The answer to your question, and the answer to your problem are two different things I think.
Damage Reduction seems to not be taken into account when dealing with Damage Over Time effects. I would be more certain of that if I had more than one DoT spell to hurt my team with, but
Concelhaut's Corrosive Siphon dealing supposedly Corrosive damage works the same whether my character wears +6 Corrosion DR armor or not.
Combusting Wounds case... Directly testing it is impossible, it doesn't hurt allies. And however I look at it, the description seems wrong. If it were a DoT effect, we're lacking information about one time - either the time over which that 5 damage is distributed, or time the spell lasts.
What follows is a baseless conjecture
It is possible that this 5 damage gets lost - if it really is DoT it might (extrapolating from my experiences) apply wrong amount of damage, and disappear the reminder if timer is not in the correct by-3-divisivness. Or it might have a long timer (in the realm of 9 seconds, which would be about 2 per 3-second period), and not stack which would fit your experience of unimpressiveness.
Any way I look at it I think we will hear about DoT effects in patch notes sooner or later.