COMENTARIOS Y FIRMA DEL PROFESOR/A:
VALORACIÓN GENERAL DEL FUNCIONAMIENTO
3. ANÁLISIS DE LA EVALUACIÓN FINAL
likewise necessary as laid down in the case of Chemise Lacoste vs. Fernandez, or when the foreign corporation is not suing or maintaining a suit but is merely defending itself from one filed against it (Times, Inc. vs. Reyes).
ATLANTIC MUTUAL INSURANCE COMPANY and CONTINENTAL INSURANCE COMPANY, plaintiffs and appellants,
vs.
CEBU STEVEDORING CO., INC., defendant and appellee (G.R. No. L-18961; August 31, 1966)
FACTS: Plaintiff-appellants, organized and existing under the laws of the US,
sued herein defendant-appellee, as subrogee to the shipper and consignee, alleging that the latter undertook to carry a shipment of copra for delivery to P&G Company at Cebu City but upon discharge, a portion of the copra was found damaged.
Defendant moved to dismiss on the ground that the complaints on the ground of failure to allege compliance with Sec. 69 of the Corporation Law which was granted after failure of the plaintiff to comply with the amendment of the complaint.
ISSUE: WON plaintiff-appellants have the right to sue as to the defects n the
pleadings and procedures?
HELD: No. It should be noted that insofar as the allegations in the complaint
have a bearing on appellants' capacity to sue, all that is averred is that they are both foreign corporations existing under the laws of the United States. This averment conjures two alternative possibilities: either they are engaged in business in the Philippines or they are not so engaged. If the first, they must have been duly licensed in order to maintain this suit; if the second, if the transaction sued upon is singular and isolated, no such license is required. In either case, the qualifying circumstance is an essential part of the element of plaintiffs' capacity to sue and must be affirmatively pleaded. To be sure, under the Rules of Court (Section 11, Rule 15) in force prior to the promulgation of the Revised Rules on January 1, 1964, it was not necessary to aver the capacity of a party to sue except to the extent required to show jurisdiction of the court. In our opinion, however, such rule does not apply in all situations and under all circumstances. The theory behind a similar rule in the United States is "that capacity ... of a party for purpose of
suit is not in dispute in the great bulk of cases, and that pleading and proof can be simplified by a rule that an averment of such matter is not necessary, except to show jurisdiction."1 But where as in the present case, the law denies to a foreign corporation the right to maintain suit unless it has previously complied with a certain requirement, then such compliance, or the fact that the suing corporation is exempt therefrom, becomes a necessary averment in the complaint. These are matters peculiarly within the knowledge of appellants alone, and it would be unfair to impose upon appellee the burden of asserting and proving the contrary. It is enough that foreign corporations are allowed by law to seek redress in our courts under certain conditions: the interpretation of the law should not go so far as to include, in effect, an inference that those conditions have been met from the mere fact that the party suing is a foreign corporation.
It was indeed in the light of these and other consideration that this Court has seen fit to amend the former rule by requiring in the Revised Rules (Section 4, Rule 8) that "facts showing the capacity of a party to sue or be sued or the authority of a party to sue or be sued in a representative capacity or the legal existence of an organized association of persons that is made a party, must be averred."
The orders appealed from are affirmed, with costs against plaintiffs- appellants
OLYMPIA BUSINESS MACHINES CO. (PHIL.) INC. and CALIFORNIA INSURANCE CO., LTD., petitioners,
vs.
E. RAZON, INC., TOYO LINE, LTD., and SEA BRIDGE CONTAINER SHIPPING LINES, INC., respondents.
(G.R. No. 75631; October 28, 1987)
FACTS: Olympia Office Machines, Ltd., a foreign corporation with offices at
Hongkong, shipped 300 portable typewriters to its sister company in Manila, Olympia Business Machines Company (Phil.), Inc., such shipment insured with California Insurance Co., Ltd. another foreign corporation.
The typewriters were discharged at North Harbor, Manila into the custody of the carrier’s agent which in turn turned it over to E. Razon, Inc. While in the latter’s possession, part of the shipment was stolen. California Insurance was subrogated to the claim for loss after paying Olympia (Phil).
Both Olympia (Phil.) and California thereafter brought a suit against E. Razon, Inc., the carrier and the container company, which had earlier refused to make good the loss of the goods.
For E.Razon’s failure to appear at the pre-trial and after ex-parte reception of evidence, the trial court decided for California. On Razon’s motion, the order was set aside and Razon amended his answer that California is a foreign corporation doing business in the Philippines without a license to do so and that it cannot maintain suit in this jurisdiction. But once again, Razon failed to appear at the pre-trial, as a result, the trial court revived the decision. On appeal, the IAC reversed the decision holding, among others, that California failed to allege in the complaint its capacity to sue.
ISSUE: WON the failure of California to aver its capacity to sue is fatal? HELD: The slightest reflection will however immediately make — Tear that
between the factual settings of the Atlantic Mutual case and the case at bar, there are distinctions of no little significance. In the former, Atlantic Mutual Insurance Co. and Continental Insurance Co., two (2) American firms, brought suit as subrogees of the shipper and/or consignee of the goods ensured without joining the latter. In the case at hand, the action was
instituted by both the subrogee, California Insurance Co., Ltd., and the subrogor, a domestic corporation, Olympia (Philippines) about whose capacity to sue no dispute exists. In Atlantic Mutual, the plaintiffs' lack of capacity to sue was raised by the defendant at the earliest opportunity, through a motion to dismiss filed within the reglementary period to answer in accordance with Rule 16 of the Rules of Court. In the case at bar, the defendant was twice declared in default, and the defense of lack of capacity to sue, was not raised until after 'the first declaration of default had been lifted. Moreover,
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there Is a pronouncement by the Court of Appeals in the instant case, that the defendant had no meritorious defenses save that of lack of capacity to sue on the part of the plaintiff.
These circumstances proscribe the application to the controversy at bar of the doctrine in Atlantic Mutual. The defendant's conduct in this case
strongly indicates the absence of any valid defense on its part against the plaintiffs' claims: the defendant failed to appear for pre-trial
despite notice, not once, but twice and was in consequence twice declared in default. The lack of any meritorious defense on its part was in fact confirmed by the declaration of the Court of Appeals, which it has not challenged, that three (3) errors attributed by it to the Trial Court were "unmeritorious except the second," i. e., plaintiff's lack of capacity to sue. Even assuming incapacity on the part of California, no such incapacity may be attributed to its co- plaintiff, Olympia Business Machines Co. (Phil.), Inc. And if strictly necessary, the latter could quite easily execute a cancellation of the deed of subrogation or of re-assignment of the right of action from California back to Olympia. Moreover, the dismissal of the case at this stage, would not bar the institution by California of the same action, this time alleging in its complaint that it was suing on a single, isolated transaction. But this would be an Idle, circuitous ceremony in the light of the unchallenged declaration by the Court of Appeals of the absence of any meritorious substantial defense on the part of defendant Razon. This would be to accord undue importance and significance to technical rules, to allow an inflexible, unreasoning adherence to such technical rules to frustrate and defeat a plainly valid claim.
WHEREFORE, the judgment of the Intermediate Appellate Court subject of the appeal is reverse and that of the Trial Court, dated February 1, 1980 reinstated and affirmed, with costs against the respondents.
TIME, INC., petitioner, vs.
HON. ANDRES REYES, as Judge of the Court of First Instance of Rizal, ELISEO S. ZARI, as Deputy Clerk of Court, Branch VI, Court of First Instance of Rizal, ANTONIO J. VILLEGAS and JUAN PONCE ENRILE, respondents.
(G.R. No. L-28882; May 31, 1971)
FACTS: Herein respondents Antonio Villegas and Juan Ponce Enrile sought to
recover from herein petitioner damages upon an alleged libel arising from a publication of Time (Asia Edition) magazine, in its issue entitled “Corruption in Asia”.
Petitioner filed a motion to dismiss on lack of jurisdiction and improper venue which was deferred until after the trial of the case.
ISSUE: WON the petition for certiorari and prohibition will prosper?
HELD: The dismissal of the present petition is asked on the ground that the
petitioner foreign corporation failed to allege its capacity to sue in the courts of the Philippines. Respondents rely on section 69 of the Corporation law, which provides:
SEC. 69. No foreign corporation or corporations formed, organized, or existing under any laws other than those of the Philippines shall be permitted to ... maintain by itself or assignee any suit for the recovery of any debt, claim, or demand whatever, unless it shall have the license prescribed in the section immediately preceding. ..." ...;
They also invoke the ruling in Marshall-Wells Co. vs. Elser & Co., Inc. 7 that
no foreign corporation may be permitted to maintain any suit in the local courts unless it shall have the license required by the law, and the ruling in Atlantic Mutual Ins. Co., Inc. vs. Cebu Stevedoring Co., Inc. 8 that "where ...
the law denies to a foreign corporation the right to maintain suit unless it has previously complied with a certain requirement, then such compliance or the fact that the suing corporation is exempt therefrom, becomes a necessary averment in the complaint." We fail to see how these doctrines can be a
propos in the case at bar, since the petitioner is not "maintaining any suit" but is merely defending one against itself; it did not file any complaint but only a corollary defensive petition to prohibit the lower court from further proceeding with a suit that it had no jurisdiction to entertain.
Petitioner's failure to aver its legal capacity to institute the present petition is not fatal, for ...
A foreign corporation may, by writ of prohibition, seek relief against the wrongful assumption of jurisdiction. And a foreign corporation seeking
a writ of prohibition against further maintenance of a suit, on the ground of want of jurisdiction in which jurisdiction is not bound by the ruling of the court in which the suit was brought, on a
motion to quash service of summons, that it has jurisdiction.
WHEREFORE, the writs applied for are granted: the respondent Court of First Instance of Rizal is declared without jurisdiction to take cognizance of its Civil Case No. 10403; and its orders issued in connection therewith are hereby annulled and set aside,. Respondent court is further commanded to desist from further proceedings in Civil case No. 10403 aforesaid. Costs against private respondents, Antonio J. Villegas and Juan Ponce Enrile.
G. LAWS GOVERNING FOREIGN CORPORATIONS
Sec. 129. Law applicable. - Any foreign corporation lawfully doing
business in the Philippines shall be bound by all laws, rules and regulations applicable to domestic corporations of the same class, except such only as provide for the creation, formation, organization or dissolution of corporations or those which fix the relations, liabilities, responsibilities, or duties of stockholders, members, or officers of corporations to each other or to the corporation.
M. E. GREY, plaintiff-appellant, vs.
INSULAR LUMBER COMPANY, defendant-appelle (G.R. No. L-45144; April 3, 1939)
FACTS: Herein defendant-appellee Insular Lumber Company is a corporation
existing and organized under the laws of the State of New York licensed to engage business in the Philippines.
The plaintiff-appellant Grey, holder of 57 shares (which is less than 3% of the outstanding capital stock of defendant corporation), was denied access to the books and records of the company because, as alleged, the laws of New York provide that only a stockholder who own at least 3% of the outstanding capital stock of a corporation may make a written request to the treasurer or other fiscal officer for a statement of its affairs; that plaintiff neither has the 3% requirement nor made the written request.
Plaintiff raises the Corporation Law which does not provide such requirements and gives any stockholder the right to examine the books of the corporation. Such law, being the law upon which the defendant corporation was issued a license to do business in the Philippines.
ISSUE: WON appellant, as a stockholder, is entitled to inspect and examine
the books and records of transactions of appellee?
HELD: Under ection 77 Stock Corporation Law of New York. Under this law,
plaintiff has the right to be furnished by the treasurer or other fiscal officer of the corporation with statement of its affairs embracing a particular account of all its assets and liabilities. In the third place, inasmuch as plaintiff, either at the hearing or in his motion for new trial, did not ask to have the stipulation of facts altered or changed, he cannot now, for the first time on appeal, raise the question that aside from the right conferred upon him by section 77 of the Stock Corporation Law of New York, he also entitled under the common law to examine and inspect the books and records of the defendant corporation. In the fourth place, neither can this right under the common law be granted the defendant in the present case, since the same can only be granted at the discretion of the court, under certain conditions, to wit:
(a) That the stockholder of a corporation in New York has the right to inspect its books and records if it can be shown that he seeks information for an honest purpose (14 C. J., 853), or to protect his interest as stockholder. (In re Steinway, 159 N. Y., 250; 53 N. E., 1103; 45 L. R. A., 461 [aff. 31 App. Div., 70; 52 N. Y. S., 343]).
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(b) That said right to examine and inspect the books of the corporation must be exercised in good faith, for a specific and honest purpose, and not to gratify curiosity, or for speculative or vexatious purposes. (14 C. J., 854, 855.)
The appellant has made no effort to prove or even allege that the information he desired to obtain through the examination and inspection of defendant's books was necessary to protect his interests as stockholder of the corporation, or that it was for a specific and honest purpose, and not to gratify curiosity, nor for speculative or vexatious purposes.
In view of the foregoing, we affirm the judgment of the lower court, with costs against the appellant.
H. AMENDMENTS TO THE ARTICLES OF INCORPROATION
Sec. 130. Amendments to articles of incorporation or by-laws of foreign corporations. - Whenever the articles of incorporation or by-laws
of a foreign corporation authorized to transact business in the Philippines are amended, such foreign corporation shall, within sixty (60) days after the amendment becomes effective, file with the Securities and Exchange Commission, and in the proper cases with the appropriate government agency, a duly authenticated copy of the articles of incorporation or by-laws, as amended, indicating clearly in capital letters or by underscoring the change or changes made, duly certified by the authorized official or officials of the country or state of incorporation. The filing thereof shall not of itself enlarge or alter the purpose or purposes for which such corporation is authorized to transact business in the Philippines.
I. AMENDMENT OF LICENSE
Sec. 131. Amended license. - A foreign corporation authorized to transact
business in the Philippines shall obtain an amended license in the event it changes its corporate name, or desires to pursue in the Philippines other or additional purposes, by submitting an application therefor to the Securities and Exchange Commission, favorably endorsed by the appropriate government agency in the proper cases.
J. MERGER/CONSOLIDATION
Sec. 132. Merger or consolidation involving a foreign corporation licensed in the Philippines. - One or more foreign corporations authorized
to transact business in the Philippines may merge or consolidate with any domestic corporation or corporations if such is permitted under Philippine laws and by the law of its incorporation: Provided, That the requirements on merger or consolidation as provided in this Code are followed.
Whenever a foreign corporation authorized to transact business in the Philippines shall be a party to a merger or consolidation in its home country or state as permitted by the law of its incorporation, such foreign corporation shall, within sixty (60) days after such merger or consolidation becomes effective, file with the Securities and Exchange Commission, and in proper cases with the appropriate government agency, a copy of the articles of merger or consolidation duly authenticated by the proper official or officials of the country or state under the laws of which merger or consolidation was effected: Provided, however, That if the absorbed corporation is the foreign corporation doing business in the Philippines, the latter shall at the same time file a petition for withdrawal of it license in accordance with this Title.
K. REVOCATION OF LICENSE
Sec. 134. Revocation of license. - Without prejudice to other grounds
provided by special laws, the license of a foreign corporation to transact business in the Philippines may be revoked or suspended by the Securities and Exchange Commission upon any of the following grounds:
1. Failure to file its annual report or pay any fees as required by this Code; 2. Failure to appoint and maintain a resident agent in the Philippines as required by this Title;
3. Failure, after change of its resident agent or of his address, to submit to
the Securities and Exchange Commission a statement of such change as required by this Title;
4. Failure to submit to the Securities and Exchange Commission an authenticated copy of any amendment to its articles of incorporation or by- laws or of any articles of merger or consolidation within the time prescribed by this Title;
5. A misrepresentation of any material matter in any application, report, affidavit or other document submitted by such corporation pursuant to this Title;
6. Failure to pay any and all taxes, imposts, assessments or penalties, if any, lawfully due to the Philippine Government or any of its agencies or political