Title
Municipality of Pililla, Rizal vs. Court of Appeals
Case
G.R. No. 105909
Decision Date
Jun 28, 1994
Municipality of Pililla sued PPC for unpaid taxes; SC affirmed RTC's ruling but modified fees. Judgment satisfied, but private counsel's unauthorized motion for additional taxes dismissed by CA, upheld by SC.
private attorneys
provincial fiscal
authority of law

Case Summary (G.R. No. 105909)

Initial Civil Judgment and Its Appellate Modification

On March 17, 1989, the Regional Trial Court of Tanay, Rizal, Branch 80, rendered judgment in Civil Case No. 057-T in favor of the plaintiff, the Municipality of Pililla, against the defendant, PPC, ordering PPC to pay specified amounts representing: (a) business tax under Section 9(A) of Municipal Tax Ordinance No. 1 for 1979 to 1983, plus taxes accruing until final determination of the case; (b) storage permit fee under Section 10 paragraph Z(13) (b-1-c) for 1975 to 1986, plus the fee accruing until final determination; (c) mayors permit fee under Section 10 paragraph (P)(2) for 1975 to 1984; (d) sanitary inspection fee for 1975 to 1984; and (e) costs of suit.

On June 3, 1991, in G.R. No. 90776, the Supreme Court affirmed the judgment but modified it: business taxes accruing prior to 1976 were held no longer payable by PPC because they had prescribed; storage fees were also disallowed because the storage tanks were owned by PPC, not the municipality, and therefore could not be used as a basis for a municipal charge for service.

This Supreme Court judgment became final and executory on July 13, 1991, and the records were remanded to the trial court for execution.

Events During Execution and the Mayor’s Satisfaction and Release

In connection with execution, on October 14, 1991, Atty. Felix E. Mendiola filed, in behalf of the plaintiff municipality, a motion in the Regional Trial Court, Branch 78, Morong, Rizal, seeking examination of PPC’s gross sales for specified years—1976 to 1978 and 1984 to 1991—for purposes of computing the business tax imposed under the local tax code, as amended.

On October 21, 1991, PPC filed a manifestation asserting that on October 18, 1991, Pililla Mayor Nicomedes Patenia received from PPC PHP 11,457,907.00 as full satisfaction of the Supreme Court judgment, evidenced by release and quitclaim documents executed by the mayor. On October 31, 1991, the trial court denied the municipality’s motion for examination and execution on the ground that the judgment had already been satisfied.

On November 21, 1991, Atty. Mendiola filed a motion for reconsideration. He contended that PPC’s total liability to the municipality amounted to PHP 24,176,599.00, while the amount covered by the release and quitclaim executed by Mayor Patenia was only PHP 12,718,692. He further claimed that the mayor could not waive the balance allegedly still due under the judgment and that the law firm of Atty. Mendiola had registered two liens—one for alleged consultancy services at 25% and another for attorneys’ fees at 25%—which, he asserted, amounted to more than PHP 12 million when quantified and added. The trial court denied the motion for reconsideration on January 28, 1992.

Referral to the Court of Appeals and PPC’s Challenge to Authority

On February 18, 1992, Atty. Mendiola again, ostensibly in behalf of the Municipality of Pililla, filed a petition for certiorari with the Supreme Court. The Supreme Court referred the petition to the Court of Appeals for proper disposition, where it was docketed as CA-G.R. SP. No. 27504. On March 2, 1992, PPC moved to question Atty. Mendiola’s authority to represent the municipality.

On March 31, 1992, the respondent Court of Appeals dismissed the petition for having been filed by a private counsel in violation of law and jurisprudence, but it did so without prejudice to the filing of a similar petition by the municipality through the proper provincial or municipal legal officer. The Court of Appeals later denied the municipality’s motion for reconsideration on June 9, 1992, prompting the present resort to the Supreme Court.

The Parties’ Positions on the Issues Raised

The petitioner assigned errors challenging: first, the Court of Appeals’ consideration of PPC’s issue on authority purportedly raised for the first time on appeal; second, the dismissal of the petition with an alternative remedy of filing a similar petition, which petitioner alleged was a departure from established jurisprudence; and third, the ruling that Atty. Mendiola’s filing violated law and jurisprudence.

The Supreme Court treated as central the legality of representation of a municipality in court by private counsel and the consequences of lack of authority. It held that the issue of Atty. Mendiola’s authority could be raised at any stage, and it addressed, in addition, the effect of the municipality’s own subsequent acts—particularly the mayor’s compromise and the municipality’s personal filings—on any claimed continued authority of the private counsel.

Supreme Court Ruling on the Authority of Private Counsel

The Supreme Court found no merit in the petition and held that the Court of Appeals was correct in ruling that Atty. Mendiola had no authority to file the petition on behalf of the Municipality of Pililla.

The Court anchored this conclusion on Section 1683 of the Revised Administrative Code, which provides that the provincial fiscal shall represent the province and any municipality or municipal district thereof in litigation, with limited exceptions. It further observed that this statutory rule is complemented by Section 3 of Republic Act No. 2264, and that together these provisions establish that only the provincial fiscal and the municipal attorney may represent a province or municipality in lawsuits. The Court stressed that the requirement is mandatory, and the municipality’s authority to employ a private lawyer is expressly limited only to circumstances where the provincial fiscal is disqualified to represent the municipality.

The Supreme Court held that the record contained nothing showing that the provincial fiscal was disqualified to act as counsel on appeal. Consequently, the appearance of private counsel was deemed unauthorized.

The Court rejected Atty. Mendiola’s submission that the exception should be read broadly to cover cases where the provincial fiscal refuses to handle the case. The Court reasoned that a provincial fiscal cannot refuse performance of official functions on grounds not provided by law without violating the oath of office. It stated that the proper course would have been to request that the Secretary of Justice appoint an acting provincial fiscal to take the place of the provincial fiscal who declined to handle and prosecute the case, consistent with Section 1679 of the Revised Administrative Code.

Effect of the Municipality’s Own Conduct and the Revocation of Counsel

The Supreme Court also considered that the lack of authority of Atty. Mendiola had been raised by the municipality itself when it commented and opposed the motion for execution of his lien filed with the trial court by the office of the Provincial Prosecutor of Rizal on behalf of the municipality.

On the procedural challenge raised by petitioner—that PPC could not raise the authority issue for the first time on appeal—the Supreme Court held the argument untenable. It ruled that the legality of representation by private counsel may be questioned at any stage of the proceedings. It noted that in earlier cases, the issue of lack of authority had been raised only later in attorney-fee-related proceedings, including after the decision had become final and executory, or after the judgment had been executed.

In addition, even if Atty. Mendiola’s representation were assumed to have been authorized, the Court held that such authority was revoked when the municipality, through the municipal mayor and without counsel’s participation, entered into a compromise agreement regarding execution of the judgment in PPC’s favor and then personally filed in court two pleadings: a Satisfaction of Judgment and a Release and Quitclaim. The Court treated the municipality’s personal appearance and presentation of pleadings as implying dismissal of the lawyer.

Client’s Rights to Dismiss Counsel and to Compromise

The Supreme Court then explained the governing principles on the relationship between client and counsel. It stated that a client who appears personally and presents a motion personally is considered to have impliedly dismissed the lawyer. It emphasized that a client is entitled to dispense with counsel at any time.

Relying on common law and Section 26, Rule 138 of the Rules of Court, the Court recognized that a litigant may dismiss counsel at any time or at any stage. It further held that a litigant may conduct the litigation personally and that there is no prohibition against appearing before the court to conduct one’s own case. It likewise reiterated that a client has the undoubted right to compromise a suit without counsel’s intervention.

The Court refused to sustain the apprehension that counsel’s interests in fees could prevent approval of a compromise. It ruled that the attorney’s right to fees from the client cannot be invoked by the attorney as a ground to disapprove or hold in abeyance the approval of a compromise agreement. It stated that any enforcement of fee rights must be pursued in the proper court through an appropriate proceeding under the Rules of Court, but such rights cannot be used to prevent judici

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