Cohen v. Benguet Commercial
REITERATIONFacts
The Antecedents: Frederick L. Cohen and Marcus Cohen (plaintiffs-appellees), a foreign commercial partnership named Harris, Cohen & Sons, not registered in the Philippine Islands and without an office therein, brought an action against The Benguet Commercial Co. (Ltd.) (defendant-appellant), a domestic corporation with its principal place of business in Baguio, Benguet. Procedural History: The plaintiffs filed an action for damages due to breach of contract. Two summonses were served on the defendant, both laying the venue in the city of Manila. The first summons was served on the defendant's president in Baguio, and the defendant specially appeared to object to the jurisdiction and venue, arguing that trial must take place in the province where the defendant resided or was found, as per Section 377 of the Code of Civil Procedure. The trial court denied this motion, deeming it a voluntary general appearance. Subsequently, a second summons was served on the defendant's president in Manila. The defendant again appeared specially to object to the venue, stipulating facts regarding its principal place of business in Baguio and the incidental nature of its presence in Manila. The trial court treated this as a motion to dismiss but ultimately denied it, asserting jurisdiction based on the defendant's appearance and service of process on its principal officer within the court's territorial jurisdiction. The Petition: The defendant appealed the trial court's decision, arguing that the venue was improperly laid in Manila, contending that the trial court erred in denying the motion to dismiss based on improper venue, asserting that the defendant, a resident of Benguet, was not properly 'found' in Manila for the purpose of establishing venue, and that the service of summons in Manila did not confer jurisdiction for trial in that city.
Issue(s)
Whether the venue of an action against a domestic corporation, whose principal place of business is in Baguio, Benguet, is properly laid in the city of Manila when the summons is served on its president in Manila. Whether the trial court erred in considering the defendant's special appearance and motion to dismiss as a voluntary general appearance, thereby waiving objections to venue. Whether the trial court erred in asserting jurisdiction over the person of the defendant based on service upon its principal officer within the territorial jurisdiction, irrespective of the proper venue.
Ruling
The Supreme Court reversed the judgment of the trial court, remanding the case with instructions to dismiss the action without prejudice to the commencement of another action in which the venue would be laid in the proper province. The Court held that the venue was improperly laid in Manila.
Ratio Decidendi
On Issue 1: The Supreme Court held that the venue was improperly laid in Manila. Section 377 of the Code of Civil Procedure dictates that transitory actions may be brought in any province where the defendant or any necessary party defendant may reside or be found, or in any province where the plaintiff resides, at the election of the plaintiff. In this case, the defendant, a domestic corporation, had its principal place of business and residence in Baguio, Benguet. While the summons was served on its president in Manila, the Court clarified that the word 'found' in Section 377, when referring to a resident defendant, is synonymous with 'reside' and thus applies only to the province of residence. Therefore, the defendant was 'found' only in Baguio for venue purposes, and laying the venue in Manila was improper. On Issue 2: The Court found that the trial court erred in considering the defendant's motion as a voluntary general appearance. The defendant's attorneys explicitly stated they were appearing 'specially' for the 'sole purpose of objecting to the venue.' The Court emphasized that the Code of Civil Procedure requires looking at the intent and purpose of the appearing party, and the specific language used by the defendant's counsel clearly indicated a limited appearance solely to challenge venue. The prayer for dismissal, in the context of an objection to venue, is a proper remedy and does not automatically convert a special appearance into a general one. On Issue 3: The Court clarified that acquiring jurisdiction over the person of the defendant through service of process does not automatically confer the right to try the case in any province where service is made. The place of service (Section 394) is distinct from the place of trial (Section 377). While the summons may be served anywhere within the Philippine Islands, the venue is determined by the residence of the parties. The trial court's assertion of jurisdiction based on service in Manila was erroneous because it conflated the place of service with the proper venue, ignoring the defendant's residence in Benguet and the provisions of Section 377.
Main Doctrine
In transitory actions, the venue must be laid in the province where the plaintiff or defendant resides. For a domestic corporation, its residence is determined by its principal place of business. The phrase 'be found' in Section 377 of the Code of Civil Procedure, which dictates venue, is applicable only to non-resident defendants. A resident defendant's mere presence or service of summons in a province other than their residence does not establish venue in that province; the venue must still be in the province of residence. This distinction is critical for ensuring that actions are tried in the most convenient location for the parties involved.