GALA VS ELLICE CORPORATION

AGRO

INDUSTRIAL

It is always sad to see families torn apart by money matters and property disputes. The concept of a close corporation organized for the purpose of running a family business or managing family property has formed the backbone of Philippine commerce and industry. Through this device, Filipino families have been able to turn their humble, hard-earned life savings into going concerns capable of providing them and their families with a modicum of material comfort and financial security as a reward for years of hard work. A family corporation should serve as a rallying point for family unity and prosperity, not as a flashpoint for familial strife. It is hoped that people reacquaint themselves with the concepts of mutual aid and security that are the original driving forces behind the formation of family corporations and use these tenets in order to facilitate more civil, if not more amicable, settlements of family corporate disputes. 96 SCRA 631 Business Organization Corporation Law Piercing the Veil of Corporate Fiction In 1989, San Juan Structural and Steel Fabricators, Inc. (San Juan) alleged that it entered into a contract of sale with Motorich Sales Corporation (Motorich) through the latters treasurer, Nenita Gruenberg. The subject of the sale was a parcel of land owned by Motorich. San Juan advanced P100k to Nenita as earnest money. On the day agreed upon on which Nenita was supposed to deliver the title of the land to Motorich, Nenita did not show up. Nenita and Motorich did not heed the subsequent demand of San Juan to comply with the contract hence San Juan sued Motorich. Motorich, in its defense, argued that it is not bound by the acts of its treasurer, Nenita, since her act in contracting with San Juan was not authorized by the corporate board. San Juan raised the issue that Nenita was actually the wife of the President of Motorich; that Nenita and her husband owns 98% of the corporations capital stocks; that as such, it is a close corporation and that makes Nenita and the President as principal stockholders who do not need any authorization from the corporate board; that in this case, the corporate veil may be properly pierced. ISSUE: Whether or not San Juan is correct. HELD: No. Motorich is right in invoking that it is not bound by the acts of Nenita because her act in entering into a contract with San Juan was not authorized by the board of directors of Motorich. Nenita is however ordered to return the P100k. There is no merit in the contention that the corporate veil should be pierced even though it is true that Nenita and her husband own 98% of the capital stocks of Motorich. The corporate veil can only be pierced if the corporate fiction is merely used by the incorporators to shield themselves against liability for fraud, illegality or inequity committed on third persons. It is incumbent upon San Juan to prove that Nenita or

her husband is merely using Motorich to defraud San Juan. In this case however, San Juan utterly failed to establish that Motorich was formed, or that it is operated, for the purpose of shielding any alleged fraudulent or illegal activities of its officers or stockholders; or that the said veil was used to conceal fraud, illegality or inequity at the expense of third persons like San Juan. SAN JUAN STRUCTURAL STEEL VS CA FACTS: February 14 1989: San Juan Structural and Steel Fabricators, Inc.'s (San Juan) entered into an agreement with Motorich Sales Corporation (Motorich) for the transfer to it of a parcel of land containing an area of 414 square meters San Juan paid the down payment of P100,000, the balance to be paid on or before March 2, 1989 March 1, 1989: Mr. Andres T. Co, president of San Juan, wrote a letter course through Motorich's broker requesting for a computation of the balance to be paid Linda Aduca, who wrote the computation of the balance March 2, 1989: San Juan was ready with the amount corresponding to the balance, covered by Metrobank Cashier's Check, payable to Motorich they were supposed to meet in the office of San Juan but Motorich's treasurer, Nenita Lee Gruenberg, did not appear Motorich refused to execute the Transfer of Rights/Deed of Assignment which is necessary to transfer the certificate of title ACL Development Corp. (ACL) is impleaded as a necessary party since Transfer Certificate of Title No. (362909) 2876 is still in its name JNM Realty & Development Corp. (JNM) is impleaded as a necessary party in view of the fact that it is the transferor of right in favor of Motorich April 6, 1989: ACL and Motorich entered into a Deed of Absolute Sale the Registry of Deeds of Quezon City issued a new title in the name of Motorich Sales Corporation, represented by Nenita Lee Gruenberg and Reynaldo L. Gruenberg, under Transfer Certificate of Title No. 3571 as a result of Nenita Lee Gruenberg and Motorich's bad faith in refusing to execute a formal Transfer of Rights/Deed of Assignment, San Juan suffered moral and nominal damages of P500,000 and exemplary damages of P100,000.00 and P100,000 attorneys fees San Juan lost the opportunity to construct a residential building in the sum of P100,000.00 Pesos CA affirmed RTC for dismissing San Juan argues that the veil of corporate fiction of Motorich should be pierced because it is a close corporation.

Since "Spouses Reynaldo L. Gruenberg and Nenita R. Gruenberg owned all or almost all or 99.866% to be accurate, of the subscribed capital stock" of Motorich, San Juan argues that Gruenberg needed no authorization from the board to enter into the subject contract. being solely owned by the Spouses Gruenberg, the company can treated as a close corporation which can be bound by the acts of its principal stockholder who needs no specific authority

ISSUE: W/N Motorich is a close corp. which does not need to be bound by its principal SH HELD: NO. petition is hereby DENIED Gruenberg, treasurer of Motorich, and Andres Co signed the contract but that cannot bind Motorich, because it never authorized or ratified such sale or even the receipt of the earnest money A corporation is a juridical person separate and distinct from its stockholders or members San Juan failed to prove otherwise The document is a hand-written one, not a corporate receipt, and it bears only Nenita Gruenberg's signature GR: acts of corporate officers within the scope of their authority are binding on the corporation. But when these officers exceed their authority, their actions "cannot bind the corporation, unless it has ratified such acts or is estopped from disclaiming them. statutorily granted privilege of a corporate veil may be used only for legitimate purposes utilized as a shield to commit fraud, illegality or inequity; defeat public convenience; confuse legitimate issues; or serve as a mere alter ego or business conduit of a person or an instrumentality, agency or adjunct of another corporation - none here

The articles of incorporation of Motorich Sales Corporation does not contain any provision stated in Sec. 96 mere ownership by a single stockholder or by another corporation of all or capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personalities A narrow distribution of ownership does not, by itself, make a close corporation Even if veil is peice it will then be a sale of conjugal property which Nenita alone could not have effected Gruenberg did not represent herself as authorized by Respondent Motorich despite the receipt issued by the former specifically indicating that she was signing on behalf of Motorich The amount paid as "earnest money" was not proven to have redounded to the benefit of Motorich it was deposited with the account of Aren Commercial c/o Motorich Andres Co being a President of San Juan for more than 10 years cannot feign ignorance of the scope of the authority of a corporate treasurer However, Nenita Gruenberg should be ordered to return to petitioner the amount she received as earnest money, as "no one shall enrich himself at the expense of another.

Manuel R. Dulay Enterprises vs. Court of Appeals [GR 91889, 27 August 1993] Facts: Manuel R.Dulay Enterprises, Inc., a domestic corporation with the following as members of its Board of Directors: Manuel R. Dulay with 19,960 shares and designated as president, treasurer and general manager; Atty. Virgilio E. Dulay with 10 shares and designated as vice-president; Linda E. Dulay with 10 shares; Celia Dulay-Mendoza with 10 shares; and Atty. Plaridel C. Jose with 10 shares and designated as secretary, owned a property covered by TCT 17880 4 and known as Dulay Apartment consisting of 16 apartment units on a 689 square meter lot, more or less, located at Seventh Street (now Buendia Extension) and F.B. Harrison Street, Pasay City. The corporation through its president, Manuel Dulay, obtained various loans for the construction of its hotel project, Dulay Continental Hotel (now Frederick Hotel). It even had to borrow money from Virgilio Dulay to be able to continue the hotel project. As a result of said loan, Virgilio Dulay occupied one of the unit apartments of the subject property since 1973 while at the same time managing the Dulay Apartment as his shareholdings in the

Sec. 96. Definition and Applicability of Title. A close corporation, within the meaning of this Code, is one whose articles of incorporation provide that: (1) All of the corporation's issued stock of all classes, exclusive of treasury shares, shall be held of record by not more than a specified number of persons, not exceeding twenty (20); (2) All of the issued stock of all classes shall be subject to one or more specified restrictions on transfer permitted by this Title; and (3) The corporation shall not list in any stock exchange or make any public offering of any of its stock of any class. Notwithstanding the foregoing, a corporation shall be deemed not a close corporation when at least two-thirds (2/3) of its voting stock or voting rights is owned or controlled by another corporation which is not a close corporation within the meaning of this Code. . . . .

corporation was subsequently increased by his father. On 23 December 1976, Manuel Dulay by virtue of Board Resolution 18 of the corporation sold the subject property to spouses Maria Theresa and Castrense Veloso in the amount of P300,000.00 as evidenced by the Deed of Absolute Sale. Thereafter, TCT 17880 was cancelled and TCT 23225 was issued to Maria Theresa Veloso. Subsequently, Manuel Dulay and the spouses Veloso executed a Memorandum to the Deed of Absolute Sale of 23 December 1976 dated 9 December 1977 giving Manuel Dulay within 2 years or until 9 December 1979 to repurchase the subject property for P200,000.00 which was, however, not annotated either in TCT 17880 or TCT 23225. On 24 December 1976, Maria Veloso, without the knowledge of Manuel Dulay, mortgaged the subject property to Manuel A. Torres for a loan of P250,000.00 which was duly annotated as Entry 68139 in TCT 23225. Upon the failure of Maria Veloso to pay Torres, the subject property was sold on 5 April 1978 to Torres as the highest bidder in an extrajudicial foreclosure sale as evidenced by the Certificate of Sheriff's Sale issued on 20 April 1978. On 20 July 1978, Maria Veloso executed a Deed of Absolute Assignment of the Right to Redeem in favor of Manuel Dulay assigning her right to repurchase the subject property from Torres as a result of the extrajudicial sale. As neither Maria Veloso nor her assignee Manuel Dulay was able to redeem the subject property within the one year statutory period for redemption, Torres filed an Affidavit of Consolidation of Ownership 13 with the Registry of Deeds of Pasay City and TCT 24799 was subsequently issued to Torres on 23 April 1979. On 1 October 1979, Torres filed a petition for the issuance of a writ of possession against spouses Veloso and Manuel Dulay in LRC Case 1742-P. However, when Virgilio Dulay appeared in court to intervene in said case alleging that Manuel Dulay was never authorized by the corporation to sell or mortgage the subject property, the trial court ordered Torres to implead the corporation as an indispensable party but the latter moved for the dismissal of his petition which was granted in an Order dated 8 April 1980. On 20 June 1980, Torres and Edgardo Pabalan, real estate administrator of Torres, filed an action against the corporation, Virgilio Dulay and Nepomuceno Redovan, a tenant of Dulay Apartment Unit No. 8-A for the recovery of possession, sum of money and damages with preliminary injunction in Civil Case 8198-P with the then Court of First Instance of Rizal. On 21 July 1980, the corporation filed an action against spouses Veloso and Torres for the cancellation of the Certificate of Sheriff's Sale and TCT 24799 in Civil Case 8278-P with the then Court of First Instance of Rizal. On 29 January 1981,

Pabalan and Torres filed an action against spouses Florentino and Elvira Manalastas, a tenant of Dulay Apartment Unit No. 7-B, with the corporation as intervenor for ejectment in Civil Case 38-81 with the Metropolitan Trial Court of Pasay City which rendered a decision on 25 April 1985, in favor of Pabalan, et al., ordering the spouses Manalastas and all persons claiming possession under them to vacate the premises; and to pay the rents in the sum of P500.00 a month from May 1979 until they shall have vacated the premises with interest at the legal rate; and to pay attorney's fees in the sum of P2,000.00 and P1,000.00 as other expenses of litigation and for them to pay the costs of the suit. Thereafter or on 17 May 1985, the corporation and Virgilio Dulay filed an action against the presiding judge of the Metropolitan Trial Court of Pasay City, Pabalan and Torres for the annulment of said decision with the Regional Trial Court of Pasay in Civil Case 2880-P. Thereafter, the 3 cases were jointly tried and the trial court rendered a decision in favor of Pabalan and Torres. Not satisfied with said decision, the corporation, et al. appealed to the Court of Appeals which rendered a decision on 23 October 1989, affirming the trial court decision. On 8 November 1989, the corporation, et al. filed a Motion for Reconsideration which was denied on 26 January 1990. The corporation, et al. filed the petition for review on certiorari. During the pendency of the petition, Torres died on 3 April 1991 as shown in his death certificate and named Torres-Pabalan Realty & Development Corporation as his heir in his holographic will dated 31 October 1986. Issue: Whether the sale of the subject property between spouses Veloso and Manuel Dulay has no binding effect on the corporation as Board Resolution 18 which authorized the sale of the subject property was resolved without the approval of all the members of the board of directors and said Board Resolution was prepared by a person not designated by the corporation to be its secretary. Held: Section 101 of the Corporation Code of the Philippines provides that "When board meeting is unnecessary or improperly held. Unless the by-laws provide otherwise, any action by the directors of a close corporation without a meeting shall nevertheless be deemed valid if: (1) Before or after such action is taken, written consent thereto is signed by all the directors; or (2) All the stockholders have actual or implied knowledge of the action and make no prompt objection thereto in writing; or (3) The directors are accustomed to take informal action with the express or implied acquiesce of all the stockholders; or (4) All the directors have express or implied knowledge of the action in question and none of them makes prompt objection thereto in writing. If a directors' meeting is held without proper call or notice, an action taken therein within the corporate powers is

deemed ratified by a director who failed to attend, unless he promptly files his written objection with the secretary of the corporation after having knowledge thereof." Herein, the corporation is classified as a close corporation and consequently a board resolution authorizing the sale or mortgage of the subject property is not necessary to bind the corporation for the action of its president. At any rate, a corporate action taken at a board meeting without proper call or notice in a close corporation is deemed ratified by the absent director unless the latter promptly files his written objection with the secretary of the corporation after having knowledge of the meeting which, in this case, Virgilio Dulay failed to do. The corporation's claim that the sale of the subject property by its president, Manuel Dulay, to spouses Veloso is null and void as the alleged Board Resolution 18 was passed without the knowledge and consent of the other members of the board of directors cannot be sustained. Virgilio E. Dulay's protestations of complete innocence to the effect that he never participated nor was even aware of any meeting or resolution authorizing the mortgage or sale of the subject premises is difficult to believe. On the contrary, he is very much privy to the transactions involved. To begin with, he is an incorporator and one of the board of directors designated at the time of the organization of Manuel R. Dulay Enterprises, Inc. In ordinary parlance, the said entity is loosely referred to as a "family corporation." The nomenclature, if imprecise, however, fairly reflects the cohesiveness of a group and the parochial instincts of the individual members of such an aggrupation of which Manuel R. Dulay Enterprises, Inc. is typical: four-fifths of its incorporators being close relatives namely, 3 children and their father whose name identifies their corporation. Besides, the fact that Virgilio Dulay on 24 June 1975 executed an affidavit that he was a signatory witness to the execution of the post-dated Deed of Absolute Sale of the subject property in favor of Torres indicates that he was aware of the transaction executed between his father and Torres and had, therefore, adequate knowledge about the sale of the subject property to Torres. Consequently, the corporation is liable for the act of Manuel Dulay and the sale of the subject property to Torres by Manuel Dulay is valid and binding. EDUCATION Section 1. The State shall protect and promote the right of all citizens to quality education at all levels, and shall take appropriate steps to make such education accessible to all. Section 2. The State shall: (1) Establish, maintain, and support a complete, adequate, and integrated system of education relevant to the needs of the people and society;

(2) Establish and maintain a system of free public education in the elementary and high school levels. Without limiting the natural right of parents to rear their children, elementary education is compulsory for all children of school age; (3) Establish and maintain a system of scholarship grants, student loan programs, subsidies, and other incentives which shall be available to deserving students in both public and private schools, especially to the underprivileged; (4) Encourage non-formal, informal, and indigenous learning systems, as well as self-learning, independent, and out-of-school study programs particularly those that respond to community needs; and (5) Provide adult citizens, the disabled, and out-ofschool youth with training in civics, vocational efficiency, and other skills. Section 3. (1) All educational institutions shall include the study of the Constitution as part of the curricula. (2) They shall inculcate patriotism and nationalism, foster love of humanity, respect for human rights, appreciation of the role of national heroes in the historical development of the country, teach the rights and duties of citizenship, strengthen ethical and spiritual values, develop moral character and personal discipline, encourage critical and creative thinking, broaden scientific and technological knowledge, and promote vocational efficiency. (3) At the option expressed in writing by the parents or guardians, religion shall be allowed to be taught to their children or wards in public elementary and high schools within the regular class hours by instructors designated or approved by the religious authorities of the religion to which the children or wards belong, without additional cost to the Government. Section 4.(1) The State recognizes the complementary roles of public and private institutions in the educational system and shall exercise reasonable supervision and regulation of all educational institutions. (2) Educational institutions, other than those established by religious groups and mission boards, shall be owned solely by citizens of the Philippines or corporations or associations at least sixty per centum of the capital of which is owned by such citizens. The Congress may, however, require increased Filipino equity participation in all educational institutions.

The control and administration of educational institutions shall be vested in citizens of the Philippines. No educational institution shall be established exclusively for aliens and no group of aliens shall comprise more than one-third of the enrollment in any school. The provisions of this subsection shall not apply to schools established for foreign diplomatic personnel and their dependents and, unless otherwise provided by law, for other foreign temporary residents. (3) All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties. Upon the dissolution or cessation of the corporate existence of such institutions, their assets shall be disposed of in the manner provided by law. Proprietary educational institutions, including those cooperatively owned, may likewise be entitled to such exemptions, subject to the limitations provided by law, including restrictions on dividends and provisions for reinvestment. (4) Subject to conditions prescribed by law, all grants, endowments, donations, or contributions used actually, directly, and exclusively for educational purposes shall be exempt from tax. Section 5. (1) the State shall take into account regional and sectoral needs and conditions and shall encourage local planning in the development of educational policies and programs. (2) Academic freedom shall be enjoyed in all institutions of higher learning. (3) Every citizen has a right to select a profession or course of study, subject to fair, reasonable, and equitable admission and academic requirements. (4) The State shall enhance the right of teachers to professional advancement. Non-teaching academic and non-academic personnel shall enjoy the protection of the State. (5) The State shall assign the highest budgetary priority to education and ensure that teaching will attract and retain its rightful share of the best available talents through adequate remuneration and other means of job satisfaction and fulfillment. PD 176

1. Ownership. All educational institutions, other than those which are already established or which may hereafter be established by religious orders, mission boards and charitable organizations, shall be owned solely by citizens of the Philippines or corporations or associations at least sixty per centum (60%) of the capital of which is owned by such citizens. Educational institutions already in operation which are not so owned shall conform with the said citizenship requirement on ownership not later than the beginning of the school year 1976-1977. 2. Control and Administration. The control and administration of all educational institutions already established or hereafter to be established in the Philippines shall be vested in citizens of the Philippines. Membership in the governing bodies or boards of such educational institutions shall be limited to citizens of the Philippines. Appointments and designations to, and employment in, positions involving the exercise of administrative discretion in the management of such educational institutions shall likewise be limited to citizens of the Philippines. The Secretary of Education is hereby authorized to fix the reasonable period within which any educational institution may comply with the requirements embodied in this section: Provided, however, That full compliance therewith shall be effected not later than the beginning of the school year 1976-1977. 3. Schools Established Exclusively for Aliens. No educational institution shall be established exclusively for aliens, nor shall any educational institution offer any curriculum exclusively for aliens: Provided, however, That all educational institutions established exclusively for aliens may continue to operate until the end of the school year 1972-1973 after which their government permits or recognition shall be deemed cancelled. Education institutions offering any curriculum exclusively for aliens shall cease from doing so not later than the school year 1972-1973, and failure to do so shall be sufficient cause for the cancellation of their government permit and/or recognition. 4. Enrolment of Alien Student. The enrolment of aliens in any school shall not exceed one-third of the total enrolment therein. Full compliance with this requirement in any school shall be effected not later than the beginning of the school year 1976-1977. 5. The provisions of Sections1 to 4 hereof shall not apply to schools established or to be established for foreign diplomatic personnel and their dependents and unless otherwise provided by law, for other foreign temporary residents. Magtibay vs Garcia

Appeal from the order of the Court of First Instance of Rizal dismissing the appellant's petition for mandamus and quo warranto. The issue posed for determination is whether the courts may review the exercise of discretion of a public officer on matters in which it is his duty to act. Appellant contends that the lower court erred in refusing to review the actuations of Lt. Col. Santiago Q. Garcia, commandant of the University of the Philippines ROTC as to matters affecting the regulation and supervision of the U.P. ROTC Corps of Cadets. On March 12, 1966, Lt. Col. Santiago Q. Garcia, then Commander of the, U.P. ROTC Cadet Corps, issued General Orders No. 23 relieving Arleo E. Magtibay of the rank of cadet colonel and as battalion commander of the lst BCT of the U.P. Cadet Corps, and designating in his stead Cadet Col. Marcelo Javier. In the same order, Magtibay was excluded from the roll of the graduating class of the ROTC Advance Course for having flunked the subject MS-42, a subject necessary for the completion of the Advance Course. On March 23, 1966, Magtibay filed with tile President of the University of the Philippines an administrative case against Lt. Col. Garcia charging the latter with abuse of discretion and seeking his relief as 1 commandant of the U.P. ROTC Cadet Corps. The Honorable Carlos P. Romulo, then President of the U.P., appointed a committee to investigate the complaint and "to review the case of Mr. Magtibay and to evaluate his scholastic record, including his examination papers, if any, in MS-42, and to make recommendations in accordance with the procedure described in paragraph 2, section 374 of the Revised U.P. Code." Said committee, after due investigation, submitted its report to the U.P. President, stating, among other things that Mr. Magtibay, due to various offenses to include major infractions of regulations and/or instructions committed during the semester, garnered a total of 140 demerits. Since 100 merits awarded each cadet at the start of the semester if equivalent to 30%, Mr. Magtibay's exhausting its 100 merits accounts for his getting "0" under Aptitude. Adding together the total percentage of 63 is way Wow the mum passing grade of 70% hence his failure in MS 2 42. On the basis of said report, President Carlos P. Romulo of the University of the Philippines issued a memorandum decision dismissing the complaint, "without prejudice to re-enrollment of the complainant in the same course (MS-42), in Accordance with existing regulations."

Apart from the administrative complaint adverted to, appellant Magtibay instituted in the Court of First Instance of Rizal a petition for mandamus and quo warranto, with prayer for preliminary mandatory injunction, against Lt. Col. Garcia and Marcelo Javier, praying that Javier be relieved as battalion commander of the lst BTC of the U.P. Cadet Corps; that he (Magtibay) be reinstated to his former rank and command; and that he be included in the roster of the U.P. ROTC Advance Course graduating class. Upon the filing of the petition, the lower court issued a writ of preliminary mandatory injunction, ordering Magtibay's reinstatement to his former rank and command. Pursuant to said writ, appellant was "reinstated commander of ist BCT U. P. ROTC Unit, 3 and Javier relieved of such command." After joinder of issues, hearing was conducted, and thereafter the lower court issued the questioned order dismissing the petition and lifting the writ of preliminary mandatory injunction. The court rationalized the order of dismissal, thus ... there seems to be merit in the contention that the remedy sought and the body from which the remedy is being sought are not the proper ones. For there does not seem to be any question that the admission, regulation and supervision of ROTC Cadet Corps all over the Philippines are vested in the Commanding General of the Philippines who, in turn, is under the President of the Philippines. Likewise, courts would not be the right branch of government to look into the propriety or impropriety of a discharge or a dismissal of a student from the Cadet Corps of the school in which he is enrolled, for that would be interferring with purely internal matters properly within the cognizance of the school authorities concerned and that arm of the Army of Philippines which has to do with and is in charge of the training of the youth in the ROTC. Hence, this appeal. We dismiss this appeal for being moot and academic. The records disclose that during the pendency of this case before the lower court, Lt. Col. Garcia had been relieved as commandant of the U.P. ROTC Corps of Cadets and assigned to another post, while Cadet Col. Javier had long graduated from the U.P. Moreover, pursuant to the writ of the preliminary

mandatory injunction issued by the lower court, appellant was reinstated to his former rank as commander of the lst BCT of the U.P. ROTC Cadet Corps, which command he held up to the end of the school year 1965-66. At any rate, appellant's prayer to compel Lt. Col. Garcia to include him in the roster of graduates of the ROTC Advance Course is absolutely bereft of any legal basis to stand on. He was not allowed to graduate because he flunked the subject MS-42, a required subject for the completion of the ROTC Advance Course. That he flunked said subject is not disputed by the appellant. True, an institution of learning has a contractual obligation to afford its students a fair opportunity to complete the course they seek to pursue. However, when a student commits a serious breach of discipline or fails to maintain the required academic standard, he forfeits his contractual right; and the court should not review 4 the discretion of university authorities. This Court has consistently adhered to the rule that a writ of mandamus will not issue to control or review the exercise of discretion of a public officer where the law imposes upon said public officer the right and duty to exercise judgment in reference to any matter in which he is required to act. It is his judgment that is 5 to be exercised and not that of the court. WHEREFORE, the order appealed from is hereby affirmed, with costs against the appellant. SO ORDERED. Makasiar (Chairman), Aquino, Concepcion Jr., Guerrero, Abad Santos and De Castro, JJ., concur.

Constitution, Academic freedom shall be enjoyed IN ALL institutions of higher learning. In short, before, ON LY INSTITUTIONS OF HIGHER LEARNING ENJOY ACADEMIC FREEDOM WHILE UNDER THE 1987 CONSTITUTION, ACADEMIC FREEDOM IS ALSO ENJOYED BY THE TEACHERS AND PROFESSORS AS WELL AS STUDENTS, ASIDE FROM THE SCHOOL. Academic freedom; due process in disciplinary actions involving students DE LA SALLE UNIVERSITY VS. COURT OF APPEALS, HON.WILFREDO D. REYES, in his capacityas Presiding Judge of Branch 36, Regional Trial Court of Manila, THE COMMISSION ON HIGHEREDUCATION, THE DEPARTMENT OF EDUCATION CULTURE AND SPORTS, ALVIN AGUILAR, JAMES PAUL BUNGUBUNG, RICHARD REVERENTE and ROBERTO VALDES, JR., G.R. No. 127980, December 19, 2007 REYES, R.T., J.: THE FACTS: Read: 1.THE UNIVERSITY OF THE PHILIPPINES VS. COURT OF APPEALS, February 9, 1993 1-a. THE UNIVERSITY OF THE PHILIPPINES VS. HON. RUBEN AYSON, August 17, 1989 1-c. UP BOARD OF REGENTS VS. CA, August 31, 1999 Academic Freedom includes the power of a University to REVOKE a degree or honor it has conferred to a student after it was found out that the students graduation was obtained through fraud. Academic freedom is given a wide sphere of authority. If an institution of higher learning can decide on who can and cannot study in it, it certainly can also determine on whom it can confer the honor and distinction of being its graduates. Academic Freedom It is an atmosphere in which there prevail the four essential freedom of a university to determine for itself on academic grounds a. who may teach, b. what may be taught, c. how it shall be taught, and d. who may be admitted to study (Emphasis supplied; citing Sinco, Philippine Political Law, 491, (1962) and the concurring opinion of Justice Frankfurter in Sweezy v. New Hampshire (354 US 234 [1957]).

POLITICAL LAW PART XIII ARTICLE XIV EDUCATION, SCIENCE, ETC. 1. Secs. 1-19 a. Read: RA 6655-The Free Secondary Education Act of 1988 Section 5 [2] Academic freedom shall be enjoyed in all institutions of higher learning. b. What is academic freedom? Very Important: (2007 Bar Question) Under the 1973 Constitution, Academic freedom shall by enjoyed BY ALL institutions of higher learning while under the 1987 Philippine

1-b) GARCIA VS. FACULTY ADMISSION, 68 SCRA 277 What is academic freedom? Briefly put, it is the freedom of professionally qualified persons to inquire, discover, publish and teach the truth as they see it in the field of their competence. It is subject to no control or authority except the control or authority of the rational methods by which truths or conclusions are sought and established in these disciplines. The personal aspect of freedom consists in the right of each university teacher recognized and effectively guaranteed by society to seek and express the truth as he personally sees it, both in his academic work and in his capacity as a private citizen. Thus the status of the individual university teacher is at least as important, in considering academic freedom, as the status of the institutions to which they belong and through which they disseminate their learning. 2) MONTEMAYOR VS. ARANETA UNIVERSITY FOUNDATION 3) VILLAR VS. TIP, April 17, 1985 4) MALABANAN VS. RAMENTO,129 SCRA 359 5) BELENA VS. PMI 6) ALCUAZ VS. PSBA, May 2, 1988 6-a) ALCUAZ VS. PSBA, September 29, 1989 (Resolution on the Motion for Reconsideration) Read also the dissenting opinion of Justice Sarmiento 7) TONGONAN VS. PANO, 137 SCRA 246 8) ATENEO VS. CA, 145 SCRA 100 9) GUZMAN VS. NU, 142 SCRA 706 10) ANGELES VS. SISON, 112 SCRA 26 11. Tan vs. CA, 199 SCRA 212 12. Colegio del Sto. Nino vs. NLRC, 197 SCRA 611 13. Dean Reyes vs. CA, 14. UP vs. CA, February 9, 1993 15. Ateneo vs. Judge Capulong, May 27, 1993 ARREZA VS ARANETA UNIVERSITY FOUNDATION Facts: According to the version of petitioners, they were either leaders or participants in what respondent University referred to as a rally/demonstration held on September 28, 1982, in front of the Life Science Building of the respondent University, but which for them, could be more accurately described as a continuation of the General Assembly of the student body held the day before one authorized by the School Administration. 4 Its purpose was to register the opposition of the students to the abolition of the schools Institute of Animal Science, as those taking

courses therein would not be able to graduate. 5 Such exercise of their right to peaceable assembly was visited by respondent University with a refusal to let them enroll after what for petitioners was a sham investigation of their alleged violation of school rules and regulations. 6 Respondent University denied granting the authorization to hold such general assembly, or student rally on September 28, 1982, alleging that the students on said date through the use of battery-operated megaphones criticized and lambasted the school administration, specifically the decision of the Board of Trustees of respondent University to merge its Institute of Animal Science with its Institute of Agriculture, ignoring the fact that the aforementioned merger of the above-named Institutes intended as a cost-saving measure would not deprive the students enrolled in the former Institute of Animal Science from earning their degrees. 7 Moreover, there were other rallies, according to respondent, held on September 8, 27 and 29, 1982, for the purpose of sympathizing with the suspension of five (5) student leaders who conducted an illegal assembly on August 27, 1982, causing additional disturbance on the campus, not only by the disorderly conduct observed but also by the resulting boycott of classes. 8 Issue: WON the refusal of the respondent to allow the petitioners to enrol, as a disciplinary acton for the conduct of the rally is violative of cognate rights of free speech and peaceful assembly? Decision: Yes. Infractions of University rules or regulations by petitioner-students justify the filing of appropriate charges. What cannot be justified is the infliction of the highly-disproportionate penalty of denial of enrollment and the consequent failure of senior students to graduate, if in the exercise of the cognate rights of free speech and peaceable assembly, improper conduct could be attributed to them. As the Court ruled in Malabanan, so they rule now. Petitioners, as all other students, may freely exercise such rights, They enjoy like the rest of the citizens the freedom to express their views and communicate their thoughts to those disposed to listen 3 in rallies and demonstrations. One last word. In the even more recent case of Villar v. Technological Institute of the Philippines, 11 reference was made to Article 26 of the Universal Declaration of Human Rights: Everyone has the right to education. Education shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory; Technical and professional education shall be made generally accessible to all on the basis of merit, Petition for mandamus granted

n Villar v. Technological Institute of the Philippines, G.R. No. 69198, April 17, 1985, 135 SCRA 706, the Court reiterated that the exercise of the freedom of assembly could not be a basis for barring students from enrolling. It enjoined the school and its officials from acts of surveillance, blacklisting, suspension and refusal to re-enroll. But the Court allowed the non-enrollment of students who clearly incurred marked academic deficiency, with the following caveat: xxx xxx xxx 4. The academic freedom enjoyed by ''institutions of higher learning" includes the right to set academic standards to determine under what circumstances failing grades suffice for the expulsion of students. Once it has done so, however, that standard should be followed meticulously. It cannot be utilized to discriminate against those students who exercise their constitutional rights to peaceable assembly and free speech. If it does so, then there is a legitimate grievance by the students thus prejudiced, their right to the equal protection clause being disregarded. [At p. 711.] ANGELES vs JUDGE SISON 112 SCRA 26 FACTS: The petitioner was mauled by two of his students in FEU outside of the school campus, specifically in Oak Barrel Restaurant, prompting his filing of criminal complaint for assault which was dismissed on the basis of an affidavit of desistance submitted by the petitioner. The administrative complaint filed before the Dean, however, was acted on by the creation of a committee to conduct administrative investigation, headed by the Dean himself. Over the opposition of the offending parties, the respondent Judge issued an order denying their motion against the conduct of administrative investigation, hence this appeal before the Court. ISSUE: Does the school, through its authorized representative, have jurisdiction to investigate over an alleged misconduct committed outside the school premises and beyond school hours? DECISION: YES. A college or any school for that matter has a dual responsibility to its students. One is to provide opportunities for learning and the other is to help them

grow and develop into mature, responsible, effective and worthy citizens of the community. Discipline is one of the means to carry out the second responsibility. Thus, there can be no doubt that the establishment of an educational institution requires rules and regulations necessary for the maintenance of an orderly educational program and the creation of an educational environment conducive to learning. Such rules and regulations are equally necessary for the protection of the students, faculty, and property. The power of school officials to investigate, an adjunct of its power to suspend or expel, is a necessary corollary to the enforcement of such rules and regulations and the maintenance of a safe and orderly educational environment conducive to learning. Common sense dictates that the school retains its power to compel its students in or off-campus to a norm of conduct compatible with their standing as members of the academic community. Hence, when as in the case at bar, the conduct complained of directly affects the suitability of the alleged violators as students, there is no reason why the school cannot impose the same disciplinary action as when the act took place inside the campus. -------In Wang Laboratories, Inc. vs. Mendoza (156 SCRA 44), this Court has ruled that if the defendant, besides setting up in a motion to dismiss his objection to the jurisdiction of the court, alleges at the same time any other ground for dismissing the action, he is deemed to have submitted himself to the jurisdiction of the court. In the process. n the case of Wang Laboratories, Inc. v. Mendoza, 156 SCRA 44, the High Court explained what constitutes "doing business" as follows: Indeed it has been held that "where a single act or transaction of a foreign corporation is not merely incidental or causal but is of such character as distinctly to indicate a purpose to do other business in the State, such constitutes doing business within the meaning of statutes prescribing the conditions under which a foreign corporation may be served with summons (Far East Int'l. Import and Export Corp. v. Nankai Kogyo Co. Ltd., 6 SCRA 725 [1962]). Assuming, arguendo, that defendant is a foreign corporation not doing business in the Philippines, it has been categorically stated in the aforecited case that although a foreign corporation is not doing

business in the Philippines, it may be used for acts done against persons in the Philippines. G.R. No. 72147 December 1, 1987 WANG LABORATORIES, INC., petitioner, vs. THE HONORABLE RAFAEL T. MENDOZA, then Presiding Judge, Regional Trial Court, Branch CXXXIV, Makati, Metro Manila, THE HONORABLE BERNARDO ABESAMIS, incumbent Presiding Judge, Regional Trial Court, Branch CXX-XIV, Makati, Metro Manila, Public Respondents and ANGARA CONCEPCION REGALA & CRUZ LAW OFFICES Private Respondents, respondents.

ACCRALAW in favor of petitioner herein to pay for the Wang 2200 US System. Sometime in May 1981, the hardware was delivered and installed by EXXBYTE in ACCRALAW's office (Rollo, p. 151). On June 10, 1981, ACCRALAW and EXXBYTE entered into another contract for the development of a data processing software program needed to computerize the ACCRALAW office (Petitioner's Brief, p. 2). Subsequent thereto and for one reason or the other, the contract for the development of a data processing software program or ISLA was not implemented. On May 7, 1984, ACCRALAW filed a complaint for breach of contract with damages, replevin and attachment against herein petitioner (Rollo, p. 152), in Civil Case No. 7183 of the Regional Trial Court, Makati (Petitioner's Brief, p. 3). On May 23, 1984, petitioner filed a Motion to Dismiss the complaint on the ground that there was improper service of summons, hence, the court below had not obtained jurisdiction over the person of the petitioner (Petitioner's Brief, p. 3). On July 13, 1984, petitioner filed a Motion for Deposition by Oral Examination for the purpose of presenting testimonial evidence in support of its motion to dismiss. The respondent court thereafter ordered the taking of the deposition by way of oral examination. On February 21, 1985, petitioner filed its reply to the opposition to motion to dismiss (Petitioner's Brief, P. 3). On March 29, 1985, ACCRALAW filed an ExAbundante Cautela Motion for leave to Effect Extraterritorial Service of Summons on petitioner. In an order dated April 24, 1985, respondent Judge Mendoza, among others, granted the Ex-Abundante Cautela Motion to Effect Extraterritorial Service of Summons, denied the petitioner's motion to dismiss on the ground that it had voluntarily submitted itself to the jurisdiction of the court, and thus declined to consider the legal and factual issues raised in the Motion to Dismiss. Hence, this petition. In the resolution of October 7, 1985, the Second Division of this Court without giving due course to the petition resolved to require respondents to comment and to issue a temporary restraining order enjoining respondent Judge from further proceeding with Civil Case No. 7183 (Rollo, pp. 138-139).

PARAS, J.: This is a petition for Certiorari, Prohibition and mandamus with Preliminary Injunction, seeking: (1) to annul and set aside the order issued by the Regional Trial Court of Makati, Branch CXXXIV, * ruling that (a) petitioner had voluntarily submitted itself to the jurisdiction of the respondent court, and (b) granting respondents' Ex Abundante Cautela Motion for Leave to Effect Extraterritorial Jurisdiction; (2) to prohibit respondent Court from proceeding further in Civil Case No. 7183; and (3) to order the same Court to pass upon the legal and factual issues raised in petitioner's Motion to Dismiss. The factual background of this case is as follows: Petitioner is a corporation duly organized under the laws of the United States with principal address at One Industrial Avenue, Lowell, Massachusetts, U.S.A., engaged in the business of manufacturing and selling computers worldwide. In the Philippines, petitioner sells its products to EXXBYTE TECHNOLOGIES CORPORATION, hereinafter referred to as EXXBYTE, its exclusive distributor. EXXBYTE is a domestic corporation engaged in the business of selling computer products to the public in its own name for its own account (Petitioner's Brief, p. 2; Rollo, pp. 268-319). Angara, Concepcion, Regala & Cruz Law Offices (hereinafter referred to as ACCRALAW for brevity) is a duly registered professional partnership (Rollo, p. 4). On September 10, 1980, respondent ACCRALAW entered into a contract with EXXBYTE for acquisition and installation of a Wang 2200 US Integrated Information System at the former's office. As stipulated in the above-said contract, a letter of credit for US$ 86,142.55 was thereafter opened by

On October 31, 1985, private respondents submitted their comment (Rollo, pp. 147-178). In the resolution of January 13, 1986, the Court resolved to give due course to the petition (Rollo, p. 187-A). In the resolution of February 5, 1986, the Court granted petitioner's motion to admit reply to comment and noted aforesaid reply. Petitioner submitted its brief on September 15, 1986 (Rollo, p. 268); the respondents, on November 15, 1986 (Rollo, p. 272). Petitioner assigns the following errors: I. RESPONDENT JUDGE MENDOZA ACTED WITHOUT OR IN EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN RULING THAT PETITIONER HAD VOLUNTARILY SUBMITTED TO THE JURISDICTION OF THE COURT BELOW. II RESPONDENT JUDGE MENDOZA ACTED WITHOUT OR IN EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN RULING THAT ACCRALAW CAN SERVE SUMMONS ON PETITIONER EXTRATERRITORIALLY. III RESPONDENT JUDGE MENDOZA ACTED WITHOUT OR IN EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN NOT HOLDING THAT THERE WAS IMPROPER SERVICE OF SUMMONS ON PETITIONER. The petition is devoid of merit. The only issue in this case is whether or not respondent Court has acquired jurisdiction over the person of the petitioner, a foreign corporation. In its Motion to Dismiss, petitioner interposed that the court has no jurisdiction over its person primarily because it is a United States corporation with principal address at One Industrial Avenue, Lowell, Massachusetts, U.S.A., is not domiciled in the Philippines, does not have any office or place of business in the Philippines, is not licensed to engage and is not engaging in business here. EXXBYTE upon whom summons was served on behalf of this defendant is a local company entirely separate and distinct from and is not the representative of the defendant (Rollo, pp. 57-60).

Petitioner's contention is untenable. The issue is not novel in our jurisdiction. There are three (3) modes of effecting service of summons upon private foreign corporations as provided for in Section 14, Rule 7 of the Rules of Court, to wit: (1) by serving upon the agent designated in accordance with law to accept service of summons; (2) if there is no resident agent, by service on the government official designated by law to that office; and (3) by serving on any officer or agent of said corporation within the Philippines (Far East Int'l. Import and Export Corp. v. Nankai Kogyo Co., Ltd., 6 SCRA 725 [1962]). Summons intended for the petitioner was served on EXXBYTE at the 3rd. Floor, Zeta Building, 191 Salcedo Street, Legaspi Village, Makati, Metro Manila (Rollo, p. 57) as its duly authorized and exclusive representative and distributor in the Philippines (Rollo, p. 24 and p. 149). Petitioner opposed such service and filed a Motion to Dismiss on the ground of lack of jurisdiction on its person, being a foreign corporation not engaged in business in the Philippines. Evidence presented by private respondent however, shows that contrary to petitioner's allegations, the various public advertisements of WANG and EXXBYTE clearly show that Wang has appointed EXXBYTE, which is domiciled in the Philippines, as its authorized exclusive representative in this country. In fact, WANG represents that its office in the Philippines is EXXBYTE, while the letterhead of EXXBYTE and its invoices show that it is WANG's representative. (Rollo, p. 65). Moreover, in its Reply to Opposition to Motion to Dismiss, WANG itself admitted that it deals exclusively with EXXBYTE in the sale of its products in the Philippines (Rollo, pp. 79 and 154). In any event, as previously stated, private respondent moved further, ex abundante cautela, for leave to effect extraterritorial service of summons on petitioner WANG. Private respondent presented to the Court documentary evidence proving that the defendant Wang has properties in the Philippines consisting of trademarks registered with the Philippine Patent Office and that WANG designated Rafael E. Evangelists of 638 Philippine Banking Building, Ayala Avenue, Makati, Metro Manila as its Resident Agent upon whom notice or process affecting the mark may be served. The same counsel represented petitioner in the oral deposition of Mr. Yeoh Asia Controller for Wang Laboratories (Annex "S," Petition). Private respondent further showed that said trademarks have been judicially attached (Rollo, p. 110). Petitioner in its Rejoinder to ACCRALAW's Reply, prays for the issuance of an order holding in abeyance any and all proceedings relative to ACCRALAW's motion for leave of court to effect extraterritorial service of summons (Rollo, p. 155).

Petitioner insists on its argument that extra-judicial summons or any kind thereof cannot bind the petitioner inasmuch as it is not doing business in the Philippines nor is it licensed to do business in the country. In the cases of Mentholatum Co., Inc. v. Mangaliman (72 Phil. 524 119411 and Topweld Manufacturing, Inc. v. Eced S.A. et al., 138 SCRA 118 [1985]), it was held that no general rule or governing principle can be laid down as to what constitutes doing or "engaging" or "trading" in business. Indeed each case must be judged in the light of its peculiar environmental circumstances; upon peculiar facts and upon the language of the Statute applicable (Far East Int'l. Import Export Corp. v. Nankai Kogyo, Co., Ltd. (6 SCRA 725 [1962]). Under the circumstances; petitioner cannot unilaterally declare that it is not doing business in the Philippines. In fact, it has installed, at least 26 different products in several corporations in the Philippines since 1976 (Respondent's Brief, Rollo, p. 272). It has registered its trade name with the Philippine Patents Office (ibid) and Mr. Yeoh who is petitioner's controller in Asia has visited the office of its distributor for at least four times where he conducted training programs in the Philippines (Oral Deposition, pp. 16; 22-23, Rollo, pp. 335; 341-342, Annex "S" to Petitioner's Brief). Wang has allowed its registered logo and trademark to be used by EXXBYTE (Pran Deposition, p. 23, Rollo, p. 342) and made it known that there exists a designated distributor in the Philippines as published in its advertisements. Indeed it has been held that "where a single act or transaction of a foreign corporation is not merely incidental or casual but is of such character as distinctly to indicate a purpose to do other business in the State, such act constitutes doing business within the meaning of statutes prescribing the conditions under which a foreign corporation may be served with summons (Far East Int'l. Import and Export Corp. v. Nankai Kogyo Co. Ltd., 6 SCRA 725 [1962]). Be that as it may, the issue on the suability of foreign corporation whether or not doing business in the Philippines has already been laid to rest. The Court has categorically stated that although a foreign corporation is not doing business in the Philippines, it may be sued for acts done against persons in the Philippines. The Court has ruled as follows: Indeed if a foreign corporation, not engaged in business in the Philippines, is not barred from seeking redress from courts in the Philippines, a fortiori, that same corporation cannot claim exemption

from being sued in Philippine courts for acts done against a person or persons in the Philippines (Facilities Management Corporation v. De la Osa, 89 SCRA 131 [1979]). Furthermore, even though petitioner objects to the jurisdiction of the Court over its person, the fact that it alleged non-jurisdictional grounds in its pleadings indicates that it has waived lack of jurisdiction of the court. As noted by the trial court, defendant Wang (petitioner herein) in its Motion to Dismiss sought affirmative reliefs requiring the exercise of jurisdiction, by praying: (1) for authority to take testimony by way of deposition upon oral examination; (2) for extension of time to file opposition to plaintiffs' motion to effect Extraterritorial Service of Summons; (3) to hold in abeyance any and all proceedings relative to plaintiffs' foregoing motion and (4) to consider as a mere scrap of paper plaintiff's motion to strike out Deposition (Rollo, p. 111). In addition, the records show that petitioner also prayed for: (1) authority to reset date of taking of deposition; (2) admission of the formal stenographic notes and (3) suspension of time to file responsive pleadings, not to mention its various participation in the proceedings in the court other than for the purpose of objecting to lack of jurisdiction (Rollo, p. 169). In fact, it is well settled that "A voluntary appearance is a waiver of the necessity of formal notice." Thus, it has been held that when the appearance is by motion for the purpose of objecting to the jurisdiction of the court over the person it must be for the sole and separate purpose of objecting to the jurisdiction of the Court. If the appearance is for any other purpose, the defendant is deemed to have submitted himself to the jurisdiction of the court. Such an appearance gives the court jurisdiction over the person (Flores v. Zurbito, 37 Phil. 746 [1918]). Clarifying further, the Court has likewise ruled that even though the defendant objects to the jurisdiction of the Court, if at the same time he alleges any non-jurisdictional ground for dismissing the action, the Court acquires jurisdiction over him (Far East International Import & Export Corporation v. Nankai Kogyo, Co., Ltd., 6 SCRA 725 11962]). PREMISES CONSIDERED, the petition is DISMISSED for lack of merit, with costs against the petitioner. The temporary restraining order is hereby lifted immediately. SO ORDERED.

Eriks Pte. Ltd. vs. Court of Appeals [GR 118843, 6 February 1997] Facts: Eriks Pte. Ltd. is a non-resident foreign corporation engaged in the manufacture and sale of elements used in sealing pumps, valves and pipes for industrial purposes, valves and control equipment used for industrial fluid control and PVC pipes and fittings for industrial uses. On various dates covering the period January 17 August 16, 1989, Delfin Enriquez, Jr., doing business under the name and style of Delrene EB Controls Center and/or EB Karmine Commercial, ordered and received from Eriks Pte. Ltd. various elements used in sealing pumps, valves, pipes and control equipment, PVC pipes and fittings. The transfers of goods were perfected in Singapore, for Enriquez's account, F.O.B. Singapore, with a 90-day credit term. Subsequently, demands were made by Eriks upon Enriquez to settle his account, but the latter failed/refused to do so. On 28 August 1991, Eriks filed with the Regional Trial Court of Makati, Branch 138, Civil Case 91-2373 for the recovery of S$41,939.63 or its equivalent in Philippine currency, plus interest thereon and damages. Enriquez responded with a Motion to Dismiss, contending that Eriks had no legal capacity to sue. In an Order dated 8 March 1993, the trial court dismissed the action on the ground that Eriks is a foreign corporation doing business in the Philippines without a license. On appeal and on 25 January 1995, the appellate court (CA GR CV 41275) affirmed said order as it deemed the series of transactions between Eriks and Enriquez not to be an "isolated or casual transaction." Thus, the appellate court likewise found Eriks to be without legal capacity to sue. Eriks filed the petition for review. Issue: Whether a foreign corporation which sold its products 16 times over a five-month period to the same Filipino buyer without first obtaining a license to do business in the Philippines, is prohibited from maintaining an action to collect payment therefor in Philippine courts.

series of transactions in question could not have been isolated or casual transactions. What is determinative of "doing business" is not really the number or the quantity of the transactions, but more importantly, the intention of an entity to continue the body of its business in the country. The number and quantity are merely evidence of such intention. The phrase "isolated transaction" has a definite and fixed meaning, i.e. a transaction or series of transactions set apart from the common business of a foreign enterprise in the sense that there is no intention to engage in a progressive pursuit of the purpose and object of the business organization. Whether a foreign corporation is "doing business" does not necessarily depend upon the frequency of its transactions, but more upon the nature and character of the transactions. Given the facts of the case, the Court cannot see how Eriks' business dealings will fit the category of "isolated transactions" considering that its intention to continue and pursue the corpus of its business in the country had been clearly established. It has not presented any convincing argument with equally convincing evidence for the Court to rule otherwise. Accordingly and ineluctably, Eriks must be held to be incapacitated to maintain the action a quo against Enriquez.

-----EASTBOARD NAVIGATION VS YSMAEL d) While plaintiff is a foreign corporation without license to transact business in the Philippines, it does not follow that it has no capacity to bring the present action. Such license is not necessary because it is in business in the Philippines. In fact, the transaction herein involved is the first business undertaken by plaintiff in the Philippines, although on a previous occasion plaintiff's vessel was chartered by the National Rice and Corn Corporation to carry rice cargo from abroad to the Philippines. These two isolated transactions do not constitute engaging in business in the Philippines within the purview of Sections 68 and 69 of the Corporation Law so as to bar plaintiff from seeking redress in our courts. (Marshall-Wells Co. vs. Henry W. Elser & Co. 49 Phil., 70; Pacific Vegetable Oil Corporation vs. Angel 0. Singson, G. R. No. L-7917, April 29, 1955.)1wphl.nt While petitioner may just be an assignee to the Deeds of Assignment, it may still fall within the meaning of doing business in light of the Supreme Court ruling in the case of Far East International Import and Export Corporation vs. Nankai Kogyo Co., 6 SCRA 725, that:

Held: Section 133, Corporation Code Thus, the sale by Eriks of the items covered by the receipts, which are part and parcel of its main product line, was actually carried out in the progressive prosecution of commercial gain and the pursuit of the purpose and object of its business, pure and simple. Further, its grant and extension of 90-day credit terms to Enriquez for every purchase made, unarguably shows an intention to continue transacting with Enriquez, since in the usual course of commercial transactions, credit is extended only to customers in good standing or to those on whom there is an intention to maintain long-term relationship. The

Where a single act or transaction however is not merely incidental or casual but indicates the foreign corporations intention to do other business in the Philippines, said single act or transaction constitutes doing or engaging in or transacting business in the Philippines. Furthermore, the court went further by declaring that even a single act may constitute doing business if it is intended to be the beginning of a series of transactions. SEC. 14. Service upon private foreign corporations . If the defendant is a foreign corporation, or a nonresident joint stock company or association, doing business in the Philippines, service may be made on its resident agent designated in accordance with law for that purpose, or, if there be no such agent, on the government official designated by law to that effect, or on any officer or agent within the Philipines. (Rule 7). hus though a Special appearance to object to the jurisdiction is not a submission, if it is followed by a motion to dismiss or to quash the motion invokes the jurisdiction of Court to decide the issue raised by the motion; and a decision of that issue binds the defendant. Therefore if the decision of the motion is based upon a finding of facts necessary to jurisdiction, this finding binds the defendant and the court acquires jurisdiction to determine the merits of the case. . . . . Undoubtedly if after his objection to the jurisdiction is wrongly overruled, a defendant files a cross complaint demanding affirmative relief, he cannot thereafter claim that the court had no jurisdiction over him.