THIRD DIVISION

[G.R. No. 137785. September 4, 2000]

NATIONAL POWER CORPORATION, petitioner, vs. VINE DEVELOPMENT CORPORATION, represented by Vicente C. Ponce; and ROMONAFE CORPORATION, represented by Oscar F. Tirona, respondents.

D E C I S I O N

PANGANIBAN, J.:

Although not authorized to handle cases pending in the Court of Appeals and the Supreme Court, lawyers of the National Power Corporation may nonetheless file notices of appeal of adverse decisions rendered by trial courts. They cannot, however, enter into compromise agreements without any specific authority to do so.

^{The Case}

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the January 19, 1999 Resolution of the Court of Appeals (CA) in CA-GR CV No. 57710,¹^[Penned by Justice Demetrio G. Demetria; with the concurrence of Justices Ma. Alicia Austria-Martinez (Division chairman) and Martin S. Villarama Jr. (member).] which is quoted here in full:

“At the hearing of this case on December 10, 1998, the Honorable Ricardo P. Galvez, Solicitor General, appeared personally and moved for the dismissal of the case on the ground that the authority of the lawyers of the National Power Corporation to appear as Special Attorneys of the Solicitor General is limited to cases before the lower courts (RTCs and MTCs). He also invokes the provisions of the Administrative Code (Section 35(1) Chapter 12, Title III, Book IV) that said lawyers have no authority to appear before this Court.

“WHEREFORE, without objection on the part of all the parties in this case, the instant appeal is DISMISSED.”²^[CA Resolution, p. 1; rollo, p. 40.]

Also challenged by petitioner is the March 8, 1999 CA Resolution denying their Motion for Reconsideration, pertinent portions of which are quoted hereunder:

“xxx (W)hether or not the Solicitor General moved for the dismissal of the appeal, the foregoing copious notes show beyond cavil the courts’ resolve to dismiss cases appealed to this Court by NAPOCOR’s house lawyers without coursing the appeal to the Solicitor General.

“That the Solicitor General did not ask for the dismissal of the appeal is irrelevant; his belated Manifestation giving the NAPOCOR counsels putative authority to appeal to us cannot cure the basic legal defect which is a violation of the Administrative Code (Section 35(1), Chapter 12, Title III, Book IV). We have said so in all the many cases brought to us by NAPOCOR’s counsel. We iterate the same rulings.

“Motion DENIED.”³^[CA Resolution, March 8, 1999, pp 5-6; rollo, pp. 45-46; also penned by Justice Demetria, concurred in by Justices Villarama and Rodrigo V. Cosico (who replaced Justice Martinez).]

^{The Facts}

The undisputed facts of the case are summarized by the Office of the Solicitor General (OSG) as follows:

“1. On July 12, 1995, petitioner instituted a complaint for expropriation of several parcels of land located at San Agustin, Dasmariñas, Cavite, with an area of 96,963.38 and 48,103.12 square meters, respectively owned by respondents Vine Development Corporation (Vine hereafter) and Romonafe Corporation (Romonafe for brevity). The case was docketed as Civil Case No. 1140-95 and was raffled to Branch 21 of the Regional Trial Court in Imus, Cavite.

“2. On January 26, 1996, the trial court issued a writ of possession authorizing petitioner to enter and take possession of the property after a showing that it ha[d] deposited with the Philippine National Bank the amount of P4,616,223.37 representing the assessed value of the property for taxation purposes pursuant to the provisions of P.D. 42 and the Supreme Court ruling in National Power Corporation versus Jocson, 206 SCRA 520 (1992).

“3. By Order dated December 3, 1996, the trial court constituted a panel of commissioners for purposes of determining the just compensation of subject property. The panel conducted an ocular inspection of the property on January 10, 1997.

“4. In an undated Commissioner’s Valuation Report, the panel recommended just compensation at the rate of P3,500.00 per square meter.

“5. Earlier, however, the Provincial Appraisal Committee (PAC) issued Resolution No. 08-95 dated October 25, 1995 placing the fair market value of Romonafe and Vine’s subject property at P1,500.00 and P2,000.00 per square meter, respectively.

“6. One (1) year and eight (8) months later, the PAC amended its aforesaid resolution under PAC Resolution No. 07-97 dated June 25, 1997 by increasing the valuation of the Romonafe’s property from P1,500.00 to P3,500.00 per square meter, or an increase of P2,000.00 per square meter. The amendment was made in response to the letter of reconsideration dated June 9, 1997 filed by Romonafe.

“7. While the case was pending, petitioner negotiated with Romonafe for the acquisition of an additional area of 27,293.88 square meters of its adjacent land.

“8. After due trial, the lower court rendered its Decision on September 5, 1997, the dispositive portion of which reads:

‘WHEREFORE, judgment is hereby rendered declaring that the parcels of land of the defendants hereinabove described consisting of 146,066.5 square meters to have been lawfully expropriated and now belong to the plaintiff to be used for public purpose.

‘The plaintiff is hereby ordered to pay to the defendants, through the Branch Clerk of Court, the fair market value of the property at P3,500.00 per square meter, that is, for defendant Vine Development Corporation, the total sum of P339,371,830.00 and for defendant Romonafe Corporation, the total sum of P168,360,920.00 plus legal rate of interest - i.e., 6% per annum - starting from the time the plaintiff took possession of the property up to the time the full amount shall have been paid.

. . . . . . . . .

‘The Branch Clerk of Court of this Court is hereby ordered to have a certified copy of this decision be registered in the Office of the Registry of Deeds of Cavite.

. . . . . . . . .

‘SO ORDERED.’

(Underscoring ours)

“9. Petitioner directly appealed the foregoing decision to the Court of Appeals on the ground that it is contrary to law, jurisprudence and evidence on record. The case was docketed as CA-G.R. CV No. 57710.

“10. During the pendency of the appeal, petitioner and Romonafe entered into a Compromise Agreement (copy attached as Annex B-1) under which petitioner would acquire seventy five thousand three hundred ninety seven (75,397) square meters of land comprising the 48,103.12 square meters subject of the appeal and 27,293.88 square meters at P3,500 per square meter. Romonafe would give petitioner a total discount of P6,542,810.40 so much so that the net principal amount representing the total purchase price of the land amounts to two hundred eighty million pesos (P280,000,000.00)”

“11. By Resolution dated June 2, 1998, the Court of Appeals gave the OSG a period of ten (10) days to comment on said compromise agreement.

“12. In its Comment dated August 18, 1998, the OSG prayed that the compromise agreement be disapproved and that the appeal be instead resolved on the merits. A copy of said comment is hereto attached as Annex C.

“13. On September 30, 1998, the OSG filed a motion to admit its supplemental comment whereby it brought to the attention of the Court of Appeals the fact that the Compromise Agreement was signed by the deputized counsels of the petitioner in flagrant violation [of] the terms and conditions of their deputation. A copy of said supplemental comment is hereto attached as Annex D.

“14. By Resolution dated November 25, 1998, the Court of Appeals set the case for hearing/oral argument on December 10, 1998.

“15. During the December 10, 1998 hearing, the Solicitor General personally appeared and argued that subject compromise agreement suffers from two (2) fatal infirmities, namely: (1) it is grossly disadvantageous to the government; and (2) the deputized lawyers of the petitioner have no legal authority to bind the Solicitor General [to] the same agreement.

“16. The following day, or on December 11, 1998, the OSG filed a Manifestation dated December 11, 1998 (copy attached as Annex E), the full text of which reads:

‘THE OFFICE OF THE SOLICITOR GENERAL (OSG), to this Honorable Court, respectfully manifests that the OSG[-]deputized counsel of the National Power Corporation (NAPOCOR) have the authority to file notices of appeal in cases being handled by them such as the subject case pursuant to their deputation letters. However, such authority does not extend to withdrawal of said appeal, execution of compromise agreements and filing of pleadings before the appellate courts without the review and approval of the Solicitor General.

“17. In a Resolution dated January 19, 1999, the Court of Appeals dismissed petitioner’s appeal, thus:

x x x x x x x x x

“18. Petitioner, through counsel, immediately filed its motion for reconsideration on February 5, 1999 (copy attached as Annex F) which the Court of Appeals denied in its Resolution dated March 8, 1999 x x x.”⁴^[Petition, pp. 4-9; rollo, pp. 10-15.]

Hence, this Petition.⁵^[This case was deemed submitted for resolution upon the Court’s receipt on April 28, 2000, of petitioner’s Manifestation and Motion in Lieu of Memorandum, signed by Assistant Solicitor Generals Carlos N. Ortega and Amparo M. Cabotaje-Tang and Associate Solicitor Christopher B. Arpon. The Manifestation in Lieu of Memorandum by Romonafe Corporation, signed by Atty. Abner O. Antazo, was received earlier on April 11, 2000.]

^{The Issues}

Petitioner raises the following issues:

“A The Honorable Court of Appeals patently erred in declaring that the Solicitor General personally moved for the dismissal of the appeal during the hearing conducted on December 10, 1998.

“B The Honorable Court of Appeals erred in dismissing the appeal for lack of legal or factual basis.”

Since the two issues are interrelated, we shall take them up jointly as follows: Did the NPC lawyers have the authority to (a) file the appeal from the trial court and (b) enter into the Compromise Agreement?

^{The Court’s Ruling}

The Petition is meritorious.

^{Main Issue:}

^{Authority of the NPC Lawyers}

On the grounds that (1) the NPC lawyers had no authority to file the appeal, and (2) Solicitor General Ricardo P. Galvez had personally moved for its dismissal during the Oral Argument on December 10, 1998, the CA dismissed the said appeal. On the other hand, the state lawyer contends that he did not ask for a dismissal, but only objected to the Compromise Agreement entered into by and between Romonafe Corporation and petitioner. According to him, the Agreement suffers from two fatal infirmities: (1) it is grossly disadvantageous to the government, and (2) the OSG-deputized lawyers of petitioner had no legal authority to bind the solicitor general.

We agree with the solicitor general. There is nothing in the records of the Oral Argument showing that he had moved for the dismissal of the appeal. Rather, his ardent prayer, even in his Comment dated August 18, 1998, had been to disapprove the Compromise Agreement and to resolve the appeal on its merits.

^{No Legal Basis for Dismissal of Appeal}

It is undisputed that the OSG has “supervision in the handling” of NPC court cases as provided for in Section 15-A of Republic Act No. 6395, which states as follows:

“Sec. 15-A. The corporation shall be under the direct supervision of the Office of the President and all legal matters shall be handled by the Chief Legal Counsel of the corporation, provided that the Solicitor General’s Office shall have supervision in the handling of court cases only of the corporation.”

Furthermore, the authority of the OSG to represent NPC is specified in Section 35(1), Chapter 12, Title III, Book IV of EO 292, which provides:

“SEC. 35. Powers and Functions. -- The Office of the Solicitor General shall represent the Government of the Philippines, its agencies and instrumentalities and its officials and agents in any litigation, proceeding, investigation or matter requiring the services of lawyers. When authorized by the President or head of the office concerned, it shall also represent government owned or controlled corporations. The Office of the Solicitor General shall constitute the law office of the Government and, as such, shall discharge duties requiring the services of lawyers. It shall have the following specific powers and functions:

(1) Represent the Government in the Supreme Court and the Court of Appeals in all criminal proceedings; represent the Government and its officers in the Supreme Court, Court of Appeals, and all other courts or tribunals in all civil actions and special proceedings in which the Government or any officer thereof in his official capacity is a party.”

To assist it in representing the government, the OSG is empowered to deputize legal officers of government departments, bureaus, agencies and offices. Paragraph 8 of the same section reads as follows:

“(8) Deputize legal officers of government departments, bureaus, agencies and offices to assist the Solicitor General and appear or represent the Government in cases involving their respective offices, brought before the courts and exercise supervision and control over such legal officers with respect to such cases.”

In pursuance of such power, the OSG issued to the NPC lawyers a letter of deputization⁶^[Signed by Assistant Solicitor General Carlos N. Ortega; addressed to Atty. Bethol K. Sadain, officer-in-charge, Office of the General Counsel, Napocor.] worded as follows:

“As Special Attorneys, you are authorized to appear as counsel in all civil cases in the lower courts (RTCs and MTCs) involving the NPC, subject to the same conditions stipulated in our letters.”⁷^[Deputation letter, April 13, 1998, p. 2; rollo, p. 89.]

The CA ruled that the deputization of the NPC lawyers excluded the authority to file appeals in the higher courts. We disagree. Under Section 2 (a) , Rule 41⁸^[“Section 2. Modes of appeal. ---

(a) Ordinary appeal. -- The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeals with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party. No record on appeal shall be required except in special proceedings and other cases of multiple or separate appeals where the law or these Rules so require. In such cases, the record on appeal shall be filed and served in like manner.” (Emphasis ours)] of the Revised Rules of Court which pertains to ordinary appeals, the notice of appeal is filed in the very same court which rendered the assailed decision, which in this case was the Regional Trial Court (RTC) of Imus, Cavite. Since the notice was filed before the RTC, the NPC lawyers acted clearly within their authority. Indeed, their action ensured that the appeal was filed within the reglementary period. Regardless of which mode of appeal is used, the appeal itself is presumed beneficial to the government; hence, it should be allowed. After all, the OSG may withdraw it, if it believes that the appeal will not advance the government’s cause.

The reason for the continuous dismissal of NPC appeals in the CA is not the absence of authority of the lawyers per se, but the failure of these lawyers to inform the OSG of the lower court’s adverse decision, resulting in the OSG’s lack of participation in the appellate proceeding.

Granting arguendo that the NPC lawyers had no authority to file the appeal, this defect was cured by the OSG’s subsequent Manifestation, the full text of which reads:

“THE OFFICE OF THE SOLICITOR GENERAL (OSG) to this Honorable Court, respectfully manifests that the OSG[-] deputized counsels of the National Power Corporation (NAPOCOR) have the authority to file notices of appeal in cases being handled by them such as the subject case pursuant to their deputation letters. However, such authority does not extend to withdrawal of said appeal, execution of compromise agreements and filing of pleadings before the appellate courts without the review and approval of the Solicitor General.”

^{Authority to Compromise}

“A compromise is an agreement between two or more persons who, to avoid a lawsuit, amicably settle their differences on such terms as they can agree on.”⁹^[15A CJ S, p. 170; citing Ross Packing Co. v. US., 42 F. Supp. 932.] A compromise may be effected by persons who, as expressed or implied from their relations, are representing and acting under the authority of the parties to a controversy. In the absence of such authority, no compromise by a third person is binding,¹⁰^[Supra, p. 181; Rowland v. Lewis, 137 SE 2d 387; Henderson v. Great Atlantic & Pac. Tea Co., 132 NW 2d 75.] as Article 1878 of the Civil Code provides that an agent, such as the counsel for the case, needs a special power to compromise. Hence, in Monte de Piedad v. Rodrigo,¹¹^[56 Phil 310, November 25, 1931, per Imperial, J.] the Court ruled that “if an attorney is not authorized by the client, he cannot compromise his client’s claim.” Furthermore, Section 23, Rule 138 of the Rules of Court requires “special authority” for attorneys to bind their clients:

“Section 23. Authority of attorneys to bind clients. - Attorneys have authority to bind their clients in any case by any agreement in relation thereto made in writing, and in taking appeals, and in all matters of ordinary judicial procedure. But they cannot, without special authority, compromise their client’s litigation, or receive anything in discharge of a client’s claim but the full amount in cash.”

If, as already ruled, NPC lawyers cannot even handle Napocor cases in the CA, how indeed can they be allowed to bind Napocor to compromises? Definitely then, their signatures on the instant Compromise Agreement are invalid.

WHEREFORE, the Petition is GRANTED and the appealed Decision REVERSED and SET ASIDE. The case is hereby REMANDED to the Court of Appeals for disposition on the merits as prayed for by the Office of the Solicitor General. No costs.

SO ORDERED.

Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.