48

THE HOME INSURANCE COMPANY vs. EASTERN SHIPPING LINES and/or ANGEL
JOSE TRANSPORTATION, INC.
G. R. L-34382, July 20, 1983

FACTS:

S. Kajita & Co., shipped on board the SS "Eastern Jupiter' from Osaka, Japan, 2,361 coils
of "Black Hot Rolled Copper Wire Rods." The said VESSEL is owned and operated by
defendant Eastern Shipping Lines (CARRIER). The shipment was covered by Bill of
Lading with arrival notice to Phelps Dodge Copper Products Corporation of the
Philippines (CONSIGNEE) at Manila. The shipment was insured with plaintiff against all
risks in the amount of P1,580,105.06 under its Insurance Policy

The coils discharged from the vessel were in bad order, consisting of loose and partly
cut coils which had to be considered scrap. The plaintiff paid the consignee under
insurance the amount of P3,260.44 for the loss/damage suffered by the cargo. Plaintiff,
a foreign insurance company duly authorized to do business in the Philippines, made
demands for payment of the aforesaid amount against the carrier and transportation
company for reimbursement of the aforesaid amount, but each refused to pay the same.

The Eastern Shipping Lines filed its answer and denied the allegations of Paragraph I
which refer to the plaintiff’s capacity to sue for lack of knowledge or information
sufficient to form a belief as to the truth thereof.

The Court of First Instance dismissed the complaint on the ground that the appellant
had failed to prove its capacity to sue. The petitioner then filed a petition for review on
certiorari.

ISSUE:
Whether or not that the trial court erred in dismissing the finding that plaintiff-
appellant has no capacity to sue.

HELD:
YES. The court held that the objective of the law is to subject the foreign corporation to
the jurisdiction of our court. The Corporation Law must be given reasonable, not an
unduly harsh interpretation which does not hamper the development of trade relations
and which fosters friendly commercial intercourse among countries. Counsel for
appellant contends that at the time of the service of summons, the appellant had not yet
been authorized to do business. But, the lack of capacity at the time of the execution of
the contracts was cured by the subsequent registration is also strengthened by the
procedural aspects of the case.

The court find the general denials inadequate to attack the foreign corporations lack of
capacity to sue in the light of its positive averment that it is authorized to do so. Section
4, Rule 8 requires that "a party desiring to raise an issue as to the legal existence of any
party or the capacity of any party to sue or be sued in a representative capacity shall do
so by specific denial, which shall include such supporting particulars as are particularly
within the pleader's knowledge. At the very least, the private respondents should have
stated particulars in their answers upon which a specific denial of the petitioner's
capacity to sue could have been based or which could have supported its denial for lack
of knowledge. And yet, even if the plaintiff's lack of capacity to sue was not properly
raised as an issue by the answers, the petitioner introduced documentary evidence that
it had the authority to engage in the insurance business at the time it filed the
complaints