D.M. Ferrer Associates Corp. v. University

SECOND DIVISION
[G.R. No. 189496. February 1, 2012.]

D.M. FERRER & ASSOCIATES CORPORATION , petitioner, vs .
UNIVERSITY OF SANTO TOMAS , respondent.
DECISION
SERENO , J :
p
Before us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules
of Court. Petitioner assails the Court of Appeals (CA) Resolution 1 promulgated on 26
June 2009 dismissing the former's Petition for Certiorari, and the Resolution 2 dated 3
September 2009 denying the subsequent Motion for Reconsideration.
The facts are undisputed:
On 25 November 2005, petitioner and University of Santo Tomas Hospital, Inc.
(USTHI) entered into a Project Management Contract for the renovation of the 4th and
5th oors of the Clinical Division Building, Nurse Call Room and Medical Records,
Medical Arts Tower, Diagnostic Treatment Building and Pay Division Building.
On various dates, petitioner demanded from USTHI the payment of the
construction costs amounting to P17,558,479.39. However, on 16 April 2008, the
University of Santo Tomas (UST), through its rector, Fr. Rolando V. Dela Rosa, wrote a
letter informing petitioner that its claim for payment had been denied, because the
Project Management Contract was without the required prior approval of the board of
trustees. Thus, on 23 May 2008, petitioner filed a Complaint 3 for sum of money, breach
of contract and damages against herein respondent UST and USTHI when the latter
failed to pay petitioner despite repeated demands.
In impleading respondent UST, petitioner alleged that the former took complete
control over the business and operation of USTHI, as well as the completion of the
construction project.
It also pointed out that the Articles of Incorporation of USTHI provided that, upon
dissolution, all of the latter's assets shall be transferred without any consideration and
shall inure to the bene t of UST. It appears that USTHI passed a Resolution on 10
January 2008 dissolving the corporation by shortening its corporate term of existence
from 16 March 2007 to 31 May 2008.
Finally, petitioner alleged that respondent, through its rector, Fr. Dela Rosa, O.P.,
verbally assured the former of the payment of USTHI's outstanding obligations.
EHCcIT
Thus, petitioner posited in part that UST may be impleaded in the case under the
doctrine of "piercing the corporate veil," wherein respondent UST and USTHI would be
considered to be acting as one corporate entity, and UST may be held liable for the
alleged obligations due to petitioner.
Subsequently, respondent led its Motion to Dismiss dated 12 June 2008. 4 It
alleged that the Complaint failed to state a cause of action, and that the claim was
unenforceable under the provisions of the Statute of Frauds.
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On 4 August 2008, Judge Bernelito R. Fernandez of Branch 97 of the Regional

Trial Court (RTC) of Quezon City granted the motion and dismissed the Complaint
insofar as respondent UST was concerned. 5
First, basing its ndings on the documents submitted in support of the
Complaint, the RTC held that respondent was not a real party-in-interest, and that it was
not privy to the contract executed between USTHI and petitioner. Second, the court
pointed out that the alleged verbal assurances of Fr. Dela Rosa should have been in
writing to make these assurances binding and demandable.
Petitioner sought a reconsideration of the RTC Order and asserted that only
allegations of the Complaint, and not the attached documents, should have been the
basis of the trial court's ruling, consistent with the rule that the cause of action can be
determined only from the facts alleged in the Complaint. It also insisted that the Statute
of Frauds was inapplicable, since USTHI's obligation had already been partially
executed. 6
On 5 October 2008, petitioner led an Urgent Motion for Voluntary Inhibition 7 on
the ground that Judge Fernandez was an alumnus of respondent UST.
Thereafter, Judge Fernandez issued an Order 8 inhibiting himself from the case,
which was consequently re-raffled to Branch 76 presided by Judge Alexander S. Balut.
On 16 April 2009, Judge Balut dismissed the Motion for Reconsideration led by
petitioner, 9 upholding the initial ndings of Judge Fernandez declaring that respondent
UST was not a real party-in-interest, and that Fr. Dela Rosa's alleged assurances of
payment were unenforceable.
Subsequently, petitioner led a Petition for Certiorari under Rule 65 with the CA.
1 0 Petitioner alleged that the trial court committed grave abuse of discretion when it
granted respondent's Motion to Dismiss on the basis of the documents submitted in
support of the Complaint, and not solely on the allegations stated therein. Petitioner
pointed out that the allegations raised questions of fact and law, which should have
been threshed out during trial, when both parties would have been given the chance to
present evidence supporting their respective allegations.
However, on 26 June 2009, the CA issued the assailed Resolution and dismissed
the Petition on the ground that a petition under Rule 65 is the wrong remedy to question
the RTC's Order that completely disposes of the case. Instead, petitioner should have
availed itself of an appeal under Rule 41 of the Rules of Court.
Petitioner moved for a reconsideration of the Resolution. 1 1 It pointed out that
the present case falls under the enumerated exceptions of Rule 41, in particular, while
the main case is still pending, no appeal may be made from a judgment or nal order
for or against one or more of several parties or in separate claims, counterclaims,
cross-claims and third-party complaints.
On 3 September 2009, the CA denied the Motion for Reconsideration through its
second assailed Resolution, holding that the motion raised no new issues or substantial
grounds that would merit the reconsideration of the court.
Hence this Petition.
TAcCDI
Petitioner raises two grounds in the present Petition: rst, whether the CA 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; second, whether the trial court committed grave abuse
of discretion when it held that the Complaint stated no cause of action.
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We rule for petitioner.

Respondent insists that petitioner should have rst led a notice of appeal
before the RTC, and the appeal should have been subsequently denied before recourse
to the CA was made. This contention holds no water.
In Jan-Dec Construction Corp. v. Court of Appeals, 1 2 we held 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 the general rule in
accordance with Rule 41, Sec. 1 (g). In that case, ruled thus:
Evidently, the CA erred in dismissing petitioner's petition for certiorari from the
Order of the RTC dismissing the complaint against respondent. While Section 1,
Rule 41 of the 1997 Rules of Civil Procedure states that an appeal may be taken
only from a nal order that completely disposes of the case, it also provides
several exceptions to the rule, to wit: (a) an order denying a motion for new trial or
reconsideration; (b) an order denying a petition for relief or any similar motion
seeking relief from judgment; (c) an interlocutory order; (d) an order disallowing or
dismissing an appeal; (e) an order denying a motion to set aside a judgment by
consent, confession or compromise on the ground of fraud, mistake or duress, or
any other ground vitiating consent; (f) an order of execution; (g) a judgment or
nal order for or against one or more of several parties or in separate claims,
counterclaims, cross-claims and third-party complaints, while the main case is
pending, unless the court allows an appeal therefrom; and (h) an order dismissing
an action without prejudice. In the foregoing instances, the aggrieved party may
file an appropriate special civil action for certiorari under Rule 65.
In the present case, the Order of the RTC dismissing the complaint
against respondent is a
nal order because it terminates the
proceedings against respondent but it falls within exception (g) of the
Rule since the case involves two defendants, Intermodal and herein
respondent and the complaint against Intermodal is still pending. Thus,
the remedy of a special civil action for certiorari availed of by petitioner
before the CA was proper and the CA erred in dismissing the petition.
(Emphasis supplied)
Clearly, in the case at bar, the CA also erred when it dismissed the Petition led
before it.
Anent the second issue, we also agree with petitioner that the Complaint states a
cause of action against respondent UST. In Abacan v. Northwestern University, Inc. , 1 3
we said:
It is settled that the existence of a cause of action is determined by the
allegations in the complaint. In resolving a motion to dismiss based on the failure
to state a cause of action, only the facts alleged in the complaint must be
considered. The test is whether the court can render a valid judgment on the
complaint based on the facts alleged and the prayer asked for. Indeed, the
elementary test for failure to state a cause of action is whether the complaint
alleges facts which if true would justify the relief demanded. Only ultimate
facts and not legal conclusions or evidentiary facts, which should not
be alleged in the complaint in the rst place, are considered for
purposes of applying the test. (Emphasis supplied)
While it is admitted that respondent UST was not a party to the contract,
petitioner posits that the former is nevertheless liable for the construction costs. In
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support of its position, petitioner alleged that (1) UST and USTHI are one and the same
corporation; (2) UST stands to bene t from the assets of USTHI by virtue of the latter's
Articles of Incorporation; (3) respondent controls the business of USTHI; and (4) UST's
of cials have performed acts that may be construed as an acknowledgement of
respondent's liability to petitioner.
aCASEH
Obviously, these issues would have been best resolved during trial. The RTC
therefore committed grave abuse of discretion when it dismissed the case against
respondent for lack of cause of action. The trial court relied on the contract executed
between petitioner and USTHI, when the court should have instead considered merely
the allegations stated in the Complaint.
WHEREFORE , in view of the foregoing, the Petition is GRANTED . Branch 76 of
the Regional Trial Court of Quezon City is hereby ordered to REINSTATE respondent
University of Santo Tomas as a defendant in C.C. No. 0862635.
SO ORDERED.
Carpio, Brion, Peralta * and Perez, JJ., concur.

Footnotes
*Additional member in lieu of Associate Justice Bienvenido L. Reyes, who recused himself from
the case due to prior action in the Court of Appeals, per Raffle dated 30 January 2012.
1.Penned by Associate Justice Marlene Gonzales-Sison, with Associate Justices Bienvenido L.
Reyes and Isaias P. Dicdican concurring; rollo, pp. 34-36.
2.Id. at 38-39.
3.Id. at 40-51.
4.Id. at 108-115.
5.Id. at 145-147.
6.Id. at 148-155
7.Id. at 178-182.
8.Id. at 183.
9.Id. at 197-198.
10.Id. at 199-217.
11.Id. at 223-230.
12.517 Phil. 96, 105 (2006).
13.495 Phil. 123, 133 (2005).
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SECOND DIVISION

[G.R. No. 189496. February 1, 2012.]

On 4 August 2008, Judge Bernelito R. Fernandez of Branch 97 of the Regional

We rule for petitioner.

Carpio, Brion, Peralta * and Perez, JJ., concur.

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