Hyatt Elevators and Escalators Corporation v. Goldstar Elevators, Phils., Inc.
REITERATIONFacts
The Antecedents: Goldstar Elevator Philippines, Inc. (GOLDSTAR) is a domestic corporation engaged in the business of elevators and escalators, with its principal office in Makati City. Hyatt Elevators and Escalators Company (HYATT) is similarly engaged in the same business, with its principal office also stated in Makati City in its Articles of Incorporation. HYATT filed a Complaint for unfair trade practices and damages against LG Industrial Systems Co. Ltd. (LGISC) and LG International Corporation (LGIC), alleging bad faith in negotiations for a joint venture and wrongful termination of their distributorship agreement, resulting in substantial damages. LGISC and LGIC moved to dismiss the complaint on grounds of lack of jurisdiction, improper venue, and failure to state a cause of action, which the trial court denied. Subsequently, HYATT amended its complaint to implead LG Otis Elevator Company (LG OTIS) as successor-in-interest to LGISC and GOLDSTAR as a party-defendant, alleging GOLDSTAR was being utilized by LG OTIS and LGIC in perpetrating unlawful acts against HYATT. GOLDSTAR then filed a Motion to Dismiss the amended complaint, arguing improper venue and failure to state a cause of action, as neither HYATT nor the defendants resided in Mandaluyong City where the case was filed. The trial court denied GOLDSTAR's motion, finding that the venue was properly laid and the complaint sufficiently stated a cause of action, noting that GOLDSTAR appeared to be managed by the same Korean officers of LG OTIS and LGIC. Procedural History: The Regional Trial Court (RTC) denied the initial Motion to Dismiss filed by LGISC and LGIC. After an Amended Complaint was filed impleading GOLDSTAR, the RTC also denied GOLDSTAR's subsequent Motion to Dismiss. GOLDSTAR's Motion for Reconsideration of this denial was also denied by the RTC. Aggrieved, GOLDSTAR filed a Petition for Certiorari with the Court of Appeals (CA), alleging grave abuse of discretion by the RTC. The Petition: The Court of Appeals (CA) granted GOLDSTAR's petition, setting aside the RTC orders and dismissing the case on the ground of improper venue. The CA ruled that venue was improper because none of the litigants resided in Mandaluyong City, and that Makati City, being the principal place of business of both parties as stated in their Articles of Incorporation, was the controlling venue. HYATT, herein petitioner, filed a Petition for Review on Certiorari with the Supreme Court, assailing the CA's decision.
Issue(s)
Whether the Court of Appeals erred in holding that venue was improper; specifically, whether the residence of a corporation for venue purposes is determined solely by its principal office as stated in its Articles of Incorporation. Whether the actual place of business of a corporation, even if unamended in its Articles of Incorporation, should override the stated principal office for venue purposes, and the implications for venue rules and the administration of justice.
Ruling
The Petition is denied, and the assailed Decision and Resolution of the Court of Appeals are affirmed. The case is dismissed on the ground of improper venue.
Ratio Decidendi
On the issue of whether venue was improper and the controlling nature of the Articles of Incorporation: The Court reiterated that the residence of a corporation for venue purposes is the place where its principal office is located as stated in its Articles of Incorporation. This is to ensure certainty and prevent forum shopping. A corporation's 'residence' is fixed by its constitutive documents. The Civil Code and Corporation Code mandate the inclusion of the principal office location in the Articles of Incorporation, making it controlling for venue. The Court emphasized that the CA's dismissal was based on improper venue, not on the failure to amend the Articles of Incorporation. On the issue of whether the actual place of business should control and the purpose of venue rules: The Court rejected the argument that the actual, unamended principal office should determine venue, stating that the requirement to state the principal office in the Articles of Incorporation would be rendered meaningless if corporations could disregard it. Allowing corporations to unilaterally change their venue based on actual operations without amending their Articles of Incorporation would create confusion and inconvenience, potentially allowing litigants to circumvent venue rules. Rules on venue are fixed for the convenience of litigants and witnesses and are designed to ensure the orderly administration of justice. Choosing the venue should not be left to a plaintiff's whim or caprice, as it may be impelled by some ulterior motivation.
Main Doctrine
The residence of a corporation, for purposes of venue, is the place where its principal office is located as stated in its Articles of Incorporation, and this is controlling even if the corporation claims to have relocated its actual office without amending its Articles.