View full case

ABOITIZ TRANSPORT SYSTEM CORPORATION v. CARLOS A. GOT LINES

FACTS:

Aboitiz Shipping Corporation (ASC), Carlos A. Gothong Lines, Inc. (CAGLI), and William Lines, Inc. (WLI) entered into an Agreement in 1996 where ASC and CAGLI agreed to transfer their shipping assets to WLI in exchange for WLI's shares of capital stock. It was agreed that WLI would run the merged shipping business as WG&A, Inc. and that any disputes arising from the Agreement shall be settled through arbitration. The Agreement also included a letter from respondent Chiongbian stating that WLI committed to acquire certain spare parts and materials from CAGLI's inventory not exceeding P400 million. CAGLI later demanded payment or return of inventory worth P158,399,700.00 that was delivered in excess of the agreed amount. CAGLI filed a complaint to compel AEV, ASC, ATSC, and respondent Chiongbian to submit to arbitration. AEV argued that the excess inventory had already been returned to CAGLI. The RTC dismissed the complaint with respect to AEV but directed the other parties to proceed to arbitration. ATSC filed a motion to exclude respondent Chiongbian from arbitration, but CAGLI filed a notice of dismissal, resulting in the RTC confirming the dismissal of the case without prejudice. ATSC's motion for reconsideration was denied, and the issue of excluding respondent Chiongbian from arbitration was considered moot and academic.

ISSUES:

  1. Whether or not the RTC was correct in confirming CAGLI's notice of dismissal and, consequently, dismissing the case without prejudice.

  2. Whether or not respondent Chiongbian should be excluded from the arbitration proceedings.

RULING:

  1. The RTC was correct in confirming CAGLI's notice of dismissal and dismissing the case without prejudice. The RTC cited Section 1 of Rule 17 of the Rules of Court which allows the plaintiff to file a notice of dismissal of the complaint as a matter of right "before service of the answer or a motion for summary judgment." The court ruled that nothing in the rules or law expressly prohibits or restricts the right of the plaintiff to withdraw the complaint by mere notice of dismissal at any stage of the proceedings.

  2. The issue of whether respondent Chiongbian should be excluded from the arbitration proceedings has been rendered moot and academic in view of the confirmation of CAGLI's notice of dismissal.

PRINCIPLES:

  • Section 1 of Rule 17 of the Rules of Court allows the plaintiff to file a notice of dismissal of the complaint as a matter of right before service of the answer or a motion for summary judgment.