Case Summary (G.R. No. 207153)
Petitioner
Development Bank of the Philippines
Respondent
Monsanto Company (mother company of MISCO and assignee of MISCO’s receivables)
Key Dates
• Sale transactions: 1978–1983
• Complaint filed by MISCO: July 31, 1986
• RTC decision dismissing complaint: August 15, 2006
• Court of Appeals decision reversing RTC: September 26, 2012
• CA resolution denying reconsideration: April 30, 2013
• Supreme Court decision: January 25, 2023
Applicable Law
• 1987 Philippine Constitution (basis for SC jurisdiction)
• Batasang Pambansa Blg. 68 (Corporation Code) § 133 on capacity to sue
• Presidential Decree No. 1789 (Omnibus Investments Act of 1981) and its IRR defining “doing business”
Transactions and Antecedents
MISCO sold acrylic fibers to CMC through Lipton as indentor. Lipton solicited orders, relayed specifications, negotiated price and terms with MISCO, and documented each sale via a five‐copy indent order. Payments were effected by drafts against acceptance, co‐accepted by CMC and DBP, payable at maturity. When CMC defaulted, MISCO sued for US$938,267.58 unpaid balance.
Procedural History
CMC admitted indebtedness but argued MISCO lacked capacity to sue for doing business without license under RA 5455 (1968). CMC also invoked novation, claiming partial payments under a revised draft agreement. DBP denied liability on drafts and challenged MISCO’s capacity. MISCO successfully moved to substitute its mother company Monsanto as plaintiff.
RTC Ruling
The Regional Trial Court held that MISCO transacted business in the Philippines without a license, thus lacking capacity to sue under Corporation Code § 133. It dismissed Monsanto’s complaint and the defendants’ counterclaims.
Court of Appeals Ruling
The CA reversed and remanded, ruling that:
- Transactions through an independent indentor do not constitute “doing business” under RA 7042 (Foreign Investments Act of 1991) § 3(d).
- Even if MISCO lacked capacity, CMC’s admission of debt estopped it from raising that defense.
Issue Before the Supreme Court
Whether a foreign corporation transacting through a bona fide Philippine indentor without license may maintain suit in Philippine courts.
Definition of “Doing Business” Under PD 1789
PD 1789’s IRR § 1(g) excludes from “doing business” transactions effected through middlemen (indentors, brokers, commission merchants) acting in their own names and for their own account. The Corporation Code § 133 bars unlicensed foreign corporations “transacting business in the Philippines” from suing, but does not define the term.
Nature of an Indentor’s Business
An indentor is a middleman or agent of both supplier and buyer, negotiating and bringing about sales without taking title. Acting in its own name and for its own account, it earns commission for matching parties and arranging terms.
Application to the Present Case
Lipton, a domestic corporation with authority to broker sales for various manufacturers, solicited orders, negotiated terms, and documented transactions in its own name. This independent status places Lipton within the IRR’s exclusion, so MISCO’s dealings through Lipton did not amount to “doing business” requiring a license
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Antecedents
- Monsanto International Sales Company (MISCO), a Delaware-organized foreign corporation, sold acrylic fibers to Continental Manufacturing Corporation (CMC) from 1978 to 1983 through a local indentor, Robert Lipton & Co., Inc. (Lipton).
- Transaction process: CMC specified product needs to Lipton → Lipton relayed to MISCO → MISCO quoted price, delivery, payment terms → indent order signed in quintuplicate (three for CMC, one each for Lipton and MISCO).
- Payment method: draft against acceptance, indorsed by CMC to its bank and paid at maturity.
- CMC defaulted on payments covering five drafts totaling US$1,417,980.89, leaving an unpaid balance of US$938,267.58.
- On July 31, 1986, MISCO sued for sum of money; CMC admitted the debt but raised two defenses:
• MISCO lacked capacity to sue for doing business without license under RA 5455.
• Payment obligations were novated by a revised draft agreement and partial payments of US$184,000 were made and accepted. - Development Bank of the Philippines (DBP), co-acceptor of the drafts, denied liability, authority of the signatory, and challenged MISCO’s capacity to sue.
- MISCO moved to substitute Monsanto Company—the mother company and assignee of MISCO’s receivables—as plaintiff; the Regional Trial Court (RTC) granted this unopposed.
RTC Decision
- Found MISCO (and thus Monsanto by assignment) transacted business in the Philippines without the required license.
- Held that under Section 133 of the Corporation Code, an unlicensed foreign corporation “doing business” cannot maintain or intervene in any action.
- Dismissed Monsanto’s complaint; also dismissed CMC’s and DBP’s counterclaims for lack of evidence.
Court of Appeals Decision
- Reversed and set aside the RTC decision; remanded the case for trial on the merits.
- Ruled that Monsanto (and MISCO) was not “doing business” under Section 3(d) of RA 7042 (Foreign Investments Act of 1991).
- Emphasized that a bona fide local indentor buying and distributing for its