Chuan v. Uy
REITERATIONFacts
The Antecedents: The underlying dispute concerns Lot 5357, originally registered under Antonio Lim Tanhu. Antonio sold the lot to spouses Francisco and Estrella Cabansag in 1966. In 1988, the Spouses Cabansag sold the lot to Serafin Uy. Subsequently, Lim Sing Chan, claiming to be Antonio's sole heir, executed an Affidavit of Self-Adjudication and Deed of Sale, selling Lot 5357 to Leopolda Cecilio in 1996. Serafin Uy filed a complaint seeking to quiet title, nullify the affidavit of adjudication and sale, and annul the tax declaration in Leopolda's name, alleging that the earlier deeds of sale were simulated and spurious, intended to defraud Antonio's estate. The petitioner, Lim Teck Chuan, also asserted claims, alleging that the deed of sale to Spouses Cabansag was fraudulent and that Lim Sing Chan was not a legitimate heir. Procedural History: Serafin Uy initiated Civil Case No. 4786-L for quieting of title and other reliefs. Leopolda Cecilio filed an answer with a counterclaim, and the petitioner, Lim Teck Chuan, filed an answer with his own counterclaim and cross-claims against Leopolda and Lim Sing Chan. During pre-trial, parties stipulated certain facts, including that Lim Sing Chan was a fictitious person, though this was later amended. Serafin Uy and Leopolda Cecilio later filed a Joint Motion to Dismiss, asserting they had amicably settled their differences and that Serafin had secured title to the property. Lim Teck Chuan opposed this motion, arguing bad faith and connivance between Serafin and Leopolda, and insisted on prosecuting his counterclaims and cross-claims within the same action. The Regional Trial Court (RTC) granted the Joint Motion to Dismiss, dismissing the entire case, including the petitioner's counterclaims, and denied his motion for reconsideration. The Petition: Lim Teck Chuan filed a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the RTC's dismissal of the case. He argued that the RTC erred in dismissing the entire action upon a joint motion to dismiss filed by the plaintiff and one of the defendants, despite his opposition and timely manifestation of his preference to have his counterclaim and cross-claim prosecuted in the same action, as provided by Section 2, Rule 17 of the Rules of Court. The Supreme Court modified the RTC's orders, reinstating the petitioner's counterclaim and ordering the RTC to hear and decide it.
Issue(s)
Whether the Regional Trial Court erred in dismissing the entire case, including the petitioner's counterclaim and cross-claim, upon a joint motion to dismiss filed by the plaintiff and one of the defendants, despite the petitioner's opposition and timely manifestation to have his claims prosecuted in the same action. Whether the dismissal of the complaint under Section 2, Rule 17 of the Rules of Court necessitates the dismissal of the defendant's counterclaim.
Ruling
The petition is PARTIALLY GRANTED. The Orders dated April 25, 2002 and October 21, 2002 of the Regional Trial Court of Lapu-lapu City, Branch 27 in Civil Case No. 4786-L are MODIFIED in that the counterclaim of Lim Teck Chuan as defendant in Civil Case No. 4786-L is REINSTATED. The Regional Trial Court is ORDERED to hear and decide Lim Teck Chuan's counterclaim with dispatch.
Ratio Decidendi
On the issue of whether the Regional Trial Court erred in dismissing the entire case, including the petitioner's counterclaim and cross-claim, upon a joint motion to dismiss filed by the plaintiff and one of the defendants, despite the petitioner's opposition and timely manifestation to have his claims prosecuted in the same action: The Supreme Court ruled that the Regional Trial Court erred in dismissing the entire case. Under Section 2, Rule 17 of the Rules of Court, when a plaintiff moves for the dismissal of the complaint and a counterclaim has been pleaded by a defendant, the dismissal shall be limited to the complaint. The dismissal is without prejudice to the right of the defendant to prosecute their counterclaim in a separate action, unless within fifteen (15) days from notice of the motion, they manifest their preference to have their counterclaim resolved in the same action. In this case, the petitioner timely filed his opposition and manifested his preference to have his counterclaim and cross-claim resolved in the same action, as allowed by the Rules. The Court emphasized that a dismissal of the complaint does not necessarily result in the dismissal of the counterclaim, citing Pinga v. Heirs of German Santiago. On the issue of whether the dismissal of the complaint under Section 2, Rule 17 of the Rules of Court necessitates the dismissal of the defendant's counterclaim: The Supreme Court clarified that the dismissal of the complaint does not automatically lead to the dismissal of the counterclaim. The Rules of Court, particularly Section 2 of Rule 17, explicitly provides that if a counterclaim has been pleaded, the dismissal of the complaint shall be limited to the complaint. The defendant's right to prosecute their counterclaim in the same or a separate action is preserved. The Court noted that previous rulings in Metals Engineering Resources Corporation v. Court of Appeals, International Container Terminal Services, Inc. v. Court of Appeals, and BA Finance Corporation v. Co., which might have suggested otherwise, have been superseded by the current Rules. The current rule allows the defendant to choose to have their counterclaim resolved in the same action by timely manifesting their preference, which the petitioner did. The RTC's interpretation that it could not proceed with the counterclaim when the plaintiff's claim was dismissed was found to be contrary to the Rules.
Main Doctrine
The dismissal of a complaint upon a joint motion of the plaintiff and a defendant does not automatically result in the dismissal of the defendant's counterclaim if the defendant timely manifests their preference to have the counterclaim prosecuted in the same action, as provided under Section 2, Rule 17 of the Rules of Court.