GR 150918; (August, 2007) (Digest)
G.R. No. 150918 ; August 17, 2007
NEGROS MERCHANTS ENTERPRISES, INC., Petitioner, vs. CHINA BANKING CORPORATION, Respondent.
FACTS
Petitioner Negros Merchants Enterprises, Inc. (NMEI) obtained a credit accommodation and a separate loan from respondent China Banking Corporation (CBC), secured by a real estate mortgage. After paying these loans, NMEI allegedly re-availed the credit line through promissory notes executed by its President, Jacinto Tan, Jr. Upon NMEI’s failure to settle the resulting obligation, CBC extrajudicially foreclosed the mortgaged properties. NMEI then filed a Complaint for Annulment of Foreclosure Sale, later amended to implicate Tan and a bank manager for alleged collusion. The Regional Trial Court (RTC) denied CBC’s Motion to Dismiss the amended complaint.
CBC elevated the matter to the Court of Appeals via a petition for certiorari. The appellate court granted the petition, annulled the RTC orders, and directed the dismissal of the civil case against CBC. It ruled the amended complaint failed to state a cause of action, as NMEI defaulted on its loan, giving CBC a clear right to foreclose. It also found the accompanying certification against forum shopping defective for lack of proper corporate authorization. NMEI filed the instant petition for review.
ISSUE
Whether the Court of Appeals correctly annulled the RTC orders and ordered the dismissal of the complaint against CBC.
RULING
Yes, the Court of Appeals was correct. The Supreme Court affirmed the dismissal of the complaint. On the procedural issue, the Court held that while a motion to dismiss based on failure to state a cause of action is typically confined to the four corners of the complaint, exceptions exist. Here, the RTC orders were based on other documents, like the promissory notes and demand letters, which were attached to the motion to dismiss and admitted by NMEI. The Court of Appeals properly examined these documents in its certiorari review, as they conclusively established that NMEI’s allegations of collusion and improper foreclosure were baseless. The documents proved NMEI’s default, which justified the foreclosure.
Regarding the forum shopping certification, the Court ruled that an amended complaint is an initiatory pleading that requires a new certification. The certification signed by NMEI’s corporate secretary was defective for lack of proof of authority from the board of directors. Substantial compliance was not achieved, as the requirement is mandatory. The defect was a valid ground for dismissal. The Court found no reversible error in the appellate court’s decision, as the RTC committed grave abuse of discretion in not dismissing a complaint that was both procedurally infirm and substantively insufficient to state a cause of action against the respondent bank.