MB FINANCE CORPORATION, FORMERLY KNOWN AS JARDINE-MANILA FINANCE, INC., PETITIONER, VS. HON. BERNARD P. ABESAMIS, JUDGE, RTC, QC, BRANCH 85, HUM­BERTO A. JAMBORA, ANNABELLE JAMB…

MB Finance versus Abesamis

The Case

This is a special civil action of certiorari brought by MB Finance Corporation, formerly known as Jardine-Manila Finance, Incorporated, against Judge Bernard Abesamis of the Regional Trial Court of Quezon City and against the spouses and family members Humberto Jambora, Annabelle Jambora-Tale, and Gerard Jambora. MB Finance asks the Supreme Court to nullify the trial judge's order denying its motion to dismiss a new complaint filed by the Jamboras. The case matters because it is a textbook illustration of res judicata — the rule that a final judgment bars not only the issues actually litigated but also every matter that could have been raised — and because it shows how the Supreme Court treats litigants who keep re-litigating the same controversy in one court after another. It also teaches the exceptions to two procedural rules: the rule against correcting interlocutory orders by certiorari, and the rule requiring a motion for reconsideration before certiorari.

Procedural History

The story begins with a replevin suit filed by Jardine-Manila Finance against the Jamboras in the then Court of First Instance of Rizal at Pasig, for the recovery of an automobile sold on installments. Judgment was rendered in favor of Jardine. The Jamboras appealed to the Court of Appeals, which affirmed the judgment in full. They then came to the Supreme Court by petition for review, which was dismissed for being filed late. Earlier, they had also failed in a certiorari suit in the Court of Appeals seeking to nullify the orders for surrender of the vehicle, and in another certiorari and prohibition suit challenging the order of immediate execution.

Execution followed. Real property of the Jamboras in Quezon City was levied upon and sold at public auction to Jardine. No redemption was made, and a final deed of sale was issued. Jardine then moved in the Pasig court for cancellation of the Jamboras' transfer certificate of title and for a writ of possession. The trial court granted only the writ of possession. The Jamboras filed a succession of motions to stop execution, all denied. They went to the Court of Appeals on certiorari and prohibition, which dismissed their petition; their motion for reconsideration was denied. They appealed to the Supreme Court, which noted their petition without action because it was filed out of time, and denied their motion for reconsideration with finality.

Undeterred, the Jamboras filed a new action in the Regional Trial Court of Quezon City for quieting of title and related relief against MB Finance and the City Sheriff. MB Finance moved to dismiss on the ground of bar by prior judgment and failure to state a cause of action. The trial judge denied the motion and required an answer. MB Finance then came to the Supreme Court by certiorari, and that is how the case reached this Court.

Facts

Humberto Jambora, Annabelle Jambora-Tale, and Gerard Jambora bought an automobile from Jardine-Manila Finance on installments and failed to pay the price. Jardine sued for replevin. Despite a writ of seizure and two orders directing surrender of the car, the Jamboras kept possession. Judgment was rendered ordering them to pay the principal sum of 26,671 pesos and 20 centavos with interest, plus liquidated damages, attorney's fees, and costs.

The Jamboras appealed and lost at every level. When execution reached their real property in Cubao, Quezon City, they resisted, arguing that Jardine had lost the capacity to enforce the judgment because it had been dissolved and replaced by MB Finance Corporation, and that the realty had never been offered as collateral. These arguments were rejected. The property was sold at auction to Jardine, no redemption was made, and a final deed of sale was issued. The courts granted a writ of possession.

After seven prior proceedings — one original action, four in the Court of Appeals, and two in the Supreme Court — the Jamboras opened yet another chapter. They filed a new complaint in the Quezon City court, repeating the same grievances: that their real property had never been offered as security, and that its value far exceeded the obligation. MB Finance moved to dismiss, and when the motion was denied, it filed this petition for certiorari.

Issues

• Whether or not the trial court's order denying the motion to dismiss may be challenged by certiorari even though it is interlocutory and no motion for reconsideration was filed.
• Whether or not the Jamboras' new action in the Quezon City court is barred by prior judgment and by the rule against forum shopping.
• Whether or not the Jamboras and their counsel should be sanctioned for re-litigating matters already finally resolved.

Applicable Provisions

Section 49, paragraph b, of Rule 39 of the Rules of Court, as quoted in the decision, provides:

A final and executory judgment or order in an action or proceeding in personam is, with respect to the matter directly adjudged, or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity.

This is the statutory basis of res judicata, and it is the provision that bars the Jamboras' new complaint, because every ground they raised could have been raised in the earlier proceedings.

Ruling

On the first issue, the Court held that the general rule — that an erroneous order denying a motion to dismiss is interlocutory and correctible only by appeal, not certiorari — admits an exception where an appeal would not be a speedy and adequate remedy. That exception applies here, because an appeal would not promptly relieve MB Finance from the injurious effects of a patently mistaken order compelling it to go through a protracted trial. The Court also held that the rule requiring a prior motion for reconsideration does not apply where the matter and issue have been squarely raised, argued, and passed upon by the lower court.

On the second issue, the Court held that all the defenses and objections regarding the Jamboras' indebtedness, the levy, the execution sale, the capacity of Jardine after its change of name, and the writ of possession had already been put at issue and resolved in the prior proceedings. The Court stated the principle plainly:

A final judgment on the merits constitutes an absolute bar to a subsequent action, and is a finality as to the claim or demand in controversy, concluding parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose.

The Court found the Jamboras guilty of violating res judicata and the rule against forum shopping, and of foisting misleading arguments on the courts — such as the claim that a judgment creditor loses capacity merely by changing its corporate name, or that a money judgment is enforceable only against the collateral given as security.

On the third issue, the Court held that the proper sanction is the summary dismissal of all their actions and proceedings, without prejudice to administrative or contempt proceedings against the erring counsel or party.

Doctrine

A Bar candidate should retain these rules. First, a final and executory judgment bars not only the issues actually raised and decided, but also every matter that could have been raised in relation to them, as Section 49, paragraph b, of Rule 39 declares. Second, the doctrine of res judicata makes a final judgment on the merits an absolute bar to a subsequent action as to every admissible matter that might have been offered. Third, an order denying a motion to dismiss is generally interlocutory and not correctible by certiorari, but certiorari lies where appeal would not be speedy and adequate. Fourth, the requirement of a prior motion for reconsideration is excused where the issue has already been squarely raised and resolved by the lower court. Fifth, forum shopping and re-litigation of finally resolved matters warrant summary dismissal and may expose counsel to disciplinary action.

Disposition

The Supreme Court granted the petition, nullified and set aside the order of June 18, 1990, and directed the Quezon City court to take no further action on the case except to dismiss it, with costs against the private respondents and an order for Attorney Humberto Jambora to show cause why no disciplinary sanction should be imposed on him.

Remember This

Memorize this line: a final judgment is conclusive not only as to the issues actually determined, but as to every other matter which the parties might have litigated and had decided as incident to the subject matter of the litigation. Examiners use this case to test res judicata and forum shopping, and the exceptions to the rules on certiorari against interlocutory orders and on the need for a motion for reconsideration.