A.M. No. RTJ-16-2460 - Tacorda vs. Cabrera-Faller

Case Summary (A.M. No. RTJ-16-2460)

Chronology and Transactions Involving Lot 5357

Antonio Lim Tanhu sold Lot 5357 to Francisco and Estrella Cabansag in 1966; however, title transfer was not accomplished due to Francisco’s frequent abroad travels. In 1988, the Cabansags sold the lot to Serafin Uy. They subsequently attempted to transfer the title in their names first but failed due to loss of the original title documents. Serafin filed a petition in 1996 to secure a new owner's duplicate title in his name. The Regional Trial Court (RTC) initially ordered issuance of this title but revoked it upon opposition by Lim Teck Chuan, who claimed to be a legitimate heir possessing the original title.

Henry Lim's Claim and Subsequent Transactions

In August 1996, Henry Lim filed an Affidavit of Self-Adjudication claiming to be the sole surviving heir of Antonio Lim Tanhu and sold the property to Leopolda Cecilio. Serafin subsequently filed suit for quieting of title and nullification of Henry’s affidavit and deed of sale, impleading Leopolda, Henry, and Lim Teck Chuan as defendants. Leopolda claimed to be a buyer in good faith, denying encumbrances or simulation of prior sales, and asserted possession of the property with an issued tax declaration.

Parties’ Claims and Pre-Trial Proceedings

Lim Teck Chuan challenged the validity of Henry’s claims and the alleged simulated 1966 deed of sale, asserting the property was never transferred during Antonio’s lifetime and that Henry was not an heir. The parties agreed at pre-trial on essential facts such as Antonio’s ownership and death, the existence of multiple deeds, and the disputed identity of Henry as a fictitious person, but rejected the stipulation of genuine admission of the 1966 deed. Three main issues were identified: validity of Serafin's causes of action, validity of defendants’ counterclaims, and Lim Teck Chuan’s cross-claim validity.

Court Proceedings and Motion to Dismiss

After scheduling and postponements, Serafin and Leopolda filed a Joint Motion to Dismiss in 2001, claiming an amicable settlement and Serafin's secured title, which would allegedly be canceled and reissued in common names. They invoked Rule 17, Section 2 of the Rules of Court, asserting dismissal of the complaint and waiver of counterclaims by Leopolda. Lim Teck Chuan opposed, citing bad faith, fraud, and asserted his valid counterclaims and cross-claims should be resolved in the same action as per procedural rules. Henry Lim remained silent throughout.

Regional Trial Court’s Dismissal Orders

The RTC granted the Joint Motion to Dismiss on April 25, 2002, dismissing the complaint and counterclaims, and denied Lim Teck Chuan’s motion to implead indispensable parties (the Cabansags), deeming the case moot since the principal reliefs had been served. The denial of motion for reconsideration on October 21, 2002 affirmed the dismissal, reasoning that a plaintiff cannot be compelled to continue litigation once reliefs are attained and that the dismissal of plaintiff’s complaint ordinarily ends the case.

Petitioner's Appeal and Legal Issue on Dismissal

Lim Teck Chuan elevated the case to the Supreme Court via a Rule 45 petition, arguing the dismissal was improper because he timely manifested his preference under Section 2, Rule 17 of the Rules of Court to have his counterclaim and cross-claim prosecuted in the same case. He contended that only the complaint should have been dismissed, not his counterclaims.

Supreme Court’s Jurisdiction and Legal Analysis

The Court confirmed its jurisdiction under Rule 45 as the controversy involved only questions of law concerning the correct interpretation of procedural rules. The core legal issue centered on whether dismissal of a complaint upon plaintiff's motion under Section 2, Rule 17 of the Rules of Civil Procedure also results in dismissal of the defendant’s counterclaims. The Court emphasized that a dismissal of the complaint is distinct from dismissal of the entire action.

Interpretation of Rule 17, Sections 1 to 4 of the Rules of Civil Procedure

Section 2, Rule 17 provides that when a complaint is dismissed upon a plaintiff’s motion after a counterclaim has been filed, the dismissal should be limited to the complaint. The defendant may either prosecute the counterclaim in a separate action or manifest a preference to have it resolved in the same action within 15 days of notice. This protects defendants’ rights to have their counterclaims heard despite dismissal of the complaint.

Application and Precedents

The Court referenced the decision in Pinga v. Heirs of German Santiago, reaffirming that dismissing the complaint does not affect counterclaims. The amendment to Rule 17 explicitly grants defendants the choice to continue counterclaims regardless of their compulsory or permissive nature. The Court criticized the RTC’s failure to adhere to this procedure and its improper blanket dismissal o

Case Syllabus (A.M. No. RTJ-16-2460)

Procedural Posture and Nature of the Petition

The case is a petition for review on certiorari filed by Lim Teck Chuan (petitioner) under Rule 45.
It assails the April 25, 2002 and October 21, 2002 Orders of the Regional Trial Court (RTC) of Lapu-lapu City, Branch 27, in Civil Case No. 4786-L.
The Orders dismissed the civil case based on a joint motion of respondents Serafin Uy and Leopolda Cecilio.
The petitioner opposed the dismissal and expressed preference to have his counterclaim and cross-claim prosecuted in the same action.
The RTC denied the motion for reconsideration of the dismissal, prompting the present appeal.
The issue raised is whether the dismissal of a complaint upon motion of the plaintiff extends also to the dismissal of the defendant’s counterclaim when the defendant manifests preference to have it heard in the same action.

Factual Background and Parties’ Interests

The controversy concerns Lot 5357, a 33,610 square meter property in Barrio Agus, Lapu-lapu City, covered by TCT No. T-0500 originally registered to Antonio Lim Tanhu, who died in 1991.
Antonio Lim Tanhu sold the property to Spouses Francisco and Estrella Cabansag in 1966 through a Deed of Sale.
Francisco failed to transfer the title due to frequent travels abroad.
In 1988, the Spouses Cabansag sold the property to Serafin Uy.
Serafin filed a petition in 1996 for issuance of a new owner’s duplicate title in his name, initially granted but later recalled due to opposition filed by the petitioner claiming ownership as one of Antonio’s six legitimate descendants.
In August 1996, Lim Sing Chan alias Henry Lim executed an Affidavit of Sole Adjudication and Deed of Sale, claiming sole heirship of Antonio and selling the lot to Leopolda Cecilio.
Serafin filed a complaint in 1997 for quieting of title, nullity of the affidavit and tax declarations, and other reliefs, impleading Leopolda, Henry, and the petitioner as defendants.
Leopolda claimed to be a buyer in good faith and denied encumbrances or fraud (counterclaim and cross-claim).
The petitioner disputed the validity of the transfers, heirship claims, and documents affecting title.
Parties stipulated some facts but disputed authenticity of critical documents and identities.

Procedural History and Trial Court Orders

The RTC denied Serafin’s motion for summary judgment in 1999 due to genuine issues of fact.
Trial dates were reset multiple times amid ongoing negotiations for amicable settlement involving Serafin and Leopolda, excluding the petitioner.
Serafin and Leopolda filed a joint motion to