HYATT ELEVATORS AND ESCALATORS CORPORATION v GOLDSTAR ELEVATORS, PHILS.

October 24, 2005 | Panganiban, J. | Certiorari | Venue Venue of Personal Actions

PETITIONER: Hyatt Elevators and Escalators Corporation
RESPONDENT: Goldstar Elevators, Phils., Inc.
SUMMARY: A case for unfair trade practices was filed by HYATT against GOLDSTAR. Both were corporations dealing with elevators.
The case was filed in Mandaluyong despite both have their principal office located in Makati. GOLDSTAR filed a motion to dismiss on
the ground of improper venue. The court held that it is clear in the Civil Code and the Corporation Code that in matters of venue,
residence shall be considered synonymous as domicile which shall be understood to be the place where their legal representation is
established or where they exercise their principal functions. This matter was also settled by jurisprudence.
DOCTRINE: It is a well established rule that the residence of a corporation is the place where its principal office is located, as stated in
its Articles of Incorporation.
FACTS:
1. Both parties are engaged in the same business of selling
installing and maintaining/servicing elevators and escalators.
On February 23, 1999, HYATT filed a complaint for unfair
trade practices and damages unther 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 that in 1988, HYATT was appointed by
LGISC and LGIC as the exclusive distributor of LG elevators
in the Philippines under a Distributorship Agreement. In the
latter part of 1996, LGISC made a proposal to change the
Distributorship Agreement to that of the joint venture,
however HYATT allege that the representatives of LGISC and
LGIC conducted the meeting in bad faith in order to put
pressures upon them and eventually terminated the Exclusive
Distributorship Agreement.
2. LGISC and LGIC filed a Motion to Dismiss on 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.
3. HYATT then filed a motion for leave of court to amend the
complaint when it learned that LGISC was to be substituted to
LG Otis because of the latter succeeding the former. THe
motion also averred that Goldstar was being utilized by LG
OTIS and LGIC in perpetrating their unlawful and unjustified
acts against HYATT. Goldstar was additionally impleaded as a
party-defendant.
4. 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 agains (respondent), since the amended
complaint fails to allege with certainty what specific ultimate
acts GOLDSTAR performed in violation of HYATTs rights.
5. Trial court dismiss the motion. Goldstar filed a MR but the
same was dismissed. CA reversed RTC and declared that the
venue was clearly improper, because none of the litigants
resided in Mandaluyong City, where the case was filed.
ISSUE:
1. WoN the venue (Mandaluyong) was improper YES.
RULING: Petition DENIED.
RATIO:
1. Sec 2 Rule 4 of the 1997 Revised Rules of Court states tgat
Venue of personal actions all other actions may be
commenced and tried where the 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.

2. But since both parties to this case are corporations, there is
a need to clarify the meaning of residence. The law
recognize two types of persons: (1) Natural and (2) juridical.
Corporations fall under juridical. A corporation, however, has
no residence1 in the same sense in which this term is applied to
a natural person.
3. In the case Young Auto Supply Company v Court of
Appelas, the court 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. But even before this ruling, it has been already
established that the residence of a corporation is the place
where its principal office is established.
4. The court held that in the purpose of venue, residence is
the same with domicile. 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. AND 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).
5. In the present case, there is no question as to the residence
of respondent. What needs to be examined is that of
petitioner. Admittedly, 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.
6. HYATT argues that the Rules of Court did 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. This is however settled by
jurisprudence.
7. 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.

1 Residence is the permanent home---the place to

which, whenever absent for business or pleasure,
one intends to return