This Supreme Court decision clarifies the application of res judicata, specifically the principle of conclusiveness of judgment, in cases involving attachment of shares of stock. The Court ruled that a prior court order definitively establishing that a notice of garnishment was improperly served prevents the same parties from relitigating the issue in a subsequent case, even if the subsequent case seeks different remedies. This ruling emphasizes the importance of finality in judicial decisions and prevents parties from repeatedly raising the same factual issues in different legal proceedings, thus ensuring efficient and consistent application of the law.

From Garnishment to Golf Shares: When a Prior Ruling Blocks a New Claim

The legal saga began with Pyramid Construction Engineering Corporation (Pyramid) seeking to recover debts owed by Macrogen Realty, which was guaranteed by Benjamin Bitanga. When Macrogen defaulted, Pyramid pursued Bitanga, leading to a writ of preliminary attachment against Bitanga’s assets, including his shares in Manila Golf & Country Club, Inc. (MGCCI). Pyramid attempted to garnish these shares, but the key question arose: was the notice of garnishment properly served on MGCCI? This initial attempt to collect resulted in a complaint for specific performance filed before the Regional Trial Court (RTC), Quezon City (QC), which sought to enforce the contract of guaranty against Bitanga and his wife, Marilyn. A partial decision was rendered finding Bitanga and his wife solidarily liable to Pyramid. However, upon appeal to the Court of Appeals (CA), the decision was modified, absolving Bitanga’s wife from any liability. This ultimately led to a Supreme Court decision in G.R. No. 173526, affirming Bitanga’s liability as guarantor.

When Pyramid tried to claim Bitanga’s MGCCI shares, it discovered that Bitanga had already sold them to Wilfred Siy. Pyramid then filed an indirect contempt case against MGCCI, Bitanga, and Siy, alleging that the sale violated the notice of garnishment. The RTC-QC, however, dismissed the contempt charges, finding that the notice of garnishment was not properly served on MGCCI. This dismissal became final and executory. Later, Engracio U. Ang, Jr., as assignee of Pyramid, filed a new complaint (Civil Case No. 13-682) before the RTC-Makati to compel MGCCI to transfer the shares to him, arguing that the garnishment was valid. The RTC-Makati dismissed this complaint based on litis pendentia, citing the pending certiorari case related to the contempt charges.

The Supreme Court, however, disagreed with the RTC-Makati’s reasoning. While the RTC-Makati had dismissed the complaint based on litis pendentia, the Supreme Court addressed the core issue: the preclusive effect of the prior contempt case ruling. The Court stated that the complaint failed not because of litis pendentia, but because the final order in the indirect contempt case already determined that the notice of garnishment was improperly served. This touches upon the principle of res judicata, which prevents the relitigation of issues already decided in a prior case. In this context, the specific variant at play is the conclusiveness of judgment rule.

This principle, a subset of res judicata, holds that a final judgment is conclusive between the parties and their privies in subsequent suits on different causes of action as to the facts that were actually and directly in issue and determined by the prior judgment. The Court emphasized that once the RTC-QC dismissed the indirect contempt charges against MGCCI and Siy, that ruling became final and binding. Because no appeal could be made, it was impossible to try the same issue again.

To properly dissect the ruling, it is important to understand the two aspects of res judicata. The first is the “bar by former judgment” rule, which requires that the subsequent case involves the same parties, subject matter, and cause of action as the prior case. The second, the “conclusiveness of judgment” rule, applies when the subsequent case involves the same parties but a different cause of action. Here, the prior and subsequent cases focused on whether MGCCI and Siy committed indirect contempt. In the subsequent case, the core issue was whether MGCCI should be forced to transfer the shares to Ang. The Supreme Court highlighted the significance of this distinction:

Section 11. Review of judgment or final order; bond for stay. – The judgment or final order of a court in a case of indirect contempt may be appealed to the proper court as in criminal cases. But execution of the judgment or final order shall not be suspended until a bond is filed by the person adjudged in contempt, in an amount fixed by the court from which the appeal is taken, conditioned that if the appeal be decided against him he will abide by and perform the judgment or final order.

The Supreme Court stated that the finding in the indirect contempt case—that the garnishment notice was not validly served on MGCCI—was conclusive and could not be relitigated. In short, even if the objective of the certiorari case was distinct, the settled fact that the notice of garnishment was not addressed and delivered to MGCCI prevented the petitioner’s cause of action. The Supreme Court applied the conclusiveness of judgment rule, stating that it is improper to allow any challenges to prior judgment.

The requisites for applying the conclusiveness of judgment rule include a final judgment on the merits by a court of competent jurisdiction, a subsequent case, and identity of parties. However, the subsequent case must not be based on the same claim, demand, or cause of action as the previous one. Instead, it must only pass upon the same matters or issues. Here, the Court determined that these requirements were met. The RTC-QC’s order dismissing the contempt charges was a final judgment on the merits, Civil Case No. 13-682 was a subsequent case, and the parties were substantially the same. However, while the causes of action differed—one seeking punishment for contempt, the other seeking specific performance—the key issue of the validity of the garnishment notice was common to both.

The Court then contrasted this with the bar by prior judgment:

Bar by Prior Judgment	Conclusiveness of Judgment
Requires identity of parties, subject matter, and cause of action.	Requires identity of parties and subject matter, but a different cause of action.
Prevents relitigation of the entire claim.	Prevents relitigation of specific facts or issues already decided.

The Supreme Court then quoted its earlier holding:

Verily, [MGCCI] and Siy cannot and could not be held liable for alleged disobedience or resistance of a lawful writ, process or order of the [c]ourt, when Bitanga sold his share. There was no order or writ addressed and delivered to [MGCCI] and Siy specifically directing/ordering them to do/perform something which they willingly/intentionally disobeyed or resisted to do/perform.

Crucially, the Rules of Court require that to attach stocks or shares of a corporation, the notice of attachment must be served on the president or managing agent of the corporation. Since the RTC-QC had already determined that this did not occur, Pyramid could not claim a valid attachment. This finding was central to the dismissal of the contempt charges and, under the principle of conclusiveness of judgment, was binding on the parties in the subsequent case.

The Court stated that there was no valid garnishment:

It is evident [that] the [September 28, 2001 notice of garnishment] allegedly disobeyed or resisted was not addressed to them [i.e., MGCCI and Siy], nor required them to do/perform a specific act which they intentionally and willfully disobeyed or resisted. Neither [MGCCI] nor Siy could have complied with the [notice of garnishment]. x x x. The attachment is ineffective.

The fact that a certiorari case was pending before the CA challenging the RTC-QC’s order did not alter the finality of that order. A certiorari case is an original action, not a continuation of the prior case. Therefore, it did not suspend the finality of the RTC-QC’s decision. In essence, because the validity of the garnishment notice had already been decided and become final, it could not be relitigated, regardless of the pendency of the certiorari case.

FAQs

What was the key issue in this case?	The key issue was whether a prior court ruling that a notice of garnishment was improperly served could prevent the relitigation of that issue in a subsequent case with a different cause of action.
What is res judicata?	Res judicata is a legal principle that prevents the relitigation of issues that have already been decided by a court. It ensures finality in judicial decisions and avoids inconsistent judgments.
What is the conclusiveness of judgment rule?	The conclusiveness of judgment rule is a variant of res judicata that applies when a subsequent case involves a different cause of action but the same parties and issues as a prior case. It prevents the relitigation of specific facts or issues that were already decided.
Why was the complaint dismissed in this case?	The complaint was dismissed because the main issue, the validity of the garnishment notice, had already been decided in a prior indirect contempt case. The principle of conclusiveness of judgment prevented the petitioner from relitigating that issue.
What is the effect of filing a certiorari case on the finality of a judgment?	Filing a certiorari case does not automatically suspend the finality of a judgment. A certiorari case is an original action, not a continuation of the prior case, and therefore does not prevent the prior judgment from becoming final.
What is the significance of serving a notice of garnishment?	Serving a notice of garnishment is crucial for attaching shares of stock in a corporation. It requires delivering a copy of the writ and notice to the president or managing agent of the corporation to be effective.
How does this case affect future litigation involving attachment of assets?	This case reinforces the importance of properly serving notices of garnishment and adhering to procedural rules. It also clarifies that prior court rulings on factual issues, such as the validity of a garnishment notice, are binding in subsequent cases involving the same parties.
What was the RTC-QC’s reason for exonerating MGCCI and Siy from indirect contempt?	The RTC-QC exonerated MGCCI and Siy because the notice of garnishment was not addressed or delivered to either of them. There was no writ or order directing them to do or perform a specific act that they intentionally disobeyed.

This case underscores the critical importance of ensuring that legal processes, such as the service of garnishment notices, are meticulously executed. The Supreme Court’s decision reinforces the principle of res judicata, specifically the conclusiveness of judgment, ensuring that factual determinations made in prior legal proceedings remain binding and prevent the endless cycle of relitigation. This promotes judicial efficiency and provides certainty to parties involved in legal disputes.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: ENGRACIO U. ANG, JR. VS. SPOUSES BENJAMIN M. BITANGA AND MARILYN ANDAL BITANGA, ET AL., G.R. No. 223046, November 28, 2019