Case Digest (G.R. No. 171995) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Steelcase, Inc. v. Design International Selections, Inc. (G.R. No. 171995, April 18, 2012), petitioner Steelcase, a Michigan corporation, and respondent DISI, a Philippine corporation, entered into an oral dealership agreement in 1986 or 1987 under which DISI marketed and sold Steelcase office furniture in the Philippines. No formal written contract was executed, but DISI paid Steelcase upon shipment and sold products in its own name and for its own account. The relationship endured until January 1999, when it was terminated by mutual claim of breach. On January 18, 1999, Steelcase filed a complaint for sum of money in the Regional Trial Court (RTC), Branch 60, Makati City, alleging that DISI owed US$600,000 plus damages, attorney’s fees, and costs. DISI answered on February 4, 1999, raising as compulsory counterclaims the absence of Steelcase’s capacity to sue because it was doing business in the Philippines without a license under R.A. No. 7042, and sought injunctive relief Case Digest (G.R. No. 171995) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties
- Steelcase, Inc. (Steelcase) is a foreign corporation organized under Michigan law, engaged in manufacturing office furniture and appointing dealers worldwide.
- Design International Selections, Inc. (DISI) is a Philippine corporation engaged in the distribution of furniture products.
- Dealership Agreement and Business Relationship
- In 1986–1987, Steelcase and DISI entered into an oral dealership agreement granting DISI the right to market, sell, distribute, install, and service Steelcase products in the Philippines. DISI acted as a non-exclusive dealer, bearing freight charges, taxes, and setting its own profit margin.
- The relationship continued smoothly until its termination in January 1999 due to alleged breaches by both parties, with neither admitting fault.
- Trial Court Proceedings
- On January 18, 1999, Steelcase filed a complaint for sum of money, claiming DISI owed US$600,000, and prayed for actual, exemplary damages, attorney’s fees, and costs.
- DISI’s February 4, 1999 Answer with Compulsory Counterclaims sought injunctive relief to enjoin Steelcase from selling in the Philippines except through DISI, dismissal of the complaint for lack of capacity to sue (Steelcase doing business without a license), and its own damages and fees.
- The RTC admitted Steelcase’s first amended complaint on April 26, 1999. On November 15, 1999, RTC dismissed the complaint, granted DISI’s TRO, set aside the April 26 order, and denied Steelcase’s second amendment motion, ruling Steelcase was doing business without a license under R.A. No. 7042. Reconsideration was denied on May 29, 2000.
- Appellate Proceedings
- Steelcase appealed to the Court of Appeals (CA), which on March 31, 2005 affirmed the RTC orders, finding Steelcase was doing business in the Philippines without the required license based on acts such as imposing management controls on DISI, canceling customer orders, sending liaison letters to local clients, and shipping directly to the Philippines.
- Steelcase’s motion for reconsideration was denied by the CA on March 23, 2006. Steelcase then filed a petition for certiorari under Rule 45 before the Supreme Court.
Issues:
- Whether Steelcase is “doing business” in the Philippines without a license, thereby lacking capacity to sue.
- How is “doing business” defined under Section 3(d) of R.A. No. 7042 and its Implementing Rules?
- Do the facts—appointment of DISI, distribution practices, management requirements—constitute “doing business”?
- Whether DISI is estopped from challenging Steelcase’s capacity to sue as an affirmative defense.
- Did DISI knowingly contract with and benefit from Steelcase’s dealership arrangement for 12 years?
- Does the doctrine of estoppel bar DISI from later questioning Steelcase’s corporate existence and capacity to sue?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)