HYATT ELEVATORS AND ESCALATORS CORPORATION vs. GOLDSTAR ELEVATORS, G.R. No.

161026

FACTS:
Both parties are engaged in the same business of selling installing and maintaining/servicing elevators
and escalators. 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 that in 1988, HYATT was appointed by LGISC and
LGIC as the exclusive distributor of LG elevators in the Philippines under a Distributorship Agreement.
In the latter part of 1996, LGISC made a proposal to change the Distributorship Agreement to that of the
joint venture, however HYATT allege that the representatives of LGISC and LGIC conducted the meeting
in bad faith in order to put pressures upon them and eventually terminated the Exclusive Distributorship
Agreement.

LGISC and LGIC filed a Motion to Dismiss on 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.

HYATT then filed a motion for leave of court to amend the complaint when it learned that LGISC was to
be substituted to LG Otis because of the latter succeeding the former. The motion also averred that
Goldstar was being utilized by LG OTIS and LGIC in perpetrating their unlawful and unjustified acts
against HYATT. Goldstar was additionally impleaded as a party-defendant.

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 GOLDSTAR performed in violation of
HYATTs rights.

Trial court dismissed the motion. Goldstar filed a MR but the same was dismissed. CA reversed RTC and
declared that the venue was clearly improper, because none of the litigants resided in Mandaluyong
City, where the case was filed.

ISSUE:
Whether or not the venue (Mandaluyong) was improper YES.

HELD:
The Petition was denied. Under Section 2 , Rule 4 of the 1997 Revised Rules of Court states that Venue
of personal actions all other actions may be commenced and tried whre the plaintiff resided, 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. But since both parties to this case are
corporation, there is a need to clarify the meaning of residence. The law recognizes two types of
persons: natural and juridical. Corporations fall under juridical. A corporation, however has no residence
in the sense in which this term is applied to a natural person.

In the case of Young Auto Supply Company vs. CA, the court rules that For practical purposes, a
corporation is I a metaphysical sense a resident of the place where its principal office is located as stated
in the articles of incorporation. But even before this ruling, it has been already established that the
residence of a corporation is the place where its principal office is established.

The court held that in the purpose of venue, residence is the same with domicile. 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. AND 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, 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.

HYATT argues that the Rules of Court did 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.
This is however settled by jurisprudence.

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.