Title
Madrigal Transport Inc. vs. Lapanday Holdings Corp.
Case
G.R. No. 156067
Decision Date
Aug 11, 2004
Madrigal Transport filed for insolvency and sued Lapanday for damages, but the case was dismissed due to insolvency. The Supreme Court ruled that certiorari was improper; an appeal was the correct remedy.
certiorari
jurisdiction
appeal
A

Case Summary (G.R. No. 156067)

Factual Background

Madrigal Transport, Inc. alleged that it entered into a joint venture with Lapanday for the purpose of operating vessels to service Del Monte Philippines, Inc.; that it proceeded on the strength of representations by Lorenzo in his capacity with Del Monte, Lapanday and Macondray; that Macondray was appointed broker to secure charter hire contracts from Del Monte; that pursuant to the joint venture Madrigal purchased a vessel by obtaining a P10,000,000 bank loan; and that despite representations and demands Lapanday and Lorenzo failed to secure the promised Del Monte charter hire contracts.

Trial Court Proceedings

After respondents filed Motions to Dismiss in March and April 1998, the trial court, RTC of Manila, Branch 36, granted those motions on December 16, 1998 for failure to state a cause of action. The RTC applied Sections 32 and 33 of Act No. 1956, concluding that upon the filing of Madrigal’s Petition for Voluntary Insolvency the exclusive right to prosecute claims vested in the court-appointed assignee. Madrigal filed a motion for reconsideration January 26, 1999, which the trial court denied on July 26, 1999.

Proceedings in the Court of Appeals

Petitioner filed a Petition for Certiorari with the Court of Appeals challenging the RTC’s December 16, 1998 and July 26, 1999 orders. The CA initially required petitioner to show cause why the petition should not be dismissed for failure to take an ordinary appeal. On January 10, 2000 the CA treated the petition as reviewable in exceptional circumstances because the main issue appeared to be purely legal. Respondents filed a Motion for Reconsideration dated February 10, 2000; after oral arguments the CA, by Decision dated February 28, 2002, granted respondents’ motion for reconsideration, set aside its prior resolution, and dismissed the Petition for Certiorari. The CA held that an order granting a motion to dismiss was final and appealable, and that if the matter were treated as an appeal it implicated pure questions of law properly brought to the Supreme Court pursuant to Section 2, Rule 50 and Section 2(c), Rule 41. The CA thereafter denied reconsideration by Resolution dated November 5, 2002.

Issues Presented

Petitioner framed two central issues: first, whether the CA erred in ruling that the RTC’s order granting respondents’ motions to dismiss was not a proper subject of a Rule 65 certiorari; and second, whether the CA erred in concluding that it lacked jurisdiction to entertain the petition because appeal was the proper remedy. Petitioner urged that Section 5, Rule 16 did not apply; that Section 1 of Rule 41 prohibited appeal in its circumstances so that certiorari was the correct remedy; and that the RTC acted with grave abuse of discretion amounting to lack of jurisdiction in dismissing the Complaint.

Supreme Court's Ruling

The Supreme Court denied the petition and affirmed the Court of Appeals’ Decision and Resolution. The Court held that the proper remedy from the RTC’s order granting the motion to dismiss was an appeal and not a petition for certiorari; that the issues raised by petitioner involved errors of judgment or pure questions of law rather than jurisdictional defects; and that certiorari could not be used as a substitute for an available appeal. Costs were assessed against petitioner. Justices Corona and Carpio-Morales concurred; Justice Sandoval-Gutierrez was on leave.

Legal Basis and Reasoning

The Court explained the fundamental distinction between an appeal and a petition for certiorari under Rule 65. An appeal under Rule 41, Section 2 is the continuation of the original suit and is the proper remedy to correct errors of judgment or errors in law where the lower court had jurisdiction; certiorari is an original action that targets errors of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction and presupposes the absence of any plain, speedy, and adequate remedy. The Court reiterated that an order or judgment that finally disposes of the case is final and appealable; an order granting a motion to dismiss terminated the proceedings and therefore was final. The Court rejected petitioner’s reliance on Section 5, Rule 16, observing that that provision recognizes the bar to refiling for dismissals on certain grounds but still preserves the right of appeal; the Court further explained that Sections 1(a) and 1(h), Rule 41 did not bar appeal from the final order here. The Court applied settled authority distinguishing errors of jurisdiction from errors of judgment, citing Pure Foods Corp. v. NLRC and Barangay Blue Ridge A of QC v. Court of Appeals, and concluded that petitioner attacked the trial court’s interpretation of law — an error of judgment — which is remedial by appeal rather than certiorari. The Court also considered but declined to ap

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