C.V. Gaspar Salvage Corp. vs. LG Ins. Co., Ltd., G.R. Nos. 206892 & 207035, Feb.
3,
2021
Doctrine:
A foreign corporation not licensed to do business in the Philippines is not absolutely
incapacitated from filing a suit in local courts. Only when that foreign corporation is
"transacting" or "doing business" in the country will a license be necessary before it
can institute suits.
Facts:
On August 5, 1997, Sunkyong America, Inc. (Sunkyong) shipped 23,842 (1,207.50
MT) bags of Peruvian fishmeal for delivery from Chimbote, Peru to Great Harvest, its
consignee in Manila. The shipment was insured against all risks for US$753,117.75
with LG insurance Company, Ltd. (LG Insurance), United States (U.S.) Branch,
through its American Manager, WM H. McGee & Co., Inc. (WM H. McGee), a
corporation organized and established under the laws of the United States of America.
Great Harvest engaged Fortune Brokerage as its customs broker. The shipment was
loaded and shipped on board the vessel MV Pearl Islands complete and in good order
and condition.6
On September 16, 1997, the shipment arrived at the Port of Manila and was
discharged into four barges owned by C.V. Gaspar for delivery to Great Harvest's
warehouse in Valenzuela, Bulacan. While the barges were moored at the Pasig River,
the cargo loaded on barge "AYNA-1" got wet resulting in the damage of 3,662 bags
of fishmeal. Of the 3,662 bags of fishmeal, 2,085 bags were dumped into the Pasig
River as they were already emitting strong foul odor, 877 bags were accepted by
Great Harvest with 65% loss allowance, and 700 bags were disposed to salvors.7
Great Harvest filed separate claims against Fortune Brokerage and C.V. Gaspar for
the damaged cargo. When both Fortune Brokerage and C.V. Gaspar ignored its
claims, Great Harvest filed a claim against its insurance policy with LG Insurance.
LG Insurance paid Great Harvest's claim.
RTC Ruling:
In the Decision dated January 21, 2008, the RTC ruled in favor of LG Insurance and
WM H. McGee.
CA Ruling:
The CA ruled that LG Insurance and WM H. McGee validly acquired the right to be
subrogated for the purpose of collecting payment from Fortune Brokerage and C.V
Gaspar relative to the damaged goods of Great Harvest.14 It also ruled that Fajardo
Law Office, representing LG Insurance and WM H. McGee, through Atty. Beda
Fajardo (Atty. Fajardo), has the authority to sign the verification and certification
against forum shopping.
Issue:
Whether Fajardo Law Office, through Atty. Fajardo, is authorized to file the
Complaint and Amended Complaint and to sign the Verification and
Certification on Non-Forum Shopping in behalf of LG Insurance and WM H.
McGee;
Ruling:
The petitions have no merit.
It is undisputed that LG Insurance is a corporation organized and established under
U.S. Laws. It is a foreign corporation that is not doing business in the Philippines.
However, it is a settled rule that a foreign corporation not doing business in the
Philippines does not entirely lack capacity to sue in this jurisdiction. Thus, the Court
ruled:
A foreign corporation not licensed to do business in the Philippines is not absolutely
incapacitated from filing a suit in local courts. Only when that foreign corporation is
"transacting" or "doing business" in the country will a license be necessary before it
can institute suits. It may, however, bring suits on isolated business transactions,
which is not prohibited under Philippine law. Thus, this Court has held that a foreign
insurance company may sue in Philippine courts upon the marine insurance policies
issued by it abroad to cover international-bound cargoes shipped by a Philippine
carrier, even if it has no license to do business in this country. It is the act of engaging
in business without the prescribed license, and not the lack of license per se, which
bars a foreign corporation from access to our courts.20
In its transactions with Great Harvest and in filing the cases against C.V. Gaspar and
Fortune Brokerage, LG Insurance acted through WM H. McGee, its American
Manager.The authority of Fajardo Law Office and Atty. Fajardo to act for and in
behalf of LG Insurance and WM H. McGee is established by the Special Power of
Attorney designating Fajardo Law Office to act as WM H. McGee's resident agent
and to represent it in a suit against Fortune Brokerage and C.V. Gaspar. WM H.
McGee also designated Atty. Fajardo as its resident agent. The Court agrees with the
CA that the designation necessarily includes signing the requisite Verification and
Certification of Non-Forum Shopping.
