Title
National Power Corp. vs. Vine Development Corp.
Case
G.R. No. 137785
Decision Date
Sep 4, 2000
NPC expropriated Vine and Romonafe's land; CA dismissed NPC's appeal over authority issues. SC reversed, invalidated compromise, remanded for merits resolution.
expropriation of land
lawyers
appeal
A

Case Summary (G.R. No. L-2482)

Factual Background

NPC filed a complaint for expropriation of parcels of land located at San Agustin, Dasmarinas, Cavite, owned by Vine Development Corporation and Romonafe Corporation. The case was docketed as Civil Case No. 1140-95 and raffled to Branch 21 of the RTC in Imus, Cavite. On January 26, 1996, the trial court issued a writ of possession authorizing NPC to enter and take possession of the properties after depositing P4,616,223.37 pursuant to P.D. 42 and the ruling in National Power Corporation v. Jocson (206 SCRA 520 [1992]).

Subsequently, the trial court constituted a panel of commissioners on December 3, 1996, which conducted an ocular inspection on January 10, 1997. The commissioners recommended a valuation of P3,500.00 per square meter, while the Provincial Appraisal Committee earlier set the fair market values at P1,500.00 and P2,000.00 per square meter for the Romonafe and Vine properties, respectively, later amending its valuation to P3,500.00 per square meter for the Romonafe property through PAC Resolution No. 07-97 dated June 25, 1997.

After trial, the RTC rendered its Decision on September 5, 1997, declaring the parcels of land lawfully expropriated and ordering NPC to pay fair market value at P3,500.00 per square meter, with interest at 6% per annum from the time NPC took possession until full payment. NPC then appealed directly to the CA, docketed as CA-G.R. CV No. 57710.

While the appeal was pending, NPC and Romonafe entered into a Compromise Agreement, under which NPC would acquire additional land areas including the area subject of the appeal, at the stipulated price of P3,500 per square meter, and Romonafe would provide a discount of P6,542,810.40, resulting in a net principal purchase price of P280,000,000.00.

Court of Appeals Proceedings and the Dismissal

During the appeal proceedings, the Office of the Solicitor General (OSG) sought disapproval of the compromise agreement and urged resolution on the merits. The CA initially gave the OSG a period to comment. The OSG commented on August 18, 1998, praying for disapproval of the compromise and resolution on the merits. On September 30, 1998, it filed a supplemental comment asserting that the compromise agreement was signed by NPC’s deputized counsels in flagrant violation of the terms and conditions of their deputation.

At the CA hearing on December 10, 1998, the Solicitor General appeared personally and, according to the CA’s later recitals, moved for dismissal based on the premise that NPC’s lawyers lacked authority to appear before the CA and the Supreme Court, as constrained by the Administrative Code (specifically Section 35(1), Chapter 12, Title III, Book IV) and the limits of NPC counsel’s deputation. The CA thereafter issued its January 19, 1999 Resolution dismissing the appeal without objection from the parties.

NPC moved for reconsideration on February 5, 1999, but the CA denied the motion in its March 8, 1999 Resolution, reasoning that the courts’ resolve to dismiss NPC appeals was rooted in a violation of the Administrative Code, and that the Solicitor General’s position after the fact could not cure the defect.

Issues Raised on Petition to the Supreme Court

NPC assigned two interrelated errors: first, that the CA patently erred in declaring that the Solicitor General personally moved for dismissal; and second, that the CA erred in dismissing the appeal for lack of legal or factual basis. The Supreme Court treated these issues jointly and focused on whether NPC’s lawyers had authority (a) to file the appeal from the trial court and (b) to enter into the compromise agreement.

Parties’ Positions

NPC contended, in substance, that its lawyers acted within the scope of their authority to prosecute the appeal. It also contested the CA’s attribution of a personal motion to dismiss by the Solicitor General, maintaining that the decisive issue should not have led to dismissal of the appeal.

The OSG argued that it did not move for the dismissal and instead objected to the compromise agreement. It identified two supposed fatal infirmities: that the compromise agreement was grossly disadvantageous to the government, and that NPC’s OSG-deputized lawyers allegedly had no legal authority to bind the Solicitor General to the agreement.

Legal Basis and Reasoning: Authority to File the Appeal

The Court first addressed whether NPC’s lawyers had authority to file the notice of appeal. It found that the record did not support the CA’s premise that the Solicitor General moved for dismissal at the December 10, 1998 oral argument. The Court noted that even the OSG’s Comment dated August 18, 1998 prayed for disapproval of the compromise agreement and resolution of the appeal on its merits, which contradicted a supposed intent to dismiss the appeal.

On the legal authority question, the Court treated the OSG’s statutory role and NPC’s supervision as essential. It observed that Section 15-A of Republic Act No. 6395 provides for OSG supervision in the handling of NPC court cases. It further noted that under Executive Order No. 292, particularly Section 35(1), Chapter 12, Title III, Book IV, the OSG represents the Government and, when authorized, can represent government-owned or controlled corporations. It also recognized the OSG’s power to deputize legal officers, including authority to “appear or represent the Government” in cases involving the respective offices brought before courts, and that the OSG had issued a deputation letter authorizing NPC lawyers to appear as counsel in civil cases in the lower courts (RTCs and MTCs) involving NPC.

The CA had construed this deputation as excluding authority to file appeals in higher courts. The Supreme Court rejected that interpretation. It relied on Section 2(a), Rule 41 of the Revised Rules of Court, which provides that an ordinary appeal from an RTC decision is taken by filing a notice of appeal in the court which rendered the judgment appealed from. Because the notice of appeal was filed with the RTC that issued the judgment, the Court held that NPC’s lawyers acted within the authority granted to them by their deputation. The Court emphasized that filing the notice in the proper court ensured compliance with the reglementary period.

The Court also reasoned that, regardless of which mode of appeal was used, the appeal is presumed beneficial to the government, and the OSG remains free to withdraw it if it concludes that the appeal will not advance the government’s cause. It further clarified that the recurring dismissal of NPC appeals in the CA was not properly attributable to a wholesale lack of authority in the lawyers themselves, but rather to failure to involve the OSG in time. In the Court’s view, that participation issue did not justify dismissal of the appeal.

The Supreme Court likewise held that even assuming arguendo a defect in the authority to file the appeal, the defect had been cured by the OSG’s later Manifestation dated December 11, 1998, which stated that the OSG-deputized counsels had authority to file notices of appeal in cases being handled by them pursuant to their deputation letters, while limiting that authority from extending to withdrawal, compromise agreements, or appellate pleadings without OSG review and approval.

Legal Basis and Reasoning: Authority to Compromise

The Court then addressed whether NPC’s lawyers had authority to enter into the compromise agreement. It treated a compromise as a settlement meant to avoid litigation and explained that a compromise binds only persons who represent and act under authority from the parties to the controversy. It underscored that Article 1878 of the Civil Code requires a special power to compromise for an agent, such as counsel, to bind the principal. It also cited Section 23, Rule 138 of the Rules of Court, which provides that attorneys may bind clients in ordinary procedural matters and in taking appeals, but cannot compromise the client’s litigation without special authority.

The Court concluded that, given the limita

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