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CIVIL PROCEDURE | B2015 CASES

Hyatt v. Goldstar
October 24, 2005 Panganiban alycat

SUMMARY: According to Hyatts Articles of Incorporation, its residence is in Makati. However, in making its complaint for unfair trade practices and damages Goldstar (also based in Makati), it filed with a trial court in Mandaluyong. This is a case of improper venue. DOCTRINE: 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. Since the principal place of business of a corporation determines its residence or domicile, then the place indicated in its articles of incorporation becomes controlling in determining the venue for this case. FACTS: Respondent Goldstar is a domestic corporation engaged in the business of marketing, distributing, selling, importing, installing, and maintaining elevators and escalators, with address in Makati. Petitioner Hyatt is a domestic corporation similarly engaged, with address also in Makati. In 1999, Hyatt filed a complaint (in a trial court in Mandaluyong, it appears) for unfair trade practices and damages under Arts. 19, 20, and 21 against LG Insdustrial Systems Co. (LGISC) and LG International Corporation alleging that: o 1988: Hyatt was appointed by LGIC and LGISC as the exclusive distributor of LG elevators and escalators in the Philippines under a Distributorship Agreement. o 1996: LGISC made a proposal to change the Exclusive Distributorship to that of a joint venture partnership. Hyatts meetings with LGISC and LGIC were conducted in utmost bad faith with malevolent intentions. In the middle of the negotiations, LGISC and LGIC terminated the Exclusive Distributorship. As a consequence, Hyatt suffered damages. LGISC and LGIC filed a Motion to Dismiss based on improper venue, among other things (no further details at this point). The trial court denied.

Hyatt filed a motion for leave of court to amend the complaint, alleging that subsequent to the complaint, it learned that LGISC transferred all its assets and goodwill to to LG Otis Elevator Company (OTIS). Thus, LGISC was to be substituted or charged to LG OTIS, its successor-in-interest. The motion averred that Goldstar was being utilized by OTIS and LGIC in perpetrating their unlawful and unjustified acts against Hyatt. Consequently, Goldstar was to be additionally impleaded. OTIS and LGIC filed their opposition to Hyatts motion, arguing that: The trial court admitted the Amended Complant. Goldstar filed a Motion to Dismiss on the grounds that: o Improper venue As neither Hyatt nor defendants reside in Mandaluyong, where the original case was filed o Failure to state a cause of action The trial court denied the Motion to Dismiss. On appeal, the CA ruled that the trial court had committed palpable error amounting to grave abuse of discretion when the latter denied Goldstars Motion to Dismiss. The venue was clearly improper, as none of the litigants resided in Mandaluyong.

ISSUE + RATIO: WON the venue was proper NO The resolution of the case rests upon a proper understanding of Sec. 2, Rule 4. Since both parties are corporations, there is a need to clarify the meaning of residence. Residence is a permanent home, the place to which, whenever absent for business or pleasure, one intends to return to. Residence is vital when dealing with venue. A corporation has no residence in the same sense as in applied to natural persons. This is why in Young Auto Supply v. CA, the Court ruled that a corporation is a resident of the place where its principal office is located as stated in the Articles of Incorporation. Residence is synonymous with domicile. The residence or domicile of a juridical person is fixed by the law creating or recognizing ot. Under Sec. 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. In the present case, there is no question as to the residence of Goldstar (Makati). What needs to be examined is that of Hyatt. Admittedly, Hyatts place of business is in Makati, as indicated in its Articles of Incorporation. Since the principal place of business of a corporation determines its residence or domicile, then that place becomes controlling in determining the venue for this case.

CIVIL PROCEDURE | B2015 CASES

Hyatt claims that the Rules of Court do not provide that when the plaintiff is a corporation, the complaint should be filed in the location of its principal office. Jurisprudence, however, has settled that the place where the principal office is located, establishes its residence. This ruling is important is important in determining the venue of an action by or against a corporation. Without merit is the argument of petitioner that the locality stated in its Articles of Incorporation does not conclusively indicate that its principal office is still in the same place. The Supreme Court agrees with the CA that the requirement to state in the Articles, the location of the principal office is not a a meaningless requirement. That proviso would be rendered nugatory if corporations were allowed to simply disregard what is expressly stated in their Articles of Incorporation. Inconclusive are the allegations of Hyatt that it had closed its Mkati office and relocated to Mandaluyong, and that Goldstar had been aware of those circumstances. Assuming arguendo that they transacted business with each other in Hyatts Mandaluyong office, the fact rema ins that in law, the latters residence was still in the place indicated in its Articles of Incorporation. Further unacceptable is its faulty reasoning that the ground for the CAs dismissal was its failure to amend its Articles of Incorporation to reflect its actual and present principal office. The CA was clear that the complaint was dismissed because the venue had been improperly laid. Indeed, it is a legal truism that the rules on the venue of personal actions are fixed for the convenience of the plaintiffs and their witnesses. Equally settled, however, is the rule that choosing the venue of an action s not left to a plaintiffs caprice; the matter is regulated by the Rules of Court. The Court finds it necessary to remind party litigants, especially corporations, that the rules on venue are designed to insure a just and orderly administration of justice. Such objective would not be attained if the plaintiff is given unrestricted freedom to choose the court where he may file his complaint or petition. HELD: CA affirmed.