GR 159786; (August, 2006) (Digest)
G.R. No. 159786 August 15, 2006
EDGARDO V. GUEVARA, Petitioner, vs. BPI SECURITIES CORPORATION, Respondent.
FACTS
Petitioner Edgardo V. Guevara, a former officer of respondent BPI Securities Corporation (BPI Securities), was implicated in a complex series of transactions involving a dacion en pago of Texas property to settle a debt. The U.S. District Court, in a related case, dismissed a counterclaim against Guevara, finding he was impleaded merely to harass him, and imposed Rule 11 sanctions on BPI Securities and its affiliate, ordering them to pay Guevara US$49,450. This U.S. judgment became final. Subsequently, BPI Securities filed an amended complaint in the Makati RTC, Civil Case No. 95-624, alleging Guevara conspired to overvalue the Texas property, causing corporate damage.
Guevara moved to dismiss, arguing the action was barred by res judicata due to the final U.S. judgment which had conclusively ruled on the impropriety of the claims against him. The RTC denied his motion. Guevara then filed a petition for certiorari with the Court of Appeals, which dismissed it, holding that res judicata was not a proper ground for a certiorari petition assailing an interlocutory order denying a motion to dismiss. The CA ruled Guevara’s remedy was an ordinary appeal after a full trial on the merits.
ISSUE
Whether the Court of Appeals erred in dismissing Guevara’s certiorari petition, which argued that the RTC committed grave abuse of discretion in not dismissing the complaint based on res judicata stemming from a final foreign judgment.
RULING
The Supreme Court granted the petition and reversed the Court of Appeals. The Court held that the denial of a motion to dismiss based on res judicata is an exception to the general rule that such denials are interlocutory and not subject to certiorari. Res judicata, when apparent from the pleadings, constitutes a prejudicial question that can terminate the case at its inception. If a court persists in proceeding despite a clear bar of res judicata, it acts without or in excess of jurisdiction, amounting to grave abuse of discretion correctible by certiorari.
Applying this to the case, the final judgment of the U.S. District Court, which dismissed the claims against Guevara and imposed sanctions for a frivolous suit, had conclusive effect under Section 48, Rule 39 of the Rules of Court. This foreign judgment, which determined the harassment nature of the claims against Guevara, created a bar by conclusiveness of judgment. The subsequent Philippine suit by BPI Securities was based on the same facts and alleged conspiracy already addressed in the U.S. proceedings. Therefore, the RTC committed grave abuse of discretion in not dismissing the complaint, as the action was plainly barred by res judicata. The case was remanded to the RTC with instructions to dismiss Civil Case No. 95-624.