YOUNG AUTO SUPPLY CO. AND NEMESIO GARCIA, PETITIONERS, VS. THE HONORABLE COURT OF APPEALS (THIRTEENTH DIVISION) AND GEORGE CHIONG ROXAS, RESPONDENTS.

Petitioners seek to set aside the decision of respondent Court of
Appeals in CA-G.R. SP No. 25237, which reversed the Order dated February 8,
1991 issued by the Regional Trial Court, Branch 11, Cebu City in Civil Case No.
CEB 6967. The order of the trial court
denied the motion to dismiss filed by respondent George C. Roxas of the
complaint for collection filed by petitioners.

It appears that sometime on October 28, 1987, Young Auto Supply
Co. Inc. (YASCO) represented by Nemesio Garcia, its president, Nelson Garcia
and Vicente Sy, sold all of their shares of stock in Consolidated Marketing
& Development Corporation (CMDC) to Roxas. The purchase price was P8,000,000.00 payable as follows: a downpayment of P4,000,000.00 and
the balance of P4,000,000.00 in four postdated checks of P1,000,000.00
each.

Immediately after the execution of the agreement, Roxas took full
control of the four markets of
CMDC. However, the vendors held on to
the stock certificates of CMDC as security pending full payment of the balance
of the purchase price.

The first check of P4,000,000.00, representing the
downpayment, was honored by the drawee bank but the four other checks
representing the balance of P4,000,000.00 were dishonored. In the meantime, Roxas sold one of the
markets to a third party. Out of the
proceeds of the sale, YASCO received P600,000.00, leaving a balance of P3,400,000.00
(Rollo, p. 176).

Subsequently, Nelson Garcia and Vicente Sy assigned all their
rights and title to the proceeds of the sale of the CMDC shares to Nemesio
Garcia.

On June 10, 1988, petitioners filed a complaint against Roxas in
the Regional Trial Court, Branch 11, Cebu City, praying that Roxas be ordered
to pay petitioners the sum of P3,400,000.00 or that full control of the
three markets be turned over to YASCO and Garcia. The complaint also prayed for the forfeiture of the partial
payment of P4,600,000.00 and the payment of attorney’s fees and costs
(Rollo, p. 290).

Roxas filed two motions for extension of time to submit his
answer. But despite said motion, he
failed to do so causing petitioners to file a motion to have him declared in
default. Roxas then filed, through a
new counsel, a third motion for extension of time to submit a responsive
pleading.

On August 19, 1988, the trial court declared Roxas in
default. The order of default was,
however, lifted upon motion of Roxas.

On August 22, 1988, Roxas filed a motion to dismiss on the
grounds that:

“1.     The complaint did not
state a cause of action due to non-joinder of indispensable parties;

2.       The claim or demand
set forth in the complaint had been waived, abandoned or otherwise
extinguished; and

3.       The venue was
improperly laid” (Rollo, p. 299).

After a hearing, wherein testimonial and documentary evidence
were presented by both parties, the trial court in an Order dated February 8,
1991 denied Roxas’ motion to dismiss. After receiving said order, Roxas filed another motion for extension of
time to submit his answer. He also
filed a motion for reconsideration, which the trial court denied in its Order
dated April 10, 1991 for being pro-forma (Rollo, p. 17). Roxas was again declared in default, on the
ground that his motion for reconsideration did not toll the running of the
period to file his answer.

On May 3, 1991, Roxas filed an unverified Motion to Lift the
Order of Default which was not accompanied with the required affidavit of
merit. But without waiting for the
resolution of the motion, he filed a petition for certiorari with the
Court of Appeals.

The Court of Appeals sustained the findings of the trial court
with regard to the first two grounds raised in the motion to dismiss but
ordered the dismissal of the complaint on the ground of improper venue (Rollo, p. 49).

A subsequent motion for reconsideration by petitioner was to no
avail.

Petitioners now come before us, alleging that the Court of
Appeals erred in:

“1.     holding that
venue should be in Pasay City, and not in Cebu City (where both
petitioners/plaintiffs are residents;

2.       not finding that
Roxas is estopped from questioning the choice of venue” (Rollo, p. 19).

The petition is meritorious.

In holding that the venue was improperly laid in Cebu City, the
Court of Appeals relied on the address of YASCO, as appearing in the Deed of
Sale dated October 28, 1987, which is “No. 1708 Dominga Street, Pasay
City.” This was the same address written on YASCO’s letters and several
commercial documents in the possession of Roxas (Decision, p. 12; Rollo, p.
48).

In the case of Garcia, the Court of Appeals said that he gave
Pasay City as his address in three letters which he sent to Roxas’ brothers and
sisters (Decision, p. 12; Rollo, p. 47). The appellate court held that Roxas was led by petitioners to believe
that their residence is in Pasay City and that he had relied upon those
representations (Decision, p. 12, Rollo, p. 47).

The Court of Appeals erred in holding that the venue was
improperly laid in Cebu City.

In the Regional Trial Courts, all personal actions are commenced
and tried in the province or city where the defendant or any of the defendants
resides or may be found, or where the plaintiff or any of the plaintiffs
resides, at the election of the plaintiff [Sec. 2(b) Rule 4, Revised Rules of
Court].

There are two plaintiffs in the case at bench: a natural person and a domestic
corporation. Both plaintiffs aver in
their complaint that they are residents of Cebu City, thus:

“1.1. Plaintiff Young
Auto Supply Co., Inc. (“YASCO”) is a domestic corporation duly
organized and existing under Philippine laws with principal place of business
at M.J. Cuenco Avenue, Cebu City. It
also has a branch office at 1708 Dominga Street, Pasay City, Metro Manila.

“Plaintiff Nemesio Garcia is of legal age, married, Filipino
citizen and with business address at Young Auto Supply Co., Inc., M. J. Cuenco Avenue, Cebu City. xxx” (Complaint, p. 1; Rollo, p. 81).

The Article of Incorporation of YASCO (SEC Reg. No. 22083)
states:

“THIRD. That the place
where the principal office of the corporation is to be established or located
is at Cebu City, Philippines (as amended on December 20, 1980 and further
amended on December 20, 1984)” (Rollo, p. 273).

A corporation has no residence in the same sense in which this
term is applied to a natural person. But for practical purposes, a corporation is in a metaphysical sense a
resident of the place where its principal office is located as stated in the
articles of incorporation (Cohen
v. Benquet Commerical Co., Ltd., 34 Phil. 526 [1916] Clavecilla Radio System v.
Antillon, 19 SCRA 379 [1967]). The Corporation Code precisely requires each
corporation to specify in its articles of incorporation the “place where
the principal office of the corporation is to be located which must be within
the Philippines” (Sec. 14 [3]). The purpose of this requirement is to fix the residence of a corporation
in a definite place, instead of allowing it to be ambulatory.

In Clavecilla Radio System v. Antillon, 19 SCRA 379
([1967]), this Court explained why actions cannot be filed against a
corporation in any place where the corporation maintains its branch
offices. The Court ruled that to allow
an action to be instituted in any place where the corporation has branch
offices, would create confusion and work untold inconvenience to said entity. By the same token, a corporation cannot be
allowed to file personal actions in a place other than its principal place of
business unless such a place is also the residence of a co-plaintiff or a
defendant.

If it was Roxas who sued YASCO in Pasay City and the latter
questioned the venue on the ground that its principal place of business was in
Cebu City, Roxas could argue that YASCO was in estoppel because it misled Roxas
to believe that Pasay City was its principal place of business. But this is not the case before us.

With the finding that the
residence of YASCO for purposes of venue is in Cebu City, where its principal
place of business is located, it becomes unnecessary to decide whether Garcia
is also a resident of Cebu City and whether Roxas was in estoppel from questioning the choice of Cebu City as
the venue.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals
appealed from is SET ASIDE and the Order dated February 8, 1991 of the Regional
Trial Court is REINSTATED.

SO ORDERED.

Cruz, (Chairman), Griño-Aquino, and
Bellosillo, JJ., concur.