Foreign Corporations

AETNA CASUALTY & SURETY COMPANY v. PACIFIC STAR LINE The contract of insurance was entered into in New York, U.S.A., and payment was made to the
Fernandez, J. consignee in its New York branch — So, it is not doing business in the Philippines. This is true
for the other cases presented by the clerk of court.
Aetna, as subrogee, instituted a case to recover a sum of money as damage to cargo that they
insured. The defendants argue that, since SEC has no record that Aetna is registered to transact It is settled that if a foreign corporation is not engaged in business in the Philippines, it may not
business in the Philippines, it cannot file suit. SC disagreed and said it may still file the suit since be denied the right to file an action in Philippine courts for isolated transactions.
the Legislature never intended to exclude a foreign corporation, which happens to obtain an
isolated order for business from the Philippines, from securing redress in the Philippine courts. The object of Sections 681 and 692 of the Corporation Law was not to prevent the foreign
corporation from performing single acts, but to prevent it from acquiring a domicile for the
DOCTRINE purpose of business without taking the steps necessary to render it amenable to suit in the local
courts. It was never the purpose of the Legislature to exclude a foreign corporation which
The object of Sections 68 and 69 of the Corporation Law was not to prevent the foreign happens to obtain an isolated order for business from the Philippines, from securing redress in
corporation from performing single acts, but to prevent it from acquiring a domicile for the the Philippine courts.
purpose of business without taking the steps necessary to render it amenable to suit in the local
courts. It was never the purpose of the Legislature to exclude a foreign corporation which DISPOSITIVE PORTION
happens to obtain an isolated order for business from the Philippines, from securing redress in
the Philippine courts. WHEREFORE, the decision appealed from is hereby set aside and the case is remanded to the
trial court for further proceedings to determine the liability of the defendants-appellees, without
pronouncements as to costs.
FACTS
1. Smith Bell & Co (SB) and Aetna Surety & Casualty Co (Aetna), as subrogees DIGESTER: AROD
instituted a civil case against Pacific Star Line, The Bradman Co. Inc., Manila Port
Service and/or Manila Railroad Company, Inc. to recover the amount of US $2,300.00
representing the value of the stolen and damaged cargo + damages. They alleged
that:
a. the defendant Pacific Star Line, as a common carrier, was operating the
vessel SS Ampal
b. the SS Ampal took on board at New York a consignment or cargo including
33 packages of Linen & Cotton Piece Goods for shipment to Manila.
c. Bill of Lading was named to Shalom & Co. as shipper
d. due to the negligence of the defendants, the shipment sustained damages
valued at US $2,300.00
e. I. Shalom & Co., Inc. immediately filed claim but defendant refused to pay
the said claim
f. plaintiff Aetna Casualty & Surety Company indemnified I. Shalom & Co., Inc.
2. Defendants submitted a SEC certification that records do not show the registration of
the Aetna Casualty & Surety Company either as a corporation or a partnership nor
that it has been used to transact business in the Philippines as a foreign corporation
3. Lower Court dismissed the claim because “although a foreign corporation may file a
suit in the Philippines in isolated cases, the evidence shows that the plaintiff has been
filing actions in the Philippines not just in isolated instances, but in numerous cases
and therefore, has been doing business in this country, contrary to Philippine laws.”
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"No foreign corporation or corporation formed, organized, or existing under any laws other
ISSUE with HOLDING than those of the Philippines shall be permitted to transact business in the Philippines until after
1. WON Aetna is doing business in the Philippines - NO and it may bring the suit it shall have obtained a license for that purpose from the Securities and Exchange
Commissioners . . . ." And according to Section 69 of said Corporation Law "No foreign
corporation or corporation formed, organized, or existing under any laws other than those of the
Aetna Casualty & Surety Company is not engaged in the business of insurance in the Philippines shall be permitted to transact business in the Philippines or maintain by itself or
Philippines but is merely collecting a claim assigned to it by the consignee. It is not barred from assignee any suit for the recovery of any debt, claim, or demand whatever, unless it shall have
filing the instant case although it has not secured a license to transact insurance business in the the license prescribed in the section immediately preceding ..."
Philippines. 2