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(Corp) 389 - Manulife V Meer - Lim

1) Manufacturers Life Insurance Co (Manulife), a Canadian corporation, operated a life insurance business in the Philippines through a branch office in Manila for over 5 years. During WWII from 1942-1945, it closed this branch office. 2) Despite the closed branch office, Manulife continued applying automatic premium loans to existing Philippine policyholders, collecting premiums. The Philippine government assessed income taxes on these loan earnings, which Manulife paid under protest. 3) The Supreme Court ruled that Manulife was still doing business in the Philippines through these loan collections and premium risk undertakings, and was therefore subject to relevant Philippine tax laws, even with the closed branch office. The Court denied Manul

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243 views1 page

(Corp) 389 - Manulife V Meer - Lim

1) Manufacturers Life Insurance Co (Manulife), a Canadian corporation, operated a life insurance business in the Philippines through a branch office in Manila for over 5 years. During WWII from 1942-1945, it closed this branch office. 2) Despite the closed branch office, Manulife continued applying automatic premium loans to existing Philippine policyholders, collecting premiums. The Philippine government assessed income taxes on these loan earnings, which Manulife paid under protest. 3) The Supreme Court ruled that Manulife was still doing business in the Philippines through these loan collections and premium risk undertakings, and was therefore subject to relevant Philippine tax laws, even with the closed branch office. The Court denied Manul

Uploaded by

Josiah Lim
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Corporate Law Case Write-up VOL [June 29, 1951]

Manufacturers Life Insurance v Meer Manufacturers Life Insurance v Meer

I. Facts of the case without having previously taken any steps indicating withdrawal in good
faith from this field of economic activity.
Manufacturers Life Insurance Co (Manulife) is a corporation duly As a matter of fact, in objecting to the payment of the tax, Manulife
organized in Canada. It is registered and licensed to engage in life insurance never insisted, before the Bureau of Internal Revenue, that it was not
business in the Philippines and maintains a branch office in Manila. It was engaged in business in this country during those years.
engaged in the business for more than five years before and including 1941 Petition denied.
but due to the exigencies of the war, it closed the branch office from 1942
to 1945. IV. Critic
At the time it was closed, the head office in Toronto, pursuant to
clauses in the insurance policies, applied automatic premium loan clauses The doctrine in the case should stand as Section 146 of the Revised
during the period the branch office was closed. For the premium loans Corporation Code maintains the phrasing by the Corporation Code, to wit:
earned, the Commissioner of Internal Revenue assessed income tax, to
SEC. 146. Law Applicable. – A foreign corporation lawfully doing business in
which Manulife paid under protest. Hence, the petition. the Philippines shall be bound by all laws, rules and regulations applicable to
domestic corporations of the same class, except those which provide for the
II. Issue/s creation, formation, organization or dissolution of corporations or those which fix
the relations, liabilities, responsibilities, or duties of stockholders, members, or
officers of corporations to each other or to the corporation.
Whether or not Manulife was doing business in the Philippines when it
applied the automatic premium loans at the time its branch office was Under the Foreign Investments Act of 1991, “doing business” includes
closed? YES “Any other act or acts that imply a continuity of commercial dealings or
arrangements, and contemplate to that extent the performance of acts or
III. Held works, or the exercise of some of the functions normally incident to, and in
progressive prosecution of, commercial gain or of the purpose or object of
Doing business in the Philippines the business organization.” Considering this definition and Section 146 of
the Revised Corporation Code, the Court correctly ruled that the relevant
Manulife takes the position that the advances of premiums were made tax laws should apply to Manulife, despite its branch office being closed for
in Toronto and that such premiums are deemed to have been paid there – the relevant taxable years. Manulife was doing business in the Philippines
not in the Philippines – and therefore those payments are not subject to when it applied premium loans for policies made with its Philippine
local taxation. The thesis overlooks the actual fact that the loans are made to clientele. There was continuity of business dealings for commercial gain,
policyholders in the Philippines, who in turn pay therewith the premium to which was highlighted when the Court said that Manulife did not express
the insurer thru the Manila Branch. Approval of the position will enable any desire to withdraw from its business in the country.
foreign insurers to evade the tax by contriving to require that premium
payments shall be made at their head offices. What is important, the law
does not contemplate premiums collected in the Philippines. It is
enough that the insurer is doing insurance business in the Philippines,
irrespective of the place of its organization or establishment.
Although during those years the appellant was not open for new
business because its branch office was closed, still it was practically and
legally, operating in this country by collecting premiums on its outstanding
policies, incurring the risks and/or enjoying the benefits consequent thereto,

G.R. NO: L-2910 PONENTE: Bengzon, J.


ARTICLE; TOPIC OF CASE: Foreign Corporations DIGEST MAKER: Josiah M Lim

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