De Leon and the resident agent

For our oral reports in Corporation Law under Prof. Ernesto Carreon I was assigned the case of Smith Bell & Co., Inc. vs. Court of Appeals, G.R. 110668, Feb. 6, 1997.

Our textbook is The Corporation Code of the Philippines (Annotated), 2013 Ed. by De Leon and De Leon, Jr.

The Smith Bell case was cited in the book in the sub-section where the De Leons were discussing the topic on Resident Agents of a foreign corporation. Here's the particular place on the book:

On page 776,

And continued on page 777,


Here's what I said in my oral report:

With due respect to the de Leons, I think this is not the precise jurisprudence that could apply to a discussion of the corporation code.

First a backgrounder.

In Sec 125 of the Corporation Code, we find that a foreign corporation applying for license to do business in the Philippines must have a resident agent. Sec 127 says a resident agent is either an individual residing in the Philippines or a domestic corporation.

Sec 128 says the purpose of a resident agent is to receive summons and other legal processes in all actions and legal proceedings against the foreign corporation.

Now let’s go to the Smith Bell case.

In 1982 Tic Hin Chiong imported from Chin Gact Corp of Taiwan 50 metric tons of phosphate. The shipment was insured by First Insurance Co against all risk under a marine insurance policy with the note “Claim, if any, payable in US currency at Manila.” The name of Smith Bell was stamped on the policy as “Claim Agent.”

On arrival in Manila, around one half of the shipment was damaged. The importer filed a claim with Smith Bell. Smith Bell relayed the claim to First Insurance who told Smith Bell that it will only pay one half of the claimed damages. The importer then sued Smith Bell solidarily with First Insurance. The trial court agreed.

The issue brought by Smith Bell to the Supreme Court is whether a claim agent of a foreign insurance company can be held jointly and severally liable. In the end, the Supreme Court affirmed the position of Smith Bell.

To repeat the summary of de Leon:

Being a mere agent and representative, he is not the real party-in-interest in an action by or against his principal.

Now to my point which is that this is not the precise jurisprudence concerning resident agents from the point of view of the Corporation Code.

The SC said so in its decision. “Indeed, from our reading of the records of this case, we find no factual and legal bases for the finding of respondent Court that petitioner is the resident agent of First Insurance Co.

Smith Bell is about an insurance company. The SC cited Sec 190 of the Insurance Code in the decision. If you will compare Sec 190 of the Insurance Code and Sec 128 of the Corporation Code you will find out that they are almost word for word the same.

Sec 190 of the Insurance Code, however, uses “General Agent” while Sec 128 of the Corporation Code uses “Resident Agent”. But they have the same functions as regards their principals. They are tasked to receive summons and other legal processes in behalf of their principals.

The Insurance Code talks of a Resident Agent which is different from the General Agent mentioned in its Sec 190 or the Resident Agent of Sec 128 of the Corporation Code.

Sec 314 of the Insurance Code says: “ The term “resident agent” as used in this title, is one duly appointed by a foreign insurer or broker not authorized to do business in the Philippines to receive in its behalf notices, summons and legal processes in connection with actions or other legal proceedings against such foreign insurer or broker.”

So while the General Agent in the Insurance Code and the Resident Agent in the Corporation Code act in behalf of their principals who are licensed to do business in the Philippines, the Resident Agent of the Insurance Code represents a foreign insurer who is not authorized to do business in the Philippines.

I think the de Leons should not have cited this particular jurisprudence.