G.R. No. 97642 August 29, 1997
AVON INSURANCE PLC., BRITISH RESERVE INSURANCE CO. LTD., CORNHILL INSURANCE PLC., IMPERIO REINSURANCE CO. (UK) LTD., INSTITUTE DE RESERGURROS DO BRAZIL, INSURANCE CORPORATION OF IRELAND PLC, LEGAL AND GENERAL ASSURANCE SOCIETY LTD., PROVINCIAL INSURANCE PLC., QBL INSURANCE (UK) LTD., ROYAL INSURANCE CO. LTD., TRINITY INSURANCE CO. LTD., GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORP. LTD., COOPERATIVE INSURANCE SOCIETY and PEARL ASSURANCE CO. LTD., petitioners, vs. COURT OF APPEALS, REGIONAL TRIAL COURT OF MANILA, BRANCH 51, YUPANGCO COTTON MILLS, WORLDWIDE SURETY & INSURANCE CO., INC., respondents.

FACTS

Private respondent Yupangco Cotton Mills filed a complaint against several foreign reinsurance companies (petitioners) to collect their alleged percentage liability under reinsurance treaties. These treaties were between the foreign insurance companies and the international insurance broker C.J. Boatright, acting as agent for respondent Worldwide Surety and Insurance Company. The reinsurance treaties were entered into abroad, and petitioners are not engaged in business in the Philippines, with no offices, places of business, or agents in the country. Service of summons was made upon petitioners through the Office of the Insurance Commissioner. Petitioners, by counsel on special appearance, filed motions to dismiss disputing the jurisdiction of the trial court and the extraterritorial service of summons. The trial court denied the motions to dismiss and directed petitioners to file their answer. Petitioners filed a notice of appeal, which was denied due course. The Court of Appeals found the petition devoid of merit, ruling that petitioners were properly served with summons and any defect was cured by their voluntary appearance via motion to dismiss, and that petitioners, as reinsurers, must be deemed to have engaged in business in the Philippines.

ISSUE

Whether Philippine courts have jurisdiction over the petitioners, who are foreign reinsurance companies not doing business in the Philippines, in a collection suit arising from reinsurance contracts entered into abroad.

RULING

No. The Supreme Court ruled that Philippine courts do not have jurisdiction over the petitioners. The Court held that the petitioners are not doing business in the Philippines. The act of entering into a reinsurance contract with a local insurer, standing alone, does not constitute “doing business” in the Philippines. Reinsurance is a separate transaction from the original insurance, and the reinsurer does not become a party to the original insurance contract. The reinsurance treaties were negotiated and concluded abroad through an international broker. There was no sufficient basis in the records to show that petitioners engaged in business activities in the country. A single act or transaction can qualify as doing business only if it is not merely incidental or casual but indicates an intention to engage in business in the Philippines, which was not present here. Furthermore, the extraterritorial service of summons was invalid because the complaint for a sum of money is a personal action not affecting the plaintiff’s status or relating to property within the Philippines. The appearance of counsel for petitioners was explicitly “by special appearance” and the motions to dismiss were based solely on lack of jurisdiction; thus, there was no voluntary submission to the trial court’s jurisdiction. The case was dismissed for lack of jurisdiction.