City Prosecutors Must Represent Local Governments: Urdaneta City Case on Private Counsel Ban

The Supreme Court has clarified a fundamental rule in local government litigation: a city prosecutor, not a private law firm, must represent a city in civil cases. In Asean Pacific Planners v. City of Urdaneta (G.R. No. 162525, September 23, 2008), the Court struck down a trial court's decision to allow a private law firm to replace the City Prosecutor as counsel for the City of Urdaneta. The ruling reinforces the statutory scheme under the Local Government Code and protects public funds from being spent on private lawyers.

The Dispute

The case began when taxpayer Waldo Del Castillo filed a complaint to annul contracts entered into by the City of Urdaneta for the construction of a four-storey commercial center and hotel. The project involved a P250 million loan from the Philippine National Bank, and Del Castillo alleged that P95 million had already been paid for minimal work. Other taxpayers later joined the suit.

The city initially filed its answer through the City Prosecutor. But after pre-trial, the Lazaro Law Firm entered its appearance as counsel for the city, seeking to withdraw the city's answer, drop it as defendant, and join it as plaintiff. The Regional Trial Court allowed this. The petitioners, the contractors involved, challenged this and other rulings before the Court of Appeals, which dismissed their petition on procedural grounds. The Supreme Court eventually took the case.

The Core Issue

The central question was whether the RTC gravely abused its discretion in allowing a private law firm to represent the City of Urdaneta in place of the City Prosecutor. The Supreme Court answered in the affirmative.

The Ruling: Public Counsel Only

The Court held that the City Prosecutor must continue to represent the city. Under Section 481(b)(3)(i) of the Local Government Code of 1991 (Republic Act No. 7160), the city legal officer is tasked to represent the city in all civil actions. However, Urdaneta City had no sitting city legal officer, despite its charter being enacted in 1998. Because of that vacancy, the City Prosecutor remained the city's legal adviser and officer for civil cases.

The Court also noted that the Local Government Code allows a special legal officer only in specific situations, such as when a component city is adverse to the provincial government. That was not the case here. The Court further cited settled jurisprudence that a local government unit cannot be represented by private counsel, as only public officers may act for public entities, and public funds should not be spent to hire private lawyers.

The Court also addressed other issues. It upheld the taxpayers' suits, finding that the allegation of overpayment for minimal work was a sufficient claim of illegal disbursement of public funds. It allowed the city to switch from defendant to plaintiff, noting that courts may allow amendments to pleadings with liberality. And it allowed contractor Capalad to change counsel, since his original lawyer represented conflicting interests.

Practical Takeaways

• City prosecutors represent cities in civil cases unless a city legal officer has been appointed under the Local Government Code. Private counsel cannot simply step in.
• Public funds cannot pay private lawyers for local governments. The rule protects public money and ensures accountability through public officers.
• Taxpayers can sue when they allege illegal disbursement of public funds, even if the funds come from loans, because the borrowing city owns the money and must repay it from public revenues.
• Pleadings can be amended liberally to serve substantial justice, even if a party made judicial admissions earlier.
• Lawyers must respect the courts. The Court fined two attorneys P2,000 each for using offensive language against the Court of Appeals in their pleadings.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.