Ferrer & Associates Corp. v. University of Santo Tomas
REITERATIONFacts
1. The Antecedents: D.M. Ferrer & Associates Corporation (Petitioner) entered into a Project Management Contract with University of Santo Tomas Hospital, Inc. (USTHI) for renovation projects. Petitioner demanded payment of ₱17,558,479.39 from USTHI. However, the University of Santo Tomas (UST), through its rector, denied the claim, stating the contract lacked board approval. Petitioner alleged UST took control of USTHI's operations and that USTHI's assets would transfer to UST upon dissolution. Petitioner also claimed UST's rector verbally assured payment of USTHI's obligations, leading to the assertion that UST and USTHI should be treated as one entity under the doctrine of piercing the corporate veil. 2. Procedural History: Petitioner filed a complaint for sum of money against UST and USTHI. UST filed a Motion to Dismiss, which the Regional Trial Court (RTC) granted, dismissing the complaint against UST. The RTC found UST not a real party-in-interest and not privy to the contract, and that alleged verbal assurances were not binding. Petitioner sought reconsideration, arguing the RTC should have relied solely on the complaint's allegations and that the Statute of Frauds was inapplicable. After the RTC judge inhibited himself, the case was re-raffled, and the new judge denied the motion for reconsideration, upholding the initial findings. Petitioner then filed a Petition for Certiorari with the Court of Appeals (CA), arguing the RTC committed grave abuse of discretion. The CA dismissed the petition, deeming certiorari the wrong remedy and stating an appeal under Rule 41 was appropriate. Petitioner moved for reconsideration, citing an exception to Rule 41, but the CA denied it. 3. The Petition: This case comes before the Supreme Court via a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court. Petitioner assails the CA's dismissal of its Petition for Certiorari and the subsequent denial of its Motion for Reconsideration. Petitioner argues the CA erred in dismissing its petition by failing to consider the exception under Section 1(g) of Rule 41, which allows a special civil action for certiorari when a case is dismissed against one of several parties while the main case is still pending. Petitioner also contends the trial court committed grave abuse of discretion in holding that the Complaint stated no cause of action, asserting that the allegations, if true, would justify the relief demanded and that factual issues should have been resolved during trial.
Issue(s)
Whether the Court of Appeals erred in dismissing the Petition for Certiorari by failing to consider the exception in Sec. 1(g) of Rule 41 of the Rules of Court. Whether the trial court committed grave abuse of discretion when it held that the Complaint stated no cause of action.
Ruling
The Supreme Court granted the Petition, reversed the Court of Appeals' Resolutions, and ordered the Regional Trial Court of Quezon City, Branch 76, to reinstate the University of Santo Tomas as a defendant in the case.
Ratio Decidendi
On the propriety of the certiorari petition: The Court ruled that the Court of Appeals erred in dismissing the Petition for Certiorari. It reiterated the principle that a petition for certiorari under Rule 65 is the proper remedy to question the dismissal of an action against one of the parties while the main case is still pending. This is in accordance with Rule 41, Section 1(g) of the Rules of Court, which provides an exception to the general rule that appeals are taken from final orders that completely dispose of a case. In this instance, the RTC's Order dismissing the complaint against respondent UST was a final order terminating proceedings against UST but did not dispose of the entire case as the complaint against USTHI was still pending. Therefore, the special civil action for certiorari availed of by petitioner before the CA was proper. On the existence of a cause of action: The Court agreed with the petitioner that the Complaint stated a cause of action against respondent UST. It emphasized that the existence of a cause of action is determined by the allegations in the complaint, and only the facts alleged therein should be considered when resolving a motion to dismiss based on the failure to state a cause of action. The test is whether the court can render a valid judgment based on the facts alleged and the prayer. Petitioner alleged that UST and USTHI are one and the same corporation, that UST stands to benefit from USTHI's assets, that UST controls USTHI's business, and that UST officials performed acts acknowledging liability. The Court found that these allegations, if true, would justify the relief demanded, and thus the RTC committed grave abuse of discretion in dismissing the case for lack of cause of action by relying on documents outside the allegations of the Complaint.
Main Doctrine
A petition for certiorari under Rule 65 is the proper remedy to question the dismissal of an action against one of the parties while the main case is still pending, as this falls under exception (g) of Rule 41, Section 1 of the Rules of Court, which allows an appeal or certiorari from a judgment or final order for or against one or more of several parties while the main case is pending.