G.R. No. L-18786 - Dionisio vs. Vda. de Dionisio

On March 31, 1966, Butuan Development Corporation (BDC), then unincorporated, through its President Edmundo Satorre purchased a 7.6923-hectare parcel in Butuan City from Spouses Jose and Socorro Sering.
On January 28, 1969, the Registry of Deeds for Butuan City issued Transfer Certificate of Title (TCT) No. RT-4724 in the name of BDC.

On May 5, 1998, Max L. Arriola, Jr., representing himself as BDC Chairman (with a board resolution), mortgaged the subject property to De Oro Resources, Inc. (DORI) and its President Louie A. Libarios.
On May 13, 2002, Satorre and his children signed BDC’s Articles of Incorporation; the SEC issued the Certificate of Incorporation on May 23, 2002.

August 23, 2005: BDC filed a complaint in RTC Agusan del Norte for declaration of nullity of the real estate mortgage (REM), alleging the owner’s duplicate TCT was missing and that the Arriolas misrepresented themselves as BDC officers.
Respondents’ defenses included denial of misrepresentation and an affirmative defense that BDC lacked corporate existence in 1998 and hence no right to hold the property.
RTC issued orders on August 11 and November 24, 2006, rejecting respondents’ special and affirmative defenses for lack of merit.
January 14, 2011: Court of Appeals (CA) set aside the RTC orders and dismissed BDC’s complaint for failure to state a cause of action; May 24, 2011: CA denied BDC’s motion for reconsideration.
July 4, 2011: BDC filed a petition for certiorari under Rule 65 before the Supreme Court.

Whether the Court of Appeals gravely abused its discretion in dismissing BDC’s complaint for declaration of nullity of the REM on the ground that it failed to state a cause of action.