G.R. No. and Date: G.R. No. L-10493, March 29, 1916

FACTS:
The plaintiffs, a foreign commercial partnership based in London, sued the defendant, a domestic corporation with its sole office and principal place of business in Baguio, Benguet, for breach of contract. The action was filed in Manila. The first summons was served on the defendant’s president in Baguio. The defendant appeared specially to object to the venue, arguing that under Section 377 of the Code of Civil Procedure, the trial must be in the province where either party resides or is found. The trial court denied this motion, ruling that the motion itself constituted a voluntary general appearance waiving the venue objection. The plaintiffs then abandoned the first service and effected a second service of summons on the defendant’s president, who was temporarily in Manila. The defendant again appeared specially, objecting to the venue via a motion supported by a stipulation of facts. The stipulation confirmed the defendant’s domicile was in Baguio, that it had no office or agency in Manila, and that its president was only casually present in Manila at the time of service. The trial court overruled the second motion, holding that (1) the first motion was a general appearance, and (2) service on the corporate officer in Manila meant the defendant was “found” there for venue purposes under Section 377.

ISSUE:
Whether the venue was properly laid in Manila, considering the defendant is a domestic corporation domiciled in Baguio, Benguet, and was served through its president who was only casually present in Manila.

RULING:
No. The Supreme Court reversed the trial court’s orders.
1. On the First Motion: The first service and the motion to dismiss based on it were abandoned by the plaintiffs when they effected a second service. Therefore, the first motion and the court’s ruling thereon had no further bearing on the case.
2. On the Second Motion and the Proper Venue: The trial court erred in its interpretation of Section 377 of the Code of Civil Procedure. The provision states that actions shall be brought in the province where the plaintiff or defendant resides, or where the defendant may be found. The Court harmonized these phrases:
If the defendant is a resident of the Philippine Islands, the venue must be laid only in the province of the plaintiff’s residence or the defendant’s residence.
The phrase “or be found” applies only to non-resident defendants. In such a case, venue may be laid in any province where the non-resident defendant may be found.
3. Application to the Case: The defendant is a domestic corporation domiciled in Baguio, Benguet, and is therefore a resident of the Philippines. Consequently, the venue could only be properly laid either in Manila (where the foreign plaintiff may be considered to reside for venue purposes) or in Benguet (where the defendant resides). It could not be laid in Manila on the sole ground that the defendant’s officer was “found” there for service. Service of summons in Manila did not equate to the defendant corporation being “found” there for determining venue under Section 377.
4. On Special Appearance: The defendant’s second motion, made specially and for the sole purpose of objecting to the venue, supported by a stipulation limiting its purpose, did not constitute a voluntary general appearance. The defendant preserved its objection.
The Supreme Court granted the defendant’s motion, set aside the trial court’s orders, and directed the case to be tried in the Court of First Instance of Benguet, the province of the defendant’s residence.