Ramon Ching and Powing Properties, Inc vs Joseph Cheng, Jaime Cheng, Mercedes Igne

RAMON CHING AND POWING PROPERTIES, INC
vs. 
JOSEPH CHENG, JAIME CHENG, MERCEDES IGNE
 G.R. No. 175507,October 8, 2014
​
Joseph Cheng, Jaime Cheng, and Mercedes Igne (the Chengs) filed a complaint for declaration of nullity of titles against Ramon Ching before the Regional Trial Court of Manila.
 
The complaint was amended, with leave of court, to implead additional defendants, Po Wing Properties, of which Ramon Ching was a primary stockholder. The amended complaint was for "Annulment of Agreement, Waiver, Extra-Judicial Settlement of Estate and the Certificates of Title Issued by Virtue of Said Documents with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction.
 
After the responsive pleadings had been filed, Po Wing Properties filed a motion to dismiss on the ground of lack of jurisdiction of the subject matter. The Regional Trial Court of Manila, Branch 6, granted the motion to dismiss. Upon motion of the Chengs’ counsel, however, the Chengs and Lucina Santos were given fifteen (15) days to file the appropriate pleading. They did not do so.
 
The Chengs and Lucina Santos filed a complaint for "Annulment of Agreement, Waiver, Extra-Judicial Settlement of Estate and the Certificates of Title Issued by Virtue of Said Documents with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction" against Ramon Ching and Po Wing Properties (the second case) and raffled to Branch 20 of the Regional Trial Court of Manila. When Branch 20 was made aware of the first case, it issued an order transferring the case to Branch 6, considering that the case before it involved substantially the same parties and causes of action.
 
The Chengs and Lucina Santos filed a motion to dismiss their complaint in the second case, praying that it be dismissed without prejudice. RTC Branch 6 issued an order granting the motion to dismiss on the basis that the summons had not yet been served on Ramon Ching and Po Wing Properties, and they had not yet filed any responsive pleading. The dismissal of the second case was made without prejudice.
 
Ramon Ching and Po Wing Properties filed a motion for reconsideration of the order dated November 22, 2002. They argue that the dismissal should have been with prejudice under the "two dismissal rule" of Rule 17, Section 1 of the 1997 Rules of Civil Procedure, in view of the previous dismissal of the first case.
 
During the pendency of the motion for reconsideration, the Chengs and Lucina Santos filed a complaint for "Disinheritance and Declaration of Nullity of Agreement and Waiver, Affidavit of Extra judicial Agreement, Deed of Absolute Sale, and Transfer Certificates of Title with Prayer for TRO and Writ of Preliminary Injunction" against Ramon Ching and Po Wing Properties (the third case) and was eventually raffled to Branch 6.
 
Ramon Ching and Po Wing Properties filed their comment/opposition to the application for temporary restraining order in the third case. They also filed a motion to dismiss on the ground of res judicata, litis pendencia, forum-shopping, and failure of the complaint to state a cause of action.
 
RTC Branch 6 issued an omnibus order resolving both the motion for reconsideration in the second case and the motion to dismiss in the third case. The trial court denied the motion for reconsideration and the motion to dismiss, holding that the dismissal of the second case was without prejudice and, hence, would not bar the filing of the third case.
 
while their motion for reconsideration in the third case was pending, Ramon Ching and Po Wing Properties filed a petition for certiorari  with the Court of Appeals, assailing the order which upheld the dismissal of the second case.
 
The trial court issued an order denying the motion for reconsideration in the third case. The denial prompted Ramon Ching and Po Wing Properties to file a petition for certiorari and prohibition with application for a writ of preliminary injunction or the issuance of a temporary restraining order with the Court of Appeals.
 
The Court of Appeals rendered the decision in the first certiorari case dismissing the petition. The appellate court ruled that Ramon Ching and Po Wing Properties’ reliance on the "two-dismissal rule" was misplaced since the rule involves two motions for dismissals filed by the plaintiff only. Upon the denial of their motion for reconsideration, Ramon Ching and Po Wing Properties filed this present petition for review under Rule 45 of the Rules of Civil Procedure.

Issue:
Whether or not the trial court’s dismissal of the second case operated as a bar to the filing of a third case, as per the "two-dismissal rule".

Held: 
No. Rule 17 of the Rules of Civil Procedure governs dismissals of actions at the instance of the plaintiff. Hence, the "two-dismissal rule" under Rule 17, Section 1 of the Rules of Civil Procedure will not apply if the prior dismissal was done at the instance of the defendant. Dismissals upon the instance of the defendant are generally governed by Rule 16, which covers motions to dismiss.
 
As a general rule, dismissals under Section 1 of Rule 17 are without prejudice except when it is the second time that the plaintiff caused its dismissal. Accordingly, for a dismissal to operate as an adjudication upon the merits, i.e, with prejudice to the re-filing of the same claim, the following requisites must be present:
(1) There was a previous case that was dismissed by a competent court;
(2) Both cases were based on or include the same claim;
(3) Both notices for dismissal were filed by the plaintiff; and
(4) When the motion to dismiss filed by the plaintiff was consented to by the defendant on the ground that the latter paid and satisfied all the claims of the former.
 
The purpose of the "two-dismissal rule" is "to avoid vexatious litigation." When a complaint is dismissed a second time, the plaintiff is now barred from seeking relief on the same claim.
 
The dismissal of the second case was without prejudice in view of the "two-dismissal rule"
 
Here, the first case was filed as an ordinary civil action. It was later amended to include not only new defendants but new causes of action that should have been adjudicated in a special proceeding. A motion to dismiss was inevitably filed by the defendants on the ground of lack of jurisdiction.
 
The dismissal of the first case was done at the instance of the defendant under Rule 16, Section 1(b) of the Rules of Civil Procedure, which states:
Section 1. Grounds.— Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made on any of the following grounds:
(b) That the court has no jurisdiction over the subject matter of the claim;
Under Section 5 of the same rule, a party may re-file the same action or claim subject to certain exceptions.
 
Thus, when respondents filed the second case, they were merely refiling the same claim that had been previously dismissed on the basis of lack of jurisdiction. When they moved to dismiss the second case, the motion to dismiss can be considered as the first dismissal at the plaintiff’s instance.
 
When respondents filed the third case on substantially the same claim, there was already one prior dismissal at the instance of the plaintiffs and one prior dismissal at the instance of the defendants.
 
While it is true that there were two previous dismissals on the same claim, it does not necessarily follow that the re-filing of the claim was barred by Rule 17, Section 1 of the Rules of Civil Procedure. The circumstances surrounding each dismissal must first be examined to determine before the rule may apply, as in this case. Thus, the trial court's dismissal of the second case is not a bar to the filing of the third case.