G.R. No. L-58820 September 30, 1982
BENITO E. DOMINGUEZ, JR., petitioner, vs. FILIPINAS INTEGRATED SERVICES CORPORATION (FISCO), and THE HON. COURT OF APPEALS, respondents.

FACTS

Gustavo A. Suarez, doing business as “Davao Arrastre Service,” previously filed a money claim against Benito Dominguez, Jr. in the Davao CFI (Civil Case No. 7877). Suarez alleged that Dominguez obtained loans totaling P626,600.00, payable upon collection of Dominguez’s claim from NAWASA. Before Dominguez could file an answer, Suarez filed a notice of dismissal with prejudice pursuant to Rule 17, Section 1 of the Rules of Court. The Davao court consequently issued an order dismissing the case with prejudice and lifting a preliminary attachment. Suarez’s counsel later filed an urgent omnibus motion, seeking to substitute Davao Arrastre and Port Services, Inc. as plaintiff and to reinstate the complaint, arguing Suarez lacked legal capacity to sue as he had previously transferred his business assets. The Davao court denied the motion, ruling the dismissal was final and binding only on Suarez.
Subsequently, Filipinas Integrated Services Corporation (FISCO), through the same attorneys, filed a new complaint for accounting and recovery of a sum of money against Dominguez in the Manila CFI (Civil Case No. 92277). FISCO alleged Dominguez, as its former president, misappropriated P626,600.00 in corporate funds received from the Davao arrastre operation. Dominguez moved to dismiss based on res judicata, claiming the second action was barred by the dismissal with prejudice of the first. The trial court granted the motion and dismissed FISCO’s complaint. The Court of Appeals affirmed the dismissal.

ISSUE

Whether the principle of res judicata bars the second action filed by FISCO against Dominguez.

RULING

No, res judicata does not apply. The Supreme Court reversed the Court of Appeals, holding that the dismissal with prejudice of the first case (Civil Case No. 7877) constituted res judicata only as to the parties in that suit and their privies. The first case was filed by Gustavo A. Suarez in his personal capacity. The second case was instituted by FISCO, a separate and distinct juridical entity. FISCO was not a party to the first case, nor was it in privity with Suarez. The Davao court, in its order denying the motion for substitution, explicitly stated the dismissal was binding on Suarez alone, as he was not identical to the corporate entity. Therefore, the elements of identity of parties required for res judicata were absent. The Court further clarified that the “Quintano doctrine,” which allows a judgment on the pleadings when a defendant relies solely on res judicata, was inapplicable because Dominguez interposed other defenses and did not submit the case for decision on that single issue. The case was remanded to the trial court for a full trial on the merits.