Hyopsung Maritime Co., Ltd. v. The Honorable Court of Appeals and Pioneer Insurance & Surety Corporation
REITERATIONFacts
The Antecedents: Pioneer Insurance & Surety Corp. (Pioneer), as subrogee of a consignee, filed an admiralty case against Hyopsung Maritime Co., Ltd. (Hyopsung), Aurelio Navigation Corp. S.A., and Litonjua Shipping Co. for the recovery of the value of lost cargo. Pioneer sought recovery of P5,000,537.48 plus interest, attorney's fees, and damages. An answer was filed by the law firm Teves, Campos, Hernandez & Lim, purportedly on behalf of all defendants, as legal representatives of the vessel's Protection & Indemnity Club. Subsequently, new counsel entered their appearance for Litonjua Shipping Co., and Atty. Eulalio A. Ventura filed a special appearance for Hyopsung solely to question the court's jurisdiction. Aurelio Navigation Corp. S.A. also filed a Motion to Dismiss based on the affirmative defenses in its Answer, particularly the extinguishment of liability due to the vessel's sinking. Procedural History: The trial court initially dismissed the complaint against all defendants. However, upon motion by Pioneer, this order was set aside. Hyopsung moved for reconsideration, which led the trial court to revive its initial order of dismissal. Pioneer appealed these orders to the Court of Appeals, which set aside the May 1984 order and remanded the case to the lower court for trial on the merits. The Petition: The present petition before the Supreme Court seeks to amend the dispositive portion of the Court of Appeals' decision to conform to its findings of fact, specifically questioning whether Hyopsung's counsel's appearance constituted a voluntary appearance that conferred jurisdiction over Hyopsung's person.
Issue(s)
Whether the appearance of the law firm Teves, Campos, Hernandez & Lim constituted a voluntary appearance that conferred jurisdiction over the person of Hyopsung Maritime Co., Ltd. Whether Hyopsung Maritime Co., Ltd., a foreign corporation not doing business in the Philippines, is amenable to the jurisdiction of Philippine courts.
Ruling
The petition is GRANTED. The dispositive portion of the Court of Appeals' decision is MODIFIED, ordering the dismissal of the complaint against Hyopsung Maritime Co., Ltd. The case is remanded to the lower court for trial on the merits as against the two other defendants.
Ratio Decidendi
On the issue of voluntary appearance and jurisdiction over the person: The Court held that the appearance of the law firm Teves, Campos, Hernandez & Lim did not constitute a voluntary appearance that conferred jurisdiction over the person of Hyopsung Maritime Co., Ltd. The Court of Appeals found, based on express findings of fact binding upon the Supreme Court, that the answer filed by that law firm was never authorized by Hyopsung. The law firm itself admitted that if the representation was a mistake and not ratified, it would welcome an order to rectify the error. Furthermore, a Certification from the President of Hyopsung confirmed that the company had never engaged the services of that law firm to represent it in the case, nor had it authorized them to file an Answer. The only authorized counsel was Atty. Eulalio Ventura, engaged specifically to question the jurisdiction of Philippine courts. Therefore, Hyopsung is not bound by the pleading or answer mistakenly filed by the law firm. Without a voluntary appearance or proper service of summons, the trial court did not acquire jurisdiction over the person of Hyopsung. On the amenability of a foreign corporation not doing business in the Philippines to Philippine courts: The Court reiterated that for a foreign corporation to be amenable to the jurisdiction of Philippine courts, it must be doing business in the Philippines. This is a sine qua non requirement for the acquisition of jurisdiction through personal or substituted service of summons under Section 14, Rule 14 of the Rules of Court. The Court of Appeals accepted the explanation of Hyopsung's president that it was not doing business in the Philippines, and no contrary proof was adduced. Consequently, Hyopsung is not amenable to process, and the local courts lack jurisdiction. The Court distinguished this case from Facilities Management Corp. vs. de la Osa, where the foreign corporation was deemed to be doing business in the Philippines due to the hiring of a Filipino employee in Manila and the execution of the employment contract there. In contrast, the present suit involved a breach of contract entirely entered into, executed, and consummated in Korea, with the petitioner being a Korean firm with offices in Seoul, the bill of lading issued in Seoul, freight prepaid in Seoul, the vessel never docking in the Philippines, and no ship agent appointed in the Philippines. Thus, the petitioner was beyond the reach of Philippine courts.
Main Doctrine
A foreign corporation not doing business in the Philippines is not amenable to the process of Philippine courts, and personal or substituted service of summons is necessary to confer jurisdiction over its person in a personal action. A voluntary appearance, which confers jurisdiction, requires an authorized act by the foreign corporation, not a mistaken or unauthorized filing by a law firm.