Ang, Jr. vs. Bitanga

A final order dismissing a charge of indirect contempt on the merits is unappealable and becomes immediately final and executory upon promulgation, operating as a conclusive adjudication of the matters determined therein under the principle of res judicata (conclusiveness of judgment), thereby precluding the relitigation of those matters in a subsequent case between the same parties or their privies, notwithstanding that the subsequent case involves a different cause of action.

Pyramid Construction Engineering Corporation (Pyramid) obtained a judgment against Benjamin Bitanga as guarantor for Macrogen Realty's unpaid construction debts. In September 2001, Pyramid secured a writ of preliminary attachment and caused the issuance of a notice of garnishment purportedly attaching Bitanga's shares in Manila Golf & Country Club, Inc. (MGCCI). Following finality of the judgment against Bitanga, Pyramid purchased the attached shares at auction in March 2009. However, MGCCI refused to transfer the shares to Pyramid, revealing that Bitanga had sold them to Wilfred Siy in March 2008 and that MGCCI had transferred title to Siy in July 2008, allegedly without knowledge of any attachment. Pyramid then filed an indirect contempt case against MGCCI, Bitanga, and Siy in the Regional Trial Court (RTC) of Quezon City. On July 19, 2012, the RTC exonerated MGCCI and Siy, finding that the notice of garnishment was addressed to the Manila Polo Club rather than MGCCI, rendering the attachment ineffective. Pyramid challenged this order via certiorari in the Court of Appeals (CA). During the pendency of the certiorari case, Pyramid assigned its rights to Engracio Ang, Jr. (petitioner), who filed a separate complaint in the RTC of Makati (Civil Case No. 13-682) seeking to compel the transfer of the shares to his name, asserting that the prior attachment remained valid.

• The Construction Debt and Guaranty: Pyramid Construction Engineering Corporation (Pyramid) entered into a construction agreement with Macrogen Realty (Macrogen) in 1997. After Macrogen defaulted, Pyramid and Macrogen executed a compromise agreement on April 17, 2000 for the payment of P6,000,000.00 in six monthly installments. Benjamin Bitanga, Macrogen's president, executed a contract of guaranty absolutely and unconditionally guaranteeing Macrogen's payment.
• The Attachment Proceedings: When Macrogen failed to pay, Pyramid filed a complaint for specific performance with preliminary attachment in the RTC-Quezon City (Civil Case No. Q-01-45041) against Bitanga and his wife. On September 10, 2001, the RTC-QC issued a writ of preliminary attachment. Pursuant thereto, the sheriff issued a notice of garnishment on September 28, 2001, intended to attach Bitanga's shares in Manila Golf & Country Club, Inc. (MGCCI) covered by Membership Certificate (MC) No. 2254. Pyramid claimed the notice was served on MGCCI's corporate secretary who forwarded it to BPI-Stock Transfer Office (BPI-STO).
• The Execution and Auction: The RTC-QC eventually rendered judgment holding Bitanga liable. After appeal and finality, the case was remanded for execution. On March 4, 2009, the RTC-QC issued a writ of execution. The sheriff sold Bitanga's MGCCI shares at public auction on March 13, 2009, with Pyramid as the winning bidder.
• The Transfer Obstruction: Pyramid requested MGCCI to transfer MC No. 2254 to its name. MGCCI refused, revealing that Bitanga had sold the shares to Wilfred Siy on March 3, 2008, and that MGCCI had already transferred title to Siy on July 30, 2008. MGCCI claimed it had no knowledge of any attachment on the shares at the time of the transfer.
• The Indirect Contempt Case: Believing the sale violated the attachment, Pyramid filed a petition for indirect contempt against MGCCI, Bitanga, and Siy in RTC-QC (Branch 99). Initially, the RTC-QC found them guilty, but in an Order dated July 19, 2012, it reversed itself and exonerated MGCCI and Siy. The RTC-QC found that the September 28, 2001 notice of garnishment was addressed to the "Manila Polo Club" rather than to MGCCI or Siy, and thus never imposed any duty upon them that could be breached.
• The Certiorari and Assignment: Pyramid filed a petition for certiorari with the CA (CA-G.R. SP No. 127909) assailing the July 19, 2012 Order. During the pendency of this case, Pyramid assigned all its rights as judgment creditor to Engracio Ang, Jr. (petitioner).
• The Subsequent Complaint: On June 5, 2013, petitioner filed Civil Case No. 13-682 in the RTC-Makati against Bitanga, MGCCI, Siy, and BPI-STO, seeking to compel the transfer of MC No. 2254 to his name and alleging that the prior attachment remained valid and gave him better rights than Siy.
• The Dismissal: MGCCI and Siy moved to dismiss on grounds of litis pendentia, among others. In an Order dated October 7, 2014, the RTC-Makati dismissed the complaint with prejudice on the ground of litis pendentia, citing the pending certiorari case in the CA. The motion for reconsideration was denied on June 15, 2015.

• Error in Applying Litis Pendentia: Petitioner argued that the RTC-Makati erred in dismissing the complaint on the ground of litis pendentia, contending that the certiorari case pending in the CA was not a bar to the filing of Civil Case No. 13-682.
• Validity of Attachment: Petitioner maintained that the September 28, 2001 notice of garnishment was validly served upon MGCCI and BPI-STO, creating a valid attachment lien on Bitanga's shares that preceded Siy's purchase and gave Pyramid (and thus petitioner as assignee) preferential rights over the shares.

• Litis Pendentia and Forum Shopping: MGCCI and Siy argued that the complaint should be dismissed for litis pendentia because the CA certiorari case (CA-G.R. SP No. 127909) involved the same parties and subject matter, or alternatively, for forum shopping.
• Failure to State Cause of Action: Respondents contended that the complaint failed to state a cause of action because the July 19, 2012 Order of the RTC-QC in the indirect contempt case had already determined that no valid attachment existed, a finding that had become final and executory.

• Res Judicata: Whether the complaint in Civil Case No. 13-682 should be dismissed on the ground that its cause of action has been precluded by the finality of the July 19, 2012 Order of the RTC-QC in the indirect contempt case under the principle of res judicata (conclusiveness of judgment).
• Litis Pendentia: Whether the RTC-Makati correctly dismissed the complaint on the ground of litis pendentia due to the pendency of the certiorari case in the Court of Appeals.

• Res Judicata (Conclusiveness of Judgment): The dismissal was sustained, not on litis pendentia, but because the cause of action was barred by the conclusiveness of judgment rule. The July 19, 2012 Order of the RTC-QC in the indirect contempt case, which exonerated MGCCI and Siy, became final and executory immediately upon promulgation because judgments dismissing indirect contempt charges on the merits are unappealable under Section 11, Rule 71 of the Rules of Court. Under the conclusiveness of judgment rule (a variant of res judicata under Section 47(c), Rule 39), matters settled in that final order—specifically, that the September 28, 2001 notice of garnishment was not addressed or delivered to MGCCI and thus no attachment existed—became binding and conclusive upon the parties and their privies, including petitioner as Pyramid's assignee. This preclusive effect barred the relitigation of the attachment's validity in Civil Case No. 13-682, even though the two cases involved different causes of action (contempt vs. specific performance).
• Effect of Certiorari: The filing of the certiorari case did not prevent the July 19, 2012 Order from attaining finality. Certiorari under Rule 65 is an original and independent action, not an appeal or continuation of the indirect contempt case. Furthermore, the CA eventually dismissed the certiorari petition on June 30, 2015, and the resolution became final on March 19, 2016, leaving no doubt as to the binding effect of the July 19, 2012 Order.
• Fatal Contradiction: Petitioner's cause of action in Civil Case No. 13-682 depended entirely on the premise that a valid attachment existed on Bitanga's shares. This premise was conclusively negated by the RTC-QC's finding in the indirect contempt case that the notice of garnishment was improperly addressed to the Manila Polo Club rather than MGCCI, rendering the attachment ineffective under Rule 57, Section 7(c) of the Rules of Court. Having been precluded from asserting the existence of a valid attachment, petitioner could not establish a right to the transfer of the shares superior to Siy's.

• Conclusiveness of Judgment (Res Judicata) — Under Section 47(c), Rule 39 of the Rules of Court, a final judgment or order in a prior case between the same parties (or their privies) is conclusive as to any matter actually and necessarily litigated and determined therein, even if the subsequent case involves a different cause of action or claim for relief. The doctrine requires: (1) a final judgment on the merits by a court of competent jurisdiction; (2) a subsequent case between the same parties or their successors-in-interest; and (3) identity of issues actually litigated and determined in the prior case. In this case, the Court applied this rule to bind the petitioner to the RTC-QC's determination that no valid attachment existed because the garnishment notice was not served on MGCCI.
• Unappeability of Judgments Dismissing Indirect Contempt — Pursuant to Section 11, Rule 71 of the Rules of Court, which provides that appeals in indirect contempt proceedings shall be taken as in criminal cases, a judgment or final order dismissing a charge of indirect contempt on the merits is unappealable and becomes immediately final and executory upon promulgation, analogous to an acquittal in a criminal prosecution. This principle rendered the July 19, 2012 Order of the RTC-QC immediately final despite the filing of a petition for certiorari.
• Certiorari as Original and Independent Action — A petition for certiorari under Rule 65 is an original and independent action intended to correct grave abuse of discretion or lack of jurisdiction; it is not a component of the appeal process nor a continuation of the original suit. Thus, the pendency of a certiorari proceeding does not suspend the finality of the judgment or order assailed, nor does it operate as an appeal to prevent the judgment from becoming final.

• "A judgment in contempt proceedings is subject to review only in the manner provided for review of judgments in criminal cases. Hence, as in criminal proceedings, an appeal would not lie from the order of dismissal of, or an exoneration from, a charge of contempt of court." — Citing In the Matter of Contempt Proceedings Against Mison, Jr., et al., on the unappealable nature of orders dismissing indirect contempt charges.
• "The certiorari case is not an appeal or a continuation of the indirect contempt case. It is an elementary tenet in remedial law that the remedy of certiorari under Rule 65 of the Rules of Court is an original and independent action whose purpose and scope of review are completely different from an appeal's." — On the nature of certiorari under Rule 65.
• "Under the rule of conclusiveness of judgment, a variant of res judicata, matters settled in that final order already assumed binding and conclusive effect on the petitioner, as well as on the other parties in the same case, and can no longer be disturbed or relitigated in any future lawsuit between them." — On the preclusive effect of the prior judgment.
• "The finding that the September 28, 2001 notice of garnishment had not been addressed and delivered to MGCCI effectively means that Pyramid, petitioner's predecessor-in-interest, was not able to secure any attachment on Bitanga's MGCCI stocks." — On the fatal effect of the prior determination on the subsequent case.

• In the Matter of Contempt Proceedings Against Mison, Jr., et al., 144 Phil. 63 (1970) — Controlling precedent establishing that orders dismissing indirect contempt charges are unappealable and become final immediately, analogous to acquittals in criminal cases.
• Digital Telecommunications Philippines, Inc. v. Cantos, 722 Phil. 10 (2013) — Followed for the proposition that dismissal of an indirect contempt charge amounts to an acquittal barring second prosecution and is unappealable.
• Gomeco Metal Corp. v. Court of Appeals, 793 Phil. 355 (2016) — Controlling precedent defining the requisites for the application of the bar by former judgment rule and the conclusiveness of judgment rule under Section 47(b) and (c), Rule 39.
• Sy v. Commission on Settlement of Land Problems, 417 Phil. 378 (2001) — Cited for the distinction between certiorari as an original independent action and the appellate process as a continuation of the original suit.

• Section 11, Rule 71, Rules of Court — Governs appeals in indirect contempt proceedings, providing that they may be appealed as in criminal cases, thereby making orders of dismissal unappealable.
• Section 47(b) and (c), Rule 39, Rules of Court — Defines the effects of former judgments, specifically the bar by former judgment rule (b) and the conclusiveness of judgment rule (c).
• Rule 57, Section 7(c), Rules of Court — Prescribes the manner of attaching stocks or shares of a corporation, requiring the sheriff to leave with the president or managing agent a copy of the writ and a notice stating that the stock is attached.

J. Reyes, Jr., Carandang, Lazaro-Javier, and Inting, JJ.