G.R. No. 120060 - Cebu Woman's Club vs. De la Victoria

Case Summary (G.R. No. 120060)

Factual Background: The Construction Contract and the Retention Fee

Petitioner held a bidding on January 7, 1994 for the construction of the Cebu School of Midwifery Building. The construction award went to respondent CAMSAC, represented by its President/General Manager, architect Catalino M. Salazar. The parties executed the construction contract on January 26, 1994. The contract included a retention fee of ten (10%) percent, to be deducted by petitioner from all progress payments. The retention was contractually to be released thirty (30) calendar days after inspection and acceptance by petitioner and after the submission by CAMSAC of a sworn statement that all obligations, including salaries, materials used, and taxes due, in connection with the construction had been duly paid.

On February 4, 1994, CAMSAC entered into a “Sub-Contract Agreement” with respondent Senoron for the construction of the same building. After about one year, Senoron filed a complaint for “sum of money with application for a writ of preliminary injunction” against petitioner and CAMSAC, anchored on the sub-contract Senoron concluded with CAMSAC. Senoron’s suit sought to restrain petitioner from paying or releasing to CAMSAC any amount relating to the 10% retention fee if petitioner complied with CAMSAC’s request for release of that retention.

In the meantime, petitioner allegedly received demand letters from suppliers and creditors, as well as from CAMSAC, urging the release of the 10% retention fee. As a result, on February 22, 1995, petitioner filed Civil Case No. CEB-17126 for interpleader and damages against CAMSAC and the other named defendants, seeking a determination of the competing rights and claims over the retention fee.

Competing Litigation and the Interpleader Filing

Soon after petitioner’s filing, on February 23, 1995, CAMSAC filed a separate action for sum of money and damages against petitioner for failure to release the 10% retention fee. Thus, at the time petitioner invoked interpleader, there were already pending proceedings involving the retention fee: Senoron’s earlier sum of money with application for preliminary injunction and CAMSAC’s subsequent sum of money and damages against petitioner.

Trial Court Proceedings: Dismissal of the Interpleader Complaint

On March 9, 1995, the RTC issued its first assailed Order dismissing the interpleader complaint. The trial court reasoned that allowing the interpleader case to proceed would result in a multiplicity of suits, because there already existed pending cases filed in the same court involving the retention fee. Specifically, it pointed to the earlier case filed by Senoron against petitioner and CAMSAC, and to the fact that the other defendants could protect their interests by intervening in the pending proceeding.

The trial court also stated that petitioner’s “proper move” would have been to file an answer in the pending case, noting that petitioner had not yet done so even though it had filed pleadings in Civil Case No. CEB-17079, including a counterclaim and/or cross-claim. The trial court observed that Arc Asia Philippines, Inc. had already moved to intervene dated March 6, 1995, so that the claims could be tried and decided in one proceeding. On these premises, it denied due course to the interpleader complaint and dismissed it.

Petitioner sought reconsideration. The RTC denied the motion through its second assailed Order dated April 11, 1995.

Issues Raised by Petitioner on Review

Petitioner resorted directly to the Supreme Court through a petition for review on certiorari, challenging the RTC’s Orders. It raised, in substance, two interrelated positions: first, that the trial court acted with grave abuse of discretion and allegedly lacked jurisdiction to “due course” and to motu proprio dismiss the interpleader action; and second, that the dismissal reflected alleged error in correlating factual allegations between Civil Case No. CEB-17126 and another pending case, Civil Case No. CEB-17079, and in making conclusions adverse to petitioner even before a proper hearing.

Petitioner further argued that the RTC Orders contained “conclusions of fact and law” that, if left unchallenged, might amount to a pre-judgment of issues not yet substantiated. It also maintained that its mode of direct resort to the Supreme Court was proper.

Respondents’ Positions and the Court’s Procedural Appraisal

The Supreme Court assessed whether petitioner’s direct recourse was procedurally correct and whether the asserted errors warranted the extraordinary relief invoked. The Court held that petitioner’s arguments were not persuasive. It emphasized that, under the rules on direct appeals, a party may go to the Supreme Court only on pure questions of law, and that the issues in the case required determinations involving factual matters.

The Court explained that resolving the interpleader case required determining whether the other pending cases relied upon by the RTC involved the same matters and arose out of the same facts and circumstances as the interpleader action. It reasoned that this necessarily called for evaluation of factual relationships among the cases, which made petitioner’s direct resort improper because the Supreme Court is not a trier of facts.

The Court also addressed petitioner’s approach in the special civil action mode. It noted that in a petition for review on certiorari, the trial judge should not be made a party, which petitioner had done. It further treated petitioner’s invocation of grave abuse of discretion and alleged jurisdictional defects as a vain attempt to justify an erroneous procedure. The Court reiterated that grave abuse of discretion or jurisdictional error is corrected through certiorari, and not through a petition for review that is limited in its scope. Where the alleged error is one of judgment correctible by appeal or petition for review, certiorari does not lie.

Finally, the Court stated that petitioner’s attempt to use Rule 65 in addition to, or as a substitute for, the remedy under Rule 45 was not allowed.

Legal Basis and Reasoning: Court’s Views on Jurisdiction, Error Type, and Proper Remedy

The Supreme Court proceeded to address the merits of petitioner’s asserted grounds only insofar as they related to the procedural and legal character of the RTC action. It held that the trial court had jurisdiction over the interpleader case. It further ruled that petitioner’s complaint that the RTC failed to observe procedures for interpleader did not constitute grave abuse of discretion that would justify the extraordinary writ. The Court characterized the alleged procedural defect as an error of judgment correctible through ordinary remedies rather than by certiorari.

On the assumption that certiorari might be considered, the Court also held that petitioner should have observed the hierarchy of courts. It noted that the Court of Appeals has original concurrent authority over special civil actions for certiorari involving the types of decisions and matters contemplated, citing Article VIII, Section 5(1), 1987 Constitution, the Judiciary Act of 1945, and Section 21(1) of Batas Pambansa Blg. 129. Thus, petitioner’s direct resort to the Supreme Court, whether framed as a review

Case Syllabus (G.R. No. 120060)

Cebu Womans Club (petitioner) sought to set aside RTC Orders dated March 9, 1995 and April 11, 1995 in Civil Case No. CEB-17126, which dismissed its complaint for interpleader and damages.
The RTC dismissal was premised on the pendency of two other cases involving claims over the same ten percent (10%) retention fee.
The respondents were Hon. Loreto D. De La Victoria (as Presiding Judge of RTC, Br. 6, Cebu City), CAMSAC International, Inc. (CAMSAC), and Phanuel Senoron.
The Supreme Court resolved the petition after addressing the propriety of the petition’s procedural route and the availability of Rule 45 and Rule 65 remedies.

Underlying Construction Contract Facts

Cebu Womans Club owned the Cebu School of Midwifery Building, the construction of which formed the factual nucleus of the controversy.
On January 7, 1994, petitioner awarded the building’s construction to CAMSAC, represented by its President/General Manager, architect Catalino M. Salazar.
The parties executed a construction contract on January 26, 1994.
The contract required a ten percent (10%) retention fee to be deducted by petitioner from all progress payments.
The retention fee was to be released thirty (30) calendar days after inspection and acceptance by petitioner and after CAMSAC submitted a sworn statement that its obligations, including salaries, materials used, and taxes due, had been duly paid.
On February 4, 1994, CAMSAC entered into a Sub-Contract Agreement with Phanuel Senoron to undertake the construction of the building.

Competing Claims Over Retention Fee

After one year, Senoron filed a complaint for sum of money with an application for a writ of preliminary injunction against petitioner and CAMSAC.
Senoron’s complaint was anchored on the Sub-Contract Agreement he concluded with CAMSAC.
Senoron sought to prevent petitioner from releasing any amount to CAMSAC regarding the retention fee if petitioner heeded CAMSAC’s request for release.
Petitioner allegedly received demand letters from suppliers-creditors as well as from CAMSAC demanding the release of the 10% retention fee.
On February 22, 1995, petitioner filed Civil Case No. CEB-17126 for interpleader and damages against multiple parties so that they could interplead and settle their respective rights and claims on the retention fee.
On February 23, 1995, CAMSAC filed a separate action for sum of money and damages against petitioner for failure to release the 10% retention fee.

RTC Orders Dismissing Interpleader

On March 9, 1995, the RTC issued the first assailed Order dismissing petitioner’s interpleader complaint.
The RTC reasoned that dismissal was warranted to prevent multiplicity of suits because another pending case existed involving Senoron.
The RTC noted that Senoron had a pending case against petitioner and CAMSAC, and that the matter involved the same ten percent (10%) retention fee.
The RTC held that giving due course to the interpleader action would result in multiplicity because the “proper move” for petitioner was to file an answer in the pending case where it had not yet filed one.
The RTC suggested that defendants and other parties could intervene in the pending case to protect their respective interests, and it pointed to an intervention motion filed by Arc Asia Phil. Inc. dated March 6, 1995.
On April 11, 1995, the RTC denied petitioner’s motion for reconsideration.

Issues Raised in Supreme Court Petition

Petitioner contended that the RTC committed grave abuse of discretion because it allegedly had “no jurisdiction” to exercise its “due course” authority and to motu proprio dismiss the interpleader action.
Petitioner argued that the RTC erred by correlating the factual allegations between Civil Case No. CEB-17126 and Civil Case No. CEB-17079 and then issuing conclusions allegedly adverse to petitioner.
Petitioner also asserted that the RTC’s March 9, 1995 Order contained conclusions of fact and law even though no hearing had yet been conducted.
Petitioner further invoked the position that its case involved issues that could be resolved without treating the matter as involving factual disputes.
The respondents, however, argued that petitioner’s direct resort to the Supreme Court was improper and that the petition did not