any part thereof lies. (Enriquez v. Macadaeg, 84 Phil. 674,1949; Garchitorena v. Register of Deeds, 101 Phil.
1207, 1957)
Personal actions upon the other hand, may be instituted in the Court of First Instance where the defendant or any of
the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the
plaintiff (Sec. 1, Rule 4, Revised Rules of Court).
A prayer for annulment or rescission of contract does not operate to efface the true objectives and nature of the action
which is to recover real property. (Inton, et al., v. Quintan, 81 Phil. 97, 1948)
An action for the annulment or rescission of a sale of real property is a real action. Its prime objective is to recover said
real property. (Gavieres v. Sanchez, 94 Phil. 760,1954)
An action to annul a real estate mortgage foreclosure sale is no different from an action to annul a private sale of real
property. (Munoz v. Llamas, 87 Phil. 737,1950)
While it is true that petitioner does not directly seek the recovery of title or possession of the property in question, his
action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the
building which, under the law, is considered immovable property, the recovery of which is petitioner's primary
objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not
operate to efface the fundamental and prime objective and nature of the case, which is to recover said real property. It
is a real action. Respondent Court, therefore, did not err in dismissing the case on the ground of improper venue (Sec.
2, Rule 4) which was timely raised (Sec. 1, Rule 16). (Punzalan, Jr. v. Vda. de Lacsamana, 121 SCRA 336, [1983]).

Thus, as aptly decided by the Court of Appeals in a decision penned by then Court of Appeals Associate Justice now
Associate Justice of the Supreme Court Carolina C. Grio-Aquino, the pertinent portion reads: "Since an extrajudicial
foreclosure of real property results in a conveyance of the title of the property sold to the highest bidder at the sale, an
action to annul the foreclosure sale is necessarily an action affecting the title of the property sold. It is therefore a real
action which should be commenced and tried in the province where the property or part thereof lies."
PREMISES CONSIDERED, the instant petition is DENIED for lack of merit and the assailed decision of the respondent
Court of Appeals is AFFIRMED.
SO ORDERED.

PAGLAUM
DEVELOPMENT
MARKETING
INC.,

MANAGEMENT
&
CORP.
and
HEALTH
TECHNOLOGIES,
Petitioners,

- versus -

G.R. No. 179018

Present:
CARPIO, J., Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.

UNION BANK OF THE PHILIPPINES,

NOTARY
PUBLIC
JOHN
DOE,
and
REGISTER OF DEEDS of Cebu City and
Cebu Province
Respondents.
Promulgated:
J. KING & SONS CO., INC.
Intervenor.

June 18, 2012

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

SERENO, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the
Decision dated 31 May 2007[1] and Resolution dated 24 July 2007[2] issued by the Court of Appeals (CA).

Petitioner Paglaum Management and Development Corporation (PAGLAUM) is the registered owner of three
parcels of land located in the Province of Cebu [3] and covered by Transfer Certificate of Title (TCT) Nos. 112488,
[4]

112489,[5] and T-68516.[6] These lots are co-owned by Benjamin B. Dy, the president of petitioner Health Marketing

Technologies, Inc. (HealthTech), and his mother and siblings. [7]

On 3 February 1994, respondent Union Bank of the Philippines (Union Bank) extended HealthTech a credit line
in the amount of 10,000,000. [8] To secure this obligation, PAGLAUM executed three Real Estate Mortgages on behalf of
HealthTech and in favor of Union Bank. [9] It must be noted that the Real Estate Mortgage, on the provision regarding
the venue of all suits and actions arising out of or in connection therewith, originally stipulates:
Section 9. Venue. The venue of all suits and actions arising out of or in connection with this
Mortgage shall be in Makati, Metro Manila or in the place where any of the Mortgaged Properties is
located, at the absolute option of the Mortgagee, the parties hereto waiving any other venue.
[10]
(Emphasis supplied.)

However, under the two Real Estate Mortgages dated 11 February 1994, the following version appears:
Section 9. Venue. The venue of all suits and actions arising out of or in connection with this
Mortgage shall be in Cebu City Metro Manila or in the place where any of the Mortgaged Properties is
located, at the absolute option of the Mortgagee, the xxxxxxxxxxxxx any other venue.[11] (Emphasis
supplied.)

Meanwhile, the same provision in the Real Estate Mortgage dated 22 April 1998 contains the following:
Section 9. Venue. The venue of all suits and actions arising out of or in connection with this
Mortgage shall be in _________ or in the place where any of the Mortgaged Properties is located, at the
absolute option of the Mortgagee, the parties hereto waiving any other venue. [12]

HealthTech and Union Bank agreed to subsequent renewals and increases in the credit line, [13] with the total
amount of debt reaching 36,500,000. [14] Unfortunately, according to HealthTech, the 1997 Asian financial crisis
adversely affected its business and caused it difficulty in meeting its obligations with Union Bank. [15] Thus, on 11
December 1998, both parties entered into a Restructuring Agreement, [16] which states that any action or proceeding
arising out of or in connection therewith shall be commenced in Makati City, with both parties waiving any other
venue.[17]

Despite the Restructuring Agreement, HealthTech failed to pay its obligation, prompting Union Bank to send a
demand letter dated 9 October 2000, stating that the latter would be constrained to institute foreclosure proceedings,
unless HealthTech settled its account in full. [18]

Since HealthTech defaulted on its payment, Union Bank extra-judicially foreclosed the mortgaged properties.
[19]

The bank, as the sole bidder in the auction sale, was then issued a Certificate of Sale dated 24 May 2001.

[20]

Thereafter, it filed a Petition for Consolidation of Title. [21]

Consequently, HealthTech filed a Complaint for Annulment of Sale and Titles with Damages and Application for
Temporary Restraining Order and Writ of Injunction dated 23 October 2001, praying for: (a) the issuance of a
temporary restraining order, and later a writ of preliminary injunction, directing Union Bank to refrain from exercising
acts of ownership over the foreclosed properties; (b) the annulment of the extra-judicial foreclosure of real properties;
(c) the cancellation of the registration of the Certificates of Sale and the resulting titles issued; (d) the reinstatement of
PAGLAUMs ownership over the subject properties; and (e) the payment of damages. [22] The case was docketed as Civil

Case No. 01-1567 and raffled to the Regional Trial Court, National Capital Judicial Region, Makati City, Branch 134 (RTC
Br. 134), which issued in favor of PAGLAUM and HealthTech a Writ of Preliminary Injunction restraining Union Bank from
proceeding with the auction sale of the three mortgaged properties. [23]

On 23 November 2001, Union Bank filed a Motion to Dismiss on the following grounds: (a) lack of jurisdiction
over the issuance of the injunctive relief; (b) improper venue; and (c) lack of authority of the person who signed the
Complaint.[24] RTC Br. 134 granted this Motion in its Order dated 11 March 2003, resulting in the dismissal of the case,
as well as the dissolution of the Writ of Preliminary Injunction. [25] It likewise denied the subsequent Motion for
Reconsideration filed by PAGLAUM and HealthTech.[26]

PAGLAUM and HealthTech elevated the case to the CA, which affirmed the Order dated 11 March 2003 [27] and
denied the Motion for Reconsideration.[28]

In the instant Petition, PAGLAUM and HealthTech argue that: (a) the Restructuring Agreement governs the
choice of venue between the parties, and (b) the agreement on the choice of venue must be interpreted with the
convenience of the parties in mind and the view that any obscurity therein was caused by Union Bank. [29]

On the other hand, Union Bank contends that: (a) the Restructuring Agreement is applicable only to the
contract of loan, and not to the Real Estate Mortgage, and (b) the mortgage contracts explicitly state that the choice of
venue exclusively belongs to it.[30]

Meanwhile, intervenor J. King & Sons Company, Inc. adopts the position of Union Bank and reiterates the
position that Cebu City is the proper venue.[31]

The sole issue to be resolved is whether Makati City is the proper venue to assail the foreclosure of the subject
real estate mortgage. This Court rules in the affirmative.

Civil Case No. 01-1567, being an action for Annulment of Sale and Titles resulting from the extrajudicial
foreclosure by Union Bank of the mortgaged real properties, is classified as a real action. In Fortune Motors v. Court of
Appeals,[32] this Court held that a case seeking to annul a foreclosure of a real estate mortgage is a real action, viz:
An action to annul a real estate mortgage foreclosure sale is no different from an action to
annul a private sale of real property. (Muoz v. Llamas, 87 Phil. 737, 1950).
While it is true that petitioner does not directly seek the recovery of title or possession of the
property in question, his action for annulment of sale and his claim for damages are closely intertwined
with the issue of ownership of the building which, under the law, is considered immovable property,
the recovery of which is petitioners primary objective. The prevalent doctrine is that an action for the
annulment or rescission of a sale of real property does not operate to efface the fundamental and
prime objective and nature of the case, which is to recover said real property. It is a real action. [33]

Being a real action, the filing and trial of the Civil Case No. 01-1567 should be governed by the following
relevant provisions of the Rules of Court (the Rules):
Rule 4

VENUE OF ACTIONS
Section 1. Venue of real actions. Actions affecting title to or possession of real property, or
interest therein, shall be commenced and tried in the proper court which has jurisdiction over
the area wherein the real property involved, or a portion thereof, is situated.
Forcible entry and detainer actions shall be commenced and tried in the municipal trial court of
the municipality or city wherein the real property involved, or a portion thereof, is situated.
Sec. 3. When Rule not applicable. This Rule shall not apply
(a)

In those cases where a specific rule or law provides otherwise; or

(b)
Where the parties have validly agreed in writing before the filing of the
action on the exclusive venue thereof. (Emphasis supplied.)

In Sps. Lantin v. Lantion,[34] this Court explained that a venue stipulation must contain words that show
exclusivity or restrictiveness, as follows:
At the outset, we must make clear that under Section 4 (b) of Rule 4 of the 1997 Rules of Civil
Procedure, the general rules on venue of actions shall not apply where the parties, before the filing of
the action, have validly agreed in writing on an exclusive venue. The mere stipulation on the venue of
an action, however, is not enough to preclude parties from bringing a case in other venues. The
parties must be able to show that such stipulation is exclusive. In the absence of qualifying
or restrictive words, the stipulation should be deemed as merely an agreement on an
additional forum, not as limiting venue to the specified place.
xxx

xxx

xxx

Clearly, the words exclusively and waiving for this purpose any other venue are
restrictive and used advisedly to meet the requirements.[35] (Emphasis supplied.)

According to the Rules, real actions shall be commenced and tried in the court that has jurisdiction over the
area where the property is situated. In this case, all the mortgaged properties are located in the Province of Cebu.
Thus, following the general rule, PAGLAUM and HealthTech should have filed their case in Cebu, and not in Makati.

However, the Rules provide an exception, in that real actions can be commenced and tried in a court other
than where the property is situated in instances where the parties have previously and validly agreed in
writing on the exclusive venue thereof. In the case at bar, the parties claim that such an agreement exists. The
only dispute is whether the venue that should be followed is that contained in the Real Estate Mortgages, as
contended by Union Bank, or that in the Restructuring Agreement, as posited by PAGLAUM and HealthTech. This Court
rules that the venue stipulation in the Restructuring Agreement should be controlling.

The Real Estate Mortgages were executed by PAGLAUM in favor of Union Bank to secure the credit line
extended by the latter to HealthTech. All three mortgage contracts contain a dragnet clause, which secures succeeding
obligations, including renewals, extensions, amendments or novations thereof, incurred by HealthTech from Union
Bank, to wit:
Section 1. Secured Obligations. The obligations secured by this Mortgage (the Secured
Obligations) are the following:

a)
All the obligations of the Borrower and/or the Mortgagor under: (i) the Notes, the
Agreement, and this Mortgage; (ii) any and all instruments or documents issued upon the renewal,
extension, amendment or novation of the Notes, the Agreement and this Mortgage, irrespective of
whether such obligations as renewed, extended, amended or novated are in the nature of new,
separate or additional obligations; and (iii) any and all instruments or documents issued pursuant to
the Notes, the Agreement and this Mortgage;
b)
All other obligations of the Borrower and/or the Mortgagor in favor of the
Mortgagee, whether presently owing or hereinafter incurred and whether or not arising from or
connected with the Agreement, the Notes and/or this Mortgage; and
c)
Any and all expenses which may be incurred in collecting any and all of the above
and in enforcing any and all rights, powers and remedies of the Mortgagee under this Mortgage. [36]

On the other hand, the Restructuring Agreement was entered into by HealthTech and Union Bank to modify the
entire loan obligation. Section 7 thereof provides:

Security. The principal, interests, penalties and other charges for which the BORROWER may
be bound to the BANK under the terms of this Restructuring Agreement, including the renewal,
extension, amendment or novation of this Restructuring Agreement, irrespective of whether the
obligations arising out of or in connection with this Restructuring Agreement, as renewed, extended,
amended or novated, are in the nature of new, separate or additional obligations, and all other
instruments or documents covering the Indebtedness or otherwise made pursuant to this Restructuring
Agreement (the Secured Obligations), shall continue to be secured by the following security
arrangements (the Collaterals):
a.
Real Estate Mortgage dated February 11, 1994 executed by Paglaum
Management and Development Corporation over a 474 square meter property covered by TCT No.
112489;
b.
Real Estate Mortgage dated February 11, 1994 executed by Paglaum
Management and Development Corporation over a 2,796 square meter property covered by TCT No.
T-68516;
c.
Real Estate Mortgage dated April 22, 1998 executed by Paglaum
Management and Development Corporation over a 3,711 square meter property covered by TCT No.
112488;
d.

Continuing Surety Agreement of Benjamin B. Dy;

Without need of any further act and deed, the existing Collaterals, shall remain in full force and
effect and continue to secure the payment and performance of the obligations of the BORROWER
arising from the Notes and this Restructuring Agreement. [37] (Emphasis supplied.)

Meanwhile, Section 20 of the Restructuring Agreement as regards the venue of actions state:
20. Venue Venue of any action or proceeding arising out of or connected with
this Restructuring Agreement, the Note, the Collateral and any and all related
documents shall be in Makati City, [HealthTech] and [Union Bank] hereby waiving any other
venue.[38] (Emphasis supplied.)

These quoted provisions of the Real Estate Mortgages and the later Restructuring Agreement clearly reveal the
intention of the parties to implement a restrictive venue stipulation, which applies not only to the principal obligation,
but also to the mortgages. The phrase waiving any other venue plainly shows that the choice of Makati City as

the venue for actions arising out of or in connection with the Restructuring Agreement and the Collateral, with the Real
Estate Mortgages being explicitly defined as such, is exclusive.

Even if this Court were to consider the venue stipulations under the Real Estate Mortgages, it must be
underscored that those provisions did not contain words showing exclusivity or restrictiveness. In fact, in the Real
Estate Mortgages dated 11 February 1994, the phrase parties hereto waiving from the entire phrase the parties
hereto waiving any other venue was stricken from the final executed contract. Following the ruling in Sps. Lantin as
earlier quoted, in the absence of qualifying or restrictive words, the venue stipulation should only be deemed as an
agreement on an additional forum, and not as a restriction on a specified place.

Considering that Makati City was agreed upon by the parties to be the venue for all actions arising out of or in
connection with the loan obligation incurred by HealthTech, as well as the Real Estate Mortgages executed by
PAGLAUM, the CA committed reversible error in affirming the dismissal of Civil Case No. 01-1567 by RTC Br. 134 on the
ground of improper venue.

WHEREFORE, the Petition for Review is GRANTED. The Decision dated 31 May 2007 and Resolution dated 24
July 2007 in CA-G.R. CV No. 82053 of the Court of Appeals, as well as the Orders dated 11 March 2003 and 19
September 2003 issued by the Regional Trial Court, Makati City, Branch 134, are REVERSED and SET ASIDE.The
Complaint in Civil Case No. 01-1567 is hereby REINSTATED.

SO ORDERED.

SPOUSES HERMES P. OCHOA and ARACELI D.

OCHOA,
Petitioners,

- versus -

G.R. No. 192877

Present:
CARPIO, J.,
Chairperson,
NACHURA,
BRION,*
PERALTA, and
ABAD, JJ.
Promulgated:

CHINA BANKING CORPORATION,

Respondent.

March 23, 2011

x------------------------------------------------------------------------------------x

RESOLUTION
NACHURA, J.:

For resolution is petitioners motion for reconsideration [1] of our January 17, 2011 Resolution [2] denying their
petition for review on certiorari[3] for failing to sufficiently show any reversible error in the assailed judgment [4] of the
Court of Appeals (CA).

Petitioners insist that it was error for the CA to rule that the stipulated exclusive venue of Makati City is binding
only

on

petitioners

complaint

for Annulment

of

Foreclosure, Sale,

and

Damages filed

before

the Regional Trial Court of Paraaque City, but not on respondent banks Petition for Extrajudicial Foreclosure of
Mortgage, which was filed with the same court.

We disagree.

The extrajudicial foreclosure sale of a real estate mortgage is governed by Act No. 3135, as amended by Act No.
4118, otherwise known as "An Act to Regulate the Sale of Property Under Special Powers Inserted In or Annexed to
Real-Estate Mortgages." Sections 1 and 2 thereof clearly state:
Section 1. When a sale is made under a special power inserted in or attached to any realestate mortgage hereafter made as security for the payment of money or the fulfillment of any other
obligation, the provisions of the following sections shall govern as to the manner in which the sale and
redemption shall be effected, whether or not provision for the same is made in the power.
Sec. 2. Said sale cannot be made legally outside of the province in which the property sold is
situated; and in case the place within said province in which the sale is to be made is the subject of
stipulation, such sale shall be made in said place or in the municipal building of the municipality in
which the property or part thereof is situated.[5]

The case at bar involves petitioners mortgaged real property located in Paraaque City over which respondent
bank was granted a special power to foreclose extra-judicially. Thus, by express provision of Section 2, the sale can
only be made in Paraaque City.

The exclusive venue of Makati City, as stipulated by the parties[6] and sanctioned by Section 4, Rule 4 of the
Rules of Court,[7] cannot be made to apply to the Petition for Extrajudicial Foreclosure filed by respondent bank
because the provisions of Rule 4 pertain to venue of actions, which an extrajudicial foreclosure is not.

Pertinent are the following disquisitions in Supena v. De la Rosa:[8]

Section 1, Rule 2 [of the Rules of Court] defines an action in this wise:

"Action means an ordinary suit in a court of justice, by which one party

prosecutes another for the enforcement or protection of a right, or the prevention or
redress of a wrong."
Hagans v. Wislizenus does not depart from this definition when it states that "[A]n action is a formal
demand of one's legal rights in a court of justice in the manner prescribed by the court or by the law. x
x x." It is clear that the determinative or operative fact which converts a claim into an "action or suit"
is the filing of the same with a "court of justice." Filed elsewhere, as with some other body or office not
a court of justice, the claim may not be categorized under either term. Unlike an action, an
extrajudicial foreclosure of real estate mortgage is initiated by filing a petition not with any court of
justice but with the office of the sheriff of the province where the sale is to be made. By no stretch of
the imagination can the office of the sheriff come under the category of a court of justice. And as aptly
observed by the complainant, if ever the executive judge comes into the picture, it is only because he
exercises administrative supervision over the sheriff. But this administrative supervision, however,
does not change the fact that extrajudicial foreclosures are not judicial proceedings, actions or suits. [9]

These pronouncements were confirmed on August 7, 2001 through A.M. No. 99-10-05-0, entitled Procedure in ExtraJudicial Foreclosure of Mortgage, the significant portions of which provide:
In line with the responsibility of an Executive Judge under Administrative Order No. 6,
date[d] June 30, 1975, for the management of courts within his administrative area, included
in which is the task of supervising directly the work of the Clerk of Court, who is also the
Ex-Office Sherif, and his staff, and the issuance of commissions to notaries public and enforcement
of their duties under the law, the following procedures are hereby prescribed in extra-judicial
foreclosure of mortgages:
1. All applications for extrajudicial foreclosure of mortgage whether under the
direction of the sheriff or a notary public, pursuant to Act 3135, as amended by Act
4118, and Act 1508, as amended, shall be filed with the Executive Judge, through the
Clerk of Court who is also the Ex-Officio Sheriff.

Verily then, with respect to the venue of extrajudicial foreclosure sales, Act No. 3135, as amended, applies, it
being a special law dealing particularly with extrajudicial foreclosure sales of real estate mortgages, and not the
general provisions of the Rules of Court on Venue of Actions.

Consequently, the stipulated exclusive venue of Makati City is relevant only to actions arising from or related
to the mortgage, such as petitioners complaint forAnnulment of Foreclosure, Sale, and Damages.

The other arguments raised in the motion are a mere reiteration of those already raised in the petition for
review. As declared in this Courts Resolution on January 17, 2011, the same failed to show any sufficient ground to
warrant the exercise of our appellate jurisdiction.

WHEREFORE, premises considered, the motion for reconsideration is hereby DENIED.

SO ORDERED.
G.R. No. 186993

August 22, 2012

10

THEODORE and NANCY ANG, represented by ELDRIGE MARVIN B. ACERON, Petitioners,

vs.
SPOUSES ALAN and EM ANG, Respondents.
VELASCO, JR.,*
LEONARDO-DE CASTRO,

**

DECISION
REYES, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set
aside the Decision1 dated August 28, 2008 and the Resolution2 dated February 20, 2009 rendered by the Court of
Appeals (CA) in CA-G.R. SP No. 101159. The assailed decision annulled and set aside the Orders dated April 12,
20073 and August 27, 20074 issued by the Regional Trial Court (RTC) of Quezon City, Branch 81 in Civil Case No. Q-0658834.
The Antecedent Facts
On September 2, 1992, spouses Alan and Em Ang (respondents) obtained a loan in the amount of Three Hundred
Thousand U.S. Dollars (US$300,000.00) from Theodore and Nancy Ang (petitioners). On even date, the respondents
executed a promissory note5 in favor of the petitioners wherein they promised to pay the latter the said amount, with
interest at the rate of ten percent (10%) per annum, upon demand. However, despite repeated demands, the
respondents failed to pay the petitioners.
Thus, on August 28, 2006, the petitioners sent the respondents a demand letter asking them to pay their outstanding
debt which, at that time, already amounted to Seven Hundred Nineteen Thousand, Six Hundred Seventy-One U.S.
Dollars and Twenty-Three Cents (US$719,671.23), inclusive of the ten percent (10%) annual interest that had
accumulated over the years. Notwithstanding the receipt of the said demand letter, the respondents still failed to
settle their loan obligation.
On August 6, 2006, the petitioners, who were then residing in Los Angeles, California, United States of America (USA),
executed their respective Special Powers of Attorney6 in favor of Attorney Eldrige Marvin B. Aceron (Atty. Aceron) for
the purpose of filing an action in court against the respondents. On September 15, 2006, Atty. Aceron, in behalf of the
petitioners, filed a Complaint7 for collection of sum of money with the RTC of Quezon City against the respondents.
On November 21, 2006, the respondents moved for the dismissal of the complaint filed by the petitioners on the
grounds of improper venue and prescription.8 Insisting that the venue of the petitioners action was improperly laid,
the respondents asserted that the complaint against them may only be filed in the court of the place where either they
or the petitioners reside. They averred that they reside in Bacolod City while the petitioners reside in Los Angeles,
California, USA. Thus, the respondents maintain, the filing of the complaint against them in the RTC of Quezon City was
improper.
The RTC Orders
On April 12, 2007, the RTC of Quezon City issued an Order 9 which, inter alia, denied the respondents motion to
dismiss. In ruling against the respondents claim of improper venue, the court explained that:
Attached to the complaint is the Special Power of Attorney x x x which clearly states that plaintiff Nancy Ang
constituted Atty. Eldrige Marvin Aceron as her duly appointed attorney-in-fact to prosecute her claim against herein
defendants. Considering that the address given by Atty. Aceron is in Quezon City, hence, being the plaintiff, venue of
the action may lie where he resides as provided in Section 2, Rule 4 of the 1997 Rules of Civil Procedure. 10
The respondents sought reconsideration of the RTC Order dated April 12, 2007, asserting that there is no law which
allows the filing of a complaint in the court of the place where the representative, who was appointed as such by the
plaintiffs through a Special Power of Attorney, resides. 11

11

The respondents motion for reconsideration was denied by the RTC of Quezon City in its Order 12 dated August 27,
2007.
The respondents then filed with the CA a petition for certiorari 13 alleging in the main that, pursuant to Section 2, Rule 4
of the Rules of Court, the petitioners complaint may only be filed in the court of the place where they or the
petitioners reside. Considering that the petitioners reside in Los Angeles, California, USA, the respondents assert that
the complaint below may only be filed in the RTC of Bacolod City, the court of the place where they reside in the
Philippines.
The respondents further claimed that, the petitioners grant of Special Power of Attorney in favor of Atty. Aceron
notwithstanding, the said complaint may not be filed in the court of the place where Atty. Aceron resides, i.e., RTC of
Quezon City. They explained that Atty. Aceron, being merely a representative of the petitioners, is not the real party in
interest in the case below; accordingly, his residence should not be considered in determining the proper venue of the
said complaint.
The CA Decision
On August 28, 2008, the CA rendered the herein Decision, 14 which annulled and set aside the Orders dated April 12,
2007 and August 27, 2007 of the RTC of Quezon City and, accordingly, directed the dismissal of the complaint filed by
the petitioners. The CA held that the complaint below should have been filed in Bacolod City and not in Quezon City.
Thus:
As maybe clearly gleaned from the foregoing, the place of residence of the plaintiffs attorney-in-fact is of no moment
when it comes to ascertaining the venue of cases filed in behalf of the principal since what should be considered is the
residence of the real parties in interest, i.e., the plaintiff or the defendant, as the case may be. Residence is the
permanent home the place to which, whenever absent for business or pleasure, one intends to return. Residence is
vital when dealing with venue. Plaintiffs, herein private respondents, being residents of Los Angeles, California, U.S.A.,
which is beyond the territorial jurisdiction of Philippine courts, the case should have been filed in Bacolod City where
the defendants, herein petitioners, reside. Since the case was filed in Quezon City, where the representative of the
plaintiffs resides, contrary to Sec. 2 of Rule 4 of the 1997 Rules of Court, the trial court should have dismissed the case
for improper venue.15
The petitioners sought a reconsideration of the Decision dated August 28, 2008, but it was denied by the CA in its
Resolution dated February 20, 2009.16
Hence, the instant petition.
Issue
In the instant petition, the petitioners submit this lone issue for this Courts resolution:
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF LAW WHEN IT RULED THAT THE
COMPLAINT MUST BE DISMISSED ON THE GROUND THAT VENUE WAS NOT PROPERLY LAID. 17
The Courts Ruling
The petition is denied.
Contrary to the CAs disposition, the petitioners maintain that their complaint for collection of sum of money against
the respondents may be filed in the RTC of Quezon City. Invoking Section 3, Rule 3 of the Rules of Court, they insist
that Atty. Aceron, being their attorney-in-fact, is deemed a real party in interest in the case below and can prosecute
the same before the RTC. Such being the case, the petitioners assert, the said complaint for collection of sum of money
may be filed in the court of the place where Atty. Aceron resides, which is the RTC of Quezon City.
On the other hand, the respondents in their Comment18 assert that the petitioners are proscribed from filing their
complaint in the RTC of Quezon City. They assert that the residence of Atty. Aceron, being merely a representative, is
immaterial to the determination of the venue of the petitioners complaint.

12

The petitioners complaint should

have been filed in the RTC of
Bacolod City, the court of the place
where the respondents reside, and
not in RTC of Quezon City.
It is a legal truism that the rules on the venue of personal actions are fixed for the convenience of the plaintiffs and
their witnesses. Equally settled, however, is the principle that choosing the venue of an action is not left to a plaintiffs
caprice; the matter is regulated by the Rules of Court. 19
The petitioners complaint for collection of sum of money against the respondents is a personal action as it primarily
seeks the enforcement of a contract. The Rules give the plaintiff the option of choosing where to file his complaint. He
can file it in the place (1) where he himself or any of them resides, or (2) where the defendant or any of the defendants
resides or may be found. The plaintiff or the defendant must be residents of the place where the action has been
instituted at the time the action is commenced.20
However, if the plaintiff does not reside in the Philippines, the complaint in such case may only be filed in the court of
the place where the defendant resides. In Cohen and Cohen v. Benguet Commercial Co., Ltd., 21 this Court held that
there can be no election as to the venue of the filing of a complaint when the plaintiff has no residence in the
Philippines. In such case, the complaint may only be filed in the court of the place where the defendant resides. Thus:
Section 377 provides that actions of this character "may be brought in any province where the defendant or any
necessary party defendant may reside or be found, or in any province where the plaintiff or one of the plaintiffs
resides, at the election of the plaintiff." The plaintiff in this action has no residence in the Philippine Islands. Only one
of the parties to the action resides here. There can be, therefore, no election by plaintiff as to the place of trial. It must
be in the province where the defendant resides. x x x. 22 (Emphasis ours)
Here, the petitioners are residents of Los Angeles, California, USA while the respondents reside in Bacolod City.
Applying the foregoing principles, the petitioners complaint against the respondents may only be filed in the RTC of
Bacolod City the court of the place where the respondents reside. The petitioners, being residents of Los Angeles,
California, USA, are not given the choice as to the venue of the filing of their complaint.
Thus, the CA did not commit any reversible error when it annulled and set aside the orders of the RTC of Quezon City
and consequently dismissed the petitioners complaint against the respondents on the ground of improper venue.
In this regard, it bears stressing that the situs for bringing real and personal civil actions is fixed by the Rules of Court
to attain the greatest convenience possible to the litigants and their witnesses by affording them maximum
accessibility to the courts.23 And even as the regulation of venue is primarily for the convenience of the plaintiff, as
attested by the fact that the choice of venue is given to him, it should not be construed to unduly deprive a resident
defendant of the rights conferred upon him by the Rules of Court. 24
Atty. Aceron is not a real party in
interest in the case below; thus, his
residence is immaterial to the venue
of the filing of the complaint.
Contrary to the petitioners claim, Atty. Aceron, despite being the attorney-in-fact of the petitioners, is not a real party
in interest in the case below. Section 2, Rule 3 of the Rules of Court reads:
Sec. 2. Parties in interest. A real party in interest is the party who stands to be benefited or injured by the judgment
in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every
action must be prosecuted or defended in the name of the real party in interest. (Emphasis ours)
Interest within the meaning of the Rules of Court means material interest or an interest in issue to be affected by the
decree or judgment of the case, as distinguished from mere curiosity about the question involved. 25 A real party in
interest is the party who, by the substantive law, has the right sought to be enforced. 26

13

Applying the foregoing rule, it is clear that Atty. Aceron is not a real party in interest in the case below as he does not
stand to be benefited or injured by any judgment therein. He was merely appointed by the petitioners as their
attorney-in-fact for the limited purpose of filing and prosecuting the complaint against the respondents. Such
appointment, however, does not mean that he is subrogated into the rights of petitioners and ought to be considered
as a real party in interest.
Being merely a representative of the petitioners, Atty. Aceron in his personal capacity does not have the right to file
the complaint below against the respondents. He may only do so, as what he did, in behalf of the petitioners the real
parties in interest. To stress, the right sought to be enforced in the case below belongs to the petitioners and not to
Atty. Aceron. Clearly, an attorney-in-fact is not a real party in interest. 27
The petitioners reliance on Section 3, Rule 3 of the Rules of Court to support their conclusion that Atty. Aceron is
likewise a party in interest in the case below is misplaced. Section 3, Rule 3 of the Rules of Court provides that:
Sec. 3. Representatives as parties. Where the action is allowed to be prosecuted and defended by a representative or
someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to
be the real property in interest. A representative may be a trustee of an expert trust, a guardian, an executor or
administrator, or a party authorized by law or these Rules. An agent acting in his own name and for the benefit of an
undisclosed principal may sue or be sued without joining the principal except when the contract involves things
belonging to the principal. (Emphasis ours)
Nowhere in the rule cited above is it stated or, at the very least implied, that the representative is likewise deemed as
the real party in interest. The said rule simply states that, in actions which are allowed to be prosecuted or defended
by a representative, the beneficiary shall be deemed the real party in interest and, hence, should be included in the
title of the case.
Indeed, to construe the express requirement of residence under the rules on venue as applicable to the attorney-infact of the plaintiff would abrogate the meaning of a "real party in interest", as defined in Section 2 of Rule 3 of the
1997 Rules of Court vis--vis Section 3 of the same Rule. 28
On this score, the CA aptly observed that:
As may be unerringly gleaned from the foregoing provisions, there is nothing therein that expressly allows, much less
implies that an action may be filed in the city or municipality where either a representative or an attorney-in-fact of a
real party in interest resides. Sec. 3 of Rule 3 merely provides that the name or names of the person or persons being
represented must be included in the title of the case and such person or persons shall be considered the real party in
interest. In other words, the principal remains the true party to the case and not the representative. Under the plain
meaning rule, or verba legis, if a statute is clear, plain and free from ambiguity, it must be given its literal meaning
and applied without interpretation. xxx29 (Citation omitted)
At this juncture, it bears stressing that the rules on venue, like the other procedural rules, are designed to insure a just
and orderly administration of justice or the impartial and even-handed determination of every action and proceeding.
Obviously, this objective will not be attained if the plaintiff is given unrestricted freedom to choose the court where he
may file his complaint or petition. The choice of venue should not be left to the plaintiff's whim or caprice. He may be
impelled by some ulterior motivation in choosing to file a case in a particular court even if not allowed by the rules on
venue.30
WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED. The Decision dated August 28,
2008 and Resolution dated February 20, 2009 rendered by the Court of Appeals in CA-G.R. SP No. 101159
are AFFIRMED.
SO ORDERED.

14

IRENE MARCOS-ARANETA, DANIEL RUBIO,

ORLANDO G. RESLIN, and JOSE G. RESLIN,
Petitioners,

- versus COURT OF APPEALS, JULITA C. BENEDICTO,

and FRANCISCA
BENEDICTO-PAULINO,
Respondents.

G.R. No. 154096

Present:
QUISUMBING, J., Chairperson,
CARPIO MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.
Promulgated:
August 22, 2008

x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 assails and seeks to nullify the Decision [1] dated October
17, 2001 of the Court of Appeals (CA) in CA-G.R. SP No. 64246 and its Resolution[2] of June 20, 2002 denying
petitioners motion for reconsideration. The assailed CA decision annulled and set aside the Orders dated October 9,
2000,December 18, 2000, and March 15, 2001 of the Regional Trial Court (RTC), Branch 17 in Batac, Ilocos Norte which
admitted petitioners amended complaint in Civil Case Nos. 3341-17 and 3342-17.

The Facts

15

Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now deceased, 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 would later allege, 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 thereupon 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,[3] Benedictos daughter, filed a Motion to Dismiss Civil Case No. 334117, followed later by an Amended Motion to Dismiss. Benedicto, on the other hand, moved to dismiss [4] Civil Case No.
3342-17, adopting in toto the five (5) grounds raised by Francisca in her amended motion to dismiss. Among these
were: (1) the cases involved an intra-corporate dispute over which the Securities and Exchange Commission, not the
RTC, has jurisdiction; (2) venue was improperly laid; and (3) 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.

To the motions to dismiss, Irene filed a Consolidated Opposition, which Benedicto and Francisca countered with
a Joint Reply to Opposition.

Upon Benedictos motion, both cases were consolidated.

During the preliminary proceedings on their motions to dismiss, Benedicto and Francisca, by way of bolstering
their contentions on improper venue, presented the Joint Affidavit[5] of Gilmia B. Valdez, Catalino A. Bactat, and
Conchita R. Rasco who all attested being employed as household staff at the Marcos Mansion in Brgy. 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 husbands house
in Makati City.

Against the aforesaid unrebutted joint affidavit, Irene presented her PhP 5 community tax certificate [6] (CTC)
issued on 11/07/99 in Curimao, Ilocos Norte to support her claimed residency in Batac, Ilocos Norte.

16

In the meantime, on May 15, 2000, Benedicto died and was substituted by his wife, Julita C. Benedicto, and
Francisca.

On June 29, 2000, the RTC dismissed both complaints, stating that these partly constituted real action, and
that Irene did not actually reside in Ilocos Norte, and, therefore, venue was improperly laid. In its dismissal order, [7] the
court also declared all the other issues raised in the different Motions to Dismiss x x x moot and academic.
From the above order, Irene interposed a Motion for Reconsideration [8] which Julita and Francisca duly
opposed.

Pending resolution of her motion for reconsideration, Irene filed on July 17, 2000 a Motion (to Admit Amended
Complaint),[9] attaching therewith a copy of the Amended Complaint [10] dated July 14, 2000 in which the names of
Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin appeared as additional plaintiffs. As stated in the amended
complaint, the added plaintiffs, all from Ilocos Norte, were Irenes new trustees. Parenthetically, the amended
complaint stated practically the same cause of action but, as couched, sought the reconveyance of the FEMII shares
only.

During the August 25, 2000 hearing, the RTC dictated in open court an order denying Irenes motion for
reconsideration aforementioned, but deferred action on her motion to admit amended complaint and the opposition
thereto.[11]

On October 9, 2000, the RTC issued an Order [12] entertaining the amended complaint, dispositively stating:
WHEREFORE, the admission of the Amended Complaint being tenable and legal, the same is
GRANTED.
Let copies of the Amended Complaint be served to the defendants who are ordered to answer
within the reglementary period provided by the rules.

The RTC predicated its order on the following premises:

(1) Pursuant to Section 2, Rule 10 of the Rules of Court, [13] Irene may opt to file, as a matter of right, an
amended complaint.
(2) The inclusion of additional plaintiffs, one of whom was a Batac, an Ilocos Norte resident, in the amended
complaint setting out the same cause of action cured the defect of improper venue.

(3) Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4 allow the filing of the amended complaint in question
in the place of residence of any of Irenes co-plaintiffs.

17

In

time,

Julita

and

Francisca

moved

to

dismiss

the

amended

complaint,

but

the

RTC,

by

Order[14] dated December 18, 2000, denied the motion and reiterated its directive for the two to answer the amended
complaint.

In said order, the RTC stood pat on its holding on the rule on amendments of pleadings. And scoffing at the
argument about there being no complaint to amend in the first place as of October 9, 2000 (when the RTC granted the
motion to amend) as the original complaints were dismissed with finality earlier, i.e., on August 25, 2000 when the
court denied Irenes motion for reconsideration of the June 29, 2000 order dismissing the original complaints, the court
stated thusly: there was actually no need to act on Irenes motion to admit, it being her right as plaintiff to amend her
complaints absent any responsive pleading thereto. Pushing its point, the RTC added the observation that the filing of
the amended complaint on July 17, 2000 ipso facto superseded the original complaints, the dismissal of which, per the
June 29, 2000 Order, had not yet become final at the time of the filing of the amended complaint.

Following the denial on March 15, 2001 of their motion for the RTC to reconsider its December 18, 2000 order
aforestated, Julita and Francisca, in a bid to evade being declared in default, filed on April 10, 2001 their Answer to the
amended complaint.[15] But on the same day, they went to the CA via a petition for certiorari, docketed as CA-G.R. SP
No. 64246, seeking to nullify the following RTC orders: the first, admitting the amended complaint; the second, denying
their motion to dismiss the amended complaint; and the third, denying their motion for reconsideration of the second
issuance.

Inasmuch as the verification portion of the joint petition and the certification on non-forum shopping bore only
Franciscas signature, the CA required the joint petitioners to submit x x x either the written authority of Julita C.
Benedicto to Francisca B. Paulino authorizing the latter to represent her in these proceedings, or a supplemental
verification and certification duly signed by x x x Julita C. Benedicto. [16] Records show the submission of the
corresponding authorizing Affidavit[17] executed by Julita in favor of Francisca.

Later developments saw the CA issuing a TRO [18] and then a writ of preliminary injunction [19] enjoining the RTC
from conducting further proceedings on the subject civil cases.

On October 17, 2001, the CA rendered a Decision, setting aside the assailed RTC orders and dismissing the
amended complaints in Civil Case Nos. 3341-17 and 3342-17. The fallo of the CA decision reads:
WHEREFORE, based on the foregoing premises, the petition is hereby GRANTED. The assailed
Orders admitting the amended complaints are SET ASIDE for being null and void, and the amended
complaints a quo are, accordingly, DISMISSED.[20]

Irene and her new trustees motion for reconsideration of the assailed decision was denied through the equally
assailed June 20, 2002 CA Resolution. Hence, this petition for review is before us.

The Issues

18

Petitioners urge the setting aside and annulment of the assailed CA decision and resolution on the following
submissions that the appellate court erred in: (1) allowing the submission of an affidavit by Julita as sufficient
compliance with the requirement on verification and certification of non-forum shopping; (2) ruling on the merits of the
trust issue which involves factual and evidentiary determination, processes not proper in a petition for certiorari under
Rule 65 of the Rules of Court; (3) ruling that the amended complaints in the lower court should be dismissed because,
at the time it was filed, there was no more original complaint to amend; (4) ruling that the respondents did not waive
improper venue; and (5) ruling that petitioner Irene was not a resident of Batac, Ilocos Norte and that none of the
principal parties are residents of Ilocos Norte.[21]
The Courts Ruling

We affirm, but not for all the reasons set out in, the CAs decision.
First Issue: Substantial Compliance with the Rule
on Verification and Certification of Non-Forum Shopping

Petitioners tag private respondents petition in CA-G.R. SP No. 64246 as defective for non-compliance with the
requirements of Secs. 4[22] and 5[23] of Rule 7 of the Rules of Court at least with regard to Julita, who failed to sign the
verification and certification of non-forum shopping. Petitioners thus fault the appellate court for directing Julitas
counsel to submit a written authority for Francisca to represent Julita in the certiorari proceedings.

We are not persuaded.

Verification not Jurisdictional; May be Corrected

Verification is, under the Rules, not a jurisdictional but merely a formal requirement which the court may motu
proprio direct a party to comply with or correct, as the case may be. As the Court articulated in Kimberly Independent
Labor Union for Solidarity, Activism and Nationalism (KILUSAN)-Organized Labor Associations in Line Industries and
Agriculture (OLALIA) v. Court of Appeals:
[V]erification is a formal, not a jurisdictional requisite, as it is mainly intended to secure an
assurance that the allegations therein made are done in good faith or are true and correct and not
mere speculation. The Court may order the correction of the pleading, if not verified, or act on the
unverified pleading if the attending circumstances are such that a strict compliance with the rule may
be dispensed with in order that the ends of justice may be served. [24]

Given this consideration, the CA acted within its sound discretion in ordering the submission of proof of
Franciscas authority to sign on Julitas behalf and represent her in the proceedings before the appellate court.

Signature by Any of the Principal Petitioners is Substantial Compliance

19

Regarding the certificate of non-forum shopping, the general rule is that all the petitioners or plaintiffs in a
case should sign it.[25] However, the Court has time and again stressed that the rules on forum shopping, which were
designed to promote the orderly administration of justice, do not interdict substantial compliance with its provisions
under justifiable circumstances.[26] As has been ruled by the Court, the signature of any of the principal
petitioners[27] or principal parties,[28] as Francisca is in this case, would constitute a substantial compliance with the rule
on verification and certification of non-forum shopping. It cannot be overemphasized that Francisca herself was a
principal party in Civil Case No. 3341-17 before the RTC and in the certiorari proceedings before the CA. Besides being
an heir of Benedicto, Francisca, with her mother, Julita, was substituted for Benedicto in the instant case after his
demise.

And should there exist a commonality of interest among the parties, or where the parties filed the case as a
collective, raising only one common cause of action or presenting a common defense, then the signature of one of
the petitioners or complainants, acting as representative, is sufficient compliance. We said so in Cavile v. Heirs of
Clarita Cavile.[29] Like Thomas Cavile, Sr. and the other petitioners in Cavile, Francisca and Julita, as petitioners before
the CA, had filed their petition as a collective, sharing a common interest and having a common single defense to
protect their rights over the shares of stocks in question.
Second Issue: Merits of the Case cannot be Resolved
on Certiorari under Rule 65

Petitioners posture on the second issue is correct. As they aptly pointed out, the CA, in the exercise of its
certiorari jurisdiction under Rule 65, is limited to reviewing and correcting errors of jurisdiction only. It cannot validly
delve into the issue of trust which, under the premises, cannot be judiciously resolved without first establishing certain
facts based on evidence.

Whether a determinative question is one of law or of fact depends on the nature of the dispute. A question of
law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain given set
of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the truth
or falsehood of facts being admitted. A question of fact obtains when the doubt or difference arises as to the truth or
falsehood of facts or when the query invites the calibration of the whole evidence considering mainly the credibility of
the witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each
other and to the whole, and the probability of the situation. [30]

Clearly then, the CA overstepped its boundaries when, in disposing of private respondents petition for
certiorari, it did not confine itself to determining whether or not lack of jurisdiction or grave abuse of discretion tainted
the issuance of the assailed RTC orders, but proceeded to pass on the factual issue of the existence and enforceability
of the asserted trust. In the process, the CA virtually resolved petitioner Irenes case for reconveyance on its
substantive merits even before evidence on the matter could be adduced. Civil Case Nos. 3341-17 and 3342-17 in fact

20

have not even reached the pre-trial stage. To stress, the nature of the trust allegedly constituted in Irenes favor and
its enforceability, being evidentiary in nature, are best determined by the trial court. The original complaints and the
amended complaint certainly do not even clearly indicate whether the asserted trust is implied or express. To be sure,
an express trust differs from the implied variety in terms of the manner of proving its existence. [31] Surely, the onus of
factually determining whether the trust allegedly established in favor of Irene, if one was indeed established, was
implied or express properly pertains, at the first instance, to the trial court and not to the appellate court in a special
civil action for certiorari, as here. In the absence of evidence to prove or disprove the constitution and necessarily the
existence of the trust agreement between Irene, on one hand, and the Benedicto Group, on the other, the appellate
court cannot intelligently pass upon the issue of trust. A pronouncement on said issue of trust rooted on speculation
and conjecture, if properly challenged, must be struck down. So it must be here.

Third Issue: Admission of Amended Complaint Proper

As may be recalled, the CA veritably declared as reversibly erroneous the admission of the amended
complaint. The flaw in the RTCs act of admitting the amended complaint lies, so the CA held, in the fact that the filing
of the amended complaint on July 17, 2000 came after the RTC had ordered with finality the dismissal of the original
complaints. According to petitioners, scoring the CA for its declaration adverted to and debunking its posture on the
finality of the said RTC order, the CA failed to take stock of their motion for reconsideration of the said dismissal order.

We agree with petitioners and turn to the governing Sec. 2 of Rule 10 of the Rules of Court which provides:
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.

As the aforequoted provision makes it abundantly clear that the plaintiff may amend his complaint once as a
matter of right, i.e., without leave of court, before any responsive pleading is filed or served. Responsive pleadings are
those which seek affirmative relief and/or set up defenses, [32] like an answer. A motion to dismiss is not a responsive
pleading for purposes of Sec. 2 of Rule 10. [33] Assayed against the foregoing perspective, the RTC did not err in
admitting petitioners amended complaint, Julita and Francisca not having yet answered the original complaints when
the amended complaint was filed. At that precise moment, Irene, by force of said Sec. 2 of Rule 10, had, as a matter of
right, the option of amending her underlying reconveyance complaints. As aptly observed by the RTC, Irenes motion to
admit amended complaint was not even necessary. The Court notes though that the RTC has not offered an
explanation why it saw fit to grant the motion to admit in the first place.

In Alpine Lending Investors v. Corpuz, the Court, expounding on the propriety of admitting an amended
complaint before a responsive pleading is filed, wrote:
[W]hat petitioner Alpine filed in Civil Case No. C-20124 was a motion to dismiss, not an
answer. Settled is the rule that a motion to dismiss is not a responsive pleading for purposes of
Section 2, Rule 10. As no responsive pleading had been filed, respondent could amend her complaint

21

in Civil Case No. C-20124 as a matter of right. Following this Courts ruling in Breslin v. Luzon
Stevedoring Co. considering that respondent has the right to amend her complaint, it is the correlative
duty of the trial court to accept the amended complaint; otherwise, mandamus would lie against it. In
other words, the trial courts duty to admit the amended complaint was purely ministerial. In fact,
respondent should not have filed a motion to admit her amended complaint. [34]

It may be argued that the original complaints had been dismissed through the June 29, 2000 RTC order. It
should be pointed out, however, that the finality of such dismissal order had not set in when Irene filed the amended
complaint on July 17, 2000, she having meanwhile seasonably sought reconsideration thereof. Irenes motion for
reconsideration was only resolved on August 25, 2000. Thus, when Irene filed the amended complaint on July 17, 2000,
the order of dismissal was not yet final, implying that there was strictly no legal impediment to her amending her
original complaints.[35]

Fourth Issue: Private Respondents did not Waive Improper Venue

Petitioners maintain that Julita and Francisca were effectively precluded from raising the matter of improper
venue by their subsequent acts of filing numerous pleadings. To petitioners, these pleadings, taken together, signify a
waiver of private respondents initial objection to improper venue.

This contention is without basis and, at best, tenuous. Venue essentially concerns a rule of procedure which, in
personal actions, is fixed for the greatest convenience possible of the plaintiff and his witnesses. The ground of
improperly laid venue must be raised seasonably, else it is deemed waived. Where the defendant failed to either file a
motion to dismiss on the ground of improper venue or include the same as an affirmative defense, he is deemed to
have waived his right to object to improper venue. [36] In the case at bench, Benedicto and Francisca raised at the
earliest time possible, meaning within the time for but before filing the answer to the complaint, [37] the matter of
improper venue. They would thereafter reiterate and pursue their objection on venue, first, in their answer to the
amended complaints and then in their petition for certiorari before the CA. Any suggestion, therefore, that Francisca
and Benedicto or his substitutes abandoned along the way improper venue as ground to defeat Irenes claim before
the RTC has to be rejected.
Fifth Issue: The RTC Has No Jurisdiction
on the Ground of Improper Venue

Subject Civil Cases are Personal Actions

It is the posture of Julita and Francisca that the venue was in this case improperly laid since the suit in question
partakes of a real action involving real properties located outside the territorial jurisdiction of the RTC in Batac.

This contention is not well-taken. In a personal action, the plaintiff seeks the recovery of personal property,
the enforcement of a contract, or the recovery of damages. [38] 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 Sec. 1 of Rule 4, the venue of

22

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 he may be found, at the election of the plaintiff. [39]

In the instant case, petitioners are basically asking Benedicto and his Group, as defendants a quo, to
acknowledge holding in trust Irenes purported 65% stockownership of UEC and FEMII, inclusive of the fruits of the
trust, and to execute in Irenes favor the necessary conveying deed over the said 65% shareholdings. In other words,
Irene seeks to compel recognition of the trust arrangement she has with the Benedicto Group. The fact that FEMIIs
assets include real properties does not materially change the nature of the action, for 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 is an action in personam, it being a suit against Francisca and the late Benedicto
(now represented 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 are not actions in rem where the actions are against the real properties instead
of against persons.[40] We particularly note that possession or title to the real properties of FEMII and UEC is not being
disputed, albeit part of the assets of the corporation happens to be real properties.

Given the foregoing perspective, we now tackle the determinative question of venue in the light of the
inclusion of additional plaintiffs in the amended complaint.

Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4

We point out at the outset that Irene, as categorically and peremptorily found by the RTC after a hearing, is not
a resident of Batac, Ilocos Norte, as she claimed. The Court perceives no compelling reason to disturb, in the confines
of this case, the factual determination of the trial court and the premises holding it together. Accordingly, Irene cannot,
in a personal action, contextually opt for Batac as venue of her reconveyance complaint. As to her, Batac, Ilocos Norte
is not what Sec. 2, Rule 4 of the Rules of Court adverts to as the place where the plaintiff or any of the principal
plaintiffs resides at the time she filed her amended complaint. That Irene holds CTC No. 17019451[41] issued
sometime in June 2000 in Batac, Ilocos Norte and in which she indicated her address as Brgy. Lacub, Batac, Ilocos is
really of no moment. Let alone the fact that one can easily secure a basic residence certificate practically anytime in
any Bureau of Internal Revenue or treasurers office and dictate whatever relevant data one desires entered, Irene
procured CTC No. 17019451 and appended the same to her motion for reconsideration following the RTCs
pronouncement against her being a resident of Batac.

23

Petitioners, in an attempt to establish that the RTC in Batac, Ilocos Norte is the proper court venue, asseverate
that Batac, Ilocos Norte is where the principal parties reside.

Pivotal to the resolution of the venue issue is a determination of the status of Irenes co-plaintiffs in the context
of Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4, which pertinently provide as follows:
Rule 3
PARTIES TO CIVIL ACTIONS
SEC. 2. Parties in interest. A real party in interest is the party who stands to be benefited
or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise
authorized by law or these Rules, every action must be prosecuted or defended in the name of the real
party in interest.
SEC. 3. Representatives as parties. Where the action is allowed to be prosecuted or
defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be
included in the title of the case and shall be deemed to be the real party in interest. A representative
may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized
by law or these Rules. An agent acting in his own name and for the benefit of an undisclosed principal
may sue or be sued without joining the principal except when the contract involves things belonging to
the principal.
Rule 4
VENUE OF ACTIONS
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.

Venue is Improperly Laid

There can be no serious dispute that the real party-in-interest plaintiff is Irene. As self-styled beneficiary of the
disputed trust, she stands to be benefited or entitled to the avails of the present suit. It is undisputed too that
petitioners Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin, all from Ilocos Norte, were included as co-plaintiffs in
the amended complaint as Irenes new designated trustees. As trustees, they can only serve as mere representatives
of Irene.

Upon the foregoing consideration, the resolution of the crucial issue of whether or not venue had properly been
laid should not be difficult.

Sec. 2 of Rule 4 indicates quite clearly that when there is more than one plaintiff in a personal action case, the
residences of the principal parties should be the basis for determining proper venue. 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 defendant as the venue. [42] Eliminate the qualifying term principal and
the purpose of the Rule would, to borrow from Justice Regalado, be defeated where a nominal or formal party is

24

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. [43]

Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-17, Irene stands undisputedly as the principal
plaintiff, the real party-in-interest. Following Sec. 2 of Rule 4, the subject civil cases ought to be commenced and
prosecuted at the place where Irene resides.

Principal Plaintif not a Resident in Venue of Action

As earlier stated, no less than the RTC in Batac declared Irene as not a resident of Batac, Ilocos Norte. Withal,
that court was an improper venue for her conveyance action.

The Court can concede that Irenes three co-plaintiffs are all residents of Batac, Ilocos Norte. But it ought to be
stressed in this regard that not one of the three can be considered as principal party-plaintiffs in Civil Case Nos. 334117 and 3342-17, included as they were in the amended complaint as trustees of the principal plaintiff.

As trustees,

they may be accorded, by virtue of Sec. 3 of Rule 3, the right to prosecute a suit, but only on behalf of the beneficiary
who must be included in the title of the case and shall be deemed to be the real party-in-interest. In the final analysis,
the residences of Irenes co-plaintiffs cannot be made the basis in determining the venue of the subject suit. This
conclusion becomes all the more forceful considering that Irene herself initiated and was actively prosecuting her
claim against Benedicto, his heirs, assigns, or associates, virtually rendering the impleading of the trustees
unnecessary.

And this brings us to the final point. Irene was a resident during the period material of Forbes Park, Makati City.
She was not a resident of Brgy. Lacub, Batac, Ilocos Norte, although jurisprudence [44] has it that one can have several
residences, if such were the established fact. The Court will not speculate on 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. 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 stays with the RTC in Batac.

Litigants ought to bank on the righteousness of their causes, the superiority of their cases, and the
persuasiveness of arguments to secure a favorable verdict. It is high time that courts, judges, and those who come to
court for redress keep this ideal in mind.

WHEREFORE, the instant petition is hereby DISMISSED. The Decision and Resolution dated October 17,
2001 and June 20, 2002, respectively, of the CA in CA-G.R. SP No. 64246, insofar as they nullified the assailed orders of
the RTC, Branch 17 in Batac, Ilocos Norte in Civil Case Nos. 3341-17 and 3342-17 on the ground of lack of jurisdiction

25

due to improper venue, are hereby AFFIRMED. The Orders dated October 9, 2000, December 18, 2000, and March 15,
2001 of the RTC in Civil Case Nos. 3341-17 and 3342-17 are accordingly ANNULLED and SET ASIDE and said civil
cases are DISMISSED.
Costs against petitioners.

SO ORDERED.

EMERGENCY LOAN PAWNSHOP INCORPORATED and DANILO R. NAPALA, petitioners, vs. THE COURT OF
APPEALS (Tenth Division) and TRADERS ROYAL BANK, respondents.
DECISION
PARDO, J.:
May an appeal be taken from a decision of the Regional Trial Court denying a motion to dismiss the complaint on
the ground of improper venue? If not, will certiorari lie?

[1]

The case before the Court is a petition for review on certiorari assailing the decision of the Court of Appeals,
granting respondents petition for certiorari and dismissing the complaint below on the ground of improper venue.

On January 18, 1996, Traders Royal Bank (TRB for brevity) sold in favor of petitioner Emergency Loan Pawnshop
Incorporated (ELPI for brevity) a parcel of land located at Km. 3 Asin, Baguio City for Five Hundred Thousand Pesos
(P500,000.00).[2]
At the time of the sale, TRB misrepresented to ELPI that the subject property was a vacant residential lot valued
at P600.00 to P800.00 per square meters, with a usable land area of 1,143.75 square meters (approximately 75% of

26

the land area of 1,525 sq.m.) without any illegal occupants or squatters, when it truth the subject property was
dominantly a public road with only 140 square meters usable area.
ELPI, after having spent to fully ascertain the actual condition of the property, demanded from TRB the rescission
and cancellation of the sale of the property. TRB refused, hence, on April 16, 1996, ELPI filed with the Regional Trial
Court, Davao, Branch 17, a complaint for annulment of sale and damages against TRB. [3]
On August 27, 1996, TRB filed a Motion to Dismiss [4] the complaint on the ground of improper venue. On
September 18, 1996 the trial court denied the motion to dismiss. [5] On October 21, 1996, TRB filed a motion for
reconsideration.[6] On November 14, 1996, the trial court denied the motion. [7]
On January 15, 1997, TRB elevated the case to the Court of Appeals by petition for certiorari and prohibition with
preliminary injunction or temporary restraining order, contending that the trial court committed a grave abuse of
discretion in denying its motion to dismiss the complaint on the ground of improper venue. [8]
After due proceedings, on March 11, 1997, the Court of Appeals promulgated its decision, the dispositive portion
of which reads:
WHEREFORE, finding merit in the petition, the Orders dated September 18,1996 and November 14, 1996 are
hereby ANNULED and SET ASIDE and Civil Case No. 24,317-96 is hereby DISMISSEDon ground of improper
venue.[9]
Hence, this petition.[10]
Petitioners seek to set aside the decision of the Court of Appeals alleging that:
1. The Court of Appeals erred in entertaining the petition for certiorari and prohibition, for lack of jurisdiction;
2. The Court of Appeals erred in ruling that the Regional Trial Court erred in not dismissing the complaint for improper
venue.[11]
According to petitioners, the determination of whether the venue of an action was improperly laid was a question
of law, thus, the Court of Appeals had no jurisdiction to entertain the petition forcertiorari and prohibition, which
involves pure questions of law.
Petitioners further alleged that an order denying a motion to dismiss is interlocutory in nature that can not be the
subject of an appeal and can not be even reviewed by a special civil action for certiorari.
We find the petition not meritorious.
The general rule is that the denial of a motion to dismiss a complaint is an interlocutory order and, hence, cannot
be appealed or questioned via a special civil action of certiorari until a final judgment on the merits of the case is
rendered.[12]
The remedy of the aggrieved party is to file an answer to the complaint and to interpose as defenses the
objections raised in his motion to dismiss, proceed to trial, and in case of an adverse decision, to elevate the entire
case by appeal in due course. However, the rule is not ironclad. Under certain situations, recourse
to certiorari or mandamus is considered appropriate, that is, (a) when the trial court issued the order without or in
excess of jurisdiction; (b) where there is patent grave abuse of discretion by the trial court; or, (c) appeal would not
prove to be a speedy and adequate remedy as when an appeal would not promptly relieve a defendant from the
injurious effects of the patently mistaken order maintaining the plaintiffs baseless action and compelling the
defendant needlessly to go through a protracted trial and clogging the court dockets by another futile case." [13]
In the case at bar, we agree with the Court of Appeals that the trial court erred grievously amounting to ousting
itself of jurisdiction. The motion of respondent TRB was well founded because venue was clearly improperly laid. The
action in the Regional Trial Court was for annulment of sale involving a parcel of land located at Km. 3 Asin Road,
Baguio City. The venue of such action is unquestionably within the territorial jurisdiction of the proper court where the

27

real property or part thereof lies. [14] An action affecting title to real property, or for recovery of, or foreclosure of
mortgage on real property, shall be commenced and tried in the proper court having jurisdiction over the area where
the real property or any part thereof lies.[15]
Hence, the case at bar clearly falls within the exceptions to the rule. The Regional Trial Court has committed a
palpable and grievous error amounting to lack or excess of jurisdiction in denying the motion to dismiss the complaint
on the ground of improper venue.
WHEREFORE, the Court denies the petition and affirms the decision of the Court of Appeals in CA-G. R. SP No.
43095, in toto.
No costs.
SO ORDERED.

28

HYATT ELEVATORS AND

G.R. No. 161026

ESCALATORS CORPORATION,
Petitioner,

Present:

Panganiban, J.,
Chairman,
Sandoval-Gutierrez,
- versus -

Corona,
Carpio Morales, and
Garcia, JJ

GOLDSTAR ELEVATORS,

Promulgated:

PHILS., INC.,*
Respondent.

October 24, 2005

x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- x

DECISION

PANGANIBAN, J.:

Well established in our jurisprudence is the rule that the residence of a corporation is the place where its principal
office is located, as stated in its Articles of Incorporation.
The Case

29

Before us is a Petition for Review[1] on Certiorari, under Rule 45 of the Rules of Court, assailing the June 26,
2003 Decision[2] and the November 27, 2003 Resolution[3] of the Court of Appeals (CA) in CA-GR SP No. 74319. The
decretal portion of the Decision reads as follows:

WHEREFORE, in view of the foregoing, the assailed Orders dated May 27, 2002 and October
1, 2002 of the RTC, Branch 213, Mandaluyong City in Civil Case No. 99-600, are hereby SET ASIDE.
The said case is hereby ordered DISMISSED on the ground of improper venue.[4]

The assailed Resolution denied petitioners Motion for Reconsideration.

The Facts
The relevant facts of the case are summarized by the CA in this wise:

Petitioner [herein Respondent] Goldstar Elevator Philippines, Inc. (GOLDSTAR for brevity) is a
domestic corporation primarily engaged in the business of marketing, distributing, selling, importing,
installing, and maintaining elevators and escalators, with address at 6 th Floor, Jacinta II Building, 64
EDSA, Guadalupe, Makati City.

On the other hand, private respondent [herein petitioner] Hyatt Elevators and Escalators
Company (HYATT for brevity) is a domestic corporation similarly engaged in the business of selling,
installing and maintaining/servicing elevators, escalators and parking equipment, with address at the
6th Floor, Dao I Condominium, Salcedo St., Legaspi Village, Makati, as stated in its Articles of
Incorporation.

On February 23, 1999, HYATT filed a Complaint for unfair trade practices and damages under
Articles 19, 20 and 21 of the Civil Code of the Philippines against LG Industrial Systems Co. Ltd. (LGISC)
and LG International Corporation (LGIC), alleging among others, that: in 1988, it was appointed by LGIC
and LGISC as the exclusive distributor of LG elevators and escalators in the Philippines under a
Distributorship Agreement; x x x LGISC, in the latter part of 1996, made a proposal to change the
exclusive distributorship agency to that of a joint venture partnership; while it looked forward to a
healthy and fruitful negotiation for a joint venture, however, the various meetings it had with LGISC
and LGIC, through the latters representatives, were conducted in utmost bad faith and with
malevolent intentions; in the middle of the negotiations, in order to put pressures upon it, LGISC and
LGIC terminated the Exclusive Distributorship Agreement;
x x x [A]s a consequence, [HYATT]
suffered P120,000,000.00 as actual damages, representing loss of earnings and business
opportunities,P20,000,000.00 as damages for its reputation and goodwill, P1,000,000.00 as and by
way of exemplary damages, and P500,000.00 as and by way of attorneys fees.

30

On March 17, 1999, LGISC and LGIC filed a Motion to Dismiss raising the following grounds:
(1) lack of jurisdiction over the persons of defendants, summons not having been served on its
resident agent; (2) improper venue; and (3) failure to state a cause of action. The [trial] court denied
the said motion in an Order dated January 7, 2000.

On March 6, 2000, LGISC and LGIC filed an Answer with Compulsory Counterclaim ex
abundante cautela. Thereafter, they filed a Motion for Reconsideration and to Expunge Complaint
which was denied.

On December 4, 2000, HYATT filed a motion for leave of court to amend the complaint,
alleging that subsequent to the filing of the complaint, it learned that LGISC transferred all its
organization, assets and goodwill, as a consequence of a joint venture agreement with Otis Elevator
Company of the USA, to LG Otis Elevator Company (LG OTIS, for brevity). Thus, LGISC was to be
substituted or changed to LG OTIS, its successor-in-interest. Likewise, the motion averred that x x x
GOLDSTAR was being utilized by LG OTIS and LGIC in perpetrating their unlawful and unjustified acts
against HYATT. Consequently, in order to afford complete relief, GOLDSTAR was to be additionally
impleaded as a party-defendant. Hence, in the Amended Complaint, HYATT impleaded x x x GOLDSTAR
as a party-defendant, and all references to LGISC were correspondingly replaced with LG OTIS.

On December 18, 2000, LG OTIS (LGISC) and LGIC filed their opposition to HYATTs motion to
amend the complaint. It argued that: (1) the inclusion of GOLDSTAR as party-defendant would lead to a
change in the theory of the case since the latter took no part in the negotiations which led to the
alleged unfair trade practices subject of the case; and (b) HYATTs move to amend the complaint at
that time was dilatory, considering that HYATT was aware of the existence of GOLDSTAR for almost two
years before it sought its inclusion as party-defendant.

On January 8, 2001, the [trial] court admitted the Amended Complaint. LG OTIS (LGISC) and
LGIC filed a motion for reconsideration thereto but was similarly rebuffed on October 4, 2001.

On April 12, 2002, x x x GOLDSTAR filed a Motion to Dismiss the amended complaint, raising
the following grounds: (1) the venue was improperly laid, as neither HYATT nor defendants reside in
Mandaluyong City, where the original case was filed; and (2) failure to state a cause of action against
[respondent], since the amended complaint fails to allege with certainty what specific ultimate acts x x
x Goldstar performed in violation of x x x Hyatts rights. In the Order dated May 27, 2002, which is the
main subject of the present petition, the [trial] court denied the motion to dismiss, ratiocinating as
follows:

Upon perusal of the factual and legal arguments raised by the movantsdefendants, the court finds that these are substantially the same issues posed by the
then defendant LG Industrial System Co. particularly the matter dealing [with] the
issues of improper venue, failure to state cause of action as well as this courts lack of

31

jurisdiction. Under the circumstances obtaining, the court resolves to rule that the
complaint sufficiently states a cause of action and that the venue is properly laid. It is
significant to note that in the amended complaint, the same allegations are adopted as
in the original complaint with respect to the Goldstar Philippines to enable this court to
adjudicate a complete determination or settlement of the claim subject of the action it
appearing preliminarily as sufficiently alleged in the plaintiffs pleading that said
Goldstar Elevator Philippines Inc., is being managed and operated by the same Korean
officers of defendants LG-OTIS Elevator Company and LG International Corporation.

On June 11, 2002, [Respondent] GOLDSTAR filed a motion for reconsideration thereto. On June
18, 2002, without waiving the grounds it raised in its motion to dismiss, [it] also filed an Answer Ad
Cautelam. On October 1, 2002, [its] motion for reconsideration was denied.

From the aforesaid Order denying x x x Goldstars motion for reconsideration, it filed the x x x
petition for certiorari [before the CA] alleging grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the [trial] court in issuing the assailed Orders dated May 27, 2002 and
October 1, 2002.[5]

Ruling of the Court of Appeals

The CA ruled that the trial court had committed palpable error amounting to grave abuse of discretion when
the latter denied respondents Motion to Dismiss. The appellate court held that the venue was clearly improper,
because none of the litigants resided in Mandaluyong City, where the case was filed.

According to the appellate court, since Makati was the principal place of business of both respondent and
petitioner, as stated in the latters Articles of Incorporation, that place was controlling for purposes of determining the

32

proper venue. The fact that petitioner had abandoned its principal office in Makati years prior to the filing of the
original case did not affect the venue where personal actions could be commenced and tried.

Hence, this Petition.[6]

The Issue

In its Memorandum, petitioner submits this sole issue for our consideration:

Whether or not the Court of Appeals, in reversing the ruling of the Regional Trial Court, erred
as a matter of law and jurisprudence, as well as committed grave abuse of discretion, in holding that in
the light of the peculiar facts of this case, venue was improper[.] [7]

This Courts Ruling

The Petition has no merit.

Sole Issue:
Venue

The resolution of this case rests upon a proper understanding of Section 2 of Rule 4 of the 1997 Revised Rules
of Court:

33

Sec. 2. Venue of personal actions. All other actions may be commenced and tried where the
plaintiff or any of the principal plaintiff resides, or where the defendant or any of the principal
defendant resides, or in the case of a non-resident defendant where he may be found, at the election
of the plaintiff.

Since both parties to this case are corporations, there is a need to clarify the meaning of residence. The law
recognizes two types of persons: (1) natural and (2) juridical. Corporations come under the latter in accordance with
Article 44(3) of the Civil Code.[8]
Residence is the permanent home -- the place to which, whenever absent for business or pleasure, one intends
to return.[9] Residence is vital when dealing with venue. [10] A corporation, however, has no residence in the same
sense in which this term is applied to a natural person. This is precisely the reason why the Court in Young Auto
Supply Company v. Court of Appeals [11] ruled that for practical purposes, a corporation is in a metaphysical sense a
resident of the place where its principal office is located as stated in the articles of incorporation. [12] Even before this
ruling, it has already been established that the residence of a corporation is the place where its principal office is
established.[13]
This Court has also definitively ruled that for purposes of venue, the term residence is synonymous with
domicile.[14] Correspondingly, the Civil Code provides:

Art. 51. When the law creating or recognizing them, or any other provision does not fix the
domicile of juridical persons, the same shall be understood to be the place where their legal
representation is established or where they exercise their principal functions. [15]

It now becomes apparent that the residence or domicile of a juridical person is fixed by the law creating or
recognizing it. Under Section 14(3) of the Corporation Code, the place where the principal office of the corporation is
to be located is one of the required contents of the articles of incorporation, which shall be filed with the Securities and
Exchange Commission (SEC).
In the present case, there is no question as to the residence of respondent. What needs to be examined is that
of petitioner.

Admittedly,[16] the latters principal place of business is Makati, as indicated in its Articles of

Incorporation. Since the principal place of business of a corporation determines its residence or domicile, then the
place indicated in petitioners articles of incorporation becomes controlling in determining the venue for this case.

34

Petitioner argues that the Rules of Court do not provide that when the plaintiff is a corporation, the complaint
should be filed in the location of its principal office as indicated in its articles of incorporation. [17] Jurisprudence has,
however, settled that the place where the principal office of a corporation is located, as stated in the articles, indeed
establishes its residence.[18] This ruling is important in determining the venue of an action by or against a corporation,
[19]

as in the present case.

Without merit is the argument of petitioner that the locality stated in its Articles of Incorporation does not

conclusively indicate that its principal office is still in the same place. We agree with the appellate court in its
observation that the requirement to state in the articles the place where the principal office of the corporation is to be
located is not a meaningless requirement. That proviso would be rendered nugatory if corporations were to be
allowed to simply disregard what is expressly stated in their Articles of Incorporation. [20]
Inconclusive are the bare allegations of petitioner that it had closed its Makati office and relocated to
Mandaluyong City, and that respondent was well aware of those circumstances.

Assuming arguendo that they

transacted business with each other in the Mandaluyong office of petitioner, the fact remains that, in law, the latters
residence was still the place indicated in its Articles of Incorporation. Further unacceptable is its faulty reasoning that
the ground for the CAs dismissal of its Complaint was its failure to amend its Articles of Incorporation so as to reflect
its actual and present principal office. The appellate court was clear enough in its ruling that the Complaint was
dismissed because the venue had been improperly laid, not because of the failure of petitioner to amend the latters
Articles of Incorporation.
Indeed, it is a legal truism that the rules on the venue of personal actions are fixed for the convenience of the
plaintiffs and their witnesses. Equally settled, however, is the principle that choosing the venue of an action is not left
to a plaintiffs caprice; the matter is regulated by the Rules of Court. [21] Allowing petitioners arguments may lead
precisely to what this Court was trying to avoid in Young Auto Supply Company v. CA:[22] the creation of confusion and
untold inconveniences to party litigants. Thus enunciated the CA:

x x x. To insist that the proper venue is the actual principal office and not that stated in its
Articles of Incorporation would indeed create confusion and work untold inconvenience. Enterprising
litigants may, out of some ulterior motives, easily circumvent the rules on venue by the simple
expedient of closing old offices and opening new ones in another place that they may find well to suit
their needs.[23]
We find it necessary to remind party litigants, especially corporations, as follows:

35

The rules on venue, like the other procedural rules, are designed to insure a just and orderly
administration of justice or the impartial and evenhanded determination of every action and
proceeding. Obviously, this objective will not be attained if the plaintiff is given unrestricted freedom
to choose the court where he may file his complaint or petition.

The choice of venue should not be left to the plaintiffs whim or caprice. He may be impelled
by some ulterior motivation in choosing to file a case in a particular court even if not allowed by the
rules on venue.[24]

WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and Resolution AFFIRMED. Costs
against petitioner.

SO ORDERED.

G.R. No. L-28882 May 31, 1971

TIME, INC., petitioner,
vs.
HON. ANDRES REYES, as Judge of the Court of First Instance of Rizal, ELISEO S. ZARI, as Deputy Clerk of
Court, Branch VI, Court of First Instance of Rizal, ANTONIO J. VILLEGAS and JUAN PONCE
ENRILE,respondents.
Sycip, Salazar, Luna, Manalo & Feliciano for petitioner.
Angel C. Cruz Law Office for respondents.
REYES, J.B.L., J.:
Petition for certiorari and prohibition, with preliminary injunction, to annul certain orders of the respondent Court of
First Instance of Rizal, issued in its Civil Case No. 10403, entitled "Antonio J. Villegas and Juan Ponce Enrile vs. Time,
Inc., and Time-Life International, Publisher of 'Time' Magazine (Asia Edition)", and to prohibit the said court from further
proceeding with the said civil case.
Upon petitioner's posting a bond of P1,000.00, this Court, as prayed for, ordered, on 15 April 1968, the issuance of a
writ of preliminary injunction.
The petition alleges that petitioner Time, Inc., 1 is an American corporation with principal offices at Rocketfeller Center,
New York City, N. Y., and is the publisher of "Time", a weekly news magazine; the petition, however, does not allege the
petitioner's legal capacity to sue in the courts of the Philippine. 2
In the aforesaid Civil Case No. 10403, therein plaintiffs (herein respondents) Antonio J. Villegas and Juan Ponce Enrile
seek to recover from the herein petitioner damages upon an alleged libel arising from a publication of Time (Asia
Edition) magazine, in its issue of 18 August 1967, of an essay, entitled "Corruption in Asia", which, in part, reads, as
follows:
The problem of Manila's mayor, ANTONIO VILLEGAS, is a case in point. When it was discovered last
year that the mayor's coffers contained far more pesos than seemed reasonable in the light of his
income, an investigation was launched. Witnesses who had helped him out under curious circumstance

36

were asked to explain in court. One government official admitted lending Villegas P30,000 pesos
($7,700) without interest because he was the mayor's compadre. An assistant declared he had given
Villegas loans without collateral because he regarded the boss as my own son. A wealthy Manila
businessman testified that he had lent Villegas' wife 15,000 pesos because the mayor was like a
brother to me. With that, Villegas denounced the investigation as an invasion of his family's privacy.
The case was dismissed on a technicality, and Villegas is still mayor. 3
More specifically, the plaintiffs' complaint alleges, inter alia that:
(4) Defendants, conspiring and confederating, published a libelous article, publicly, falsely and
maliciously imputing to Plaintiffs the commission of the crimes of graft, corruption and nepotism; that
said publication particularly referred to Plaintiff Mayor Antonio J. Villegas as a case in point in
connection with graft, corruption and nepotism in Asia; that said publication without any doubt referred
to co-plaintiff Juan Ponce Enrile as the high government official who helped under curious
circumstances Plaintiff Mayor Antonio J. Villegas in lending the latter approximately P30,000.00
($7,700.00) without interest because he was the Mayor's compadre; that the purpose of said
Publications is to cause the dishonor, discredit and put in public contempt the Plaintiffs, particularly
Plaintiff Mayor Antonio J. Villegas.
On motion of the respondents-plaintiffs, the respondent judge, on 25 November 1967, granted them leave to take the
depositions "of Mr. Anthony Gonzales, Time-Life international", and "Mr. Cesar B. Enriquez, Muller & Phipps (Manila)
Ltd.", in connection with the activities and operations in the Philippines of the petitioner, and, on 27 November 1967,
issued a writ of attachment on the real and personal estate of Time, Inc.
Petitioner received the summons and a copy of the complaint at its offices in New York on 13 December 1967 and, on
27 December 1967, it filed a motion to dismiss the complaint for lack of jurisdiction and improper venue, relying upon
the provisions of Republic Act 4363. Private respondents opposed the motion.
In an order dated 26 February 1968, respondent court deferred the determination of the motion to dismiss until after
trial of the case on the merits, the court having considered that the grounds relied upon in the motion do not appear to
be indubitable.
Petitioner moved for reconsideration of the deferment private respondents again opposed.
On 30 March 1968, respondent judge issued an order re-affirming the previous order of deferment for the reason that
"the rule laid down under Republic Act. No. 4363, amending Article 360 of the Revised Penal Code, is not applicable to
actions against non-resident defendants, and because questions involving harassment and inconvenience, as well as
disruption of public service do not appear indubitable. ..."
Failing in its efforts to discontinue the taking of the depositions, previously adverted to, and to have action taken,
before trial, on its motion to dismiss, petitioner filed the instant petition for certiorari and prohibition.
The orders for the taking of the said depositions, for deferring determination of the motion to dismiss, and for
reaffirming the deferment, and the writ of attachment are sought to be annulled in the petition..
There is no dispute that at the time of the publication of the allegedly offending essay, private respondents Antonio
Villegas and Juan Ponce Enrile were the Mayor Of the City of Manila and Undersecretary of Finance and concurrently
Acting Commissioner of Customs, respectively, with offices in the City of Manila. The issues in this case are:
1. Whether or not, under the provisions of Republic Act No. 4363 the respondent Court of First Instance of Rizal has
jurisdiction to take cognizance of the civil suit for damages arising from an allegedly libelous publication, considering
that the action was instituted by public officers whose offices were in the City of Manila at the time of the publication;
if it has no jurisdiction, whether or not its erroneous assumption of jurisdiction may be challenged by a foreign
corporation by writ of certiorari or prohibition; and
2. Whether or not Republic Act 4363 is applicable to action against a foreign corporation or non-resident defendant.
Provisions of Republic Act No. 4363, which are relevant to the resolution of the foregoing issues, read, as follows:

37

Section 1. Article three hundred sixty of the Revised Penal Code, as amended by Republic Act
Numbered Twelve hundred and eighty-nine, is further amended to read as follows:
'ART. 360. Persons responsible. Any person who shall publish, exhibit, or cause the
publication or exhibition of any defamation in writing or by similar means, shall be
responsible for the same.
The author or editor of a book or pamphlet, or the editor or business manager of a daily newspaper,
magazine or serial publication, shall be responsible for the defamations contained therein to the extent
as if he were the author thereof.
The criminal and civil action for damages in cases of written defamations as provided for in this
chapter, shall be filed simultaneously or separately with the court of first instance of the province or
city where the libelous article is printed and first published or where any of the offended parties
actually resides at the time of the commission of the offense; Provided, however, That where one of
the offended parties is a public officer whose office is in the City of Manila at the time of the
commission of the offense, the action shall be filed in the Court of First Instance of the City of Manila or
of the city or province where the libelous article is printed and first published, and in case such public
officer does not hold office in the City of Manila, the action shall be filed in the Court of First Instance of
the province or city where he held office at the time of the commission of the offense or where the
libelous article is printed and first published and in case one of the offended parties is a private
individual, the action shall be filed in the Court of First Instance of the province or city where he
actually resides at the time of the commission of the offense or where the libelous matter is printed
and first published; Provided, further, That the civil action shall be filed in the same court where the
criminal action is filed and vice versa; Provided, furthermore, That the court where the criminal action
or civil action for damages is first filed, shall acquire jurisdiction to the exclusion of other courts; And
provided finally, That this amendment shall not apply to cases of written defamations, the civil and/or
criminal actions which have been filed in court at the time of the effectivity of the law
xxx xxx xxx
xxx xxx xxx
Sec. 3. This Act shall take effect only if and when, within thirty days from its approval, the
newspapermen in the Philippines shall organize, and elect the members of, a Philippine Press Council,
a private agency of the said newspapermen, whose function shall be to promulgate a Code of Ethics
for them and the Philippine press investigate violations thereof, and censure any newspaperman or
newspaper guilty of any violation of the said Code, and the fact that such Philippine Press Council has
been organized and its members have been duly elected in accordance herewith shall be ascertained
and proclaimed by the President of the Philippines.
Under the first proviso in section 1, the venue of a civil action for damages in cases of written defamations is localized
upon the basis of, first, whether the offended party or plaintiff is a public officer or a private individual; and second, if
he is a public officer, whether his office is in Manila or not in Manila, at the time of the commission of the offense. If the
offended party is a public officer in the office in the City of Manila, the proviso limits him to two (2) choices of venue,
namely, in the Court of First instance of the City of Manila or in the city or province where the libelous article is printed
and first published ..."
The complaint lodged in the court of Rizal by respondents does not allege that the libelous article was printed and first
published in the province of Rizal and, since the respondents-plaintiffs are public officers with offices in Manila at the
time of the commission of the alleged offense, it is clear that the only place left for them wherein to file their action, is
the Court of First Instance of Manila.
The limitation of the choices of venue, as introduced into the Penal Code through its amendments by Republic Act
4363, was intended "to minimize or limit the filing of out-of-town libel suits" to protect an alleged offender from
"hardships, inconveniences and harassments" and, furthermore, to protect "the interest of the public service" where
one of the offended parties is a public officer." 4 The intent, of the law is clear: a libeled public official might sue in the
court of the locality where he holds office, in order that the prosecution of the action should interfere as little as
possible with the discharge of his official duties and labors. The only alternative allowed him by law is to prosecute

38

those responsible for the libel in the place where the offending article was printed and first published. Here, the law
tolerates the interference with the libeled officer's duties only for the sake of avoiding unnecessary harassment of the
accused. Since the offending publication was not printed in the Philippines, the alternative venue was not open to
respondent Mayor Villegas of Manila and Undersecretary of Finance Enrile, who were the offended parties.
But respondents-plaintiffs argue that Republic Act No. 4363 is not applicable where the action is against non-existent
defendant, as petitioner Time, Inc., for several reasons. They urge that, in enacting Republic Act No. 4363, Congress
did not intend to protect non-resident defendants as shown by Section 3, which provides for the effectivity of the
statute only if and when the "newspapermen in the Philippines" have organized a "Philippine Press Council" whose
function shall be to promulgate a Code of Ethics for "them" and "the Philippine press"; and since a non-resident
defendant is not in a position to comply with the conditions imposed for the effectivity of the statute, such defendant
may not invoke its provisions; that a foreign corporation is not inconvenienced by an out-of-town libel suit; that it
would be absurd and incongruous, in the absence of an extradition treaty, for the law to give to public officers with
office in Manila the second option of filing a criminal case in the court of the place where the libelous article is printed
and first published if the defendant is a foreign corporation and that, under the "single publication" rule which
originated in the United States and imported into the Philippines, the rule was understood to mean that publications in
another state are not covered by venue statutes of the forum.
The implication of respondents' argument is that the law would not take effect as to non-resident defendants or
accused. We see nothing in the text of the law that would sustain such unequal protection to some of those who may
be charged with libel. The official proclamation that a Philippine Press Council has been organized is made a precondition to the effectivity of the entire Republic Act No. 4363, and no terms are employed therein to indicate that the
law can or will be effective only as to some, but not all, of those that may be charged with libeling our public officers.
The assertion that a foreign corporation or a non-resident defendant is not inconvenienced by an out-of-town suit is
irrelevant and untenable, for venue and jurisdiction are not dependent upon convenience or inconvenience to a party;
and moreover, venue was fixed under Republic Act No. 4363, pursuant to the basic policy of the law that is, as
previously stated, to protect the interest of the public service when the offended party is a public officer, by minimizing
as much as possible any interference with the discharge of his duties.
That respondents-plaintiffs could not file a criminal case for libel against a non-resident defendant does not make
Republic Act No. 4363 incongruous of absurd, for such inability to file a criminal case against a non-resident natural
person equally exists in crimes other than libel. It is a fundamental rule of international jurisdiction that no state can by
its laws, and no court which is only a creature of the state, can by its judgments or decrees, directly bind or affect
property or persons beyond the limits of the state. 5 Not only this, but if the accused is a corporation, no criminal action
can lie against it, 6 whether such corporation or resident or non-resident. At any rate, the case filed by respondentsplaintiffs is case for damages.
50 Am. Jur. 2d 659 differentiates the "multiple publication" and "single publication" rules (invoked by private
respondents) to be as follows:
The common law as to causes of action for tort arising out of a single publication was to the effect that
each communication of written or printed matter was a distinct and separate publication of a libel
contained therein, giving rise to a separate cause of action. This rule ('multiple publication' rule) is still
followed in several American jurisdictions, and seems to be favored by the American Law Institute.
Other jurisdictions have adopted the 'single publication' rule which originated in New York, under which
any single integrated publication, such as one edition of a newspaper, book, or magazine, or one
broadcast, is treated as a unit, giving rise to only one cause of action, regardless of the number of
times it is exposed to different people. ...
These rules are not pertinent in the present scheme because the number of causes of action that may be available to
the respondents-plaintiffs is not here in issue. We are here confronted by a specific venue statute, conferring
jurisdiction in cases of libel against Public officials to specified courts, and no other. The rule is that where a statute
creates a right and provides a remedy for its enforcement, the remedy is exclusive; and where it confers jurisdiction
upon a particular court, that jurisdiction is likewise exclusive, unless otherwise provided. Hence, the venue provisions
of Republic Act No. 4363 should be deemed mandatory for the party bringing the action, unless the question of venue
should be waived by the defendant, which was not the case here. Only thus can the policy of the Act be upheld and
maintained. Nor is there any reason why the inapplicability of one alternative venue should result in rendering the
other alternative, also inapplicable.

39

The dismissal of the present petition is asked on the ground that the petitioner foreign corporation failed to allege its
capacity to sue in the courts of the Philippines. Respondents rely on section 69 of the Corporation law, which provides:
SEC. 69. No foreign corporation or corporations formed, organized, or existing under any laws other
than those of the Philippines shall be permitted to ... maintain by itself or assignee any suit for the
recovery of any debt, claim, or demand whatever, unless it shall have the license prescribed in the
section immediately preceding. ..." ...;
They also invoke the ruling in Marshall-Wells Co. vs. Elser & Co., Inc. 7 that no foreign corporation may be permitted to
maintain any suit in the local courts unless it shall have the license required by the law, and the ruling in Atlantic
Mutual Ins. Co., Inc. vs. Cebu Stevedoring Co., Inc. 8 that "where ... the law denies to a foreign corporation the right to
maintain suit unless it has previously complied with a certain requirement, then such compliance or the fact that the
suing corporation is exempt therefrom, becomes a necessary averment in the complaint." We fail to see how these
doctrines can be a propos in the case at bar, since the petitioner is not "maintaining any suit" but is merely defending
one against itself; it did not file any complaint but only a corollary defensive petition to prohibit the lower court from
further proceeding with a suit that it had no jurisdiction to entertain.
Petitioner's failure to aver its legal capacity to institute the present petition is not fatal, for ...
A foreign corporation may, by writ of prohibition, seek relief against the wrongful assumption of
jurisdiction. And a foreign corporation seeking a writ of prohibition against further maintenance of a
suit, on the ground of want of jurisdiction in which jurisdiction is not bound by the ruling of the court in
which the suit was brought, on a motion to quash service of summons, that it has jurisdiction. 9
It is also advanced that the present petition is premature, since respondent court has not definitely ruled on the
motion to dismiss, nor held that it has jurisdiction, but only argument is untenable. The motion to dismiss was
predicated on the respondent court's lack of jurisdiction to entertain the action; and the rulings of this Court are that
writs of certiorari or prohibition, or both, may issue in case of a denial or deferment of action on such a motion to
dismiss for lack of jurisdiction.
If the question of jurisdiction were not the main ground for this petition for review by certiorari, it
would be premature because it seeks to have a review of an interlocutory order. But as it would be
useless and futile to go ahead with the proceedings if the court below had no jurisdiction this petition
was given due course.' (San Beda vs. CIR, 51 O.G. 5636, 5638).
'While it is true that action on a motion to dismiss may be deferred until the trial and an order to that
effect is interlocutory, still where it clearly appears that the trial judge or court is proceeding in excess
or outside of its jurisdiction, the remedy of prohibition would lie since it would be useless and a waste
of time to go ahead with the proceedings. (Philippine International Fair, Inc., et al. vs. Ibaez, et al., 50
Off. Gaz. 1036; Enrique v. Macadaeg, et al., 47 Off. Gaz. 1207; see also San Beda College vs. CIR, 51
Off. Gaz. 5636.)' (University of Sto. Tomas v. Villanueva, L-13748, 30 October 1959.).
Similarly, in Edward J. Nell Co. vs. Cubacub, L-20843, 23 June 1965, 14 SCRA 419, this Court held:
'.......................................................... It is a settledrule that the jurisdiction of a court over the subjectmatter is determined by the allegations in the complaint; and when a motion to dismiss is filed for lack
of jurisdiction those allegations are deemed admitted for purposes of such motion, so that it may be
resolved without waiting for the trial. Thus it has been held that the consideration thereof may not be
postponed in the hope that the evidence may yield other qualifying or concurring data which would
bring the case under the court's jurisdiction.'
To the same effect are the rulings in: Ruperto vs. Fernando, 83 Phil. 943; Administrator of Hacienda Luisita Estate vs.
Alberto, L-12133, 21 October 1958.
Summing up, We hold:
(1) The under Article 360 of the Revised Penal Code, as amended by Republic Act No. 4363, actions for damages by
public officials for libelous publications against them can only be filed in the courts of first instance ofthe city or

40

province where the offended functionary held office at the time ofthe commission of the offense, in case the libelous
article was first printed or published outside the Philippines.
(2) That the action of a court in refusing to rule, or deferring its ruling, on a motion to dismiss for lack of jurisdiction
over the subject matter, or for improper venue, is in excess of jurisdiction and correctable by writ of prohibition or
certiorari sued out in the appellate Court, even before trial on the merits is had.
WHEREFORE, the writs applied for are granted: the respondent Court of First Instance of Rizal is declared without
jurisdiction to take cognizance of its Civil Case No. 10403; and its orders issued in connection therewith are hereby
annulled and set aside,. Respondent court is further commanded to desist from further proceedings in Civil case No.
10403 aforesaid. Costs against private respondents, Antonio J. Villegas and Juan Ponce Enrile.
The writ of preliminary injunction heretofore issued by this Supreme Court is made permanent.

41

G.R. No. 190071

August 15, 2012

UNION BANK OF THE PHILIPPINES, Petitioner,

vs.
MAUNLAD HOMES, INC. and all other persons or entities claiming rights under it, Respondents.
VILLARAMA, JR.,*
DECISION
BRION, J.:
Before the Court is the petition for review on certiorari1 under Rule 45 of the Rules of Court filed by petitioner Union
Bank of the Philippines (Union Bank), assailing the decision dated October 28, 2009 2 of the Court of Appeals (CA) in
CA-G.R. SP No. 107772.
THE FACTS
Union Bank is the owner of a commercial complex located in Malolos, Bulacan, known as the Maunlad Shopping Mall.
Sometime in August 2002, Union Bank, as seller, and respondent Maunlad Homes, Inc. (Maunlad Homes), as buyer,
entered into a contract to sell3 involving the Maunlad Shopping Mall. The contract set the purchase price atP 151
million, P 2.4 million of which was to be paid by Maunlad Homes as down payment payable on or before July 5, 2002,
with the balance to be amortized over the succeeding 180-month period. 4 Under the contract, Union Bank authorized
Maunlad Homes to take possession of the property and to build or introduce improvements thereon. The parties also
agreed that if Maunlad Homes violates any of the provisions of the contract, all payments made will be applied as
rentals for the use and possession of the property, and all improvements introduced on the land will accrue in favor of
Union Bank.5 In the event of rescission due to failure to pay or to comply with the terms of the contract, Maunlad
Homes will be required to immediately vacate the property and must voluntarily turn possession over to Union Bank. 6
When Maunlad Homes failed to pay the monthly amortization, Union Bank sent the former a Notice of Rescission of
Contract7 dated February 5, 2003, demanding payment of the installments due within 30 days from receipt; otherwise,
it shall consider the contract automatically rescinded. Maunlad Homes failed to comply. Hence, on November 19, 2003,
Union Bank sent Maunlad Homes a letter demanding payment of the rentals due and requiring that the subject
property be vacated and its possession turned over to the bank. When Maunlad Homes continued to refuse, Union
Bank instituted an ejectment suit before the Metropolitan Trial Court (MeTC) of Makati City, Branch 64, on February 19,
2004. Maunlad Homes resisted the suit by claiming, among others, that it is the owner of the property as Union Bank
did not reserve ownership of the property under the terms of the contract. 8By virtue of its ownership, Maunlad Homes
claimed that it has the right to possess the property.
On May 18, 2005, the MeTC dismissed Union Banks ejectment complaint. 9 It found that Union Banks cause of action
was based on a breach of contract and that both parties are claiming a better right to possess the property based on
their respective claims of ownership of the property.
The MeTC ruled that the appropriate action to resolve these conflicting claims was an accion reivindicatoria, over
which it had no jurisdiction.
On appeal, the Regional Trial Court (RTC) of Makati City, Branch 139, affirmed the MeTC in its decision dated July 17,
2008;10 it agreed with the MeTC that the issues raised in the complaint extend beyond those commonly involved in an
unlawful detainer suit. The RTC declared that the case involved a determination of the rights of the parties under the
contract. Additionally, the RTC noted that the property is located in Malolos, Bulacan, but the ejectment suit was filed
by Union Bank in Makati City, based on the contract stipulation that "the venue of all suits and actions arising out or in
connection with the Contract to Sell shall be in Makati City." 11 The RTC ruled that the proper venue for the ejectment
action is in Malolos, Bulacan, pursuant to the second paragraph of Section 1, Rule 4 of the Rules of Court, which states:

42

Section 1. Venue of real actions. - Actions affecting title to or possession of real property, or interest therein, shall be
commenced and tried in the proper court which has jurisdiction over the area wherein the real property involved, or a
portion thereof, is situated.
Forcible entry and detainer actions shall be commenced and tried in the municipal trial court of the municipality or city
wherein the real property involved, or a portion thereof, is situated. [emphasis ours]
The RTC declared that Union Bank cannot rely on the waiver of venue provision in the contract because ejectment is
not an action arising out of or connected with the contract.
Union Bank appealed the RTC decision to the CA through a petition for review under Rule 42 of the Rules of Court. The
CA affirmed the RTC decision in its October 28, 2009 decision, 12 ruling that Union Banks claim of possession is based
on its claim of ownership which in turn is based on its interpretation of the terms and conditions of the contract,
particularly, the provision on the consequences of Maunlad Homes breach of contract. The CA determined that Union
Banks cause of action is premised on the interpretation and enforcement of the contract and the determination of the
validity of the rescission, both of which are matters beyond the jurisdiction of the MeTC. Therefore, it ruled that the
dismissal of the ejectment suit was proper. The CA, however, made no further ruling on the issue of venue of the
action.
From the CAs judgment, Union Bank appealed to the Court by filing the present petition for review on certiorariunder
Rule 45 of the Rules of Court.
THE PARTIES ARGUMENTS
Union Bank disagreed with the CAs finding that it is claiming ownership over the property through the ejectment
action. It claimed that it never lost ownership over the property despite the execution of the contract, since only the
right to possess was conceded to Maunlad Homes under the contract; Union Bank never transferred ownership of the
property to Maunlad Homes. Because of Maunlad Homes failure to comply with the terms of the contract, Union Bank
believes that it rightfully rescinded the sale, which rescission terminated Maunlad Homes right to possess the subject
property. Since Maunlad Homes failed to turn over the possession of the subject property, Union Bank believes that it
correctly instituted the ejectment suit.
The Court initially denied Union Banks petition in its Resolution dated March 17, 2010. 13 Upon motion for
reconsideration filed by Union Bank, the Court set aside its Resolution of March 17, 2010 (in a Resolution dated May
30, 201114) and required Maunlad Homes to comment on the petition.
Maunlad Homes contested Union Banks arguments, invoking the rulings of the lower courts. It considered Union
Banks action as based on the propriety of the rescission of the contract, which, in turn, is based on a determination of
whether Maunlad Homes indeed failed to comply with the terms of the contract; the propriety of the rescission,
however, is a question that is within the RTCs jurisdiction. Hence, Maunlad Homes contended that the dismissal of the
ejectment action was proper.
THE COURTS RULING
We find the petition meritorious.
The authority of the MeTC to
interpret contracts in an unlawful
detainer action
In any case involving the question of jurisdiction, the Court is guided by the settled doctrine that the jurisdiction of a
court is determined by the nature of the action pleaded by the litigant through the allegations in his complaint. 15
Unlawful detainer is an action to recover possession of real property from one who unlawfully withholds possession
after the expiration or termination of his right to hold possession under any contract, express or implied. The
possession of the defendant in unlawful detainer is originally legal but became illegal due to expiration or termination
of the right to possess.16 Under Section 1, Rule 70 of the Rules of Court, the action must be filed "within one (1) year

43

after the unlawful deprivation or withholding of possession." Thus, to fall within the jurisdiction of the MeTC, the
complaint must allege that
1. the defendant originally had lawful possession of the property, either by virtue of a contract or by tolerance
of the plaintiff; 2. eventually, the defendants possession of the property becameillegal or unlawful upon notice
by the plaintiff to defendant of the expiration or the termination of the defendants right of possession;
3. thereafter, the defendant remained in possession of the property and deprived the plaintiff the enjoyment
thereof; and
4. within one year from the unlawful deprivation or withholding of possession, the plaintiff instituted the
complaint for ejectment.17
Contrary to the findings of the lower courts, all four requirements were alleged in Union Banks Complaint. Union Bank
alleged that Maunlad Homes "maintained possession of the subject properties" pursuant to the Contract to
Sell.18 Maunlad Homes, however, "failed to faithfully comply with the terms of payment," prompting Union Bank to
"rescind the Contract to Sell in a Notice of Rescission dated February 5, 2003." 19 When Maunlad Homes "refused to turn
over and vacate the subject premises,"20 Union Bank sent another Demand Letter on November 19, 2003 to Maunlad
Homes requiring it (1) "[t]o pay the equivalent rentals-in-arrears as of October 2003 in the amount ofP 15,554,777.01
and monthly thereafter until the premises are fully vacated and turned over" to Union Bank, and (2) to vacate the
property peacefully and turn over possession to Union Bank. 21 As the demand went unheeded, Union Bank instituted
an action for unlawful detainer before the MeTC on February 19, 2004, within one year from the date of the last
demand. These allegations clearly demonstrate a cause of action for unlawful detainer and vested the MeTC
jurisdiction over Union Banks action.
Maunlad Homes denied Union Banks claim that its possession of the property had become unlawful. It argued that its
failure to make payments did not terminate its right to possess the property because it already acquired ownership
when Union Bank failed to reserve ownership of the property under the contract. Despite Maunlad Homes claim of
ownership of the property, the Court rules that the MeTC retained its jurisdiction over the action; a defendant may not
divest the MeTC of its jurisdiction by merely claiming ownership of the property. 22 Under Section 16, Rule 70 of the
Rules of Court, "when the defendant raises the defense of ownership in his pleadings and the question of possession
cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine
the issue of possession." Section 18, Rule 70 of the Rules of Court, however, states that "the judgment x x x shall be
conclusive with respect to the possession only and shall in no wise bind the title or affect the ownership of the land or
building."
The authority granted to the MeTC to preliminarily resolve the issue of ownership to determine the issue of possession
ultimately allows it to interpret and enforce the contract or agreement between the plaintiff and the defendant. To
deny the MeTC jurisdiction over a complaint merely because the issue of possession requires the interpretation of a
contract will effectively rule out unlawful detainer as a remedy. As stated, in an action for unlawful detainer, the
defendants right to possess the property may be by virtue of a contract, express or implied; corollarily, the
termination of the defendants right to possess would be governed by the terms of the same contract. Interpretation of
the contract between the plaintiff and the defendant is inevitable because it is the contract that initially granted the
defendant the right to possess the property; it is this same contract that the plaintiff subsequently claims was violated
or extinguished, terminating the defendants right to possess. We ruled in Sps. Refugia v. CA23 that
where the resolution of the issue of possession hinges on a determination of the validity and interpretation of the
document of title or any other contract on which the claim of possession is premised, the inferior court may likewise
pass upon these issues.
The MeTCs ruling on the rights of the parties based on its interpretation of their contract is, of course, not conclusive,
but is merely provisional and is binding only with respect to the issue of possession.
Thus, despite the CAs opinion that Union Banks "case involves a determination of the rights of the parties under the
Contract to Sell,"24 it is not precluded from resolving this issue. Having acquired jurisdiction over Union Banks action,
the MeTC can resolve the conflicting claims of the parties based on the facts presented and proved.

44

The right to possess the property was

extinguished when the contract to
sell failed to materialize
Maunlad Homes acquired possession of the property based on its contract with Union Bank. While admitting that it
suspended payment of the installments,25 Maunlad Homes contended that the suspension of payment did not affect its
right to possess the property because its contract with Union Bank was one of sale and not to sell; hence, ownership of
the
property has been transferred to it, allowing it to retain possession notwithstanding nonpayment of installments. The
terms of the contract, however, do not support this conclusion.
Section 11 of the contract between Union Bank and Maunlad Homes provides that "upon payment in full of the
Purchase Price of the Property x x x, the SELLER shall execute and deliver a Deed of Absolute Sale conveying the
Property to the BUYER."26 "Jurisprudence has established that where the seller promises to execute a deed of absolute
sale upon the completion by the buyer of the payment of the price, the contract is only a contract to sell." 27 The
presence of this provision generally identifies the contract as being a mere contract to sell. 28 After reviewing the terms
of the contract between Union Bank and Maunlad Homes, we find no reasonable ground to exempt the present case
from the general rule; the contract between Union Bank and Maunlad Homes is a contract to sell.
In a contract to sell, the full payment of the purchase price is a positive suspensive condition whose non-fulfillment is
not a breach of contract, but merely an event that prevents the seller from conveying title to the purchaser. "The nonpayment of the purchase price renders the contract to sell ineffective and without force and effect." 29Maunlad Homes
act of withholding the installment payments rendered the contract ineffective and without force and effect, and
ultimately deprived itself of the right to continue possessing Maunlad Shopping Mall.
The propriety of filing the unlawful
detainer action in Makati City
pursuant to the venue stipulation in
the contract
Maunlad Homes questioned the venue of Union Banks unlawful detainer action which was filed in Makati City while the
contested property is located in Malolos, Bulacan. Citing Section 1, Rule 4 of the Rules of Court, Maunlad Homes
claimed that the unlawful detainer action should have been filed with the municipal trial court of the municipality or
city where the real property involved is situated. Union Bank, on the other hand, justified the filing of the complaint
with the MeTC of Makati City on the venue stipulation in the contract which states that "the venue of all suits and
actions arising out of or in connection with this Contract to Sell shall be at Makati City." 30
While Section 1, Rule 4 of the Rules of Court states that ejectment actions shall be filed in "the municipal trial court of
the municipality or city wherein the real property involved x x x is situated," Section 4 of the same Rule provides that
the rule shall not apply "where the parties have validly agreed in writing before the filing of the action on the exclusive
venue thereof." Precisely, in this case, the parties provided for a different venue. In Villanueva v. Judge Mosqueda, etc.,
et al.,31 the Court upheld the validity of a stipulation in a contract providing for a venue for ejectment actions other
than that stated in the Rules of Court. Since the unlawful detainer action is connected with the contract, Union Bank
rightfully filed the complaint with the MeTC of Makati City.
WHEREFORE, we hereby GRANT the petition and SET ASIDE the decision dated October 28, 2009 of the Court of
Appeals in CA-G.R. SP No. 107772. Respondent Maunlad Homes, Inc. is ORDERED TO VACATE the Maunlad Shopping
Mall, the property subject of the case, immediately upon the finality of this Decision. Respondent Maunlad Homes, Inc.
is further ORDERED TO PAY the rentals-in-arrears, as well as rentals accruing in the interim until it vacates the
property.
The case is REMANDED to the Metropolitan Trial Court of Makati City, Branch 64, to determine the amount of rentals
due. In addition to the amount determined as unpaid rent, respondent Maunlad Homes, Inc. is ORDERED TO PAY legal
interest of six percent (6o/o) per annum, from November 19, 2003, when the demand to pay and to vacate was made,
up to the finality of this Decision. Thereafter, an interest of twelve percent ( 12%) per annum shall be imposed on the
total amount due until full payment is made.
SO ORDERED.

45

G. R. No. 156966

May 7, 2004

PILIPINO TELEPHONE CORPORATION, petitioner,

vs.
DELFINO TECSON, respondent.
DECISION
VITUG, J.:
The facts, by and large, are undisputed.
On various dates in 1996, Delfino C. Tecson applied for six (6) cellular phone subscriptions with petitioner Pilipino
Telephone Corporation (PILTEL), a company engaged in the telecommunications business, which applications were
each approved and covered, respectively, by six mobiline service agreements.
On 05 April 2001, respondent filed with the Regional Trial Court of Iligan City, Lanao Del Norte, a complaint against
petitioner for a "Sum of Money and Damages." Petitioner moved for the dismissal of the complaint on the ground of
improper venue, citing a common provision in the mobiline service agreements to the effect that "Venue of all suits arising from this Agreement or any other suit directly or indirectly arising from the
relationship between PILTEL and subscriber shall be in the proper courts of Makati, Metro Manila. Subscriber
hereby expressly waives any other venues."1

46

In an order, dated 15 August 2001, the Regional Trial Court of Iligan City, Lanao del Norte, denied petitioners motion
to dismiss and required it to file an answer within 15 days from receipt thereof.
Petitioner PILTEL filed a motion for the reconsideration, through registered mail, of the order of the trial court. In its
subsequent order, dated 08 October 2001, the trial court denied the motion for reconsideration.
Petitioner filed a petition for certiorari under Rule 65 of the Revised Rules of Civil Procedure before the Court of
Appeals.
The Court of Appeals, in its decision of 30 April 2002, saw no merit in the petition and affirmed the assailed orders of
the trial court. Petitioner moved for a reconsideration, but the appellate court, in its order of 21 January 2003, denied
the motion.
There is merit in the instant petition.
Section 4, Rule 4, of the Revised Rules of Civil Procedure 2 allows the parties to agree and stipulate in writing, before
the filing of an action, on the exclusive venue of any litigation between them. Such an agreement would be valid and
binding provided that the stipulation on the chosen venue is exclusive in nature or in intent, that it is expressed in
writing by the parties thereto, and that it is entered into before the filing of the suit. The provision contained in
paragraph 22 of the "Mobile Service Agreement," a standard contract made out by petitioner PILTEL to its subscribers,
apparently accepted and signed by respondent, states that the venue of all suits arising from the agreement, or any
other suit directly or indirectly arising from the relationship between PILTEL and subscriber, "shall be in the proper
courts of Makati, Metro Manila." The added stipulation that the subscriber "expressly waives any other venue" 3 should
indicate, clearly enough, the intent of the parties to consider the venue stipulation as being preclusive in character.
The appellate court, however, would appear to anchor its decision on the thesis that the subscription agreement, being
a mere contract of adhesion, does not bind respondent on the venue stipulation.
Indeed, the contract herein involved is a contract of adhesion. But such an agreement is not per se inefficacious. The
rule instead is that, should there be ambiguities in a contract of adhesion, such ambiguities are to be construed
against the party that prepared it. If, however, the stipulations are not obscure, but are clear and leave no doubt on
the intention of the parties, the literal meaning of its stipulations must be held controlling. 4
A contract of adhesion is just as binding as ordinary contracts. It is true that this Court has, on occasion, struck down
such contracts as being assailable when the weaker party is left with no choice by the dominant bargaining party and
is thus completely deprived of an opportunity to bargain effectively. Nevertheless, contracts of adhesion are not
prohibited even as the courts remain careful in scrutinizing the factual circumstances underlying each case to
determine the respective claims of contending parties on their efficacy.
In the case at bar, respondent secured six (6) subscription contracts for cellular phones on various dates. It would be
difficult to assume that, during each of those times, respondent had no sufficient opportunity to read and go over the
terms and conditions embodied in the agreements. Respondent continued, in fact, to acquire in the pursuit of his
business subsequent subscriptions and remained a subscriber of petitioner for quite sometime.
In Development Bank of the Philippines vs. National Merchandising Corporation,5 the contracting parties, being of age
and businessmen of experience, were presumed to have acted with due care and to have signed the assailed
documents with full knowledge of their import. The situation would be no less true than that which obtains in the
instant suit. The circumstances in Sweet Lines, Inc. vs. Teves,6 wherein this Court invalidated the venue stipulation
contained in the passage ticket, would appear to be rather peculiar to that case. There, the Court took note of an acute
shortage in inter-island vessels that left passengers literally scrambling to secure accommodations and tickets from
crowded and congested counters. Hardly, therefore, were the passengers accorded a real opportunity to examine the
fine prints contained in the tickets, let alone reject them.
A contract duly executed is the law between the parties, and they are obliged to comply fully and not selectively with
its terms. A contract of adhesion is no exception. 7
WHEREFORE, the instant petition is GRANTED, and the questioned decision and resolution of the Court of Appeals in
CA-G.R. SP No. 68104 are REVERSED and SET ASIDE. Civil Case No. 5572 pending before the Regional Trial Court of

47

Iligan City, Branch 4, is DISMISSED without prejudice to the filing of an appropriate complaint by respondent against
petitioner with the court of proper venue. No costs.
SO ORDERED.

SPOUSES HERMES P. OCHOA and ARACELI D.

OCHOA,
Petitioners,

- versus -

G.R. No. 192877

Present:
CARPIO, J.,
Chairperson,
NACHURA,
BRION,*
PERALTA, and
ABAD, JJ.
Promulgated:

CHINA BANKING CORPORATION,

Respondent.

March 23, 2011

x------------------------------------------------------------------------------------x
RESOLUTION

48

NACHURA, J.:

For resolution is petitioners motion for reconsideration [1] of our January 17, 2011 Resolution [2] denying their
petition for review on certiorari[3] for failing to sufficiently show any reversible error in the assailed judgment [4] of the
Court of Appeals (CA).

Petitioners insist that it was error for the CA to rule that the stipulated exclusive venue of Makati City is binding
only

on

petitioners

complaint

for Annulment

of

Foreclosure, Sale,

and

Damages filed

before

the Regional Trial Court of Paraaque City, but not on respondent banks Petition for Extrajudicial Foreclosure of
Mortgage, which was filed with the same court.

We disagree.

The extrajudicial foreclosure sale of a real estate mortgage is governed by Act No. 3135, as amended by Act No.
4118, otherwise known as "An Act to Regulate the Sale of Property Under Special Powers Inserted In or Annexed to
Real-Estate Mortgages." Sections 1 and 2 thereof clearly state:
Section 1. When a sale is made under a special power inserted in or attached to any realestate mortgage hereafter made as security for the payment of money or the fulfillment of any other
obligation, the provisions of the following sections shall govern as to the manner in which the sale and
redemption shall be effected, whether or not provision for the same is made in the power.
Sec. 2. Said sale cannot be made legally outside of the province in which the property sold is
situated; and in case the place within said province in which the sale is to be made is the subject of
stipulation, such sale shall be made in said place or in the municipal building of the municipality in
which the property or part thereof is situated.[5]

The case at bar involves petitioners mortgaged real property located in Paraaque City over which respondent
bank was granted a special power to foreclose extra-judicially. Thus, by express provision of Section 2, the sale can
only be made in Paraaque City.

The exclusive venue of Makati City, as stipulated by the parties[6] and sanctioned by Section 4, Rule 4 of the
Rules of Court,[7] cannot be made to apply to the Petition for Extrajudicial Foreclosure filed by respondent bank
because the provisions of Rule 4 pertain to venue of actions, which an extrajudicial foreclosure is not.

Pertinent are the following disquisitions in Supena v. De la Rosa:[8]

Section 1, Rule 2 [of the Rules of Court] defines an action in this wise:

49

"Action means an ordinary suit in a court of justice, by which one party

prosecutes another for the enforcement or protection of a right, or the prevention or
redress of a wrong."
Hagans v. Wislizenus does not depart from this definition when it states that "[A]n action is a formal
demand of one's legal rights in a court of justice in the manner prescribed by the court or by the law. x
x x." It is clear that the determinative or operative fact which converts a claim into an "action or suit"
is the filing of the same with a "court of justice." Filed elsewhere, as with some other body or office not
a court of justice, the claim may not be categorized under either term. Unlike an action, an
extrajudicial foreclosure of real estate mortgage is initiated by filing a petition not with any court of
justice but with the office of the sheriff of the province where the sale is to be made. By no stretch of
the imagination can the office of the sheriff come under the category of a court of justice. And as aptly
observed by the complainant, if ever the executive judge comes into the picture, it is only because he
exercises administrative supervision over the sheriff. But this administrative supervision, however,
does not change the fact that extrajudicial foreclosures are not judicial proceedings, actions or suits. [9]

50

These pronouncements were confirmed on August 7, 2001 through A.M. No. 99-10-05-0, entitled Procedure in
Extra-Judicial Foreclosure of Mortgage, the significant portions of which provide:
In line with the responsibility of an Executive Judge under Administrative Order No. 6,
date[d] June 30, 1975, for the management of courts within his administrative area, included
in which is the task of supervising directly the work of the Clerk of Court, who is also the
Ex-Office Sherif, and his staff, and the issuance of commissions to notaries public and enforcement
of their duties under the law, the following procedures are hereby prescribed in extra-judicial
foreclosure of mortgages:
1. All applications for extrajudicial foreclosure of mortgage whether under the
direction of the sheriff or a notary public, pursuant to Act 3135, as amended by Act
4118, and Act 1508, as amended, shall be filed with the Executive Judge, through the
Clerk of Court who is also the Ex-Officio Sheriff.

Verily then, with respect to the venue of extrajudicial foreclosure sales, Act No. 3135, as amended, applies, it
being a special law dealing particularly with extrajudicial foreclosure sales of real estate mortgages, and not the
general provisions of the Rules of Court on Venue of Actions.

Consequently, the stipulated exclusive venue of Makati City is relevant only to actions arising from or related
to the mortgage, such as petitioners complaint forAnnulment of Foreclosure, Sale, and Damages.

The other arguments raised in the motion are a mere reiteration of those already raised in the petition for
review. As declared in this Courts Resolution on January 17, 2011, the same failed to show any sufficient ground to
warrant the exercise of our appellate jurisdiction.

WHEREFORE, premises considered, the motion for reconsideration is hereby DENIED.

SO ORDERED.

51

G.R. No. 170281

January 18, 2008

REPUBLIC OF THE PHILIPPINES, represented by the ANTI-MONEY LAUNDERING COUNCIL, petitioner,

vs.
GLASGOW CREDIT AND COLLECTION SERVICES, INC. and CITYSTATE SAVINGS BANK, INC., respondents.
DECISION
CORONA, J.:
This is a petition for review1 of the order2 dated October 27, 2005 of the Regional Trial Court (RTC) of Manila, Branch
47, dismissing the complaint for forfeiture3 filed by the Republic of the Philippines, represented by the Anti-Money
Laundering Council (AMLC) against respondents Glasgow Credit and Collection Services, Inc. (Glasgow) and Citystate
Savings Bank, Inc. (CSBI).
On July 18, 2003, the Republic filed a complaint in the RTC Manila for civil forfeiture of assets (with urgent plea for
issuance of temporary restraining order [TRO] and/or writ of preliminary injunction) against the bank deposits in
account number CA-005-10-000121-5 maintained by Glasgow in CSBI. The case, filed pursuant to RA 9160 (the AntiMoney Laundering Act of 2001), as amended, was docketed as Civil Case No. 03-107319.
Acting on the Republics urgent plea for the issuance of a TRO, the executive judge 4 of RTC Manila issued a 72-hour
TRO dated July 21, 2003. The case was thereafter raffled to Branch 47 and the hearing on the application for issuance
of a writ of preliminary injunction was set on August 4, 2003.
After hearing, the trial court (through then Presiding Judge Marivic T. Balisi-Umali) issued an order granting the
issuance of a writ of preliminary injunction. The injunctive writ was issued on August 8, 2003.
Meanwhile, summons to Glasgow was returned "unserved" as it could no longer be found at its last known address.
On October 8, 2003, the Republic filed a verified omnibus motion for (a) issuance of alias summons and (b) leave of
court to serve summons by publication. In an order dated October 15, 2003, the trial court directed the issuance
of alias summons. However, no mention was made of the motion for leave of court to serve summons by publication.
In an order dated January 30, 2004, the trial court archived the case allegedly for failure of the Republic to serve
the alias summons. The Republic filed an ex parte omnibus motion to (a) reinstate the case and (b) resolve its pending
motion for leave of court to serve summons by publication.
In an order dated May 31, 2004, the trial court ordered the reinstatement of the case and directed the Republic to
serve the alias summons on Glasgow and CSBI within 15 days. However, it did not resolve the Republics motion for
leave of court to serve summons by publication declaring:
Until and unless a return is made on the alias summons, any action on [the Republics] motion for leave of
court to serve summons by publication would be untenable if not premature.
On July 12, 2004, the Republic (through the Office of the Solicitor General [OSG]) received a copy of the sheriffs return
dated June 30, 2004 stating that the alias summons was returned "unserved" as Glasgow was no longer holding office
at the given address since July 2002 and left no forwarding address.
Meanwhile, the Republics motion for leave of court to serve summons by publication remained unresolved. Thus, on
August 11, 2005, the Republic filed a manifestation and ex parte motion to resolve its motion for leave of court to
serve summons by publication.
On August 12, 2005, the OSG received a copy of Glasgows "Motion to Dismiss (By Way of Special Appearance)" dated
August 11, 2005. It alleged that (1) the court had no jurisdiction over its person as summons had not yet been served

52

on it; (2) the complaint was premature and stated no cause of action as there was still no conviction for estafa or other
criminal violations implicating Glasgow and (3) there was failure to prosecute on the part of the Republic.
The Republic opposed Glasgows motion to dismiss. It contended that its suit was an action quasi in rem where
jurisdiction over the person of the defendant was not a prerequisite to confer jurisdiction on the court. It asserted that
prior conviction for unlawful activity was not a precondition to the filing of a civil forfeiture case and that its complaint
alleged ultimate facts sufficient to establish a cause of action. It denied that it failed to prosecute the case.
On October 27, 2005, the trial court issued the assailed order. It dismissed the case on the following grounds: (1)
improper venue as it should have been filed in the RTC of Pasig where CSBI, the depository bank of the account sought
to be forfeited, was located; (2) insufficiency of the complaint in form and substance and (3) failure to prosecute. It
lifted the writ of preliminary injunction and directed CSBI to release to Glasgow or its authorized representative the
funds in CA-005-10-000121-5.
Raising questions of law, the Republic filed this petition.
On November 23, 2005, this Court issued a TRO restraining Glasgow and CSBI, their agents, representatives and/or
persons acting upon their orders from implementing the assailed October 27, 2005 order. It restrained Glasgow from
removing, dissipating or disposing of the funds in account no. CA-005-10-000121-5 and CSBI from allowing any
transaction on the said account.
The petition essentially presents the following issue: whether the complaint for civil forfeiture was correctly dismissed
on grounds of improper venue, insufficiency in form and substance and failure to prosecute.
The Court agrees with the Republic.
The Complaint Was Filed
In The Proper Venue
In its assailed order, the trial court cited the grounds raised by Glasgow in support of its motion to dismiss:
1. That this [c]ourt has no jurisdiction over the person of Glasgow considering that no [s]ummons has been
served upon it, and it has not entered its appearance voluntarily;
2. That the [c]omplaint for forfeiture is premature because of the absence of a prior finding by any tribunal
that Glasgow was engaged in unlawful activity: [i]n connection therewith[,] Glasgow argues that the
[c]omplaint states no cause of action; and
3. That there is failure to prosecute, in that, up to now, summons has yet to be served upon Glasgow. 5
But inasmuch as Glasgow never questioned the venue of the Republics complaint for civil forfeiture against it, how
could the trial court have dismissed the complaint for improper venue? In Dacoycoy v. Intermediate Appellate
Court6 (reiterated in Rudolf Lietz Holdings, Inc. v. Registry of Deeds of Paraaque City),7 this Court ruled:
The motu proprio dismissal of petitioners complaint by [the] trial court on the ground of improper
venue is plain error. (emphasis supplied)
At any rate, the trial court was a proper venue.
On November 15, 2005, this Court issued A.M. No. 05-11-04-SC, the Rule of Procedure in Cases of Civil Forfeiture, Asset
Preservation, and Freezing of Monetary Instrument, Property, or Proceeds Representing, Involving, or Relating to an
Unlawful Activity or Money Laundering Offense under RA 9160, as amended (Rule of Procedure in Cases of Civil
Forfeiture). The order dismissing the Republics complaint for civil forfeiture of Glasgows account in CSBI has not yet
attained finality on account of the pendency of this appeal. Thus, the Rule of Procedure in Cases of Civil Forfeiture
applies to the Republics complaint.8 Moreover, Glasgow itself judicially admitted that the Rule of Procedure in Cases of
Civil Forfeiture is "applicable to the instant case."9

53

Section 3, Title II (Civil Forfeiture in the Regional Trial Court) of the Rule of Procedure in Cases of Civil Forfeiture
provides:
Sec. 3. Venue of cases cognizable by the regional trial court. A petition for civil forfeiture shall be filed in any
regional trial court of the judicial region where the monetary instrument, property or proceeds
representing, involving, or relating to an unlawful activity or to a money laundering ofense are
located; provided, however, that where all or any portion of the monetary instrument, property or proceeds is
located outside the Philippines, the petition may be filed in the regional trial court in Manila or of the judicial
region where any portion of the monetary instrument, property, or proceeds is located, at the option of the
petitioner. (emphasis supplied)
Under Section 3, Title II of the Rule of Procedure in Cases of Civil Forfeiture, therefore, the venue of civil forfeiture
cases is any RTC of the judicial region where the monetary instrument, property or proceeds representing, involving, or
relating to an unlawful activity or to a money laundering offense are located. Pasig City, where the account sought to
be forfeited in this case is situated, is within the National Capital Judicial Region (NCJR). Clearly, the complaint for civil
forfeiture of the account may be filed in any RTC of the NCJR. Since the RTC Manila is one of the RTCs of the NCJR, 10 it
was a proper venue of the Republics complaint for civil forfeiture of Glasgows account.
The Complaint Was Sufficient In Form And Substance
In the assailed order, the trial court evaluated the Republics complaint to determine its sufficiency in form and
substance:
At the outset, this [c]ourt, before it proceeds, takes the opportunity to examine the [c]omplaint and determine
whether it is sufficient in form and substance.
Before this [c]ourt is a [c]omplaint for Civil Forfeiture of Assets filed by the [AMLC], represented by the Office of
the Solicitor General[,] against Glasgow and [CSBI] as necessary party. The [c]omplaint principally alleges the
following:
(a) Glasgow is a corporation existing under the laws of the Philippines, with principal office address at Unit 703,
7th Floor, Citystate Center [Building], No. 709 Shaw Boulevard[,] Pasig City;
(b) [CSBI] is a corporation existing under the laws of the Philippines, with principal office at Citystate Center
Building, No. 709 Shaw Boulevard, Pasig City;
(c) Glasgow has funds in the amount of P21,301,430.28 deposited with [CSBI], under CA 005-10-000121-5;
(d) As events have proved, aforestated bank account is related to the unlawful activities of Estafa and violation
of Securities Regulation Code;
(e) The deposit has been subject of Suspicious Transaction Reports;
(f) After appropriate investigation, the AMLC issued Resolutions No. 094 (dated July 10, 2002), 096 (dated July
12, 2002), 101 (dated July 23, 2002), and 108 (dated August 2, 2002), directing the issuance of freeze orders
against the bank accounts of Glasgow;
(g) Pursuant to said AMLC Resolutions, Freeze Orders Nos. 008-010, 011 and 013 were issued on different
dates, addressed to the concerned banks;
(h) The facts and circumstances plainly showing that defendant Glasgows bank account and deposit are
related to the unlawful activities of Estafa and violation of Securities Regulation Code, as well as to a money
laundering offense [which] [has] been summarized by the AMLC in its Resolution No. 094; and
(i) Because defendant Glasgows bank account and deposits are related to the unlawful activities of Estafa and
violation of Securities Regulation Code, as well as [to] money laundering offense as aforestated, and being the

54

subject of covered transaction reports and eventual freeze orders, the same should properly be forfeited in
favor of the government in accordance with Section 12, R.A. 9160, as amended. 11
In a motion to dismiss for failure to state a cause of action, the focus is on the sufficiency, not the veracity, of the
material allegations.12 The determination is confined to the four corners of the complaint and nowhere else. 13
In a motion to dismiss a complaint based on lack of cause of action, the question submitted to the court for
determination is the sufficiency of the allegations made in the complaint to constitute a cause of action and
not whether those allegations of fact are true, for said motion must hypothetically admit the truth of the facts
alleged in the complaint.
The test of the sufficiency of the facts alleged in the complaint is whether or not, admitting the
facts alleged, the court could render a valid judgment upon the same in accordance with the
prayer of the complaint.14 (emphasis ours)
In this connection, Section 4, Title II of the Rule of Procedure in Cases of Civil Forfeiture provides:
Sec. 4. Contents of the petition for civil forfeiture. - The petition for civil forfeiture shall be verified and contain
the following allegations:
(a) The name and address of the respondent;
(b) A description with reasonable particularity of the monetary instrument, property, or proceeds, and
their location; and
(c) The acts or omissions prohibited by and the specific provisions of the Anti-Money Laundering Act,
as amended, which are alleged to be the grounds relied upon for the forfeiture of the monetary
instrument, property, or proceeds; and
[(d)] The reliefs prayed for.
Here, the verified complaint of the Republic contained the following allegations:
(a) the name and address of the primary defendant therein, Glasgow;15
(b) a description of the proceeds of Glasgows unlawful activities with particularity, as well as the location
thereof, account no. CA-005-10-000121-5 in the amount of P21,301,430.28 maintained with CSBI;
(c) the acts prohibited by and the specific provisions of RA 9160, as amended, constituting the grounds for the
forfeiture of the said proceeds. In particular, suspicious transaction reports showed that Glasgow engaged in
unlawful activities of estafa and violation of the Securities Regulation Code (under Section 3(i)(9) and (13), RA
9160, as amended); the proceeds of the unlawful activities were transacted and deposited with CSBI in
account no. CA-005-10-000121-5 thereby making them appear to have originated from legitimate sources; as
such, Glasgow engaged in money laundering (under Section 4, RA 9160, as amended); and the AMLC
subjected the account to freeze order and
(d) the reliefs prayed for, namely, the issuance of a TRO or writ of preliminary injunction and the forfeiture of
the account in favor of the government as well as other reliefs just and equitable under the premises.
The form and substance of the Republics complaint substantially conformed with Section 4, Title II of the Rule of
Procedure in Cases of Civil Forfeiture.
Moreover, Section 12(a) of RA 9160, as amended, provides:
SEC. 12. Forfeiture Provisions.

55

(a) Civil Forfeiture. When there is a covered transaction report made, and the court has, in a petition filed for
the purpose ordered seizure of any monetary instrument or property, in whole or in part, directly or indirectly,
related to said report, the Revised Rules of Court on civil forfeiture shall apply.
In relation thereto, Rule 12.2 of the Revised Implementing Rules and Regulations of RA 9160, as amended, states:
RULE 12
Forfeiture Provisions
xxx xxx xxx
Rule 12.2. When Civil Forfeiture May be Applied. When there is a SUSPICIOUS TRANSACTION REPORT OR A
COVERED TRANSACTION REPORT DEEMED SUSPICIOUS AFTER INVESTIGATION BY THE AMLC, and the court has,
in a petition filed for the purpose, ordered the seizure of any monetary instrument or property, in whole or in
part, directly or indirectly, related to said report, the Revised Rules of Court on civil forfeiture shall apply.
RA 9160, as amended, and its implementing rules and regulations lay down two conditions when applying for civil
forfeiture:
(1) when there is a suspicious transaction report or a covered transaction report deemed suspicious after
investigation by the AMLC and
(2) the court has, in a petition filed for the purpose, ordered the seizure of any monetary instrument or
property, in whole or in part, directly or indirectly, related to said report.
It is the preliminary seizure of the property in question which brings it within the reach of the judicial process. 16 It is
actually within the courts possession when it is submitted to the process of the court. 17 The injunctive writ issued on
August 8, 2003 removed account no. CA-005-10-000121-5 from the effective control of either Glasgow or CSBI or their
representatives or agents and subjected it to the process of the court.
Since account no. CA-005-10-000121-5 of Glasgow in CSBI was (1) covered by several suspicious transaction reports
and (2) placed under the control of the trial court upon the issuance of the writ of preliminary injunction, the conditions
provided in Section 12(a) of RA 9160, as amended, were satisfied. Hence, the Republic, represented by the AMLC,
properly instituted the complaint for civil forfeiture.
Whether or not there is truth in the allegation that account no. CA-005-10-000121-5 contains the proceeds of unlawful
activities is an evidentiary matter that may be proven during trial. The complaint, however, did not even have to show
or allege that Glasgow had been implicated in a conviction for, or the commission of, the unlawful activities of estafa
and violation of the Securities Regulation Code.
A criminal conviction for an unlawful activity is not a prerequisite for the institution of a civil forfeiture proceeding.
Stated otherwise, a finding of guilt for an unlawful activity is not an essential element of civil forfeiture.
Section 6 of RA 9160, as amended, provides:
SEC. 6. Prosecution of Money Laundering.
(a) Any person may be charged with and convicted of both the offense of money laundering and the unlawful
activity as herein defined.
(b) Any proceeding relating to the unlawful activity shall be given precedence over the prosecution of any
offense or violation under this Act without prejudice to the freezing and other remedies provided.
(emphasis supplied)
Rule 6.1 of the Revised Implementing Rules and Regulations of RA 9160, as amended, states:
Rule 6.1. Prosecution of Money Laundering

56

(a) Any person may be charged with and convicted of both the offense of money laundering and the unlawful
activity as defined under Rule 3(i) of the AMLA.
(b) Any proceeding relating to the unlawful activity shall be given precedence over the prosecution of any
offense or violation under the AMLA without prejudice to the application ex-parte by the AMLC to the Court
of Appeals for a freeze order with respect to the monetary instrument or property involved therein and resort
to other remedies provided under the AMLA, the Rules of Court and other pertinent laws and
rules. (emphasis supplied)
Finally, Section 27 of the Rule of Procedure in Cases of Civil Forfeiture provides:
Sec. 27. No prior charge, pendency or conviction necessary. No prior criminal charge, pendency of or
conviction for an unlawful activity or money laundering offense is necessary for the commencementor
the resolution of a petition for civil forfeiture. (emphasis supplied)
Thus, regardless of the absence, pendency or outcome of a criminal prosecution for the unlawful activity or for money
laundering, an action for civil forfeiture may be separately and independently prosecuted and resolved.
There Was No Failure
To Prosecute
The trial court faulted the Republic for its alleged failure to prosecute the case. Nothing could be more erroneous.
Immediately after the complaint was filed, the trial court ordered its deputy sheriff/process server to serve summons
and notice of the hearing on the application for issuance of TRO and/or writ of preliminary injunction. The subpoena to
Glasgow was, however, returned unserved as Glasgow "could no longer be found at its given address" and had moved
out of the building since August 1, 2002.
Meanwhile, after due hearing, the trial court issued a writ of preliminary injunction enjoining Glasgow from removing,
dissipating or disposing of the subject bank deposits and CSBI from allowing any transaction on, withdrawal, transfer,
removal, dissipation or disposition thereof.
As the summons on Glasgow was returned "unserved," and considering that its whereabouts could not be ascertained
despite diligent inquiry, the Republic filed a verified omnibus motion for (a) issuance of aliassummons and (b) leave of
court to serve summons by publication on October 8, 2003. While the trial court issued an alias summons in its order
dated October 15, 2003, it kept quiet on the prayer for leave of court to serve summons by publication.
Subsequently, in an order dated January 30, 2004, the trial court archived the case for failure of the Republic to cause
the service of alias summons. The Republic filed an ex parte omnibus motion to (a) reinstate the case and (b) resolve
its pending motion for leave of court to serve summons by publication.
In an order dated May 31, 2004, the trial court ordered the reinstatement of the case and directed the Republic to
cause the service of the alias summons on Glasgow and CSBI within 15 days. However, it deferred its action on the
Republics motion for leave of court to serve summons by publication until a return was made on the aliassummons.
Meanwhile, the Republic continued to exert efforts to obtain information from other government agencies on the
whereabouts or current status of respondent Glasgow if only to save on expenses of publication of summons. Its
efforts, however, proved futile. The records on file with the Securities and Exchange Commission provided no
information. Other inquiries yielded negative results.
On July 12, 2004, the Republic received a copy of the sheriffs return dated June 30, 2004 stating that
the aliassummons had been returned "unserved" as Glasgow was no longer holding office at the given address since
July 2002 and left no forwarding address. Still, no action was taken by the trial court on the Republics motion for leave
of court to serve summons by publication. Thus, on August 11, 2005, the Republic filed a manifestation and ex
parte motion to resolve its motion for leave of court to serve summons by publication.
It was at that point that Glasgow filed a motion to dismiss by way of special appearance which the Republic vigorously
opposed. Strangely, to say the least, the trial court issued the assailed order granting Glasgows motion.

57

Given these circumstances, how could the Republic be faulted for failure to prosecute the complaint for civil forfeiture?
While there was admittedly a delay in the proceeding, it could not be entirely or primarily ascribed to the Republic.
That Glasgows whereabouts could not be ascertained was not only beyond the Republics control, it was also
attributable to Glasgow which left its principal office address without informing the Securities and Exchange
Commission or any official regulatory body (like the Bureau of Internal Revenue or the Department of Trade and
Industry) of its new address. Moreover, as early as October 8, 2003, the Republic was already seeking leave of court to
serve summons by publication.
In Marahay v. Melicor,18 this Court ruled:
While a court can dismiss a case on the ground of non prosequitur, the real test for the exercise of such power
is whether, under the circumstances, plaintiff is chargeable with want of due diligence in failing to proceed
with reasonable promptitude. In the absence of a pattern or scheme to delay the disposition of the
case or a wanton failure to observe the mandatory requirement of the rules on the part of the
plaintif, as in the case at bar, courts should decide to dispense with rather than wield their
authority to dismiss. (emphasis supplied)
We see no pattern or scheme on the part of the Republic to delay the disposition of the case or a wanton failure to
observe the mandatory requirement of the rules. The trial court should not have so eagerly wielded its power to
dismiss the Republics complaint.
Service Of Summons
May Be By Publication
In Republic v. Sandiganbayan,19 this Court declared that the rule is settled that forfeiture proceedings are actionsin
rem. While that case involved forfeiture proceedings under RA 1379, the same principle applies in cases for civil
forfeiture under RA 9160, as amended, since both cases do not terminate in the imposition of a penalty but merely in
the forfeiture of the properties either acquired illegally or related to unlawful activities in favor of the State.
As an action in rem, it is a proceeding against the thing itself instead of against the person. 20 In actions in rem orquasi
in rem, jurisdiction over the person of the defendant is not a prerequisite to conferring jurisdiction on the court,
provided that the court acquires jurisdiction over the res.21 Nonetheless, summons must be served upon the defendant
in order to satisfy the requirements of due process. 22 For this purpose, service may be made by publication as such
mode of service is allowed in actions in rem and quasi in rem.23
In this connection, Section 8, Title II of the Rule of Procedure in Cases of Civil Forfeiture provides:
Sec. 8. Notice and manner of service. - (a) The respondent shall be given notice of the petition in the same manner as
service of summons under Rule 14 of the Rules of Court and the following rules:
1. The notice shall be served on respondent personally, or by any other means prescribed in Rule 14 of the
Rules of Court;
2. The notice shall contain: (i) the title of the case; (ii) the docket number; (iii) the cause of action; and (iv) the
relief prayed for; and
3. The notice shall likewise contain a proviso that, if no comment or opposition is filed within the reglementary
period, the court shall hear the case ex parte and render such judgment as may be warranted by the facts
alleged in the petition and its supporting evidence.
(b) Where the respondent is designated as an unknown owner or whenever his whereabouts are
unknown and cannot be ascertained by diligent inquiry, service may, by leave of court, be
efected upon him by publication of the notice of the petition in a newspaper of general
circulation in such places and for such time as the court may order. In the event that the cost
of publication exceeds the value or amount of the property to be forfeited by ten percent, publication
shall not be required. (emphasis supplied)

58

WHEREFORE, the petition is hereby GRANTED. The October 27, 2005 order of the Regional Trial Court of Manila,
Branch 47, in Civil Case No. 03-107319 is SET ASIDE. The August 11, 2005 motion to dismiss of Glasgow Credit and
Collection Services, Inc. is DENIED. And the complaint for forfeiture of the Republic of the Philippines, represented by
the Anti-Money Laundering Council, is REINSTATED.
The case is hereby REMANDED to the Regional Trial Court of Manila, Branch 47 which shall forthwith proceed with the
case pursuant to the provisions of A.M. No. 05-11-04-SC. Pending final determination of the case, the November 23,
2005 temporary restraining order issued by this Court is hereby MAINTAINED.
SO ORDERED.

59