Académique Documents
Professionnel Documents
Culture Documents
2
obtain. There are three types of contract surety
bonds:
DECISION
Lepanto-Taisho
interested parties
the
Present
CORON
Chairpe
LEONAR
BERSAM
DEL CA
VILLARA
G.R. N
payment
Insurance
of
unpaid
Corporation
oil
and
(now
petroleum
3
Fumitechniks,
represented
by
Ma.
Lourdes
of P15,700,000.00. As
stated
in
the
agreement
executed
since
no
between
such
agreement
Fumitechniks
was
and
of P15,000,000.00.[7] Consequently,
principal
reason
letter
notified
applied for.[8]
of Account
dated February
6,
Closed.
2002,
In
respondent
agreement
as
petitioner
confirmed
by
products
between November
11,
Simultaneously, a letter
[6]
was sent to
petitioner
also
contested
the
amount
of
of P15,080,030.30,
total obligation.[10]
plus
interest,
costs
and
4
Petitioner,
[11]
in
its
Answer
with
entered
ORDERING
defendantappellant
First
Lepanto-Taisho
Insurance Corporation to pay
plaintiff-appellant
Caltex
(Philippines) Inc. now Chevron
Philippines, Inc. the sum of
P15,084,030.00.
Counterclaim,
SO ORDERED.[12]
complaint
as
well
as
petitioners
of
the
written
agreement
secured
written
agreement
(principal
contract)
filed
motion
for
According
to
the
appellate
court,
Fumitechniks
issued. Considering
of
the
that
surety
such
oral
bond
it
contract
executed,
the
CA
ruled
that
the
5
EVIDENCE FOR BEING CONTRARY
TO THE PAROL EVIDENCE RULE,
IMMATERIAL AND IRRELEVANT AND
CONTRARY TO THE STATUTE OF
FRAUDS.
undertaking.[16]
The extent of a suretys liability is determined by
the language of the suretyship contract or bond
itself. It
determine
principal
or
by
another
obligor,
of
party,
an
called
obligation
the
the
or
It
includes
official
recognizances,
fulfilling
an
by
implication,
whether
petitioner
is
liable
to
itself.
performance
extended
the principal.
guarantees
be
surety,
cannot
the
therefrom. And
called
benefit
party,
any
receive
of
this
WHEREAS,
the
abovebounden
principal,
on 15th day
of October, 2001 entered
into
[an] agreement with CALTEX
PHILIPPINES,
INC. of
6
________________ to
faithfully
fully
and
only (P15,700,000.00),
Currency.
WHEREAS,
said Obligee__ requires
said
principal to give a good and
sufficient bond in the above stated
sum to secure the full and faithful
performance on his part of
said agreement__.
The
liability
of
FIRST
LEPANTO-TAISHO
INSURANCE
CORPORATION, under this Bond will
expire on 10.15.01_. Furthermore,
it is hereby understood that FIRST
LEPANTO-TAISHO
INSURANCE
CORPORATION will not be liable for
any claim not presented to it in
writing within fifteen (15) days
from the expiration of this bond,
and that the Obligee hereby waives
its right to claim or file any court
action against the Surety after the
termination of fifteen (15) days
from the time its cause of action
accrues.[19]
Philippine
x[18] (Emphasis
Petitioner posits that non-compliance with the
bond
WHEREAS,
the
obligee
requires the Principal to post a
bond to
guarantee
payment/remittance of the cost
of fuel products withdrawn
within the stipulated time in
accordance with terms and
conditions of the agreement;
ineffective. Since
all
stipulations
and
interpreted
together,
in
this
case,
the
and
attachment
of
the
written
premiums and
7
delivered the bond to respondent, who in turn,
that
and
credit
bonds
clearly
are
agreement
not
for
covered
agreements.
by
Supplying
the
written
the
distribution
details
of
these
argues
that
by
between
Fumitechniks
and
respondent
it
also
never
admitted
xxxx
agreement
was
never
attached
thereto,
xxxx
xxxx
reading
of Surety
Bond
FLTICG
(16)
No.
on
credit
by
Fumitechniks
in
agreement
has
reference
to
the
and
Marketing
respondents
terms
Atty. Selim:
A : Yes Sir.
the
follows:
by
relayed
has
Atty. Quiroz:
Q : What was the reason why you
are
not
reducing
your
agreement with your client
into writing?
A : Well, of course as I said, there is
no fix pricing in terms of
distributorship agreement,
its usually with regards to
direct
service
to
the
customers
which
have
direct fixed price.
8
xxxx
entered
the
176
creditor and
of
the
the Insurance
Code states:
Sec. 176. The liability of the
surety or sureties shall be joint and
several with the obligor and shall
be limited to the amount of the
bond. It is determined strictly by
the terms of the contract of
suretyship in relation to the
principal contract between the
obligor
and
the
obligee. (Emphasis supplied.)
xxxx
Q : How did you relay that, how did
you relay the terms and
conditions to the defendant?
A : I dont know, it was during the
time for collection because I
collected them and explain
the terms and conditions.
Q : You testified awhile ago that
you did not talk to the
defendant First LepantoTaisho
Insurance
Corporation?
you have
terms and
defendant
have not?
products
withdrawn
by
Fumitechniks
in
A : Yes Sir.
bond
specifically
makes
A : Yes Sir.
xxxx
between
principal. Section
A : Yes Sir.
A:I
into
control.[22] Moreover,
[20]
undertaking,
being
surety
an
agreement
onerous
is
strictly
petitioner
binds
the
latter
as
surety,
and
credit
agreement
which
the
and
conditions
of
its
terms
non-compliance
by
the
creditor
9
legality of the surety contract but on the creditors
motion
for
reconsideration
is
addressed
is
dismissed
should
faith.
allow
of
[25]
its
be
complied
alleged
with
business
in
good
grant
counterclaim
of
moral
for
moral
damages
to
of
not
distributors;
and
written agreement.
having writtencontracts
practice
the
petitioners
with
to
the
respondents
contention
motion
for
of
petitioner
that
reconsideration
filed
Petitioner
is
fees. The
likewise
settled
not
rule
entitled
to
is
no
attorneys
that
10
and that not every winning party is entitled to an
automatic grant of attorneys fees.[30] In pursuing
its claim on the surety bond, respondent was
acting on the belief that it can collect on the
obligation of Fumitechniks notwithstanding the
non-submission of the written principal contract.
WHEREFORE, the petition for review on
certiorari
is PARTLY
dated November
20,
Resolution
CV
No.
86623,
DECISION
CORTES, J.:
On January 7, 1966, Philippine Commercial and
Industrial Bank (PCIB) filed a complaint against
Alpha Insurance and Surety Co., Inc., (ALPHA),
Community Builders, Inc. and Filadelfo Rojas in
the Court of First Instance (CFI) of Manila. The
complaint alleged that Community Builders and
Rojas borrowed P150,000 from PCIB , that ALPHA
issued Surety Bond No. G-1689 in the amount of
P50,000 to guarantee payment of the loan, and
that upon maturity the defendants failed to pay.
In its answer with cross-claim against Community
Builders and Rojas, ALPHA admitted having
11
19, 1966, at 8:30 a.m.
SO ORDERED.
After trial, the CFI rendered judgment in favor of
PCIB and against Rojas, Community Builders and
ALPHA, ordering them to pay P50,000 plus
attorneys fees and costs. The Court further
ordered defendants Rojas and Community
Builders to pay the remaining P100,000.
Rojas and Community Builders appealed to the
Court of Appeals. However, since their counsel
could not be served with the notice to file brief,
their appeal was dismissed.
ALPHA likewise appealed to the appellate court
which reversed the decision of the CFI on the
ground that it was not shown that the surety
bond bears any relation to the promissory note.
Hence, this petition, PCIB raising a purely
procedural issue. Petitioner contends that the
appellate court erred in ruling in favor of ALPHA
on the basis of a question of fact which had not
been raised before the CFI and which is not within
the issues raised in the pleadings, nor in the pretrial order.
The issue raised calls for a determination of
whether or not the relations of the surety bond to
the promissory note was ever raised as an issue
in the Answer filed by ALPHA or in the pre-trial
conference held between the
parties.chanrobles.com : virtual law library
The pertinent allegation in PCIBs complaint
reads:chanrob1es virtual 1aw library
3. That in conjunction with the aforesaid
promissory note entered into by and between the
plaintiff and the defendants Filadelfo Rojas and
Community Builders Co., Inc., as principals and
the Alpha Insurance and Surety Co., Inc., as
surety, executed jointly and severally in the City
of Manila, Philippines, Alpha Bond No. G-1689 in
the amount of P50,000 to guarantee the payment
by the said principals of their obligation to the
plaintiff in accordance with the terms and
conditions recited in the said promissory note,
copy of the surety bond is attached hereto as
Annex "B" and made integral part hereof by
reference;
while the corresponding denial in the answer of
ALPHA states:chanrob1es virtual 1aw library
3. (Defendant) ADMITS the material allegations of
paragraph 3 of the complaint in so far as the
same refers to its surety bond (Annex "B") only;
12
P150,000 dated September 26, 1962 was not yet
executed. The Court thus rules that paragraph 3
of the answer of ALPHA merely admitted the
execution of Surety Bond No. G-1689, but did not
admit, nay, denied, that said bond secured the
debt of Rojas and Community Builders. In view of
the specific denial, the relation of the bond to the
debt was properly raised as an issue in the
Answer.
We next consider the pre-trial order.chanrobles
law library
PCIB calls the attention of this Court to that
portion of the pre-trial order which
reads:chanrob1es virtual 1aw library
The issue, therefore, is whether the defendants
have already paid the amount stated in the
promissory note by virtue of the assignment
aforesaid.
and contends that since the trial court has so
limited the issue, then ALPHA can no longer raise
the defense that bond bears no relation to the
promissory note.
The pertinent provision of the Rules of Court
provides:chanrob1es virtual 1aw library
Sec. 4 Record of pre-trial results. After the pretrial the court shall make an order which recites
the action taken at the conference, the
amendments allowed to the pleadings, and the
agreements made by the parties as to any of the
matters considered. Such order shall limit the
issues for trial to those not disposed of by
admissions or agreements of counsel and when
entered controls the subsequent course of action,
unless modified before trial to prevent manifest
injustice. (Italics supplied.)
While the rule provides that the pre-trial order of
the court "controls the subsequent course of
action," it is categorical that the issues for trial
must be limited to "those not disposed of by
admissions or agreements of counsel." In other
words, the court has no discretion to exclude
from trial issues not resolved by voluntary
agreement between the parties.
The pre-trial order clearly states that ALPHA
claimed that "it is not bound by the surety bond
for the reason that it was issued for less than the
amount of the plaintiffs claim and that the same
was issued prior to the execution of the
promissory note." This particular issue not having
been disposed of by admissions or agreements
during the pre-trial, it remained a proper subject
13
clause of the contract of suretyship. It cannot be
extended by implication, beyond the terms of the
contract. [Zenith Insurance Corp. v. CA Et. Al., No.
57957, December 29, 1982, 119 SCRA 485.]
In the case at bar, Surety Bond No. G-1689 was
executed to secure a discounting line of credit
accommodation granted by PCIB to Community
Builders Co., Inc. in the amount of P50,000.
PCIB contends that the loan evidenced by the
promissory note signed by Filadelfo Rojas, both in
his personal capacity and as President of
Community Builders, was granted in line with the
credit accommodation secured by the surety
bond; hence, ALPHA is liable for the
debt.chanrobles.com:cralaw:red
Note however that by the express terms of Surety
Bond No. G-1689, ALPHA bound itself to pay the
discounting line of Community Builders only
which has a personality distinct and separate
from Rojas. The promissory note, on the other
hand, was signed both by Rojas and by
Community Builders. Also, the amount of the
credit line which ALPHA agreed to secure was
only P50,000; whereas, the promissory note was
for P150,000. Clearly therefore, the debt on which
PCIB bases its action is not within the purview of
the Surety Bond No. G-1689. Thus, even granting
that Rojas and Community Builders offered Surety
Bond No. G-1689 as security for the P150,000
debt, ALPHA, which merely undertook to secure a
P50,000 credit line of Community Builders,
cannot be held answerable for the debt.
WHEREFORE, the petition is hereby DENIED. The
appealed decision is AFFIRMED.
SO ORDERED.
INTRA-STRATA ASSURANCE CORPORATION
and PHILIPPINE HOME ASSURANCE
CORPORATION,Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES, represented
by the BUREAU OF CUSTOMS, Respondent.
DECISION
BRION, J.:
Before this Court is the Petition for Review on
Certiorari under Rule 45 of the Rules of Court filed
by Intra-Strata Assurance Corporation (IntraStrata) and Philippine Home Assurance
Corporation (PhilHome), collectively referred to
as "petitioners."
14
WHEREFORE, premises considered, the Court
RESOLVES directing:
(1) the defendant Grand Textile
Manufacturing Corporation to pay plaintiff,
the sum of P2,363,174.00, plus interests
at the legal rate from the filing of the
Complaint until fully paid;
SO ORDERED.
The CA fully affirmed the RTC decision in its
decision dated November 26, 2002. From this CA
decision, the petitioners now come before this
Court through a petition for review on certiorari
alleging that the CA decided the presented legal
questions in a way not in accord with the law and
with the applicable jurisprudence.
ASSIGNED ERRORS
The petitioners present the following points as
the conclusions the CA should have made:
1. that they were released from their
obligations under their bonds when Grand
Textile withdrew the imported goods
without payment of taxes, duties, and
other charges; and
15
party element in the fulfillment of the principal
obligation that an obligor owes an obligee. In
short, there are effectively two (2) contracts
involved when a surety agreement comes into
play a principal contract and an accessory
contract of suretyship. Under the accessory
contract, the surety becomes directly, primarily,
and equally bound with the principal as the
original promissor although he possesses no
direct or personal interest over the latters
obligations and does not receive any benefit
therefrom.12
The Bonds Under Consideration
That the bonds under consideration are surety
bonds (and hence are governed by the above
laws and rules) is not disputed; the petitioners
merely assert that they should not be liable for
the reasons summarized above. Two elements,
both affecting the suretyship agreement, are
material in the issues the petitioners pose. The
first is the effect of the law on the suretyship
agreement; the terms of the suretyship
agreement constitute the second.
A feature of the petitioners bonds, not stated
expressly in the bonds themselves but one that is
true in every contract, is that applicable laws
form part of and are read into the contract
without need for any express reference. This
feature proceeds from Article 1306 of the Civil
Code pursuant to which we had occasion to rule:
It is to be recognized that a large degree of
autonomy is accorded the contracting parties.
Not that it is unfettered. They may, according to
Article 1306 of the Civil Code "establish such
stipulations, clauses, terms, and conditions as
they may deem convenient, provided that they
are not contrary to law, morals, good customs,
public order, or public policy." The law thus sets
limits. It is a fundamental requirement that
the contract entered into must be in
accordance with, and not repugnant to, an
applicable statute. Its terms are embodied
therein. The contracting parties need not
repeat them. They do not even have to be
referred to. Every contract thus contains
not only what has been explicitly stipulated
but also the statutory provisions that have
any bearing on the matter."13
16
a surety agreement, directly, primarily, and
equally bind them to the obligee to pay the
obligors obligation.
The second element to consider in a suretyship
agreement relates to the terms of the bonds
themselves, under the rule that the terms of the
suretyship are determined by the suretyship
contract itself.14 The General Warehousing
Bond15 that is at the core of the present dispute
provides:
KNOW ALL MEN BY THESE PRESENTS:
That I/we GRAND TEXTILE MANUFACTURING
CORPORATION Km. 21, Marilao, Bulacan, as
Principal, and PHILIPPINE HOME ASSURANCE as
the latter being a domestic corporation duly
organized and existing under and by virtue of the
laws of the Philippines, as Surety, are held and
firmly bound unto the Republic of the Philippines,
in the sum of PESOS TWO MILLION ONLY
(P2,000,000.00), Philippine Currency, to be paid
to the Republic of the Philippines, for the
payment whereof, we bind ourselves, our heirs,
executors, administrators and assigns, jointly and
severally, firmly by these presents:
WHEREAS, the above-bounden Principal will from
time to time make application to make entry for
storing in customs-internal revenue bonded
warehouse certain goods, wares, and
merchandise, subject to customs duties and
special import tax or internal revenue taxes or
both;
WHEREAS, the above principal in making
application for storing merchandise in customsinternal revenue bonded warehouse as above
stated, will file this in his name as principal, which
bond shall be approved by the Collector of
Customs or his Deputy; and
WHEREAS, the surety hereon agrees to accept all
responsibility jointly and severally for the acts of
the principal done in accordance with the terms
of this bond.
NOW THEREFORE, the condition of this obligation
is such that if within six (6) months from the date
of arrival of the importing vessel in any case, the
goods, wares, and merchandise shall be regularly
and lawfully withdrawn from public stores or
bonded warehouse on payment of the legal
17
due to the payment of the required duties, taxes,
and other charges?
We note in this regard the rule that a surety is
released from its obligation when there is a
material alteration of the contract in connection
with which the bond is given, such as a change
which imposes a new obligation on the promising
party, or which takes away some obligation
already imposed, or one which changes the legal
effect of the original contract and not merely its
form. A surety, however, is not released by a
change in the contract which does not have the
effect of making its obligation more onerous.16
We find under the facts of this case no significant
or material alteration in the principal contract
between the government and the importer, nor in
the obligation that the petitioners assumed as
sureties. Specifically, the petitioners never
assumed, nor were any additional obligation
imposed, due to any modification of the terms of
importation and the obligations thereunder. The
obligation, and one that never varied, is on the
part of the importer, to pay the customs duties,
taxes, and charges due on the importation, and
on the part of the sureties, to be solidarily bound
to the payment of the amounts due on the
imported goods upon their withdrawal or upon
expiration of the given terms. The petitioners
lack of consent to the withdrawal of the goods, if
this is their complaint, is a matter between them
and the principal Grand Textile; it is a matter
outside the concern of government whose
interest as creditor-obligee in the importation
transaction is the payment by the importerobligor of the duties, taxes, and charges due
before the importation process is concluded. With
respect to the sureties who are there as third
parties to ensure that the amounts due are paid,
the creditor-obligee's active concern is to enforce
the sureties solidary obligation that has become
due and demandable. This matter is further and
more fully explored below.
The Need for Notice to Bondsmen
To support the conclusion that they should be
released from the bonds they issued, the
petitioners argue that upon the issuance and
acceptance of the bonds, they became direct
parties to the bonded transaction entitled to
participate and actively intervene, as sureties, in
the handling of the imported articles; that, as
sureties, they are entitled to notice of any act of
18
perform the obligation. He cannot complain that
the creditor has not notified him in the absence of
a special agreement to that effect in the contract
of suretyship.
Significantly, nowhere in the petitioners bonds
does it state that prior notice is required to fix the
sureties liabilities. Without such express
requirement, the creditors right to enforce
payment cannot be denied as the petitioners
became bound as soon as Grand Textile, the
principal debtor, defaulted. Thus, the filing of the
collection suit was sufficient notice to the sureties
of their principals default.
The petitioners reliance on Visayan Surety and
Insurance Corporation v. Pascual25 and Aguasin v.
Velasquez26does not appear to us to be well taken
as these cases do not squarely apply to the
present case. These cases relate to bonds issued
as a requirement for the issuance of writs of
replevin. The Rules of Court expressly require that
before damages can be claimed against such
bonds, notice must be given to the sureties to
bind them to the award of damages. No such
requirement is evident in this case as neither the
Tariff and Customs Code nor the issued bonds
require prior notice to sureties.
The petitioners argument focusing on the
additional risks they incur if they cannot
intervene in the handling of the warehoused
articles must perforce fail in light of what we have
said above regarding the nature of their
obligation as sureties and the relationships
among the parties where a surety agreement
exists. We add that the petitioners have
effectively waived as against the creditor (the
government) any such claim in light of the
provision of the bond that "the surety hereon
agrees to accept all responsibility jointly and
severally for the acts of the principal done in
accordance with the terms of this bond."27 Any
such claim including those arising from the
withdrawal of the warehoused articles without the
payment of the requisite duties, taxes and
charges is for the principal and the sureties to
thresh out between or among themselves.
Government is Not Bound by Estoppel
As its final point, the petitioners argue that they
cannot be held liable for the unpaid customs
duties, taxes, and other charges because it is the
Bureau of Customs duty to ensure that the duties
19
SEC. 100. The original insured has no interest in
a contract of reinsurance.
AVON INSURANCE V. CA
20
Commissioner, pursuant to Section 14, Rule 14 of
the Rules of Court.[5]
In a Petition for Certiorari filed with the Court
of Appeals, petitioners submitted that respondent
Court has no jurisdiction over them, being all
foreign corporations not doing business in the
Philippines with no office, place of business or
agents
in
the
Philippines.The
remedy
of Certiorari was resorted to by petitioners on the
premise that if petitioners had filed an answer to
the complaint as ordered by the respondent
court, they would risk abandoning the issue of
jurisdiction. Moreover, extra-territorial service of
summons on petitioners is null and void because
the complaint for collection is not one affecting
plaintiffs status and not relating to property
within the Philippines.
The Court of Appeals found the petition
devoid of merit, stating that:
1. Petitioners were properly served with
summons and whatever defect, if any,
in the service of summons were cured
by their voluntary appearance in
court, via motion to dismiss.
2. Even assuming that petitioners have
not yet voluntarily appeared as codefendants in the case below even
after having filed the motion to
dismiss adverted to, still the situation
does not deserve dismissal of the
complaint as far as they are
concerned, since as held by this Court
in Linger Fisher GMBH vs. IAC, 125
SCRA 253.
A case should not be dismissed simply because
an original summons was wrongfully served. It
should be difficult to conceive for example, that
when a defendant personally appears before a
court complaining that he had not been validly
summoned, that the case filed against him should
be dismissed. An alias summons can be actually
served on said defendant.
3. Being
reinsurers
of
respondent
Worlwide Surety and Insurance of the
risk which the latter assumed when it
issued the fire insurance policies in
dispute in favor of respondent
Yupangco, petitioners cannot now
validly argue that they do not do
21
defendants) can submit themselves voluntarily to
the jurisdiction of Philippine Courts, even if there
is no extra-judicial (sic) service of summons upon
them.
3. The voluntary appearance of the petitioners
(then defendants) before the Honorable Trial
Court amounted, in effect, to voluntary
submission to its jurisdiction over their persons.[7]
In the decisions of the courts below, there is
much left to speculation and conjecture as to
whether or not the petitioners were determined
to be doing business in the Philippines or not.
To qualify the petitioners business of
reinsurance within the Philippine forum, resort
must be made to established principles in
determining what is meant by doing business in
the Philippines. In Communication Materials and
Design, Inc. et. al vs. Court of Appeals,[8]it was
observed that:
There is no exact rule of governing principle as to
what constitutes doing or engaging in or
transacting business. Indeed, such case must be
judged in the light of its peculiar circumstances,
upon its peculiar facts and upon the language of
the statute applicable. 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.
Article 44 of the Omnibus Investments Code of
1987 defines the phrase to include:
'soliciting orders, purchases, service contracts
opening offices, whether called liaison offices of
branches; appointing representatives or
distributors who are domiciled in the Philippines
or who in any calendar year stay in the
Philippines for a period or periods totaling one
hundred eighty (180) days or more; participating
in the management, supervision or control of any
domestic business firm, entity or corporation in
the Philippines, and any other act or acts that
imply a continuity or commercial dealings or
arrangements and contemplate 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, commercial gain or of
purpose and object of the business organization.
22
remotely
connected
with
the
Philippines. Moreover there is authority to the
effect that a reinsurance company is not doing
business in a certain state merely because the
property of lives which are insured by the original
insurer company are located in that state. [12] The
reason for this is that a contract or reinsurance is
generally a separate and distinct arrangement
from the original contract of insurance, whose
contracted risk is insured in the reinsurance
agreement.[13] Hence, the original insured has
generally no interest in the contract of
reinsurance.[14]
A foreign corporation, is one which owes its
existence to the laws of another state, [15]and
generally has no legal existence within the state
in which it is foreign. In Marshall Wells Co. vs.
Elser,[16] it was held that corporations have no
legal status beyond the bounds of sovereignty by
which they are created. Nevertheless, it is widely
accepted that foreign corporations are, by reason
of state comity, allowed to transact business in
other states and to sue in the courts of
such fora. In the Philippines foreign corporations
are allowed such privileges, subject to certain
restrictions, arising from the states sovereign
right of regulation.
Before a foreign corporation can transact
business in the country, it must first obtain a
license to transact business here [17] and secure
the proper authorizations under existing law.
If a foreign corporation engages in business
activities without the necessary requirements, it
opens itself to court actions against it, but it shall
not be allowed maintain or intervene in an action,
suit or proceeding for its own account in any
court or tribunal or agency in the Philippines.[18]
The purpose of the law in requiring that
foreign corporations doing business in the
country be licensed to do so, is to subject the
foreign corporations doing business in the
Philippines to the jurisdiction of the courts,
[19]
otherwise, a foreign corporation illegally doing
business here because of its refusal or neglect to
obtain the required license and authority to do
business may successfully though unfairly plead
such neglect or illegal act so as to avoid service
and thereby impugn the jurisdiction of the local
courts.
23
sorcery;
extracting
substance
out
of
nothingness. In addition, the assertion that a
resident of the Philippines will be inconvenienced
by an out-of-town suit against a foreign entity, is
irrelevant and unavailing to sustain the
continuance of a local action, for jurisdiction is
not dependent upon the convenience or
inconvenience of a party.[21]
It is also argued that having filed a motion to
dismiss in the proceedings before the trial court,
petitioners have thus acquiesced to the courts
jurisdiction, and they cannot maintain the
contrary at this juncture.
This argument is at the most, flimsy.
In civil cases, jurisdiction over the person of
the defendant is acquired either by his voluntary
appearance in court and his submission to its
authority or by service of summons.[22]
Fundamentally, the service of summons is
intended to give official notice to the defendant
or respondent that an action had been
commenced
against
it. The
defendant
or
respondent is thus put on guard as to the
demands of the plaintiff as stated in the
complaint.[23] The service of summons, upon the
defendant becomes an important element in the
operation of a courts jurisdiction upon a party to
a suit, as service of summons upon the defendant
is the means by which the court acquires
jurisdiction over his person.[24]Without service of
summons, or when summons are improperly
made, both the trial and the judgment, being in
violation of due process, are null and void,
[25]
unless the defendant waives the service of
summons by voluntarily appearing and answering
the suit.[26]
When a defendant voluntarily appears, he is
deemed to have submitted himself to the
jurisdiction of the court.[27] This is not, however,
always the case. Admittedly, and without
subjecting himself to the courts jurisdiction, the
defendant in an action can, by special
appearance object to the courts assumption on
the ground of lack of jurisdiction. If he so wishes
to assert this defense, he must do so seasonably
by motion for the purpose of objecting to the
jurisdiction of the court, otherwise, he shall be
deemed to have submitted himself to that
jurisdiction.[28] In the case of foreign corporations,
it has been held that they may seek relief against
24
from maintaining further proceeding in the case
aforestated.
SO ORDERED.
DOUBLE INSURANCE
SEC. 95. A double insurance exists where the
same person is insured by several insurers
separately in respect to the same subject and
interest.
SEC. 96. Where the insured in a policy other
than life is over insured by double insurance:
(a) The insured, unless the policy otherwise
provides, may claim payment from the insurers in
such order as he may select, up to the amount for
which the insurers are severally liable under their
respective contracts;
(b) Where the policy under which the insured
claims is a valued policy, any sum received by
him under any other policy shall be deducted
from the value of the policy without regard to the
actual value of the subject matter insured;
(c) Where the policy under which the insured
claims is an unvalued policy, any sum received by
him under any policy shall be deducted against
the full insurable value, for any sum received by
him under any policy;
(d) Where the insured receives any sum in
excess of the valuation in the case of valued
policies, or of the insurable value in the case of
unvalued policies, he must hold such sum in trust
for the insurers, according to their right of
contribution among themselves;
(e) Each insurer is bound, as between himself
and the other insurers, to contribute ratably to
the loss in proportion to the amount for which he
is liable under his contract.
GENERAL INSURANCE vs. NG
HUA, respondent.
Suit to recover on a fire insurance policy. The
insurer presented several defenses in the Manila
court of first instance. After trial, it was required
to pay.
25
exceeds the face value of the policy," hence there
is no co-insurance here.
Discussion Undoubtedly, co-insurance exists
under the condition described by the appellate
court. But that is one kind of co-insurance. It
is not the only situation where co-insurance
exists. Other insurers of the same property
against the same hazard are sometimes referred
as co-insurers and the ensuing combination as
co-insurance.1 And considering the terms of the
policy which required the insured to declare other
insurances, the statement in question must be
deemed to be a statement (warranty) binding on
both insurer and insured, that there were no
other insurance on the property. Remember it
runs "Co-Insurance declared"; emphasis on the
last word. If "Co-Insurance" means that the Court
of Appeals says, the annotation served no
purpose. It would even be contrary to the
policyitself, which in its clause No. 17 made the
insured a co-insurer for the excess of the value of
the property over the amount of the policy.
The annotation then, must be deemed to be a
warranty that the property was not insured by
any other policy. Violation thereof entitles the
insurer to rescind. (Sec. 69. Insurance Act) Such
misrepresentation is fatal in the light of our views
in Santa Ana vs. Commercial Union Assurance
Company, Ltd., 55 Phil., 329. The materiality of
non-disclosure of other insurance policies is not
open to doubt.
Furthermore, even if the annotations were
overlooked, the defendant insurer would still be
free from liability because there is no question
that the policy issued by General Indemnity had
not been stated in nor endorsed on Policy No. 471
of defendant. And as stipulated in the abovequoted provisions of such policy "all benefit under
this policy shall be forfeited."2