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ANG MGA KAANIB SA IGLESIA NG DIOS KAY KRISTO HESUS, H.S.K.

SA BANSANG PILIPINAS, INC. petitioner, vs. IGLESIA NG DIOS


KAY CRISTO JESUS, HALIGI AT SUHAY NG
KATOTOHANAN, respondent.

DECISION
YNARES-SANTIAGO, J.:

This is a petition for review assailing the Decision dated October 7, 1997[1] and the Resolution
dated February 16, 1999[2] of the Court of Appeals in CA-G.R. SP No. 40933, which affirmed the
Decision of the Securities and Exchange and Commission (SEC) in SEC-AC No. 539.[3]
Respondent Iglesia ng Dios Kay Cristo Jesus, Haligi at Suhay ng Katotohanan (Church of
God in Christ Jesus, the Pillar and Ground of Truth),[4] is a non-stock religious society or
corporation registered in 1936. Sometime in 1976, one Eliseo Soriano and several other members
of respondent corporation disassociated themselves from the latter and succeeded in registering on
March 30, 1977 a new non-stock religious society or corporation, named Iglesia ng Dios Kay
Kristo Hesus, Haligi at Saligan ng Katotohanan.
On July 16, 1979, respondent corporation filed with the SEC a petition to compel the Iglesia
ng Dios Kay Kristo Hesus, Haligi at Saligan ng Katotohanan to change its corporate name, which
petition was docketed as SEC Case No. 1774. On May 4, 1988, the SEC rendered judgment in
favor of respondent, ordering the Iglesia ng Dios Kay Kristo Hesus, Haligi at Saligan ng
Katotohanan to change its corporate name to another name that is not similar or identical to any
name already used by a corporation, partnership or association registered with the
Commission.[5] No appeal was taken from said decision.
It appears that during the pendency of SEC Case No. 1774, Soriano, et al., caused the
registration on April 25, 1980 of petitioner corporation, Ang Mga Kaanib sa Iglesia ng Dios Kay
Kristo Hesus, H.S.K., sa Bansang Pilipinas. The acronym H.S.K. stands for Haligi at Saligan ng
Katotohanan.[6]
On March 2, 1994, respondent corporation filed before the SEC a petition, docketed as SEC
Case No. 03-94-4704, praying that petitioner be compelled to change its corporate name and be
barred from using the same or similar name on the ground that the same causes confusion among
their members as well as the public.
Petitioner filed a motion to dismiss on the ground of lack of cause of action. The motion to
dismiss was denied. Thereafter, for failure to file an answer, petitioner was declared in default and
respondent was allowed to present its evidence ex parte.
On November 20, 1995, the SEC rendered a decision ordering petitioner to change its
corporate name. The dispositive portion thereof reads:

PREMISES CONSIDERED, judgment is hereby rendered in favor of the petitioner


(respondent herein).
Respondent Mga Kaanib sa Iglesia ng Dios Kay Kristo Jesus (sic), H.S.K. sa Bansang
Pilipinas (petitioner herein) is hereby MANDATED to change its corporate name to
another not deceptively similar or identical to the same already used by the
Petitioner, any corporation, association, and/or partnership presently registered with
the Commission.

Let a copy of this Decision be furnished the Records Division and the Corporate
and Legal Department [CLD] of this Commission for their records, reference and/or
for whatever requisite action, if any, to be undertaken at their end.

SO ORDERED.[7]

Petitioner appealed to the SEC En Banc, where its appeal was docketed as SEC-AC No.
539. In a decision dated March 4, 1996, the SEC En Banc affirmed the above decision, upon a
finding that petitioner's corporate name was identical or confusingly or deceptively similar to that
of respondents corporate name.[8]
Petitioner filed a petition for review with the Court of Appeals. On October 7, 1997, the Court
of Appeals rendered the assailed decision affirming the decision of the SEC En Banc. Petitioners
motion for reconsideration was denied by the Court of Appeals on February 16, 1992.
Hence, the instant petition for review, raising the following assignment of errors:
I

THE HONORABLE COURT OF APPEALS ERRED IN CONCLUDING THAT


PETITIONER HAS NOT BEEN DEPRIVED OF ITS RIGHT TO
PROCEDURAL DUE PROCESS, THE HONORABLE COURT OF APPEALS
DISREGARDED THE JURISPRUDENCE APPLICABLE TO THE CASE AT
BAR AND INSTEAD RELIED ON TOTALLY INAPPLICABLE
JURISPRUDENCE.
II

THE HONORABLE COURT OF APPEALS ERRED IN ITS INTEPRETATION


OF THE CIVIL CODE PROVISIONS ON EXTINCTIVE PRESCRIPTION,
THEREBY RESULTING IN ITS FAILURE TO FIND THAT THE
RESPONDENT'S RIGHT OF ACTION TO INSTITUTE THE SEC CASE HAS
SINCE PRESCRIBED PRIOR TO ITS INSTITUTION.
III

THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER AND


PROPERLY APPLY THE EXCEPTIONS ESTABLISHED BY
JURISPRUDENCE IN THE APPLICATION OF SECTION 18 OF THE
CORPORATION CODE TO THE INSTANT CASE.
IV

THE HONORABLE COURT OF APPEALS FAILED TO PROPERLY


APPRECIATE THE SCOPE OF THE CONSTITUTIONAL GUARANTEE ON
RELIGIOUS FREEDOM, THEREBY FAILING TO APPLY THE SAME TO
PROTECT PETITIONERS RIGHTS.[9]

Invoking the case of Legarda v. Court of Appeals,[10] petitioner insists that the decision of the
Court of Appeals and the SEC should be set aside because the negligence of its former counsel of
record, Atty. Joaquin Garaygay, in failing to file an answer after its motion to dismiss was denied
by the SEC, deprived them of their day in court.
The contention is without merit. As a general rule, the negligence of counsel binds the client.
This is based on the rule that any act performed by a lawyer within the scope of his general or
implied authority is regarded as an act of his client.[11] An exception to the foregoing is where the
reckless or gross negligence of the counsel deprives the client of due process of law.[12] Said
exception, however, does not obtain in the present case.
In Legarda v. Court of Appeals, the effort of the counsel in defending his clients cause
consisted in filing a motion for extension of time to file answer before the trial court. When his
client was declared in default, the counsel did nothing and allowed the judgment by default to
become final and executory. Upon the insistence of his client, the counsel filed a petition to annul
the judgment with the Court of Appeals, which denied the petition, and again the counsel allowed
the denial to become final and executory. This Court found the counsel grossly negligent and
consequently declared as null and void the decision adverse to his client.
The factual antecedents of the case at bar are different. Atty. Garaygay filed before the SEC a
motion to dismiss on the ground of lack of cause of action. When his client was declared in default
for failure to file an answer, Atty. Garaygay moved for reconsideration and lifting of the order of
default.[13] After judgment by default was rendered against petitioner corporation, Atty. Garaygay
filed a motion for extension of time to appeal/motion for reconsideration, and thereafter a motion
to set aside the decision.[14]
Evidently, Atty. Garaygay was only guilty of simple negligence. Although he failed to file an
answer that led to the rendition of a judgment by default against petitioner, his efforts were
palpably real, albeit bereft of zeal.[15]
Likewise, the issue of prescription, which petitioner raised for the first time on appeal to the
Court of Appeals, is untenable. Its failure to raise prescription before the SEC can only be
construed as a waiver of that defense.[16] At any rate, the SEC has the authority to de-register at all
times and under all circumstances corporate names which in its estimation are likely to spawn
confusion. It is the duty of the SEC to prevent confusion in the use of corporate names not only
for the protection of the corporations involved but more so for the protection of the public.[17]
Section 18 of the Corporation Code provides:
Corporate Name. --- No corporate name may be allowed by the Securities and
Exchange Commission if the proposed name is identical or deceptively or confusingly
similar to that of any existing corporation or to any other name already protected by
law or is patently deceptive, confusing or is contrary to existing laws. When a change
in the corporate name is approved, the Commission shall issue an amended certificate
of incorporation under the amended name.

Corollary thereto, the pertinent portion of the SEC Guidelines on Corporate Names states:

(d) If the proposed name contains a word similar to a word already used as part of the
firm name or style of a registered company, the proposed name must contain two
other words different from the name of the company already registered;

Parties organizing a corporation must choose a name at their peril; and the use of a name
similar to one adopted by another corporation, whether a business or a nonprofit organization, if
misleading or likely to injure in the exercise of its corporate functions, regardless of intent, may
be prevented by the corporation having a prior right, by a suit for injunction against the new
corporation to prevent the use of the name.[18]
Petitioner claims that it complied with the aforecited SEC guideline by adding not only two
but eight words to their registered name, to wit: Ang Mga Kaanib" and "Sa Bansang Pilipinas,
Inc., which, petitioner argues, effectively distinguished it from respondent corporation.
The additional words Ang Mga Kaanib and Sa Bansang Pilipinas, Inc. in petitioners name
are, as correctly observed by the SEC, merely descriptive of and also referring to the members,
or kaanib, of respondent who are likewise residing in the Philippines. These words can hardly
serve as an effective differentiating medium necessary to avoid confusion or difficulty in
distinguishing petitioner from respondent. This is especially so, since both petitioner and
respondent corporations are using the same acronym --- H.S.K.;[19] not to mention the fact that both
are espousing religious beliefs and operating in the same place. Parenthetically, it is well to
mention that the acronym H.S.K. used by petitioner stands for Haligi at Saligan ng
Katotohanan.[20]
Then, too, the records reveal that in holding out their corporate name to the public, petitioner
highlights the dominant words IGLESIA NG DIOS KAY KRISTO HESUS, HALIGI AT SALIGAN
NG KATOTOHANAN, which is strikingly similar to respondent's corporate name, thus making it
even more evident that the additional words Ang Mga Kaanib and Sa Bansang Pilipinas, Inc., are
merely descriptive of and pertaining to the members of respondent corporation.[21]
Significantly, the only difference between the corporate names of petitioner and respondent
are the words SALIGAN and SUHAY. These words are synonymous --- both mean ground,
foundation or support. Hence, this case is on all fours with Universal Mills Corporation v.
Universal Textile Mills, Inc.,[22] where the Court ruled that the corporate names Universal Mills
Corporation and Universal Textile Mills, Inc., are undisputably so similar that even under the test
of reasonable care and observation confusion may arise.
Furthermore, the wholesale appropriation by petitioner of respondent's corporate name cannot
find justification under the generic word rule. We agree with the Court of Appeals conclusion that
a contrary ruling would encourage other corporations to adopt verbatim and register an existing
and protected corporate name, to the detriment of the public.
The fact that there are other non-stock religious societies or corporations using the names
Church of the Living God, Inc., Church of God Jesus Christ the Son of God the Head, Church of
God in Christ & By the Holy Spirit, and other similar names, is of no consequence. It does not
authorize the use by petitioner of the essential and distinguishing feature of respondent's registered
and protected corporate name.[23]
We need not belabor the fourth issue raised by petitioner. Certainly, ordering petitioner to
change its corporate name is not a violation of its constitutionally guaranteed right to religious
freedom. In so doing, the SEC merely compelled petitioner to abide by one of the SEC guidelines
in the approval of partnership and corporate names, namely its undertaking to manifest its
willingness to change its corporate name in the event another person, firm, or entity has acquired
a prior right to the use of the said firm name or one deceptively or confusingly similar to it.
WHEREFORE, in view of all the foregoing, the instant petition for review is DENIED. The
appealed decision of the Court of Appeals is AFFIRMED in toto.
SO ORDERED.

G.R. No. 104175 June 25, 1993

YOUNG AUTO SUPPLY CO. AND NEMESIO GARCIA, petitioners,


vs.
THE HONORABLE COURT OF APPEALS (THIRTEENTH DIVISION) AND GEORGE CHIONG
ROXAS, respondents.

Angara, Abello, Concepcion, Regala & Cruz for petitioners.

Antonio Nuyles for private respondent.

QUIASON, J.:

Petitioners seek to set aside the decision of respondent Court of Appeals in CA-G.R. SP No. 25237,
which reversed the Order dated February 8, 1991 issued by the Regional Trial Court, Branch 11,
Cebu City in Civil Case No. CEB 6967. The order of the trial court denied the motion to dismiss filed
by respondent George C. Roxas of the complaint for collection filed by petitioners.

It appears that sometime on October 28, 1987, Young Auto Supply Co. Inc. (YASCO) represented
by Nemesio Garcia, its president, Nelson Garcia and Vicente Sy, sold all of their shares of stock in
Consolidated Marketing & Development Corporation (CMDC) to Roxas. The purchase price was
P8,000,000.00 payable as follows: a downpayment of P4,000,000.00 and the balance of
P4,000,000.00 in four post dated checks of P1,000,000.00 each.
Immediately after the execution of the agreement, Roxas took full control of the four markets of
CMDC. However, the vendors held on to the stock certificates of CMDC as security pending full
payment of the balance of the purchase price.

The first check of P4,000,000.00, representing the down-payment, was honored by the drawee bank
but the four other checks representing the balance of P4,000,000.00 were dishonored. In the
meantime, Roxas sold one of the markets to a third party. Out of the proceeds of the sale, YASCO
received P600,000.00, leaving a balance of P3,400,000.00 (Rollo, p. 176).

Subsequently, Nelson Garcia and Vicente Sy assigned all their rights and title to the proceeds of the
sale of the CMDC shares to Nemesio Garcia.

On June 10, 1988, petitioners filed a complaint against Roxas in the Regional Trial Court, Branch 11,
Cebu City, praying that Roxas be ordered to pay petitioners the sum of P3,400,00.00 or that full
control of the three markets be turned over to YASCO and Garcia. The complaint also prayed for the
forfeiture of the partial payment of P4,600,000.00 and the payment of attorney's fees and costs
(Rollo, p. 290).

Roxas filed two motions for extension of time to submit his answer. But despite said motion, he failed
to do so causing petitioners to file a motion to have him declared in default. Roxas then filed, through
a new counsel, a third motion for extension of time to submit a responsive pleading.

On August 19, 1988, the trial court declared Roxas in default. The order of default was, however,
lifted upon motion of Roxas.

On August 22, 1988, Roxas filed a motion to dismiss on the grounds that:

1. The complaint did not state a cause of action due to non-joinder of indispensable
parties;

2. The claim or demand set forth in the complaint had been waived, abandoned or
otherwise extinguished; and

3. The venue was improperly laid (Rollo, p. 299).

After a hearing, wherein testimonial and documentary evidence were presented by both parties, the
trial court in an Order dated February 8, 1991 denied Roxas' motion to dismiss. After receiving said
order, Roxas filed another motion for extension of time to submit his answer. He also filed a motion
for reconsideration, which the trial court denied in its Order dated April 10, 1991 for being pro-
forma (Rollo, p. 17). Roxas was again declared in default, on the ground that his motion for
reconsideration did not toll the running of the period to file his answer.

On May 3, 1991, Roxas filed an unverified Motion to Lift the Order of Default which was not
accompanied with the required affidavit or merit. But without waiting for the resolution of the motion,
he filed a petition for certiorari with the Court of Appeals.

The Court of Appeals sustained the findings of the trial court with regard to the first two grounds
raised in the motion to dismiss but ordered the dismissal of the complaint on the ground of improper
venue (Rollo, p. 49).

A subsequent motion for reconsideration by petitioner was to no avail.


Petitioners now come before us, alleging that the Court of Appeals
erred in:

1. holding the venue should be in Pasay City, and not in Cebu City (where both
petitioners/plaintiffs are residents;

2. not finding that Roxas is estopped from questioning the choice of venue (Rollo, p.
19).

The petition is meritorious.

In holding that the venue was improperly laid in Cebu City, the Court of Appeals relied on the
address of YASCO, as appearing in the Deed of Sale dated October 28, 1987, which is "No. 1708
Dominga Street, Pasay City." This was the same address written in YASCO's letters and several
commercial documents in the possession of Roxas (Decision, p. 12; Rollo, p. 48).

In the case of Garcia, the Court of Appeals said that he gave Pasay City as his address in three
letters which he sent to Roxas' brothers and sisters (Decision, p. 12; Rollo, p. 47). The appellate
court held that Roxas was led by petitioners to believe that their residence is in Pasay City and that
he had relied upon those representations (Decision, p. 12, Rollo, p. 47).

The Court of Appeals erred in holding that the venue was improperly laid in Cebu City.

In the Regional Trial Courts, all personal actions are commenced and tried in the province or city
where the defendant or any of the defendants resides or may be found, or where the plaintiff or any
of the plaintiffs resides, at the election of the plaintiff [Sec. 2(b) Rule 4, Revised Rules of Court].

There are two plaintiffs in the case at bench: a natural person and a domestic corporation. Both
plaintiffs aver in their complaint that they are residents of Cebu City, thus:

1.1. Plaintiff Young Auto Supply Co., Inc., ("YASCO") is a domestic corporation duly
organized and existing under Philippine laws with principal place of business at M. J.
Cuenco Avenue, Cebu City. It also has a branch office at 1708 Dominga Street,
Pasay City, Metro Manila.

Plaintiff Nemesio Garcia is of legal age, married, Filipino citizen and with business
address at Young Auto Supply Co., Inc., M. J. Cuenco Avenue, Cebu City. . . .
(Complaint, p. 1; Rollo, p. 81).

The Article of Incorporation of YASCO (SEC Reg. No. 22083) states:

THIRD That the place where the principal office of the corporation is to be
established or located is at Cebu City, Philippines (as amended on December 20,
1980 and further amended on December 20, 1984) (Rollo, p. 273).

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 (Cohen v. Benguet Commercial
Co., Ltd., 34 Phil. 256 [1916] Clavecilla Radio System v. Antillon, 19 SCRA 379 [1967]). The
Corporation Code precisely 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" (Sec. 14 [3]). The purpose of this requirement is to fix the residence of a corporation in a
definite place, instead of allowing it to be ambulatory.

In Clavencilla Radio System v. Antillon, 19 SCRA 379 ([1967]), this Court explained why actions
cannot be filed against a corporation in any place where the corporation maintains its branch offices.
The Court ruled that to allow an action to be instituted in any place where the corporation has branch
offices, would create confusion and work untold inconvenience to said entity. By the same token, a
corporation cannot be allowed to file personal actions in a place other than its principal place of
business unless such a place is also the residence of a co-plaintiff or a defendant.

If it was Roxas who sued YASCO in Pasay City and the latter questioned the venue on the ground
that its principal place of business was in Cebu City, Roxas could argue that YASCO was in estoppel
because it misled Roxas to believe that Pasay City was its principal place of business. But this is not
the case before us.

With the finding that the residence of YASCO for purposes of venue is in Cebu City, where its
principal place of business is located, it becomes unnecessary to decide whether Garcia is also a
resident of Cebu City and whether Roxas was in estoppel from questioning the choice of Cebu City
as the venue.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals appealed from is
SET ASIDE and the Order dated February 8, 1991 of the Regional Trial Court is REINSTATED.

SO ORDERED.

HYATT ELEVATORS AND G.R. No. 161026


ESCALATORS CORPORATION,
Petitioner, Present:
Panganiban, J.,
Chairman,
Sandoval-Gutierrez,
- versus - Corona,
Carpio Morales, and
Garcia, JJ
GOLDSTAR ELEVATORS, Promulgated:
PHILS., INC.,*
Respondent. October 24, 2005
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- x

DECISION
PANGANIBAN, J.:

W
ell established in our jurisprudence is the rule that
the residence of a corporation is the place where its principal
office is located, as stated in its Articles of Incorporation.

The Case

Before us is a Petition for Review[1] on Certiorari, under Rule 45 of the


Rules of Court, assailing the June 26, 2003 Decision[2] and the November 27,
2003 Resolution[3] of the Court of Appeals (CA) in CA-GR SP No. 74319.
The decretal portion of the Decision reads as follows:
WHEREFORE, in view of the foregoing, the assailed Orders
dated May 27, 2002 and October 1, 2002 of the RTC, Branch 213,
Mandaluyong City in Civil Case No. 99-600, are hereby SET ASIDE.
The said case is hereby ordered DISMISSED on the ground of
improper venue.[4]

The assailed Resolution denied petitioners Motion for Reconsideration.

The Facts

The relevant facts of the case are summarized by the CA in this wise:
Petitioner [herein Respondent] Goldstar Elevator Philippines,
Inc. (GOLDSTAR for brevity) is a domestic corporation primarily
engaged in the business of marketing, distributing, selling, importing,
installing, and maintaining elevators and escalators, with address at
6th Floor, Jacinta II Building, 64 EDSA, Guadalupe, Makati City.

On the other hand, private respondent [herein petitioner] Hyatt


Elevators and Escalators Company (HYATT for brevity) is a domestic
corporation similarly engaged in the business of selling, installing and
maintaining/servicing elevators, escalators and parking equipment,
with address at the 6th Floor, Dao I Condominium, Salcedo St.,
Legaspi Village, Makati, as stated in its Articles of Incorporation.

On February 23, 1999, HYATT filed a Complaint for unfair trade


practices and damages under Articles 19, 20 and 21 of the Civil Code
of the Philippines against LG Industrial Systems Co. Ltd. (LGISC) and
LG International Corporation (LGIC), alleging among others, that: in
1988, it was appointed by LGIC and LGISC as the exclusive
distributor of LG elevators and escalators in the Philippines under a
Distributorship Agreement; x x x LGISC, in the latter part of 1996,
made a proposal to change the exclusive distributorship agency to
that of a joint venture partnership; while it looked forward to a healthy
and fruitful negotiation for a joint venture, however, the various
meetings it had with LGISC and LGIC, through the latters
representatives, were conducted in utmost bad faith and with
malevolent intentions; in the middle of the negotiations, in order to put
pressures upon it, LGISC and LGIC terminated the Exclusive
Distributorship Agreement; x x x [A]s a consequence, [HYATT]
suffered P120,000,000.00 as actual damages, representing loss of
earnings and business opportunities, P20,000,000.00 as damages for
its reputation and goodwill, P1,000,000.00 as and by way of
exemplary damages, and P500,000.00 as and by way of attorneys
fees.

On March 17, 1999, LGISC and LGIC filed a Motion to Dismiss


raising the following grounds: (1) lack of jurisdiction over the persons
of defendants, summons not having been served on its resident
agent; (2) improper venue; and (3) failure to state a cause of action.
The [trial] court denied the said motion in an Order dated January 7,
2000.

On March 6, 2000, LGISC and LGIC filed an Answer with


Compulsory Counterclaim ex abundante cautela. Thereafter, they
filed a Motion for Reconsideration and to Expunge Complaint which
was denied.
On December 4, 2000, HYATT filed a motion for leave of court
to amend the complaint, alleging that subsequent to the filing of the
complaint, it learned that LGISC transferred all its organization, assets
and goodwill, as a consequence of a joint venture agreement with Otis
Elevator Company of the USA, to LG Otis Elevator Company (LG
OTIS, for brevity). Thus, LGISC was to be substituted or changed to
LG OTIS, its successor-in-interest. Likewise, the motion averred that
x x x GOLDSTAR was being utilized by LG OTIS and LGIC in
perpetrating their unlawful and unjustified acts against HYATT.
Consequently, in order to afford complete relief, GOLDSTAR was to
be additionally impleaded as a party-defendant. Hence, in the
Amended Complaint, HYATT impleaded x x x GOLDSTAR as a party-
defendant, and all references to LGISC were correspondingly
replaced with LG OTIS.

On December 18, 2000, LG OTIS (LGISC) and LGIC filed their


opposition to HYATTs motion to amend the complaint. It argued that:
(1) the inclusion of GOLDSTAR as party-defendant would lead to a
change in the theory of the case since the latter took no part in the
negotiations which led to the alleged unfair trade practices subject of
the case; and (b) HYATTs move to amend the complaint at that time
was dilatory, considering that HYATT was aware of the existence of
GOLDSTAR for almost two years before it sought its inclusion as
party-defendant.

On January 8, 2001, the [trial] court admitted the Amended


Complaint. LG OTIS (LGISC) and LGIC filed a motion for
reconsideration thereto but was similarly rebuffed on October 4, 2001.

On April 12, 2002, x x x GOLDSTAR filed a Motion to Dismiss


the amended complaint, raising the following grounds: (1) the venue
was improperly laid, as neither HYATT nor defendants reside in
Mandaluyong City, where the original case was filed; and (2) failure to
state a cause of action against [respondent], since the amended
complaint fails to allege with certainty what specific ultimate acts x x x
Goldstar performed in violation of x x x Hyatts rights. In the Order
dated May 27, 2002, which is the main subject of the present petition,
the [trial] court denied the motion to dismiss, ratiocinating as follows:

Upon perusal of the factual and legal arguments raised by the


movants-defendants, the court finds that these are
substantially the same issues posed by the then defendant LG
Industrial System Co. particularly the matter dealing [with] the
issues of improper venue, failure to state cause of action as
well as this courts lack of jurisdiction. Under the
circumstances obtaining, the court resolves to rule that the
complaint sufficiently states a cause of action and that the
venue is properly laid. It is significant to note that in the
amended complaint, the same allegations are adopted as in
the original complaint with respect to the Goldstar Philippines
to enable this court to adjudicate a complete determination or
settlement of the claim subject of the action it appearing
preliminarily as sufficiently alleged in the plaintiffs pleading
that said Goldstar Elevator Philippines Inc., is being managed
and operated by the same Korean officers of defendants LG-
OTIS Elevator Company and LG International Corporation.

On June 11, 2002, [Respondent] GOLDSTAR filed a motion for


reconsideration thereto. On June 18, 2002, without waiving the
grounds it raised in its motion to dismiss, [it] also filed an Answer Ad
Cautelam. On October 1, 2002, [its] motion for reconsideration was
denied.

From the aforesaid Order denying x x x Goldstars motion for


reconsideration, it filed the x x x petition for certiorari [before the CA]
alleging grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the [trial] court in issuing the assailed Orders
dated May 27, 2002 and October 1, 2002.[5]

Ruling of the Court of Appeals

The CA ruled that the trial court had committed palpable error
amounting to grave abuse of discretion when the latter denied respondents
Motion to Dismiss. The appellate court held that the venue was clearly
improper, because none of the litigants resided in Mandaluyong City, where
the case was filed.
According to the appellate court, since Makati was the principal place
of business of both respondent and petitioner, as stated in the latters Articles
of Incorporation, that place was controlling for purposes of determining the
proper venue. The fact that petitioner had abandoned its principal office in
Makati years prior to the filing of the original case did not affect the venue
where personal actions could be commenced and tried.

Hence, this Petition.[6]

The Issue

In its Memorandum, petitioner submits this sole issue for our


consideration:

Whether or not the Court of Appeals, in reversing the ruling of


the Regional Trial Court, erred as a matter of law and jurisprudence,
as well as committed grave abuse of discretion, in holding that in the
light of the peculiar facts of this case, venue was improper[.][7]

This Courts Ruling


The Petition has no merit.

Sole Issue:
Venue

The resolution of this case rests upon a proper understanding of


Section 2 of Rule 4 of the 1997 Revised Rules of Court:

Sec. 2. Venue of personal actions. All other actions may be


commenced and tried where the plaintiff or any of the principal plaintiff
resides, or where the defendant or any of the principal defendant
resides, or in the case of a non-resident defendant where he may be
found, at the election of the plaintiff.

Since both parties to this case are corporations, there is a need to clarify
the meaning of residence. The law recognizes two types of persons: (1)
natural and (2) juridical. Corporations come under the latter in accordance
with Article 44(3) of the Civil Code.[8]

Residence is the permanent home -- the place to which, whenever


absent for business or pleasure, one intends to return.[9] Residence is vital
when dealing with venue.[10] A corporation, however, has no residence in the
same sense in which this term is applied to a natural person. This is precisely
the reason why the Court in Young Auto Supply Company v. Court of
Appeals[11] ruled that 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.[12] Even before this ruling, it has already been
established that the residence of a corporation is the place where its principal
office is established.[13]

This Court has also definitively ruled that for purposes of venue, the
term residence is synonymous with domicile.[14] Correspondingly, the Civil
Code provides:

Art. 51. When the law creating or recognizing them, or any other
provision does not fix the domicile of juridical persons, the same shall
be understood to be the place where their legal representation is
established or where they exercise their principal functions.[15]

It now becomes apparent that the residence or domicile of a juridical


person is fixed by the law creating or recognizing it. Under Section 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, which shall be filed with the Securities and Exchange
Commission (SEC).

In the present case, there is no question as to the residence of


respondent. What needs to be examined is that of petitioner.
Admittedly,[16] the latters principal place of business is Makati, as indicated
in its Articles of Incorporation. Since the principal place of business of a
corporation determines its residence or domicile, then the place indicated in
petitioners articles of incorporation becomes controlling in determining the
venue for this case.
Petitioner argues 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 as indicated in its articles of incorporation.[17]Jurisprudence
has, however, settled that the place where the principal office of a
corporation is located, as stated in the articles, indeed establishes its
residence.[18] This ruling is important in determining the venue of an action
by or against a corporation,[19] as in the present case.

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. We agree with the appellate court in its
observation that the requirement to state in the articles the place where the
principal office of the corporation is to be located is not a meaningless
requirement. That proviso would be rendered nugatory if corporations were
to be allowed to simply disregard what is expressly stated in their Articles of
Incorporation.[20]

Inconclusive are the bare allegations of petitioner that it had closed its
Makati office and relocated to Mandaluyong City, and that respondent was
well aware of those circumstances. Assuming arguendo that they transacted
business with each other in the Mandaluyong office of petitioner, the fact
remains that, in law, the latters residence was still the place indicated in its
Articles of Incorporation. Further unacceptable is its faulty reasoning that
the ground for the CAs dismissal of its Complaint was its failure to amend
its Articles of Incorporation so as to reflect its actual and present principal
office. The appellate court was clear enough in its ruling that the Complaint
was dismissed because the venue had been improperly laid, not because of
the failure of petitioner to amend the latters Articles of Incorporation.

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 principle that choosing the venue of an
action is not left to a plaintiffs caprice; the matter is regulated by the Rules
of Court.[21] Allowing petitioners arguments may lead precisely to what this
Court was trying to avoid in Young Auto Supply Company v. CA:[22] the creation
of confusion and untold inconveniences to party litigants. Thus enunciated
the CA:

x x x. 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.[23]

We find it necessary to remind party litigants, especially corporations,


as follows:
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.

The choice of venue should not be left to the plaintiffs whim or


caprice. He may be impelled by some ulterior motivation in choosing
to file a case in a particular court even if not allowed by the rules on
venue.[24]

WHEREFORE, the Petition is hereby DENIED, and the assailed


Decision and Resolution AFFIRMED. Costs against petitioner.
SO ORDERED.