First Corporation vs. Former Sixth Division of the Court of Appeals

Certiorari under Rule 65 will not lie to review factual findings of the trial court as affirmed by the Court of Appeals, nor may it serve as a substitute for a lost appeal under Rule 45; where the petition was filed beyond the reglementary period for a Rule 45 petition, it cannot be treated as such even under a liberal construction of the Rules.

First Corporation is a domestic corporation engaged primarily in trade. Eduardo M. Sacris was an alleged creditor who extended loans to the corporation, while Cesar A. Abillar served as the corporation's President and Chairman of the Board from 1993 until 26 February 1998. The dispute centers on loan transactions entered into between Sacris and Abillar, ostensibly on behalf of the corporation, and whether the corporation may be held liable for obligations incurred through its former president.

In 1991, the corporate officers of First Corporation—Vicente C. Esmeralda, Edgardo C. Cerbo, Nicolas E. Esposado, Rafael P. La Rosa, and Cesar A. Abillar—persuaded Eduardo M. Sacris to invest in the corporation's business, particularly its Rema Tip Top Division, which needed fresh equity infusion. The corporation promised to convert the investment into shareholding. While that conversion remained pending, Sacris and the corporation agreed to treat the amount as a loan bearing one percent interest per month. From 1991 to 1994, Sacris extended a ₱1.2 million loan to the Rema Tip Top Division. In 1997, he extended another ₱1 million, bringing the total to ₱2.2 million. All funds were given to Abillar, then President and Chairman of the Board, and receipts were issued by the corporation in Abillar's name. The corporation failed to convert the investment into equity; instead, it agreed to pay 2.5% monthly interest on the loan. The corporation made partial payments of ₱400,000 on the principal and interest payments of ₱33,750.27 and ₱23,250, leaving an outstanding balance of ₱1.8 million.

On 27 February 1998, a Special Stockholders' Meeting was held to elect a new Board and officers. The stockholders did not re-elect Abillar as President or as a member of the Board, having lost confidence in him due to alleged anomalies during his tenure. On 13 March 1998, Sacris executed a Deed of Assignment in favor of Abillar, transferring his remaining collectibles of ₱1.8 million from the corporation, with Abillar undertaking to pay Sacris that amount on or before 30 July 1998. On 10 April 1998, Abillar filed a Complaint for Sum of Money with a prayer for a writ of preliminary attachment before the RTC of Pasig City, docketed as Civil Case No. 66757. While that case was pending, Sacris and Abillar rescinded the Deed of Assignment because Abillar failed to pay the ₱1.8 million by the agreed deadline. They executed a Deed of Rescission on 27 August 1998, and Sacris himself demanded payment from the corporation, which refused.

Sacris then filed a Motion for Intervention with a Complaint in Intervention in Civil Case No. 66757. The RTC of Pasig City initially denied the motion but later admitted the Complaint in Intervention and dismissed Abillar's original complaint. First Corporation petitioned the Court of Appeals for certiorari, which granted the petition, set aside the RTC orders, and directed that the complaint be dismissed with prejudice and the motion for intervention denied without prejudice. Pursuant to that decision, Sacris filed a new Complaint for Sum of Money with Damages before the RTC of Quezon City, docketed as Civil Case No. Q01-44599, to recover the ₱1.8 million. First Corporation denied liability, asserting it had no knowledge of or consent to the transactions between Sacris and Abillar, and filed a Third-Party Complaint against Abillar, alleging that the loan transactions were entered into without the corporation's authority or ratification.

On 28 June 2004, the RTC of Quezon City rendered judgment in favor of Sacris and Abillar, ordering First Corporation to pay ₱1,800,000 plus 24% annual interest, attorney's fees of ₱20,000 to Abillar and ₱50,000 to Sacris, and costs. The Court of Appeals affirmed this decision on 29 November 2005 and denied the motion for reconsideration on 14 February 2006. First Corporation received the denial on 23 February 2006, giving it until 10 March 2006 to file a Petition for Review under Rule 45. Instead, it allowed that period to lapse and filed a Petition for Certiorari under Rule 65 on 6 April 2006, the 42nd day from receipt of the denial.

• Sufficiency of Evidence: Petitioner argued that the RTC and the Court of Appeals committed grave abuse of discretion in holding that Sacris's claims of a purported loan were supported by a preponderance of evidence, contending that the documentary evidence presented by private respondents was tainted with irregularities—including certifications, official receipts, check vouchers, deposit slips, and a handwritten settlement note.
• Benefit to the Corporation: Petitioner maintained that the conclusion that it benefited from the loans had no basis in fact or law, pointing out that its financial statements for 1992–1997 showed entries of "loans payable" only for 1992 and 1993, with no outstanding loan entries in subsequent years.
• Authority of Abillar: Petitioner alleged that the RTC and the Court of Appeals gravely abused their discretion in holding that Abillar was authorized to borrow money from Sacris, arguing that the corporation's by-laws only authorized Abillar, as President, to sign negotiable instruments and contracts, and never granted blanket authority to bind the corporation in any contract.
• Damages and Third-Party Complaint: Petitioner contended that the lower courts acted with grave abuse of discretion in failing to award damages in its favor and in dismissing its Third-Party Complaint against Abillar.

• Improper Remedy: Respondents argued that the grounds enumerated by petitioner clearly called for a review of the factual findings of the RTC, and that certiorari under Rule 65 cannot be used to review findings of fact and evidence, nor to correct erroneous conclusions of law or fact.
• Substitute for Appeal: Respondents maintained that petitioner was using certiorari as a delaying tool to prevent the RTC decision from becoming final and executory, and as an improper substitute for the lost remedy of ordinary appeal.
• Waiver of Grave Abuse of Discretion Argument: Respondents averred that because petitioner failed to allege grave abuse of discretion in its appeal before the Court of Appeals, it could not now raise that allegation before the Supreme Court to justify its availment of certiorari.

• Propriety of Certiorari: Whether a Petition for Certiorari under Rule 65 is the proper remedy to challenge the factual findings and evidentiary appreciation of the RTC as affirmed by the Court of Appeals.
• Substitute for Lost Appeal: Whether the Petition for Certiorari may be treated as a Petition for Review under Rule 45 when it was filed beyond the 15-day reglementary period for such an appeal.
• Corporate Liability: Whether the lower courts committed grave abuse of discretion in holding the corporation liable for loans obtained by its former president without explicit board authorization.

• Propriety of Certiorari: No. Certiorari under Rule 65 does not extend to the review of factual findings or the evaluation of evidence; errors in the appreciation of evidence are errors of judgment, not errors of jurisdiction, and are not correctible by certiorari.
• Substitute for Lost Appeal: No. The petition was filed on the 42nd day from receipt of the denial of the motion for reconsideration, well beyond the 15-day reglementary period for a Rule 45 petition, and thus cannot be treated as one under Rule 45.
• Corporate Liability: Not reached as a certiorari issue. The factual findings of both lower courts that the corporation received and benefited from the loans were supported by documentary evidence on record, and this Court is not a trier of facts.

• Propriety of Certiorari: The Court reaffirmed the well-entrenched rule that it is not a trier of facts and will not pass upon the findings of fact of the trial court, especially when affirmed by the appellate court. A closer examination of the grounds relied upon by petitioner revealed that it was essentially seeking a review of the factual findings and evidence—specifically, the sufficiency of documentary evidence, whether the corporation benefited from the loans, and whether Abillar was authorized to borrow on the corporation's behalf. These are matters requiring examination and re-evaluation of evidence, which fall outside the scope of certiorari. An error in the evaluation of evidence is an error of judgment committed in the exercise of jurisdiction, not an error of jurisdiction correctible by the extraordinary writ of certiorari. The distinction is fundamental: an error of jurisdiction exists when the court acts without or in excess of jurisdiction or with grave abuse of discretion tantamount thereto; an error of judgment is correctible only by appeal.

• Substitute for Lost Appeal: The proper remedy from an adverse decision of the Court of Appeals is an appeal under Rule 45, not a Petition for Certiorari under Rule 65. While the Court may, in the interest of justice and under the liberal spirit of the Rules, treat a Petition for Certiorari as one filed under Rule 45—particularly when filed within the reglementary period—no compelling reason justified such liberal treatment here. Petitioner received the appellate court's resolution denying its motion for reconsideration on 23 February 2006, giving it until 10 March 2006 to file a Rule 45 petition. Instead, it allowed that period to lapse and filed the Rule 65 petition on 6 April 2006, the 42nd day. Because the petition was filed beyond the reglementary period, it could not be treated as a Rule 45 petition, and certiorari could not serve as a substitute for the lost remedy of appeal. Even if treated as a Rule 45 petition, it would still be dismissed for lack of merit, as the case did not fall under the recognized exceptions allowing the Court to resolve factual issues.

• Corporate Liability: The factual findings of the RTC and the Court of Appeals were properly supported by evidence on record. Both courts found that the loans were reflected in the corporation's financial statements, particularly for 1992–1993, contrary to petitioner's claim. The financial statements were not the sole basis; the RTC also relied on documentary evidence—certifications acknowledging ₱1,200,000 received from Sacris, receipts showing ₱1,000,000 received as investment, check vouchers reflecting interest payments and partial principal payments, and official receipts—all confirming that the corporation received money from Sacris through Abillar and acknowledged receipt. These documents supported the conclusion that the corporation consented to and benefited from the transactions, precluding petitioner's claim that it never authorized Abillar's acts. Because the findings were supported by evidence, the Court found no reason to deviate from the rule against factual review.

• Certiorari is not a substitute for appeal — Certiorari under Rule 65 is an extraordinary remedy available only when a tribunal acts without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction. It cannot be used to review factual findings, re-evaluate evidence, or correct errors of judgment. Where the proper remedy is an ordinary appeal under Rule 45 and that remedy has been lost through the petitioner's own lapse, certiorari will not serve as a substitute.

• Error of judgment vs. error of jurisdiction — An error of judgment is one committed by a court in the exercise of its jurisdiction, correctible by appeal. An error of jurisdiction is one where the act complained of was issued without or in excess of jurisdiction, or with grave abuse of discretion tantamount to lack or excess of jurisdiction, correctible only by certiorari. Errors in the appreciation of evidence or conclusions anchored on factual findings are errors of judgment.

• Factual findings of trial court affirmed by appellate court are binding — The Supreme Court is not a trier of facts and will not pass upon the findings of fact of the trial court, especially when affirmed by the Court of Appeals, unless the case falls under recognized exceptions (e.g., findings grounded on speculation, inference manifestly mistaken, grave abuse of discretion, judgment based on misapprehension of facts, conflicting findings, findings contrary to admissions, findings contrary to those of the trial court, conclusions without citation of specific evidence, undisputed facts, findings premised on absence of evidence but contradicted by record, or manifest oversight of relevant facts).

• Liberal treatment of Rule 65 as Rule 45 — The Court may treat a Petition for Certiorari as a Petition for Review under Rule 45 in the interest of justice, particularly when filed within the reglementary period for a Rule 45 petition. However, this liberal construction will not apply when the petition was filed beyond the 15-day reglementary period, as the petitioner cannot use certiorari to revive a lost appeal.

• "It is a fundamental aphorism in law that a review of facts and evidence is not the province of the extraordinary remedy of certiorari, which is extra ordinem - beyond the ambit of appeal." — This passage articulates the core rationale for dismissing the petition: certiorari's scope is limited to jurisdictional errors, not evidentiary review.

• "An error of judgment is one which the court may commit in the exercise of its jurisdiction. An error of jurisdiction is one where the act complained of was issued by the court without or in excess of jurisdiction, or with grave abuse of discretion, which is tantamount to lack or in excess of jurisdiction and which error is correctible only by the extraordinary writ of certiorari." — This defines the controlling distinction between errors correctible by appeal and those correctible by certiorari, a foundational remedial law principle.

• "Petitioner corporation will not be allowed to use the remedy of certiorari as a substitute for the lapsed or lost remedy of appeal." — This statement crystallizes the rule that certiorari cannot revive a lost appeal, particularly when the petitioner allowed the reglementary period to lapse before filing.

• Western Shipyard Services, Inc. vs. Court of Appeals, G.R. No. 110340, May 28, 2001 — Cited for the rule that the Supreme Court is not a trier of facts and will not pass upon the factual findings of the trial court, especially when affirmed by the appellate court.
• Philippine Rabbit Bus Lines, Inc. vs. Macalinao, G.R. No. 141856, Feb. 11, 2005 — Cited both for the binding nature of concurrent factual findings and for the recognized exceptions allowing the Court to review factual issues.
• Delsan Transport Lines, Inc. vs. Court of Appeals, 335 Phil. 1066 (1997) — Distinguished. In that case, the Court treated a Rule 65 petition as one under Rule 45 because it was filed within the 15-day reglementary period. The present case was distinguished because the petition was filed on the 42nd day, beyond the reglementary period.
• Verde vs. Macapagal, G.R. No. 151342, June 23, 2005 — Cited for the rule that the proper remedy from an adverse decision of the Court of Appeals is an appeal under Rule 45, not a Petition for Certiorari under Rule 65.
• Montebon vs. Tanglao-Dacanay, G.R. No. 136062, April 7, 2005 — Cited for the principle that certiorari does not include inquiry into the correctness of evidence evaluation and that the Court will not re-examine conflicting evidence or substitute the findings of the lower court.

• Rule 65, 1997 Revised Rules of Civil Procedure — Governs the Petition for Certiorari. The Court held that the remedy was improperly invoked, as the issues raised were factual and certiorari does not extend to the review of evidence or factual findings.
• Rule 45, 1997 Revised Rules of Civil Procedure — Governs Petitions for Review on Certiorari from decisions of the Court of Appeals. The Court held that this was the proper remedy petitioner should have availed of within 15 days from receipt of the denial of its motion for reconsideration, and that the failure to do so within that period precluded liberal treatment of its Rule 65 petition as one under Rule 45.

Justice Ynares-Santiago (Chairperson) and Justice Nachura concurred.