[CONFLICT: PRELIMINARY CONSIDERATIONS]

THE HOME INSURANCE COMPANY VS. EASTERN SHIPPING LINES

G.R. No. L-34382, July 20, 1983,GUTIERREZ, JR., J.
In two separate instances, herein petitioner Home Insurance
paid the consignees (Phelps Dodge, International Harvester) under its
insurance policy, by virtue of which the former became subrogated to
the rights and actions of the consignees against herein respondents
Eastern Shipping Lines and Columbian Philippines. But said respondents
failed and refused to pay the same, prompting the petitioner to file
complaints against them.
In both cases, the petitioner averred that it is duly authorized to
do business in the Philippines. The respondents denied the allegations
which refer to petitioners capacity to sue for lack of knowledge or
information sufficient to form a belief as to the truth thereof. The trial
court dismissed the complaints in the two cases on the same ground
that the plaintiff failed to prove its capacity to sue but admitting that if it
had such capacity, respondents are liable and should pay the petitioner
with interest. When the insurance contracts which formed the basis of
these cases were executed, the petitioner had not yet secured the
necessary licenses and authority. The lower court, therefore, declared
that pursuant to the basic public policy reflected in the Corporation Law,
the insurance contracts executed before a license was secured must be
held null and void. The court ruled that the contracts could not be
validated by the subsequent procurement of the license.

ISSUE
Whether the petitioner has a capacity to sue by virtue of its
subsequent registration.

RULING

YES.

The applicable provision of the old Corporation Law, Act 1459, as

amended is:
"Sec. 68. No foreign corporation or corporations formed, organized, or
existing under any laws other than those of the Philippine Islands shall
bepermitted to transact business in the Philippine Islands until after it
shallhave obtained a license for that purpose. . ."
In Marshall Wells Co. v.Henry W. Elser & Co. (46 Phil. 70), the
object of Sections 68 and 69 of the Corporation Law was to subject the
foreign corporation doing business inthe Philippines to the jurisdiction of

our courts. The lawsimply means that no foreign corporation shall be

permitted 'to transactbusiness in the Philippine Islands,' unless it shall
have the license required by law, and, until it complies with thelaw, shall
not be permitted to maintain any suit in the local courts.
Insofar as transacting business without a license is concerned,
Section 69 ofthe Corporation Law imposed a penal sanction
imprisonment, fine, or both.And insofar as litigation is concerned, the
foreign corporation or its assignee may not maintain any suit for the
recovery of any debt, claim, or demandwhatever. The Corporation Law is
silent on whether or not the contractexecuted by a foreign corporation
with no capacity to sue is null and void abinitio.
We are not unaware of the conflicting schools of thought both
here and abroad which are divided on whether such contracts are void or
merelyvoidable. Professor Sulpicio Guevarra in his book Corporation Law
cites an Illinois decisionwhich holds the contracts void and a Michigan
statute and decision declaringthem merely voidable:
"Where a contract which is entered into by a foreign corporation without
complying with the local requirements of doing business is rendered
voideither by the express terms of a statute or by statutory construction,
asubsequent compliance with the statute by the corporation will not
enable itto maintain an action on the contract. (Illinois statute) . . . But
where the statute merely prohibits the maintenance of a suit onsuch
contract (without expressly declaring the contract 'void'), it was heldthat
a failure to comply with the statute rendered the contract voidable
andnot void, and compliance at any time before suit was sufficient.
(Michigan statute)
Our jurisprudence leans towards the view that the very fact
that the prohibition againstmaintaining an action in the courts of the
state was inserted in the statuteought to be conclusive proof that the
legislature did not intend or understandthat contracts made without
compliance with the law were void. The statutedoes not fix any time
within which foreign corporations shall comply with theAct. If such
contracts were void, no suits could be prosecuted on them in any court. .
. . The primary purpose of our statute is to compel a foreigncorporation
desiring to do business within the state to submit itself to thejurisdiction
of the courts of this state. The statute was not intended toexclude
foreign corporations from the state. It does not, in terms, renderinvalid
contracts made in this state by non-complying corporations. Thebetter
reason, the wiser and fairer policy, and the greater weight lie withthose
decisions which hold that where, as here, there is a prohibition with
apenalty, with no express or implied declarations respecting the validity
ofenforceability of contracts made by qualified foreign corporations, the
contracts . . . are enforceable . . . upon compliance with the law. (Peter
& Burghard Stone Co. v. Carper, 172 N.E. 319 [1930]).

[CONFLICT: PRELIMINARY CONSIDERATIONS]

Apart from the objectivesearlier cited from Marshall Wells Co. v.

Henry W. Elser & Co. (supra), it haslong been the rule that a foreign
corporation actually doing business in the
Philippines without license to do so may be sued in our courts.There is
no question that the contracts are enforceable. The requirement
ofregistration affects only the remedy.
(A. 2) FIRST PHILIPPINE INTERNATIONAL BANK v. CA
Producer Bank of the Philippines acquired six parcels of land with a total
area of 101 hectares located at Don Jose, Sta. Rosa, Laguna. The
property used to be owned by BYME Investment and Development
Corporation which had them mortgaged with the bank as collateral fora
loan. The original plaintiffs, Demetrio Demetria and Jose O. Janolo,
wanted to purchase the property and thus initiated negotiations with
Mercurio Rivera, the manager of Producers Bank, for that purpose.
Defendant bank, through defendant Rivera, acknowledged receipt of the
negotiation letter and stated, in its communication of December 2, 1987
that said letter has been referred x xx to the office of our Conservator
for proper disposition. However, no response came from the Acting
Conservator.endants through Acting Conservator Encarnacion repudiated
the authority of defendant Rivera and claimed that his dealings with the
plaintiffs, particularly his counter-offer of P5.5 Million are unauthorized or
illegal.
Plaintiffs filed a suit for specific performance with damages against the
bank, its Manager Rivera and Acting Conservator Encarnacion. The basis
of the suit was that the transaction had with the bank resulted in a
perfected contract of sale. The defendants took the position that there
was no such perfected sale because the defendant Rivera is not
authorized to sell the property, and that there was no meeting of the
minds as to the price.
On July 11, 1992, during the pendency of the proceedings in the Court of
Appeals, Henry Co and several other stockholders of the Bank, through
counsel Angara Abello Concepcion Regala and Cruz, filed an action
(hereafter, the Second Case) -purportedly a derivative suit - with
the Regional Trial Court of Makati, Branch 134, docketed as Civil Case
No. 92-1606, against Encarnacion, Demetria and Janolo to declare any
perfected sale of the property as unenforceable and to stop Ejercito from
enforcing or implementing the sale.
ISSUE:
Whether there was forum shopping on the part of Petitioner Bank
RULING: We rule for private respondent
To begin with, forum-shopping originated as a concept in private
international law, where non-resident litigants are given the option to

choose the forum or place wherein to bring their suit for various reasons
or excuses, including to secure procedural advantages, to annoy and
harass the defendant, to avoid overcrowded dockets, or to select a more
friendly venue. To combat these less than honorable excuses, the
principle of forum non conveniens was developed whereby a court, in
conflicts of law cases, may refuse impositions on its jurisdiction where it
is not the most convenient or available forum and the parties are not
precluded from seeking remedies elsewhere.
In this light, Blacks Law Dictionarysays that forum-shopping occurs
when 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 Words and Phrases a litigant is open to
the charge of forum shopping whenever he chooses a forum with slight
connection to factual circumstances surrounding his suit, and litigants
should be encouraged to attempt to settle their differences without
imposing undue expense and vexatious situations on the courts.
In the Philippines, forum-shopping has acquired a connotation
encompassing not only a choice of venues, as it was originally
understood in conflicts of laws, but also to a choice of remedies. As to
the first (choice of venues), the Rules of Court, for example, allow a
plaintiff to commence personal actions 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 (Rule 4, Sec. 2 [b]).
As to remedies, aggrieved parties, for example, are given a choice of
pursuing civil liabilities independently of the criminal, arising from the
same set of facts. A passenger of a public utility vehicle involved in a
vehicular accident may sue on culpa contractual, culpa aquiliana or
culpa criminal - each remedy being available independently of the others
- although he cannot recover more than once.
Applying the foregoing principles in the case before us and comparing it
with the Second Case, it is obvious that there exist identity of parties or
interests represented, identity of rights or causes and identity of reliefs
sought.
Very simply stated, the original complaint in the court a quo which gave
rise to the instant petition was filed by the buyer (herein private
respondent and his predecessors-in-interest) against the seller (herein
petitioners) to enforce the alleged perfected sale of real estate. On the
other hand, the complaintin the Second Case seeks to declare such
purported sale involving the same real property as unenforceable as
against the Bank, which is the petitioner herein. In other words, in the
Second Case, the majority stockholders, in representation of the Bank,
are seeking to accomplish what the Bank itself failed to do in the original
case in the trial court. In brief, the objective or the relief being sought,
though worded differently, is the same, namely, to enable the petitioner
Bank to escape from the obligation to sell the property to respondent.

[CONFLICT: PRELIMINARY CONSIDERATIONS]

(A.3) MCGEE v. INTERNATIONAL INSURANCE CO.

In 1944, Lowell Franklin, a resident of California, bought a life insurance
policy from an Arizona corporation,naming petitioner as beneficiary.
Later, respondent, a Texas corporation, agreed to assume the insurance
obligations of the Arizona corporation, and mailed a reinsurance
certificate to petitioner's son in California, offering to insure him in
accordance with his policy.
In 1950, Franklin died. His mother, the beneficiary, notified the insurance
company of his death. Respondent refused to pay, claiming that Franklin
committed suicide. McGee obtained judgment against the insurance
company in California state court and attempted to enforce it in Texas.
Texas state court refused to enforce the California judgment holding it
th
was void under the 14 amendment (lack of jurisdiction).
ISSUE:
Whether the insurance company , a non-resident corporation, is subject
to jurisdiction in a state where it never had any office or agent, merely
because it was a party to contract with a resident of the state
Ruling:
Turning to this case we think it apparent that the Due Process Clause did
not preclude the California court from entering a judgment binding on
respondent. It is 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. Doherty & Co. v. Goodman, 294
U.S. 623 ; Pennoyer v. Neff, 95 U.S. 714, 735 .2 The contract was
delivered in California, the premiums were mailed from there and the
insured was a resident of that State when he died. It cannot be denied
that California has a manifest interest in providing effective means of
redress for its residents when their insurers refuse to pay claims. These
residents would be at a severe disadvantage if they were forced to follow
the insurance company to a distant State in order to hold it legally
accountable. When claims were small or moderate individual claimants
frequently could not afford the cost of bringing an action in a foreign
forum - thus in effect making the company judgment proof. Often the
crucial witnesses - as here on the company's defense of suicide will be
found in the insured's locality Of course there may be inconvenience to
the insurer if it is held amenable to suit in California where it had this
contract but certainly nothing which amounts to a denial of due process..
There is no contention that respondent did not have adequate notice of
the suit or sufficient time to prepare its defenses and appear.
The California statute became law in 1949, after respondent had entered
into the agreement with Franklin to assume Empire Mutual's obligation

to him. Respondent contends that application of the statute to this

existing contract improperly impairs the obligation of the contract. We
believe that contention is devoid of merit. The statute was remedial, in
the purest sense of that term, and neither enlarged nor impaired
respondent's substantive rights or obligations under the contract. It did
nothing more than to provide petitioner with a California forum to
enforce whatever substantive rights she might have against respondent.
At the same time respondent was given a reasonable time to appear and
defend on the merits after being notified of the suit. Under such
circumstances it had no vested right not to be sued in California.

[CONFLICT: PRELIMINARY CONSIDERATIONS]

(A.4) VALMONTE v. ALCALA

FACTS:The petitioners alleged that they are the unregistered owners of
Apartment No. 1411 located at Echabelita Street, Paco, Manila, as the
petitioner Maria Lourdes is one of the heirs and successors-in-interests of
Cornelio Arreola and Antonina Pascua, the registered owners of the
property. Since the petitioners were migrating to the United States, they
offered Apartment No. 1411 for lease to the respondent at the rate
ofP1,500.00 per month beginning January 1980; the latter accepted the
offer. The lease contract, initially verbal, was consummated by the
respondents payment of two (2) months rental fees and the petitioners
delivery to the respondent of the keys.
Due to the respondents subsequent failure to pay the agreed rentals
despite written demand, the petitioners filed a complaint for
unlawful detainer against her on April 26, 2002 before the MTC.As the
petitioners were already US residents at that time, they signed the
required Verification/Certification of Non-Forum Shopping of their
complaint before a notary public in the state ofWashington on March 18,
2002, and had this Verification/Certification authenticated by the
Philippine Consulate General in San Francisco on March 27, 2002. The
respondent contended in her defense that the petitioners had no cause
of action against her; she was already the rightful owner of Apartment
No. 1411 by virtue of a sale between her and petitioners,as evidenced
by the Memorandum of Agreement datedAugust 8, 1987. On April 25,
2003, the MTC ruled in the petitioners favor.The respondent appealed
the MTC decision to the Regional Trial Court (RTC), Branch 50, Manila,
which reversed the MTC ruling in its decision dated November 3, 2004.
The petitioners responded to the reversal by filing a Petition for
Review(CA Petition) with the CA on March 31, 2005. On the same date,
they also formally manifestedwith the CA that to comply with the
verification and certification requirements under Sections 1 and 2 of Rule
42 of the Rules of Court they were in the meantime submitting
a photostatic copy of theVerification/Certification as the original was still
in the Philippine Consulate in San Francisco for authentication. They
promised to submit the original document as soon as the consulate
completed the authentication process. Indeed, on April 8, 2005,
petitioners submitted to the CA the original authenticated
Verification/Certification and moved that the appellate court consider the
submission as full compliance with the verification requirements of the
Rules.
Meanwhile, the CA issued April 8 Resolutiondismissing the petition due
to the petitioners failure to attach the complaint, the answer, the
position papers filed with the MTC, the memorandum filed with the RTC,
and other material portions of the record supporting the allegations of
the petition. The petitioners received a copy of this April 8 Resolution
on April 15, 2005.

On April 28, 2005, the petitioners moved for the reconsiderationof the
April 8 Resolution, attaching thereto the missing pleadings. The CA
denied the motion.
ISSUE: WON variance between the dates of the verification/certification
executed abroad and the CA petition is fatal considering the parties are
residing overseas.
RULING: No.
First, the variance in dates does not necessarily contradict the
categorical declaration made by petitioners in their affidavit that they
read and understood the contents of the pleading. The petitioners claim
in this regard is that they read a copy of the CA Petition through an
electronic mail sent to them by their lawyers. In short, the pleading and
the verification are prepared separately and a variance in their dates is a
matter that may satisfactorily be explained. To demand the litigants to
read the very same document that is to be filed before the courts is too
rigorous a requirement; what the Rules require is for a party to read the
contents of a pleading without any specific requirement on the form or
manner in which the reading is to be done. That a client may read the
contents of a pleading without seeing the same pleading to be actually
filed with the court is, in these days of e-mails and other technological
advances in communication, not an explanation that is hard to believe.
Apparently in this case, counsel sent a copy of the draft petition by email and finalized it as soon as it was approved by the petitioners. The
latter, on the other 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, thereby complying with
the required timeliness for the filing of the petition. To our mind, beyond
the manner of these exchanges, what is important is that efforts were
made to satisfy the objective of the Rule to ensure good faith and
veracity in the allegations of a pleading thereby allowing the courts to
act on the case with reasonable certainty that the petitioners real
positions have been pleaded.
Second, the "circumstances" we mentioned above refer to the
petitioners unique situation as parties residing overseas who are
litigating locally through their local counsel. While these overseas
litigants are not excused from complying with our Rules such as the
strict observance of the periods for appeal and the verification
requirement, we must take into account the attendant realities brought
into play because they are suing from overseas or via long distance
communications with their counsel. In the verification requirement, there
are added formalities required for the acceptance in the Philippines of
statements sworn overseas before foreign notaries; we require their
authentication by our consulates. This is a process whose completion
time may vary depending, among others, on various factors such as the
location of the requesting party from the consulate; the peculiarities of

[CONFLICT: PRELIMINARY CONSIDERATIONS]

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 motion for reconsideration based on
attachments already made, but there existed another reason the
variance in dates for maintaining the dismissal of the petition.
Fourth, we note that most of the material allegations set forth by
petitioners in their CA Petition are already in their complaint for unlawful
detainer filed before the MTC on April 26, 2002. Attached to the
complaint was a Verification/Certification dated March 18, 2002 in which
petitioners declared under oath that they had caused the preparation of
the complaint through their lawyers and had read and understood the
allegations of the complaint. The material facts alleged in the CA Petition
are likewise stated in the records of the case, as part of the findings of
facts made by the MTC and the RTC. Verification as to the truth of these
facts in the petition for review before the CA was, therefore, strictly a
redundancy; its filing remained a necessity only because the Rules on
the filing of a petition for review before the CA require it. This

consideration could have led to a more equitable treatment of the

petitioners failure to strictly comply with the Rules, additionally justified
by the fact that the failure to comply with the rules on verification is a
formal rather than a jurisdictional defect.

[CONFLICT: PRELIMINARY CONSIDERATIONS]

(B. 3) Sim vs. NLRC

CORAZON C. SIM, petitioners, vs. NATIONAL LABOR

COMMISSION and EQUITABLE PCI-BANK, respondents.

RULING:

RELATIONS

G.R. No. 157376

October 2, 2007
AUSTRIA-MARTINEZ, J.:
FACTS:
Corazon Sim (petitioner) filed a case for illegal dismissal with the Labor
Arbiter, alleging that she was initially employed by Equitable PCI-Bank
(respondent) in 1990 as Italian Remittance Marketing Consultant to the
Frankfurt Representative Office. Eventually, she was promoted to
Manager position, until September 1999, when she received a letter
from Remegio David -- the Senior Officer, European Head of PCIBank,
and Managing Director of PCIB- Europe -- informing her that she was
being dismissed due to loss of trust and confidence based on alleged
mismanagement and misappropriation of funds. The Labor Arbiter
dismissed the case for want of jurisdiction and/or lack of merit stressing
that the labor relations system in the Philippines has no extra-territorial
jurisdiction. The National Labor Relations Commission (NLRC) affirmed
the Labor Arbiter's Decision and dismissed petitioner's appeal for lack of
merit.
ISSUE: WON the LA has extra-territorial jurisdiction

Article 217 of the Labor Code provides for the jurisdiction of the Labor
Arbiter and the National Labor Relations Commission x x x Moreover,
Section 10 of Republic Act (R.A.) No. 8042, or the Migrant Workers and
Overseas Filipinos Act of 1995,18 provides:
SECTION 10. Money Claims. Notwithstanding any provision of law to
the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive jurisdiction to
hear and decide, within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-employee relationship
or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other
forms of damages.
Also, Section 62 of the Omnibus Rules and Regulations Implementing
R.A. No. 804219 provides that the Labor Arbiters of the NLRC shall have
the original and exclusive jurisdiction to hear and decide all claims
arising out of employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including
claims for actual, moral, exemplary and other forms of damages, subject
to the rules and procedures of the NLRC.
Under these provisions, it is clear that labor arbiters have original and
exclusive jurisdiction over claims arising from employer-employee
relations, including termination disputes involving all workers, among
whom are overseas Filipino workers.