City of Caloocan vs. Court of Appeals

A city mayor may institute judicial proceedings for the recovery of funds and property on behalf of the city without prior authorization from the Sanggunian, but being the proper party to file such suits, the mayor—not the City Legal Officer—must sign the certification against forum-shopping; and where multiple cases arising from the same transaction involve substantial identity of parties, identity of rights asserted, and such identity that any judgment in one would amount to res judicata in the others, the later-filed case must be dismissed for forum-shopping and litis pendentia.

Caloocan City, through its Sangguniang Panlungsod, authorized the sale of a 22,685.82-square-meter patrimonial property covered by TCT No. 54327 to Gotesco Investments, Inc., represented by Jose C. Go. The Commission on Audit disapproved the initial deed of sale but, on reconsideration, approved the sale at a higher price per square meter, prompting the Sanggunian to pass an amending ordinance directing execution of an amended deed. The dispute arose from the interplay between the original and amended deeds of sale, the refusal of the incumbent mayor to execute the amended deed, and Gotesco's efforts to register the original deed and tender payment, all of which spawned multiple civil cases. The legal backdrop includes Section 455 of the Local Government Code and Section 9 of the Caloocan City Charter, both vesting in the city mayor the power to institute judicial proceedings for the recovery of city funds and property.

On 2 August 1990, the Sangguniang Panlungsod of Caloocan City passed Ordinance No. 068, authorizing then Mayor Macario Asistio, Jr. to negotiate and enter into a contract of sale over a 22,685.82-square-meter patrimonial property of the city covered by TCT No. 54327. On 6 September 1990, Mayor Asistio executed a Deed of Absolute Sale over the property in favor of Jose C. Go of Gotesco Investments, Inc. for ₱136,114,800.00. The Commission on Audit initially disapproved the deed but, upon reconsideration, approved the sale on the condition that the price be pegged at ₱8,926.39 per square meter, or ₱182,085,078.30 for the entire property.

In response to the COA's conditional approval, the Sanggunian passed an amending ordinance on 23 October 1997 directing the execution of an amended deed of absolute sale pursuant to the COA decision. The incumbent mayor, Reynaldo O. Malonzo, vetoed the ordinance on the ground that the original deed was valid and subsisting, but the Sanggunian overrode the veto through Resolution No. 0609. On 28 November 1997, Gotesco executed an "Express Consent to the Novation of the Deed of Absolute Sale" and tendered an amended deed reflecting the price of ₱182,085,078.30. Mayor Malonzo received the documents but refused to sign the amended deed.

A DILG opinion dated 12 March 1998 stated that the deed of sale could be registered with the Register of Deeds, registration being a ministerial act. Gotesco then tendered ₱182,085,078.30 as payment, plus ₱910,425.39 for transfer tax and ₱9,687,440.17 for real estate tax, to the City Treasurer and to Malonzo, but the payments were refused. Gotesco consequently filed Civil Case No. C-18274 for consignation of the purchase price and tax payments. On 2 April 1998, the Land Registration Authority allowed registration of the deed, and on 15 April 1998, TCT No. 326321 was issued in Gotesco's name.

On 16 April 1998, Caloocan City filed Civil Case No. C-18308, a petition for prohibition with preliminary injunction, to enjoin the registration of the sale. During its pendency, the city filed Civil Case No. C-18337 for annulment of the sale and cancellation of Gotesco's title. Gotesco moved to dismiss the annulment case, but the trial court denied the motion on 31 July 1998, as well as the subsequent motion for reconsideration. Gotesco elevated the matter to the Court of Appeals via certiorari, which initially dismissed the petition on 10 January 2000 but, upon reconsideration, reversed itself on 12 September 2000 and ordered the dismissal of Civil Case No. C-18337 on the ground of forum-shopping, finding identity of parties and causes of action among the three civil cases and ruling that the certification against forum-shopping was defective for having been signed by the City Legal Officer rather than Mayor Malonzo.

• No Forum-Shopping: Petitioner insisted it was not guilty of forum-shopping because the cases it filed involved different issues, causes of action, and objectives, such that forum-shopping cannot be said to exist when there are different causes of action, issues, and objectives between the cases.
• No Res Judicata: Petitioner argued there can be no res judicata among the cases because (i) they have different causes of action; (ii) the evidence presented in Civil Case No. C-18308 is not sufficient to sustain the cause of action in the second case; (iii) there is no identity of parties; and (iv) there is no identity of subject matter.
• No New Arguments on Reconsideration: Petitioner maintained that the Court of Appeals had no basis for reversing its earlier decision since private respondents did not present any new evidence or novel arguments, their motion for reconsideration containing mere reiterations of their original submissions.
• Timely Filing and Compliance: Petitioner contended that its petition was seasonably filed and perfected, and complied with the material data rule.
• Mayor's Authority to Sue: Petitioner argued that the petition was filed in accordance with the powers and duties of a mayor under the Charter of the City of Caloocan and the Local Government Code, and thus needs no authority from the Sanggunian to institute actions or suits on behalf of the city.

• Timeliness of Petition: Respondents claimed the petition was filed out of time.
• Defective Form: Respondents averred that the petition violated the material data rule, was instituted by a non-party (Reynaldo O. Malonzo) rather than the City of Caloocan as indicated by Malonzo's own verification referring to himself as "petitioner," and lacked a City Council resolution authorizing him to file the petition. Respondents also pointed out that petitioner failed to attach a copy of the complaint in Civil Case No. C-18274, which is material and relevant.
• Forum-Shopping and Litis Pendentia Exist: Respondents argued that the Court of Appeals correctly ruled that forum-shopping and litis pendentia exist, because the factual allegations in the three subject cases and even the annexes attached to the complaint are practically one and the same, the principal parties are identical, and the causes of action in C-18337 are both subject of judicial inquiry in C-18274 and C-18308.

• Authority of Mayor to File Suits: Whether a city mayor has the authority to file suits on behalf of the city without prior authorization from the Sanggunian.
• Defective Certification Against Forum-Shopping: Whether the certification against forum-shopping signed by the City Legal Officer, rather than the mayor as principal party, is defective.
• Forum-Shopping / Litis Pendentia: Whether the filing of Civil Cases Nos. C-18308, C-18337, and C-18274 constitutes forum-shopping and litis pendentia warranting the dismissal of Civil Case No. C-18337.

• Authority of Mayor to File Suits: Yes. The mayor has the authority to file suits for the recovery of funds and property on behalf of the city without prior Sanggunian authorization, pursuant to Section 455(b)(3)(ix) of the Local Government Code and Section 9(d) of the Caloocan City Charter.
• Defective Certification Against Forum-Shopping: Yes, the certification is defective. Being the proper party to file such suits, the mayor must sign the certification against forum-shopping, not the City Legal Officer, who is merely counsel and not a party to the case.
• Forum-Shopping / Litis Pendentia: Yes. The three cases involve substantial identity of parties, identity of rights asserted and relief prayed for founded on the same facts, and such identity that any judgment in one would amount to res judicata in the others, satisfying the requisites of litis pendentia and forum-shopping.

• Authority of Mayor to File Suits: Section 455(b)(3)(ix) of the Local Government Code empowers the city mayor to "institute or cause to be instituted administrative or judicial proceedings" for the recovery of funds and property and to cause the city to be defended against all suits. Section 9(d) of the Caloocan City Charter contains a parallel provision. Nowhere in the enumerated powers and duties of the Sanggunian under Section 458 of the Code is there a requirement of prior authorization in favor of the mayor for filing suits on behalf of the city. Civil Cases Nos. C-18308 and C-18337 were filed to preserve and recover city property, squarely within the mayor's statutory authority. The institution of these suits was therefore within the bounds of Malonzo's authority as city mayor.

• Defective Certification Against Forum-Shopping: Since the mayor is the proper party to file suits on behalf of the city, the mayor must necessarily be the one to sign the certification against forum-shopping. The City Legal Officer, despite being an official of the city, was merely its counsel and not a party to the case. The certification signed by the City Legal Officer was therefore defective, and this alone could have warranted dismissal of Civil Case No. C-18337 under Section 5, Rule 7 of the Revised Rules of Civil Procedure.

• Forum-Shopping / Litis Pendentia: Forum-shopping exists where a litigant sues the same party against whom another action for the alleged violation of the same right and enforcement of the same relief is still pending. The requisites of litis pendentia are: (a) identity of parties, or at least such parties representing the same interests; (b) identity of rights asserted and relief prayed for, founded on the same facts; and (c) identity such that any judgment in the pending case would amount to res judicata in the other. The three cases involve the same principal parties—the City of Caloocan and Gotesco—with other parties impleaded merely as nominal parties. Absolute identity of parties is not required; substantial identity suffices. The causes of action in all three cases are based on the same set of facts—the failure to execute an amended deed of sale pursuant to City Ordinance No. 068 and the procedure undertaken in the transfer of ownership of the subject land. The same evidence would sustain the causes of action in each case, and the cases are intimately intertwined such that any judgment in one would amount to res judicata in the others. Filing multiple petitions or complaints constitutes abuse of court processes, degrading the administration of justice and congesting court dockets, and litigants are not excused from the rule on forum-shopping regardless of the nobility of their intentions.

• Forum-Shopping — Forum-shopping exists where a litigant sues the same party against whom another action or actions for the alleged violation of the same right and the enforcement of the same relief is/are still pending. The defense of litis pendentia in one case is a bar to the others, and a final judgment in one would constitute res judicata and cause the dismissal of the rest. Applied here, the Court found that Caloocan City's filing of Civil Cases Nos. C-18308 and C-18337, together with Gotesco's Civil Case No. C-18274, all arising from the same disputed sale, constituted forum-shopping.

• Litis Pendentia — The requisites for litis pendentia are: (a) identity of parties, or at least such parties who represent the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity with respect to the two preceding particulars is such that any judgment rendered in the pending case, regardless of which party is successful, would amount to res judicata in the other. All three requisites were found to concur among the civil cases at bar.

• Substantial Identity of Parties — Absolute identity of parties is not required; it is enough that there is substantial identity of parties. The Court applied this principle to hold that the City of Caloocan and Gotesco Investments, Inc. were the principal parties in all three cases, while the other impleaded parties were merely nominal.

• Authority of City Mayor to Institute Suits — Under Section 455(b)(3)(ix) of the Local Government Code and Section 9(d) of the Caloocan City Charter, the city mayor may institute judicial proceedings for the recovery of funds and property on behalf of the city without prior authorization from the Sanggunian, as no such requirement appears in the enumerated powers of the Sanggunian under Section 458.

• Certification Against Forum-Shopping — Proper Signatory — The certification against forum-shopping must be signed by the principal party under oath, not by counsel. A City Legal Officer, though an official of the city, is merely counsel and not a party to the case; a certification signed by the City Legal Officer instead of the mayor is defective and may warrant dismissal.

• "From the foregoing, it is clear that the mayor has the authority to file suits 'for the recovery of funds and property' on behalf of the city, even without the prior authorization from the Sanggunian." — This passage articulates the ratio decidendi on the mayor's statutory authority to sue on behalf of the city, grounded in both the Local Government Code and the Caloocan City Charter.

• "However, being the proper party to file such suits, the mayor must necessarily be the one to sign the certification against forum-shopping, and not the City Legal Officer, who, despite being an official of the City, was merely its counsel and not a party to the case." — This defines the rule on who must execute the certification against forum-shopping when a local government unit is a party, distinguishing the principal party from counsel.

• "Litigants, no matter how noble their intentions for filing such suits, and no matter their zeal in pursuing their suits, are not excused from the coverage of the rule on forum-shopping." — This statement underscores the mandatory and non-discretionary nature of the forum-shopping rule, frequently cited to emphasize that good faith does not exempt a litigant from compliance.

• Korea Exchange Bank vs. Gonzales, G.R. Nos. 142286-87, 15 April 2005, 456 SCRA 224 — Cited as controlling authority for the definition of forum-shopping and the principle that absolute identity of parties is not required, substantial identity being sufficient. Also cited for the rule that identity of causes of action exists if the same evidence will sustain the second action, even if the relief sought differs.
• Spouses Melo vs. Court of Appeals, G.R. No. 123686, 376 Phil. 204 (1999) — Cited for the three requisites of litis pendentia.
• Wee vs. Galvez, G.R. No. 147394, 11 August 2004, 436 SCRA 96 — Cited for the principle that filing multiple petitions or complaints constitutes abuse of court processes, degrading the administration of justice and congesting court dockets.

• Section 455(b)(3)(ix), Local Government Code (R.A. 7160) — Empowers the city mayor to institute or cause to be instituted administrative or judicial proceedings for violation of ordinances, collection of taxes, fees or charges, recovery of funds and property, and to cause the city to be defended against all suits. Applied to uphold Mayor Malonzo's authority to file Civil Cases Nos. C-18308 and C-18337 without prior Sanggunian authorization.
• Section 458, Local Government Code (R.A. 7160) — Enumerates the powers and duties of the Sangguniang Panlungsod. Cited to show that no requirement of prior authorization for the mayor to file suits appears among the Sanggunian's enumerated powers.
• Section 9(d), Charter of the City of Caloocan (R.A. No. 3278) — Provides that the mayor shall cause judicial proceedings to be instituted to recover property and funds of the city and to protect the interests of the city. Applied as a parallel statutory basis for the mayor's authority to sue.
• Section 5, Rule 7, Revised Rules of Civil Procedure — Provides that failure to comply with the requirements on the certification against forum-shopping shall be cause for dismissal of the case without prejudice. Applied to support the finding that the defective certification signed by the City Legal Officer warranted dismissal.

Leonardo A. Quisumbing (Associate Justice, Chairperson), Antonio T. Carpio (Associate Justice), Conchita Carpio Morales (Associate Justice), and Presbitero J. Velasco, Jr. (Associate Justice) concurred.