Cosco Philippines Shipping, Inc. vs. Kemper Insurance Company

A certification against forum shopping signed by counsel on behalf of a corporation must be accompanied by proof that the signatory is duly authorized by a board resolution or secretary's certificate; otherwise, the complaint is fatally defective and subject to dismissal without prejudice. The lack of such proof is generally not curable by mere amendment, and the same rule applies to certifications signed by a person on behalf of a corporation unaccompanied by proof of authority to file the complaint.

Respondent Kemper Insurance Company is a foreign insurance company based in Illinois, USA, with no license to engage in business in the Philippines, except in isolated transactions. Petitioner Cosco Philippines Shipping, Inc. is a domestic shipping company organized under Philippine laws. In 1998, respondent insured a shipment of imported frozen boneless beef owned by Genosi, Inc., which was loaded in Brisbane, Australia for shipment to the Philippines. The dispute arose from a claim for spoilage of the shipment, which led to respondent paying the insured and being subrogated to its claims against petitioner.

Respondent Kemper Insurance Company, a foreign insurance company based in Illinois, USA, insured a shipment of imported frozen boneless beef owned by Genosi, Inc., which was loaded at a port in Brisbane, Australia for shipment to Genosi, Inc. in the Philippines. Upon arrival at the Manila port, a portion of the shipment was rejected by Genosi, Inc. due to spoilage arising from alleged temperature fluctuations of petitioner's reefer containers. Genosi, Inc. filed a claim against both petitioner and respondent, which was referred to McLarens Chartered for investigation and adjustment. After processing the claim documents, McLarens Chartered recommended a settlement of $64,492.58, which Genosi, Inc. accepted.

Respondent paid the claim of Genosi, Inc. in the amount of $64,492.58, and Genosi, Inc., through its General Manager Avelino S. Mangahas, Jr., executed a Loss and Subrogation Receipt dated September 22, 1999, subrogating respondent to its claims against petitioner to the extent of the amount paid. Respondent made demands upon petitioner, but the latter failed and refused to pay. On October 28, 1999, respondent filed a Complaint for Insurance Loss and Damages against petitioner before the RTC, alleging that the loss was due to petitioner's fault and negligence in the temperature fluctuations of the reefer container caused by a breakdown in the electronics controller assembly.

In its Answer dated November 29, 1999, petitioner insisted, among others, that respondent had no capacity to sue since it was doing business in the Philippines without the required license; that the complaint had prescribed and/or was barred by laches; that no timely claim was filed; and that the loss was due to causes beyond the carrier's control. During pre-trial proceedings, petitioner filed a Motion to Dismiss on November 8, 2001, contending that Atty. Rodolfo A. Lat, who signed the certification against forum shopping, failed to show his authority to sue and sign the certification. Petitioner argued that Atty. Lat's act of signing the certification was a clear violation of Section 5, Rule 7 of the 1997 Rules of Court.

Respondent admitted that it failed to attach proof of Atty. Lat's authority in the complaint but claimed subsequent compliance through an authenticated Special Power of Attorney dated May 11, 2000, notarized before the Consulate General of Chicago, Illinois, USA, which was signed by one Brent Healy, respondent's underwriter. The SPA allegedly authorized Atty. Lat to represent respondent in the pre-trial and all stages of the proceedings. Respondent also averred that petitioner was barred by laches from questioning the defect in the certification.

• Lack of Corporate Authority: Petitioner argued that respondent failed to submit any board resolution or secretary's certificate authorizing Atty. Lat to institute the complaint and sign the certificate of non-forum shopping on its behalf, and that since respondent is a juridical entity, the signatory must show proof of authority to sign on behalf of the corporation.
• Defective Special Power of Attorney: Petitioner argued that the SPA dated May 11, 2000, submitted by Atty. Lat, was signed by Brent Healy, respondent's underwriter, who lacks authorization from its board of directors, and that the powers granted to Atty. Lat refer to representation during pre-trial and do not cover the specific power to sign the certificate.

• Subsequent Compliance: Respondent admitted that it failed to attach concrete proof of Atty. Lat's authority in the complaint but argued that there was subsequent compliance through the submission of an authenticated SPA empowering Atty. Lat to represent it in the pre-trial and all stages of the proceedings.
• Laches/Estoppel: Respondent averred that petitioner is barred by laches from questioning the purported defect in respondent's certificate of non-forum shopping.

• Authority to Sign Certification: Whether Atty. Lat was properly authorized by respondent to sign the certification against forum shopping on its behalf.
• Relaxation of Rules: Whether the circumstances of the case warranted the liberal application of the rules on certification against forum shopping.
• Estoppel by Laches: Whether petitioner is barred by laches from raising the defect in respondent's certificate of non-forum shopping.

• Authority to Sign Certification: No. Atty. Lat was not properly authorized by respondent to sign the certification against forum shopping, as there was no proof that respondent, a private corporation, authorized him through a board resolution to sign the verification and certification on its behalf.
• Relaxation of Rules: No. The circumstances of the case did not necessitate the relaxation of the rules, as there was no proof of authority submitted even belatedly, no board resolution or secretary's certificate subsequently submitted, and no satisfactory explanation for the failure to comply.
• Estoppel by Laches: No. The factual setting in Sibonghanoy is not similar to the present case, as the trial court's jurisdiction was questioned during the pre-trial stage, and considerable length of time had not elapsed for laches to attach.

• Authority to Sign Certification: The Court held that the certification against forum shopping must be signed by the principal parties, and if the principal party cannot sign, the one signing on his behalf must have been duly authorized. With respect to a corporation, the certification may be signed by a specifically authorized lawyer who has personal knowledge of the facts required to be disclosed. A corporation exercises its powers through its board of directors and/or its duly authorized officers and agents, and physical acts like signing documents can be performed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of directors. Citing Philippine Airlines, Inc. vs. Flight Attendants and Stewards Association of the Philippines (FASAP), the Court ruled that only individuals vested with authority by a valid board resolution may sign the certificate of non-forum shopping on behalf of a corporation, and proof of such authority must be presented. Since respondent is a corporation, the certification must be executed by an officer or member of the board of directors or by one duly authorized by a resolution of the board; otherwise, the complaint will have to be dismissed. The lack of certification is generally not curable by mere amendment but shall be a cause for dismissal without prejudice, and the same rule applies to certifications signed by a person on behalf of a corporation unaccompanied by proof of authorization.

• Relaxation of Rules: The Court distinguished the cases cited by the CA where the lack of authority was remedied through subsequent compliance. In Republic vs. Coalbrine International Philippines, Inc., the Court allowed subsequent compliance on the basis of a special circumstance or compelling reason. In China Banking Corporation vs. Mondragon International Philippines, Inc., the board resolution subsequently attached recognized the pre-existing status of the bank manager as an authorized signatory. In Abaya Investments Corporation vs. Merit Philippines, the authority to sign was ratified by the Board. In the present case, there was no proof of authority submitted even belatedly, no board resolution or secretary's certificate subsequently submitted, and no satisfactory explanation for the failure to comply. The Court held that obedience to procedural rules is needed for fair results, and utter disregard of the rules cannot be rationalized by harking on the policy of liberal construction. The SPA dated May 11, 2000, signed by Brent Healy, was fatally defective and had no evidentiary value, as it failed to establish Healy's authority to act on behalf of respondent in the absence of a board resolution or secretary's certificate.

• Estoppel by Laches: The Court held that if a complaint is filed for and in behalf of a plaintiff who is not authorized to do so, the complaint is not deemed filed and does not produce any legal effect. Since Atty. Lat was not duly authorized to file the complaint and sign the verification and certification, the complaint is considered not filed and ineffectual, and is dismissable due to lack of jurisdiction. Courts acquire jurisdiction over plaintiffs upon the filing of the complaint, and since no valid complaint was ever filed, the RTC did not acquire jurisdiction over the person of respondent. The issue of jurisdiction may be raised at any stage of the proceedings, even on appeal, and is not lost by waiver or estoppel. Citing Regalado vs. Go, the Court noted that estoppel by laches may be invoked to bar the issue of lack of jurisdiction only in cases where the factual milieu is analogous to Sibonghanoy, where the defense was raised almost 15 years after the questioned ruling. In the present case, jurisdiction was questioned during the pre-trial stage, and it cannot be said that considerable length of time had elapsed for laches to attach.

• Certification Against Forum Shopping (Corporate Signatories) — The certification against forum shopping must be signed by the principal parties; if the principal party cannot sign, the one signing on his behalf must have been duly authorized. For a corporation, the certification may be signed by a specifically authorized lawyer who has personal knowledge of the facts required to be disclosed, but only individuals vested with authority by a valid board resolution may sign on behalf of a corporation, and proof of such authority must be presented. The lack of certification is generally not curable by mere amendment but shall be a cause for dismissal without prejudice.

• Effect of Unauthorized Filing — If a complaint is filed for and in behalf of a plaintiff who is not authorized to do so, the complaint is not deemed filed and does not produce any legal effect. The court should dismiss the complaint on the ground that it has no jurisdiction over the complaint and the plaintiff, since courts acquire jurisdiction over plaintiffs upon the filing of the complaint.

• Estoppel by Laches (Jurisdiction) — Estoppel by laches may be invoked to bar the issue of lack of jurisdiction only in cases where the factual milieu is analogous to Tijam vs. Sibonghanoy, where the defense of lack of jurisdiction was raised so belatedly as to warrant the presumption that the party entitled to assert it had abandoned or declined to assert it. The ruling in Sibonghanoy is the exception rather than the rule.

• "We have consistently held that the certification against forum shopping must be signed by the principal parties. If, for any reason, the principal party cannot sign the petition, the one signing on his behalf must have been duly authorized. With respect to a corporation, the certification against forum shopping may be signed for and on its behalf, by a specifically authorized lawyer who has personal knowledge of the facts required to be disclosed in such document." — This passage states the controlling rule on who may sign the certification against forum shopping for a corporation and the requirement of proper authorization.

• "There is no proof that respondent, a private corporation, authorized Atty. Lat, through a board resolution, to sign the verification and certification against forum shopping on its behalf. Accordingly, the certification against forum shopping appended to the complaint is fatally defective, and warrants the dismissal of respondent's complaint for Insurance Loss and Damages (Civil Case No. 99-95561) against petitioner." — This passage applies the rule to the facts and establishes the fatal defect in the certification.

• "Contrary to the CA's finding, the Court finds that the circumstances of this case do not necessitate the relaxation of the rules. There was no proof of authority submitted, even belatedly, to show subsequent compliance with the requirement of the law. Neither was there a copy of the board resolution or secretary's certificate subsequently submitted to the trial court that would attest to the fact that Atty. Lat was indeed authorized to file said complaint and sign the verification and certification against forum shopping, nor did respondent satisfactorily explain why it failed to comply with the rules." — This passage distinguishes the case from instances where the Court relaxed the rules due to subsequent compliance.

• "Accordingly, since Atty. Lat was not duly authorized by respondent to file the complaint and sign the verification and certification against forum shopping, the complaint is considered not filed and ineffectual, and, as a necessary consequence, is dismissable due to lack of jurisdiction." — This passage establishes the legal effect of an unauthorized filing and the consequent lack of jurisdiction.

• Philippine Airlines, Inc. vs. Flight Attendants and Stewards Association of the Philippines (FASAP), G.R. No. 143088, January 24, 2006 — Controlling precedent holding that only individuals vested with authority by a valid board resolution may sign the certificate of non-forum shopping on behalf of a corporation, and proof of such authority must be presented.
• Republic vs. Coalbrine International Philippines, Inc., G.R. No. 161838, April 7, 2010 — Cited for the instances where the lack of authority was remedied through subsequent compliance, but distinguished because the present case lacked subsequent compliance.
• China Banking Corporation vs. Mondragon International Philippines, Inc., cited in Republic vs. Coalbrine — Distinguished because the board resolution subsequently attached recognized the pre-existing status of the bank manager as an authorized signatory.
• Abaya Investments Corporation vs. Merit Philippines, cited in Republic vs. Coalbrine — Distinguished because the authority to sign was ratified by the Board and the case had been decided on the merits.
• Tamondong vs. Court of Appeals, G.R. No. 158397, November 26, 2004 — Held that if a complaint is filed for and in behalf of a plaintiff who is not authorized to do so, the complaint is not deemed filed and does not produce any legal effect.
• Regalado vs. Go, G.R. No. 167988, February 6, 2007 — Cited for the definition of laches and the rule that estoppel by laches applies only when laches is clearly present.
• Tijam vs. Sibonghanoy, 131 Phil. 556 (1968) — The landmark doctrine on jurisdiction by estoppel, distinguished because the factual setting in the present case is not analogous.

• Section 5, Rule 7, 1997 Rules of Civil Procedure — Requires the plaintiff or principal party to certify under oath in the complaint or other initiatory pleading that no other action or claim involving the same issues has been commenced or is pending. Failure to comply shall not be curable by mere amendment but shall be cause for dismissal without prejudice, upon motion and after hearing. The Court applied this provision to hold that the certification signed by Atty. Lat without proof of authority was fatally defective.
• Corporation Code — Referred to for the principle that a corporation has no power except those expressly conferred on it and those implied or incidental to its existence, and that a corporation exercises said powers through its board of directors and/or its duly authorized officers and agents.

Velasco, Jr. (Chairperson), Abad, Mendoza, and Perlas-Bernabe, JJ., concurred.