ALLIED AGRI-BUSINESS v. CA

 

ALLIED AGRI-BUSINESS DEVELOPMENT CO., INC., petitioner, vs. COURT OF APPEALS and CHERRY VALLEY FARMS LIMITED, respondents

[G.R. No. 118438. December 4, 1998.]

 

FACTS:

Respondent Cherry Valley Farms Limited (CHERRY VALLEY) filed against petitioner Allied Agri-Business Development Co. Inc. (ALLIED) a complaint with the RTC Makati City for collection of sum of money alleging, among others that:

(a) CHERRY VALLEY is a foreign corporation with principal office in England.

(b) on September 1982-February 1983 (6 months), ALLIED purchased in 10 separate orders and received from CHERRY VALLEY several duck hatching eggs and ducklings which in value totaled £51,245.12;

(c) ALLIED did not pay the total purchase price despite repeated demands evidenced by a letter of Solicitor Braithwaite of England in behalf of CHERRY VALLEY;

(d) instead of paying its obligation, ALLIED through its president wrote CHERRY VALLEY inviting the latter to be a stockholder in a new corporation to be formed by ALLIED, which invitation however was rejected by CHERRY VALLEY and,

(e) ALLIED's president Ricardo Quintos expressly acknowledged through a letter of the obligation of his corporation to CHERRY VALLEY.

ALLIED filed an answer denying the material allegations of the complaint and contended that:

(a) private respondent CHERRY VALLEY lacked the legal capacity to sue;

(b) the letter of Quintos to CHERRY VALLEY was never authorized by the board of petitioner ALLIED, thus any admission made in that letter could not bind ALLIED;

(c) the alleged amount did not represent the true and real obligation, if any, of petitioner;

(d) to the best of the knowledge of ALLIED, not all ducks and ducklings covered and represented by CHERRY VALLEY's invoices were actually ordered by the former; and, (e) private respondent had no cause of action against petitioner.

On 19 July 1988, CHERRY VALLEY served on ALLIED's counsel a REQUEST FOR ADMISSION dated 15 July 1988 worded as follows:

1. That the chairman of the board of directors and president of your corporation is Mr. Ricardo V. Quintos;

2. That out of the 3,000,000 subscribed shares of stock, 1,496,000 shares are owned by Mr. Ricardo Quintos and 1,432,000 shares is (sic) also owned by his wife, Agnes dela Torre;

3. That for a period of six (6) months starting from 1 September 1982, your corporation ordered and received from CHERRY VALLEY duck eggs and ducklings with a total value of £51,245.12 as reflected on CHERRY VALLEY invoices issued to you;

4. That you received a letter dated 22 March 1985 from Mr. P.R.C. Braithwaite, solicitor of CHERRY VALLEY, demanding settlement of your unpaid account of £52,245.12 for the above-stated purchases;

5. That instead of paying your obligation to CHERRY VALLEY, Mr. Ricardo Quintos, in his capacity as president of your corporation, sent a letter to CHERRY VALLEY dated 17 July 1985 proposing the setting up of a new corporation with CHERRY VALLEY refusing acceptance of your proposal; 

6. That you received a letter dated 26 September 1985 from Mr. J. Cross, Director and Secretary of CHERRY VALLEY refusing acceptance of your proposal;

7. That Mr. Ricardo Quintos in a letter dated 8 October 1985 admitted your indebtedness in the sum of English Sterling Pounds £51,245.12.

It is further requested that said sworn admission be made within 10 days from receipt of this request.

 

ALLIED filed its Comments/Objections alleging that:

(a) the admissions requested were matters which the private respondent had the burden to prove through its own witness during the trial and thus petitioner need not answer; and

 

(b) the request for admission regarding the ownership set-up of petitioner corporation was immaterial and improper for not having been pleaded in the complaint.

 

In its Reply, CHERRY VALLEY maintained that there was no need on its part to produce a witness to testify on the matters requested for admission, for these pertained to incidents personal to and within the knowledge of petitioner alone. 

RTC issued an Order disregarding ALLIED's Comments/Objections to Request for Admission in view of its non-compliance with Sec. 2, Rule 26, of the Rules of Court and directing ALLIED to answer the request for admission within ten (10) days from receipt of the order, otherwise, the matters contained in the request would be deemed admitted.

ALLIED moved to reconsider the order but this was denied.

RTC directed the latter to answer the request for admission within a non-extendible period of five (5) days from receipt of the order.

ALLIED failed to submit a sworn answer to the request for admission within the additional period of five (5) days granted by the trial court.

 

Hence, CHERRY VALLEY filed a motion for summary judgment alleging that there was already an implied admission on the matters requested for admission pursuant to Rule 26 of the Rules of Court.

 

The RTC rendered judgment against petitioner.

CA affirmed RTC’s judgment.

 

ISSUE:

1. W/N the complaint should have been instantly dismissed on the ground of lack of personality to sue on the part of respondent CHERRY VALLEY

2. W/N failure to answer the request for admission did not result in its admission of the matters

 

RULING:

1. NO. The complaint should not be instantly dismissed on the ground of lack of personality to sue on the part of respondent CHERRY VALLEY

We cannot sustain the allegation that respondent CHERRY VALLEY being an unlicensed foreign corporation lacked the legal capacity to institute the suit in the trial court for the recovery of money claims from petitioner. In fact, petitioner is estopped from challenging or questioning the personality of a corporation after having acknowledged the same by entering into a contract with it.  The doctrine of lack of capacity to sue or failure of a foreign corporation to acquire a local license was never intended to favor domestic corporations who enter into solitary transactions with unwary foreign firms and then repudiate their obligations simply because the latter are not licensed to do business in this country. 

 

2.NO. Petitioner’s failure to answer the request for admission resulted in its admission of the matters.

Section 1 of Rule 26 of the Rules of Court provides:

SEC. 1. Request for Admission. — At any time after issues have been joined, a party may file and serve upon any other party a written request for the admission by the latter of the genuineness of any material and relevant document described in and exhibited with the request or of the truth of any material and relevant matter of fact set forth in the request. Copies of the documents shall be delivered with the request unless copies have already been furnished.

 

The purpose of the rule governing requests for admission of facts and genuineness of documents is to expedite trial and to relive parties of the costs of proving facts which will not be disputed on trial and the truth of which can be ascertained by reasonable inquiry.

 

Each of the matters of which an admission is requested shall be deemed admitted UNLESS within a period designated in the request which shall not be less than fifteen (15) days after service thereof, or within such further time as the court may allow on motion, the party to whom the request is directed files and serves upon the party requesting the admission a sworn statement either denying specifically the matters of which an admission is requested or setting forth in detail the reasons why he cannot truthfully either admit or deny those matters. 

Upon service of request for admission, the party served may do any of the following acts:

(a) he may admit each of the matters of which an admission is requested, in which case, he need not file an answers;

(b) he may admit the truth of the matters of which admission is requested by serving upon the party requesting a written admission of such matters within the period stated in the request, which must not be less than ten (10) day after service, or within such further time as the court may allow on motion and notice;

(c) he may file a sworn statement denying specifically the matter of which an admission is requested; or,

(d) he may file a sworn statement setting forth in the detail the reasons why he cannot truthfully either admit or deny the matters of which an admission is requested. 

 

The records show that although petitioner filed with the trial court its comments and objections to the request for admission served on it by private respondent, the trial court disregarded the objections and directed petitioner after denying its motion for reconsideration, to answer the request within five (5) days from receipt of the directive; otherwise, the matters of which the admission was requested would be deemed admitted.

Petitioner failed to submit the required answer within the period.

The matters set forth in the request were therefore deemed admitted by petitioner, i.e., (a) that for a period of six (6) months starting from 1 September 1982, petitioner ordered and received from respondent CHERRY VALLEY duck eggs and ducklings amounting to £51,245.12; (b) that petitioner received a letter dated 22 March 1985 from private respondent's lawyer demanding payment of the amount of the purchases; (c) that instead of paying the obligation to respondent CHERRY VALLEY, petitioner's president Ricardo Quintos sent a letter to the former proposing the establishment of a new corporation with CHERRY VALLEY as one of the stockholders; (d) that the proposal was refused by the Director of CHERRY VALLEY; and, (e) that petitioner's president Ricardo Quintos admitted the indebtedness of his corporation to CHERRY VALLEY in the sum of English Sterling Pounds £51,245.12. 

The burden of affirmative action is on the party upon whom notice is served to avoid the admission rather than upon the party seeking the admission. Hence, when petitioner failed to reply to a request to admit, it may not argue that the adverse party has the burden of proving the facts sought to be admitted. Petitioner's silence is an admission of the facts stated in the request. 

This Court finds that the motion for summary judgment filed by respondent CHERRY VALLEY on the ground that there were no questions of fact in issue since the material allegations of the complaint were not disputed was correctly granted by the trial court.

WHEREFORE, the Petition is DENIED. The decision of the Court of Appeals dated 6 September 1994 which AFFIRMED the trial court in "ordering defendant to pay plaintiff the sum of £51,245.12 or its peso equivalent at the time of payment plus legal interest from the date of filing of this complaint until fully paid;" and "ordering defendant to pay plaintiff ten percent (10%) of the total amount due from defendant by way of attorney's fees since no protracted trial was held in this case plus cost of suit," with the modification that "Allied shall pay the monetary award of attorney's fees and costs of suit be deleted," is AFFIRMED. Costs against herein petitioner Allied Agri-Business Development Co., Inc.