G.R. No. 160409; October 2, 2009
LANDCENTER CONSTRUCTION AND DEVELOPMENT CORPORATION, Petitioner, vs. V.C. PONCE, CO., INC. AND VICENTE C. PONCE, Respondents.

FACTS

The dispute involves the ownership of a parcel of land in Parañaque City, originally titled under respondent V.C. Ponce Co., Inc. The property was mortgaged to PCI Bank, foreclosed, and eventually sold to petitioner Landcenter. In a prior case (Civil Case No. 33017), the RTC ordered the reconveyance of 54 lots to respondents. The parties entered into a compromise agreement wherein Landcenter would reconvey 24 lots in full settlement. However, respondents later produced a Deed of Assignment, allegedly signed by Landcenter’s president, purporting to convey the entire original property (TCT No. S-30409) and two road lots to them. Landcenter filed a complaint (Civil Case No. 97-0532) to annul this deed, claiming forgery and lack of corporate authority.
During the pendency of this annulment case, the RTC issued an order dated September 21, 1999, directing respondents to remove sales ad boards from the property and ordering the Register of Deeds to cancel respondents’ derivative titles (TCT Nos. 110001 to 110239). Subsequently, Landcenter filed a Motion to Withdraw its complaint, which the RTC granted in its Order dated June 9, 2000, dismissing the case without prejudice. Respondents appealed to the Court of Appeals, arguing the dismissal should have been with prejudice.

ISSUE

Whether the Court of Appeals correctly annulled the RTC’s orders and ruled that the dismissal of Civil Case No. 97-0532, upon Landcenter’s motion to withdraw, should have restored the parties to their positions prior to the filing of the complaint, thereby vacating the earlier interlocutory orders.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The legal logic is anchored on the nature of a dismissal without prejudice upon the plaintiff’s motion. Under Section 2, Rule 17 of the Rules of Court, such a dismissal leaves the parties as if no action had been filed. Consequently, all proceedings and orders issued in the case are nullified. The RTC’s September 21, 1999 Order, which directed the cancellation of respondents’ titles, was an interlocutory order incidental to the pending annulment case. Once the main case was withdrawn and dismissed, there was no longer any jurisdictional basis for that order to subsist. To allow it to remain effective would unjustly impair respondents’ rights, as the order was issued before any determination on the merits of Landcenter’s claim of forgery. The dismissal without prejudice restored the status quo ante, rendering the contested orders void. The Court of Appeals correctly vacated the RTC’s orders to prevent prejudice to respondents, who were left without a forum to challenge the cancellation of their titles after the withdrawal of the very complaint that triggered the issuance of the order.