Hyatt Elevators and Escalators Corporation vs. Goldstar Elevators, Phils., Inc.

A corporation's residence for purposes of determining the venue of personal actions is the place where its principal office is located as stated in its Articles of Incorporation, regardless of its actual physical relocation to another locality.

Hyatt Elevators and Escalators Corporation, a domestic corporation engaged in the elevator business with its principal office stated in its Articles of Incorporation as Makati City, filed a complaint for unfair trade practices and damages against LG Industrial Systems Co. Ltd. (LGISC) and LG International Corporation (LGIC) in the Regional Trial Court of Mandaluyong City. After amending the complaint to substitute LG Otis for LGISC and implead Goldstar Elevators, Phils., Inc. (also a Makati-based corporation), Goldstar moved to dismiss on the ground of improper venue, arguing that none of the litigants resided in Mandaluyong. Hyatt countered that it had closed its Makati office and relocated to Mandaluyong, making venue proper.

• Original Action: Hyatt filed a complaint for unfair trade practices and damages under Articles 19, 20, and 21 of the Civil Code against LGISC and LGIC in RTC Mandaluyong City, claiming ₱120,000,000.00 in actual damages. Hyatt alleged it was the exclusive distributor of LG elevators and escalators, and that LGISC and LGIC negotiated a joint venture in bad faith and terminated the exclusive distributorship agreement to apply pressure.
• Amended Complaint: Subsequent to the filing, Hyatt learned that LGISC transferred its organization, assets, and goodwill to LG Otis Elevator Company pursuant to a joint venture agreement with Otis Elevator Company of the USA. Hyatt moved to amend the complaint to substitute LG OTIS for LGISC and implead Goldstar, alleging Goldstar was being utilized by LG OTIS and LGIC to perpetrate unlawful acts against Hyatt.
• Motion to Dismiss: Goldstar moved to dismiss the amended complaint on grounds of improper venue and failure to state a cause of action, noting that neither Hyatt nor the defendants resided in Mandaluyong. The RTC denied the motion, finding the venue properly laid and the cause of action sufficiently stated, noting that Goldstar was managed by the same Korean officers as the other defendants.
• Appellate Review: Goldstar filed a petition for certiorari with the CA. The CA granted the petition and dismissed the case, holding that venue was improperly laid because both Hyatt and Goldstar had their principal places of business in Makati City as stated in their Articles of Incorporation. The CA rejected Hyatt's contention that its actual relocation to Mandaluyong changed its residence for venue purposes.

• Rules of Court Interpretation: Petitioner argued that the Rules of Court do not explicitly mandate that a corporate plaintiff must file a complaint in the location of its principal office as indicated in its Articles of Incorporation.
• Actual Residence Prevails: Petitioner maintained that the locality stated in its Articles of Incorporation does not conclusively indicate its current principal office, having closed its Makati office and relocated to Mandaluyong City, a fact known to respondent.
• Misconstrual of CA Rationale: Petitioner asserted that the CA dismissed the complaint based on improper venue, not on the failure to amend the Articles of Incorporation, implying that actual residence should dictate venue over the formal address on file with the SEC.

• Principal Office in Articles Controls: Respondent countered that the principal place of business stated in the Articles of Incorporation is controlling for venue purposes, rendering the requirement to state the principal office meaningless if corporations could simply disregard it.
• Prevention of Circumvention: Respondent argued that allowing actual location to prevail over the Articles would create confusion and enable enterprising litigants to easily circumvent venue rules by the simple expedient of closing old offices and opening new ones.

• Venue of Personal Actions: Whether the Court of Appeals erred in holding that venue was improperly laid when the principal office stated in the corporation's Articles of Incorporation differs from its actual physical office.

• Venue of Personal Actions: The appellate court committed no error; venue was improperly laid. The residence of a corporation for venue purposes is fixed by the principal office location stated in its Articles of Incorporation. Allowing actual physical location to override the Articles would create confusion and permit litigants to circumvent venue rules by the simple expedient of moving offices. The requirement to state the principal office in the Articles is not a meaningless requirement and cannot be disregarded. Even if the parties transacted business in Mandaluyong, the corporation's residence in law remains the place indicated in its Articles.

• Residence of a Corporation for Venue Purposes — For practical purposes, a corporation is a resident of the place where its principal office is located as stated in its articles of incorporation. This residence is synonymous with domicile and is fixed by the law creating or recognizing the juridical person. Under the Corporation Code, the place where the principal office is located is a required content of the articles of incorporation, and this stated location controls over the actual physical location for determining the venue of personal actions.

• "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 rules on venue, like the other procedural rules, are designed to insure a just and orderly administration of justice or the impartial and evenhanded determination of every action and proceeding. Obviously, this objective will not be attained if the plaintiff is given unrestricted freedom to choose the court where he may file his complaint or petition."
• "To insist that the proper venue is the actual principal office and not that stated in its Articles of Incorporation would indeed create confusion and work untold inconvenience. Enterprising litigants may, out of some ulterior motives, easily circumvent the rules on venue by the simple expedient of closing old offices and opening new ones in another place that they may find well to suit their needs."

• Young Auto Supply Company v. Court of Appeals, 223 SCRA 670 (1993) — Followed. Established that a corporation is a resident of the place where its principal office is located as stated in the articles of incorporation, a rule adopted to prevent confusion and inconvenience to litigants.
• Clavecilla Radio System v. Antillon, 19 SCRA 379 (1967) — Followed. Held that the residence of a corporation is the place where its principal office is established and that the choice of venue is not left to a plaintiff's caprice.
• Evangelista v. Santos, 86 Phil. 387 (1950) — Followed. Defined residence as the permanent home and established that for venue purposes, residence is synonymous with domicile.

• Section 2, Rule 4, 1997 Rules of Court — Provides that personal actions may be commenced and tried where the plaintiff or defendant resides. Applied to determine that because neither corporate party resided in Mandaluyong according to their Articles of Incorporation, venue was improperly laid.
• Article 51, Civil Code — Provides that when the law does not fix the domicile of juridical persons, it shall be the place where their legal representation is established or where they exercise principal functions. Applied to support the rule that corporate domicile/residence is fixed by the law recognizing it, specifically the Corporation Code.
• Section 14(3), Corporation Code — Requires the articles of incorporation to state the place where the principal office of the corporation is to be located. Applied to establish that the principal office stated in the articles controls the determination of corporate residence for venue purposes.

Sandoval-Gutierrez, Corona, Carpio Morales, Garcia