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[ G.R. No. 122253. June 9, 1999]

PETRON CORP. vs. HON. PEDRO B. VILLAFUERTE, JR.

FIRST DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this court dated JUN 9, 1999.

G.R. No. 122253 (Petron Corporation vs. Hon. Pedro B. Villafuerte, Jr. In his capacity as Presiding Judge of the Regional Trial Court, Branch 4, Balanga, Bataan, The Sangguniang Bayan of Limay, Bataan and Hon. Nelson David, in his capacity as mayor of the Municipality of Limay, Bataan.)

The case before the Court is a petition for review on certiorari to set aside the decision of the Court of Appeals1 [CA-GR SP No. 37578, promulgated on July 7, 1995, Vidallon-Magtolis, J., ponente, Paras and Abad Santos, JJ., concurring.] and its resolution denying reconsideration, 2 [Issued on October 2, 1995.] the dispositive portion of which decision reads as follows:

"WHEREFORE, the petition is hereby DENIED for lack of merit. The prayer for a writ of injunction is likewise DENIED. Let this case be DISMISSED.

SO ORDERED."3 [Rollo, pp. 38-46.]

On February 16,1996, the Court required the respondents to comment on the petition.4 [Rollo, p. 68.] On April 19,1996, respondents Sangguniang Bayan of the municipality of Limay and municipal mayor Nelson David filed their comment.5 [Rollo, pp. 73-100.] On November 21,1996, petitioner filed its reply6 [Rollo, pp. 139-158.]. On December 20,1996, respondents filed a rejoinder.7

By resolution dated January 15, 1997, we gave due course to the petition.8 [Rollo, p.267.]

The facts of the case are as follows:

Petron corporation (Petron for brevity), is a business enterprise engaged in refining and selling of oil and other petroleum products. Its plant and refinery are located in Barangay Alangan, Limay, Bataan.

On November 13, 1993, the Sangguniang Bayan of the municipality of Limay, Bataan, enacted Ordinance No. 90, Series of 1992, which provides:

"Section 5- Amount of share for the LGU's:

as provided for in section 291 of the Code: LGU;S have a share on the preceding fiscal year from the proceeds derived by any GOCC engaged in the utilization and development of the National wealth based on the following formula whichever, will produce a higher share for the LGU.'

(1) One percent (1%) of the gross sales or receipts on finished products where water was used based on the preceding year;

(2) Forty percent (40%) of all taxes, fees or charges including related surcharges, interests, or fines the GOCC would have paid if it were not otherwise exempt.

On April 30, 1993, petitioner filed with the Regional Trial Court (RTC), Balanga, Bataan, a petition for declaration of nullity of Municipal Ordinance No. 90, series of 1992, with prayer for the issuance of a temporary restraining order and a writ of preliminary injunction. The case was raffled to Branch 04, presided over by Judge Pedro B. Villafuerte, Jr.

At that time there was no provincial legal officer, and the municipality of Limay, Bataan had no regular municipal officer as well. On May 3, 1993, municipal mayor Nelson David requested the Secretary of Justice (DOJ for brevity), to assign a government lawyer to represent the municipality and the DOJ, co-respondents in the case. The DOJ was later dropped as party respondents.

On May 3, 1993, respondent Mayor sent a letter to the Secretary of Justice, inquiring whether legal impediments exists for legal consultants hired by the municipality to represent it in the civil case. The mayor also sent a letter to the office of the Solicitor General, however, there was no reply. Mayor David then made oral representations with the Provincial Prosecutor of Bataan for the assignment of an assistant prosecutor to handle the case.

On August 16, 1994, Mayor David reiterated his earlier request for representation by the Office of the Provincial Prosecutor.9 [Comment, Annex "5", Rollo, p. 107.]

On October 6, 1994, Secretary of Justice Franklin M. Drilon, replied to the letter of the Provincial Prosecutor of Balanga, Bataan, as follows:

"Under Section 481 (a) of the Local Government Code of 1991, the appointment of a Legal Officer shall be mandatory for the Provincial and city governments although it is optional for the municipal government. And in Section 31 thereof, the municipal government, in the absence of a municipal legal officer, may secure the services of the provincial legal officer and in the absence of the latter, that of the provincial prosecutor, but only on any legal question affecting the municipality.

"It is therefore, clear that the services of the Provincial Prosecutor that may be extended to a municipality covers only opinions on any legal question. It does not include any authority to appear and represent the municipality or any of its officials in any court proceedings."

On July 6, 1994, the Philippine National Oil Company (PNOC) filed a Motion to Disqualify Special Counsel,10 [Rollo, pp. 208-213.] citing Section 481 of the Local Government Code11 ["Section 481. x x x The appointment of a legal officer shall be mandatory for the provincial and city governments and optional for the municipal government.

(b) The legal officer, the chief legal counsel for the local government, shall take charge of the office for legal services and shall:xxx

(3) In addition to the foregoing duties and function, 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, as a special legal officer may be employed to represent the adverse party; xxx] and Section 1683 of the Revised Administrative Code of 1917.12 ["Section 1683. Duty of the Fiscal to represent provinces and provincial subdivisions in litigation.- The Provincial fiscal shall represent the province and any municipality, or municipal district thereof in any court, except in case whereof original jurisdiction is vested in the Supreme Court or in a case where the municipal district in question is a party adverse to the provincial government or to some other municipality, or municipal district in the same province. When the interests of a provincial government and any political division thereof are opposed, the provincial fiscal shall act on behalf of the province.

When the provincial fiscal is disqualified to serve any municipality or other political subdivision of a province, a special attorney may be employed by its counsel."] Petron adopted the said motion in its manifestation dated September 5, 1994. On September 21, 1994 the trial court denied the motion and on October 6, 1994, Petron filed a motion for reconsideration, but the same was denied.

On December 6, 1994, Petron filed a petition for Certiorari with Preliminary Injunction and/or Temporary Restraining Order with the Supreme Court, for declaration of nullity of the order dated September 21, 1994, of the respondent Judge Villafuerte, Jr. affirming the validity of the appearance of private counsel for respondents Sangguniang Bayan and Mayor David, as well as the subsequent order dated November 9, 1994, denying the motion for reconsideration of the previous order.

On June 5, 1995, the Supreme Court referred the case of the Court of Appeals for consideration and adjudication. On July 7, 1995, the Court of Appeals promulgated its decision, dismissing the petition for lack of merit and denying the application for a writ of injunction. On July 31, 1995, Petron filed a motion for reconsideration. On October 2, 1995, the Court of Appeals denied the motion.

On November 7, 1995, Petron filed the present recourse.

Meantime, on April 7, 1995, respondent Judge rendered decision in Special Civil Action No. 009-ML, upholding the validity of the questioned Municipal Ordinance and condemning Petron to pay damages in the amount of approximately P1.2 billion (P4.5 billion, including interests) to the municipality of Limay, plus attorney's fees equivalent to 5% of the said amount. In due time, Petron appealed to the Court of Appeals, where the case is still pending.13 [Docketed as CA-G. R. CV No. 52293.]

Consequently, it would be inappropriate for this Court to now resolve this case, as the ruling hereon might tend to influence the outcome of the case before the Court of Appeals.

WHEREFORE, we reset consideration of the case six (6) months from now and enjoin the Court of Appeals to decide the appeal in CA-G. R. CV No. 52293 with all reasonable dispatch, not exceeding three (3) months from notice. Let copy of the decision be furnished to this Court within ten (10) days from promulgation.

Very truly yours,

(SGD.) VIRGINIA ANCHETA-SORIANO

Clerk of Court