Hyatt Elevators and Escalators v Goldstar

GR 161026 Oct 24, 2005

TOPIC: Principal Place of Business

SUMMARY:
Petitioner Hyatt filed an unfair trade practices and damages against LGISC and LG International
Corporation alleging that defendants committed acts intended to establish their own company and
cripple Hyatt’s business operations in the Philippines. Hyatt filed a motion for leave of court to
amend the complaint, to add as defendant Respondent Goldstar, alleging that the latter was being
utilized by LG OTIS and LGIC in perpetrating their unlawful and unjustified acts against Hyatt.

Goldstar filed a Motion to dismiss the amended complaint alleging that venue was improperly laid
as neither the Hyatt, LG, nor Goldstar itself resided in Mandaluyong city where the case was
originally filed.

The RTC denied the motion. The CA dismissed the case and held that Makati was the principal place
of business of both respondent and petitioner, as stated in the latter’s Articles of Incorporation, that
place was controlling for purposes of determining the proper venue.

The SC affirmed the CA. (see doctrine)

DOCTRINE:
The place where the principal office of a corporation is located, as stated in the articles, indeed
establishes its residence. 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 filing a case.

FACTS:
 Petitioner Hyatt Elevators Company was the Philippine distributor of elevators and escalators
of Lucky Goldstar International Corporation (LGISC) and Goldstar Industrial (different from
Respondent)

 Petitioner Hyatt filed a complaint for unfair trade practices before the RTC Mandaluyong
against LGISC and LG International Corporation, alleging that:
o it was appointed as the exclusive distributor of LG elevators and escalators in the
Philippines under Distributorship Agreement
o after establishing a Philippine market for Defendants’ elevators and escalators
pursuant to a distributorship agreement executed, the Defendants unfairly committed
trade practices intended to establish their own company and cripple Hyatt’s business
operations as the exclusive distributor of LG elevators, escalators and parking
equipment in the Philippines.
 Later, Petitioner Hyatt filed amended complaint impleading LG Otis and Respondent Goldstar,
alleging that:
o Subsequent to the filing of the complaint, LGISC transferred all its organization, assets
and goodwill, to LG Otis
 Thus, LGISC should to be substituted or changed to LG OTIS
o As to Goldstar, it was being utilized by LG OTIS and LGIC in perpetrating their
unlawful and unjustified acts against Hyatt
 In found that LGISC was the principal stockholder of Goldstar Elevators

 LGISC and LG Industrial Corporation opposed the amended complaint on the ground that:
o 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
o and HYATT was aware of the existence of GOLDSTAR for almost two years before it
sought its inclusion as party-defendant.

 Despite such opposition, the amended complaint was admitted by the trial court.

 Thereafter, Respondent GOLDSTAR filed a Motion to Dismiss the amended complaint, raising
the following grounds:
o failure to state a cause of action against
 the amended complaint fails to allege what specific ultimate acts Goldstar
performed in violation of Hyatt's rights
o and the venue was improperly laid
 neither Hyatt nor defendants reside in Mandaluyong City, where the
original case was filed
 both parties, in fact, reside in Makati City

 This was again denied by the RTC

 On motion for reconsideration, the CA reversed the RTC, holding that:

o the venue was clearly improper, because none of the litigants 'resided in Mandaluyong
City, where the case was filed
o Makati was the principal place of business of both respondent and petitioner, as
stated in the latter's Articles of Incorporation

 Hence, this petition.

 Petitioner Hyatt argues that:

o 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
 o it had closed its Makati office and relocated to Mandaluyong City, and that
Respondent was well aware of those circumstances, as they transacted in
Mandaluyong

ISSUE:
W/N the venue is properly laid in Mandaluyong – NO
Laws on residence and venue
 Section 2 of Rule 4 of the 1997 Revised Rules of Court provides that:
o 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.

 As to juridical persons, the Civil Code Art. 51 provides:

o 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.

 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).

Laws on residence and venue

 In this case, Petitioner’s principal place of business is Makati, as indicated in its Articles of
Incorporation.
o Since the principal place of business of a corporation determines its residence or
domicile, then the place indicated in petitioner's articles of incorporation becomes
controlling in determining the venue for this case.

 The argument 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, is without merit
o Jurisprudence has settled that the place where the principal office of a corporation is
located, as stated in the articles, indeed establishes its residence

 Without merit is the argument of petitioner Hyatt that the locality stated in its Articles of
Incorporation does not conclusively indicate that its principal office is still in the same place
o 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.”
o That proviso would be rendered nugatory if corporations were to be allowed to simply
disregard what is expressly stated in their Articles of Incorporation
  Assuming arguendo that the parties transacted business with each other in the Mandaluyong
office of petitioner Hyatt, the fact remains that, in law, the latter’s residence was still the place
indicated in its Articles of Incorporation.

RULING:
WHEREFORE, the Petition is hereby DENIED , and the assailed Decision and Resolution AFFIRMED .
Costs against petitioner.