Davao Light & Power Co., Inc. vs. Court of Appeals

A corporation's residence for purposes of venue is the place where its principal office is located as stated in its articles of incorporation, and representations made in contracts to which the opposing party is a stranger cannot create estoppel barring the corporation from filing suit in that venue.

Davao Light & Power Co., Inc. (DLPC) is a domestic private corporation that, per its amended articles of incorporation and by-laws, has its principal office in Cebu City. Private respondent Francisco Tesorero is an individual against whom DLPC filed a complaint for damages. The dispute centers on whether DLPC's representations in separate contracts with the National Power Corporation (NAPOCOR) — stating its principal office at "163-165 P. Reyes Street, Davao City" — should estop it from filing suit in Cebu City, and whether venue for a corporation's personal action is governed by the articles of incorporation or by extrinsic contractual representations.

On April 10, 1992, Davao Light & Power Co., Inc. filed a complaint for damages against Francisco Tesorero before the Regional Trial Court of Cebu City, Branch 11, docketed as Civil Case No. CEB-11578, praying for damages in the amount of ₱11,000,000.00. The complaint alleged that DLPC's principal place of business was in Banilad, Cebu City.

In lieu of an answer, Tesorero filed a motion to dismiss on four grounds: failure to state a cause of action, the claim having been extinguished or rendered moot, non-joinder of indispensable parties, and improper venue. The last ground was the most material. Tesorero argued that DLPC's principal office was at "163-165 P. Reyes Street, Davao City," as evidenced by contracts of lease and a contract of sale of electric generating equipment executed between DLPC and the National Power Corporation. He further pointed to allegations in pleadings filed by DLPC in several civil cases pending before the RTC of Davao, in which DLPC stated its residence as Davao City.

On August 3, 1992, the trial court granted the motion to dismiss on the ground of improper venue. The trial court reasoned that the representations made by DLPC in its lease contracts with NAPOCOR — stating that its principal office was in Davao City — barred DLPC from denying the same, and that considerations of judicial economy and party convenience supported filing the case in Davao City. DLPC's motion for reconsideration was denied on October 1, 1992.

DLPC originally filed a petition for review on certiorari before the Supreme Court on November 20, 1992, docketed as G.R. No. 107381. The Court declined to take immediate cognizance and, on January 11, 1993, referred the petition to the Court of Appeals, where it was docketed as CA-G.R. SP No. 29996. On August 31, 1993, the Court of Appeals denied due course and dismissed the petition. Counsel for DLPC received a copy of the decision on September 6, 1993. Without filing a motion for reconsideration, DLPC filed the instant petition before the Supreme Court.

• Procedural Due Process: Petitioner argued that the Court of Appeals denied it procedural due process by failing to resolve the third issue it raised.
• Estoppel Elements Absent: Petitioner maintained that its right to file its action for damages in Cebu City, where its principal office is located and where it paid ₱55,398.50 in docket fees, could not be negated by a supposed estoppel absent the essential elements of a false statement having been made to private respondent, private respondent's reliance in good faith on the truth thereof, and private respondent's action or inaction based thereon to his detriment or prejudice.

• Improper Venue: Respondent argued that the proper venue was Davao City, not Cebu City, because petitioner was estopped from claiming its residence was in Cebu City given contradictory statements in contracts with NAPOCOR stating its principal office was at "163-165 P. Reyes St., Davao City."
• Judicial Admissions: Respondent contended that petitioner made several judicial admissions as to its principal office in Davao City through allegations in pleadings filed by petitioner in numerous civil cases pending before the RTC of Davao in which it was either plaintiff or defendant.

• Venue of Personal Actions by Corporations: Whether the residence of a corporation for purposes of venue is determined by the principal office stated in its articles of incorporation or by representations made in contracts and pleadings filed in other cases.
• Estoppel Against a Corporation: Whether a corporation is estopped from filing suit in the venue of its principal office as stated in its articles of incorporation based on contradictory address representations in contracts to which the opposing party is a stranger.

• Venue of Personal Actions by Corporations: Yes. Venue for a personal action by a corporation is determined by the place where its principal office is located as stated in its articles of incorporation, which for DLPC is Cebu City.
• Estoppel Against a Corporation: No. Estoppel does not lie because the private respondent was not a party to the contracts containing the contradictory representations and did not rely on them.

• Venue of Personal Actions by Corporations: A corporation has no residence in the same sense as a natural person, but for practical purposes it is considered a resident of the place where its principal office is located as stated in its articles of incorporation. The Corporation Code requires each corporation to specify in its articles of incorporation the place where its principal office is to be located, the purpose being to fix the residence of a corporation in a definite place rather than allowing it to be ambulatory. DLPC's amended articles of incorporation and by-laws state that its principal office is in Cebu City. An action for damages being a personal action, venue is determined under Rule 4, Section 2 of the Rules of Court, which allows the action to be commenced where the plaintiff resides, at the election of the plaintiff. The Court relied on Young Auto Supply Co. vs. Court of Appeals, which held that the articles of incorporation control over extrinsic documents such as contracts and commercial documents in determining a corporation's residence for venue purposes.

• Estoppel Against a Corporation: The elements of estoppel require that the false statement be made to the party claiming estoppel, that such party relied on it in good faith, and that the party acted or failed to act on that reliance to his detriment or prejudice. Private respondent Tesorero was not a party to any of the contracts with NAPOCOR in which DLPC stated its address as Davao City; he was a complete stranger to those covenants. His claim that he was privy thereto as a member of the public for whose benefit the equipment was leased was rejected as flimsy. Likewise, there was no showing that Tesorero was a party to the civil cases in Davao where DLPC alleged its residence as Davao City, or that he relied on those representations. Without the essential elements of estoppel, the doctrine could not bar DLPC from filing suit in Cebu City.

• Corporate Residence for Venue Purposes — A corporation is considered a resident of the place where its principal office is located as stated in its articles of incorporation. The purpose of the Corporation Code requirement to specify the principal office is to fix the residence of a corporation in a definite place, instead of allowing it to be ambulatory. This residence controls for venue purposes over contradictory representations in contracts or pleadings in other cases.

• Distinction Between Venue and Jurisdiction — Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by consent or waiver upon a court which otherwise would have no jurisdiction over the subject matter; but venue as fixed by statute may be changed by the consent of the parties, and an objection that the plaintiff brought suit in the wrong place may be waived by failure to make a timely objection.

• Elements of Estoppel — Estoppel requires (a) a false statement or representation made to the party claiming estoppel; (b) reliance in good faith on the truth thereof by that party; and (c) action or inaction based on such reliance of such character as to change the party's position or status to his injury, detriment, or prejudice. A stranger to the contract containing the representation cannot invoke estoppel.

• "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." — This passage, quoted from Young Auto Supply Co. vs. Court of Appeals, articulates the canonical rule for determining corporate residence for venue purposes.

• "The purpose of this requirement is to fix the residence of a corporation in a definite place, instead of allowing it to be ambulatory." — This explains the rationale behind the Corporation Code's requirement that each corporation specify its principal office in its articles of incorporation.

• "Private respondent is not a party to any of the contracts presented before us. He is a complete stranger to the covenants executed between petitioner and NAPOCOR, despite his protestations that he is privy thereto, on the rather flimsy ground that he is a member of the public for whose benefit the electric generating equipment subject of the contracts were leased or acquired." — This passage establishes why estoppel could not be invoked against the petitioner, as the essential element of reliance by the party claiming estoppel was absent.

• Young Auto Supply Co. vs. Court of Appeals, 223 SCRA 670 (1993) — Controlling precedent. The Supreme Court reversed the Court of Appeals' dismissal on venue grounds, holding that a corporation's residence for venue purposes is the principal office stated in its articles of incorporation, not addresses appearing in contracts or commercial documents. The Court applied the same reasoning to the instant case.
• Cohen vs. Benguet Commercial Co., Ltd., 34 Phil. 526 (1916) — Cited within Young Auto Supply for the proposition that a corporation is a resident of the place where its principal office is located as stated in its articles of incorporation.
• Clavecilla Radio System vs. Antillon, 19 SCRA 379 (1967) — Cited for the rule that actions cannot be filed against a corporation in any place where it maintains branch offices, as this would create confusion and inconvenience; by the same token, a corporation cannot file personal actions in a place other than its principal place of business unless such place is also the residence of a co-plaintiff or defendant.
• Santos III vs. Northwest Orient Airlines, 210 SCRA 256 (1992) — Cited for the distinction between venue and jurisdiction.
• Baritua vs. Court of Appeals, 267 SCRA 331 (1997) — Cited for the proposition that an action for damages is a personal action.

• Section 14(3), Corporation Code — 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. Applied to fix DLPC's residence for venue purposes at Cebu City, as stated in its amended articles of incorporation.
• Rule 4, Section 2, Rules of Court (Venue of Personal Actions) — Provides that all personal 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, at the election of the plaintiff. Applied to allow DLPC to file its damages suit in Cebu City, its residence as a corporate plaintiff.

Bellosillo, Mendoza, Quisumbing, and Buena, JJ., concurred.