Clavecilla Radio System v. Antillon
REITERATIONFacts
1. The Antecedents: The underlying dispute arose from a misdelivered telegram. New Cagayan Grocery (appellee) filed a complaint for damages against Clavecilla Radio System (appellant) alleging that the Cagayan de Oro branch of Clavecilla omitted the word "NOT" from a telegram, thereby altering its meaning and causing damages to the addressee. The original message was intended to confirm the availability of refined goods for shipment. 2. Procedural History: New Cagayan Grocery initially filed a complaint for damages against Clavecilla Radio System in the Municipal Court of Cagayan de Oro City. Clavecilla Radio System filed a motion to dismiss, arguing lack of cause of action and improper venue. The City Judge denied this motion. Subsequently, Clavecilla Radio System filed a petition for prohibition with preliminary injunction with the Court of First Instance of Misamis Oriental, seeking to stop the City Judge from proceeding with the case due to improper venue. The Court of First Instance dismissed this petition, upholding the City Judge's jurisdiction. 3. The Petition: Clavecilla Radio System appealed the dismissal of its petition for prohibition to the Supreme Court. The appellant contended that the suit against it should have been filed in Manila, where its principal office is located, arguing that the venue was improperly laid in Cagayan de Oro City. The appeal specifically challenges the lower court's interpretation of the venue rules for corporations, particularly concerning the place of service of summons versus the corporation's residence.
Issue(s)
Whether the venue for the action for damages against Clavecilla Radio System was properly laid in Cagayan de Oro City. Whether the principle that a corporation may be sued where it may be served with summons applies when the corporation has a residence in the Philippines.
Ruling
The order of the Court of First Instance is reversed. The venue for the action was improperly laid in Cagayan de Oro City. The case is dismissed without prejudice to its refiling in the proper venue.
Ratio Decidendi
On the venue for the action against Clavecilla Radio System: The Court clarified that the action for damages filed by New Cagayan Grocery was based on tort, not on a written contract. According to Section 1 of Rule 4(b)(3) of the New Rules of Court, for actions not upon a written contract, venue lies in the municipality where the defendant or any of the defendants resides or may be served with summons. The Court reiterated the settled principle that the residence of a corporation is the place where its principal office is established. Since it was undisputed that Clavecilla Radio System's principal office was in Manila, the suit against it should have been filed in Manila. On the applicability of the "may be served with summons" principle: The Court addressed the contention that venue was properly laid in Cagayan de Oro City because Clavecilla could be served with summons there through its branch office. Citing Cohen vs. Benguet Commercial Co., Ltd., the Court held that the phrase "may be served with summons" does not apply when the defendant resides in the Philippines. In such cases, the defendant may only be sued in the municipality of its residence, irrespective of where it may be found and served. The Court emphasized that a corporation, like an individual, has only one residence at a time, which is its principal office. Allowing suits in any place where a branch office exists would lead to confusion and inconvenience. The Court further stressed that the laying of venue is regulated by the Rules of Court and is not left to the plaintiff's caprice, as stated in Evangelista vs. Santos, et al..
Main Doctrine
The residence of a corporation is the place where its principal office is established. For actions not based on a written contract, venue may be laid where the defendant resides or may be served with summons. However, if the defendant corporation resides in the Philippines, it may only be sued in the municipality of its residence, regardless of where it may be found and served with summons.