Allied Agri-Business Development Co., Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Respondent Cherry Valley Farms Limited (CHERRY VALLEY), an English company, filed a complaint against petitioner Allied Agri-Business Development Co., Inc. (ALLIED) for collection of a sum of money. CHERRY VALLEY alleged that ALLIED purchased duck hatching eggs and ducklings from September 1, 1982, to February 16, 1983, totaling £51,245.12, which remained unpaid despite demands. CHERRY VALLEY further alleged that ALLIED's president, Ricardo Quintos, had acknowledged the obligation and even proposed a new corporation, which CHERRY VALLEY rejected. Procedural History: ALLIED filed an answer denying the material allegations and raising defenses such as CHERRY VALLEY's lack of capacity to sue and the unauthorized nature of Quintos's admissions. CHERRY VALLEY then served a Request for Admission on ALLIED, seeking admissions regarding the ownership structure of ALLIED, the purchases made, the demand for payment, the proposal for a new corporation, and the acknowledgment of indebtedness. ALLIED filed objections, arguing that the requested admissions were matters CHERRY VALLEY should prove and that some were immaterial. The trial court disregarded ALLIED's objections and ordered it to answer the request within ten days, warning that failure to do so would result in the matters being deemed admitted. After denying ALLIED's motion for reconsideration, the trial court granted ALLIED a non-extendible period of five days to answer. ALLIED failed to submit a sworn answer. Consequently, CHERRY VALLEY filed a motion for summary judgment, asserting implied admissions. The trial court rendered judgment in favor of CHERRY VALLEY, ordering ALLIED to pay the principal amount, legal interest, and attorney's fees. The Court of Appeals affirmed the trial court's decision with modifications, deleting the award for attorney's fees and costs of suit. The Petition: ALLIED assailed the Court of Appeals' decision, arguing that the appellate court erred in affirming the summary judgment, that the complaint should have been dismissed due to CHERRY VALLEY's lack of personality to sue, that the summary judgment denied ALLIED due process by not requiring CHERRY VALLEY to produce witnesses, and that the requested admissions were matters CHERRY VALLEY bore the burden of proving.
Issue(s)
Whether respondent CHERRY VALLEY, an unlicensed foreign corporation, had the legal capacity to sue in Philippine courts. Whether ALLIED's failure to file a sworn answer to the Request for Admission resulted in the implied admission of the facts stated therein. Whether the trial court erred in granting a summary judgment based on the implied admissions.
Ruling
The petition is denied. The decision of the Court of Appeals affirming the trial court's summary judgment is affirmed, with the modification that the award of attorney's fees and costs of suit be deleted.
Ratio Decidendi
On the capacity to sue of a foreign corporation: The Court reiterated that a foreign corporation is estopped from challenging its capacity to sue after it has entered into a contract with a domestic corporation. The doctrine of lack of capacity to sue was not intended to shield domestic corporations from their obligations to foreign firms with whom they have transacted business. The Court cited Georg Gratjahn GMBA & Co. v. Isnani and Commucations Materials and Designs, Inc. v. Court of Appeals to support this principle, emphasizing that such defenses are not meant to favor domestic entities who later seek to repudiate their contractual commitments. On the effect of failure to answer a Request for Admission: The Court explained that Section 2 of Rule 26 of the Rules of Court mandates that matters in a Request for Admission are deemed admitted if not denied under oath within the prescribed period. The burden of affirmative action rests on the party served with the request to avoid admission. In this case, ALLIED failed to submit a sworn answer despite being directed by the trial court, thus admitting the material allegations in CHERRY VALLEY's request. This included the ordering and receipt of goods, the demand for payment, the acknowledgment of debt by ALLIED's president, and the proposal for a new corporation. On the propriety of summary judgment: The Court affirmed that a summary judgment is appropriate when the facts admitted, particularly through a party's failure to respond to a Request for Admission, demonstrate that no genuine issue of material fact exists. By admitting the material facts necessary for judgment through its silence, ALLIED effectively conceded the plaintiff's claims. Therefore, the trial court's grant of summary judgment was in accordance with the rules and jurisprudence, as there were no longer disputed material facts to be tried.
Main Doctrine
A party's failure to file a sworn answer to a Request for Admission within the period prescribed by the Rules of Court, or as extended by the court, results in the implied admission of the matters stated in the request, which can then be the basis for a summary judgment.