A. PRELIMINARY CONSIDERATIONS corporation with no capacity to sue is null and void ab initio.

#1 We are not unaware of the conflicting schools of thought both here and
THE HOME INSURANCE COMPANY VS. EASTERN SHIPPING LINES abroad which are divided on whether such contracts are void or merely voidable.
G.R. No. L-34382, July 20, 1983,GUTIERREZ, JR., J. Professor Sulpicio Guevarra in his book Corporation Law cites an Illinois decision
In two separate instances, herein petitioner Home Insurance paid the which holds the contracts void and a Michigan statute and decision declaring them
consignees (Phelps Dodge, International Harvester) under its insurance policy, by merely voidable: "Where a contract which is entered into by a foreign corporation
virtue of which the former became subrogated to the rights and actions of the without complying with the local requirements of doing business is rendered void
consignees against herein respondents Eastern Shipping Lines and Columbian either by the express terms of a statute or by statutory construction, a subsequent
Philippines. But said respondents failed and refused to pay the same, prompting the compliance with the statute by the corporation will not enable it to maintain an
petitioner to file complaints against them. action on the contract. (Illinois statute) . . . But where the statute merely prohibits the
In both cases, the petitioner averred that it is duly authorized to do business maintenance of a suit on such contract (without expressly declaring the contract
in the Philippines. The respondents denied the allegations which refer to petitioner’s 'void'), it was held that a failure to comply with the statute rendered the contract
capacity to sue for lack of knowledge or information sufficient to form a belief as to voidable and not void, and compliance at any time before suit was sufficient.
the truth thereof. The trial court dismissed the complaints in the two cases on the (Michigan statute)
same ground that the plaintiff failed to prove its capacity to sue but admitting that if Our jurisprudence leans towards the view that “the very fact that the
it had such capacity, respondents are liable and should pay the petitioner with prohibition against maintaining an action in the courts of the state was inserted in the
interest. When the insurance contracts which formed the basis of these cases were statute ought to be conclusive proof that the legislature did not intend or understand
executed, the petitioner had not yet secured the necessary licenses and authority. that contracts made without compliance with the law were void. The statute does not
The lower court, therefore, declared that pursuant to the basic public policy reflected fix any time within which foreign corporations shall comply with the Act. If such
in the Corporation Law, the insurance contracts executed before a license was contracts were void, no suits could be prosecuted on them in any court. . . . The
secured must be held null and void. The court ruled that the contracts could not be primary purpose of our statute is to compel a foreign corporation desiring to do
validated by the subsequent procurement of the license. business within the state to submit itself to the jurisdiction of the courts of this state.
The statute was not intended to exclude foreign corporations from the state. It does
ISSUE: not, in terms, render invalid contracts made in this state by non-complying
Whether the petitioner has a capacity to sue by virtue of its subsequent corporations. The better reason, the wiser and fairer policy, and the greater weight lie
registration. with those decisions which hold that where, as here, there is a prohibition with a
penalty, with no express or implied declarations respecting the validity of
RULING YES. enforceability of contracts made by qualified foreign corporations, the contracts . . .
The applicable provision of the old Corporation Law, Act 1459, as amended are enforceable . . . upon compliance with the law.” (Peter & Burghard Stone Co. v.
is: Carper, 172 N.E. 319 [1930]).
"Sec. 68. No foreign corporation or corporations formed, organized, or existing under Apart from the objectives earlier cited from Marshall Wells Co. v. Henry W.
any laws other than those of the Philippine Islands shall be permitted to transact Elser & Co. (supra), it has long been the rule that a foreign corporation actually doing
business in the Philippine Islands until after it shall have obtained a license for that business in the Philippines without license to do so may be sued in our courts. There
purpose. . ." is no question that the contracts are enforceable. The requirement of registration
In Marshall Wells Co. v. Henry W. Elser & Co. (46 Phil. 70), the object of affects only the remedy.
Sections 68 and 69 of the Corporation Law was to subject the foreign corporation
doing business in the Philippines to the jurisdiction of our courts. The law simply #2
means that no foreign corporation shall be permitted 'to transact business in the FIRST PHILIPPINE INTERNATIONAL BANK v. CA
Philippine Islands,' unless it shall have the license required by law, and, until it FACTS: Producer Bank of the Philippines acquired six parcels of land with a total area
complies with the law, shall not be permitted to maintain any suit in the local courts. of 101 hectares located at Don Jose, Sta. Rosa, Laguna. The property used to be
Insofar as transacting business without a license is concerned, Section 69 of owned by BYME Investment and Development Corporation which had them
the Corporation Law imposed a penal sanction — imprisonment, fine, or both. And mortgaged with the bank as collateral fora loan. The original plaintiffs, Demetrio
insofar as litigation is concerned, the foreign corporation or its assignee may not Demetria and Jose O. Janolo, wanted to purchase the property and thus initiated
maintain any suit for the recovery of any debt, claim, or demand whatever. The negotiations with Mercurio Rivera, the manager of Producers Bank, for that purpose.
Corporation Law is silent on whether or not the contract executed by a foreign
 Defendant bank, through defendant Rivera, acknowledged receipt of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs
negotiation letter and stated, in its communication of December 2, 1987 that said resides, at the election of the plaintiff‖ (Rule 4, Sec. 2 [b]). As to remedies, aggrieved
letter has been ―referred x xx to the office of our Conservator for proper parties, for example, are given a choice of pursuing civil liabilities independently of
disposition.‖ However, no response came from the Acting Conservator. Defendants the criminal, arising from the same set of facts. A passenger of a public utility vehicle
through Acting Conservator Encarnacion repudiated the authority of defendant involved in a vehicular accident may sue on culpa contractual, culpa aquiliana or culpa
Rivera and claimed that his dealings with the plaintiffs, particularly his counter-offer criminal - each remedy being available independently of the others - although he
of P5.5 Million are unauthorized or illegal. cannot recover more than once.
Plaintiffs filed a suit for specific performance with damages against the bank, Applying the foregoing principles in the case before us and comparing it with
its Manager Rivera and Acting Conservator Encarnacion. The basis of the suit was that the Second Case, it is obvious that there exist identity of parties or interests
the transaction had with the bank resulted in a perfected contract of sale. The represented, identity of rights or causes and identity of reliefs sought.
defendants took the position that there was no such perfected sale because the Very simply stated, the original complaint in the court a quo which gave rise
defendant Rivera is not authorized to sell the property, and that there was no to the instant petition was filed by the buyer (herein private respondent and his
meeting of the minds as to the price.‖ predecessors-in-interest) against the seller (herein petitioners) to enforce the alleged
On July 11, 1992, during the pendency of the proceedings in the Court of perfected sale of real estate. On the other hand, the complaint in the Second Case
Appeals, Henry Co and several other stockholders of the Bank, through counsel seeks to declare such purported sale involving the same real property ―as
Angara Abello Concepcion Regala and Cruz, filed an action (hereafter, the ―Second unenforceable as against the Bank,‖ which is the petitioner herein. In other words, in
Case‖) -purportedly a ―derivative suit‖ - with the Regional Trial Court of Makati, the Second Case, the majority stockholders, in representation of the Bank, are
Branch 134, docketed as Civil Case No. 92-1606, against Encarnacion, Demetria and seeking to accomplish what the Bank itself failed to do in the original case in the trial
Janolo ―to declare any perfected sale of the property as unenforceable and to stop court. In brief, the objective or the relief being sought, though worded differently, is
Ejercito from enforcing or implementing the sale.‖ the same, namely, to enable the petitioner Bank to escape from the obligation to sell
the property to respondent.
ISSUE:
Whether there was forum shopping on the part of Petitioner Bank #3
MCGEE v. INTERNATIONAL INSURANCE CO.
RULING: We rule for private respondent FACTS: In 1944, Lowell Franklin, a resident of California, bought a life insurance policy
To begin with, forum-shopping originated as a concept in private from an Arizona corporation, naming petitioner as beneficiary. Later, respondent, a
international law, where non-resident litigants are given the option to choose the Texas corporation, agreed to assume the insurance obligations of the Arizona
forum or place wherein to bring their suit for various reasons or excuses, including to corporation, and mailed a reinsurance certificate to petitioner's son in California,
secure procedural advantages, to annoy and harass the defendant, to avoid offering to insure him in accordance with his policy.
overcrowded dockets, or to select a more friendly venue. To combat these less than In 1950, Franklin died. His mother, the beneficiary, notified the insurance company of
honorable excuses, the principle of forum non conveniens was developed whereby a his death. Respondent refused to pay, claiming that Franklin committed suicide.
court, in conflicts of law cases, may refuse impositions on its jurisdiction where it is McGee obtained judgment against the insurance company in California state court
not the most ―convenient‖ or available forum and the parties are not precluded and attempted to enforce it in Texas. Texas state court refused to enforce the
from seeking remedies elsewhere. th
California judgment holding it was void under the 14 amendment (lack of
In this light, Black‘s Law Dictionary says that forum-shopping ―occurs when
jurisdiction).
a party attempts to have his action tried in a particular court or jurisdiction where he
feels he will receive the most favorable judgment or verdict.‖ Hence, according to
ISSUE:
Words and Phrases ―a litigant is open to the charge of ̳forum shopping‘ whenever he
Whether the insurance company, a non-resident corporation, is subject to
chooses a forum with slight connection to factual circumstances surrounding his suit,
jurisdiction in a state where it never had any office or agent, merely because it was a
and litigants should be encouraged to attempt to settle their differences without
party to contract with a resident of the state
imposing undue expense and vexatious situations on the courts.‖
In the Philippines, forum-shopping has acquired a connotation encompassing not only
Ruling:
a choice of venues, as it was originally understood in conflicts of laws, but also to a
Turning to this case we think it apparent that the Due Process Clause did not
choice of remedies. As to the first (choice of venues), the Rules of Court, for example,
preclude the California court from entering a judgment binding on respondent. It is
allow a plaintiff to commence personal actions ―where the defendant or any of the
sufficient for purposes of due process that the suit was based on a contract which had
substantial connection with that State. Cf. Hess v. Pawloski,274 U.S. 352 ; Henry L. her defense that the petitioners had no cause of action against her; she was already
Doherty & Co. v. Goodman, 294 U.S. 623 ; Pennoyer v. Neff, 95 U.S. 714, 735 .2 The the rightful owner of Apartment No. 1411 by virtue of a sale between her and
contract was delivered in California, the premiums were mailed from there and the petitioners, as evidenced by the Memorandum of Agreement dated August 8, 1987.
insured was a resident of that State when he died. It cannot be denied that California On April 25, 2003, the MTC ruled in the petitioners favor. The respondent appealed
has a manifest interest in providing effective means of redress for its residents when the MTC decision to the Regional Trial Court (RTC), Branch 50, Manila, which reversed
their insurers refuse to pay claims. These residents would be at a severe disadvantage the MTC ruling in its decision dated November 3, 2004.
if they were forced to follow the insurance company to a distant State in order to The petitioners responded to the reversal by filing a Petition for Review(CA
hold it legally accountable. When claims were small or moderate individual claimants Petition) with the CA on March 31, 2005. On the same date, they also formally
frequently could not afford the cost of bringing an action in a foreign forum - thus in manifested with the CA that to comply with the verification and certification
effect making the company judgment proof. Often the crucial witnesses - as here on requirements under Sections 1 and 2 of Rule 42 of the Rules of Court they were in the
the company's defense of suicide will be found in the insured's locality Of course meantime submitting a photostatic copy of the Verification/Certification as the
there may be inconvenience to the insurer if it is held amenable to suit in California original was still in the Philippine Consulate in San Francisco for authentication. They
where it had this contract but certainly nothing which amounts to a denial of due promised to submit the original document as soon as the consulate completed the
process.. There is no contention that respondent did not have adequate notice of the authentication process. Indeed, on April 8, 2005, petitioners submitted to the CA the
suit or sufficient time to prepare its defenses and appear. original authenticated Verification/Certification and moved that the appellate court
The California statute became law in 1949, after respondent had entered consider the submission as full compliance with the verification requirements of the
into the agreement with Franklin to assume Empire Mutual's obligation to him. Rules.
Respondent contends that application of the statute to this existing contract Meanwhile, the CA issued April 8 Resolution dismissing the petition due to
improperly impairs the obligation of the contract. We believe that contention is the petitioners failure to attach the complaint, the answer, the position papers filed
devoid of merit. The statute was remedial, in the purest sense of that term, and with the MTC, the memorandum filed with the RTC, and other material portions of
neither enlarged nor impaired respondent's substantive rights or obligations under the record supporting the allegations of the petition. The petitioners received a copy
the contract. It did nothing more than to provide petitioner with a California forum to of this April 8 Resolution on April 15, 2005.
enforce whatever substantive rights she might have against respondent. At the same On April 28, 2005, the petitioners moved for the reconsideration of the April
time respondent was given a reasonable time to appear and defend on the merits 8 Resolution, attaching thereto the missing pleadings. The CA denied the motion.
after being notified of the suit. Under such circumstances it had no vested right not to
be sued in California. ISSUE:
WON variance between the dates of the verification/certification executed
#4 abroad and the CA petition is fatal considering the parties are residing overseas.
VALMONTE v. ALCALA
FACTS: The petitioners alleged that they are the unregistered owners of Apartment RULING: No.
No. 1411 located at Echabelita Street, Paco, Manila, as the petitioner Maria Lourdes is First, the variance in dates does not necessarily contradict the categorical
one of the heirs and successors-in-interests of Cornelio Arreola and Antonina Pascua, declaration made by petitioners in their affidavit that they read and understood the
the registered owners of the property. Since the petitioners were migrating to contents of the pleading. The petitioners’ claim in this regard is that they read a copy
the United States, they offered Apartment No. 1411 for lease to the respondent at of the CA Petition through an electronic mail sent to them by their lawyers. In short,
the rate ofP1,500.00 per month beginning January 1980; the latter accepted the the pleading and the verification are prepared separately and a variance in their dates
offer. The lease contract, initially verbal, was consummated by the respondents is a matter that may satisfactorily be explained. To demand the litigants to read the
payment of two (2) months rental fees and the petitioners delivery to the respondent very same document that is to be filed before the courts is too rigorous a
of the keys. requirement; what the Rules require is for a party to read the contents of a pleading
Due to the respondents subsequent failure to pay the agreed rentals despite without any specific requirement on the form or manner in which the reading is to be
written demand, the petitioners filed a complaint for unlawful detainer against her done. That a client may read the contents of a pleading without seeing the same
on April 26, 2002 before the MTC.As the petitioners were already US residents at that pleading to be actually filed with the court is, in these days of e-mails and other
time, they signed the required Verification/Certification of Non-Forum Shopping of technological advances in communication, not an explanation that is hard to believe.
their complaint before a notary public in the state of Washington on March 18, 2002, Apparently in this case, counsel sent a copy of the draft petition by e-mail and
and had this Verification/Certification authenticated by the Philippine Consulate finalized it as soon as it was approved by the petitioners. The latter, on the other
General in San Francisco on March 27, 2002. The respondent contended in hand, complied with their end not only by approving the terms of the petition, but
also by sending a copy of their sworn statement in order to file the petition soonest, motion for reconsideration based on attachments already made, but there existed
thereby complying with the required timeliness for the filing of the petition. To our another reason – the variance in dates – for maintaining the dismissal of the petition.
mind, beyond the manner of these exchanges, what is important is that efforts were Fourth, we note that most of the material allegations set forth by petitioners
made to satisfy the objective of the Rule – to ensure good faith and veracity in the in their CA Petition are already in their complaint for unlawful detainer filed before
allegations of a pleading – thereby allowing the courts to act on the case with the MTC on April 26, 2002. Attached to the complaint was a
reasonable certainty that the petitioners’ real positions have been pleaded. Verification/Certification dated March 18, 2002 in which petitioners declared under
Second, the "circumstances" we mentioned above refer to the petitioners’ oath that they had caused the preparation of the complaint through their lawyers and
unique situation as parties residing overseas who are litigating locally through their had read and understood the allegations of the complaint. The material facts alleged
local counsel. While these overseas litigants are not excused from complying with our in the CA Petition are likewise stated in the records of the case, as part of the findings
Rules such as the strict observance of the periods for appeal and the verification of facts made by the MTC and the RTC. Verification as to the truth of these facts in
requirement, we must take into account the attendant realities brought into play the petition for review before the CA was, therefore, strictly a redundancy; its filing
because they are suing from overseas or via long distance communications with their remained a necessity only because the Rules on the filing of a petition for review
counsel. In the verification requirement, there are added formalities required for the before the CA require it. This consideration could have led to a more equitable
acceptance in the Philippines of statements sworn overseas before foreign notaries; treatment of the petitioners’ failure to strictly comply with the Rules, additionally
we require their authentication by our consulates. This is a process whose completion justified by the fact that the failure to comply with the rules on verification is a formal
time may vary depending, among others, on various factors such as the location of rather than a jurisdictional defect.
the requesting party from the consulate; the peculiarities of foreign laws on notaries;
the volume of transactions in a consulate, noting particularly the time of year when
the authentication is requested; and the mode of sending the authenticated
documents to the Philippines. Apparently compelled by one or a combination of
these reasons, the petitioners in fact manifested when they filed their petition that
they were submitting a photostatic copy of the Verification/Certification executed in
Washington on March 17, 2005 since the original was still with the Philippine
Consulate in San Francisco for authentication. We take judicial notice that the
petitioners’ request for authentication coincided with the observance of the Holy
Week. We find it significant that, conformably with their Manifestation, the
petitioners’ counsel filed on April 8, 2005 the duly sworn and authenticated
Verification as soon as counsel received it. Under these circumstances, there is every
reason for an equitable and relaxed application of the rules to the petitioners’
situation.
Third, we discern utmost good faith on the part of the petitioners when they
filed their Manifestation about their problem, intent, and plan of compliance with the
verification requirement. They in fact stated early on through this Manifestation that
their verification had been executed on March 17, 2005 in Washington, that is, at a
date much earlier than the filing of their petition and manifestation. Unfortunately,
the CA failed to note the variance in dates at the earliest opportunity; thus, the CA
dismissed the petition on some other ground, only to hark back later on to the
variance in dates in their reconsideration of the earlier dismissal. Given this good faith
and the early disclosure, it was basically unfair for the CA – who had earlier
overlooked the variance in dates – to subsequently make this ground the basis of yet
another dismissal of the petition. The CA – after overlooking the variance in dates at
the first opportunity – should have at least asked for the petitioners’ explanation on
why the variance should not be an additional ground for the dismissal of the petition,
instead of reflecting in their order on reconsideration that it could have granted the