G.R. No. 48671; September 30, 1942
LEVY HERMANOS, INC., plaintiff-appellant, vs. MONICA DE GOROSPE and JOSE GOROSPE, defendants-appellees.

FACTS

On June 18, 1938, Levy Hermanos, Inc. sued Monica de Gorospe and Jose Gorospe in the Court of First Instance of Manila for the replevin of a Terraplane automobile and the rescission of its sale, alleging the purchaser’s failure to pay promissory notes representing the balance of the purchase price, which fell due from November 21, 1937, to May 21, 1938. After the defendants were declared in default for failure to answer, the plaintiff’s attorney filed a petition on March 28, 1939, with the defendants’ conformity, requesting the dismissal of the case without prejudice and the cancellation of the replevin bond. The petition stated that the defendant Monica de Gorospe had satisfied the monthly installments for the period from November 21, 1937, to May 21, 1938, the nonpayment of which was alleged in the complaint. The plaintiff also asked that the defendants be condemned to pay costs. The court granted the petition on March 29, 1939. Subsequently, on August 28, 1940, the plaintiff instituted the present action to recover the sum due on the promissory notes that fell due in March, April, and May 1938. The defendants raised the special defense of res adjudicata, alleging full payment and that the dismissal of the previous action barred the present suit. The plaintiff replied that its motion for dismissal was without prejudice and that the allegation of payment up to May 21, 1938, was a clerical error. The trial court sustained the defense of res adjudicata, holding the plaintiff estopped from claiming nonpayment after admitting payment in its dismissal motion, and dismissed the case.

ISSUE

Whether or not the dismissal of the previous action constitutes a bar (res adjudicata) to the present action.

RULING

No. The Supreme Court reversed the trial court’s judgment and remanded the case for further proceedings. The Court held that the dismissal of the previous action was not a bar to the present suit. The petition for dismissal contained a manifest inconsistency: it alleged payment of all installments up to May 21, 1938, yet requested dismissal “without prejudice.” These allegations were incompatible—one contradicted the other—and both were superfluous and should be disregarded. Since the dismissal was filed by the plaintiff before the defendants answered the complaint, it properly fell under paragraph 1 of Section 127 of the Code of Civil Procedure (in force at the time), which allows a plaintiff to dismiss an action before trial and provides that such dismissal shall not be a bar to another action for the same cause. The law itself defines the effect of such a dismissal, and the parties cannot vary it by any allegation or reservation. Furthermore, the plaintiff’s allegation of payment did not constitute estoppel because the defendants had knowledge of the true facts, were not misled, and would not be prejudiced by the present action, which merely seeks to prevent them from taking undue advantage of a supposed mistake.