G.R. No. L-26809 December 29, 1977
AETNA CASUALTY & SURETY COMPANY, plaintiff-appellant, vs. PACIFIC STAR LINE, THE BRADMAN CO. INC., MANILA PORT SERVICE and/or MANILA RAILROAD COMPANY, INC., defendants-appellees.

FACTS

Aetna Casualty & Surety Company, as subrogee, filed a complaint to recover the value of cargo shipped aboard the SS Ampal, owned by Pacific Star Line. The shipment of linen and cotton goods, consigned to Judy Philippines, Inc., arrived in Manila and was discharged into the custody of the arrastre operator, Manila Port Service. The cargo sustained pilferage and seawater damage valued at US $2,300. The shipper, I. Shalom & Co., Inc., was indemnified by Aetna under an insurance contract executed in New York. Aetna, having paid the claim, sought reimbursement from the carrier and the arrastre operator.
The defendants moved to dismiss the complaint, contending that Aetna, being a foreign corporation without a license to transact business in the Philippines, lacked the legal capacity to sue. The Court of First Instance of Manila sustained this defense and dismissed the complaint solely on that ground, without making any finding on the substantive liability of the defendants for the cargo damage.

ISSUE

Whether the plaintiff-appellant, Aetna Casualty & Surety Company, a foreign corporation without a license to do business in the Philippines, has the legal capacity to institute the present action for recovery of a sum of money as subrogee of the insured consignee.

RULING

Yes. The Supreme Court reversed the trial court’s dismissal and remanded the case for further proceedings. The legal capacity to sue is not barred by the mere absence of a license. The prohibition under the Corporation Law (Sections 68 and 69) against an unlicensed foreign corporation “transacting business” in the country from maintaining a suit applies only if the corporation is indeed engaged in such business within the Philippines.
The Court applied the “isolated transactions” doctrine. The contract of insurance was perfected in New York, and the indemnity payment was made there. Aetna’s act of filing the instant suit, along with a few other similar collection cases arising from subrogation, does not constitute “doing business” in the Philippines. These are merely incidental acts to collect a claim assigned to it, not a continuity of commercial acts that would constitute engaging in the insurance business within the national territory. Following precedents like Marshall-Wells Co. vs. Elser & Co. and Eastboard Navigation, Ltd. vs. Juan Ysmael & Co., Inc., the Court ruled that a foreign corporation not engaged in business in the Philippines is not required to secure a license as a condition for seeking redress in local courts for isolated transactions. Therefore, Aetna has the legal personality to bring the suit, and the case must be tried on the merits to determine the defendants’ liability for the cargo loss.