G.R. No. 137898 ; December 15, 2000
CHINA ROAD AND BRIDGE CORPORATION, petitioner, vs. COURT OF APPEALS (Special Seventh Division) and JADE PROGRESSIVE SAVINGS AND MORTGAGE BANK, respondents.

FACTS

China Road and Bridge Corporation (CRBC), a foreign contractor, subcontracted part of a government project to Hi-Quality Builders and Traders, Inc. (Hi-Quality). To secure a loan from Jade Progressive Savings and Mortgage Bank (Jadebank), Hi-Quality, with CRBC’s approval, executed a Deed of Assignment assigning its receivables from CRBC to Jadebank. Hi-Quality subsequently obtained several loans, issuing promissory notes and endorsing checks—some drawn by its president and others issued by CRBC—as security. All checks were dishonored upon presentment. Jadebank filed a collection suit against Hi-Quality, its president, and CRBC, alleging conspiracy and fraud. The trial court granted a writ of preliminary attachment, later discharged upon CRBC’s posting of a counter-bond.
CRBC filed a Motion to Dismiss the complaint for lack of cause of action, arguing the Deed of Assignment was subject to the subcontract and that Jadebank failed to allege any act or omission by CRBC constituting a breach. The trial court denied the motion, ruling the allegations sufficiently stated a cause of action. CRBC then filed a petition for certiorari with the Court of Appeals, which was dismissed for being the wrong remedy. CRBC appealed the trial court’s denial to the Court of Appeals via a notice of appeal. Jadebank moved to dismiss this appeal, arguing it raised only questions of law proper for the Supreme Court. The Court of Appeals denied the motion to dismiss, prompting CRBC’s petition for certiorari before the Supreme Court.

ISSUE

Whether the Court of Appeals committed grave abuse of discretion in denying the motion to dismiss CRBC’s appeal, which raised only questions of law.

RULING

Yes, the Court of Appeals committed grave abuse of discretion. The Supreme Court granted the petition, reversing the appellate court’s resolutions. The core legal logic is jurisdictional and pertains to the mode of appeal. The trial court’s order denying a motion to dismiss based on lack of cause of action is an interlocutory order that resolves no substantive rights but merely defers adjudication on the merits. An appeal from such an order raises only questions of law—specifically, whether the allegations in the complaint are sufficient to constitute a cause of action—which do not involve an examination of the probative value of evidence.
Under the 1997 Rules of Civil Procedure, appeals raising only questions of law must be brought directly to the Supreme Court via a petition for review on certiorari under Rule 45. An appeal taken from the Regional Trial Court to the Court of Appeals raising purely legal questions is improper and must be dismissed outright pursuant to Section 2, Rule 50. Since CRBC’s appeal challenged the legal sufficiency of the allegations in the complaint, it involved solely a question of law. The Court of Appeals, therefore, had no jurisdiction to entertain the appeal and its denial of the motion to dismiss constituted a patent disregard of this clear procedural rule, amounting to grave abuse of discretion. Consequently, the Supreme Court ordered the dismissal of the appeal in CA-G.R. CV No. 57375.