Steelcase, Inc. (Steelcase) granted Design International Selections, Inc. (DISI) the right to market, sell, distribute, install, and service its products to end-user customers within the Philippines.Steelcase argues that Section 3(d) of R.A. No. 7042 or the Foreign Investments Act of 1991 (FIA) expressly states that the phrase doing business excludes the appointment by a foreign corporation of a local distributor domiciled in the Philippines which transacts business in its own name and for its own account. On the other hand, DISI argues that it was appointed by Steelcase as the latter’s exclusive distributor of Steelcase products. The dealership agreement between Steelcase and DISI had been described by the owner himself as basically a buy and sell arrangement.
Whether Steelcase had been doing business in the Philippines.
[T]he appointment of a distributor in the Philippines is not sufficient to constitute doing business unless it is under the full control of the foreign corporation. On the other hand, if the distributor is an independent entity which buys and distributes products, other than those of the foreign corporation, for its own name and its own account, the latter cannot be considered to be doing business in the Philippines. Here, DISI was an independent contractor which sold Steelcase products in its own name and for its own account. As a result, Steelcase cannot be considered to be doing business in the Philippines by its act of appointing a distributor as it falls under one of the exceptions under R.A. No. 7042.