G.R. No. 138208. April 23, 2007.
SPS. ISIDRO “ABEL” CRUZ and LEA CRUZ, Petitioners, vs. SPS. FLORENCIO and AMPARO CARAOS, et al., Respondents.

FACTS

Respondents, occupants of a lot in Pasay City, were members of a cooperative formed upon petitioner Isidro Cruz’s initiative to acquire the land. They contributed funds, which were deposited with the DBP. Petitioners later secured respondents’ signatures on a blank paper, allegedly for financing, but attached it to a Contract of Lease. Without respondents’ knowledge, petitioners used cooperative funds to purchase the lot from the owner. Petitioners then demanded rentals and filed an ejectment case. Respondents filed a criminal complaint for estafa and initially filed a civil case (Civil Case No. 95-1387) for specific performance and annulment, which was dismissed by the RTC, Branch 117, Pasay City, on grounds of forum shopping due to pending ejectment and barangay conciliation proceedings.
Subsequently, respondents filed a second, nearly identical complaint (Civil Case No. 96-0225) before RTC, Branch 118. Petitioners moved to dismiss this second complaint also on the ground of forum shopping, arguing it was a reiteration of the previously dismissed action. The RTC, Branch 118, granted the motion to dismiss, finding the allegations and causes of action in both complaints substantially the same and that the refiling constituted forum shopping.

ISSUE

Whether the Court of Appeals erred in annulling the RTC’s order dismissing the second complaint on the ground of forum shopping.

RULING

The Supreme Court affirmed the Court of Appeals’ decision. The legal logic is anchored on the doctrine against forum shopping and the proper application of the rules on dismissal. The RTC, Branch 118, correctly identified that the second complaint was substantially a replication of the first, warranting dismissal for forum shopping. However, the Court of Appeals properly annulled the dismissal order because the RTC, Branch 118, committed a grave error in the legal effect of its dismissal. A dismissal based on forum shopping (under Rule 16, Section 1(i) of the 1997 Rules of Civil Procedure) does not constitute an adjudication on the merits and therefore does not bar the refiling of the action, unless the dismissal is specifically grounded on lis pendens (pending action) or res judicata (a prior judgment). The first case (Civil Case No. 95-1387) was dismissed without prejudice on procedural grounds (forum shopping due to other pending actions), not on the merits. Consequently, the dismissal of that first case did not preclude respondents from refiling a substantially similar complaint. The second RTC (Branch 118) thus erred in treating the prior dismissal as a bar. The proper course was for the RTC, Branch 118, to consolidate the second case with the first dismissed case or to proceed with its adjudication, not to dismiss it outright based on the prior procedural dismissal.