Clavecilla Radio System vs. Antillon

The governing principle is that for a personal action not founded on a written contract, a domestic corporation may be sued only at the municipality where its principal office is established. Because the Rules of Court restrict the "may be served with summons" alternative to defendants who do not reside in the Philippines, a corporation with a fixed principal office cannot be sued at the location of its branch offices. Venue is strictly regulated and cannot be laid at the plaintiff's convenience.

On March 12, 1963, a telegraphic message intended for New Cagayan Grocery was transmitted through Clavecilla Radio System’s network but suffered a critical omission of the word "NOT" at the Cagayan de Oro branch office, fundamentally altering the message's commercial purport and allegedly causing financial damages to the addressee. New Cagayan Grocery filed a civil complaint for damages before the Municipal Court of Cagayan de Oro City on June 22, 1963. Clavecilla Radio System moved to dismiss the complaint for lack of cause of action and improper venue. The City Judge denied the motion and set the case for trial. Clavecilla subsequently filed a petition for prohibition with preliminary injunction before the Court of First Instance of Misamis Oriental to restrain the City Judge from proceeding with the case.

• On March 12, 1963, a telegraphic message addressed to New Cagayan Grocery was filed at Clavecilla Radio System’s Bacolod Branch Office for transmission to its Cagayan de Oro branch. The message read: "NECAGRO CAGAYAN DE ORO (CLAVECILLA) REURTEL WASHED NOT AVAILABLE REFINED TWENTY FIFTY IF AGREEABLE SHALL SHIP LATER REPLY POHANG."
• Upon receipt at the Cagayan de Oro branch, the transmitting personnel omitted the word "NOT" between "WASHED" and "AVAILABLE" before delivering the message to the addressee. New Cagayan Grocery alleged that this alteration changed the commercial import of the telegram and caused actionable damages.
• New Cagayan Grocery instituted a civil action for damages before the Municipal Court of Cagayan de Oro City on June 22, 1963. Clavecilla Radio System filed a motion to dismiss, asserting that the complaint stated no cause of action and that venue was improperly laid.
• The City Judge denied the motion to dismiss on September 18, 1963, ruling that Clavecilla could be sued either in Manila, where its principal office is located, or in Cagayan de Oro, where it was validly served with summons through its branch manager.
• Clavecilla filed a petition for prohibition with preliminary injunction before the Court of First Instance of Misamis Oriental to enjoin the City Judge from proceeding. The CFI dismissed the petition, prompting the present appeal.

• Petitioner maintained that the action for damages must be filed exclusively in Manila, where it maintains its principal office and legal residence.
• Petitioner argued that Section 1(b)(3) of Rule 4 of the New Rules of Court restricts venue to the defendant's residence for actions not based on a written contract. Because a corporation's residence is statutorily fixed at its principal office, the alternative ground "may be served with summons" does not apply to domestic corporations.
• Petitioner contended that permitting suit at branch locations would violate settled venue rules, create procedural confusion, and impose undue operational burdens on corporate entities.

• Respondents countered that venue was properly laid in Cagayan de Oro City because the petitioner maintained an operational branch office there and was validly served with summons through its branch manager.
• Respondents maintained that the phrase "may be served with summons" under the venue rules expressly authorizes the filing of the action at the location where the defendant can be found and served, regardless of principal office location.
• Respondents argued that the City Judge correctly assumed cognizance of the case and that the petition for prohibition lacked merit.

• Procedural Issues: Whether the Court of First Instance correctly dismissed the petition for prohibition challenging the Municipal Court's assumption of jurisdiction over the damages case.
• Substantive Issues: Whether venue for a personal action based on tort against a domestic corporation may be laid at the municipality housing its branch office rather than its principal office.

• Procedural: The Court reversed the Court of First Instance's order dismissing the petition for prohibition. The lower court erred in affirming the Municipal Court's cognizance of the case because the venue was improperly laid, thereby depriving the trial court of proper jurisdiction over the subject matter.
• Substantive: The Court ruled that venue was improperly laid in Cagayan de Oro. Because the action is founded on tort rather than a written contract, Section 1(b)(3), Rule 4 of the New Rules of Court mandates filing at the defendant's residence. The residence of a corporation is its principal office, which in this case is Manila. The Court held that the statutory phrase "or may be served with summons" applies only when the defendant does not reside in the Philippines. A domestic corporation possesses a single legal residence, and the existence of branch offices does not create alternative venues. Allowing suit at branch locations would contravene the Rules of Court and generate substantial inconvenience. The case was remanded without prejudice to the filing of the proper action in Manila.

• Corporate Residence Doctrine — The residence of a corporation is legally fixed at the place where its principal office is established, as specified in its articles of incorporation. The Court applied this doctrine to hold that a domestic corporation can be sued only at its principal office for personal actions not based on contract, rejecting the contention that branch offices constitute alternative legal residences for venue purposes.
• Strict Regulation of Venue — Venue in personal actions is governed by mandatory procedural rules and is not subject to the plaintiff's discretion. The Court relied on this principle to emphasize that statutory venue provisions must be strictly construed, and courts cannot assume jurisdiction when venue is improperly laid.

• "The term 'may be served with summons' does not apply when the defendant resides in the Philippines for, in such case, he may be sued only in the municipality of his residence, regardless of the place where he may be found and served with summons." — The Court employed this statutory construction to clarify that the alternative venue ground for service of summons is strictly limited to non-resident defendants, thereby foreclosing its application to domestic corporations.
• "The fact that it maintains branch offices in some parts of the country does not mean that it can be sued in any of these places. To allow an action to be instituted in any place where a corporate entity has its branch offices would create confusion and work untold inconvenience to the corporation." — This passage articulates the policy rationale underlying the restriction of corporate venue to the principal office, emphasizing administrative efficiency and the prevention of forum shopping.

• Cohen v. Benguet Commercial Co., Ltd. — Cited as controlling precedent establishing that the "may be served with summons" venue alternative does not apply to defendants residing within the Philippines.
• Alcantara v. Secretary of the Interior & Evangelista v. Santos — Cited to support the principle that a natural or juridical person can maintain only one legal residence at a time, and that venue is strictly regulated by the Rules of Court rather than plaintiff preference.

• Section 1(b)(3), Rule 4 of the New Rules of Court — Governs venue for personal actions not based on a written contract in inferior courts. The Court interpreted the provision to require filing at the defendant's residence, holding that the service-of-summons alternative is inapplicable to domestic corporations.