ZALAMEDA, J.:
IN VIEW OF ALL THE FOREGOING, plaintiff's complaint is hereby dismissed. The counterclaims of defendant CMC and DBP are likewise dismissed for want evidence.
SO ORDERED.[18]
WHEREFORE, the appeal is PARTLY GRANTED. The Decision dated August 15, 2006 of the Regional Trial Court, Branch 156, Pasig City in Civil Case No. 53682 is REVERSED and SET ASIDE. The instant case is REMANDED to the trial court which is directed to decide the case on the merits and with dispatch.The CA ruled that Monsanto is not deemed "doing business" in the Philippines as defined under Sec. 3(d) of RA 7042 or the Foreign Investments Act of 1991. It stated that if the distributor is an independent entity which buys and distributes products, other than those of the foreign corporation, for its own name and for its own account, the foreign corporation cannot be considered to be doing business in the Philippines. Giving credence to the testimony of Lipton's Vice President, Desiderio F. Torres, the CA held that the subject transactions were made through a bona fide local indentor.[20]
SO ORDERED.[19]
SECTION 133. Doing Business Without License. - No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws.The Corporation Code, however, is silent as to the definition of the phrase "doing business." It has been held that there is no general rule or governing principle as to what constitutes "doing" or "engaging in" or "transacting" business in the Philippines. As such, each case must be judged in the light of its peculiar circumstances.[29]
ARTICLE 65. Definition of Terms. - As used in this Book, the term "investment" shall mean equity participation in any enterprise formed, organized or existing under the laws of the Philippines; and the phrase "doing business" shall include soliciting orders, purchases, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors who are domiciled in the Philippines or who in any calendar year stay in the Philippines for a period or periods totalling one hundred eighty (180) days or more; participating in the management, supervision or control of any domestic business firm, entity or corporation in the Philippines, and any other act or acts that imply a continuity of commercial dealings or arrangements and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization. (Emphasis supplied.)Sec. 1(g) of the IRR of PD 1789 clarifies said definition by providing that "doing business" includes:
(1) Soliciting orders, purchases (sales) or service contracts. Concrete and specific solicitations by a foreign firm or by an agent of such foreign firm, not acting independently of the foreign firm, amounting to negotiations or fixing of the terms and conditions of sales or service contracts, regardless of where the contracts are actually reduced to writing, shall constitute doing business even if the enterprise has no office or fixed place of business in the Philippines. The arrangements agreed upon as to manner, time and terms of delivery of the goods or the transfer of title thereto is immaterial. A foreign firm which does business through the middlemen acting in their own names, such as indentors, commercial brokers or commission merchants, shall not be deemed doing business in the Philippines. But such indentors, commercial brokers or commission merchants shall be the ones deemed to be doing business in the Philippines.The same language was used in the definition of "doing business" under Executive Order No. 226 or the Omnibus Investment Code of 1987 and its IRR. Section 3(d) of RA 7042 likewise provides a similar definition:
(2) Appointing a representative or distributor who is domiciled in the Philippines, unless said representative or distributor has an independent status, i.e., it transacts business in its name and for its own account, and not in the name or for the account of a principal. Thus, where a foreign firm is represented in the Philippines by a person or local company which does not act in its name but in the name of the foreign firm, the latter is doing business in the Philippines. (Emphases and underscoring supplied.)
(d) The phrase "doing business" shall include soliciting orders, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totalling one hundred eighty (180) days or more; participating in the management, supervision or control of any domestic business, firm, entity or corporation in the Philippines; and any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization: Provided, however, That the phrase "doing business: shall not be deemed to include mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or the exercise of rights as such investor; nor having a nominee director or officer to represent its interests in such corporation; nor appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account; (Emphasis supplied.)The foregoing laws and rules consistently provide that the appointment of representatives which transact business in its own name and for its own account shall not be deemed as "doing business." Markedly, the IRR of PD 1789 specifically mentions transactions done through middlepersons acting in their own names, such as indentors, as excluded from the phrase "doing business."
On the other hand, there is no statutory definition of "indent" in this jurisdiction. However, the Rules and Regulations to Implement Presidential Decree No. 1789 (the Omnibus Investments Code) lumps "indentors" together with "commercial brokers" and "commission merchants" in this manner: x x xFrom the language of Section 1(g) of the IRR of PD 1789 and the nature of the business of an indentor as described in Schmid, it can be concluded that when an indentor brings about a purchase and sale of goods between a foreign supplier and a local purchaser, as an agent of both parties, it is in contemplation of law transacting for its own account. Precisely because such is the business of an indentor as a middleman.
Therefore, an indentor is a middleman in the same class as commercial brokers and commission merchants. To get an idea of what an indentor is, a look at the definition of those in his class may prove helpful.x x x x
Thus, the chief feature of a commercial broker and a commercial merchant is that in effecting a sale, they are merely intermediaries or middlemen, and act in a certain sense as the agent of both parties to the transaction.
Webster defines an indent as "a purchase order for goods especially when sent from a foreign country." [Webster's Ninth New Collegiate Dictionary 612 (1986).] It would appear that there are three parties to an indent transaction, namely, the buyer, the indentor, and the supplier who is usually a non-resident manufacturer residing in the country where the goods are to be bought [Commissioner of Internal Revenue v. Cadwallader Pacific Company, G.R. No. L-20343, September 29, 1976, 73 SCRA 59.] An indentor may therefore be best described as one who, for compensation, acts as a middleman in bringing about a purchase and sale of goods between a foreign supplier and a local purchaser.[31] (Emphases supplied.)
Q. And as indentor can you please describe how you pursue the business?DBP does not deny nor offer controverting evidence against the foregoing. It contends, however, that Lipton is not transacting business in its own name and account, as its function was merely to act as go-between to the transactions of CMC and MISCO. It stressed that Lipton had no authority to agree and enter into agreement for the supply of raw materials for MISCO and that MISCO acted and transacted in its own behalf.
A. We are or we represent the different manufacturers through out the world and we have all the products that they manufacture and we elicit and offer the products to various manufacturers here in the Philippines, sir. It is from this transaction that we get our commission. In other words, we put together the buyer and the manufacturer and from that we get commission. That is our manner of operating our income, sir.[34]
The rule is that a party is estopped to challenge the personality of a corporation after having acknowledged the same by entering into a contract with it. And the "doctrine of estoppel to deny corporate existence applies to foreign as well as to domestic corporations;" "one who has dealt with a corporation of foreign origin as a corporate entity is estopped to deny its corporate existence and capacity." The principle "will be applied to prevent a person contracting with a foreign corporations from later taking advantage of its noncompliance with the statues, chiefly in cases where such person has received the benefits of the contract (Sherwood v. Alvis, 83 Ala 115, 3 So 307, limited and distinguished in Dudley v. Collier, 87 Ala 431, 6 So 304; Spinney v. Miller 114 Iowa 210, 86 NW 317), where such person has acted as agent for the corporation and has violated his fiduciary obligations as such, and where the statute does not provide that the contract shall be void, but merely fixes a special penalty for violation of the statute. . . "Here, the CA did not err in ruling that the doctrine of estoppel applies. This is in view of the undisputed fact that CMC contracted with, and was benefitted by, the transaction with MISCO. While DBP denies participation in the transaction, this Court, not being a trier of facts, is constrained from making a determination based on such allegation. Further, such argument is rendered unavailing by the above disquisition resolving MISCO's, or Monsanto's, capacity to sue.
The doctrine was adopted by this Court as early as 1924 in Asia Banking Corporation v. Standard Products Co., in which the following pronouncement was made:"The general rule that in the absence of fraud a person who has contracted or otherwise dealt with an association in such a way as to recognize and in effect admit its legal existence as corporate body is thereby estopped to deny its corporate existence in any action leading out of or involving such contract or dealing, unless its existence is attacked for causes which have arisen since making the contract or other dealing relied on as an estoppel and this applies to foreign as well as domestic corporations. (14 CJ. 227; Chinese Chamber of Commerce vs. Pua Te Ching, 14 Phil. 222)."
Section 1. Definitions and scope of this Act.- (1) As used in this Act, the term "investment" shall mean equity participation in any enterprise formed, organized or existing under the laws of the Philippines; and the phrase "doing business" shall include soliciting orders, purchases, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors who are domiciled in the Philippines or who in any calendar year stay in the Philippines for a period or periods totaling one hundred eighty days or more; participating in the management, supervision or control of any domestic business firm, entity or corporation in the Philippines; and any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization.[11] Rollo, p. 50.