G.R. No.

172727

September 8, 2010

QUEENSLAND-TOKYO COMMODITIES, INC., ROMEO Y. LAU, and

CHARLIE COLLADO, Petitioners,
vs.
THOMAS GEORGE, Respondent.
RESOLUTION
NACHURA, J.:
At bar is a petition for review on certiorari under Rule 45 of the Rules of Court
filed by Queensland-Tokyo Commodities, Inc. (QTCI), Romeo Y. Lau (Lau), and
Charlie Collado (Collado), challenging the September 30, 2005 Decision 1 and
the January 20, 2006 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP
No. 58741.
QTCI is a duly licensed broker engaged in the trading of commodity
futures. In 1995, Guillermo Mendoza, Jr. (Mendoza) and Oniler Lontoc
(Lontoc) of QTCI met with respondent Thomas George (respondent),
encouraging the latter to invest with QTCI. On July 7, 1995, upon
Mendozas prodding, respondent finally invested with QTCI. On the same day,
Collado, in behalf of QTCI, and respondent signed the Customers
Agreement.3 Forming part of the agreement was the Special Power
of Attorney4 executed by respondent, appointing Mendoza as his
attorney-in-fact with full authority to trade and manage his account.
On June 20, 1996, the Securities and Exchange Commission (SEC) issued a
Cease-and-Desist Order (CDO) against QTCI. Alarmed by the issuance of
the CDO, respondent demanded from QTCI the return of his investment, but
it was not heeded. He then sought legal assistance, and discovered that
Mendoza and Lontoc were not licensed commodity futures
salesmen.
On February 4, 1998, respondent filed a complaint for Recovery of
Investment with Damages5 with the SEC against QTCI, Lau, and Collado
(petitioners), and against the unlicensed salesmen, Mendoza and Lontoc. The
case was docketed as SEC Case No. 02-98-5886, and was raffled to SEC
Hearing Officer Julieto F. Fabrero.
Only petitioners answered the complaint, as Mendoza and Lontoc
had since vanished into thin air. Traversing the complaint,
petitioners denied the material allegations in the complaint and
alleged lack of cause of action, as a defense. Petitioners averred
that QTCI only assigned duly qualified persons to handle the
accounts of its clients; and denied allowing unlicensed brokers or
agents to handle respondents account. They claimed that they

were not aware of, nor were they privy to, any arrangement which
resulted in the account of respondent being handled by unlicensed
brokers. They added that even assuming that the subject account
was handled by an unlicensed broker, respondent is now estopped
from raising it as a ground for the return of his investment. They
pointed out that respondent transacted business with QTCI for
almost a year, without questioning the license or the authority of
the traders handling his account. It was only after it became
apparent that QTCI could no longer resume its business transactions
by reason of the CDO that respondent raised the alleged lack of
authority of the brokers or traders handling his account. The losses
suffered by respondent were due to circumstances beyond
petitioners control and could not be attributed to them.
Respondents remedy, they added, should be against the unlicensed
brokers who handled the account. Thus, petitioners prayed for the
dismissal of the complaint.6
After due proceedings, the SEC Hearing Officer rendered a decision 7 in favor
of respondent, decreeing that:
WHEREFORE, premises considered, [petitioners] Queensland Tokyo
[C]ommodities, Inc., Romeo Y. Lau (aka "Lau Ching Yee") and Charlie
F. Collado are hereby ordered to jointly and severally pay the
[respondent] the following:
1. The amount of P138,164.00, Philippine currency, representing the x
x x return of his [respondents] peso investment, plus legal rate of
interest from February 1998 until fully paid;
2. The amount of $19,820.00, American dollars, or its peso equivalent
at the time of payment representing the [respondents] return of his
dollar investments, plus legal rate of interest from February 1998 until
fully paid;
3. The amount of P100,000.00 as (sic) by way of moral damages;
4. The amount of P50,000.00 as and (sic) by way of exemplary
damages;
5. The amount of P10,000.00 as and for attorneys fees; and
6. The amount of P2,877.00 as cost of suit.
SO ORDERED.8
Petitioners appealed to the Commission en banc, but the appeal was
dismissed because the Notice of Appeal and the Memorandum on Appeal
were not verified.9

Petitioners then went to the CA via a petition for review10 under Rule 43,
faulting the Commission en banc for dismissing their appeal on purely
technical ground. They insisted that they did not violate the rules on
commodity futures trading. Thus, they faulted the SEC Hearing Officer for
nullifying the Customers Agreement and for holding them liable for
respondents claims.
On September 30, 2005, the CA rendered the now challenged Decision.11 It
declared the dismissal of petitioners appeal by the Commission en banc
improper. Nevertheless, it did not order a remand of the case to the
Commission en banc because jurisdiction over petitioners appeal
had already been transferred to the Regional Trial Court (RTC) by
virtue of Republic Act No. 8799 or the Securities Regulation Code.
The CA thus proceeded to decide the merits of the case, affirming in toto the
decision of the SEC Hearing Officer. The appellate court failed to see any
reason to disturb the SEC Hearing Officers finding of liability on the part
of petitioners. It sustained the finding that petitioners violated the
Revised Rules and Regulations on Commodity Futures Trading when
they allowed an unlicensed salesman, like Mendoza, to handle
respondents account. The CA also upheld the nullification of the
Customers Agreement, and the award of moral and exemplary
damages, as well attorneys fees, in favor of respondent. The CA
disposed, thus:
WHEREFORE, premises considered, the petition is DISMISSED for lack of
merit. The assailed decision dated February 7, 2000 is hereby AFFIRMED in
toto.
SO ORDERED.12
Petitioners filed a motion for reconsideration,13 but the CA denied it on
January 20, 2006.14
Hence, this recourse by petitioners arguing that:
A.
THE HONORABLE COURT OF APPEALS ERRED IN CONCLUDING THAT
PETITIONERS KNOWINGLY PERMITTED AN UNLICENSED TRADER TO SOLICIT
AND HANDLE REPONDENTS ACCOUNT, AND THAT PETITIONERS ARE GUILTY
OF FRAUD AND MISREPRESENTATION.
B.
THE HONORABLE COURT OF APPEALS ERRED IN FINDING INDIVIDUAL
PETITIONERS SOLIDARILY LIABLE FOR THE DAMAGES AND AWARDS DUE
[THE] RESPONDENT.15

Petitioners insist that they did not violate the Revised Rules and
Regulations on Commodity Futures Trading. They claim that it has been
QTCIs policy and practice to appoint only licensed traders to trade the
clients account. They denied any participation in the designation of Mendoza
as respondents attorney-in-fact; taking exception to the findings that they
permitted Mendoza to trade respondents account. Petitioners also assailed
the weight given by the SEC Hearing Officer and by the CA to respondents
evidence.
It is evident that the issue raised in this petition is the correctness of the
factual findings of the SEC Hearing Officer, as affirmed by the CA. It is wellsettled that factual findings of administrative agencies are generally held to
be binding and final so long as they are supported by substantial evidence in
the records of the case. It is not the function of this Court to analyze or weigh
all over again the evidence and the credibility of witnesses presented before
the lower court, tribunal, or office, as we are not a trier of facts. Our
jurisdiction is limited to reviewing and revising errors of law imputed to the
lower court, the latters findings of fact being conclusive and not reviewable
by this Court.16
We sustain the finding of the SEC Hearing Officer and the CA that petitioners
allowed unlicensed individuals to engage in, solicit or accept orders in
futures contracts, and thus, transgressed the Revised Rules and Regulations
on Commodity Futures Trading.17
We are not persuaded by petitioners assertion that they had no
hand in Mendozas designation as respondents attorney-in-fact. As
pointed out by the CA, the Special Power of Attorney formed part of
respondents agreement with QTCI, and under the Customers
Agreement,18 only a licensed or registered dealer or investment
consultant may be appointed as attorney-in-fact. Thus:
2. If I so desire, I shall appoint you as my agent pursuant to a Special Power
of Attorney which I shall execute for this purpose and which form part of this
Agreement.
xxxx
18. I hereby confer, pursuant to the Special Power of Attorney herewith
attached, full authority to your licensed/registered dealer/investment in
charge of my account/s and your Senior Officer, who must also be a
licensed/registered dealer/investment consultant, to sign all order slips on
futures trading. 19
Inexplicably, petitioners did not object to, and in fact recognized, Mendozas
appointment as respondents attorney-in-fact. Collado, in behalf of QTCI,

concluded the Customers Agreement despite the fact that the appointed
attorney-in-fact was not a licensed dealer. Worse, petitioners permitted
Mendoza to handle respondents account.
Indubitably, petitioners violated the Revised Rules and Regulations on
Commodity Futures Trading prohibiting any unlicensed person to engage in,
solicit or accept orders in futures contract. Consequently, the SEC Hearing
Officer and the CA cannot be faulted for declaring the contract between QTCI
and respondent void.
Batas Pambansa Bilang (B.P. Blg.) 178 or the Revised Securities Act explicitly
provided:
SEC. 53. Validity of Contracts. x x x.
(b) Every contract executed in violation of any provision of this Act, or any
rule or regulation thereunder, and every contract, including any contract for
listing a security on an exchange heretofore or hereafter made, the
performance of which involves the violation of, or the continuance of any
relationship or practice in violation of, any provision of this Act, or any rule
and regulation thereunder, shall be void.
Likewise, Paragraph 2920 of the Customers Agreement provides:
29.
Contracts entered into by unlicensed Account Executives (A/E) or Investment
consultants are deemed void and of no legal effect.
Clearly, the CA merely adhered to the clear provision of B.P. Blg. 178 and to
the stipulation in the parties agreement when it declared as void the
Customers Agreement between QTCI and respondent.
It is settled that a void contract is equivalent to nothing; it produces no civil
effect. It does not create, modify, or extinguish a juridical relation. Parties to
a void agreement cannot expect the aid of the law; the courts leave them as
they are, because they are deemed in pari delicto or in equal fault.21 This
rule, however, is not absolute. Article 1412 of the Civil Code provides an
exception, and permits the return of that which may have been given under
a void contract. Thus:
Art. 1412. If the act in which the unlawful or forbidden cause consists does
not constitute a criminal offense, the following rules shall be observed:
(1) When the fault is on the part of both contracting parties, neither
may recover what he has given by virtue of the contract, or demand
the performance of the other's undertaking;
(2) When only one of the contracting parties is at fault, he cannot
recover what he has given by reason of the contract, or ask for the

fulfillment of what has been promised him. The other, who is not at
fault, may demand the return of what he has given without any
obligation to comply with his promise.
The evidence on record established that petitioners indeed permitted an
unlicensed trader and salesman, like Mendoza, to handle respondents
account. On the other hand, the record is bereft of proof that respondent had
knowledge that the person handling his account was not a licensed trader.
Respondent can, therefore, recover the amount he had given under the
contract. The SEC Hearing Officer and the CA, therefore, committed no
reversible error in holding that respondent is entitled to a full recovery of his
investments.
Petitioners Collado and Lau next fault the CA in making them solidarily liable
for the payment of respondents claim.
Doctrine dictates that a corporation is invested by law with a
personality separate and distinct from those of the persons
composing it, such that, save for certain exceptions, corporate
officers who entered into contracts in behalf of the corporation
cannot be held personally liable for the liabilities of the latter.
Personal liability of a corporate director, trustee, or officer, along
(although not necessarily) with the corporation, may validly attach,
as a rule, only when (1) he assents to a patently unlawful act of
the corporation, or when he is guilty of bad faith or gross
negligence in directing its affairs, or when there is a conflict of
interest resulting in damages to the corporation, its stockholders,
or other persons; (2) he consents to the issuance of watered down
stocks or who, having knowledge thereof, does not forthwith file
with the corporate secretary his written objection thereto; (3) he
agrees to hold himself personally and solidarily liable with the
corporation; or (4) he is made by a specific provision of law
personally answerable for his corporate action.221avvphi1
In holding Lau and Collado jointly and severally liable with QTCI for
respondents claim, the SEC Hearing Officer explained in this wise:
Anent the issue of who among the individual [petitioners] are jointly liable
with QTCI in the payment of the awards, the Commission took into
consideration, among others, that audit report on the trading activities
submitted by the Brokers and Exchange Department (BED) of this
Commission (Exhibit "J"). The findings contained in the report include the
presence of seven (7) unlicensed investment consultants in QTCI, and the

company practice of changing deeds of Special Power of Attorney bearing

those who are licensed (exhibits "J-1" and "J-2").
The Commission also took into consideration the fact that
[petitioner] Collado, who is not a licensed commodity salesman,
himself violated the aforequoted provisions of the Revised Rules
and Regulations on Commodity Futures Trading when he admitted
having participated in the execution of the customers orders (p. 7,
TSN dated January 21, 1999) without giving any exception thereto,
which presumably includes his participation in the execution of
customers orders of the [respondent].
Such being the case, [Mendozas] participation in the trading of
[respondents] account is within the knowledge of [petitioner]
Collado.
The presence of seven (7) unlicensed investment consultants within QTCI
apart from x x x Mendoza, and [petitioner] Collados participation in the
unlawful execution of orders under the [respondents] account clearly
established the fact that the management of QTCI failed to implement the
rules and regulations against the hiring of, and associating with, unlicensed
consultants or traders. How these unlicensed personnel been able to pursue
their unlawful activities is a reflection of how negligent [the] management
was.
[Petitioner] Romeo Lau, as president of [petitioner] QTCI, cannot
feign innocence on the existence of these unlawful activities within
the company, especially so that Collado, himself a ranking officer of
QTCI, is involved in the unlawful execution of customers orders.
[Petitioner] Lau, being the chief operating officer, cannot escape the
fact that had he exercised a modicum of care and discretion in
supervising the operations of QTCI, he could have detected and
prevented the unlawful acts of [petitioner] Collado and Mendoza.
It is therefore safe to conclude that although Lau may not have participated
nor been aware of the unlawful acts, he is however deemed to have been
grossly negligence in directing the affairs of QTCI.
In all, it having been established by substantial evidence that [petitioner]
Collado assented to the unlawful act of QTCI, and that [petitioner] Lau is
grossly negligent in directing the affairs of QTCI, and pursuant to Section 31
of the Corporation Code, they are therefore, jointly and severally liable with
QTCI for all the damages and awards due to the [respondent].23
We find no compelling reason to depart from the conclusion of the SEC
Hearing Officer, which was affirmed by the CA. We are in full accord with his

reasons for holding Lau and Collado jointly and severally liable with
QTCI for the payment of respondents claim.
Finally we sustain the awards for moral and exemplary damages in favor of
respondent. Moral damages are meant to compensate the claimant for any
physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar
injuries unjustly caused. Although incapable of pecuniary estimation, the
amount must somehow be proportional to and in approximation of the
suffering inflicted. Moral damages are not punitive in nature and were never
intended to enrich the claimant at the expense of the defendant.24
Likewise, exemplary damages are properly exigible of QTCI. Article 222925 of
the Civil Code provides that such damages may be imposed by way of
example or correction for the public good. While exemplary damages cannot
be recovered as a matter of right, they need not be proved, although plaintiff
must show that he is entitled to moral, temperate, or compensatory
damages before the court may consider the question of whether or not
exemplary damages should be awarded. Exemplary damages are imposed
not to enrich one party or impoverish another, but to serve as a deterrent
against or as a negative incentive to curb socially deleterious actions.26
However, the same statutory and jurisprudential standards dictate reduction
of the amounts of moral and exemplary damages fixed by the SEC. Certainly,
there is no hard-and-fast rule in determining what would be a fair and
reasonable amount of moral and exemplary damages, since each case must
be governed by its own peculiar facts.27 Courts are given discretion in
determining the amount, with the limitation that it should not be palpably
and scandalously excessive. Indeed, it must be commensurate to the loss or
injury suffered.28
In this case, we find a need to modify, by reducing the awards for moral
damages from P100,000.00 to P50,000.00; and for exemplary damages
from P50,000.00 to P30,000.00.
In fine, except for the modification of the awards for moral and exemplary
damages, there is no justification to overturn the findings of the SEC Hearing
Officer, as affirmed by the CA.
We reiterate that the findings of facts and conclusions of law of the SEC are
controlling on the reviewing authority. Indeed, the rule is that the findings of
fact of administrative bodies, if based on substantial evidence, are
controlling on the reviewing authority. It has been held that it is not for the
appellate court to substitute its own judgment for that of the administrative
agency on the sufficiency of the evidence and the credibility of the

witnesses. The Hearing Officer had the optimum opportunity to review the
pieces of evidence presented before him and to observe the demeanor of the
witnesses. Administrative decisions on matters within his jurisdiction are
entitled to respect and can only be set aside on proof of grave abuse of
discretion, fraud, or error of law,29 which has not been shown by petitioner in
this case.
WHEREFORE, the challenged Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 58741 are AFFIRMED with MODIFICATION that
the awards for moral and exemplary damages are reduced to P50,000.00
and P30,000.00, respectively.
SO ORDERED.

G.R. No. 173463

October 13, 2010

GLOBAL BUSINESS HOLDINGS, INC. (formerly Global Business Bank,

Inc.), Petitioner,
vs.
SURECOMP SOFTWARE, B.V., Respondent.
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court, assailing the Decision1dated May 5, 2006 and the
Resolution2 dated July 10, 2006 of the Court of Appeals (CA) in CA-G.R. SP No.
75524.
The facts of the case are as follows:
On March 29, 1999, respondent Surecomp Software, B.V. (Surecomp), a
foreign corporation duly organized and existing under the laws of the
Netherlands, entered into a software license agreement with Asian Bank
Corporation (ABC), a domestic corporation, for the use of its IMEX Software
System (System) in the banks computer system for a period of twenty (20)
years.3
In July 2000, ABC merged with petitioner Global Business Holdings, Inc.
(Global),4 with Global as the surviving corporation. When Global took over
the operations of ABC, it found the System unworkable for its
operations, and informed Surecomp of its decision to discontinue
with the agreement and to stop further payments thereon.
Consequently, for failure of Global to pay its obligations under the agreement
despite demands, Surecomp filed a complaint for breach of contract
with damages before the Regional Trial Court (RTC) of Makati. The
case was docketed as Civil Case No. 01-1278.5
In its complaint, Surecomp alleged that it is a foreign corporation not doing
business in the Philippines and is suing on an isolated transaction. Pursuant
to the agreement, it installed the System in ABCs computers for a
consideration of US$298,000.00 as license fee. ABC also undertook to pay
Surecomp professional services, which included on-site support and
development of interfaces, and annual maintenance fees for five (5)
subsequent anniversaries, and committed to purchase one (1) or two (2)
Remote Access solutions at discounted prices. In a separate transaction, ABC
requested Surecomp to purchase on its behalf a software called MF Cobol
Runtime with a promise to reimburse its cost. Notwithstanding the delivery of
the product and the services provided, Global failed to pay and comply with
its obligations under the agreement. Thus, Surecomp demanded payment of

actual damages amounting to US$319,955.00 and an additional amount of

US$227,610.00 for Globals unilateral pretermination of the agreement,
exemplary damages, attorneys fees and costs of suit.6
Instead of filing an answer, Global filed a motion to dismiss based on
two grounds: (1) that Surecomp had no capacity to sue because it
was doing business in the Philippines without a license; and (2) that
the claim on which the action was founded was unenforceable under
the Intellectual Property Code of the Philippines.7
On the first ground, Global argued that the contract entered into was not an
isolated transaction since the contract was for a period of 20 years.
Furthermore, Global stressed that it could not be held accountable for any
breach as the agreement was entered into between Surecomp and ABC. It
had not, in any manner, taken part in the negotiation and execution of the
agreement but merely took over the operations of ABC as a result of the
merger. On the second ground, Global averred that the agreement, being a
technology transfer arrangement, failed to comply with Sections 87 and 88
of the Intellectual Property Code of the Philippines.8
In the interim, Global filed a motion for leave to serve written interrogatories
to Surecomp in preparation for the hearing on the motion to dismiss,
attaching thereto its written interrogatories.
After an exchange of pleadings on the motions filed by Global, on June 18,
2002, the RTC issued an Order,9 the pertinent portions of which read:
After a thorough and careful deliberation of the respective arguments
advanced by the parties in support of their positions in these two (2)
incidents, and since it cannot be denied that there is indeed a contract
entered into between the plaintiff [Surecomp] and the defendant [Global],
the latter as a successor in interest of the merging corporation Asian Bank,
defendant [Global] is estopped from denying plaintiffs [Surecomps] capacity
to sue it for alleged breach of that contract with damages. Its argument that
it was not the one who actually contracted with the plaintiff [Surecomp] as it
was the merging Asian Bank which did, is of no moment as it does not relieve
defendant Global Bank of its contractual obligation under the Agreement on
account of its undertaking under it:
"x x x shall be responsible for all the liabilities and obligations of ASIANBANK
in the same manner as if the Merged Bank had itself incurred such liabilities
or obligations, and any pending claim, action or proceeding brought by or
against ASIANBANK may be prosecuted by or against the Merged Bank. The
right of creditors or liens upon the property of ASIANBANK shall not be
impaired by the merger; provided that the Merged Bank shall have the right

to exercise all defenses, rights, privileges, set-offs and counter-claims of

every kind and nature which ASIANBANK may have, or with the Merged Bank
may invoke under existing laws."
It appearing however that the second ground relied upon by the defendant
[Global], i.e., that the cause of action of the plaintiff is anchored on an
unenforceable contract under the provision of the Intellectual Property Code,
will require a hearing before the motion to dismiss can be resolved and
considering the established jurisprudence in this jurisdiction, that availment
of mode of discovery by any of the parties to a litigation, shall be liberally
construed to the end that the truth of the controversy on hand, shall be
ascertained at a less expense with the concomitant facility and
expeditiousness, the motion to serve written interrogatories upon the
plaintiff [Surecomp] filed by the defendant [Global] is GRANTED insofar as
the alleged unenforceability of the subject contract is concerned.
Accordingly, the latter is directed to serve the written interrogatories upon
the plaintiff [Surecomp], which is required to act on it in accordance with the
pertinent rule on the matter.
Necessarily, the resolution of the motion to dismiss is held in abeyance until
after a hearing on it is property conducted, relative to the second ground
aforementioned.
SO ORDERED.10
Surecomp moved for partial reconsideration, praying for an outright denial of
the motion to dismiss, while Global filed a motion for reconsideration.11
On November 27, 2002, the RTC issued an Order,12 the fallo of which reads:
WHEREFORE, the Order of this Court dated 18 June 2002 is modified.
Defendants [Globals] Motion to Dismiss dated 17 October 2001 is denied on
the two grounds therein alleged. Defendant [Global] is given five (5) days
from receipt of this Order within which to file its Answer.
The resolution of defendants [Globals] Motion to Serve Written
Interrogatories is held in abeyance pending the filing of the Answer.
SO ORDERED.13
In partially modifying the first assailed Order, the RTC ratiocinated, viz.:
This court sees no reason to further belabor the issue on plaintiffs capacity
to sue since there is a prima facie showing that defendant entered into a
contract with defendant and having done so, willingly, it cannot now be
made to raise the issue of capacity to sue [Merrill Lynch Futures, Inc. v. CA,
211 SCRA 824]. That defendant was not aware of plaintiffs lack of capacity
to sue or that defendant did not benefit from the transaction are arguments

that are hardly supported by the evidence already presented for the
resolution of the Motion to Dismiss.
As to the issue of unenforceability of the subject contract under the
Intellectual Property Code, this court finds justification in modifying the
earlier Order allowing the further presentation of evidence. It appearing that
the subject contract between the parties is an executed, rather than an
executory, contract the statute of frauds therefore finds no application here.
xxxx
As to defendants Motion to Serve Written Interrogatories, this court finds
that resort to such a discovery mechanism while laudable is premature as
defendant has yet to file its Answer. As the case now stands, the issues are
not yet joined and the disputed facts are not clear.14
Undaunted, Global filed a petition for certiorari with prayer for the issuance
of a temporary restraining order and/or writ of preliminary injunction under
Rule 65 of the Rules of Court before the CA, contending that the RTC abused
its discretion and acted in excess of its jurisdiction.15
On May 5, 2006, the CA rendered a Decision,16 the dispositive portion of
which reads:
WHEREFORE, premises considered, the instant petition is DENIED. The
assailed Orders dated June 18, 2002 and November 27, 2002 of the Regional
Trial Court of Makati City, Branch 146, in Civil Case No. 01-1278 are hereby
AFFIRMED.
SO ORDERED.17
A motion for reconsideration was filed by Global. On July 10, 2006, the CA
issued a Resolution18 denying the motion for reconsideration for lack of merit.
Hence, this petition.
Global presents the following issues for resolution: (1) whether a special civil
action for certiorari is the proper remedy for a denial of a motion to dismiss;
and (2) whether Global is estopped from questioning Surecomps capacity to
sue.19
The petition is bereft of merit.
I
An order denying a motion to dismiss is an interlocutory order which neither
terminates nor finally disposes of a case as it leaves something to be done
by the court before the case is finally decided on the merits. As such, the
general rule is that the denial of a motion to dismiss cannot be questioned in
a special civil action for certiorari which is a remedy designed to correct
errors of jurisdiction and not errors of judgment.20

To justify the grant of the extraordinary remedy of certiorari, the denial of the
motion to dismiss must have been tainted with grave abuse of discretion. By
"grave abuse of discretion" is meant such capricious and whimsical exercise
of judgment that is equivalent to lack of jurisdiction. The abuse of discretion
must be grave as where the power is exercised in an arbitrary or despotic
manner by reason of passion or personal hostility, and must be so patent and
gross as to amount to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined by or to act all in contemplation of law.21
In the instant case, Global did not properly substantiate its claim of
arbitrariness on the part of the trial court judge that issued the assailed
orders denying the motion to dismiss. In a petition for certiorari, absent such
showing of arbitrariness, capriciousness, or ill motive in the disposition of the
trial judge in the case, we are constrained to uphold the courts ruling,
especially because its decision was upheld by the CA.
II
The determination of a corporations capacity is a factual question that
requires the elicitation of a preponderant set of facts.22 As a rule, unlicensed
foreign non-resident corporations doing business in the Philippines cannot
file suits in the Philippines.23 This is mandated under Section 133 of the
Corporation Code, which reads:
Sec. 133. Doing business without a 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.
A corporation has a legal status only within the state or territory in which it
was organized. For this reason, a corporation organized in another country
has no personality to file suits in the Philippines. In order to subject a foreign
corporation doing business in the country to the jurisdiction of our courts, it
must acquire a license from the Securities and Exchange Commission and
appoint an agent for service of process. Without such license, it cannot
institute a suit in the Philippines.241avvphi1
The exception to this rule is the doctrine of estoppel. Global is estopped from
challenging Surecomps capacity to sue.
A foreign corporation doing business in the Philippines without license may
sue in Philippine courts a Filipino citizen or a Philippine entity that had
contracted with and benefited from it.25 A party is estopped from challenging

the personality of a corporation after having acknowledged the same by

entering into a contract with it.26 The principle is applied to prevent a person
contracting with a foreign corporation from later taking advantage of its
noncompliance with the statutes, chiefly in cases where such person has
received the benefits of the contract. 27
Due to Globals merger with ABC and because it is the surviving corporation,
it is as if it was the one which entered into contract with Surecomp. In the
merger of two existing corporations, one of the corporations survives and
continues the business, while the other is dissolved, and all its rights,
properties, and liabilities are acquired by the surviving corporation. 28 This is
particularly true in this case. Based on the findings of fact of the RTC, as
affirmed by the CA, under the terms of the merger or consolidation, Global
assumed all the liabilities and obligations of ABC as if it had incurred such
liabilities or obligations itself. In the same way, Global also has the right to
exercise all defenses, rights, privileges, and counter-claims of every kind and
nature which ABC may have or invoke under the law. These findings of fact
were never contested by Global in any of its pleadings filed before this Court.
WHEREFORE, in view of the foregoing, the Decision dated May 5, 2006 and
the Resolution dated July 10, 2006 of the Court of Appeals in CA-G.R. SP No.
75524 are hereby AFFIRMED. Costs against petitioner.
SO ORDERED.