GENERAL CORPORATION OF THE PHILIPPINES AND MAYON INVESTMENT CO., PLAINTIFFS AND APPELLEES, VS. UNION INSURANCE SOCIETY OF CANTON, LTD. AND/OR FIREMAN’S FUND INSURANCE CO., DEFEN…

General Corporation of the Philippines and the Mayon Investment Co,
are domestic corporations duly organized and existing by virtue of the
laws of the Philippines, with principal offices in the City of Manila,
The Union Insurance Society of Canton, Ltd, is a foreign insurance
corporation, duly authorized to do business in the Philippines, with
head office in the City of Hongkong, China, and a branch office in
Manila. The Fireman’s Fund Insurance Co. is a foreign insurance
corporation duly organized and existing under the laws of the State of
California, U.S.A. It has been duly registered with the Insurance
Commissioner of the Bureau of Commerce as such insurance company since
November 7, 1946, and authorized to do business in the Philippines
since that date.

The Union Insurance Society of Canton, Ltd. has been acting as
settling agent of and settling Insurance claims against the Fireman’s
Fund Insurance Co. even before the last world war and continued as such
at least up to November 7, 1946,

In Civil Case No. 511 of the Court of First Instance of Manila, the
General Corporation of the Philippines and the Mayon Investment Co. as
plaintiffs sued the Union Insurance Society of Canton, Ltd, and the
Fireman’s Fund Insurance Co. for the payment of twelve marine insurance
policies in the sum of P57,137.60. Said policies were issued by the
Fireman’s Fund Insurance Co. for merchandise shipped from the United
States to the Philippines in 1945, in the name of Western Canvas
Products Company and/or Rovan Trading Company, doing business in
Seattle, Washington, U. S. A. The original bills of lading and the
original insurance policies covering the merchandise, all indorsed in
blank, were sent by the insured to the Hongkong & Shanghai Banking
Corporation in Manila with instructions that the said documents were to
be surrendered and title to the merchandise covered by them to be
transferred upon payment in full of the invoice price.

Upon arrival of the merchandise in Manila the consignee or
purchaser would appear to have failed to meet the terms of the sale and
following a certain agreement between the shippers and the herein
plaintiffs, the shipping papers, including the twelve marine insurance
policies were surrendered to the herein plaintiffs and the merchandise
released to them, the latter claiming that they had paid to the bank
the full invoice price. It was later found that some of the merchandise
were lost and others damaged while in transit and inasmuch as the
policies were made payable to the order of the assured in Manila, the
plaintiffs filed the corresponding claims with the defendant Union
Insurance Society of Canton, Ltd. in Manila acting as settling agent of
its co-defendant Fireman’s Fund Insurance Co. It seems that all the
claim papers with the exception of insurance policy No. 70448/6
(Exhibit E-2) for $2,902.36 were forwarded to defendant Fireman’s Fund
Insurance Co. at Seattle, Washington, following instructions from the
said company, and the claims there approved by the insurance company.
However, the claims were there adjudicated by the Superior Court of the
State of Washington for King County against the plaintiffs in the
present case and in favor of other claimants. As regards the claim
based on insurance policy No. 70448/6, Exhibit E-2, involved in the
present appeal, inasmuch as It was filed a little late, it was not
forwarded to the United States and so was never passed upon by the
Fireman’s Fund Insurance Co. at Seattle; neither was it approved or
disapproved by the Union Insurance Society of Canton, Ltd. in Manila.

In the trial court the parties submitted the case upon a partial
stipulation of facts and some evidence, oral and documentary. After
hearing, said court found and held that as regards the eleven marine
insurance policies which have been the subject of inter pleader in the
Superior Court in the State of Washington for King County and decided
by said court against the herein plaintiffs, said decision constituted res adjudicata
binding upon the plaintiffs herein. The trial court absolved the
defendant Union Insurance Society of Canton, Ltd. from the complaint
but condemned the Fireman’s Fund Insurance Co. to pay the plaintiffs
the sum of $2,000 or its equivalent in Philippine currency, with legal
interest from and including September 12, 1946, on the claim based on
the marine insurance policy No. 70448/6, Exhibit E-2.

The plaintiffs General Corporation of the Philippines and Mayon
Investment Co. appealed from that part of the decision referring to the
eleven marine insurance policies. Said appeal is now docketed in the
Supreme Court as G. R. No. L-2303. The Fireman’s Fund Insurance Co.
appealed from the decision insofar as it was sentenced to pay $2,000 to
the plaintiffs. Because of the amount involved the appeal was sent to
the Court of Appeals. However, being a companion case of G. R, No.
L-2303, at the instance of appellant, the case was finally elevated to
the Supreme Court which gave it due course by its resolution of
December 9j 1948, and docketed here as G.R. No. L-2684. This is the
case on appeal now under consideration.

The appellant contends that the trial court erred in holding that
it acquired jurisdiction over appellant Fireman’s Fund Insurance Co.
and in rendering judgment against it in the sum of $2,000.

As regards the issue of jurisdiction, it is well to state that the
summons corresponding to appellant Fireman’s Fund Insurance Co, was
served on September 12, 1946, on the Union Insurance Society of Canton,
Ltd, then acting as appellant’s settling agent in this country. At that
time, the appellant had not yet been registered and authorized to do
business in the Philippines. Said registration and authority came as
already stated, only on November 7, 1946, that is, a little less than two months later.

The attorneys for the Union Insurance Society of Canton, Ltd. on
September 25, 1946, petitioned the trial court to quash and declare
null and void the summons issued thru it on its co-defendant Fireman’s
Fund Insurance Co. on the ground that the said company was not doing
business in the Philippines, and that the Union Insurance Society of
Canton, Ltd. had no authority from its co-defendant to receive summons
on its behalf. The trial court in its order of October 18, 1946,
overruled said petition on the ground that according to the complaint,
the Fireman’s Fund Insurance Co. was doing business in the Philippines
and a mere denial of said allegation was not sufficient to justify the
court in quashing the summons, and that the matter of doing business in
the Philippines was a question of fact to be determined at the hearing
of the case.

Section 14, Rule 7 of the Rules of Court reads as follows:

“Sec. 14. Service upon private foreign corporations.—If
the defendant is a foreign corporation, or a non-resident joint Stock
company or association, doing business in the Philippines, service may
be made on its resident agent designated in accordance with law for
that purpose, or, if there be no such agent, on the government official
designated by law to that effect, or on any of its officers or agents within the Philippines.”

Applying the above legal provision, the trial court in its decision
held that service of summons for appellant Fireman’s Fund Insurance Co.
on its settling agent Union Insurance Society of Canton, Ltd., was
legal and gave the court jurisdiction over said appellant, the court
ruling that the phrase “or agents within the Philippines” clearly
embraced settling agents like the Union Insurance Society of Canton,
Ltd.

We agree with the trial court in its ruling on this point. Section
14, Rule 7 of the Rules of Court above-quoted in employing the phrase
“doing business in the Philippines” makes no distinction as to whether
said business was being done or engaged in legally with the
corresponding authority and license of the Government or, perhaps
illegally, without the benefit of any such authority or license. As
long as a foreign private corporation does safe or engages in business
in this jurisdiction, it should and will be amenable to process and the
jurisdiction of the local courts, this for the protection of the
citizens, and service upon any agent of said foreign corporation
constitutes personal service upon the corporation and accordingly
judgment may be rendered against said foreign corporation, (Fisher,
Philippine Law of Stock Corporation, pp. 451, 456.)

But, was the Fireman’s Fund Insurance Co. in September, 1946, then
doing business in the Philippines, within legal contemplation? It is a
rule generally accepted that one single or isolated business
transaction does not constitute “doing business” within the meaning of
the law, and that transactions which are occasional, incidental and
casual, not of a character to indicate a purpose to engage in business
do not constitute the doing or engaging in business contemplated by
law. In order that a foreign corporation may be regarded as doing
business within a State, there must be continuity of conduct and
intention to establish a continuous business, such as the appointment
of a local agent, and not one of a temporary character. (Thompson on
Corporations, Vol., 8, 3d edition, pp. 844-847 and Fisher’s Philippine
Law of Stock Corporation p. 415.)

The Fireman’s Fund Insurance Co., to judge by the twelve marine
insurance policies issued as already mentioned, policies covering
different shipments, made payable in Manila, endorsed in blank, and in
practice, collectible by the consignees in Manila or such other persons
or entities who meet the terms by paying the amounts of the invoices,
rendering it not only convenient but. necessary for said Fireman’s Fund
Insurance Co. to appoint and keep a settling agent in this
jurisdiction, was certainly doing business in the Philippines. And
these were not casual or Isolated business transactions. According to
the evidence, since before the war, the Fireman’s Fund Insurance Co,
would appear to have engaged in this kind of business and had employed
its co-defendant Union Insurance Society of Canton, Ltd. as its
settling agent, altho sometime in 1946, between July and August of that
year, appellant had its own employee from Its head office in America,
one John L. Stewart, acting as its settling agent here. And, to
conclusively prove continuity of the business and the intention of the
appellant not only to establish but to continue such regular business
in this jurisdiction, on November 7, 1946, less than two months after
service of summons, it applied for, obtained a license and was
authorized to regularly do business in the Philippines,

Counsel for appellant contends that at the time of the service of
summons, the appellant had not yet been authorized to do business. But,
as already stated, Sec. 14, Rule 7 of the Rules of Court makes no
distinction as to or without authority to do business in the
Philippines. The test is whether a foreign corporation was actually
doing business here. Otherwise, a foreign corporation illegally doing
business here because of its refusal or neglect to obtain the
corresponding license and authority to do business may successfully tho
unfairly plead such neglect or illegal act so as to avoid service and
thereby impugn the jurisdiction of the local courts. It would indeed be
anomalous and quite prejudicial, even disastrous, to the citizens in
this jurisdiction who in all good faith and in the regular course of
business accept and pay for shipments of goods from America, relying
for their protection on duly executed foreign marine insurance policies
made payable in Manila and duly endorsed and delivered to them, that
when they go to court to enforce said policies, the insurer who all
along has been engaging in this business of issuing similar marine
policies, serenely pleads immunity to local jurisdiction because of its
refusal or neglect to obtain the corresponding license to do business
here thereby compelling the consignees or purchasers of the goods
insured to go to America and sue in its courts for redress.

Appellant further contends that according to Section 68 of the
Corporation Law, service of summons on a foreign corporation may be
made only upon an agent of said corporation residing in the Philippines
and authorized by the foreign corporation to accept service. Said
section refers to a foreign corporation doing business in the
Philippines ubina has complied with the law and obtained the corresponding license. It does not refer to a foreign corporation
actually doing business here but without the corresponding license or
authority. In the latter case, service of summons is governed by
section 14, Rule 7 of the Rules of Court.

We may add that the defense of lack of jurisdiction interposed “by
appellant seems to be based on a mere technicality. True, on September
12, 1946, when service of the summons was made, the appellant had not
yet been authorized to do business in the Philippines and so it had not
yet designated an agent authorized to accept service of summons. But
less than no months thereafter, the appellant obtained such license or
authority and even according to its own theory was then amenable to the
jurisdiction of the local courts. It employed able attorneys who filed
an, answer, including motions on its behalf, and during the hearing
held on October 21, 1947, that is to say, about one year after it had
been authorized to do business here, it was represented by the same
attorneys who not only cross-examined the witness for the plaintiffs
and agreed to or objected to documentary evidence, but Introduced a
witness on its behalf and presented documentary evidence. Under such
circumstances, it must be clear that the appellant may not successfully
plead lack of jurisdiction over its person.

The appellant next urges that the plaintiffs had no interest in the
insurance policy, having received the same merely for collection
according to paragraph VII of the complaint. The truth is that the
plaintiffs have such interest sufficient to authorize them to sue on
and recover upon said policy because they have met all the terms of the
shipper, paid all the amounts demanded by it thru the bank and in turn
were given all the shipping papers, including the insurance policy,
Exhibit E-2. It is to be remembered that this insurance policy was endorsed in blank and payable in Manila. One of the conditions of said
policy is that thru it the appellant insured the shipper (Western
Canvas Products Co.) “as will as in his or their own nature as in that
of those to whomsoever the subject matter of this policy does, may or
shall appertain, in the sum of $2,000” (First paragraph of the policy,
Exhibit E-2). Moreover, as correctly found by the trial court, there
was an agreement Exhibit 2 attached to Exhibit F-2 whereby the shipper
Western Canvas Product Co. authorized the plaintiffs herein to
prosecute this case against appellant.

Now, we come to the evidence or proof as to the loss or damage said
to have been suffered by the plaintiffs. Said plaintiffs claim that
their documentary evidence Exhibits E to E-23 establish their loss;
that said documents are of the same class of documents presented in the
other eleven insurance policies and which were approved by the
appellant in America in G.R. No. L-2303. Counsel for the appellant,
however, insists that the plaintiffs1 claim was never approved by
appellant or its settling agent. In this we agree. The settling; agent
here declined to take action upon the claim filed by the plaintiffs
based on the policy Exhibit E-2 and said plaintiffs failed or refused
to present said claim before the appellant in America. We shall
therefore have to determine whether the evidence is sufficient to
support the claim. The trial court without discussing the evidence or
referring to the documents merely held that the evidence was sufficient
to prove the claim.

Examining the evidence we find that Atty, Nabong for the the
plaintiffs gave no testimony about the loss. He merely identified the
documents intended to prove said loss, According to the report (Exh.
E-21) of plaintiffs1 surveyor C.B. Nelson & Co, which made the
survey in order to ascertain the nature and extent of the damage
alleged to have been sustained on the shipment of the 21 cases of
merchandise which came on the American Mail Line SS Wideawake
which arrived in Manila on October 14, 1945, covered by the policy
Exhibit E-2, eleven cases—Nos. 8, 10, 11, 12, 15, 16, 17, 18, 19, 20
and 21 still remained undelivered, and that claim for these cases
should be supported by short landed certificates issued by the Steamship
agent. We failed to find these certificates among the exhibits
presented. It seems that efforts were made on behalf of the plaintiffs
to obtain these certificates from the Manila Terminal Co. (Exhibit
E-8), American Mail Line, Ltd, (Exhibit E-9), and the Luzon Stevedoring
Co. (Exhibits E-10 and E-11), but that said certificates were never
issued. In Exhibit E-14, the Manila Terminal Co., writing to the Luzon
Brokerage Co., and speaking of the eleven cases of merchandise said to
have been short landed, merely promised to make careful investigation
and to issue the corresponding certificate if its record indicated that
the cargoes were not landed from the vessel. And, in Exhibit E-18, the
Everett Steamship Corporation in a letter to one of the plaintiffs
(General Corporation of the Philippines) said that “all merchandise
manifested on the bill of lading No. S-76 was discharged in full and in
apparent good order;” that “once cargo leaves the ship’s tackle,
responsibility was entirely out of our hands,” and “in view of the
above we regret that we cannot tender recognition of your claim”
(apparently referring to the eleven cases). We therefore find that the
claim for the loss or short landing of these eleven cases which
constitute the bulk of the claim has not been proven.

Going back to the report of the surveyor C.B. Nelson & Co.
(Exhibit E-21), said report made a detailed survey of the shortage or
damage on cases Nos. 5, 9, 13 and 14. According to Exhibit E-7 the
shortage or damage on these four cases is valued at $635.50 or P1,271.
These exhibits E-7 and E-21 were admitted in court without objection by
the appellant. We find the claim in the amount of $635.50 to have been
duly established.

In conclusion we hold that a foreign corporation actually doing
business in this jurisdiction, with or without license or authority to
do so, is amenable to process and the jurisdiction of local courts. If
such foreign corporation has a license to do business, then summons to.
it will be served on the agent designated by it for the purpose, or
otherwise in accordance with the provisions of the Corporation Law.
Where such foreign corporation actually doing business here has not
applied for license to do so and has not designated an agent to receive
summons, then service of summons on it will be made pursuant to the
provisions of the Rules of Court, particularly Rule 7, Section 14
thereof. We further hold that where a foreign Insurance corporation
engages in regular marine insurance business here by issuing marine
insurance policies abroad to cover foreign shipments to the
Philippines, said policies being made payable here, and said Insurance
company appoints and keeps an agent here to receive and settle claims
flowing from said policies, then said foreign corporation will be
regarded as doing business here in contemplation of law.

In view of the foregoing, the decision appealed from is hereby
modified so as to reduce the amount awarded to the plaintiffs and to be
paid by the appellant Fireman’s Fund Insurance Co. from $2,000 to
$635.50 or Its equivalent In Philippine currency, and in all other
respects, the decision is affirmed. No pronouncement as to costs.

Moran, C.J., Ozaeta, Paras, Pablo, Bengzon, Tuason, and Reyes, JJ., concur.