Torres v. Court of Appeals
REITERATIONFacts
The Antecedents: Spouses Isidro Sierra and Antonia Magtaas sold a parcel of land to Marta B. Chivi on January 1, 1955, misrepresenting that the land was not registered and covered by a free patent application. Chivi agreed to the purchase price of P10,800.00, with full payment contingent upon the Sierras registering the land under Act 496. Chivi initiated a registration proceeding. On May 24, 1958, Chivi sold her rights to the land to spouses Jaime Laico and Luz Los Banos for P25,647.00, with a stipulation that Chivi would return double the purchase price if she failed to transfer title. The Laicos, shown a petition withdrawing the Sierras' free patent application, continued the registration proceeding. In December 1959, the Laicos discovered, and Chivi learned in January 1960, that a free patent title had been issued to Isidro Sierra on February 26, 1932. The Sierras executed another deed of sale in favor of the Laicos on January 17, 1960. The Laicos withdrew their registration application and filed for reconstitution of the patent title. Procedural History: On June 14, 1960, the Sierras filed a complaint against Marta B. Chivi and the Laicos in the Court of First Instance (CFI) of Rizal (Civil Case No. 6184), seeking to repurchase the land under the Public Land Act. The Chivis and Laicos counter-claimed for damages due to the Sierras' alleged bad faith and misrepresentation. The Laicos filed a cross-claim against the Chivis for double the purchase price if the Sierras obtained a favorable judgment. On March 12, 1964, the Sierras and Laicos entered into a compromise agreement without the Chivis' knowledge, stipulating that the Laicos were absolute owners, the Sierras would withdraw objections to title reconstitution, and the Laicos would pay P10,000.00 to the Sierras. The Sierras would convert their action against the Chivis to one for collection of the balance of the sales price and damages, and the Laicos would pursue their cross-claim against the Chivis, paying the Sierras half of any amount exceeding P25,647.00. The CFI approved the compromise and dismissed the complaint against the Laicos with prejudice, and the Laicos' counter-claim against the Sierras. The Chivis were not notified of the dismissal. The CFI declared the Chivis in default on July 14, 1964, for failing to appear at the pre-trial, and allowed the Laicos to present evidence on their cross-claim. The Chivis' motion for reconsideration was denied. On February 5, 1965, the CFI rendered judgment for the Laicos on the cross-claim, ordering the Chivis to pay P15,000.00. A writ of execution was issued, and the sheriff levied upon the Chivis' properties. The Petition: The Chivis filed a petition for certiorari and prohibition with preliminary injunction with the Court of Appeals (CA) to annul the orders authorizing ex parte evidence, the decision on the cross-claim, the writ of execution, the levy, and the execution sale, arguing the CFI lacked jurisdiction. The CA issued a preliminary injunction. On August 31, 1965, the CA declared all proceedings on the cross-claim null and void and restrained the CFI judge and sheriff from further proceedings. The Laicos moved for reconsideration. Marta B. Chivi died and was substituted by Angelina Chivi. The CA denied the motion for reconsideration on March 16, 1966. The Laicos filed the instant appeal by certiorari.
Issue(s)
Whether a cross-claim can stand after the dismissal of the original complaint with prejudice. Whether the Court of Appeals erred in annulling the proceedings on the cross-claim and the subsequent orders and writs. Whether the Chivis were guilty of laches in filing their petition for certiorari.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals, holding that the cross-claim was null and void. The Court found that the cross-claim was purely defensive and dependent on the success of the original complaint, which was dismissed with prejudice. Therefore, the dismissal of the complaint carried with it the dismissal of the cross-claim. The Court also found that the Court of Appeals correctly ruled on the issue of laches.
Ratio Decidendi
On the issue of whether a cross-claim can stand after the dismissal of the original complaint with prejudice: The Court held that a cross-claim, as defined in Section 7 of Rule 6, is any claim by one party against a co-party arising out of the transaction or occurrence that is the subject matter of the original action or a counterclaim. The cross-claim of the Laicos against the Chivis was for P51,294.00, based on Chivi's alleged failure to transfer title, and contingent upon the Sierras obtaining a favorable judgment. The Court cited Osius vs. Barton (88 A.L.R. 394, 402) for the principle that a cross-bill strictly speaking is an auxiliary suit dependent upon the original bill, and its dismissal carries with it a purely defensive cross-bill. The Laicos' cross-claim was found to be purely defensive in nature, arising entirely out of the complaint and capable of prospering only if the plaintiffs (Sierras) succeeded. Therefore, it could not be the subject of independent adjudication once its nexus with the original complaint was severed by the dismissal. The warranty itself became functus officio when the Sierras, who held the patent title, transferred it directly to the Laicos. The compromise agreement between the Sierras and Laicos, executed without the Chivis' knowledge or consent, further extinguished any basis for the cross-claim, as the Laicos had already acquired the land directly from the Sierras. The P10,000.00 paid in the settlement was not part of the cross-claim. Thus, the dismissal of the cross-claim should have followed the dismissal of the complaint as a matter of course. On whether the Court of Appeals erred in annulling the proceedings on the cross-claim and the subsequent orders and writs: The Court found that the trial court committed a grave abuse of discretion amounting to lack of jurisdiction by setting the cross-claim for pre-trial, receiving evidence thereon, and rendering judgment against the cross-defendants after the original complaint had been dismissed with prejudice. The cross-claim was inextricably linked to and utterly dependent upon the success of the Sierras' complaint for repurchase. When the complaint was dismissed, the cross-claim could not survive. The CA's annulment of the proceedings, orders, decisions, writs, and processes connected with the cross-claim was therefore correct. The Court also noted that Judge Guillermo Torres should not have been made an active party-petitioner as his participation was functus officio after the judgment was rendered. On whether the Chivis were guilty of laches in filing their petition for certiorari: The Court agreed with the Court of Appeals' ruling that the Chivis were not guilty of laches. The petition for certiorari was filed on April 13, 1965, only about two months and seven days after the default judgment was rendered on February 5, 1965, and only twelve days after the writ of execution was issued on April 1, 1965. This period was deemed reasonable and shorter than periods previously considered acceptable in similar cases. The CA correctly found that the filing was timely, considering the nature of the petition which assailed the validity of the default judgment and the subsequent execution proceedings.
Main Doctrine
A cross-claim, being an auxiliary suit dependent upon the original bill, cannot survive the dismissal of the original complaint, especially when it is purely defensive in nature and its success is contingent upon the success of the dismissed complaint.