FACTS:

Respondent Yupangco Cotton Mills filed a complaint against several foreign reinsurance companies, including the petitioners, to collect their alleged percentage liability under contract treaties. The reinsurance contracts were entered into abroad, and petitioners argued that they were not doing business in the Philippines, therefore, the court does not have jurisdiction over them. The service of summons on petitioners was made through the office of the Insurance Commissioner. Petitioners filed motions to dismiss, disputing the jurisdiction of the court and the extraterritorial service of summons. The court denied the motions to dismiss, leading to the petitioners filing an appeal. The Court of Appeals found the appeal to be without merit and stated that the petitioners were properly served with summons.

The petitioners in this case are foreign corporations that issued fire insurance policies to the respondent Yupangco. The petitioners argue that they are not doing business in the Philippines as they have no office, place of business, or agents in the country. However, the respondent argues that foreign corporations can be sued in Philippine courts, even if they are not doing business in the country, and that the appearance of the petitioners before the trial court constituted voluntary submission to its jurisdiction. The lower courts did not clearly determine whether the petitioners were doing business in the Philippines or not. To determine this, the court refers to established principles and the language of the relevant statute.

ISSUES:

1. What constitutes "doing business in the Philippines"?

2. Can a single act or transaction in the Philippines qualify a foreign corporation to be doing business in the Philippines?

3. Does the plaintiff need to prove that the defendant is doing business in the Philippines in order to acquire jurisdiction?

4. Whether foreign corporations not doing business in the Philippines are exempt from being sued in Philippine courts.

5. Whether the petitioners, as foreign corporations not doing business in the Philippines, have submitted themselves to the jurisdiction of the court by filing a motion to dismiss.

6. Whether the appearance of the petitioners through counsel constitutes an acquiescence to the court's jurisdiction.

7. Whether the petitioners abandoned their objections to the jurisdiction of the trial court.

RULING:

1. The term "doing business in the Philippines" implies a continuity of commercial dealings and arrangements, and contemplates the performance of acts or works that are normally incident to the purpose and object of the corporation's organization. It includes soliciting orders, opening offices, appointing representatives or distributors, participating in the management or control of a domestic business firm, and other acts that imply a continuity of commercial dealings.

2. A single act or transaction made in the Philippines cannot qualify a foreign corporation to be doing business in the Philippines, unless such single act indicates the corporation's intention to do business in the country.

3. The plaintiff does not need to prove that the defendant is doing business in the Philippines in order to acquire jurisdiction. It is sufficient for the plaintiff to allege in the complaint that the defendant has an agent in the Philippines for summons to be validly served.

4. Foreign corporations that are not doing business in the Philippines are exempt from being sued in Philippine courts. To subject such corporations to the court's jurisdiction would violate the essence of sovereignty.

5. Filing a motion to dismiss does not constitute submission to the jurisdiction of the court if the purpose is to object to the court's assumption of jurisdiction. The petitioners consistently and unfailingly objected to the trial court's assumption of jurisdiction and did not seek any affirmative relief in their motions to dismiss.

6. The Supreme Court held that the appearance of the petitioners' counsel does not constitute an acquiescence to the court's jurisdiction. It was also ruled that the petitioners did not abandon their objections to the jurisdiction of the trial court. Therefore, the Regional Trial Court of Manila, Branch 51 is declared without jurisdiction to take cognizance of Civil Case No. 86-37932, and all its orders and issuances in connection therewith are set aside and annulled. The respondent court is ordered to desist from maintaining further proceedings in the case.

PRINCIPLES:

• The definition of "doing business in the Philippines" varies depending on the circumstances and language of the applicable statute.

• The purpose of requiring foreign corporations to obtain a license to do business in the Philippines is to subject them to the jurisdiction of the local courts.

• A foreign corporation engaging in business activities without the necessary requirements opens itself to court actions, but it shall not be allowed to maintain or intervene in any action, suit, or proceeding for its own account in the Philippines.

• Foreign corporations are allowed to transact business in other states by reason of state comity, subject to certain restrictions imposed by the sovereign right of regulation.

• Each state has the power to regulate the conditions under which foreign corporations may do business within its jurisdiction.

• Foreign corporations that are not doing business in the Philippines are exempt from being sued in Philippine courts.

• Filing a motion to dismiss does not constitute submission to the jurisdiction of the court if the purpose is to object to the court's assumption of jurisdiction.

• Appearance through counsel does not amount to a waiver of objections to the court's jurisdiction.

• The objection to jurisdiction can still be asserted even if there has been a previous appearance in the court.