This case clarifies that a lawyer who is also a member of a local legislative body (sanggunian) is prohibited from acting as counsel against government instrumentalities, including government-owned or controlled corporations. The Supreme Court emphasized that the Local Government Code and the Administrative Code of 1987 are clear: the term “instrumentality” includes government-owned or controlled corporations. This ruling ensures that local officials avoid conflicts of interest and uphold their duty to the government.

When Can a Local Legislator Represent a Client Against a Government Corporation?

The Republic of the Philippines, represented by the National Power Corporation (NPC), sought to disqualify Atty. Richard B. Rambuyong from representing a client in a case against NPC. Atty. Rambuyong was, at the time, the incumbent Vice-Mayor of Ipil, Zamboanga Sibugay. NPC argued that Section 90(b)(1) of the Local Government Code (RA 7160) prohibits sanggunian members from appearing as counsel against any office, agency, or instrumentality of the government, and that NPC, as a government-owned or controlled corporation, fell under this prohibition. The central legal question was whether NPC could be considered an “instrumentality” of the government, thereby disqualifying Atty. Rambuyong from representing the opposing party.

The Regional Trial Court (RTC) initially ruled that government-owned or controlled corporations were expressly excluded from the prohibition in Section 90(b)(1) of the Local Government Code. However, the Court of Appeals (CA) dismissed NPC’s petition, stating that the trial judge had not acted with grave abuse of discretion. Dissatisfied, NPC elevated the matter to the Supreme Court, arguing that both the Local Government Code and the 1987 Administrative Code require Atty. Rambuyong to inhibit himself from acting as counsel against NPC. The Supreme Court then examined the relevant provisions of law and jurisprudence to determine whether NPC should be considered an instrumentality of the government for purposes of the prohibition in the Local Government Code.

The Supreme Court emphasized the importance of statutory interpretation, citing Aparri v. Court of Appeals, which states that if the words of a statute are not obscure or ambiguous, their meaning must be determined from the language employed. Here, Section 2 of the Administrative Code of 1987 defines “agency of the Government” as including “any of the various units of the Government, including a department, bureau, office, instrumentality, or government-owned or controlled corporations, or a local government or a distinct unit therein.” The same section defines “instrumentality” as including “regulatory agencies, chartered institutions and government-owned or controlled corporations.”

Sec. 2. General Terms Defined. — Unless the specific words of the text, or the context as a whole, or a particular statute, shall require a different meaning:
(10) Instrumentality — refers to any agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. This term includes regulatory agencies, chartered institutions and government-owned or controlled corporations.

The Court found that the Administrative Code of 1987 is clear and unambiguous in including government-owned or controlled corporations within the definition of “instrumentality.” It then cited Maceda v. Macaraig, Jr., which explicitly stated that the NPC is a government instrumentality. Given the clarity of both the law and jurisprudence, the Supreme Court held that the RTC had committed grave abuse of discretion in interpreting the law in a way that excluded government-owned or controlled corporations from the definition of “instrumentality of the government.” This interpretation ran contrary to the plain language of the statute and existing case law.

Furthermore, the Supreme Court defined grave abuse of discretion as “such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction.” It emphasized that a strained and contrary interpretation of clearly worded provisions of law constitutes an earmark of despotism and grave abuse of discretion. The Court emphasized that Section 446 of the Local Government Code provides that the sanggunian bayan is the legislative body of the municipality, with the municipal vice mayor as the presiding officer. As such, Atty. Rambuyong, as a sanggunian member, was prohibited by Section 90(b)(1) of the Local Government Code from appearing as counsel of a party adverse to the NPC.

FAQs

What was the key issue in this case?	The central issue was whether the National Power Corporation (NPC), as a government-owned or controlled corporation, is considered an “instrumentality” of the government under Section 90(b)(1) of the Local Government Code. This determination was crucial in deciding whether Atty. Rambuyong, a sanggunian member, was prohibited from representing a client against NPC.
What does Section 90(b)(1) of the Local Government Code prohibit?	Section 90(b)(1) of the Local Government Code prohibits sanggunian members who are also members of the Bar from appearing as counsel before any court in any civil case wherein a local government unit or any office, agency, or instrumentality of the government is the adverse party.
How does the Administrative Code of 1987 define “instrumentality”?	The Administrative Code of 1987 defines “instrumentality” as any agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter, including government-owned or controlled corporations.
What was the Supreme Court’s ruling in this case?	The Supreme Court ruled that the NPC is indeed an “instrumentality” of the government, and therefore, Atty. Rambuyong, as a sanggunian member, was disqualified from appearing as counsel for the plaintiff in the case against NPC. The Court reversed the decisions of the Court of Appeals and the Regional Trial Court.
What is the significance of the Maceda v. Macaraig, Jr. case in this context?	The Maceda v. Macaraig, Jr. case explicitly stated that the NPC is a government instrumentality, reinforcing the Supreme Court’s interpretation of the law in the present case. This prior ruling provided a strong precedent for the Court’s decision.
What constitutes “grave abuse of discretion”?	“Grave abuse of discretion” is defined as such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. It also includes an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law.
Why is it important for sanggunian members to avoid representing interests adverse to the government?	It is crucial for sanggunian members to avoid representing interests adverse to the government to prevent conflicts of interest and uphold their duty to the public. This ensures that their decisions and actions are not influenced by personal or private interests that may be contrary to the interests of the government and the people they serve.
What is the effect of this ruling on other government-owned or controlled corporations?	This ruling reinforces the principle that government-owned or controlled corporations are considered instrumentalities of the government. Thus, the prohibition against sanggunian members acting as counsel against government instrumentalities extends to all such corporations, ensuring consistency in the application of the law.

In conclusion, the Supreme Court’s decision in this case provides a clear interpretation of the Local Government Code and the Administrative Code of 1987, emphasizing that government-owned or controlled corporations are considered instrumentalities of the government. This ruling serves to prevent conflicts of interest and ensure that local government officials uphold their duty to the government.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: REPUBLIC OF THE PHILIPPINES vs. ATTY. RICHARD B. RAMBUYONG, G.R. No. 167810, October 04, 2010