Case Number Case Title GR Number Date Doctrine Enunciated

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54 Avon Insurance PLC, et al vs Court of Appeals 97642 August 29, 1997 Doctrine of Isolated Transaction

FACTS: Respondent Yupangco Cotton Mills filed a complaint against several foreig n reinsurance companies(among which are petitioners) to collect their alleged percentage liability under contract treati es between the foreign insurance companies and the international insurancebroker C.J. Boatright, acting as agent for respondent Worldwide Surety and Insurance Company. Inasmuch as petitioners are not engaged in business in the philippines with no o ffices, places of business or agents in the Philippines, the reinsurance treaties having been entered abroad, service of sum mons upon motion of respondent Yupangco, was made upon petitioners through the office of the Insurance Commissioner. Petition ers, by counsel on special appearance, seasonably filed motions to dismiss disputing the jurisdiction of respondent Cou rt. Worldwide Surety and Insurance, in a Deed of Assignment, acknowledged a remaining balance still due Yupangco Cotton Cotton Mills, and assigned to the latter all reinsurance proceeds still collecti ble from all the foreign reinsurance companies. Thus, in its interest as assigneee and original insured, yupangco Cotton Mills i nstituted this collection suit against the petitioners. ISSUE: Whether or not the respondent court has no jurisdiction over the petitone rs being a foreign corporations not doing business in the Philippines with no office, place of business or agents in the P hilippines. LAWS: 1. Section 123 of Batasang Pambansa Blg. 68 - Definition and rights of for eign Corporations - For the purposes of this code, a foreign corporation is one formed, organized or existing under any laws other than those of the Philippines and whose laws allow Filipino citizens and corporations to do business in its own country or state. It shall have the right to transact business in the philippines after it shall have obtained a license to transact b usiness in this country in accordance with this code and a certificate of authority from the appropriate government agency. 2. Foreign Investment Act of 1991 (R.A. 7042) - Acts constituting "doing b usiness": a. soliciting orders, service contracts, opening offices, whether called 'liaison' offices or branches; b. Appointing representativesor distributors domiciled in the philippine s or who in any calendar year stay in the country for a period or periods totaling 180 days or more; c. participating in the management, supervision or control of any domest ic business, firm or entity or corporation in the philippines; and d. Any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performanceof acts or works, or the exercise of some of the functions normal

ly incidentto, and in progressive prosecution of commercial gain or of the purpose of the business organization. RULING: The court held that there is no sufficient basis in the records which w ould merit the institution of this collection suit in the philippines, More specifically, there is nothing to substantiate the private respondent's submission that the petitioners had engaged in business activities in this country. This is not an i nstance where the erroneous service of summons upon the defendant can be cured by the issuanced and service of alias summons, a s in the absence of showing that petitioners had been doing business in the country, they can not be summoned to answer for t he charges leveled against them. As the court observed, in so far as the state is concerned, such foreign corporation has no l egal existence. Therefore, to subject such corporation to the courts' jurisdiction would violate the essence of sovereignty .