Case Summary (G.R. No. 161026)
Factual Background
HYATT ELEVATORS AND ESCALATORS CORPORATION alleged that it was the exclusive distributor of LG elevators and escalators and that the termination of that distributorship caused it substantial damages. The original complaint named LG Industrial Systems Co., Ltd. and LG International Corporation as defendants and sought damages for alleged unfair trade practices and other relief. GOLDSTAR ELEVATORS, PHILS., INC. was later impleaded in an amended complaint on the theory that it was being utilized by the LG entities in perpetrating unlawful acts against Hyatt. The parties’ corporate addresses as stated in their articles were placed in issue: GOLDSTAR’s articles reflected a principal office at Jacinta II Building, Guadalupe, Makati, while HYATT’s articles indicated an office at Dao I Condominium, Salcedo St., Legaspi Village, Makati.
Trial Court Proceedings
The RTC admitted Hyatt’s amended complaint and, on May 27, 2002, denied Goldstar’s motion to dismiss which had asserted improper venue and failure to state a cause of action. The trial court reasoned that the amended complaint adopted allegations sufficient to permit adjudication of claims against Goldstar and that the complaint had been pleaded so as to afford complete relief, mentioning that Goldstar was allegedly managed and operated by the same Korean officers of the LG defendants. A motion for reconsideration by Goldstar was denied October 1, 2002.
Proceedings in the Court of Appeals
GOLDSTAR petitioned the Court of Appeals by certiorari, alleging grave abuse of discretion in the RTC’s denial of its motion to dismiss. The CA found palpable error in the trial court’s ruling and held that venue was improperly laid in Mandaluyong City because none of the litigants “resided” there. The CA treated Makati—the place indicated in the corporations’ articles of incorporation—as the corporate residence for venue purposes and concluded that the trial court had erred in denying dismissal. The CA therefore set aside the RTC orders and ordered the case dismissed on the ground of improper venue.
Issue Presented to the Supreme Court
The sole issue presented was whether the Court of Appeals erred in holding that venue was improperly laid and committed grave abuse of discretion in reversing the RTC and dismissing the case.
Supreme Court Disposition
The Supreme Court denied the petition for review and affirmed the CA Decision and Resolution. The Court imposed costs against the petitioner.
Legal Basis and Reasoning
The Court anchored its decision on the language of Rule 4, Sec. 2, 1997 Revised Rules of Court, which permits personal actions to be commenced where the plaintiff or any principal plaintiff resides, or where the defendant or any principal defendant resides. The Court explained that corporations are juridical persons under Article 44(3), Civil Code, and that a juridical person’s domicile or residence is fixed by law. The Court reiterated the long-established rule, as articulated in Young Auto Supply Company v. Court of Appeals, that for practical and juridical purposes a corporation’s residence is the place where its principal office is located as stated in its articles of incorporation. The Court relied also on Article 51, Civil Code, and Section 14(3), Corporation Code, which require the articles of incorporation to state the place where the principal office is to be located and thereby fix the domicile for juridical persons. The Court rejected petitioner’s contention that the corporate residence for venue should reflect the actual physical office in use at the time of suit. It held that allowing a corporation to defea
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Case Syllabus (G.R. No. 161026)
Parties and Posture
- HYATT ELEVATORS AND ESCALATORS CORPORATION, PETITIONER filed a petition for review on certiorari under Rule 45 assailing the Court of Appeals' decision and resolution in CA-GR SP No. 74319.
- GOLDSTAR ELEVATORS, PHILS., INC., RESPONDENT was impleaded as a defendant in the underlying civil action and invoked dismissal on grounds of improper venue and failure to state a cause of action.
- The Court of Appeals set aside the Regional Trial Court orders dated May 27, 2002 and October 1, 2002 and ordered the case dismissed on the ground of improper venue.
- The Supreme Court denied the petition and affirmed the assailed decision and resolution with costs against petitioner.
Key Facts
- HYATT was a domestic corporation engaged in selling, installing, and maintaining elevators, escalators and parking equipment and stated its address in its Articles of Incorporation as the 6th Floor, Dao I Condominium, Salcedo St., Legaspi Village, Makati City.
- GOLDSTAR was a domestic corporation engaged in marketing and servicing elevators and escalators with address at the 6th Floor, Jacinta II Building, 64 EDSA, Guadalupe, Makati City.
- On February 23, 1999, HYATT filed a complaint for unfair trade practices and damages under Articles 19, 20 and 21 of the Civil Code against LG Industrial Systems Co. Ltd. and LG International Corporation alleging termination of an exclusive distributorship and damages of P120,000,000, P20,000,000, P1,000,000, and P500,000.
- HYATT moved to amend its complaint on December 4, 2000 to substitute LG Otis Elevator Company for LGISC and to implead GOLDSTAR, alleging that GOLDSTAR was being utilized by LG Otis and LGIC in perpetrating wrongful acts.
- On April 12, 2002, GOLDSTAR moved to dismiss the amended complaint on the grounds of improper venue and failure to state a cause of action, and the trial court denied that motion on May 27, 2002.
- GOLDSTAR filed a motion for reconsideration which the trial court denied on October 1, 2002, and GOLDSTAR thereafter filed a petition for certiorari with the Court of Appeals asserting grave abuse of discretion.
Procedural History
- HYATT commenced the action in the Regional Trial Court, Branch 213, Mandaluyong City, on February 23, 1999.
- The trial court denied LGISC and LGIC's motion to dismiss on January 7, 2000 and later admitted HYATT's amended complaint on January 8, 2001.
- GOLDSTAR filed a motion to dismiss the amended complaint on April 12, 2002, which the trial court denied in an Order dated May 27, 2002, and denied GOLDSTAR's motion for reconsideration on October 1, 2002.
- The Court o