Case Summary (G.R. No. L-26406)
Petitioner
Home Insurance Company, duly organized under foreign law and authorized after January 1967 to do business in the Philippines through its local agent, Victor H. Bello.
Respondents
Case L-34382: Eastern Shipping Lines; Angel Jose Transportation, Inc.
Case L-34383: N. V. Nedlloyd Lijnen (and its local agent Columbian Philippines, Inc.); Guacods, Inc.
Key Dates
• December 22, 1966 – shipment on SS Neder Rijn (L-34383)
• January 13, 1967 – shipment on SS Eastern Jupiter (L-34382)
• February 1, 1968 / January 5, 1968 – dates from which interest is computed
• July 20, 1983 – decision of the Supreme Court
Applicable Constitution
1973 Philippine Constitution (in force at the time of decision).
Applicable Law
• Corporation Law (Act 1459, as amended)—Secs. 68-69: licensing and capacity of foreign corporations to transact business and to sue.
• Insurance Law—regulation of licensing of insurers by the Insurance Commissioner.
• Civil Code (Art. 1409[1])—contracts contrary to law are void.
• Rules of Court (Rule 8, Sec. 4)—requirements for pleading capacity to sue.
• BP Blg. 68 [Corporation Code] Sec. 133—access of unlicensed foreign corporations to courts.
Facts of L-34382
S. Kajita & Co. shipped 2,361 coils of hot-rolled copper wire rods from Osaka to Manila aboard the SS Eastern Jupiter owned by Eastern Shipping Lines. The shipment, covered by Bill of Lading No. O-MA-9, was insured with petitioner for P1,580,105.06. Upon discharge, 53 coils were in bad order; at consignee’s warehouse, 73 were loose or cut and 28 were scrap. Weighing revealed a shortage of 593.15 kg. Petitioner paid P3,260.44 to the consignee, thereby becoming subrogated, and demanded reimbursement from the carriers, which was refused.
Facts of L-34383
Hansa Transport Kontor shipped 30 packages of farm-equipment parts from Bremen to Manila aboard the SS Neder Rijn owned by N. V. Nedlloyd Lijnen and represented locally by Columbian Philippines, Inc. The cargo, insured for P98,567.79, arrived with nine packages in bad order; five of those missing items valued at P2,426.98. Petitioner paid that amount to the consignee, became subrogated, and sought reimbursement from the carriers, who refused.
Procedural History
Petitioner sued in Manila Court of First Instance, Branch XVII, in both cases. Respondents either denied knowledge of petitioner’s capacity to sue or admitted it. The trial court dismissed both complaints for failure to prove capacity to sue, deeming the insurance contracts executed before license issuance void and unenforceable. Petitioner filed consolidated petitions for certiorari.
Issue
Whether insurance contracts executed by a foreign insurer before securing the license required under the Corporation Law are void and, if so, whether subsequent licensing or pleading suffices to confer capacity to sue.
Lower Court Rationale
The trial court held that:
- Under Sec. 68, no foreign corporation may transact business without a license; under Sec. 69, it may not maintain any suit unless licensed.
- Petitioner’s license, issued July 1, 1967, postdated the February and January 1967 insurance contracts, rendering them void under Civil Code Art. 1409(1).
- Subsequent licensing could not validate pre-licensing contracts; public policy demanded strict compliance to protect the public.
Legal Framework and Precedents
• Act 1459 Secs. 68-69 aim to bring foreign corporations under Philippine judicial jurisdiction, not to bar isolated transactions.
• Marshall Wells Co. v. Elser (46 Phil. 70 [1924]) promotes a reasonable construction that prevents commercial embarrassment and fosters trade.
• General Corp. v. Union Insurance Society (87 Phil. 313) affirms that actual business in the Philippines subjects a foreign corporation to local jurisdiction regardless of licensing timing.
• Conflicting foreign authorities distinguish “void” from “voidable” contracts, but Philippine jurisprudence favors enforceability upon compliance or upon prosecutorial licensing.
• BP Blg. 68 Sec. 133 now clarifies that unlicensed foreign corporations may not maintain suit but may be sued on valid causes of action.
Interpretation and Policy Considerations
The primary purpose of the licensing pr
Case Syllabus (G.R. No. L-26406)
Relevant Facts in G.R. No. L-34382
- On January 13, 1967, S. Kajita & Co., for Atlas Consolidated Mining & Development Corporation, loaded 2,361 coils of black hot rolled copper wire rods aboard SS “Eastern Jupiter,” owned and operated by Eastern Shipping Lines (Carrier).
- Shipment covered by Bill of Lading No. O-MA-9, with arrival notice to Phelps Dodge Copper Products Corporation of the Philippines (Consignee) at Manila.
- Insured by The Home Insurance Company for ₱1,580,105.06 under Policy No. AS-73633.
- Discharge revealed 53 coils in bad order; Consignee ultimately received all 2,361 coils, of which 73 were loose and partly cut, 28 entangled and partly cut (considered scrap).
- Weighing at warehouse showed 263,940.85 kg versus invoiced 264,534.00 kg, a shortage of 593.15 kg (1,209.56 lbs).
- Home Insurance paid Consignee ₱3,260.44 and was subrogated to Consignee’s rights.
- Demands for reimbursement were made upon Eastern Shipping Lines and Angel Jose Transportation, Inc., both of which refused payment.
Relevant Facts in G.R. No. L-34383
- On December 22, 1966, Hansa Transport Kontor shipped 30 packages of service parts of farm equipment and implements from Bremen aboard SS “Neder Rijn,” owned by N. V. Nedlloyd Lijnen and represented locally by Columbian Philippines, Inc. (Carrier).
- Shipment covered by Bill of Lading No. 22, consigned to International Harvester Macleod, Inc. (Consignee) in Manila.
- Insured by Home Insurance under Cargo Policy No. AS-73735 “with average terms” for ₱98,567.79.
- Discharged cargo showed 29 packages, of which seven were in bad order; Consignee received 29 packages, nine in bad order, but accepted one with negligible damage.
- Inspection revealed three of eight remaining cases intact; five packages showed missing items valued at US $131.14 and one package undelivered valued at US $394.66 (total US $525.80 or ₱2,426.98).
- Home Insurance paid Consignee ₱2,426.98 and was subrogated to its rights.
- Demands on N. V. Nedlloyd Lijnen, Columbian Philippines, Inc., and Guacods, Inc. for reimbursement were refused.
Procedural History
- Petitioner filed suits for maritime damages in Civil Cases No. 71923 (L-34382) and No. 71694 (L-34383) in the Court of First Instance of Manila, Branch XVII.
- Respondents in L-34382: Eastern Shipping Lines denied knowledge of Home Insurance’s capacity to sue; Angel Jose Transportation admitted jurisdictional averments.
- Respondents in L-34383: N. V. Nedlloyd Lijnen, C