Global Holdings v. Surecomp Software
REITERATIONFacts
The Antecedents: Respondent Surecomp Software, B.V. (Surecomp), a Dutch corporation, entered into a software license agreement with Asian Bank Corporation (ABC) for a period of twenty (20) years. Subsequently, ABC merged with petitioner Global Business Holdings, Inc. (Global), with Global as the surviving corporation. Global found the software unworkable and discontinued payments, leading Surecomp to file a complaint for breach of contract with damages. Procedural History: Global filed a motion to dismiss, arguing that Surecomp lacked the capacity to sue as it was doing business in the Philippines without a license, and that the contract was unenforceable under the Intellectual Property Code. The Regional Trial Court (RTC) initially granted Global's motion for leave to serve written interrogatories but held the resolution of the motion to dismiss in abeyance. Upon Surecomp's motion for partial reconsideration and Global's motion for reconsideration, the RTC denied Global's motion to dismiss on both grounds, finding that Global was estopped from questioning Surecomp's capacity to sue and that the contract was executed, not executory, thus not subject to the statute of frauds. Global then filed a petition for certiorari with the Court of Appeals (CA), which affirmed the RTC's orders. The CA denied Global's motion for reconsideration, leading to the present petition. The Petition: Global seeks a review of the CA's decision, raising two issues: (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 Surecomp's capacity to sue.
Issue(s)
Whether a special civil action for certiorari is the proper remedy for a denial of a motion to dismiss. Whether Global is estopped from questioning Surecomp's capacity to sue.
Ruling
The petition is bereft of merit. 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.
Ratio Decidendi
On the propriety of certiorari: An order denying a motion to dismiss is an interlocutory order and generally cannot be questioned via a special civil action for certiorari, which is designed to correct errors of jurisdiction, not errors of judgment. For certiorari to prosper, the denial must be tainted with grave abuse of discretion, meaning a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction. In this case, Global failed to substantiate its claim of arbitrariness on the part of the trial court. Absent such a showing, the ruling of the trial court, as upheld by the CA, must be sustained. The Court reiterated that certiorari is an extraordinary remedy and not a substitute for appeal. On the estoppel of Global to question Surecomp's capacity to sue: As a general rule, unlicensed foreign corporations doing business in the Philippines cannot sue in Philippine courts, as mandated by Section 133 of the Corporation Code. However, an exception exists under the doctrine of estoppel, where a foreign corporation doing business without a license may sue a Filipino entity that contracted with and benefited from it. A party is estopped from challenging the personality of a corporation after acknowledging it by entering into a contract and receiving benefits. In this case, Global, as the surviving corporation from the merger with ABC, assumed all liabilities and obligations of ABC. Therefore, it is as if Global itself entered into the contract with Surecomp. The findings of fact by the RTC, affirmed by the CA, established that Global assumed ABC's liabilities and obligations, making it estopped from questioning Surecomp's capacity to sue, especially since it benefited from the contract through the merger.
Main Doctrine
A foreign corporation doing business in the Philippines without a license may sue a Filipino entity that contracted with and benefited from it, as the latter is estopped from questioning the former's capacity to sue.