SECOND DIVISION
[ G.R. No. 162525, September 23, 2008 ]ASEAN PACIFIC PLANNERS v. CITY OF URDANETA +
ASEAN PACIFIC PLANNERS, APP CONSTRUCTION AND DEVELOPMENT CORPORATION* AND CESAR GOCO, PETITIONERS, VS. CITY OF URDANETA, CEFERINO J. CAPALAD, WALDO C. DEL CASTILLO, NORBERTO M. DEL PRADO, JESUS A. ORDONO AND AQUILINO
MAGUISA,** RESPONDENTS.
D E C I S I O N
ASEAN PACIFIC PLANNERS v. CITY OF URDANETA +
ASEAN PACIFIC PLANNERS, APP CONSTRUCTION AND DEVELOPMENT CORPORATION* AND CESAR GOCO, PETITIONERS, VS. CITY OF URDANETA, CEFERINO J. CAPALAD, WALDO C. DEL CASTILLO, NORBERTO M. DEL PRADO, JESUS A. ORDONO AND AQUILINO
MAGUISA,** RESPONDENTS.
D E C I S I O N
QUISUMBING, J.:
The instant petition seeks to set aside the Resolutions[1] dated April 15, 2003 and February 4, 2004 of the Court of Appeals in CA-G.R. SP No. 76170.
This case stemmed from a Complaint[2] for annulment of contracts with prayer for preliminary prohibitory injunction and temporary restraining order filed by respondent Waldo C. Del Castillo, in his capacity as taxpayer, against respondents City of Urdaneta and Ceferino J. Capalad doing business under the name JJEFWA Builders, and petitioners Asean Pacific Planners (APP) represented by Ronilo G. Goco and Asean Pacific Planners Construction and Development Corporation (APPCDC) represented by Cesar D. Goco.
Del Castillo alleged that then Urdaneta City Mayor Rodolfo E. Parayno entered into five contracts for the preliminary design, construction and management of a four-storey twin cinema commercial center and hotel involving a massive expenditure of public funds amounting to P250 million, funded by a loan from the Philippine National Bank (PNB). For minimal work, the contractor was allegedly paid P95 million. Del Castillo also claimed that all the contracts are void because the object is outside the commerce of men. The object is a piece of land belonging to the public domain and which remains devoted to a public purpose as a public elementary school. Additionally, he claimed that the contracts, from the feasibility study to management and lease of the future building, are also void because they were all awarded solely to the Goco family.
In their Answer,[3] APP and APPCDC claimed that the contracts are valid. Urdaneta City Mayor Amadeo R. Perez, Jr., who filed the city's Answer,[4] joined in the defense and asserted that the contracts were properly executed by then Mayor Parayno with prior authority from the Sangguniang Panlungsod. Mayor Perez also stated that Del Castillo has no legal capacity to sue and that the complaint states no cause of action. For respondent Ceferino J. Capalad, Atty. Oscar C. Sahagun filed an Answer[5] with compulsory counterclaim and motion to dismiss on the ground that Del Castillo has no legal standing to sue.
Respondents Norberto M. Del Prado, Jesus A. Ordono and Aquilino Maguisa became parties to the case when they jointly filed, also in their capacity as taxpayers, a Complaint-in-Intervention[6] adopting the allegations of Del Castillo.
After pre-trial, the Lazaro Law Firm entered its appearance as counsel for Urdaneta City and filed an Omnibus Motion[7] with prayer to (1) withdraw Urdaneta City's Answer; (2) drop Urdaneta City as defendant and be joined as plaintiff; (3) admit Urdaneta City's complaint; and (4) conduct a new pre-trial. Urdaneta City allegedly wanted to rectify its position and claimed that inadequate legal representation caused its inability to file the necessary pleadings in representation of its interests.
In its Order[8] dated September 11, 2002, the Regional Trial Court (RTC) of Urdaneta City, Pangasinan, Branch 45, admitted the entry of appearance of the Lazaro Law Firm and granted the withdrawal of appearance of the City Prosecutor. It also granted the prayer to drop the city as defendant and admitted its complaint for consolidation with Del Castillo's complaint, and directed the defendants to answer the city's complaint.
In its February 14, 2003 Order,[9] the RTC denied reconsideration of the September 11, 2002 Order. It also granted Capalad's motion to expunge all pleadings filed by Atty. Sahagun in his behalf. Capalad was dropped as defendant, and his complaint filed by Atty. Jorito C. Peralta was admitted and consolidated with the complaints of Del Castillo and Urdaneta City. The RTC also directed APP and APPCDC to answer Capalad's complaint.
Aggrieved, APP and APPCDC filed a petition for certiorari before the Court of Appeals. In its April 15, 2003 Resolution, the Court of Appeals dismissed the petition on the following grounds: (1) defective verification and certification of non-forum shopping, (2) failure of the petitioners to submit certified true copies of the RTC's assailed orders as mere photocopies were submitted, and (3) lack of written explanation why service of the petition to adverse parties was not personal.[10] The Court of Appeals also denied APP and APPCDC's motion for reconsideration in its February 4, 2004 Resolution.[11]
Hence, this petition, which we treat as one for review on certiorari under Rule 45, the proper remedy to assail the resolutions of the Court of Appeals.[12]
Petitioners argue that:
Petitioners argue that the Court of Appeals should not have dismissed the petition on mere technicalities since they have attached the proper documents in their motion for reconsideration and substantially complied with the rules.
Respondent Urdaneta City maintains that the Court of Appeals correctly dismissed the petition because Cesar Goco had no proof he was authorized to sign the certification of non-forum shopping in behalf of APPCDC.
Indeed, Cesar Goco had no proof of his authority to sign the verification and certification of non-forum shopping of the petition for certiorari filed with the Court of Appeals.[14] Thus, the Court of Appeals is allowed by the rules the discretion to dismiss the petition since only individuals vested with authority by a valid board resolution may sign the certificate of non-forum shopping in behalf of a corporation. Proof of said authority must be attached; otherwise, the petition is subject to dismissal.[15]
However, it must be pointed out that in several cases,[16] this Court had considered as substantial compliance with the procedural requirements the submission in the motion for reconsideration of the authority to sign the verification and certification, as in this case. The Court notes that the attachments in the motion for reconsideration show that on March 5, 2003, the Board of Directors of APPCDC authorized Cesar Goco to institute the petition before the Court of Appeals.[17] On March 22, 2003, Ronilo Goco doing business under the name APP, also appointed his father, Cesar Goco, as his attorney-in-fact to file the petition.[18] When the petition was filed on March 26, 2003[19] before the Court of Appeals, Cesar Goco was duly authorized to sign the verification and certification except that the proof of his authority was not submitted together with the petition.
Similarly, petitioners submitted in the motion for reconsideration certified true copies of the assailed RTC orders and we may also consider the same as substantial compliance.[20] Petitioners also included in the motion for reconsideration their explanation[21] that copies of the petition were personally served on the Lazaro Law Firm and mailed to the RTC and Atty. Peralta because of distance. The affidavit of service[22] supported the explanation. Considering the substantial issues involved, it was thus error for the appellate court to deny reinstatement of the petition.
Having discussed the procedural issues, we shall now proceed to address the substantive issues raised by petitioners, rather than remand this case to the Court of Appeals. In our view, the issue, simply put, is: Did the RTC err and commit grave abuse of discretion in (a) entertaining the taxpayers' suits; (b) allowing a private law firm to represent Urdaneta City; (c) allowing respondents Capalad and Urdaneta City to switch from being defendants to becoming complainants; and (d) allowing Capalad's change of attorneys?
On the first point at issue, petitioners argue that a taxpayer may only sue where the act complained of directly involves illegal disbursement of public funds derived from taxation. The allegation of respondents Del Castillo, Del Prado, Ordono and Maguisa that the construction of the project is funded by the PNB loan contradicts the claim regarding illegal disbursement since the funds are not directly derived from taxation.
Respondents Del Castillo, Del Prado, Ordono and Maguisa counter that their personality to sue was not raised by petitioners APP and APPCDC in their Answer and that this issue was not even discussed in the RTC's assailed orders.
Petitioners' contentions lack merit. The RTC properly allowed the taxpayers' suits. In Public Interest Center, Inc. v. Roxas,[23] we held:
In addition, APP and APPCDC's lack of objection in their Answer on the personality to sue of the four complainants constitutes waiver to raise the objection under Section 1, Rule 9 of the Rules of Court.[26]
On the second point, petitioners contend that only the City Prosecutor can represent Urdaneta City and that law and jurisprudence prohibit the appearance of the Lazaro Law Firm as the city's counsel.
The Lazaro Law Firm, as the city's counsel, counters that the city was inutile defending its cause before the RTC for lack of needed legal advice. The city has no legal officer and both City Prosecutor and Provincial Legal Officer are busy. Practical considerations also dictate that the city and Mayor Perez must have the same counsel since he faces related criminal cases. Citing Mancenido v. Court of Appeals,[27] the law firm states that hiring private counsel is proper where rigid adherence to the law on representation would deprive a party of his right to redress a valid grievance.[28]
We cannot agree with the Lazaro Law Firm. Its appearance as Urdaneta City's counsel is against the law as it provides expressly who should represent it. The City Prosecutor should continue to represent the city.
Section 481(a)[29] of the Local Government Code (LGC) of 1991[30] mandates the appointment of a city legal officer. Under Section 481(b)(3)(i)[31] of the LGC, the city legal officer is supposed to represent the city in all civil actions, as in this case, and special proceedings wherein the city or any of its officials is a party. In Ramos v. Court of Appeals,[32] we cited that under Section 19[33] of Republic Act No. 5185,[34] city governments may already create the position of city legal officer to whom the function of the city fiscal (now prosecutor) as legal adviser and officer for civil cases of the city shall be transferred.[35] In the case of Urdaneta City, however, the position of city legal officer is still vacant, although its charter[36] was enacted way back in 1998.
Because of such vacancy, the City Prosecutor's appearance as counsel of Urdaneta City is proper. The City Prosecutor remains as the city's legal adviser and officer for civil cases, a function that could not yet be transferred to the city legal officer. Under the circumstances, the RTC should not have allowed the entry of appearance of the Lazaro Law Firm vice the City Prosecutor. Notably, the city's Answer was sworn to before the City Prosecutor by Mayor Perez. The City Prosecutor prepared the city's pre-trial brief and represented the city in the pre-trial conference. No question was raised against the City Prosecutor's actions until the Lazaro Law Firm entered its appearance and claimed that the city lacked adequate legal representation.
Moreover, the appearance of the Lazaro Law Firm as counsel for Urdaneta City is against the law. Section 481(b)(3)(i) of the LGC provides when a special legal officer may be employed, that is, in actions or proceedings where a component city or municipality is a party adverse to the provincial government. But this case is not between Urdaneta City and the Province of Pangasinan. And we have consistently held that a local government unit cannot be represented by private counsel[37] as only public officers may act for and in behalf of public entities and public funds should not be spent to hire private lawyers.[38] Pro bono representation in collaboration with the municipal attorney and prosecutor has not even been allowed[39]
Neither is the law firm's appearance justified under the instances listed in Mancenido when local government officials can be represented by private counsel, such as when a claim for damages could result in personal liability. No such claim against said officials was made in this case. Note that before it joined the complainants, the city was the one sued, not its officials. That the firm represents Mayor Perez in criminal cases, suits in his personal capacity,[40] is of no moment.
On the third point, petitioners claim that Urdaneta City is estopped to reverse admissions in its Answer that the contracts are valid and, in its pre-trial brief, that the execution of the contracts was in good faith.
We disagree. The court may allow amendment of pleadings.
Section 5,[41] Rule 10 of the Rules of Court pertinently provides that if evidence is objected to at the trial on the ground that it is not within the issues raised by the pleadings, the court may allow the pleadings to be amended and shall do so with liberality if the presentation of the merits of the action and the ends of substantial justice will be subserved thereby. Objections need not even arise in this case since the Pre-trial Order[42] dated April 1, 2002 already defined as an issue whether the contracts are valid. Thus, what is needed is presentation of the parties' evidence on the issue. Any evidence of the city for or against the validity of the contracts will be relevant and admissible. Note also that under Section 5, Rule 10, necessary amendments to pleadings may be made to cause them to conform to the evidence.
In addition, despite Urdaneta City's judicial admissions, the trial court is still given leeway to consider other evidence to be presented for said admissions may not necessarily prevail over documentary evidence,[43] e.g., the contracts assailed. A party's testimony in open court may also override admissions in the Answer.[44]
As regards the RTC's order admitting Capalad's complaint and dropping him as defendant, we find the same in order. Capalad insists that Atty. Sahagun has no authority to represent him. Atty. Sahagun claims otherwise. We note, however, that Atty. Sahagun represents petitioners who claim that the contracts are valid. On the other hand, Capalad filed a complaint for annulment of the contracts. Certainly, Atty. Sahagun cannot represent totally conflicting interests. Thus, we should expunge all pleadings filed by Atty. Sahagun in behalf of Capalad.
Relatedly, we affirm the order of the RTC in allowing Capalad's change of attorneys, if we can properly call it as such, considering Capalad's claim that Atty. Sahagun was never his attorney.
Before we close, notice is taken of the offensive language used by Attys. Oscar C. Sahagun and Antonio B. Escalante in their pleadings before us and the Court of Appeals. They unfairly called the Court of Appeals a "court of technicalities"[45] for validly dismissing their defectively prepared petition. They also accused the Court of Appeals of protecting, in their view, "an incompetent judge."[46] In explaining the "concededly strong language," Atty. Sahagun further indicted himself. He said that the Court of Appeals' dismissal of the case shows its "impatience and readiness to punish petitioners for a perceived slight on its dignity" and such dismissal "smacks of retaliation and does not augur for the cold neutrality and impartiality demanded of the appellate court."[47]
Accordingly, we impose upon Attys. Oscar C. Sahagun and Antonio B. Escalante a fine of P2,000 [48] each payable to this Court within ten days from notice and we remind them that they should observe and maintain the respect due to the Court of Appeals and judicial officers;[49] abstain from offensive language before the courts;[50] and not attribute to a Judge motives not supported by the record.[51] Similar acts in the future will be dealt with more severely.
WHEREFORE, we (1) GRANT the petition; (2) SET ASIDE the Resolutions dated April 15, 2003 and February 4, 2004 of the Court of Appeals in CA-G.R. SP No. 76170; (3) DENY the entry of appearance of the Lazaro Law Firm in Civil Case No. U-7388 and EXPUNGE all pleadings it filed as counsel of Urdaneta City; (4) ORDER the City Prosecutor to represent Urdaneta City in Civil Case No. U-7388; (5) AFFIRM the RTC in admitting the complaint of Capalad; and (6) PROHIBIT Atty. Oscar C. Sahagun from representing Capalad and EXPUNGE all pleadings that he filed in behalf of Capalad.
Let the records of Civil Case No. U-7388 be remanded to the trial court for further proceedings.
Finally, we IMPOSE a fine of P2,000 each on Attys. Oscar C. Sahagun and Antonio B. Escalante for their use of offensive language, payable to this Court within ten (10) days from receipt of this Decision.
SO ORDERED.
Carpio Morales, Tinga, Velasco, Jr., and Brion, JJ., concur.
* Asean Pacific Planners and Development Corporation in some parts of the record.
** Public respondents Court of Appeals and Presiding Judge of the Regional Trial Court omitted as respondents per Section 4 (a), Rule 45.
[1] Rollo, pp. 51-52 and 53-55. Penned by Associate Justice Rebecca De Guia-Salvador, with Associate Justices Marina L. Buzon and Rosmari D. Carandang concurring.
[2] Id. at 117-126. Dated September 6, 2001.
[3] Id. at 136-140. Dated September 20, 2001.
[4] Id. at 141-143. Dated October 10, 2001.
[5] Id. at 131-135. Dated October 12, 2001.
[6] Id. at 127-130. Dated January 24, 2002.
[7] Id. at 168-195. Dated April 24, 2002.
[8] Id. at 56-76.
[9] Id. at 77-93.
[10] Id. at 51.
[11] Id. at 55.
[12] APP and APPCDC filed a petition for extension of 30 days to file a petition for review. Within the extension requested, they filed a petition for certiorari under Rule 65 with Cesar Goco as additional petitioner. In their memorandum, petitioners stated that this petition is one for review on certiorari.
[13] Rollo, pp. 546-547.
[14] CA rollo, pp. 30-32.
[15] Philippine Airlines, Inc. v. Flight Attendants and Stewards Association of the Philippines (FASAP), G.R. No. 143088, January 24, 2006, 479 SCRA 605, 608.
[16] General Milling Corp. v. NLRC, 442 Phil. 425, 427 (2002); Novelty Philippines, Inc. v. Court of Appeals, G.R. No. 146125, September 17, 2003, 411 SCRA 211, 216-220; Philippine Airlines, Inc. v. Flight Attendants and Stewards Association of the Philippines (FASAP), supra at 609.
[17] CA rollo, p. 245.
[18] Id. at 246.
[19] Id. at 2.
[20] Caingat v. National Labor Relations Commission, G.R. No. 154308, March 10, 2005, 453 SCRA 142, 148-149; Pinakamasarap Corporation v. National Labor Relations Commission, G.R. No. 155058, September 26, 2006, 503 SCRA 128, 130.
[21] CA rollo, pp. 240-241.
[22] Id. at 244.
[23] G.R. No. 125509, January 31, 2007, 513 SCRA 457.
[24] Id. at 470.
[25] ART. 1953. A person who receives a loan of money ... acquires the ownership thereof, and is bound to pay to the creditor an equal amount of the same kind and quality.
[26] SECTION 1. Defenses and objections not pleaded. - Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.
[27] G.R. No. 118605, April 12, 2000, 330 SCRA 419.
[28] Id. at 426.
[29] SECTION 481. Qualifications, Terms, Powers and Duties. - ...
x x x x
The appointment of legal officer shall be mandatory for the provincial and city governments and optional for the municipal government.
x x x x
[30] Under Republic Act No. 7160, effective on January 1, 1992.
[31] SECTION 481. Qualifications, Terms, Powers and Duties. - ...
x x x x
(b) The legal officer, the chief legal counsel of the local government unit, shall take charge of the office of legal services and shall:
[32] G.R. No. 99425, March 3, 1997, 269 SCRA 34.
[33] Sec. 19. Creation of positions of Provincial Attorney and City Legal Officer.-To enable the provincial and city governments to avail themselves of the full time and trusted services of legal officers, the positions of provincial attorney and city legal officer may be created ... For this purpose the functions hitherto performed by the provincial and city fiscals in serving as legal adviser and legal officer for civil cases of the province and city shall be transferred to the provincial attorney and city legal officer, respectively.
[34] An Act Granting Further Autonomous Powers to Local Governments, approved on September 12, 1967.
[35] Ramos v. Court of Appeals, supra at 46.
[36] Republic Act No. 8480 (An Act Converting the Municipality of Urdaneta in the Province of Pangasinan into a Component City to be Known as the City of Urdaneta) approved on February 10, 1998.
x x x x
SEC. 37. The City Legal Officer. - (a) The city legal officer must be a citizen of the Philippines, a resident of the City of Urdaneta, of good moral character, and a member of the Philippine Bar. He must have practiced his profession for at least five (5) years immediately preceding the date of his appointment.
x x x x
[37] Mancenido v. Court of Appeals, supra note 27, at 425; Ramos v. Court of Appeals, supra at 47; Alinsug v. RTC Br. 58, San Carlos City, Negros Occidental, G.R. No. 108232, August 23, 1993, 225 SCRA 553, 557-558.
[38] Ramos v. Court of Appeals, supra at 48.
[39] Alinsug v. RTC Br. 58, San Carlos City, Negros Occidental, supra at 558-559.
[40] Urbano v. Chavez, G.R. Nos. 87977 and 88578, March 19, 1990, 183 SCRA 347, 358.
[41] SEC 5. Amendment to conform to or authorize presentation of evidence.-When issues not raised by the pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure to amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so with liberality if the presentation of the merits of the action and the ends of substantial justice will be subserved thereby. The court may grant a continuance to enable the amendment to be made.
[42] Rollo, pp. 160-164.
[43] National Power Corporation v. Court of Appeals, G.R. Nos. 113103 and 116000, June 13, 1997, 273 SCRA 419, 445.
[44] Atillo III v. Court of Appeals, G.R. No. 119053, January 23, 1997, 266 SCRA 596, 604.
[45] CA rollo, p. 238.
[46] Id.
[47] Rollo, p. 550.
[48] Nuñez v. Astorga, A.C. No. 6131, February 28, 2005, 452 SCRA 353, 364.
[49] Code of Professional Responsibility
x x x x
CANON 11 - A LAWYER SHALL OBSERVE AND MAINTAIN THE RESPECT DUE TO THE COURTS AND TO JUDICIAL OFFICERS AND SHOULD INSIST ON SIMILAR CONDUCT BY OTHERS.
x x x x
[50] Rule 11.03 - A lawyer shall abstain from scandalous, offensive or menacing language or behavior before the Courts.
[51] Rule 11.04 - A lawyer shall not attribute to a Judge motives not supported by the record or have no materiality to the case.
This case stemmed from a Complaint[2] for annulment of contracts with prayer for preliminary prohibitory injunction and temporary restraining order filed by respondent Waldo C. Del Castillo, in his capacity as taxpayer, against respondents City of Urdaneta and Ceferino J. Capalad doing business under the name JJEFWA Builders, and petitioners Asean Pacific Planners (APP) represented by Ronilo G. Goco and Asean Pacific Planners Construction and Development Corporation (APPCDC) represented by Cesar D. Goco.
Del Castillo alleged that then Urdaneta City Mayor Rodolfo E. Parayno entered into five contracts for the preliminary design, construction and management of a four-storey twin cinema commercial center and hotel involving a massive expenditure of public funds amounting to P250 million, funded by a loan from the Philippine National Bank (PNB). For minimal work, the contractor was allegedly paid P95 million. Del Castillo also claimed that all the contracts are void because the object is outside the commerce of men. The object is a piece of land belonging to the public domain and which remains devoted to a public purpose as a public elementary school. Additionally, he claimed that the contracts, from the feasibility study to management and lease of the future building, are also void because they were all awarded solely to the Goco family.
In their Answer,[3] APP and APPCDC claimed that the contracts are valid. Urdaneta City Mayor Amadeo R. Perez, Jr., who filed the city's Answer,[4] joined in the defense and asserted that the contracts were properly executed by then Mayor Parayno with prior authority from the Sangguniang Panlungsod. Mayor Perez also stated that Del Castillo has no legal capacity to sue and that the complaint states no cause of action. For respondent Ceferino J. Capalad, Atty. Oscar C. Sahagun filed an Answer[5] with compulsory counterclaim and motion to dismiss on the ground that Del Castillo has no legal standing to sue.
Respondents Norberto M. Del Prado, Jesus A. Ordono and Aquilino Maguisa became parties to the case when they jointly filed, also in their capacity as taxpayers, a Complaint-in-Intervention[6] adopting the allegations of Del Castillo.
After pre-trial, the Lazaro Law Firm entered its appearance as counsel for Urdaneta City and filed an Omnibus Motion[7] with prayer to (1) withdraw Urdaneta City's Answer; (2) drop Urdaneta City as defendant and be joined as plaintiff; (3) admit Urdaneta City's complaint; and (4) conduct a new pre-trial. Urdaneta City allegedly wanted to rectify its position and claimed that inadequate legal representation caused its inability to file the necessary pleadings in representation of its interests.
In its Order[8] dated September 11, 2002, the Regional Trial Court (RTC) of Urdaneta City, Pangasinan, Branch 45, admitted the entry of appearance of the Lazaro Law Firm and granted the withdrawal of appearance of the City Prosecutor. It also granted the prayer to drop the city as defendant and admitted its complaint for consolidation with Del Castillo's complaint, and directed the defendants to answer the city's complaint.
In its February 14, 2003 Order,[9] the RTC denied reconsideration of the September 11, 2002 Order. It also granted Capalad's motion to expunge all pleadings filed by Atty. Sahagun in his behalf. Capalad was dropped as defendant, and his complaint filed by Atty. Jorito C. Peralta was admitted and consolidated with the complaints of Del Castillo and Urdaneta City. The RTC also directed APP and APPCDC to answer Capalad's complaint.
Aggrieved, APP and APPCDC filed a petition for certiorari before the Court of Appeals. In its April 15, 2003 Resolution, the Court of Appeals dismissed the petition on the following grounds: (1) defective verification and certification of non-forum shopping, (2) failure of the petitioners to submit certified true copies of the RTC's assailed orders as mere photocopies were submitted, and (3) lack of written explanation why service of the petition to adverse parties was not personal.[10] The Court of Appeals also denied APP and APPCDC's motion for reconsideration in its February 4, 2004 Resolution.[11]
Hence, this petition, which we treat as one for review on certiorari under Rule 45, the proper remedy to assail the resolutions of the Court of Appeals.[12]
Petitioners argue that:
We first resolve whether the Court of Appeals erred in denying reconsideration of its April 15, 2003 Resolution despite APP and APPCDC's subsequent compliance.I.
THE APPELLATE COURT PALPABLY ERRED AND GRAVELY ABUSED ITS JUDICIAL PREROGATIVES BY SUMMARILY DISMISSING THE PETITION ON THE BASIS OF PROCEDURAL TECHNICALITIES DESPITE SUBSTANTIAL COMPLIANCE [THEREWITH]...
II.
THE TRIAL COURT PALPABLY ERRED AND GRAVELY ABUSED ITS JUDICIAL PREROGATIVES BY CAPRICIOUSLY
Petitioners argue that the Court of Appeals should not have dismissed the petition on mere technicalities since they have attached the proper documents in their motion for reconsideration and substantially complied with the rules.
Respondent Urdaneta City maintains that the Court of Appeals correctly dismissed the petition because Cesar Goco had no proof he was authorized to sign the certification of non-forum shopping in behalf of APPCDC.
Indeed, Cesar Goco had no proof of his authority to sign the verification and certification of non-forum shopping of the petition for certiorari filed with the Court of Appeals.[14] Thus, the Court of Appeals is allowed by the rules the discretion to dismiss the petition since only individuals vested with authority by a valid board resolution may sign the certificate of non-forum shopping in behalf of a corporation. Proof of said authority must be attached; otherwise, the petition is subject to dismissal.[15]
However, it must be pointed out that in several cases,[16] this Court had considered as substantial compliance with the procedural requirements the submission in the motion for reconsideration of the authority to sign the verification and certification, as in this case. The Court notes that the attachments in the motion for reconsideration show that on March 5, 2003, the Board of Directors of APPCDC authorized Cesar Goco to institute the petition before the Court of Appeals.[17] On March 22, 2003, Ronilo Goco doing business under the name APP, also appointed his father, Cesar Goco, as his attorney-in-fact to file the petition.[18] When the petition was filed on March 26, 2003[19] before the Court of Appeals, Cesar Goco was duly authorized to sign the verification and certification except that the proof of his authority was not submitted together with the petition.
Similarly, petitioners submitted in the motion for reconsideration certified true copies of the assailed RTC orders and we may also consider the same as substantial compliance.[20] Petitioners also included in the motion for reconsideration their explanation[21] that copies of the petition were personally served on the Lazaro Law Firm and mailed to the RTC and Atty. Peralta because of distance. The affidavit of service[22] supported the explanation. Considering the substantial issues involved, it was thus error for the appellate court to deny reinstatement of the petition.
Having discussed the procedural issues, we shall now proceed to address the substantive issues raised by petitioners, rather than remand this case to the Court of Appeals. In our view, the issue, simply put, is: Did the RTC err and commit grave abuse of discretion in (a) entertaining the taxpayers' suits; (b) allowing a private law firm to represent Urdaneta City; (c) allowing respondents Capalad and Urdaneta City to switch from being defendants to becoming complainants; and (d) allowing Capalad's change of attorneys?
On the first point at issue, petitioners argue that a taxpayer may only sue where the act complained of directly involves illegal disbursement of public funds derived from taxation. The allegation of respondents Del Castillo, Del Prado, Ordono and Maguisa that the construction of the project is funded by the PNB loan contradicts the claim regarding illegal disbursement since the funds are not directly derived from taxation.
Respondents Del Castillo, Del Prado, Ordono and Maguisa counter that their personality to sue was not raised by petitioners APP and APPCDC in their Answer and that this issue was not even discussed in the RTC's assailed orders.
Petitioners' contentions lack merit. The RTC properly allowed the taxpayers' suits. In Public Interest Center, Inc. v. Roxas,[23] we held:
In the case of taxpayers' suits, the party suing as a taxpayer must prove that he has sufficient interest in preventing the illegal expenditure of money raised by taxation. Thus, taxpayers have been allowed to sue where there is a claim that public funds are illegally disbursed or that public money is being deflected to any improper purpose, or that public funds are wasted through the enforcement of an invalid or unconstitutional law.Here, the allegation of taxpayers Del Castillo, Del Prado, Ordono and Maguisa that P95 million of the P250 million PNB loan had already been paid for minimal work is sufficient allegation of overpayment, of illegal disbursement, that invests them with personality to sue. Petitioners do not dispute the allegation as they merely insist, albeit erroneously, that public funds are not involved. Under Article 1953[25] of the Civil Code, the city acquired ownership of the money loaned from PNB, making the money public fund. The city will have to pay the loan by revenues raised from local taxation or by its internal revenue allotment.
x x x x
Petitioners' allegations in their Amended Complaint that the loan contracts entered into by the Republic and NPC are serviced or paid through a disbursement of public funds are not disputed by respondents, hence, they are invested with personality to institute the same.[24]
In addition, APP and APPCDC's lack of objection in their Answer on the personality to sue of the four complainants constitutes waiver to raise the objection under Section 1, Rule 9 of the Rules of Court.[26]
On the second point, petitioners contend that only the City Prosecutor can represent Urdaneta City and that law and jurisprudence prohibit the appearance of the Lazaro Law Firm as the city's counsel.
The Lazaro Law Firm, as the city's counsel, counters that the city was inutile defending its cause before the RTC for lack of needed legal advice. The city has no legal officer and both City Prosecutor and Provincial Legal Officer are busy. Practical considerations also dictate that the city and Mayor Perez must have the same counsel since he faces related criminal cases. Citing Mancenido v. Court of Appeals,[27] the law firm states that hiring private counsel is proper where rigid adherence to the law on representation would deprive a party of his right to redress a valid grievance.[28]
We cannot agree with the Lazaro Law Firm. Its appearance as Urdaneta City's counsel is against the law as it provides expressly who should represent it. The City Prosecutor should continue to represent the city.
Section 481(a)[29] of the Local Government Code (LGC) of 1991[30] mandates the appointment of a city legal officer. Under Section 481(b)(3)(i)[31] of the LGC, the city legal officer is supposed to represent the city in all civil actions, as in this case, and special proceedings wherein the city or any of its officials is a party. In Ramos v. Court of Appeals,[32] we cited that under Section 19[33] of Republic Act No. 5185,[34] city governments may already create the position of city legal officer to whom the function of the city fiscal (now prosecutor) as legal adviser and officer for civil cases of the city shall be transferred.[35] In the case of Urdaneta City, however, the position of city legal officer is still vacant, although its charter[36] was enacted way back in 1998.
Because of such vacancy, the City Prosecutor's appearance as counsel of Urdaneta City is proper. The City Prosecutor remains as the city's legal adviser and officer for civil cases, a function that could not yet be transferred to the city legal officer. Under the circumstances, the RTC should not have allowed the entry of appearance of the Lazaro Law Firm vice the City Prosecutor. Notably, the city's Answer was sworn to before the City Prosecutor by Mayor Perez. The City Prosecutor prepared the city's pre-trial brief and represented the city in the pre-trial conference. No question was raised against the City Prosecutor's actions until the Lazaro Law Firm entered its appearance and claimed that the city lacked adequate legal representation.
Moreover, the appearance of the Lazaro Law Firm as counsel for Urdaneta City is against the law. Section 481(b)(3)(i) of the LGC provides when a special legal officer may be employed, that is, in actions or proceedings where a component city or municipality is a party adverse to the provincial government. But this case is not between Urdaneta City and the Province of Pangasinan. And we have consistently held that a local government unit cannot be represented by private counsel[37] as only public officers may act for and in behalf of public entities and public funds should not be spent to hire private lawyers.[38] Pro bono representation in collaboration with the municipal attorney and prosecutor has not even been allowed[39]
Neither is the law firm's appearance justified under the instances listed in Mancenido when local government officials can be represented by private counsel, such as when a claim for damages could result in personal liability. No such claim against said officials was made in this case. Note that before it joined the complainants, the city was the one sued, not its officials. That the firm represents Mayor Perez in criminal cases, suits in his personal capacity,[40] is of no moment.
On the third point, petitioners claim that Urdaneta City is estopped to reverse admissions in its Answer that the contracts are valid and, in its pre-trial brief, that the execution of the contracts was in good faith.
We disagree. The court may allow amendment of pleadings.
Section 5,[41] Rule 10 of the Rules of Court pertinently provides that if evidence is objected to at the trial on the ground that it is not within the issues raised by the pleadings, the court may allow the pleadings to be amended and shall do so with liberality if the presentation of the merits of the action and the ends of substantial justice will be subserved thereby. Objections need not even arise in this case since the Pre-trial Order[42] dated April 1, 2002 already defined as an issue whether the contracts are valid. Thus, what is needed is presentation of the parties' evidence on the issue. Any evidence of the city for or against the validity of the contracts will be relevant and admissible. Note also that under Section 5, Rule 10, necessary amendments to pleadings may be made to cause them to conform to the evidence.
In addition, despite Urdaneta City's judicial admissions, the trial court is still given leeway to consider other evidence to be presented for said admissions may not necessarily prevail over documentary evidence,[43] e.g., the contracts assailed. A party's testimony in open court may also override admissions in the Answer.[44]
As regards the RTC's order admitting Capalad's complaint and dropping him as defendant, we find the same in order. Capalad insists that Atty. Sahagun has no authority to represent him. Atty. Sahagun claims otherwise. We note, however, that Atty. Sahagun represents petitioners who claim that the contracts are valid. On the other hand, Capalad filed a complaint for annulment of the contracts. Certainly, Atty. Sahagun cannot represent totally conflicting interests. Thus, we should expunge all pleadings filed by Atty. Sahagun in behalf of Capalad.
Relatedly, we affirm the order of the RTC in allowing Capalad's change of attorneys, if we can properly call it as such, considering Capalad's claim that Atty. Sahagun was never his attorney.
Before we close, notice is taken of the offensive language used by Attys. Oscar C. Sahagun and Antonio B. Escalante in their pleadings before us and the Court of Appeals. They unfairly called the Court of Appeals a "court of technicalities"[45] for validly dismissing their defectively prepared petition. They also accused the Court of Appeals of protecting, in their view, "an incompetent judge."[46] In explaining the "concededly strong language," Atty. Sahagun further indicted himself. He said that the Court of Appeals' dismissal of the case shows its "impatience and readiness to punish petitioners for a perceived slight on its dignity" and such dismissal "smacks of retaliation and does not augur for the cold neutrality and impartiality demanded of the appellate court."[47]
Accordingly, we impose upon Attys. Oscar C. Sahagun and Antonio B. Escalante a fine of P2,000 [48] each payable to this Court within ten days from notice and we remind them that they should observe and maintain the respect due to the Court of Appeals and judicial officers;[49] abstain from offensive language before the courts;[50] and not attribute to a Judge motives not supported by the record.[51] Similar acts in the future will be dealt with more severely.
WHEREFORE, we (1) GRANT the petition; (2) SET ASIDE the Resolutions dated April 15, 2003 and February 4, 2004 of the Court of Appeals in CA-G.R. SP No. 76170; (3) DENY the entry of appearance of the Lazaro Law Firm in Civil Case No. U-7388 and EXPUNGE all pleadings it filed as counsel of Urdaneta City; (4) ORDER the City Prosecutor to represent Urdaneta City in Civil Case No. U-7388; (5) AFFIRM the RTC in admitting the complaint of Capalad; and (6) PROHIBIT Atty. Oscar C. Sahagun from representing Capalad and EXPUNGE all pleadings that he filed in behalf of Capalad.
Let the records of Civil Case No. U-7388 be remanded to the trial court for further proceedings.
Finally, we IMPOSE a fine of P2,000 each on Attys. Oscar C. Sahagun and Antonio B. Escalante for their use of offensive language, payable to this Court within ten (10) days from receipt of this Decision.
SO ORDERED.
Carpio Morales, Tinga, Velasco, Jr., and Brion, JJ., concur.
* Asean Pacific Planners and Development Corporation in some parts of the record.
** Public respondents Court of Appeals and Presiding Judge of the Regional Trial Court omitted as respondents per Section 4 (a), Rule 45.
[1] Rollo, pp. 51-52 and 53-55. Penned by Associate Justice Rebecca De Guia-Salvador, with Associate Justices Marina L. Buzon and Rosmari D. Carandang concurring.
[2] Id. at 117-126. Dated September 6, 2001.
[3] Id. at 136-140. Dated September 20, 2001.
[4] Id. at 141-143. Dated October 10, 2001.
[5] Id. at 131-135. Dated October 12, 2001.
[6] Id. at 127-130. Dated January 24, 2002.
[7] Id. at 168-195. Dated April 24, 2002.
[8] Id. at 56-76.
[9] Id. at 77-93.
[10] Id. at 51.
[11] Id. at 55.
[12] APP and APPCDC filed a petition for extension of 30 days to file a petition for review. Within the extension requested, they filed a petition for certiorari under Rule 65 with Cesar Goco as additional petitioner. In their memorandum, petitioners stated that this petition is one for review on certiorari.
[13] Rollo, pp. 546-547.
[14] CA rollo, pp. 30-32.
[15] Philippine Airlines, Inc. v. Flight Attendants and Stewards Association of the Philippines (FASAP), G.R. No. 143088, January 24, 2006, 479 SCRA 605, 608.
[16] General Milling Corp. v. NLRC, 442 Phil. 425, 427 (2002); Novelty Philippines, Inc. v. Court of Appeals, G.R. No. 146125, September 17, 2003, 411 SCRA 211, 216-220; Philippine Airlines, Inc. v. Flight Attendants and Stewards Association of the Philippines (FASAP), supra at 609.
[17] CA rollo, p. 245.
[18] Id. at 246.
[19] Id. at 2.
[20] Caingat v. National Labor Relations Commission, G.R. No. 154308, March 10, 2005, 453 SCRA 142, 148-149; Pinakamasarap Corporation v. National Labor Relations Commission, G.R. No. 155058, September 26, 2006, 503 SCRA 128, 130.
[21] CA rollo, pp. 240-241.
[22] Id. at 244.
[23] G.R. No. 125509, January 31, 2007, 513 SCRA 457.
[24] Id. at 470.
[25] ART. 1953. A person who receives a loan of money ... acquires the ownership thereof, and is bound to pay to the creditor an equal amount of the same kind and quality.
[26] SECTION 1. Defenses and objections not pleaded. - Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.
[27] G.R. No. 118605, April 12, 2000, 330 SCRA 419.
[28] Id. at 426.
[29] SECTION 481. Qualifications, Terms, Powers and Duties. - ...
x x x x
The appointment of legal officer shall be mandatory for the provincial and city governments and optional for the municipal government.
x x x x
[30] Under Republic Act No. 7160, effective on January 1, 1992.
[31] SECTION 481. Qualifications, Terms, Powers and Duties. - ...
x x x x
(b) The legal officer, the chief legal counsel of the local government unit, shall take charge of the office of legal services and shall:
x x x x
(3) In addition to the foregoing duties and functions, the legal officer shall:
(3) In addition to the foregoing duties and functions, the legal officer shall:
(i) Represent the local government unit in all civil actions and special proceedings wherein the local government unit or any official thereof, in his official capacity, is a party: Provided, That, in actions or proceedings where a component city or municipality is a
party adverse to the provincial government or to another component city or municipality, a special legal officer may be employed to represent the adverse party;
x x x x
[32] G.R. No. 99425, March 3, 1997, 269 SCRA 34.
[33] Sec. 19. Creation of positions of Provincial Attorney and City Legal Officer.-To enable the provincial and city governments to avail themselves of the full time and trusted services of legal officers, the positions of provincial attorney and city legal officer may be created ... For this purpose the functions hitherto performed by the provincial and city fiscals in serving as legal adviser and legal officer for civil cases of the province and city shall be transferred to the provincial attorney and city legal officer, respectively.
[34] An Act Granting Further Autonomous Powers to Local Governments, approved on September 12, 1967.
[35] Ramos v. Court of Appeals, supra at 46.
[36] Republic Act No. 8480 (An Act Converting the Municipality of Urdaneta in the Province of Pangasinan into a Component City to be Known as the City of Urdaneta) approved on February 10, 1998.
x x x x
SEC. 37. The City Legal Officer. - (a) The city legal officer must be a citizen of the Philippines, a resident of the City of Urdaneta, of good moral character, and a member of the Philippine Bar. He must have practiced his profession for at least five (5) years immediately preceding the date of his appointment.
x x x x
[37] Mancenido v. Court of Appeals, supra note 27, at 425; Ramos v. Court of Appeals, supra at 47; Alinsug v. RTC Br. 58, San Carlos City, Negros Occidental, G.R. No. 108232, August 23, 1993, 225 SCRA 553, 557-558.
[38] Ramos v. Court of Appeals, supra at 48.
[39] Alinsug v. RTC Br. 58, San Carlos City, Negros Occidental, supra at 558-559.
[40] Urbano v. Chavez, G.R. Nos. 87977 and 88578, March 19, 1990, 183 SCRA 347, 358.
[41] SEC 5. Amendment to conform to or authorize presentation of evidence.-When issues not raised by the pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure to amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so with liberality if the presentation of the merits of the action and the ends of substantial justice will be subserved thereby. The court may grant a continuance to enable the amendment to be made.
[42] Rollo, pp. 160-164.
[43] National Power Corporation v. Court of Appeals, G.R. Nos. 113103 and 116000, June 13, 1997, 273 SCRA 419, 445.
[44] Atillo III v. Court of Appeals, G.R. No. 119053, January 23, 1997, 266 SCRA 596, 604.
[45] CA rollo, p. 238.
[46] Id.
[47] Rollo, p. 550.
[48] Nuñez v. Astorga, A.C. No. 6131, February 28, 2005, 452 SCRA 353, 364.
[49] Code of Professional Responsibility
x x x x
CANON 11 - A LAWYER SHALL OBSERVE AND MAINTAIN THE RESPECT DUE TO THE COURTS AND TO JUDICIAL OFFICERS AND SHOULD INSIST ON SIMILAR CONDUCT BY OTHERS.
x x x x
[50] Rule 11.03 - A lawyer shall abstain from scandalous, offensive or menacing language or behavior before the Courts.
[51] Rule 11.04 - A lawyer shall not attribute to a Judge motives not supported by the record or have no materiality to the case.