G.R. No. L-2993 - Almeida vs. Abaroa

Case Summary (G.R. No. L-2993)

Parties, Venue, and Court-Centered Setting

The controversy was litigated in the Regional Trial Court in Dagupan City, with separate branches handling related cases: Branch 41 for Civil Case No. D-6157, Branch 43 for Civil Case No. D-8664, and Branch 44—under Judge Laron—for Civil Case No. D-8696. The petition before the Court sought to annul the challenged orders and writ for alleged grave abuse of discretion and related jurisdictional error.

Applicable Legal Framework and Relief Sought in Certiorari

The petition treated the denial of a motion to dismiss as reviewable through extraordinary relief because it was asserted to have been issued with grave abuse of discretion or without or in excess of jurisdiction. The decision also applied established doctrines on litis pendentia (or lis pendens) as a ground for dismissal when the requisites of identity among the parties, the rights asserted, and the relief sought are met such that a judgment in one case would amount to res judicata in the other.

Contract Award and Initial Rescission Suit (Civil Case No. D-6157)

On March 3, 1978, the City of Dagupan awarded a lease contract over the Magsaysay Market Area to P and M for approximately 3,692 square meters. Because P and M failed to comply with contractual conditions, the City filed on May 25, 1982 an action to rescind the lease with the RTC in Dagupan City, docketed as Civil Case No. D-6157. That case was decided on January 16, 1985 in favor of the City based on a “Joint Manifestation” of the parties dated September 20, 1984. A writ of execution issued on September 26, 1985 ordered the immediate delivery of possession of the leased premises to the City.

Reversal Setting Aside the Earlier Judgment

P and M sought reconsideration on November 5, 1985, but the incident was resolved only on August 17, 1987. On that date, the RTC set aside the January 16, 1985 decision on the ground that the joint manifestation used as the basis for judgment was not a valid compromise agreement. The RTC reasoned, among others, that the joint manifestation was not signed by the plaintiff, did not pray for a decision based on it, did not terminate the case in a manner consistent with compromise, and did not clearly specify proposed terms and conditions, including proposals subject to review by other government agencies, which was inconsistent with the nature of a compromise approved by the court.

Denial of Reconsideration in D-6157

The City moved for reconsideration, but the trial court denied the motion on October 26, 1987, thereby leaving the August 17, 1987 resolution setting aside the earlier decision as the controlling ruling in that procedural stage of Civil Case No. D-6157.

The April 1987 Lease With Petitioner and the Emergence of Construction

While the motion for reconsideration in Civil Case No. D-6157 was pending, the Sangguniang Panlungsod of the City of Dagupan adopted Resolution No. 1462-87 on April 20, 1987, authorizing the City Mayor to enter into a contract of lease with petitioner Bugnay Construction and Development Corporation. On April 27, 1987, pursuant to that resolution, petitioner entered into the contract of lease with the City over the Magsaysay Market Area. Under the contract, petitioner agreed to finance, establish, construct, develop, manage, operate, maintain, control, and supervise a commercial center and a modern public market building, paying monthly rental of P8.00 per square meter for twenty (20) years, with the lease term to begin from the date when stallholders would be relocated. The contract also required petitioner to turn over, without demand, the entire market building and appurtenances to the City upon expiration of the lease period. After relocation became the condition for commencement, petitioner commenced construction.

P and M’s Action in Branch 43 (Civil Case No. D-8664)

On June 15, 1987, while the City’s motion for reconsideration in D-6157 remained unresolved, P and M, through counsel, filed in Branch 43 of the RTC an action docketed as Civil Case No. D-8664 for “Injunction with Prayer for Preliminary Injunction and Temporary Restraining Order, Annulment of Contract and Damages.” P and M alleged that because Civil Case No. D-6157 was still pending, its lease contract continued to exist, and thus the lease contract executed by the City with petitioner was null and void and an ultra vires act. P and M sought to enjoin petitioner from continuing the construction of the market building.

A temporary restraining order issued on June 19, 1987 was later dissolved on June 30, 1987 for lack of great or irreparable injury if no restraining order were issued. Defendants thereafter filed pleadings. Importantly, the narrative reflected that Branch 43 treated the earlier D-6157 case as a prejudicial question, and it dissolved its restraining order with the stated view that the relief could be better treated after the outcome in D-6157.

Ravanzo’s Subsequent Action in Branch 44 (Civil Case No. D-8696)

On July 17, 1987, Regino Ravanzo, Jr. filed with Branch 44 of the RTC an action for “Injunction with Preliminary Injunction and Temporary Restraining Order and Damages,” docketed as Civil Case No. D-8696, against the City of Dagupan, the City Mayor, and petitioner. The action was presented as an attack on the legality of the lease contract between the City and petitioner and was framed as a taxpayer’s suit. It was based on the same core factual allegations asserted in Civil Case No. D-8664, and it alleged multiple reasons why the lease contract should be declared null and void, with prayer for injunctive relief stopping the construction.

The Challenged Orders and Writ in D-8696

On July 24, 1987, Judge Laron issued a restraining order enjoining petitioner from continuing construction. The City and its acting mayor filed a motion to dismiss on July 28, 1987, alleging, among others, that Ravanzo was not the real party in interest, that the complaint stated no cause of action, and that there was another action pending between the same parties involving the same subject matter, issues, purpose, and prayer, amounting to forum-shopping. Judge Laron denied the motion on August 5, 1987, and denied reconsideration on August 7, 1987. He then required Ravanzo to post a bond of P100,000.00 in the order dated August 12, 1987, and issued the writ of preliminary injunction on August 14, 1987. Petitioner then filed this special civil action for certiorari to assail those rulings.

Issues Framed for Resolution in the Petition

The petition raised determinative issues: whether Judge Laron committed grave abuse of discretion by denying dismissal and issuing injunctive relief despite litis pendentia or pendency of another case between the same parties for the same cause; whether the denial of the motion to dismiss reflected grave abuse of discretion in failing to recognize that Ravanzo lacked personality and thus had no cause of action; and whether the private respondents committed forum-shopping.

The Court’s Ruling on Propriety of Certiorari

The Court held that while orders denying motions to dismiss are ordinarily interlocutory and not appealable, certiorari and prohibition may lie when denial was issued with grave abuse of discretion or was made without or in excess of jurisdiction. The Court then proceeded to evaluate the pleadings and concluded that the trial court should have dismissed the case.

Litis Pendentia and Identity of Interests: Dismissal Should Have Followed

The Court found that Civil Case No. D-8696 necessarily failed on the basis of pendency of another action between the same parties for the same cause. It reiterated that litis pendentia requires identity of parties (or representation of the same interest), identity of rights asserted and the relief founded on the same facts, and such identity that the judgment in the pending case would amount to res judicata in the other.

Although the two cases were filed with different nominal plaintiffs—P and M in D-8664 and Ravanzo in D-8696—the Court held that both represented the same interest. It reasoned that Ravanzo was the person who acted as counsel or representative in the related litigation of P and M, and that Ravanzo later filed D-8696 in another branch to obtain substantially the same injunctive relief against petitioner’s construction, after the temporary restraints in the first case had been dissolved and without achieving the desired preliminary injunction. The Court characterized the taxpayer labeling as a transparent attempt to obtain indirectly what was not obtained directly in the earlier case.

The Court also treated the claimed differences in the framing of the actions as legally insubstantial. It reasoned that Ravanzo in D-8696 effectively sought the same declaration of nullity of the lease contract and the same injunctive restraint that P and M sought in D-8664. It emphasized that whatever judgment would be rendered in D-8664 would necessarily create res judicata consequences for D-8696. The Court underscored that a party cannot escape the principle against litigating the same cause of action twice by altering the form of action or the method of presentation.

Capacity and Taxpayer Locus Standi: Absence of Monetary Interest

The Court further held that the trial court’s reliance on doctrines supporting taxpayer standing was misplaced. The RTC had declared that Ravanzo had legal capacity to sue based on authority recognizing that plaintiffs may sue to prevent unlawful disbursement of public funds and to contest expenditures committed without authority. The Court viewed this reliance as self-defeating, because taxpayer standing depends on the existence of the requisite pecuniary or monetary interest and the challenged act must involve illegal expenditure of public funds raised by taxation.

The Court examined the challenged lease contract and concluded, on its face, that no public funds were to be used. The terms showed that petitioner financed and would construct

Case Syllabus (G.R. No. L-2993)

The case arose from a special civil action for certiorari assailing actions taken by respondent judge in Civil Case No. D-8696.
Bugnay Construction and Development Corporation (petitioner) challenged four connected orders and process: an order denying a motion to dismiss dated August 5, 1987, denial of reconsideration dated August 7, 1987, an order dated August 12, 1987 for issuance of a writ of preliminary injunction, and the resulting writ dated August 14, 1987.
The Court treated the petition as a proper avenue of review because the assailed denial of dismissal allegedly involved grave abuse of discretion and was claimed to be without or in excess of jurisdiction.

Parties and Procedural Posture

Petitioner was the lessee who entered into a new lease contract with the City of Dagupan and began constructing a commercial center and modern public market building.
Respondents included private respondent Regino R. Ravanzo, Jr., who filed the suit in Civil Case No. D-8696, and the City of Dagupan and its officials, as named in the complaints; respondent judge presided over RTC Branch 44.
The challenged case, Civil Case No. D-8696, was styled as “Injunction with Preliminary Injunction and Temporary Restraining Order and Damages” and was filed by Ravanzo in his asserted capacity as a taxpayer.
Before Civil Case No. D-8696, another case involving closely related subject matter already existed and was active: Civil Case No. D-8664 in RTC Branch 43 and Civil Case No. D-6157 in RTC Branch 41.
The Court ultimately ordered dismissal of both Civil Case No. D-8664 and Civil Case No. D-8696, dissolved the writ of preliminary injunction, and directed an expedited disposition of Civil Case No. D-6157.

Contractual Background and Antecedent Litigation

On March 3, 1978, the City of Dagupan awarded a lease contract to P and M Agro-Development Corporation over the Magsaysay Market Area.
Due to P and M’s alleged failure to comply with contract conditions, the City filed an action to rescind the lease contract with the Regional Trial Court of Pangasinan in Dagupan City, Branch 41 as Civil Case No. D-6157.
Civil Case No. D-6157 was decided in favor of the City on January 16, 1985 based on a “Joint Manifestation” of the parties.
After motion, the trial court set aside its prior decision on August 17, 1987, ruling that the “Joint Manifestation” was not a valid basis for a compromise-type judgment.
The City’s motion for reconsideration of the August 17, 1987 ruling was denied on October 26, 1987.
During the pendency of the resolution in Civil Case No. D-6157, the Sangguniang Panlungsod of Dagupan adopted Resolution No. 1462-87 authorizing the City Mayor to enter into a contract of lease with petitioner.
On April 27, 1987, petitioner entered into a new lease contract with the City, agreeing to finance, construct, develop, manage, operate, maintain, control, and supervise a commercial center and public market building for twenty (20) years.
The contract provided a monthly rental of P8.00 per square meter, a commencement condition tied to relocation of stallholders, and an obligation to turn over the entire market building and appurtenances to the City without demand at the end of the lease term.
Upon fulfillment of the relocation condition, petitioner began construction immediately.

Initiation of Civil Cases

On June 15, 1987, P and M, through counsel and including Regino R. Ravanzo, Jr., filed Civil Case No. D-8664 for injunction with prayer for preliminary injunction and temporary restraining order, annulment of contract, and damages in RTC Branch 43.
P and M alleged that because Civil Case No. D-6157 was still pending, its lease contract subsisted, and thus the City’s lease to petitioner was allegedly null and void and an alleged ultra vires act.
The Branch 43 court issued a temporary restraining order on June 19, 1987, which it later dissolved on June 30, 1987, finding that no great or irreparable injury would result absent restraint.
On July 17, 1987, Ravanzo filed in RTC Branch 44 the present action, Civil Case No. D-8696, for injunction with preliminary injunction and temporary restraining order and damages.
Ravanzo alleged thirty (30) reasons for declaring the lease contract null and void and prayed that petitioner be enjoined from continuing construction.
On July 24, 1987, respondent judge issued a restraining order enjoining petitioner from continuing construction.
On August 5, 1987, respondent judge denied a motion to dismiss filed by the City and its Acting Mayor, despite grounds including non-real party in interest, lack of cause of action, pendency of another action involving same subject matter and relief, and forum-shopping.

Motion to Dismiss and Issuance of Injunction

The City’s motion to dismiss in Civil Case No. D-8696 argued that Ravanzo was not the real party in interest, the complaint failed to state a cause of action, and another action already covered the same controversy.
Respondent judge denied both the initial motion to dismiss and the subsequent motion for reconsideration dated August 7, 1987.
After the filing of a bond in the amount of P100,000.00 by Ravanzo, respondent judge issued a writ of preliminary injunction on August 14, 1987.
Petitioner brought the matter to the Supreme Court through the present petition for certiorari, challenging the injunctive relief as arising from a legally defective refusal to dismiss.

Determinative Issues Raised

Petitioner argued that respondent judge committed grave abuse of discretion by issuing a writ of preliminary injunction in Civil Case No. D-8696 despite the alleged pendency of another action involving the same parties and cause.
Petitioner argued that respondent judge erred in denying the motion to dismiss by refusing to recognize that Ravanzo lacked personality to file a taxpayer suit, thereby