EXPERTRAVEL & TOURS, INC., PETITIONER, VS. COURT OF APPEALS AND KOREAN AIRLINES, RESPONDENTS.

Expertravel and Tours versus Korean Airlines

The Case

This is a petition for review on certiorari brought by Expertravel and Tours, Incorporated against Korean Airlines and the Court of Appeals. Korean Airlines sued Expertravel in the Regional Trial Court of Manila to collect an unpaid account, and the complaint carried a verification and certificate against forum shopping signed not by a corporate officer but by the airline's resident agent and counsel. Expertravel moved to dismiss, the trial court refused, the Court of Appeals refused as well, and the Supreme Court was asked to say whether that signature satisfied the Rules of Court. The case matters because it fixes who, within a corporation, may sign the certificate against forum shopping, and because it draws the outer boundary of judicial notice when a party claims that a board resolution was passed by teleconference.

Procedural History

Korean Airlines filed its complaint for collection in the Regional Trial Court of Manila. Expertravel moved to dismiss on the ground that its counsel, Attorney Aguinaldo, was not authorized to execute the verification and certificate against forum shopping. The trial court denied the motion, giving credence to the claim that the board of directors had approved a resolution in a teleconference, and it denied reconsideration. Expertravel then went up to the Court of Appeals on a petition for certiorari and mandamus. The Court of Appeals dismissed the petition, holding that the verification and certificate signed by Attorney Aguinaldo substantially complied with the Rules, that he had been authorized by the board resolution, and that the trial court could take judicial notice of the teleconference. Reconsideration was denied. Expertravel then came to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Korean Airlines is a corporation organized in South Korea and licensed to do business in the Philippines. Its general manager in the country was Suk Kyoo Kim, and its appointed counsel was Attorney Mario Aguinaldo and his law firm. In September 1999, through Attorney Aguinaldo, the airline sued Expertravel in the Regional Trial Court of Manila to collect a principal amount of 260,150 pesos, plus attorney's fees and exemplary damages. The verification and certificate against forum shopping was signed by Attorney Aguinaldo, who stated that he was the resident agent and legal counsel of the airline and had caused the preparation of the complaint.

Expertravel moved to dismiss, arguing that Attorney Aguinaldo was not authorized to execute the certificate. The airline opposed, saying he was its resident agent registered with the Securities and Exchange Commission and also its corporate secretary. At a hearing, Attorney Aguinaldo claimed he had been authorized by a board resolution approved in a special meeting held in June 1999, and the trial court gave the airline time to produce the resolution. What was eventually submitted, in March 2000, was an affidavit of the general manager stating that the board held a special teleconference in June 1999, attended by him and Attorney Aguinaldo, at which the resolution was approved, but that the corporation had no written copy of that resolution.

The trial court denied the motion to dismiss, giving credence to the claim that the teleconference took place, and it took judicial notice of the teleconference without any prior hearing. Later, in its comment before the Court of Appeals, the airline appended a secretary's and resident agent's certificate signed by Attorney Aguinaldo, quoting the board resolution that authorized him and his firm to take whatever legal action was necessary to collect the unpaid account. Expertravel insisted that the teleconference and the resolution were fabrications, and that compliance with the rule could be judged only from the complaint itself.

Issues

• Whether or not the certificate against forum shopping signed by the corporation's resident agent and counsel, without any showing of authority from the board of directors, substantially complies with Section 5, Rule 7 of the Rules of Court.
• Whether or not the trial court may take judicial notice that a board of directors held a teleconference and approved a resolution, without notice and hearing, and treat that as proof of the signer's authority.

Applicable Provisions

Section 5, Rule 7 of the Rules of Court provides:

Section 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.

This is the provision whose requirements the Court measures the signature of Attorney Aguinaldo against.

Section 127 of the Corporation Code provides:

Section 127. Who may be a resident agent. A resident agent may either be an individual residing in the Philippines or a domestic corporation lawfully transacting business in the Philippines: Provided, That in the case of an individual, he must be of good moral character and of sound financial standing.

This defines who the resident agent is, and it says nothing about authority to sign certifications in litigation.

Section 128 of the Corporation Code provides:

Section 128. Resident agent; service of process. The Securities and Exchange Commission shall require as a condition precedent to the issuance of the license to transact business in the Philippines by any foreign corporation that such corporation file with the Securities and Exchange Commission a written power of attorney designating some persons who must be a resident of the Philippines, on whom any summons and other legal processes may be served in all actions or other legal proceedings against such corporation, and consenting that service upon such resident agent shall be admitted and held as valid as if served upon the duly-authorized officers of the foreign corporation as its home office.

This confines the resident agent's role to receiving process against the corporation, which is why being resident agent does not carry authority to sign the certificate.

Ruling

On the first issue, the Court held that the petition is meritorious. The requirement of a certificate against forum shopping is mandatory, and the certification is a peculiar and personal responsibility of the party, who alone has actual knowledge of whether he has begun similar actions elsewhere. For a private corporation, the certificate may be signed by a specifically authorized person, including retained counsel, who has personal knowledge of the facts required. But where the adverse party disputes the signer's authority, the corporation must allege and establish that authority. Here, the verification and certificate signed by Attorney Aguinaldo contained no allegation that the board of directors had authorized him to execute it, and no board resolution was appended or incorporated. The Court also held that being resident agent does not supply the authority, because under the Corporation Code the resident agent's function is to receive summons and other legal processes for the foreign corporation, and such an agent may not even be aware of actions initiated by the corporation itself, here or abroad. The later submission of a resolution was an attempt at subsequent compliance that cast doubt on the claim that the teleconference ever took place.

On the second issue, the Court held that the trial court could not take judicial notice of the teleconference. Judicial notice is limited to facts of common and general knowledge, well and authoritatively settled, not doubtful or uncertain, and not subject to reasonable dispute. The Court acknowledged that courts may take judicial notice that business transactions may be made through teleconferencing, and it described the three basic types: video conferencing, computer conferencing, and audio conferencing. But it stressed that teleconferencing only facilitates the linking of people and does not alter the complexity of group communication, and that although it may be easier to communicate through it, it may also be easier to miscommunicate. A court cannot take judicial notice of a fact that depends on the existence of another fact of which it has no constructive knowledge. That a particular board met by teleconference on a particular day and passed a particular resolution is precisely such a fact, and it had to be proved, not assumed.

Doctrine

First, the certificate against forum shopping is mandatory and is the personal responsibility of the party, because only the party has actual knowledge of other pending actions. Second, a corporation may sign through a specifically authorized person, including retained counsel with personal knowledge, but when the signer's authority is challenged, the corporation must allege and prove that authority. Third, the authority must appear from the complaint or its annexes; a board resolution produced later is at best an attempt at subsequent compliance, allowed only in exceptional circumstances. Fourth, the office of resident agent under the Corporation Code is to receive process against the foreign corporation, and it does not by itself authorize the signing of a certificate against forum shopping. Fifth, judicial notice covers only facts of common and general knowledge that are not subject to reasonable dispute; a court may notice that teleconferencing exists as a mode of business communication, but it cannot notice that a specific board held a specific teleconference and approved a specific resolution.

Disposition

The Supreme Court granted the petition, set aside the decision of the Court of Appeals and the orders of the trial court, and dismissed the complaint of Korean Airlines without prejudice.

Remember This

Memorize the line that the resident agent receives process but does not thereby sign the certificate against forum shopping, and that a corporation must show board authority from the complaint itself. Examiners use this case to test the corporate signer of the certificate against forum shopping and the limits of judicial notice over teleconferenced board meetings.