GR 207153; (January, 2023) (Digest)
G.R. No. 207153 , January 25, 2023
Development Bank of the Philippines, Petitioner, vs. Monsanto Company, Respondent.
FACTS
Monsanto International Sales Company (MISCO), a foreign corporation, sold acrylic fibers to Continental Manufacturing Corporation (CMC) from 1978 to 1983 through a local indentor, Robert Lipton and Co., Inc. (Lipton). The transactions involved Lipton relaying inquiries and specifications between CMC and MISCO, with payment via drafts against acceptance. CMC failed to settle its obligations, prompting MISCO to file a complaint for sum of money against CMC and Development Bank of the Philippines (DBP), which was alleged to be a co-acceptor of the drafts. The complaint was later amended to substitute MISCO with its mother company and assignee, respondent Monsanto Company. CMC and DBP defended on the ground that MISCO, as an unlicensed foreign corporation “doing business” in the Philippines, lacked the capacity to sue. The Regional Trial Court (RTC) dismissed the complaint, ruling that MISCO was transacting business without a license and thus lacked capacity. The Court of Appeals (CA) reversed, ruling that MISCO was not “doing business” as it transacted through a bona fide local indentor, and remanded the case for merits. DBP filed the present Petition for Review.
ISSUE
Whether the CA erred in finding that MISCO, or its assign Monsanto, a foreign corporation without a license to transact business in the Philippines, has the capacity to sue.
RULING
The Petition is denied. The Supreme Court upheld the CA’s ruling that MISCO, transacting through a local indentor, was not “doing business” in the Philippines and thus retained the capacity to sue despite lacking a license. The applicable law was Presidential Decree No. 1789 (Omnibus Investments Act of 1981) and its Implementing Rules and Regulations (IRR), which explicitly provide that a foreign firm doing business through middlemen acting in their own names, such as indentors, shall not be deemed doing business in the Philippines. The Court found that Lipton, the indentor, was an independent entity transacting in its own name and for its own account, as evidenced by its Articles of Incorporation showing a diverse business purpose and the testimony of its Vice President. Therefore, MISCO’s transactions through Lipton did not constitute “doing business.” Consequently, MISCO and its assignee, Monsanto, had the capacity to sue. The case was remanded to the trial court for resolution on the merits.