G.R. No.

188996

SERI SOMBOONSAKDIKUL, Petitioner

vs.
ORLANE S.A., Respondent

DECISION

JARDELEZA, J.:

Assailed in this petition is the Decision1 of the Court of Appeals (CA) in CA-G.R. SP
No. 105229 dated July 14, 2009 which affirmed the decision of the Director General of
the Intellectual Property Office (IPO) denying the application for the mark "LOLANE."

Facts

On September 23, 2003, petitioner Seri Somboonsakdikul (petitioner) filed an application

for registration2 of the mark LOLANE with the IPO for goods3 classified under Class 3
(personal care products) of the International Classification of Goods and Services for the
Purposes of the Registration of Marks (International Classification of Goods).4 Orlane
S.A. (respondent) filed an opposition to petitioner's application, on the ground that the
mark LOLANE was similar to ORLANE in presentation, general appearance and
pronunciation, and thus would amount to an infringement of its mark.5 Respondent
alleged that: (1) it was the rightful owner of the ORLANE mark which was first used in
1948; (2) the mark was earlier registered in the Philippines on July 26, 1967 under
Registration No. 129961 for the following goods:6

x x x perfumes, toilet water, face powders, lotions, essential oils, cosmetics, lotions for
the hair, dentrifices, eyebrow pencils, make-up creams, cosmetics & toilet preparations
under Registration No. 12996.7

and (3) on September 5, 2003, it filed another application for use of the trademark on its
additional products:

x x x toilet waters; revitalizing waters, perfumes, deodorants and body deodorants, anti-
perspiration toiletries; men and women perfume products for face care and body care;
face, eye, lips, nail, hand make-up products and make-up removal products, towels
impregnated with cosmetic lotions; tanning and instant tanning sunproducts,
sunprotection products, (not for medical use), after-suncosmetic products; cosmetic
products; slimming cosmetic aids; toiletries; lotions, shampoos and hair care products;
shave and after shave products, shaving and hair removing products; essential oils;
toothpastes; toiletry, cosmetic and shaving kits for travel, filled or fitted vanity-cases[.]8

Respondent adds that by promotion, worldwide registration, widespread and high

standard use, the mark had acquired distinction, goodwill, superior quality image and
reputation and was now well-known.9 Imputing bad faith on the petitioner, respondent
claimed that LOLANE' s first usage was only on August 19, 2003.10

In his answer,11 petitioner denied that the LOLANE mark was confusingly similar to the
mark ORLANE. He averred that he was the lawful owner of the mark LOLANE which
he has used for various personal care products sold worldwide. He alleged that the first
worldwide use of the mark was in Vietnam on July 4, 1995. Petitioner also alleged that he
had continuously marketed and advertised Class 3 products bearing LOLANE mark in
the Philippines and in different parts of the world and that as a result, the public had come
to associate the mark with him as provider of quality personal care products.12
Petitioner maintained that the marks were distinct and not confusingly similar either
under the dominancy test or the holistic test. The mark ORLANE was in plain block
upper case letters while the mark LOLANE was printed in stylized word with the second
letter L and the letter A co-joined. Furthermore, the similarity in one syllable would not
automatically result in confusion even if used in the same class of goods since his
products always appear with Thai characters while those of ORLANE always had the
name Paris on it. The two marks are also pronounced differently. Also, even if the two
marks contained the word LANE it would not make them confusingly similar since the
IPO had previously allowed the co-existence of trademarks containing the syllable "joy"
or "book" and that he also had existing registrations and pending applications for
registration in other countries.13

The Bureau of Legal Affairs (BLA) rejected petitioner's application in a Decision14 dated
February 27, 2007, finding that respondent's application was filed, and its mark
registered, much earlier.15 The BLA ruled that there was likelihood of confusion based
on the following observations: (1) ORLANE and LOLANE both consisted of six letters
with the same last four letters - LANE; (2) both were used as label for similar products;
(3) both marks were in two syllables and that there was only a slight difference in the first
syllable; and (4) both marks had the same last syllable so that if these marks were read
aloud, a sound of strong similarity would be produced and such would likely deceive or
cause confusion to the public as to the two trademarks.16

Petitioner filed a motion for reconsideration but this was denied by the Director of the
BLA on May 7, 2007.17 The BLA ruled that the law did not require the marks to be so
identical as to produce actual error or mistake as the likelihood of confusion was enough.
The BLA also found that the dominant feature in both marks was the word LANE; and
that the marks had a strong visual and aural resemblance that could cause confusion to
the buying public. This resemblance was amplified by the relatedness of the goods.18

On appeal, the Director General of the IPO affirmed the Decision of the BLA Director.
Despite the difference in the first syllable, there was a strong visual and aural
resemblance since the marks had the same last four letters, i.e., LANE, and such word is
pronounced in this jurisdiction as in "pedestrian lane."19 Also, the mark ORLANE is a
fanciful mark invented by the owner for the sole purpose of functioning as a trademark
and is highly distinctive. Thus, the fact that two or more entities would accidentally adopt
an identical or similar fanciful mark was too good to be true especially when they dealt
with the same goods or services.20 The Director General also noted that foreign
judgments invoked by petitioner for the grant of its application are not judicial
precedents.21

Thus, petitioner filed a petition for review22 before the CA arguing that there is no
confusing similarity between the two marks. Petitioner maintained that LANE is not the
dominant feature of the mark and that the dominancy test did not apply since the
trademarks are only plain word marks and the dominancy test presupposes that the marks
involved are composite marks.23 Petitioner pointed out that the IPO had previously
allowed the mark GIN LANE under Registration No. 4-2004-006914 which also involved
products under Class 3.24 While petitioner admitted that foreign judgments are not
judicial precedents, he argued that the IPO failed to recognize relevant foreign judgments,
i.e., the Australian Registrar of Trademarks and the IPO of Singapore which ruled that
there was no confusing similarity between the marks LOLANE and ORLANE.25 Lastly,
the Director General should have deferred to the findings of the Trademark Examiner
who made a substantive examination of the application for trademark registration, and
who is an expert in the field and is in the best position to determine whether there already
exists a registered mark or mark for registration. Since petitioner's application for
registration of the mark LOLANE proceeded to allowance and publication without any
adverse citation of a prior confusingly similar mark, this meant that the Trademark
Examiner was of the view that LO LANE was not confusingly similar to ORLANE.26

The CA Ruling

The CA denied the petition and held that there exists colorable imitation of respondent's
mark by LOLANE.27

The CA accorded due respect to the Decision of the Director General and ruled that there
was substantial evidence to support the IPO's findings of fact. Applying the dominancy
test, the CA ruled that LOLANE' s mark is confusingly or deceptively similar to
ORLANE. There are predominantly striking similarities in the two marks including
LANE, with only a slight difference in the first letters, thus the two marks would likely
cause confusion to the eyes of the public. The similarity is highlighted when the two
marks are pronounced considering that both are one word consisting of two syllables. The
CA ruled that when pronounced, the two marks produce similar sounds.28 The CA did
not heed petitioner's contention that since the mark ORLANE is of French origin, the
same is pronounced as "ORLAN." Filipinos would invariably pronounce it as "OR-
LEYN."29 The CA also noted that the trademark ORLANE is a fanciful name and
petitioner was not able to explain why he chose the word LOLANE as trademark for his
personal care products. Thus, the only logical conclusion is that he would want to benefit
from the established reputation and goodwill of the ORLANE mark.30

The CA rejected petitioner's assertion that his products' cheaper price and low-income
market eliminates the likelihood of confusion. Low-income groups, and even those who
usually purchased ORLANE products despite the higher cost, may be led to believe that
LOLANE products are low-end personal care products also marketed by respondent.31

The CA upheld the applicability of the dominancy test in this case. According to the CA,
the dominancy test is already recognized and incorporated in Section 155.1 of Republic
Act No. 8293 (RA 8293), otherwise known as the Intellectual Property Code of the
Philippines.32 Citing McDonald's Corporation v. MacJoy Fastfood Corporation,33 the
CA ruled that the dominancy test is also preferred over the holistic test. This is because
the latter relies only on the visual comparison between two trademarks, whereas the
dominancy test relies not only on the visual, but also on their aural and connotative
comparisons, and their overall impressions created.34 Nonetheless, the CA stated that
there is nothing in this jurisdiction dictating that the dominancy test is applicable for
composite marks.35

The CA was not swayed by the alleged favorable judgment by the IPO in the GIN LANE
application, ruling that in trademark cases, jurisprudential precedents should be applied
only to a case if they are specifically in point.36 It also did not consider the ruling of the
IPOs in Australia, South Africa, Thailand and Singapore which found no confusing
similarity between the marks LOLANE and ORLANE, stating that foreign judgments do
not constitute judicial precedent in this jurisdiction.37

Finally, the CA did not give merit to petitioner's contention that the Director General
should have deferred to the findings of the Trademark Examiner. According to the CA,
the proceedings before the Trademark Examiner are ex-parte,38 and his findings are
merely prima facie. Whatever his decision may be is still subject to review and/or
appeal.39

The Petition40

Petitioner maintains that the CA erred in its interpretation of the dominancy test, when it
ruled that the dominant feature of the contending marks is the suffix "LANE."41 The CA
failed to consider that in determining the dominant portion of a mark, significant weight
must be given to whether the buyer would be more likely to remember and use one part
of a mark as indicating the origin of the goods.42 Thus, that part which will likely make
the most impression on the ordinary viewer will be treated as the dominant portion of
conflicting marks and given greater weight in the comparison.43

Petitioner argues that both LOLANE and ORLANE are plain word marks which are
devoid of features that will likely make the most impression on the ordinary viewer. If at
all, the very word marks themselves, LOLANE and ORLANE are each to be regarded as
dominant features.44 Moreover, the suffix LANE is a weak mark, being "in common use
by many other sellers in the market. "45 Thus, LANE is also used in the marks
SHELLANE and GIN LANE, the latter covering goods under Class 3. Moreover, the two
marks are aurally different since respondent's products originate from France and is read
as "OR-LAN" and not "OR-LEYN."46

Petitioner also claims that the CA completely disregarded the holistic test, thus ignoring
the dissimilarity of context between LOLANE and ORLANE. Assuming that the two
marks produce similar sounds when pronounced, the differences in marks in their entirety
as they appear in their respective product labels should still be the controlling factor in
determining confusing similarity.47

Besides, there has been no explicit declaration abandoning the holistic test.48 Thus,
petitioner urges us to go beyond the similarities in spelling and instead consider how the
marks appear in their respective labels, the dissimilarities in the size and shape of the
containers, their color, words appearing thereon and the general appearance,49 hence: (1)
the commonality of the marks ORLANE and LOLANE starts from and ends with the
four-letter similarity-LANE and nothing else;50 (2) ORLANE uses "safe" or
conventional colors while LOLANE uses loud or psychedelic colors and designs with
Thai characters;51 and (3) ORLANE uses the term "Paris," indicating the source of origin
of its products.52

Petitioner likewise claims that consumers will be more careful in their choice because the
goods in question are directly related to personal hygiene and have direct effects on their
well-being, health and safety.53 Moreover, with the huge price difference between
ORLANE and LOLANE products, relevant purchasers are less likely to be confused.54

Finally, petitioner notes that respondent has neither validly proven nor presented
sufficient evidence that the mark ORLANE is in actual commercial use in the
Philippines. Respondent failed to allege in any of its pleadings submitted to the IPO's
BLA and the IPO Director General the names of local outlets that products bearing the
mark ORLANE are being marketed or sold to the general consuming public.55

Respondent's Comment56

Respondent reiterates the decisions of the CA and the IPO.57 It maintains that ORLANE
is entitled to protection under RA 8293 since it is registered with the IPO with proof of
actual use.58 Respondent posits that it has established in the world59 and in the
Philippines an image and reputation for manufacturing and selling quality beauty
products. Its products have been sold in the market for 61 years and have been used in the
Philippines since 1972.60 Thus, to allow petitioner's application would unduly prejudice
respondent's right over its registered trademark.61 Lastly, respondent argues that
decisions of administrative agencies such as the IPO shall not be disturbed by the courts,
absent any showing that the former have acted without or in excess of their jurisdiction,
or with grave abuse of discretion.62

Issue
We resolve the issue of whether there is confusing similarity between ORLANE and
LOLANE which would bar the registration of LOLANE before the IPO.

Our Ruling

We find that the CA erred when it affirmed the Decision of the IPO.

While it is an established rule in administrative law that the courts of justice should
respect the findings of fact of administrative agencies, the courts may not be bound by
such findings of fact when there is absolutely no evidence in support thereof or such
evidence is clearly, manifestly and patently insubstantial; and when there is a clear
showing that the administrative agency acted arbitrarily or with grave abuse of discretion
or in a capricious and whimsical manner, such that its action may amount to an excess or
lack of jurisdiction.63 Moreover, when there is a showing that the findings or
conclusions, drawn from the same pieces of evidence, were arrived at arbitrarily or in
disregard of the evidence on record, they may be reviewed by the courts.64 Such is the
case here.

There is no colorable imitation between the marks LOLANE and ORLANE which would
lead to any likelihood of confusion to the ordinary purchasers.

A trademark is defined under Section 121.1 of RA 8293 as any visible sign capable of
distinguishing the goods. It is susceptible to registration if it is crafted fancifully or
arbitrarily and is capable of identifying and distinguishing the goods of one manufacturer
or seller from those of another.65 Thus, the mark must be distinctive.66 The registrability
of a trademark is governed by Section 123 of RA 8293. Section 123.1 provides:

Section 123. Registrability. -

123 .1. A mark cannot be registered if it:

xxx

d. Is identical with a registered mark belonging to a different proprietor or a mark with an

earlier filing or priority date, in respect of:

i. The same goods or services, or

ii. Closely related goods or services, or

iii. If it nearly resembles such a mark as to be likely to deceive or cause confusion;

e. Is identical with, or confusingly similar to, or constitutes a translation of a mark which

is considered by the competent authority of the Philippines to be well-known
internationally and in the Philippines, whether or not it is registered here, as being already
the mark of a person other than the applicant for registration, and used for identical or
similar goods or services: Provided, That in determining whether a mark is well-known,
account shall be taken of the knowledge of the relevant sector of the public, rather than of
the public at large, including knowledge in the Philippines which has been obtained as a
result of the promotion of the mark;

xxx

In Mighty Corporation v. E. & J Gallo Winery,67 we laid down the

requirements for a finding of likelihood of confusion, thus:

There are two types of confusion in trademark infringement. The first is "confusion of
goods" when an otherwise prudent purchaser is induced to purchase one product in the
belief that he is purchasing another, in which case defendant's goods are then bought as
the plaintiffs and its poor quality reflects badly on the plaintiffs reputation. The other is
"confusion of business" wherein the goods of the parties are different but the defendant's
product can reasonably (though mistakenly) be assumed to originate from the plaintiff,
thus deceiving the public into believing that there is some connection between the
plaintiff and defendant which, in fact, does not exist.

In determining the likelihood of confusion, the Court must consider: [a] the
resemblance between the trademarks; [b] the similarity of the goods to which the
trademarks are attached; [c] the likely effect on the purchaser and [d] the
registrant's express or implied consent and other fair and equitable considerations.
(Citations omitted, emphasis supplied.)68

While Mighty Corporation enumerates four requirements, the most essential requirement,
to our mind, for the determination of likelihood of confusion is the existence of
resemblance between the trademarks, i.e., colorable imitation. Absent any finding of its
existence, there can be no likelihood of confusion. Thus we held:

Whether a trademark causes confusion and is likely to deceive the public hinges on
"colorable imitation" which has been defined as "such similarity in form, content, words,
sound, meaning, special arrangement or general appearance of the trademark or trade
name in their overall presentation or in their essential and substantive and distinctive
parts as would likely mislead or confuse persons in the ordinary course of purchasing the
genuine article." (Citations omitted.)69

We had the same view in Emerald Garment Manufacturing Corporation v. Court of

Appeals,70 where we stated:

Proceeding to the task at hand, the essential element of infringement is colorable

imitation. This term has been defined as "such a close or ingenious imitation as to be
calculated to deceive ordinary purchasers, or such resemblance of the infringing mark to
the original as to deceive an ordinary purchaser giving such attention as a purchaser
usually gives, and to cause him to purchase the one supposing it to be the other."

Colorable imitation does not mean such similitude as amounts to identity. Nor does it
require that all the details be literally copied. x x x (Citation omitted, emphasis
supplied.)71

In determining colorable imitation, we have used either the dominancy test or the holistic
or totality test. The dominancy test considers the similarity of the prevalent or dominant
features of the competing trademarks that might cause confusion, mistake, and deception
in the mind of the purchasing public. More consideration is given on the aural and visual
impressions created by the marks on the buyers of goods, giving little weight to factors
like process, quality, sales outlets, and market segments.72 On the other hand, the holistic
test considers the entirety of the marks as applied to the products, including the labels and
packaging, in determining confusing similarity. The focus is not only on the predominant
words but also on the other features appearing on the labels.73

The CA's use of the dominancy test is in accord with our more recent ruling in UFC
Philippines, Inc. (now merged with Nutria-Asia, Inc. as the surviving entity) v. Barrio
Fiesta Manufacturing Corporation.74 In UFC Philippines, Inc., we relied on our
declarations in McDonald's Corporation v. L.C. Big Mak Burger, Inc.,75 Co Tiong Sa v.
Director of Patents,76 and Societe Des Produits Nestle, S.A. v. Court of Appeals77 that
the dominancy test is more in line with the basic rule in trademarks that confusing
similarity is determined by the aural, visual and connotative and overall impressions
created by the marks. Thus, based on the dominancy test, we ruled that there is no
confusing similarity between "PAPA BOY & DEVICE" mark, and "PAPA KETSARAP"
and "PAPA BANANA CATSUP."

While there are no set rules as what constitutes a dominant feature with respect to
trademarks applied for registration, usually, what are taken into account are signs, color,
design, peculiar shape or name, or some special, easily remembered earmarks of the
brand that readily attracts and catches the attention of the ordinary consumer.78 In UFC
Philippines, Inc., what we considered as the dominant feature of the mark is the first
word/figure that catches the eyes or that part which appears prominently to the eyes and
ears.79

However, while we agree with the CA's use of the dominancy test, we arrive at a
different conclusion. Based on the distinct visual and aural differences between LOLANE
and ORLANE, we find that there is no confusing similarity between the two marks.

The suffix LANE is not the dominant feature of petitioner's mark. Neither can it be
considered as the dominant feature of ORLANE which would make the two marks
confusingly similar.

First, an examination of the appearance of the marks would show that there are noticeable
differences in the way they are written or printed as shown below:80

As correctly argued by petitioner in his answer before the BLA, there are visual
differences between LOLANE and ORLANE since the mark ORLANE is in plain block
upper case letters while the mark LOLANE was rendered in stylized word with the
second letter L and the letter A co-joined.81

Second, as to the aural aspect of the marks, LOLANE and ORLANE do not sound alike.
Etepha v. Director of Patents, et al.82 finds application in this case. In Etepha, we ruled
that there is no confusing similarity between PERTUSSIN and ATUSSIN. The Court
considered among other factors the aural differences between the two marks as follows:

5. As we take up Pertussin and Atussin once again, we cannot escape notice of the fact
that the two words do not sound alike-when pronounced. There is not much phonetic
similarity between the two. The Solicitor General well-observed that in Pertussin the
pronunciation of tbe prefix "Per", whether correct or incorrect, includes a combination of
three letters

P, e and r; whereas, in Atussin the whole starts with the single letter A added to suffix
"tussin".1âwphi1 Appeals to the ear are dissimilar. And this, because in a word
combination, the part that comes first is the most pronounced. An expositor of the
applicable rule here is the decision in the Syrocol-Cheracol controversy. There, the ruling
is that trademark Syrocol (a cough medicine preparation) is not confusedly similar to
trademark Cheracol (also a cough medicine preparation). Reason: the two words "do not
look or sound enough alike to justify a holding of trademark infringement", and the "only
similarity is in the last syllable, and that is not uncommon in names given drug
compounds". (Citation omitted, emphasis supplied.)83

Similar to Etepha, appeals to the ear in pronouncing ORLANE and LOLANE are
dissimilar. The first syllables of each mark, i.e., OR and LO do not sound alike, while the
proper pronunciation of the last syllable LANE-"LEYN" for LOLANE and "LAN" for
ORLANE, being of French origin, also differ. We take exception to the generalizing
statement of the Director General, which was affirmed by the CA, that Filipinos would
invariably pronounce ORLANE as "ORLEYN." This is another finding of fact which has
no basis, and thus, justifies our reversal of the decisions of the IPO Director General and
the CA. While there is possible aural similarity when certain sectors of the market would
pronounce ORLANE as "ORLEYN," it is not also impossible that some would also be
aware of the proper pronunciation--especially since, as respondent claims, its trademark
ORLANE has been sold in the market for more than 60 years and in the Philippines, for
more than 40 years.84

Respondent failed to show proof that the suffix LANE has registered in the mind of
consumers that such suffix is exclusively or even predominantly associated with
ORLANE products. Notably and as correctly argued by petitioner, the IPO previously
allowed the registration of the mark GIN LANE for goods also falling under Class 3, i.e.,
perfume, cologne, skin care preparations, hair care preparations and toiletries.85

We are mindful that in the earlier cases of Mighty Corporation and Emerald, despite a
finding that there is no colorable imitation, we still discussed the nature of the goods
using the trademark and whether the goods are identical, similar, competing or related.
We need not belabor a similar discussion here considering that the essential element in
determining likelihood of confusion, i.e., colorable imitation by LO LANE of the mark
ORLANE, is absent in this case. Resemblance between the marks is a separate
requirement from, and must not be confused with, the requirement of a similarity of the
goods to which the trademarks are attached. In Great White Shark Enterprises, Inc v.
Caralde, Jr.,86 after we ruled that there was no confusing similarity between Great White
Shark's "GREG NORMAN LOGO" and Caralde's "SHARK & LOGO" mark due to the
visual and aural dissimilarities between the two marks, we deemed it unnecessary to
resolve whether Great White Shark's mark has gained recognition as a well-known mark.

Finding that LOLANE is not a colorable imitation of ORLANE due to distinct visual and
aural differences using the dominancy test, we no longer find it necessary to discuss the
contentions of the petitioner as to the appearance of the marks together with the
packaging, nature of the goods represented by the marks and the price difference, as well
as the applicability of foreign judgments. We rule that the mark LOLANE is entitled to
registration.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated
July 14, 2009 is REVERSED and SET ASIDE. Petitioner's application of the mark
LOLANE for goods classified under Class 3 of the International Classification of Goods
is GRANTED.

SO ORDERED.
G.R. No. 224583

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee

vs.
MICHAEL PALANAY y MINISTER, Accused-Appellant

DECISION

VELASCO, JR., J.:

Nature of the Case

For review is the Decision1 dated October 20, 2015 of the Court of Appeals (CA) in CA-
G.R. CR-H.C. No. 01140-MIN affirming the Decision2 dated February 22, 2013 of the
Regional Trial Court (RTC) of Cagayan de Oro City, Branch 19, in Criminal Case No.
2010-343, finding accused-appellant Michael Palanay y Minister guilty of qualified rape
under Article 266-A in relation to Article 266-B of the Revised Penal Code (RPC), as
amended by Republic Act No. 8353.3

In line with our ruling in People v. Cabalquinto,4 the real name of the victim, as well as
any information which tends to establish or compromise her identity, shall be withheld.
The initials "AAA" shall be used instead to represent her.

Factual Antecedents

On September 3, 3010, accused-appellant was charged with the crime of rape in an

Information,5 the accusatory portion of which reads:

That on August 31, 2010 at around 1:00 o'clock in the morning, at ________ Cagayan de
Oro City, Philippines, and within the jurisdiction of this Honorable Court, the above-
named accused, with lewd design, did then and there willfully, unlawfully, and
feloniously have carnal knowledge with his niece, who is a minor offended party, AAA,
16 years old (Date of birth: _____ ) against her will and consent, to her damage and
prejudice.

Contrary to and in violation of Art. 266-A, in relation to Art. 266-B of the Revised Penal
Code, as amended by Republic Act 8353, and with the aggravating circumstance that
AAA is a relative by consanguinity within the third civil degree and is below 18 years of
age.

The facts, culled from the records, are as follows:

Version of the Prosecution

On the evening of August 30, 2010, AAA was sleeping in her room when she was
suddenly awakened by someone removing her short pants and panty. She awoke to find
accused Palanay, her uncle and brother of her mother, lying beside her and removing his
own short pants. Thereafter, he kissed AAA' s lips, touched her breasts, and inserted his
penis into her vagina. After satisfying his bestial desires, Palanay slept by AAA's side.
AAA put her clothes on, went to the comfort room, and cried in silence. By early
morning, AAA went to the house of her elder sister, BBB, and narrated her tragic
experience. Upon learning of the incident, BBB went to her elder sister, CCC, to relay
what happened to AAA.6

BBB corroborated the testimony of AAA. She narrated that, on August 31, 2010 at
around 7:00 a.m., she found AAA outside her door sobbing. When asked what caused her
troubles, AAA recounted that she was raped by Palanay. Aghast, BBB went to the house
of CCC to inform her about what happened to AAA and to plan their next step. CCC
blottered the incident and filed a complaint against Palanay for the rape of AAA.7

Version of the Defense

Palanay testified that, in the evening of August 31, 2010, he was at his friend's house
drinking until 3:00 a.m. the following morning. At around 7:00 a.m., he went to the house
of his brother to ask the latter to help him cultivate a land.8 Palanay testified that the
house of AAA is adjacent to the house of his brother, but he did not notice her.

Palanay contended that the charge against him was motivated by the quarrel he had with
the mother of AAA.

Ruling of the RTC

After trial, the RTC rendered a Decision finding Palanay guilty beyond reasonable doubt
as charged. The dispositive portion of the Decision reads:

ALL THE FOREGOING CONSIDERED, the Court finds accused [Palanay] GUILTY
beyond reasonable doubt of the crime of rape, as charged and for which the court hereby
imposes upon him the penalty of reclusion perpetua. He is further adjudged to pay
"AAA" civil indemnity in the sum of Seventy Five (₱75,000.00) Pesos without need of
proof and moral damages in the sum of Thirty Thousand (₱30,000.00) Pesos only. With
costs.

SO ORDERED.

In convicting Palanay of the crime charged, the RTC gave more weight and credence to
the prosecution's evidence. The trial court observed that AAA was able to positively
identify Palanay as the perpetrator of the crime. The commission of the rape was further
bolstered by the medical findings of AAA after the rape was committed.9

On appeal to the CA, Palanay asserted that AAA' s failure to offer serious resistance
against his sexual advances cast doubt on his guilt for the crime charged.

Ruling of the Court of Appeals

The CA affirmed the RTC's Decision in toto. The fallo of the CA's Decision reads:

WHEREFORE, premises considered, the instant appeal is DENIED. The February 22,
2013 Decision of the Regional Trial Court, Branch 19, Cagayan de Oro City, in Criminal
Case No. 2010-343, finding [Palanay] guilty beyond reasonable doubt for the crime of
Rape under Article 266-A in relation to Article 266-B of the Revised Penal Code is
hereby AFFIRMED.

SO ORDERED.

Aggrieved, Palanay filed the instant appeal.

The sole issue for the resolution of this Court is whether the prosecution has proven the
guilt of Palanay for the rape of AAA beyond reasonable doubt.

Our Ruling
We affirm the conviction of Palanay for rape under Article 266-A qualified by
relationship in relation to Article 266-B of the RPC, which respectively provide:

Art. 266-A. Rape; When And How Committed. - Rape is Committed-

1. By a man who shall have carnal knowledge of a woman under any of the following
circumstances:

a) Through force, threat or intimidation;

b) When the offended party is deprived or reason or is otherwise unconscious;

c) By means of fraudulent machination or grave abuse of authority;

d) When the offended party is under twelve (12) years of age or is demented, even though
none of the circumstances mentioned above be present. x x x

(Emphasis supplied)

x x xx

ART. 266-B. Penalties. - Rape under paragraph 1 of the next preceding article shall be
punished by reclusion perpetua.

x x xx

The death penalty shall also be imposed if the crime of rape is committed with any of the
following aggravating/qualifying circumstances:

1) When the victim is under eighteen (18) years of age and the offender is a parent,
ascendant, stepparent, guardian, relative by consanguinity or affinity within the third civil
degree, or the common-law spouse of the parent of the victim.

Hence, in a conviction for qualified rape, the prosecution must prove all the elements
thereof, which are: (1) sexual congress (2) with a woman; (3) done by force, threat, or
intimidation without consent; (4) the victim is under eighteen years of age at the time of
the rape; and (5) the offender is a parent, ascendant, stepparent, guardian, relative by
consanguinity or affinity within the third civil degree of the victim, or the common-law
spouse of the parent of the victim.

In the present case, all the foregoing elements of qualified rape are present.

AAA categorically asserted that Palanay, her uncle, had carnal knowledge of her. She
was steadfast in her testimony that, in the early morning of August 31, 2010, Palanay
undressed her and touched her breast against her will. He then forced himself on her and
inserted his penis into her vagina. At the time of the incident, AAA was just sixteen (16)
years old.

The findings in the medical examination of AAA taken after the rape support this
allegation.10 While a medical examination of the victim is not indispensable in the
prosecution of a rape case, and no law requires a medical examination for the successful
prosecution of the case, the medical examination conducted and the medical certificate
issued are veritable corroborative pieces of evidence, which strongly bolster the victim's
testimony.11 In addition, as found by the trial court, AAA's recollection of what
happened after her harrowing experience was sufficiently corroborated by BBB.
To discredit AAA, Palanay makes much of her failure to offer resistance to his advances
to discount the occurrence of rape.

Suffice to state this assertion is utterly trivial in nature and does not affect the merits of
the case. It bears to stress that in rape cases, the law does not impose a burden on the rape
victim to prove resistance because it is not an element of rape.12 Thus, the failure to
shout or offer tenacious resistance does not make voluntary the victim's submission to the
criminal act of the offender.13

In any event, the failure of AAA to resist Palanay's sexual advances due to the amount of
intimidation exerted on her was sufficiently explained. In her testimony before the trial
court, she recalled:

PROS. VALCONCHA:

Q You said earlier you did not shout at that time, why is that?

A Because I was afraid.

Q Why were you afraid of the accused?

A Because he is tough.

Q When you said he is tough what do you mean by that?

A He even kicked me.14 (Emphasis supplied)

COURT:

Some clarificatory questions from the court.

(To the witness)

x x xx

Q You said you are afraid of Ompoc and Michael, you are afraid of them even
before this incident on August 31?

A Yes, Your Honor.

Q Why, would they bully you? What would they do that to make you afraid?

A They used to scold me.

Q Always?

A Michael Palanay used to scold me.

Q He only scolded you but he has not beaten you or physically assaulted you?

A Sometimes he kicked me.

Q Whey they started to scold you when you were still at tender age?

A When I am already grown up.

Q So, you were intimidated by Ompoc Palanay, how about Michael?

A Yes, Your Honor.15 (Emphasis and underscoring supplied)

By the distinctive nature of rape cases, conviction usually rests solely on the basis of the
testimony of the victim, provided that such testimony is credible, natural, convincing, and
consistent with human nature and the normal course of things.16 Thus, the victim's
credibility becomes the primordial consideration in the resolution of rape cases.17 The
evaluation of the credibility of witnesses and their testimonies is a matter best undertaken
by the trial court given its unique opportunity to observe the witnesses firsthand and to
note their demeanor, conduct, and attitude under grilling examination.18 In this regard,
factual findings of the trial court, its calibration of the testimonies of the witnesses, and
its conclusions anchored on its findings are accorded by the appellate court high respect,
if not conclusive effect, more so when affirmed by the CA.19

Applied in this case, the ruling of the trial court as regards the credibility of the
prosecution witnesses, and affirmed by the court a quo, must be given weight by this
Court. The Court does not see any reason to disturb the RTC and the CA's appreciation of
AAA's testimony and find that the prosecution satisfactorily established all the elements
of qualified rape.

Rape victims react differently. Some may offer strong resistance while others may be too
intimidated to offer any resistance at all.20 There is no standard form of reaction for a
woman when facing a shocking and horrifying experience such as a sexual assault. The
workings of the human mind placed under emotional stress are unpredictable, and people
react differently some may shout, some may faint, and some may be shocked into
insensibility, while others may openly welcome the intrusion. However, any of these
conducts does not impair the credibility of a rape victim.21

In AAA's case, it is evident that she feared Palanay, her uncle, who can be reasonably
expected to exercise moral authority over her, even prior to the rape incident.1âwphi1
This fear caused her to be immobilized and unable to offer physical resistance to
Palanay's advances. The failure to physically resist the attack, however, does not detract
from the established fact that a reprehensible act was done to a child-woman by no less
than a member of her family. In cases of qualified rape, moral ascendancy or influence
supplants the element of violence or intimidation.22 Physical resistance need not be
established when intimidation is brought to bear on the victim and the latter submits
herself out of fear. As this Court held in People v. Lomaque,23 the failure to shout or
offer tenuous resistance does not make voluntary the victim's submission to the criminal
acts of the accused.

Anent Palanay's defenses of denial and alibi, the same deserve scant consideration. It is a
time-honored principle in jurisprudence that positive identification prevails over alibi
since the latter can easily be fabricated and is inherently unreliable.24 For the defense of
alibi to prosper, the accused must prove that he was somewhere else when the offense
was committed and that he was so far away that it was not possible for him to have been
physically present at the place of the crime or at its immediate vicinity at the time of its
commission.25

The trial court correctly observed that Palanay only testified as to his whereabouts after
the commission of the rape; he utterly failed to account for his whereabouts on the wee
hours of August 31, 2010 when the rape took place. In stark contrast, AAA was able to
positively identify Palanay as the person who ravished her. Palanay' s alibi and bare
denial cannot outweigh AAA' s affirmative testimony.
Moreover, Palanay' s allegation that the accusation against him was ill-motivated due to a
misunderstanding that he had with AAA's mother is useless.1âwphi1 In People v. Arthur
Mendoza and Dave Mendoza,26 the Court reiterated that it is unlikely for a young girl-or
for her family-to impute the crime of rape to no less than a relative and to face social
humiliation, if not to vindicate her honor.27

As to relationship of the parties, there is no dispute that Palanay, being the uncle of AAA,
is the latter's relative by third degree of consanguinity, as this was also among the
admitted facts contained in the Pre-Trial Order.28

All told, Palanay's conviction for the rape of AAA under Article 266-A stands. In
accordance with Article 266-B, the rape is qualified by the relationship of the parties and
calls for the application of the death penalty, Palanay being a relative within the third
degree of consanguinity of AAA. In view, however, of the passage of Republic Act No.
9346 which suspends the imposition of the death penalty, Palanay shall suffer the penalty
of reclusion perpetua without eligibility for parole.

To conform to Our pronouncement in People v. Jugu,eta,29 the civil indemnity and

moral damages awarded must be increased from SeventyFive Thousand Pesos
(₱75,000.00) and Thirty Thousand Pesos (₱30,000.00), respectively, to One Hundred
Thousand Pesos (₱100,000.00) each. We further order the payment of exemplary
damages of One Hundred Thousand Pesos (₱100,000.00) in accordance with Article
223030 of the Civil Code, in view of the qualifying circumstance of relationship, as well
as Palanay's moral corruption, perversity, and wickedness in ravishing his own niece. The
imposition of exemplary damages is further warranted to deter others from committing
similar acts or for correction for the public good.31 Finally, interest at the rate of 6% per
annum is imposed on all damages awarded from the date of finality of judgment until
fully paid.32

WHEREFORE, the appeal is DISMISSED. The Decision dated October 20, 2015 of the
Court of Appeals in CA-G.R. CR-H.C. No. 01140-MIN is hereby AFFIRMED with
further MODIFICATION. As modified, the judgment shall read, as follows:

WHEREFORE, premises considered, the instant appeal is DENIED. The February 22,
2013 Decision of the Regional Trial Court, Branch 19, Cagayan de Oro City, in Criminal
Case No. 2010-343, finding [Palanay] guilty beyond reasonable doubt for the crime of
Rape under Article 266-A in relation to Article 266-B of the Revised Penal Code is
hereby AFFIRMED with MODIFICATIONS. The civil indemnity and moral damages
awarded are increased to One Hundred Thousand Pesos (₱100,000.00) each. In addition,
Palanay is further ordered to pay AAA exemplary damages in the amount of One
Hundred Thousand Pesos (₱100,000.00). All damages awarded shall earn interest at six
percent (6%) per annum from the date of finality of this judgment until fully paid.

SO ORDERED.
G.R. No. 188146

PILIPINAS SHELL PETROLEUM CORPORATION, Petitioner

vs.
ROYAL FERRY SERVICES, INC., Respondent

DECISION

LEONEN, J.:

The venue for a petition for voluntary insolvency proceeding under the Insolvency Law is
the Court of First Instance of the province or city where the insolvent debtor resides. A
corporation is considered a resident of the place where its principal office is located as
stated in its Articles of Incorporation. However, when it is uncontroverted that the
insolvent corporation abandoned the old principal office, the corporation is considered a
resident of the city where its actual principal office is currently found.

This resolves a Petition for Review on Certiorari1 assailing the Court of Appeals'
January 30, 2009 Decision2 and May 26, 2009 Resolution3 in CA-G.R. CV No. 88320,
which reinstated the Order4 that declared Royal Ferry Services Inc. insolvent made by
the Regional Trial Court of Manila, Branch 24 (Regional Trial Court).

Royal Ferry Services Inc. (Royal Ferry) is a corporation duly organized and existing
under Philippine law.5 According to its Articles of Incorporation, Royal Ferry's principal
place of business is located at 2521 A. Bonifacio Street, Bangkal, Makati City.6
However, it currently holds office at Room 203, BF Condominium Building, Andres
Soriano comer Solano Streets, Intramuros, Manila.7

On August 28, 2005, Royal Ferry filed a verified Petition for Voluntary Insolvency
before the Regional Trial Court of Manila.8 It alleged that in 2000, it suffered serious
business losses that led to heavy debts.9 Efforts to revive the company's finances failed,
and almost all assets were either foreclosed or sold to satisfy the liabilities incurred.10
Royal Ferry ceased its operations on February 28, 2002.11 In a special meeting on
August 25, 2005, its Board of Directors approved and authorized the filing of a petition
for voluntary insolvency in court.12

The Regional Trial Court declared Royal Ferry insolvent in its Order13 dated December
19, 2005, the relevant portion of which reads:

Finding the petition sufficient in form and substance and pursuant to the provisions of
Act No. 1956, petitioner Royal Ferry Services, Inc., is hereby declared insolvent.

The Court hereby further directs and orders:

1. The Branch Sheriff to take possession of, and safely keep until the appointment, of an
Assignee all the deeds, vouchers, books of accounts, papers, notes, bills and securities of
the petitioner and all its real and personal properties, estates and effects not exempt from
execution;

2. All persons and entities owing money to petitioner are hereby forbidden to make
payment for its accounts or to deliver or transfer any property to petitioner except to the
duly elected Assignee;

3. All civil proceedings against petitioner are deemed stayed;

4. For purposes of electing an Assignee, a meeting of all creditors of the petitioner is
hereby set on February 24, 2006 at 8:30 a.m. before this Court, at Room 435, Fourth
Floor, Manila City Hall Building.

Let this Order be published in a newspaper of general circulation in the Philippines, once
a week for three (3) consecutive weeks, and copies thereof be furnished all creditors
listed in the schedule of creditors at the expense of petitioner.

SO ORDERED.14

On December 23, 2005, Pilipinas Shell Petroleum Corporation (Pilipinas Shell) filed
before the Regional Trial Court of Manila a Formal Notice of Claim15 and a Motion to
Dismiss.16 In the Notice of Claim, Pilipinas Shell asserted that Royal Ferry owed them
the amount of ₱2,769,387.67.17 In its Motion to Dismiss, Pilipinas Shell alleged that the
Petition was filed in the wrong venue.18 It argued that the Insolvency Law provides that
a petition for insolvency should be filed before the court with territorial jurisdiction over
the corporation's residence.19 Since Royal Ferry's Articles of Incorporation stated that
the corporation's principal office is located at 2521 A. Bonifacio St., Bangkal, Makati
City, the Petition should have been filed before the Regional Trial Court of Makati and
not before the Regional Trial Court of Manila.20

On January 30, 2006, the Regional Trial Court of Manila issued the Order21 denying
Pilipinas Shell's Motion to Dismiss for lack of merit. It found Royal Ferry to have
sufficiently shown full compliance with the requirements of the Insolvency Law on venue
and that it had abandoned its Makati office and moved to Manila. The Regional Trial
Court also noted that when the Branch Sherriff confiscated Royal Ferry's books and
personal assets, the properties were taken from a Manila address, at Room 203, BF
Condominium Building, Andres Soriano comer Streets, Intramuros, Manila.

Pilipinas Shell moved for reconsideration on February 24, 2006.22

In the Order23 dated June 15, 2006, the Regional Trial Court reconsidered the denial of
Pilipinas Shell's Motion to Dismiss. It held that a corporation cannot change its place of
business without amending its Articles of Incorporation.24 Without the amendment,
Royal Ferry's transfer did not produce any legal effect on its residence.25 The Regional
Trial Court granted the dismissal of the Petition for Voluntary Insolvency. The
dispositive portion of the Order reads:

Accordingly, the Order of this court dated January 30, 2006 denying the claimant-
movant's motion to dismiss is hereby reconsidered. The Motion to Dismiss is granted.
The Petition for Voluntary Insolvency is hereby ordered DISMISSED.

SO ORDERED.26

Aggrieved, Royal Ferry filed a Notice of Appeal27 on October 26, 2006. On November
7, 2006, the Regional Trial Court forwarded the records of the case to the Court of
Appeals.28

In the Decision29 dated January 30, 2009, the Court of Appeals reinstated the insolvency
proceedings. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, the instant appeal is GRANTED. Accordingly, the

following Orders of the Regional Trial Court of Manila (Branch 24) in Civil Case No. 05-
113384 are SET ASIDE: 1) Order dated 15 June 2006, which granted Pilipinas Shell's
"Motion to Dismiss the Petition for Voluntary Insolvency;" and 2) Order dated 16
October 2006, which denied Royal Ferry's Motion for Reconsideration. On the other
hand, the Orders of the trial court dated 5 September 2005 and 19 December 2005,
granting an adjudication of insolvency in favor of Royal Ferry are REINSTATED.

SO ORDERED.30 (Emphasis in the original)

The Court of Appeals held that the Motion to Dismiss failed to comply with Section 8131
of the Insolvency Law, which required the written consent of all creditors before a
petition for insolvency can be dismissed. It overturned the grant of the Motion to Dismiss
since Pilipinas Shell failed to secure the written consent of all the creditors of Royal
Ferry.

On the alleged jurisdictional defects of Royal Ferry's Petition for Voluntary Insolvency,
the Court of Appeals found that "the [Manila Regional Trial Court] has jurisdiction over
the instant case, and therefore, has the authority to render a decision on it."32 It likewise
found that Manila was the proper venue for the case because "the cities of Makati and
Manila are part of one region, or even a province, city or municipality, if Section 51 of
the Corporation Code of the Philippines is taken by analogy."33 The Court of Appeals
stated that Section 8234 of the Insolvency Law dictates that an order granting an
adjudication of insolvency is appealable only to the Supreme Court.35

Pilipinas Shell moved for reconsideration, but the Motion was denied on May 26,
2009.36 Hence, this Petition was filed on July 20, 2009.

Petitioner contended that the Court of Appeals should not have taken cognizance of
respondent Royal Ferry's appeal because it "failed to comply with Section 13, paragraphs
(a), (c), (d), (e), (f), and (h), Rule 44 of the Rules of Court."37 Petitioner claimed that the
Court of Appeals erred when it held that the "petition for voluntary insolvency [was filed]
in the proper venue since the cities of Makati and Manila are part of one region[.]"38
According to petitioner, there was no reason to consider Makati and Manila as part of one
region or province for the purpose of determining venue.39

Moreover, petitioner argued that since respondent's Articles of Incorporation stated that
its principal office was located at 2521 A. Bonifacio St., Bangkal, Makati City,40 the
Petition for Voluntary Insolvency should have been filed in Makati, not in Manila.
Petitioner cited Hyatt Elevators and Escalators Corporation v. Goldstar Elevators Phils.,
Inc.,41 where this Court held that a corporation's residence was the place where its
principal office was located as stated in its Articles of Incorporation.42 Thus, the address
in respondent's Articles of Incorporation should control the venue.

Finally, petitioner claimed that Section 81 of the Insolvency Law is inapplicable to this
case as it contemplated a situation where the trial court had jurisdiction over the case.43
Petitioner reiterated that because the venue was improperly laid, the trial court could not
issue a final order declaring respondent insolvent.

In its Comment,44 respondent averred that jurisdiction over the subject was determined
by the allegations in the pleading.45 Respondent argued that because it stated in its
Petition that it held office in Manila, the Regional Trial Court of Manila had jurisdiction
over the case.46 It further asserted that the fiction of a corporation's residence must give
way to fact.

On April 29, 2016, respondent moved to dismiss the case.47 Respondent stated that it
entered into a Compromise Agreement48 with petitioner, which resulted in the Court of
Appeals' judgment based on the compromise agreement.49 It argued that the Judgment,
promulgated in a related case docketed as CA-G.R. CV No. 102522,50 made the present
Petition moot and academic.51 In CA-G.R. CV No. 102522, the Court of Appeals
deemed the stipulations of the Compromise Agreement valid and not contrary to law,
morals, good customs, public order, or public policy.52 The dispositive portion of the
Judgment reads:

WHEREFORE, the foregoing premises considered, the Compromise Agreement is

hereby APPROVED and judgment is hereby rendered in accordance therewith. The
parties are hereby enjoined to comply with and abide by the said terms and conditions
thereof. By virtue of such approval, this case is now deemed CLOSED and
TERMINATED.

SO ORDERED.53 (Emphasis in the original)

On September 23, 2016, petitioner filed a Comment54 to respondent's Motion to Dismiss.

It claimed that the Compromise Agreement was only between Pilipinas Shell, and
Antonino R. Gascon, Jr., and Jonathan D. Gascon (the Gascons ).55 Respondent was not
a party to the agreement.56 Petitioner argued that it had agreed to waive any action
against respondent's officers, directors, employees, stockholders, and successors-in-
interest, but that it did not agree to waive its claim against respondent.57

On October 25, 2016, respondent filed a Reply58 stating that petitioner was held
solidarily liable with the Gascons in CA-G.R. CV No. 102522. Thus, when petitioner
"released the Gascons, two (2) of the solidary debtors, of all their obligations",59
petitioner effectively extinguished the entire obligation under Article 121560 of the Civil
Code.

The issues for resolution are:

First, whether this Petition is moot and academic in light of the Compromise Agreement
dated August 4, 2015;

Second, whether the Court of Appeals erred in taking cognizance of Royal Ferry's appeal
despite its violation of Rule 44, Section 13 of the Rules of Court; and

Lastly, whether the Petition for Insolvency was properly filed.

Respondent argues that the Petition is moot and academic in light of the Compromise
Agreement. It alleges that petitioner has abandoned its claim against respondent and,
consequently, lost its status as respondent's creditor. Thus, petitioner has no more interest
in the case and can no longer question the insolvency proceeding.61

For its part, petitioner contends that it has waived only its claims against "[respondent's]
Antonino R. Gascon, Jr. and Jonathan D. Gascon and its other officers, directors,
employees, stockholders, successors-in-interest and did not waive or abandon any of its
claims against [respondent]."62 (Emphasis in the original).

Petitioner has not abandoned its claim against respondent. Paragraphs 4 and 5 of the
Compromise Agreement provide:

4. The FIRST PARTY waives any further action of whatsoever nature, whether past,
present or contingent, in connection with the causes of action against the SECOND
PARTY and THIRD PARTY alleged in its complaint in Civil Case No. 05-773, entitled
"Pilipinas Shell Petroleum Corporation vs. Royal Ferry Services, Inc., Antonino R.
Gascon, Jr. and Jonathan D. Gascon," already partially resolved by the Regional Trial
Court of Makati, Branch 141 in its Partial Decision dated 20 May 2013 and Order dated 3
December 2013;
5. Should the Supreme Court of the Philippines rule in favor of the FIRST PARTY in
"Pilipinas Shell Petroleum Corporation vs. Royal Ferry Services, Inc." (G.R. No.
188146), or otherwise reinstate the Orders dated 15 June 2006 and 16 October 2006 of
the Regional Trial Court of Manila, Branch 24, dismissing the Petition for Voluntary
Insolvency filed by Royal Ferry Services, Inc., the FIRST PARTY agrees not to hold the
officers, directors, employees, stockholders, successors-in-interest of Royal Ferry
Services, Inc., the SECOND PARTY, the THIRD PARTY, and the heirs and assigns of
the foregoing personally liable for the obligations of Royal Ferry Services, Inc. to the
FIRST PARTY, and, instead, abandon completely all causes of action against said
officers, directors, employees, stockholders, successors-in-interest of Royal Ferry
Services, Inc., the SECOND PARTY, the THIRD PARTY, and their heirs and assigns.63

The Compromise Agreement was between petitioner and the Gascons. Contrary to its
claim, respondent was not a party to the agreement. Nowhere in the Compromise
Agreement did petitioner agree to waive its claim against respondent.

In CA-GR. CV No. 102522, petitioner held the Gascons solidarily liable with respondent
for the same debt that petitioner was claiming in these proceedings. It is on this basis that
respondent now asserts that it is a solidary debtor with the Gascons and can, thus, acquire
the benefit stipulated in Article 121564 of the Civil Code.

Respondent did not present any other proof of this alleged solidary liability. In CA-GR.
CV No. 102522, one of petitioner's contentions was whether the corporate veil should be
pierced to make the Gascons liable for respondent's liabilities. Before the Court of
Appeals could rule on the matter, however, the Compromise Agreement had been
executed and the case was closed.

A case is moot and academic when it ceases to present a justiciable controversy because
of supervening events so that a declaration would be of no practical use or value.65 As
respondent has failed to establish that petitioner has abandoned its claim against it,
petitioner continues to have an interest in the insolvency proceeding.

II

On the issue of the formal defects of respondent's appeal, we uphold the Court of Appeals
Decision to rule on the merits of the case.

Petitioner alleges that respondent's Appellant's Brief has failed to comply with Rule 44,
Section 13, paragraphs (a), (c), (d), (e), (f), and (h) of the Rules of Court:

(a) First, the Appellant's Brief is bereft of page references to the record in its "Statements
of Facts and of the Case" and its discussion supporting its assignment of errors, in
violation of Section 13 (c), (d) and (f) of Rule 44.

(b) Second, the Appellant's Brief failed to include a statement of the issues of fact or law
to be submitted to [the Court of Appeals] for judgment, in violation of Section 13(e),
Rule 44.

(c) Third, the Appellant's Brief does not contain the page of the report on which the
citation of authorities is found, in violation of Section 13(f), Rule 44.

(d) Fourth, the table of cases is not alphabetically arranged, in violation of Section 13(a),
Rule 44.

(e) Fifth, the Appellants Brief does not contain, as an appendix, a copy of the judgment or
final order appealed from, in violation of Section 13(h), Rule 44.66
On the other hand, respondent argues that it has substantially complied with the
requirements under the law.67 It claims that the absence of page references to the record
in its "Statements of Facts and of the Case" has not automatically resulted in the
dismissal of the appeal.68 Further, as the records of this case are not voluminous, the
Court of Appeals was not inconvenienced by the lapse.69

Respondent likewise claims that although the Appellant's Brief did not specifically
contain the phrase "statement of issues," the three errors in issue were identifiable
through a reading of the Brief.70 It claims that its failure to append a copy of the trial
court Order has been mooted because the Court of Appeals has issued the Resolution
requiring them to submit copies of the assailed Order.71 Lastly, respondent argues that it
only cited five (5) cases in the Brief. Hence, a citation of authorities was unnecessary.72

The Court of Appeals committed no reversible error in deciding to rule on the merits. The
term "may" in Rule 50, Section 173 of the Rules of Court means that the Court of
Appeals has discretion to dismiss an appeal based on the enumerated grounds. The Court
of Appeals exercised its discretion when it decided that the interest of justice would be
better served by overlooking the pleading's technical defects. Time and again, this Court
has declared that dismissal on purely technical grounds is frowned upon.74 It is judicial
policy to determine a case based on the merits so that the parties have full opportunity to
ventilate their cause and defenses.75 The Court of Appeals did not err in taking
cognizance of the appeal.

III

The Petition for Insolvency was properly filed before the Regional Trial Court of Manila.

The first insolvency law, Republic Act No. 1956, was entitled "An Act Providing for the
Suspension of Payments, the Relief of Insolvent Debtors, the Protection of Creditors, and
the Punishment of Fraudulent Debtors (Insolvency Law)". It was derived from the
Insolvency Act of California (1895), with few provisions taken from the United States
Bankruptcy Act of 1898.76 With the enactment of Republic Act No. 10142, otherwise
known as the Financial Rehabilitation and Insolvency Act of 2010 (FRIA), the
Insolvency Law was expressly repealed on July 18, 2010. The FRIA is currently the
special law that governs insolvency. However, because the relevant proceedings in this
case took place before the enactment of the FRIA, the case needs to be resolved under the
provisions of the Insolvency Law.

Insolvency proceedings are defined as the statutory procedures by which a debtor obtains
financial relief and undergoes judicially supervised reorganization or liquidation of its
assets for the benefit of its creditors.77

Respondent argues that the Regional Trial Court of Manila obtained jurisdiction because
in its Petition for Voluntary Insolvency, respondent alleged that its principal office was
then found in Manila. On the other hand, petitioner argues that filing the petition before
the Regional Trial Court of Manila was a patent jurisdictional defect as the Regional Trial
Court of Manila did not have territorial jurisdiction over respondent's residence.78

Petitioner confuses the concepts of jurisdiction and venue. In City of Lapu-Lapu v. Phil.
Economic Zone Authority:79

On the one hand, jurisdiction is "the power to hear and determine cases of the general
class to which the proceedings in question belong." Jurisdiction is a matter of substantive
law. Thus, an action may be filed only with the court or tribunal where the Constitution
or a statute says it can be brought. Objections to jurisdiction cannot be waived and may
be brought at any stage of the proceedings, even on appeal. When a case is filed with a
court which has no jurisdiction over the action, the court shall motu proprio dismiss the
case.

On the other hand, venue is "the place of trial or geographical location in which an action
or proceeding should be brought." In civil cases, venue is a matter of procedural law. A
party's objections to venue must be brought at the earliest opportunity either in a motion
to dismiss or in the answer; otherwise the objection shall be deemed waived. When the
venue of a civil action is improperly laid, the court cannot motu proprio dismiss the
case.80 (Citations omitted)

Wrong venue is merely a procedural infirmity, not a jurisdictional impediment.81

Jurisdiction is a matter of substantive law, while venue is a matter of procedural law.82
Jurisdiction is conferred by law, and the Insolvency Law vests jurisdiction in the Court of
First Instance-now the Regional Trial Court.

Jurisdiction is acquired based on the allegations in the complaint.83 The relevant portion
of respondent's Petition for Voluntary Insolvency reads:

Petitioner was incorporated on 18 October 1996 with principal place of business in 2521
A. Bonifacio Street, Bangkal, Makati City.1âwphi1 At present and during the past six
months, [Royal Ferry] has held office in Rm. 203 BF Condo Building, Andres Soriano
cor. Solana St., Intramuros, Manila, within the jurisdiction of the Honorable Court, where
its books of accounts and most of its remaining assets are kept.84

Section 14 of the Insolvency Law specifies that the proper venue for a petition for
voluntary insolvency is the Regional Trial Court of the province or city where the
insolvent debtor has resided in for six (6) months before the filing of the petition.85 In
this case, the issue of which court is the proper venue for respondent's Petition for
Voluntary Insolvency comes from the confusion on an insolvent corporation's residence.

Petitioner contends that the residence of a corporation depends on what is stated in its
articles of incorporation, regardless of whether the corporation physically moved to a
different location. On the other hand, respondent posits that the fiction of a corporation's
residence must give way to uncontroverted facts.

In Young Auto Supply Co. v. Court of Appeals:86

A corporation has no residence in the same sense in which this term is applied to a
natural person. But 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... The Corporation Code precisely requires each corporation to specify in
its articles of incorporation the "place where the principal office of the corporation is to
be located which must be within the Philippines" ... The purpose of this requirement is to
fix the residence of a corporation in a definite place, instead of allowing it to be
ambulatory. 87

Young Auto Supply dealt with the venue of a corporation's personal action by applying
the provisions of the Rules of Court. Nonetheless, the Rules of Court also provides for
when its provisions on venue do not apply. Rule 4, Section 4 provides:

RULE4
Venue of Actions

....

SECTION 4. 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.

As there is a specific law that covers the rules on venue, the Rules of Court do not apply.

The old Insolvency Law provides that in determining the venue for insolvency
proceedings, the insolvent corporation should be considered a resident of the place where
its actual place of business is located six (6) months before the filing of the petition:

Sec. 14. Application. - An insolvent debtor, owing debts exceeding in amount the sum of
one thousand pesos, may apply to be discharged from his debts and liabilities by petition
to the Court of First Instance of province or city in which he has resided for six months
next preceding the filing of such petition. In his petition he shall set forth his place of
residence, the period of his residence therein immediately prior to filing said petition, his
inability to pay all his debts in full, his willingness to surrender all his property, estate,
and effects not exempt from execution for the benefit of his creditors, and an application
to be adjudged an insolvent. He shall annex to his petition a schedule and inventory in the
form herein-after provided. The filing of such petition shall be an act of insolvency.
(Emphasis supplied) 88

The law places a premium on the place of residence before a petition is filed since venue
is a matter of procedure that looks at the convenience of litigants.89 In insolvency
proceedings, this Court needs to control the property of the insolvent corporation. In
Metropolitan Bank and Trust Company v. S.F Naguiat Enterprises, Inc.:90

Conformably, it is the policy of Act No. 1956 to place all the assets and liabilities of the
insolvent debtor completely within the jurisdiction and control of the insolvency court
without the intervention of any other court in the insolvent debtor's concerns or in the
administration of the estate. It was considered to be of prime importance that the
insolvency proceedings follow their course as speedily as possible in order that a
discharge, if the insolvent debtor is entitled to it, should be decreed without unreasonable
delay. "Proceedings of [this] nature cannot proceed properly or with due dispatch unless
they are controlled absolutely by the court having charge thereof."91 (Citations omitted)

To determine the venue of an insolvency proceeding, the residence of a corporation

should be the actual place where its principal office has been located for six (6) months
before the filing of the petition. If there is a conflict between the place stated in the
articles of incorporation and the physical location of the corporation's main office, the
actual place of business should control.

Requiring a corporation to go back to a place it has abandoned just to file a case is the
very definition of inconvenience. There is no reason why an insolvent corporation should
be forced to exert whatever meager resources it has to litigate in a city it has already left.

In any case, the creditors deal with the corporation's agents, officers, and employees in
the actual place of business. To compel a corporation to litigate in a city it has already
abandoned would create more confusion.

Moreover, the six (6)-month qualification of the law's requirement of residence shows
intent to find the most accurate location of the debtor's activities. If the address in a
corporation's articles of incorporation is proven to be no longer accurate, then legal
fiction should give way to fact.
Petitioner cites Hyatt Elevators and Escalators Corp. v. Goldstar Elevators Phils. Inc.,92
where this Court ruled that a corporation's articles of incorporation is the controlling
document that determines the venue of a corporation's action.93 Thus, abandoning the
principal office does not affect the venue of the corporation's personal action if the
corporation's articles of incorporation were not previously amended to reflect this change.

Two glaring differences between this case and Hyatt make the latter inapplicable. First,
Hyatt found inconclusive the allegation that the petitioner corporation relocated to a
different city.94 Here, the Regional Trial Court found that respondent had sufficiently
shown that it had been a resident of Manila for six (6) months before it filed its Petition
for Voluntary

Insolvency.95 Second, and more importantly, Hyatt involves a complaint for unfair trade
practices and damages-a personal action governed by the Civil Code and the Rules of
Court.96 This case, however, involves insolvency, a special proceeding governed by a
special law that specifically qualifies the residence of the petitioner.

IV

We cannot sustain the ruling of the Court of Appeals that the "petition for voluntary
insolvency [was filed] in the proper venue since the cities of Makati and Manila are part
of one region[.]"97 This is untenable. Section 14 of Batas Pambansa Blg. 129 provides
several judges to preside over the different branches assigned to Manila and Makati.
Thus, the two venues are distinct:

(d) One hundred seventy-two Regional Trial Judges shall be commissioned for the
National Capital Judicial Region. There shall be:

Eighty-two branches (Branches I to LXXXII) for the city of Manila, with seats thereat;

Twenty-five branches (Branches LXXXIII to CVII) for Quezon City, with seats thereat;

Twelve branches (Branches CVIII to CXIX) for Pasay City, with seats thereat;

Twelve branches (Branches CXX to CXXXI) for Caloocan City, with seats thereat;

Thirty-nine branches (Branches CXXXII to CLXX) for the municipalities of Navotas,

Malabon, San Juan, Mandaluyong, Makati, Pasig, Pateros, Taguig, Marikina, Parafiaque,
Las Piñas, and Muntinlupa, Branches CXXXII to CL with seats at Makati,

Branches CLI to CLXVIII at Pasig, and Branches CLXIX and CLXX at Malabon; and

Two branches (Branches CLXXI and CLXXII) for the municipality of Valenzuela, with
seats thereat. (Emphasis supplied)

Despite being in the same region, Makati and Manila are treated as two distinct venues.
To deem them as interchangeable venues for being in the same region has no basis in
law.

Respondent is a resident of Manila. The law should be read to lay the venue of the
insolvency proceeding in the actual location of the debtor's activities. If it is
uncontroverted that respondent's address in its Articles of Incorporation is no longer
accurate, legal fiction should give way to fact. Thus, the Petition was correctly filed
before the Regional Trial Court of Manila.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed
Decision dated January 30, 2009 and the Resolution dated May 26, 2009 of the Court of
Appeals in CA-G.R. CV No. 88320 are AFFIRMED.

SO ORDERED.