The Supreme Court ruled that a complaint filed by a corporation was improperly verified because the lawyer who signed the verification and certificate against forum shopping lacked specific authorization from the corporation’s board. This means that for corporations to properly pursue legal action, they must ensure their legal representatives are explicitly authorized to sign critical documents, thereby preventing dismissal of cases due to procedural defects. The decision emphasizes the importance of strict compliance with the rules of court, particularly concerning verification and certification requirements.

The Teleconference That Wasn’t: Validating Corporate Resolutions in Court

This case, Expertravel & Tours, Inc. vs. Court of Appeals and Korean Airlines, G.R. No. 152392, delves into the critical issue of forum shopping and the necessary authorization for a corporation’s representative to execute a certificate against it. Korean Airlines (KAL) filed a complaint against Expertravel and Tours, Inc. (ETI) for collection of a sum of money. The complaint was verified and accompanied by a certification against forum shopping signed by Atty. Mario Aguinaldo, who claimed to be KAL’s resident agent and legal counsel. ETI moved to dismiss the complaint, arguing that Atty. Aguinaldo lacked the proper authorization to execute these documents as required by the Rules of Court.

KAL opposed the motion, asserting that Atty. Aguinaldo was indeed its resident agent, registered with the Securities and Exchange Commission (SEC), and also the corporate secretary. KAL further claimed that a board resolution approved during a teleconference on June 25, 1999, authorized Atty. Aguinaldo to file the complaint. However, when asked to produce the resolution, KAL initially requested extensions, and eventually submitted an affidavit from its general manager stating that the corporation did not keep a written copy of resolutions approved during teleconferences.

The Regional Trial Court (RTC) initially denied ETI’s motion to dismiss, giving credence to KAL’s claims. ETI then filed a petition for certiorari and mandamus, which was eventually dismissed by the Court of Appeals (CA). The CA held that the verification and certification executed by Atty. Aguinaldo were sufficient. ETI then elevated the case to the Supreme Court, arguing that the lower courts erred in considering the affidavit and certification as proof of compliance with the rules, and that the RTC improperly took judicial notice of the alleged teleconference.

The Supreme Court analyzed Section 5, Rule 7 of the Rules of Court, which mandates that a plaintiff must certify under oath that they have not commenced any other action involving the same issues in any court, tribunal, or quasi-judicial agency. The Court reiterated that this requirement is mandatory and cannot be excused. The certification is a personal responsibility of the party, assuring the court that there are no other pending cases involving the same parties, issues, and causes of action.

When the plaintiff is a corporation, the certification must be signed by a specifically authorized person. In National Steel Corporation v. Court of Appeals, the Court explained that corporations can only act through delegated individuals, such as officers and agents. Thus, the individual signing the verification and certification must have explicit authority from the corporation to do so. The rationale behind this is that the authorized person has the necessary knowledge of the facts required in the certificate.

In this case, the Supreme Court found that KAL failed to adequately demonstrate that Atty. Aguinaldo was specifically authorized to execute the certificate of non-forum shopping on its behalf. The verification and certification included in the complaint did not state that Atty. Aguinaldo was authorized by KAL’s Board of Directors, nor was any such resolution attached. While Atty. Aguinaldo was KAL’s resident agent in the Philippines, the Court clarified that this role does not automatically grant him the authority to execute the required certification. According to Sections 127 and 128 of the Corporation Code, the resident agent’s authority is limited to receiving legal processes on behalf of the foreign corporation.

The Court highlighted the limitations of a resident agent’s knowledge, stating that while a resident agent may be aware of actions filed against the corporation, they may not know of actions initiated by the corporation, either in the Philippines or in the country of its origin. This underscores the need for a specific authorization for the certificate of non-forum shopping. The attempt by KAL to retroactively comply with the rule by submitting a resolution allegedly approved during a teleconference was viewed with skepticism by the Court.

The Court delved into the issue of judicial notice regarding teleconferences. It acknowledged that in the age of modern technology, courts can take judicial notice that business transactions can be conducted through teleconferencing. Citing Republic Act No. 8792, the Electronic Commerce Act, and SEC Memorandum Circular No. 15, series of 2001, the Court recognized the reality of teleconferencing and videoconferencing for corporate governance. However, the Court was not convinced that a teleconference actually occurred, or that a board resolution specifically authorizing Atty. Aguinaldo was passed.

The Court highlighted inconsistencies in KAL’s claims. Initially, KAL stated that the resolution was with its main office in Korea, only to later claim that no written copy existed because resolutions approved during teleconferences were not kept. This raised serious doubts about the veracity of KAL’s assertions. The Court also questioned why the alleged teleconference and the resolution were not mentioned in the original complaint, which would have been logical if the resolution had indeed been approved before the filing.

The Court also noted that Atty. Aguinaldo had signed a Secretary’s/Resident Agent’s Certificate as early as January 10, 1999, stating that the board had held a teleconference on June 25, 1999. This certificate was not attached to the complaint and was only submitted much later during the proceedings in the Court of Appeals. The Court found this timeline and the lack of explanation surrounding the certificate’s delayed submission highly suspicious. As such, the Supreme Court reversed the Court of Appeals’ decision and ordered the dismissal of KAL’s complaint without prejudice.

FAQs

What was the key issue in this case?	The key issue was whether the lawyer who signed the verification and certificate against forum shopping for Korean Airlines (KAL) had the proper authority to do so on behalf of the corporation.
What is a certificate of non-forum shopping?	A certificate of non-forum shopping is a sworn statement, required by the Rules of Court, in which the plaintiff certifies that they have not filed any other action involving the same issues in any other court or tribunal. This prevents parties from simultaneously pursuing the same case in multiple venues.
Why is a certificate of non-forum shopping required?	The requirement aims to prevent the abuse of court processes by parties who may seek favorable outcomes in multiple venues simultaneously, thus ensuring judicial efficiency and fairness.
Can a lawyer sign the certificate of non-forum shopping on behalf of a corporation?	Yes, but only if the lawyer is specifically authorized by the corporation’s board of directors to do so. The lawyer must have explicit authority and knowledge of the facts required in the certificate.
What is a resident agent of a foreign corporation?	A resident agent is a person or entity in the Philippines designated by a foreign corporation to receive legal processes on its behalf. This ensures that the foreign corporation can be properly served with court notices and other legal documents.
Does being a resident agent automatically authorize a person to sign the certificate of non-forum shopping?	No, being a resident agent does not automatically grant the authority to sign the certificate of non-forum shopping. A specific authorization from the corporation is still required.
What is judicial notice, and how does it relate to teleconferences?	Judicial notice is the recognition by a court of certain facts that are commonly known or easily verifiable. The court can take judicial notice of the fact that teleconferences are a modern means of conducting business, but it still requires proof that a specific teleconference actually took place and that a resolution was validly passed.
What happens if a party fails to comply with the requirement to submit a certificate of non-forum shopping?	Failure to comply with the requirement can result in the dismissal of the case without prejudice. The dismissal means the case can be re-filed if the deficiency is corrected.
What was the significance of the alleged teleconference in this case?	KAL claimed that a teleconference was held during which its board of directors authorized Atty. Aguinaldo to file the complaint and execute the required certification. However, the Supreme Court found inconsistencies and doubted whether the teleconference actually occurred.

This case serves as a reminder of the importance of strict compliance with procedural rules and the need for corporations to properly authorize their representatives in legal proceedings. By failing to provide sufficient evidence of Atty. Aguinaldo’s authority, Korean Airlines risked and ultimately suffered the dismissal of its complaint. The ruling highlights the necessity of maintaining proper corporate records and ensuring that all legal filings are adequately supported by appropriate authorizations.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Expertravel & Tours, Inc. vs. Court of Appeals and Korean Airlines, G.R. No. 152392, May 26, 2005