Definition:

A non-stock corporation is a corporation (either for-profit or non-profit)

that does not issue shares of stock. A non-profit corporation is non-stock by
definition, since the purpose of the non-profit corporation is not to pay
shareholder dividends. A for-profit corporation may be non-stock for several
reasons:

The corporation may be closely held (owned by only a few individuals}

who have no interest in selling shares.

The corporation may be formed for a single, short-term purpose or a

specific transaction. For example, the corporation may be formed to build
an office building or other construction project.

The corporation may be set up as a non-profit, with members instead

of shareholders.
Also Known As: Closely held corporation or private corporation

THE
CORPORATION CODE
OF THE
PHILIPPINES
[Batas Pambansa Blg. 68]
TITLE XI
NON-STOCK CORPORATIONS
Sec. 87. Definition. - For the purposes of this Code, a non-stock corporation is one where no
part of its income is distributable as dividends to its members, trustees, or officers, subject to
the provisions of this Code on dissolution: Provided, That any profit which a non-stock
corporation may obtain as an incident to its operations shall, whenever necessary or proper, be
used for the furtherance of the purpose or purposes for which the corporation was organized,
subject to the provisions of this Title.
The provisions governing stock corporation, when pertinent, shall be applicable to non-stock
corporations, except as may be covered by specific provisions of this Title. (n)
Sec. 88. Purposes. - Non-stock corporations may be formed or organized for charitable,
religious, educational, professional, cultural, fraternal, literary, scientific, social, civic service, or
similar purposes, like trade, industry, agricultural and like chambers, or any combination
thereof, subject to the special provisions of this Title governing particular classes of non-stock

corporations.

(n)

Chapter I - MEMBERS
Sec. 89. Right to vote. - The right of the members of any class or classes to vote may be
limited, broadened or denied to the extent specified in the articles of incorporation or the bylaws. Unless so limited, broadened or denied, each member, regardless of class, shall be
entitled to one vote.
Unless otherwise provided in the articles of incorporation or the by-laws, a member may vote by
proxy in accordance with the provisions of this Code. (n)
Voting by mail or other similar means by members of non-stock corporations may be authorized
by the by-laws of non-stock corporations with the approval of, and under such conditions which
may be prescribed by, the Securities and Exchange Commission.
Sec. 90. Non-transferability of membership. - Membership in a non-stock corporation and
all rights arising therefrom are personal and non-transferable, unless the articles of
incorporation or the by-laws otherwise provide. (n)
Sec. 91. Termination of membership. - Membership shall be terminated in the manner and
for the causes provided in the articles of incorporation or the by-laws. Termination of
membership shall have the effect of extinguishing all rights of a member in the corporation or in
its property, unless otherwise provided in the articles of incorporation or the by-laws. (n)

Chapter II - TRUSTEES AND OFFICERS

Sec. 92. Election and term of trustees. - Unless otherwise provided in the articles of
incorporation or the by-laws, the board of trustees of non-stock corporations, which may be
more than fifteen (15) in number as may be fixed in their articles of incorporation or by-laws,
shall, as soon as organized, so classify themselves that the term of office of one-third (1/3) of
their number shall expire every year; and subsequent elections of trustees comprising one-third
(1/3) of the board of trustees shall be held annually and trustees so elected shall have a term of
three (3) years. Trustees thereafter elected to fill vacancies occurring before the expiration of a
particular term shall hold office only for the unexpired period.
No person shall be elected as trustee unless he is a member of the corporation.
Unless otherwise provided in the articles of incorporation or the by-laws, officers of a non-stock
corporation may be directly elected by the members. (n)
Sec. 93. Place of meetings. - The by-laws may provide that the members of a non-stock
corporation may hold their regular or special meetings at any place even outside the place
where the principal office of the corporation is located: Provided, That proper notice is sent to all
members indicating the date, time and place of the meeting: and Provided, further, That the
place
of
meeting
shall
be
within
the
Philippines.
(n)
Chapter III - DISTRIBUTION OF ASSETS IN
NON-STOCK CORPORATIONS
Sec. 94. Rules of distribution. - In case dissolution of a non-stock corporation in accordance

with the provisions of this Code, its assets shall be applied and distributed as follows:
1. All liabilities and obligations of the corporation shall be paid, satisfied and discharged, or
adequate provision shall be made therefore;
2. Assets held by the corporation upon a condition requiring return, transfer or conveyance, and
which condition occurs by reason of the dissolution, shall be returned, transferred or conveyed
in accordance with such requirements;
3. Assets received and held by the corporation subject to limitations permitting their use only
for charitable, religious, benevolent, educational or similar purposes, but not held upon a
condition requiring return, transfer or conveyance by reason of the dissolution, shall be
transferred or conveyed to one or more corporations, societies or organizations engaged in
activities in the Philippines substantially similar to those of the dissolving corporation according
to a plan of distribution adopted pursuant to this Chapter;
4. Assets other than those mentioned in the preceding paragraphs, if any, shall be distributed in
accordance with the provisions of the articles of incorporation or the by-laws, to the extent that
the articles of incorporation or the by-laws, determine the distributive rights of members, or any
class or classes of members, or provide for distribution; and
5. In any other case, assets may be distributed to such persons, societies, organizations or
corporations, whether or not organized for profit, as may be specified in a plan of distribution
adopted pursuant to this Chapter. (n)
Sec. 95. Plan of distribution of assets. - A plan providing for the distribution of assets, not
inconsistent with the provisions of this Title, may be adopted by a non-stock corporation in the
process of dissolution in the following manner:
The board of trustees shall, by majority vote, adopt a resolution recommending a plan of
distribution and directing the submission thereof to a vote at a regular or special meeting of
members having voting rights. Written notice setting forth the proposed plan of distribution or a
summary thereof and the date, time and place of such meeting shall be given to each member
entitled to vote, within the time and in the manner provided in this Code for the giving of notice
of meetings to members. Such plan of distribution shall be adopted upon approval of at least
two-thirds (2/3) of the members having voting rights present or represented by proxy at such
meeting. (n)

Samples:

Human resource management (HRM) is the function that assists organizations in achieving
goals by obtaining and maintaining effective employees.
Some of the responsibilities of human resource management include to:

Train the workforce to maintain competitiveness of the organization

Develop and communicate industrial relations policies and procedures to conform to

legislation.

Involvement in grievance and disciplinary hearings

Lead negotiations as needed

Implement termination and hiring procedures

Assessment and management of organizational climate and employee relations

Liaison with trade unions

Implementation of outcomes of collective bargaining and negotiation

Develop compensation strategies and policies in compliance with legislation, market

forces, and the organizations business strategy.

Manage overall labor costs.

Update employee information

Advise management regarding trends emerging from the data.

Conduct HRM research with the aim of solving problems in the organization.

Additional Definitions

Human Resource Management

Human Resource Management (HRM) is the term used to describe formal systems devised
for the management of people within an organization. The responsibilities of a human
resource manager fall into three major areas: staffing, employee compensation and benefits,
and defining/designing work. Essentially, the purpose of HRM is to maximize the productivity
of an organization by optimizing the effectiveness of its employees. This mandate is unlikely
to change in any fundamental way, despite the ever-increasing pace of change in the
business world. As Edward L. Gubman observed in the Journal of Business Strategy, "the
basic mission of human resources will always be to acquire, develop, and retain talent; align
the workforce with the business; and be an excellent contributor to the business. Those
three challenges will never change."
Until fairly recently, an organization's human resources department was often consigned to
lower rungs of the corporate hierarchy, despite the fact that its mandate is to replenish and
nourish what is often citedlegitimatelyas an organization's greatest resource, it's work
force. But in recent years recognition of the importance of human resources management to
a company's overall health has grown dramatically. This recognition of the importance of
HRM extends to small businesses, for while they do not generally have the same volume of
human resources requirements as do larger organizations, they too face personnel
management issues that can have a decisive impact on business health. As Irving Burstiner
commented inThe Small Business Handbook, "Hiring the right peopleand training them
wellcan often mean the difference between scratching out the barest of livelihoods and
steady business growth. Personnel problems do not discriminate between small and big
business. You find them in all businesses, regardless of size."

HUMAN RESOURCE MANAGEMENTKEY

RESPONSIBILITIES
Human resource management is concerned with the development of both individuals and
the organization in which they operate. HRM, then, is engaged not only in securing and
developing the talents of individual workers, but also in implementing programs that
enhance communication and cooperation between those individual workers in order to
nurture organizational development.
The primary responsibilities associated with human resource management include: job
analysis and staffing, organization and utilization of work force, measurement and appraisal
of work force performance, implementation of reward systems for employees, professional
development of workers, and maintenance of work force.
Job analysis consists of determiningoften with the help of other company areasthe
nature and responsibilities of various employment positions. This can encompass
determination of the skills and experiences necessary to adequately perform in a position,
identification of job and industry trends, and anticipation of future employment levels and
skill requirements. "Job analysis is the cornerstone of HRM practice because it provides valid
information about jobs that is used to hire and promote people, establish wages, determine
training needs, and make other important HRM decisions," stated Thomas S. Bateman and

Carl P. Zeithaml inManagement: Function and Strategy. Staffing, meanwhile, is the actual
process of managing the flow of personnel into, within (through transfers and promotions),
and out of an organization. Once the recruiting part of the staffing process has been
completed, selection is accomplished through job postings, interviews, reference checks,
testing, and other tools.
Organization, utilization, and maintenance of a company's work force is another key function
of HRM. This involves designing an organizational framework that makes maximum use of an
enterprise's human resources and establishing systems of communication that help the
organization operate in a unified manner. Other responsibilities in this area include safety
and health and worker-management relations. Human resource maintenance activities
related to safety and health usually entail compliance with federal laws that protect
employees from hazards in the workplace. These regulations are handed down from several
federal agencies, including the Occupational Safety and Health Administration (OSHA) and
the Environmental Protection Agency (EPA), and various state agencies, which implement
laws in the realms of worker's compensation, employee protection, and other areas.
Maintenance tasks related to worker-management relations primarily entail: working with
labor unions; handling grievances related to misconduct, such as theft or sexual
harassment; and devising communication systems to foster cooperation and a shared sense
of mission among employees.
Performance appraisal is the practice of assessing employee job performance and providing
feedback to those employees about both positive and negative aspects of their
performance. Performance measurements are very important both for the organization and
the individual, for they are the primary data used in determining salary increases,
promotions, and, in the case of workers who perform unsatisfactorily, dismissal.
Reward systems are typically managed by HR areas as well. This aspect of human resource
management is very important, for it is the mechanism by which organizations provide their
workers with rewards for past achievements and incentives for high performance in the
future. It is also the mechanism by which organizations address problems within their work
force, through institution of disciplinary measures. Aligning the work force with company
goals, stated Gubman, "requires offering workers an employment relationship that motivates
them to take ownership of the business plan."
Employee development and training is another vital responsibility of HR personnel. HR is
responsible for researching an organization's training needs, and for initiating and evaluating
employee development programs designed to address those needs. These training programs
can range from orientation programs, which are designed to acclimate new hires to the
company, to ambitious education programs intended to familiarize workers with a new
software system.
"After getting the right talent into the organization," wrote Gubman, "the second traditional
challenge to human resources is to align the workforce with the businessto constantly
build the capacity of the workforce to execute the business plan." This is done through
performance appraisals, training, and other activities. In the realm of performance appraisal,
HRM professionals must devise uniform appraisal standards, develop review techniques,
train managers to administer the appraisals, and then evaluate and follow up on the
effectiveness of performance reviews. They must also tie the appraisal process into
compensation and incentive strategies, and work to ensure that federal regulations are
observed.
Responsibilities associated with training and development activities, meanwhile, include the
determination, design, execution, and analysis of educational programs. The HRM
professional should be aware of the fundamentals of learning and motivation, and must
carefully design and monitor training and development programs that benefit the overall

organization as well as the individual. The importance of this aspect of a business's

operation can hardly be overstated. As Roberts, Seldon, and Roberts indicated in Human
Resources Management, "the quality of employees and their development through training
and education are major factors in determining long-term profitability of a small business.
Research has shown specific benefits that a small business receives from training and
developing its workers, including: increased productivity; reduced employee turnover;
increased efficiency resulting in financial gains; [and] decreased need for supervision."
Meaningful contributions to business processes are increasingly recognized as within the
purview of active human resource management practices. Of course, human resource
managers have always contributed to overall business processes in certain respectsby
disseminating guidelines for and monitoring employee behavior, for instance, or ensuring
that the organization is obeying worker-related regulatory guidelines. Now, increasing
numbers of businesses are incorporating human resource managers into other business
processes as well. In the past, human resource managers were cast in a support role in
which their thoughts on cost/benefit justifications and other operational aspects of the
business were rarely solicited. But as Johnston noted, the changing character of business
structures and the marketplace are making it increasingly necessary for business owners
and executives to pay greater attention to the human resource aspects of operation: "Tasks
that were once neatly slotted into well-defined and narrow job descriptions have given way
to broad job descriptions or role definitions. In some cases, completely new work
relationships have developed; telecommuting, permanent part-time roles and outsourcing
major non-strategic functions are becoming more frequent." All of these changes, which
human resource managers are heavily involved in, are important factors in shaping business
performance.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-17716

July 31, 1962

LUNETA MOTOR COMPANY, petitioner,

vs.
A.D. SANTOS, INC., ET AL., respondents.
Jose Agbulos for petitioner.
Graciano C. Regala and Angel A. Sison for respondents.
DIZON, J.:
Appeal from the decision of the Public Service Commission in case No. 123401
dismissing petitioner's application for the approval of the sale in its favor, made by
the Sheriff of the City of Manila, of the certificate of public convenience granted
before the war to Nicolas Concepcion (Commission Cases Nos. 60604 and 60605,
reconstituted after the war in Commission Case No. 1470) to operate a taxicab
service of 27 units in the City of Manila and therefrom to any point in Luzon.
It appears that on December 31, 1941, to secure payment of a loan evidenced by a
promissory note executed by Nicolas Concepcion and guaranteed by one Placido
Esteban in favor of petitioner, Concepcion executed a chattel mortgage covering the
above mentioned certificate in favor of petitioner.
To secure payment of a subsequent loan obtained by Concepcion from the
Rehabilitation Finance Corporation (now Development Bank of the Philippines) he
constituted a second mortgage on the same certificate. This second mortgage was
approved by the respondent Commission, subject to the mortgage lien in favor of
petitioner.
The certificate was later sold to Francisco Benitez, Jr., who resold it to Rodi Taxicab
Company. Both sales were made with assumption of the mortgage in favor of the
RFC, and were also approved provisionally by the Commission, subject to
petitioner's lien.
On October 10, 1953 petitioner filed an action to foreclose the chattel mortgage
executed in its favor by Concepcion (Civil Case No. 20853 of the Court of First
Instance of Manila) in view of the failure of the latter and his guarantor, Placido
Esteban, to pay their overdue account.

While the above case was pending, the RFC also instituted foreclosure proceedings
on its second chattel mortgage, and as a result of the decision in its favor therein
rendered, the certificate of public convenience was sold at public auction in favor of
Amador D. Santos for P24,010.00 on August 31, 1956. Santos immediately applied
with the Commission for the approval of the sale, and the same was approved on
January 26, 1957, subject to the mortgage lien in favor of petitioner.
On June 9, 1958 the Court of First Instance of Manila rendered judgment in Civil
Case No. 20853, amended on August 1, 1958, adjudging Concepcion indebted to
petitioner in the sum of P15,197.84, with 12% interest thereon from December 2,
1941 until full payment, plus other assessments, and ordered that the certificate of
public convenience subject matter of the chattel mortgage be sold at public auction
in accordance with law. Accordingly, on March 3, 1959 said certificate was sold at
public auction to petitioner, and six days thereafter the Sheriff of the City of Manila
issued in its favor the corresponding certificate of sale. Thereupon petitioner filed
the application mentioned heretofore for the approval of the sale. In the meantime
and before his death, Amador D. Santos sold and transferred (Commission Case No.
1272231) all his rights and interests in the certificate of public convenience in
question in favor of the now respondent A.D. Santos, Inc., who opposed petitioner's
application.
The record discloses that in the course of the hearing on said application and after
petitioner had rested its case, the respondent A. D. Santos, Inc., with leave of court,
filed a motion to dismiss based on the following grounds:
a) under the petitioner's Articles of Incorporation, it was not authorized to
engage in the taxicab business or operate as a common carrier;
b) the decision in Civil Case No. 20853 of the Court of First Instance of Manila
did not affect the oppositor nor its predecessor Amador D. Santos inasmuch
as neither of them had been impleaded into the case;
c) that what was sold to the petitioner were only the "rights, interests and
participation" of Nicolas Concepcion in the certificate that had been granted
to him which were no longer existing at the time of the sale.
On October 18, 1960, the respondent Commission, after considering the
memoranda submitted by the parties, rendered the appealed decision sustaining
the first ground relied upon in support thereof, namely, that under petitioner's
articles of incorporation it had no authority to engage in the taxicab business or
operate as a common carrier, and that, is a result, it could not acquire by purchase
the certificate of public convenience referred to above. Hence, the present appeal
interposed by petitioner who claims that, in accordance with the Corporation Law
and its articles of incorporation, it can acquire by purchase the certificate of public

convenience in question, maintaining inferentially that, after acquiring said

certificate, it could make use of it by operating a taxicab business or operate is a
common carrier by land.
There is no question that a certificate of public convenience granted to the public
operator is liable to execution (Raymundo vs. Luneta Motor Co., 58 Phil. 889) and
may be acquired by purchase. The question involved in the present appeal,
however, is not only whether, under the Corporation Law and petitioner's articles of
incorporation, it may acquire by purchase a certificate of public convenience, such
as the one in question, but also whether, after its acquisition, petitioner may hold
the certificate and thereunder operate as a common carrier by land.
It is not denied that under Section 13 (5) of the Corporation Law, a corporation
created thereunder may purchase, hold, etc., and otherwise deal in such real and
personal property is the purpose for which the corporation was formed may permit,
and the transaction of its lawful business may reasonably and necessarily require.
The issue here is precisely whether the purpose for which petitioner was organized
and the transaction of its lawful business reasonably and necessarily require the
purchase and holding by it of a certificate of public convenience like the one in
question and thus give it additional authority to operate thereunder as a common
carrier by land.
Petitioner claims in this regard that its corporate purposes are to carry on a general
mercantile and commercial business, etc., and that it is authorized in its articles of
incorporation to operate and otherwise deal in and concerning automobiles and
automobile accessories' business in all its multifarious ramification (petitioner's brief
p. 7) and to operate, etc., and otherwise dispose of vessels and boats, etc., and to
own and operate steamship and sailing ships and other floating craft and deal in the
same and engage in the Philippine Islands and elsewhere in the transportation of
persons, merchandise and chattels by water; all this incidental to the transportation
of automobiles (id. pp. 7-8 and Exhibit B).
We find nothing in the legal provision and the provisions of petitioner's articles of
incorporation relied upon that could justify petitioner's contention in this case. To
the contrary, they are precisely the best evidence that it has no authority at all to
engage in the business of land transportation and operate a taxicab service. That it
may operate and otherwise deal in automobiles and automobile accessories; that it
may engage in the transportation of persons by water does not mean that it may
engage in the business of land transportation an entirely different line of
business. If it could not thus engage in the line of business, it follows that it may not
acquire an certificate of public convenience to operate a taxicab service, such as
the one in question, because such acquisition would be without purpose and would
have no necessary connection with petitioner's legitimate business.

In view of the conclusion we have arrived at on the decisive issue involved in this
appeal, we deem it unnecessary to resolve the other incidental questions raised by
petitioner.
WHEREFORE, the appealed decision is affirmed, with costs.
Bengzon, C.J., Padilla, Concepcion, Barrera, Paredes and Makalintal, JJ., concur.
Regala, J., took no part.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 104175 June 25, 1993

YOUNG AUTO SUPPLY CO. AND NEMESIO GARCIA, petitioners,
vs.
THE HONORABLE COURT OF APPEALS (THIRTEENTH DIVISION) AND GEORGE
CHIONG ROXAS,respondents.
Angara, Abello, Concepcion, Regala & Cruz for petitioners.
Antonio Nuyles for private respondent.

QUIASON, J.:

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 post
dated 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 down-payment, 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 P3,400,00.00 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 proforma (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 or 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 the 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 in 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. . . . (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. Benguet Commercial Co., Ltd., 34 Phil. 256 [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 Clavencilla 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, Grio-Aquino and Bellosillo, JJ., concur.