Title
Bugnay Construction and Development Corp. vs. Laron
Case
G.R. No. 79983
Decision Date
Aug 10, 1989
City of Dagupan rescinded lease with P&M for non-compliance; Bugnay awarded new lease. P&M filed dual suits, accused of forum-shopping; SC ruled for Bugnay, citing abuse of discretion, lack of standing, and litis pendentia.
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Case Digest (G.R. No. 79983)

Facts:

  1. Lease Contract and Rescission:

    • On March 3, 1978, the City of Dagupan awarded a lease contract to respondent P and M Agro-Development Corporation (P and M) over the Magsaysay Market Area.
    • Due to P and M's failure to comply with the lease conditions, the City filed a rescission case (Civil Case No. D-6157) on May 25, 1982.
    • On January 16, 1985, the court ruled in favor of the City based on a "Joint Manifestation" by both parties. A writ of execution was issued on September 26, 1985, ordering P and M to vacate the premises.
  2. Motion for Reconsideration:

    • P and M filed a motion for reconsideration on November 5, 1985, which was resolved on August 17, 1987. The court set aside the earlier decision, ruling that the "Joint Manifestation" was not a valid compromise agreement.
  3. New Lease Contract with Petitioner:

    • On April 20, 1987, the Sangguniang Panlungsod of Dagupan authorized the City Mayor to enter into a lease contract with petitioner Bugnay Construction and Development Corporation (Bugnay).
    • On April 27, 1987, Bugnay and the City executed a lease contract for the Magsaysay Market Area. Bugnay began construction after relocating the stallholders.
  4. Legal Actions by P and M and Ravanzo:

    • On June 15, 1987, P and M, through its counsel Regino R. Ravanzo, Jr., filed Civil Case No. D-8664 against the City and Bugnay, seeking to annul the lease contract and enjoin construction.
    • On July 17, 1987, Ravanzo, as a taxpayer, filed Civil Case No. D-8696 against the City, its officials, and Bugnay, seeking similar reliefs.
    • Respondent Judge Crispin C. Laron issued a restraining order and later a writ of preliminary injunction in Civil Case No. D-8696, despite the pendency of Civil Case No. D-8664.
  5. Motion to Dismiss and Denial:

    • The City and Bugnay filed a motion to dismiss Civil Case No. D-8696, citing forum-shopping and lack of cause of action.
    • Respondent Judge denied the motion to dismiss on August 5, 1987, and the motion for reconsideration on August 7, 1987.

Issue:

  1. Whether respondent Judge committed grave abuse of discretion by issuing a writ of preliminary injunction in Civil Case No. D-8696 despite the pendency of Civil Case No. D-8664.
  2. Whether respondent Judge erred in denying the motion to dismiss Civil Case No. D-8696, despite Ravanzo lacking standing as a taxpayer.
  3. Whether private respondents engaged in forum-shopping.

Ruling:

The Supreme Court ruled in favor of petitioner Bugnay Construction and Development Corporation.

  1. Grave Abuse of Discretion:

    • The respondent Judge committed grave abuse of discretion by issuing the writ of preliminary injunction in Civil Case No. D-8696, as the same reliefs were sought in Civil Case No. D-8664. The two cases involved the same parties, issues, and cause of action, constituting litis pendentia.
  2. Lack of Standing:

    • Ravanzo lacked standing to file a taxpayer’s suit because the lease contract did not involve the disbursement of public funds. The construction and operation of the market building were financed by Bugnay, not the City.
  3. Forum-Shopping:

    • Private respondents engaged in forum-shopping by filing two cases (Civil Case No. D-8664 and Civil Case No. D-8696) in different branches of the same court, seeking the same reliefs. This act was condemned as an abuse of judicial processes.

Ratio:

  1. Litis Pendentia:

    • For litis pendentia to apply, there must be: (a) identity of parties or interests, (b) identity of rights asserted and reliefs sought, and (c) a judgment in one case that would constitute res judicata in the other. These elements were present in the two cases filed by private respondents.
  2. Taxpayer’s Suit:

    • A taxpayer’s suit is only allowed when the act complained of involves the illegal disbursement of public funds. Since no public funds were involved in the lease contract, Ravanzo lacked the requisite standing to file the suit.
  3. Forum-Shopping:

    • Forum-shopping is prohibited as it abuses judicial processes and degrades the administration of justice. Private respondents’ filing of two cases seeking the same reliefs in different branches of the same court constituted forum-shopping.
  4. Judicial Admonition:

    • The Supreme Court reprimanded Ravanzo for forum-shopping and admonished respondent Judge for failing to recognize the procedural irregularities in the case.

Dispositive Portion

The Supreme Court:

  1. Ordered the dismissal of Civil Cases Nos. D-8664 and D-8696 without prejudice to the filing of proper remedies in Civil Case No. D-6157.
  2. Dissolved the writ of preliminary injunction issued in Civil Case No. D-8696.
  3. Directed the presiding judge of Branch 41 to expedite the resolution of Civil Case No. D-6157.


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