G.R. No. L-38579 - Dioquino vs. Cruz

On February 4, 1964, while Governor Rene Espina was on official business in Manila, Vice-Governor Priscillano Almendras and three members of the Provincial Board of Cebu enacted Resolution No. 188 donating 210 provincial-owned lots (totaling over 380 hectares) to the City of Cebu.
The Vice-Governor was authorized to sign the deed of donation on behalf of the Province, and the document was prepared and notarized by a private lawyer.
The donation was approved by the Office of the President through Executive Secretary Juan Cancio and was contingent upon raising funds for the City’s public improvement projects by selling the donated lots within one year from August 15, 1964.

Upon his return, Governor Espina denounced the donation as illegal and immoral, arguing that it involved practically all the patrimonial property of the province when its income was significantly lower than that of the City of Cebu.
In response to fears that the lots would be disposed of, officers of the Cebu Mayor’s League and several taxpayers, including Atty. Pablo P. Garcia, initiated a case seeking to have the donation declared illegal and void, alleging that the suit was brought in a derivative capacity on behalf of the Province.
The case was docketed as Civil Case No. R-8669 in the Court of First Instance of Cebu, Branch VI, where the City of Cebu and Mayor Sergio Osmena, Jr. moved to dismiss the suit on the basis that the plaintiffs lacked legal capacity, resulting in the eventual dismissal of the case in May 1965.

With the City of Cebu moving ahead to sell the unsold lots—advertised in July 1965—and facing imminent loss of property, Governor Espina engaged Atty. Pablo P. Garcia to file and prosecute a separate complaint for the annulment of the deed of donation, accompanied by an application for a writ of preliminary injunction granted on August 6, 1965.
As litigation progressed, the complaint was amended to include Cebu City Mayor Carlos P. Cuizon, following developments such as Sergio Osmena, Jr.’s candidacy filing for the Senate.
In 1972 and again in 1973, the Provincial Board and subsequently the Provincial Attorney, Alfredo G. Baguia, joined the suit, representing not only the Province of Cebu but also Governor Espina and other provincial officials.

A compromise agreement between the province and the City of Cebu was reached on June 25, 1974, and approved by the court on July 15, 1974.
The court’s order under the compromise mandated:

The return of the unsold lots to the Province.
A payment by the Province to the City for the returned properties.
Specific retained lots by the City and cancellation of certain certification of titles, among other reliefs.

The dispute on the disposition of the properties thus set the stage for further litigation and claims regarding the legal expenses incurred.

For his legal services in Civil Case No. 238-BC, Atty. Garcia filed a Notice of Attorney’s Lien on April 14, 1975, claiming compensation based on quantum meruit.
The Province of Cebu opposed the claim, arguing that attorney’s fees and reimbursement of incidental expenses were not recoverable by law and settled jurisprudence.
After a series of motions, hearings, and appeals, the Court of First Instance (presided by Judge Alfredo Marigomen) rendered a judgment on May 30, 1979, awarding Atty. Garcia P30,000.00 and P289.43 in expenses.

Both parties appealed from the trial decision; however, Atty. Garcia appealed only from the portion fixing his fees at P30,000.00 instead of 30% of the properties’ market value.
The Intermediate Appellate Court, on October 18, 1985, affirmed the trial court’s findings but modified the award by fixing the fee at 5% of the market value of the involved properties as of the filing date in 1975.
Subsequently, Atty. Garcia withdrew his petition to further contest the fee percentage, leaving the Province of Cebu’s appeal pending before the Supreme Court.
The case also involved contentious issues regarding the employment of a private attorney in representing a government entity, raising questions about the authority of Governor Espina and the applicability of Sections 1681-1683 of the Revised Administrative Code and Section 37, Rule 138 of the Rules of Court.

Whether Governor Espina was authorized to engage Atty. Garcia as counsel for the Province of Cebu, considering that the Provincial Board—the natural and proper representative body—was a litigant in the case.
Whether the circumstances of an intramural dispute within the provincial government justified the employment of a private attorney when the statutory rule mandates representation by the provincial fiscal or municipal attorney.

Whether Atty. Garcia is entitled to recover attorney’s fees on a quantum meruit basis despite the fact that his employment was, strictly speaking, unauthorized given the provisions of the Revised Administrative Code.
The appropriateness of fixing attorney’s fees at 5% of the market value of the properties versus the originally claimed 30% or an award based on actual services rendered as determined by the trial court.

Whether the doctrine of implied municipal liability can be invoked to bind the Province in the payment of legal fees, given that the Province benefited from the services rendered by Atty. Garcia.
Whether exceptions to the strict statutory scheme on local government representation should apply in a situation where the Provincial Board’s conflict of interest made it impossible for them to formalize the employment of the provincial fiscal.