G.R. No. 189496; February 1, 2012
D.M. FERRER & ASSOCIATES CORPORATION, Petitioner, vs. UNIVERSITY OF SANTO TOMAS, Respondent.

FACTS

Petitioner D.M. Ferrer & Associates Corporation entered into a Project Management Contract with University of Santo Tomas Hospital, Inc. (USTHI) for renovation works. After USTHI failed to pay the construction costs, petitioner filed a complaint for sum of money against both USTHI and respondent University of Santo Tomas (UST). Petitioner alleged UST was liable under the doctrine of piercing the corporate veil, citing UST’s control over USTHI, the transfer of USTHI’s assets to UST upon dissolution, and verbal payment assurances from UST’s rector.
Respondent UST filed a Motion to Dismiss, arguing it was not a party to the contract and that the verbal assurances were unenforceable under the Statute of Frauds. The Regional Trial Court (RTC) granted the motion, dismissing the complaint against UST. The RTC based its ruling on the contract documents showing UST was not a privy, and that the rector’s assurances were not in writing. Petitioner’s motion for reconsideration was denied. Petitioner then filed a Petition for Certiorari with the Court of Appeals (CA), alleging the RTC committed grave abuse of discretion by considering documents beyond the complaint’s allegations. The CA dismissed the petition, ruling that certiorari under Rule 65 was the wrong remedy since the RTC order was a final dismissal; an ordinary appeal under Rule 41 should have been filed instead.

ISSUE

(1) Whether the CA erred in dismissing the Petition for Certiorari by failing to consider the exception under Rule 41, Section 1(g). (2) Whether the RTC committed grave abuse of discretion in dismissing the complaint against UST for failure to state a cause of action.

RULING

The Supreme Court ruled for the petitioner. On the first issue, the Court held that the CA erred in dismissing the certiorari petition. Under Rule 41, Section 1(g) of the Rules of Court, an appeal cannot be taken from a judgment or final order that does not dispose of the entire case. Since the RTC’s order dismissed the complaint only against respondent UST while the main case against USTHI remained pending, it was a final order but not appealable. The proper remedy was indeed a petition for certiorari under Rule 65, as established in Jan-Dec Construction Corp. v. Court of Appeals.
On the second issue, the Court found that the RTC committed grave abuse of discretion in dismissing the complaint against UST for failure to state a cause of action. In a motion to dismiss based on this ground, the test is whether, admitting the facts alleged in the complaint, the court can render a valid judgment. The trial court should confine itself to the allegations in the complaint and not consider other evidence like the attached contract. Petitioner’s allegations—that UST and USTHI were one entity, that UST controlled USTHI, and that UST’s officials acknowledged liability—if proven true, could justify relief under the doctrine of piercing the corporate veil. These are ultimate facts that require a full trial for resolution. The RTC’s reliance on evidentiary matters outside the complaint constituted a capricious and whimsical exercise of judgment. The case was remanded for trial.