G.R. No. L-26809. December 29, 1977
AETNA CASUALTY & SURETY COMPANY, PLAINTIFF-APPELLANT, VS. PACIFIC STAR LINE, THE BRADMAN CO., INC., MANILA PORT SERVICE AND/OR MANILA RAILROAD COMPANY, INC., DEFENDANTS-APPELLEES.
FERNANDEZ, J.:
This is an appeal from the decision of the Court of First
Instance of Manila, Branch XVI, in Civil Case No. 53074 entitled “Aetna
Casualty & Surety Company vs. Pacific Star Line, The Bradman
Co. Inc., Manila Port Service and/or Manila Railroad Company, Inc.”
dismissing the complaint on the ground that the plaintiff has no legal capacity
to bring this suit and making no finding as to the
liability of the defendants.[1]
On February 11, 1963, Smith
Bell & Co. (Philippines), Inc. and Aetna Casualty & Surety Co. Inc., as
subrogee, instituted Civil Case No. 53074 in the
Court of First Instance of Manila against Pacific Star Line, The Bradman Co. Inc., Manila Port Service and/or Manila
Railroad Company, Inc. to recover the amount of US$2,300.00 representing the
value of the stolen and damaged cargo plus litigation expenses and exemplary
damages in the amounts of P1,000.00 and P2,000.00, respectively, with legal
interest thereon from the filing of the suit and costs.
The complaint stated that during the time material to the action,
the defendant Pacific Star Line, as a common carrier, was operating the vessel
SS Ampal on a commercial run between United States
and Philippine Ports including Manila; that the defendant, The Bradman Co. Inc., was the ship agent in the Philippines for
the SS Ampal and/or Pacific Star Line; that the
Manila Railroad Co. Inc. and Manila Port Service were the arrastre
operators in the port of Manila and were authorized to deliver cargoes
discharged into their custody on presentation of release papers from the
Bureau of Customs and the steamship carrier and/or its agents; that on December
22, 1961, the SS Ampal took on board at New York,
N.Y., U.S.A., a consignment or cargo including 33 packages of Linen &
Cotton Piece Goods for shipment to Manila for which defendant Pacific Star Line
issued Bill of Lading No. 18 in the name of I. Shalom & Co., Inc., as
shipper, consigned to the order of Judy Philippines, Inc., Manila; that the SS Ampal arrived in Manila on February 10, 1962 and in due
course, discharged her cargo into the custody of Manila Port Service; that due
to the negligence of the defendants, the shipment sustained damages valued at
US$2,300.00 representing pilferage and seawater damage; that I. Shalom &
Co., Inc. immediately filed claim for the undelivered and damaged cargo with
defendant Pacific Star Line in New York, N.Y., but said defendant refused and
still refuses to pay the said claim; that the cargo was insured by I. Shalom
& Co., Inc. with plaintiff Aetna Casualty & Surety Company for loss
and/or damage; that upon demand, plaintiff Aetna Casualty & Surety Company
indemnified I. Shalom & Co., Inc. the amount of US$2,300.00; that in
addition to this, the plaintiffs had obligated themselves to pay attorney’s
fees and they further anticipated incurring litigation expenses which may be
assessed at P1,000.00; that plaintiffs
and/or their predecessor-in-interest sustained losses due to the negligence of
Pacific Star Line prior to delivery of the cargo to Manila or, in the alternative,
due to the negligence of Manila Port Service after delivery of the cargo to it
by the SS Ampal; that despite repeated demands, none
of the defendants has been willing to accept liability for the claim of the
plaintiffs and/or I. Shalom & Co., Inc.; and that by reason of defendants’
evident bad faith, they should consequently be liable to pay exemplary damages
in the amount of P2,000.00.[2]
On motion of the defendants Pacific Star Line and The Bradman Co. Inc. and with the
conformity of the plaintiff Aetna Casualty & Surety Company, the plaintiff
smith Bell & Co. (Philippines),
Inc. was dropped and the complaint was dismissed as to said
plaintiff.[3]
In their answer filed on February 28, 1963, the defendants Manila
Port Service and Manila Railroad Company, Inc. alleged that they have exercised
due care and diligence in handling and delivering the cargoes consigned to
Judy Philippines, Inc.; that, in fact, they had delivered the merchandise to
the consignee thereof in the same quantity,
order and condition as when the
same was actually received from the carrying vessel; that a portion of
the shipment in question was discharged from the carrying vessel in bad order
and condition and consequently,
any loss or shortage incurred thereto, is the sole responsibility of the said carrying vessel and not that of the arrastre operator; that they have delivered to the
consignee thereof the same quantity of merchandise and in the same order or
condition as when received from the carrying vessel; that since no claim of the
value of the goods in question was filed by the plaintiff or any of its
representative within 15 days from the discharge of the last package from the
carrying vessel, the claim has become time-barred and/or prescribed pursuant to
the management contract under which said defendants were appointed as arrastre operator at the Port of Manila; that consequently,
they are completely relieved or released from any or all liability therefor; and that they do not in any manner act as agent
of the carrying vessel in the discharge of the goods at the piers.[4]
The Pacific Star Line and The Bradman
Co. Inc. alleged in their answer as special defenses that the plaintiff’s cause
of action, if any, against the answering defendants had prescribed under the
provisions of the Carriage of Goods by Sea Act and/or the terms of the covering
bill of lading; that the entire shipment covered by the bill of lading issued
by answering defendant Pacific Star Line was discharged complete and in good
order condition into the custody of the
other defendant, Manila Port Service, which was the operator of the arrastre service at the Port of Manila; that any damage
which may have occurred to the cargo while it was in the custody of the
defendant Manila Port Service was caused solely by the negligence of said arrastre operator and is, therefore, its sole responsibility;
the defendant Manila Port Service is not the vessel agent in the receiving,
handling, custody and/or delivery of the cargo purchased; that the vessel’s
responsibility ceased upon removal of the cargo from the ship’s tackle; that
defendant Manila Port Service is not the vessel’s or answering defendant’s
agent in the receiving, handling, custody and/or delivery of the cargo
consignee; that the vessel’s responsibility ceased upon removal of the cargo
from the ship’s tackle; that the vessel’s liability, if any, for one case
cannot exceed the sum of P500.00 under the Carriage of Goods by Sea Act.[5]
The defendants Manila Port Service and Manila Railroad Company,
Inc. amended their answer to allege that the plaintiff, Aetna Casualty &
Surety Company, is a foreign corporation not duly licensed to do business in
the Philippines and, therefore, without capacity to sue and be sued.[6]
The parties submitted on November
23, 1965 the following partial stipulation of facts:
“PARTIAL STIPULATION OF FACTS
COME NOW the parties,
through their undersigned counsel, and
to this Honorable Court respectfully submit the following Partial Stipulation
of Facts:
A.
– On their part, defendants admit:
1. – Paragraphs 2, 3, and 4 of the complaint;
2. – That the S/S Ampal arrived in Manila, on February 10, 1962 and in due
course discharged her cargoes into the custody of the defendant Manila Port
Service, including the subject shipment complete and in good order, except two
(2) cases Nos. 5804 and 16705 which were discharged under B. O. Tally Sheets Nos. 2721 and 2722 and turned
over to the custody of the defendant Manila Port Service by the vessel S/S Ampal. The shipping
documents covering the cargo were indorsed and sent to Judy’s Philippines, Inc.
for processing and eventual return thereof
to the owner, and which cleared the documents with the defendants and the
Bureau of Customs;
3. – That the I. Shalom & Co.,
Inc. filed claim for undelivered and damaged portion of subject cargo with
defendant Pacific Star Line in New York, New York, but said defendant refused and still refuses to pay the
said claim, for the reason stated in said defendant’s letter to Smith, Bell
& Co. (Philippines), Inc. dated June 1, 1962, copy of which letter is
hereto attached and marked Annex A;
4. – That Judy’s
Philippines, Inc. through its customs broker filed provisional claims with
defendant The Bradman Company, Inc. and the defendant
Manila Port Service on February 13, 1962.
B. – Defendants
admit the genuineness and due execution of the following documents:
1.-
Bill of Lading No. 18 dated December
22, 1961, ex S/S Ampal, attached hereto and marked
as Annex B;
2.-
Invoice dated December 26, 1961
of I. Shalom & Co., Inc. attached hereto and marked as Annex C;
3. – Provisional
Claim filed with The Bradman Co., Inc. on February
13, 1962, attached hereto and marked as Annex D;
4. – Provisional
Claim filed with the Manila Port Service on February 13, 1962, attached hereto
and marked as Annex E;
5.-
Request for Bad Order Examination No. 1073 dated March 6, 1962 covering Cases Nos. 16705 and 5804,
attached hereto and marked as Annex F;
6. – Request for Bad
Order Examination No. 1177 dated March 5, 1962 covering Cases Nos. 14913 and 15043,
attached hereto and marked as Annex G;
7. – Formal Claim
dated April 10, 1962 addressed to defendant Pacific Star Line filed by I.
Shalom & Co. Inc. attached hereto and marked as Annex H;
8.- Letter dated May 3, 1962
addressed to defendant Manila Port Service by Smith, Bell & Co. (Philippines)
Inc., attached hereto and marked as Annex I;
9. – Letter dated
August 8, 1962 addressed to the defendant Manila Port Service by Smith, Bell
& Co. (Philippines) Inc., attached hereto and marked as Annex J;
10. – Certification
of Insurance, authenticated by the Philippine Consul, New York, U.S.A., attached hereto and marked as Annex K;
11. – Subrogation
Receipt dated June 1, 1962,
attached hereto and marked as Annex L;
C. – On their part,
plaintiff and defendants Pacific Star Line and The Bradman
Company, Inc. admit:
1.- Having knowledge
and being bound by the provisions of the Management Contract entered into by
and between the Manila Port Service and the Bureau of Customs on February 29, 1956, covering the operation of the arrastre service in the Port of Manila, a copy of which is
attached hereto and marked as Annex M;
2.-
The genuineness and due execution of Gate Pass No. 35482 which, among others,
covers Case No. 14915, attached hereto and marked as Annex N;
3. – The genuineness
and due execution of Gate Pass No. 34837, which, among others, cover Cases
Nos. 16706 and 16707, attached hereto and marked as Annex O;
4.-
The genuineness and due execution of a Certification issued by the Office of
the Insurance Commissioner dated December
19, 1964, a photostat copy of which is
attached hereto and marked as Annex P;
5. – The genuineness and due execution
of a Certification issued by the Securities and Exchange Commission dated November 10, 1964, a photostat copy of which is attached hereto and marked as
Annex Q;
6. – That the value of the shipment in
question was not specified or manifested in the bill of lading and that the arrastre charges thereon
were paid on the basis of weight and/or measurement and not on the value
thereof.
D. On their part, plaintiff and defendant Manila Port Service
admit:
1.-
That the shipment in question was discharged complete and in good order
condition into the custody of the
Manila Port Service except Cases Nos. 5804 and 16705 covered by Tally Sheets
Nos. 2721 and 2722;
2. – That as per signed copies of
Survey Report and Turnover Receipt both dated February 26, 1962, all goods
contained in Case No. 5804 were received in good order condition by the
consignee who waived all claims thereon and that the contents of Case No. 16705
were turned over to the defendant Manila Port Service in the condition shown in
said Turnover Receipt;
3.- The genuineness and due execution of the following documents:
(a)
Tally Sheet No. 2721 dated November 2, 1962 attached hereto and
marked as Annex R;
(b)
Tally Sheet No. 2722, dated November 2, 1962, attached hereto and
marked as Annex S;
(c)
Survey Report dated February 26, 1962, attached hereto
and marked as Annex T;
(d)
Turnover Receipt dated February 26, 1962, attached hereto
and marked as Annex U.
WHEREFORE, it is respectfully prayed that the following Partial
Stipulation of Facts be approved, and the parties be allowed to present
evidence on the remaining controverted issues.
Manila, Philippines,
September, 1965.
ROSS, SELPH, SALCEDO, DEL
ROSARIO, BITO AND MISA
By:
(Sgd.) MARIANO
LOZADA
( T. ) MARIANO LOZADA
Counsel for the Defendants
PACIFIC STAR LINE and
THE BRADMAN COMPANY,
INC.
405 FNCB Building, Manila
OZAETA, GIBBS & OZAETA
By:
(Sgd.) JESUS S.
J. SAYOC
( T. ) JESUS S. J. SAYOC
Counsel
for the Plaintiffs
7th
Floor, Magsaysay Bldg.
520 T. M. Kalaw
Street
Ermita, Manila
D. F. MACARANAS &
A. M. ABRENICA
By:
(Sgd.) ALIPIO M.
ABRENICA
( T. ) ALIPIO M. ABRENICA
Counsel for the Defendants
MANILA PORT SERVICE and
MANILA RAILROAD COMPANY, INC.
Terminal Bldg., Port Area
Manila”[7]
The case was submitted for decision on the basis of the partial
stipulation of facts and three (3) documents submitted in evidence by the defendants
consisting of (a) a certification issued by the Office of the Insurance
Commission to the effect that there is no record in said office showing that
Aetna Casualty & Surety Company has been licensed to transact insurance
business in the Philippines; (b) a certification issued by the Securities and Exchange Commission that its records do
not show the registration of the Aetna Casualty & Surety Company either as
a corporation or a partnership nor that it has been licensed to transact
business in the Philippines as a foreign corporation; (c) a certification of
the Clerk of Court of the Court of First Instance of Manila issued on August 5,
1965 to the effect that thirteen (13) civil cases appear to have been filed by
and/or against the Aetna Casualty & Surety Company in said court.[8]
The trial court dismissed the complaint because:
“There has been a ruling that foreign corporation may file a
suit in the Philippines
in isolated cases. But the case of the
plaintiff here is not that. The
evidence shows that the plaintiff has been filing actions in the Philippines
not just in isolated instances, but in numerous cases and therefore, has been
doing business in this country, contrary to Philippine laws.”[9]
The plaintiff Aetna
Casualty & Surety Company appealed to this Court assigning the
following errors:
“I
THE LOWER COURT ERRED IN RULING THAT APPELLANT INSURANCE COMPANY IS
SUBJECT TO THE REQUIREMENTS OF SECTIONS
68 AND 69 OF ACT 1459, AS AMENDED, AND FAILING TO COMPLY THEREWITH, HAS
NO LEGAL CAPACITY TO BRING SUIT IN THIS JURISDICTION.
II
THE LOWER COURT
ERRED IN DISMISSING THE COMPLAINT.”[10]
The main issue involved in this appeal is whether or not the
appellant, Aetna Casualty & Surety Company, has been doing business in the Philippines. It is a fact that said appellant has no
license to transact business in the Philippines
as a foreign corporation.
Section 68 of the
Corporation Law provides that “No foreign corporation or corporation
formed, organized, or existing under any laws other than those of the Philippines
shall be permitted to transact business in the Philippines until after it shall
have obtained a license for that purpose from the Securities and Exchange
Commissioners x x x.”
And according to Section 69 of said Corporation Law “No foreign corporation
or corporation formed, organized, or existing under any laws other than those
of the Philippines shall be permitted to transact business in the Philippines
or 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 x x x.”
It is settled that if a foreign corporation is not engaged in
business in the Philippines,
it may not be denied the right to file an action in Philippine courts for isolated
transactions.[11]
The object of Sections 68 and 69 of the Corporation Law was not
to prevent the foreign corporation from performing single acts, but to prevent
it from acquiring a domicile for the purpose of business without taking the
steps necessary to render it amenable to suit in the local courts. It was never the purpose of the Legislature
to exclude a foreign corporation which happens to obtain an isolated order for
business from the Philippines,
from securing redress in the Philippine courts.[12]
In Mentholatum Co., Inc. et al. vs. Mangaliman, et al., this Court ruled that:
“No general rule or governing principle can be laid down as to what constitutes
‘doing’ or ‘engaging in’ or ‘transacting’ business. Indeed, each case must be judged in the light
of its peculiar environmental circumstances.
The true test, however, seems to be whether the foreign corporation is
continuing the body or substance of the
business or enterprise for which it was organized or whether it has
substantially retired from it and turned it over to another. (Traction Cos. v.
Collectors of Int. Revenue [C. C.
A. Ohio], 223 F.
984, 987.) The term implies a continuity of commercial dealings
and arrangements, and contemplates, to that extent, the performance of acts
or works or the exercise of some of the functions normally incident to, and in
progressive prosecution of, the purpose and object of its organization. (Griffin v. Implement Dealers’ Mut.
Fire Ins.
Co., 241 N. W. 75, 77; Pauline
Oil & Gas Co. v. Mutual Tank Line Co., 246 P. 851, 852, 118 Okl. 111; Automotive Material Co. vs. American Standard
Metal Products Corp., 158 N. E. 698, 703, 327 Ill. 367.)”[13]
And in Eastboard Navigation, Ltd., et
al. vs. Juan Ysmael & Co., Inc., this Court held
that:
“(d) While
plaintiff is a foreign corporation without license to transact business in the
Philippines, it
does not follow that it has no capacity to bring the present action. Such license is not necessary because it is
not engaged in business in the Philippines. In fact, the transaction herein involved is
the first business undertaken by plaintiff in the Philippines,
although on a previous occasion plaintiff’s vessel was chartered by the
National Rice and Corn Corporation to carry rice cargo from abroad to the Philippines. These two isolated transactions do not constitute engaging in business
in the Philippines
within the purview of Sections 68 and 69 of the Corporation Law so as to bar plaintiff from seeking redress
in our courts. (Marshall-Wells
Co. vs. Henry W. Elser & Co. 49 Phil., 70;
Pacific Vegetable Oil Corporation vs.
Angel O. Singson, G. R. No. L-7917, April 29, 1955.)”[14]
Based on the rulings laid down in the foregoing cases, it cannot
be said that the Aetna Casualty & Surety Company is transacting business
of insurance in the Philippines
for which it must have a license. The contract of insurance was entered into in
New York, U.S.A., and payment was made to the consignee in
its New
York
branch. It appears from the list of
cases issued by the Clerk of Court of the Court of First Instance of Manila
that all the actions, except two (2) cases filed by Smith, Bell & Co., Inc.
against the Aetna Casualty & Surety Company, are claims against the shipper
and the arrastre operators just like the case at bar.
Consequently, since the appellant Aetna Casualty & Surety
Company is not engaged in the business of insurance in the Philippines
but is merely collecting a claim assigned to it by the consignee, it is not
barred from filing the instant case although it has not secured a license to transact insurance business in the Philippines.
WHEREFORE, the decision appealed from is hereby set aside
and the case is remanded to the trial court for further proceedings to
determine the liability of the defendants-appellees,
without pronouncement as to costs.
SO ORDERED.
Teehankee, (Chairman), Makasiar, Muñoz Palma, and Guerrero, JJ., concur.
Martin, J., no part.
[1]
Record on Appeal, p. 50, Rollo, p. 13.
[2]
Ibid., pp. 2-5, Rollo, p. 13.
[3]
Ibid., p. 19, Rollo, p. 13.
[4]
Ibid., pp. 20-24, Rollo, p. 13.
[5]
ibid., pp. 25-29, Rollo,
p. 13.
[6]
Ibid., pp. 30-34, Rollo, p. 13.
[7]
Ibid., pp. 35-41, Rollo, p. 13.
[8]
Ibid., pp. 41-47, Rollo, p. 13.
[9]
Ibid., p. 50, Rollo, p. 13.
[10]
Brief for Plaintiff-Appellant, pp. 1-2,
Rollo, p. 78.
[11]
Western Equipment & Supply Co. vs. Reyes, 51 Phil. 115.
[12]
Marshall-Wells Co. vs. Elser & Co., 46
Phil. 70, 75.
[13]
72 Phil. 524, 528-529.
[14]
102 Phil., pp. 1, 18.