New York Marine Managers, Inc. v. Court of Appeals
REITERATIONFacts
1. The Antecedents: A shipment of soda ash loaded in Portland, U.S.A., on board the vessel "MS Abu Hanna" for delivery to Manila was insured by petitioner, New York Marine Managers, Inc. Upon arrival in Manila, the shipment was transferred to the vessel "MV Biyayang Ginto," owned by private respondent Vlasons Shipping Inc. The consignees rejected the shipment as a total loss due to alleged wettage, hardening, and contamination. Petitioner, having paid the claim of US$58,323.96 to the supplier, stepped into the supplier's shoes as subrogee. 2. Procedural History: Petitioner, as subrogee, filed a complaint for damages against private respondent with the Regional Trial Court (RTC) of Manila. Private respondent moved to dismiss the complaint, raising several grounds including lack of cause of action, no privity of contract, risks not covered by insurance, charter agreement absolving respondent, extinguished claim, and petitioner's lack of legal capacity to sue. The RTC denied the motion to dismiss, and a subsequent motion for reconsideration was also denied. Private respondent then filed a petition for certiorari and prohibition with the Court of Appeals (CA), alleging grave abuse of discretion by the RTC. The CA granted the petition, finding the RTC's orders patently erroneous and holding the complaint fatally defective for failing to allege the duly authorized representative or resident agent of petitioner in the Philippines, thus enjoining the RTC from further proceedings except to dismiss the case. 3. The Petition: Petitioner seeks certiorari under Rule 65 of the Rules of Court, arguing that the CA acted whimsically, capriciously, and arbitrarily in deeming its complaint fatally defective. Petitioner contends that a foreign corporation engaged in an isolated transaction is not required to appoint a resident agent or representative in the Philippines to sue locally. The Supreme Court, however, noted that the proper remedy would be a petition for review on certiorari under Rule 45. Even when treating the petition as such, the Court found that the complaint failed to affirmatively plead the ultimate fact that petitioner was not doing business in the Philippines, which is essential for invoking the isolated transaction rule. Furthermore, the Court agreed with the CA that the complaint was fatally defective for failing to allege a duly authorized representative or resident agent, especially after the authority of petitioner's counsel was challenged.
Issue(s)
Whether the Court of Appeals gravely abused its discretion amounting to lack or excess of jurisdiction in reversing the trial court's denial of the motion to dismiss. Whether a foreign corporation engaged in an isolated transaction in the Philippines is required to allege in its complaint the appointment of a duly authorized representative or resident agent; and whether the complaint sufficiently alleged the petitioner's capacity to sue.
Ruling
The petition is denied. The assailed decision of the Court of Appeals is affirmed. Costs against the petitioner.
Ratio Decidendi
On the propriety of a Rule 65 petition: The Court held that a petition for certiorari under Rule 65 is not the proper remedy for mere errors of judgment. Where the issue involves the wisdom or legal soundness of a decision, not the jurisdiction of the court to render it, it is beyond the province of a special civil action for certiorari. Erroneous findings and conclusions do not make the appellate court vulnerable to the corrective writ of certiorari; they constitute errors of law, not abuse of discretion, when the court has jurisdiction. On the capacity to sue of a foreign corporation in an isolated transaction and the requirement of a resident agent: The Court reiterated that a foreign corporation not engaged in business in the Philippines may sue on an isolated transaction. However, to avail itself of this rule, the foreign corporation must affirmatively plead its capacity to sue. This requires disclosing the ultimate fact that it is not doing business in the Philippines. The mere allegation that it is a foreign corporation existing under the laws of the United States is insufficient, as it does not clarify whether it is engaged in business or not. The qualifying circumstance of being exempt from licensing requirements due to an isolated transaction must be affirmatively pleaded. The Court affirmed the appellate court's finding that the complaint was fatally defective for failing to allege the duly authorized representative or resident agent of the petitioner in the Philippines. While a lawyer is presumed authorized to represent a client, this presumption is disputable. When the authority of the lawyer is challenged, as it was continuously assailed by the private respondent, the lawyer must show proof of such authority to bind the client. The failure to present competent proof of due authorization renders the pleadings insufficient to establish representation and binds the client only if they acquiesce, which requires knowledge of representation.
Main Doctrine
A foreign corporation not engaged in business in the Philippines may sue on an isolated transaction, but must affirmatively plead its capacity to sue by disclosing the ultimate fact that it is not doing business in the Philippines. Furthermore, its complaint is fatally defective if it fails to allege its duly authorized representative or resident agent in the jurisdiction, especially when its authority to sue has been challenged.