G.R. No. L-17115 - Guevarra vs. Gimenez

Case Summary (G.R. No. L-17115)

Factual Background

Around September 1, 1959, Miguel Cuaderno, then Governor of the Central Bank, acting for the Central Bank, asked Guevara to cooperate with the Central Bank’s legal counsel in defending the Central Bank and its Monetary Board in Civil Case No. 41226. That suit was an action for certiorari, mandamus, quo warrant and damages filed by R. Marino Corpus, and it sought damages in the amount of P574,000 against individual members of the Monetary Board and the Governor of the Central Bank.

Guevara entered his appearance as counsel and argued, verbally and in writing, during multiple scheduled dates in 1959, 1960, and before the case’s eventual dismissal. He also submitted a Motion to Dismiss and related filings, including an amended motion and rejoinder materials. The Central Bank’s Monetary Board, through Resolution No. 1283 dated September 8, 1959, designated Guevara to collaborate with the Central Bank’s legal counsel and authorized the Governor to arrange the fee terms.

Guevara submitted his proposal through a letter dated September 11, 1959, offering a retainer’s fee of P10,000 plus a per diem of P300 for every hearing or trial, with an additional P5,000 in case of appeal to the Supreme Court. The Governor accepted the proposal effective as of the entry of Guevara’s appearance on September 1, 1959. The Court of First Instance of Manila dismissed Civil Case No. 41226 on June 14, 1960, upon motion by respondents, represented by Guevara.

Before that dismissal, Guevara had billed the Central Bank for the retainer fee on January 10, 1960, for P10,000. The Central Bank’s auditor sought advice from the Auditor General. In a communication dated June 10, 1960, the Auditor General stated he would not object to the retainer’s fee of P10,000 so long as payment was not made in a lump sum and instead proceeded in installments. The proposed schedule was P3,000 after filing the answer to the petition; P3,000 after decision by the Court of First Instance; P2,000 after filing briefs in case of appeal; and P2,000 when the case was finally terminated, with the understanding that if there was no appeal, the balance would be paid in full.

As to the P300 per diem, however, the Auditor General expressed the view that it was excessive and may not be allowed in audit. Because Guevara’s services included eleven (11) hearings, his per diem aggregated P3,300. Guevara thus filed the present mandamus action on July 6, 1960 to compel approval of both the retainer fee and the per diem for the hearings he attended.

Respondents’ Answer and Allegations

In their answer, respondents alleged that P6,000 had already been paid on account of the retainer fee. They also impugned the legality of Guevara’s contract with the Central Bank, asserting that the Central Bank lacked authority to enter into the fee arrangement and that the Monetary Board lacked power to confirm it. Respondents maintained that the Central Bank and Monetary Board were represented in Civil Case No. 41226 by their legal staff, and they further invoked the existence of government corporate counsel and the rule that authority to engage special counsel for the Republic of the Philippines vested, under Section 1664 of the Revised Administrative Code, in the Solicitor General, with the approval of the Secretary of Justice.

Respondents additionally argued that Guevara should have appealed from the Auditor General’s action rather than resorting to mandamus.

Court’s Assessment of the Defenses

The Court observed that two defenses advanced by respondents were inconsistent. Respondents attacked the legality of the contract while simultaneously asserting that part of the retainer fee, P6,000, had already been paid. The Court treated that payment as a partial performance that could not have occurred without approval of respondents and their authorized representatives, and it therefore amounted to an implied admission of the contract’s legality.

The Court further noted that respondents’ position echoed, with only limited qualification, the Auditor General’s earlier communication dated June 10, 1960, which stated no objection to the P10,000 retainer fee if paid in installments, while only disputing the P300 per diem on the ground of excessiveness.

Authority to Engage Counsel and Fee Reasonableness

Respondents relied on Section 1664 of the Revised Administrative Code to argue that the Central Bank could not lawfully engage special counsel without compliance with the authority of the Solicitor General. The Court rejected the argument by focusing on the nature and designation of Guevara’s engagement.

The Court recognized that, well before suit was resolved, the then Secretary of Justice, Hon. Pedro Tuason, had issued an opinion upholding the Central Bank’s inherent power to employ attorneys and pay them reasonable compensation. The Secretary of Justice reasoned that the limitation contained in Section 1686 for compensation of special counsel appointed under that section applied to fees payable by the Department of Justice or other branches of the Government, not to the Central Bank. The Secretary of Justice further treated the Central Bank as enjoying a distinct personality with the right to sue and be sued, making it comparable to a private party not bound by that statutory restriction on attorney compensation. The Secretary of Justice stated that even if the Secretary of Justice appointed such lawyers, it did not alter the Central Bank’s inherent power to employ attorneys for compensation the Monetary Board might deem reasonable.

The Court also treated the cases invoked by respondents—Angara vs. Gorospe and Enriquez vs. Auditor General—as inapposite because they involved local government officials or municipal corporations governed by the Revised Administrative Code provisions at issue, unlike the Central Bank, which was governed by a special charter.

Applicability of Section 1664

The Court analyzed Section 1664 and held it inapplicable to the arrangement at issue. Section 1664 concerned attorneys retained in the name of the Government of the Republic of the Philippines, and who were necessary to assist the Solicitor General in the discharge of official duties. The Court found that Guevara had been retained in the name of the Central Bank, a personality distinct and separate from the Republic of the Philippines. The Court further found that Guevara did not appear in Civil Case No. 41226 as representative of the Solicitor General, and that the Solicitor General did not participate or intervene in the case at all. Consequently, Guevara’s engagement was not for the purpose of assisting the Solicitor General, and the statutory condition described in Section 1664 did not govern the fee arrangement.

Remedy of Mandamus and the Auditor General’s Ministerial Duty

Respondents contended that Guevara’s remedy was to appeal rather than file mandamus. The Court held otherwise, emphasizing the character of the Auditor General’s role when the relevant conditions for payment are established. Where a contract is made by a government agency through its proper officer acting within authority, and where there is a legal appropriation to cover the disbursement, and where delivery or rendition of services has been attested to, the Auditor General has a duty enforceable by mandamus to approve and pass in audit vouchers for the disbursement issued by the proper agency officer. The Court cited Radiowealth vs. Agregado, Tan C. Tee & Co. vs. Wright, and Inchausti & Co. vs. Wright in support.

The Court anchored this duty in Article XI, Section 2, describing the Auditor General’s function as limited to auditing government expenditures of funds or property pertaining to, or held in trust by, the government or its political subdivisions. The audit necessarily involves determining whether there is a law appropriating funds for the purpose, whether the contract conformed to the appropriation law, whether the goods or services were delivered or rendered pursuant to the contract and attested by the proper officer, and whether payment was authorized by the responsible officials.

When those requirements were fulfilled, the Court held that the Auditor General could not refuse approval on grounds of unwise contracting or unreasonable amount. The Court stated that the Auditor General’s corrective function did not extend to disapproval it

Case Syllabus (G.R. No. L-17115)

The case involved an original action for mandamus to compel respondents, Pedro M. Gimenez as Auditor General of the Philippines and Ismael Mathay as Auditor of the Central Bank, to approve and pass in audit two bills of petitioner Guillermo B. Guevara for professional services rendered to the Central Bank.
The Court granted the writ and ordered respondents to pass in audit and approve payment of the amounts claimed by petitioner, subject to deducting P6,000 already collected by him.
The controversy centered on the legality and audit approval of petitioner’s compensation arrangement with the Central Bank for his legal services in Civil Case No. 41226.

Parties and Procedural Posture

Petitioner Guillermo B. Guevara filed an original action for mandamus on July 6, 1960 against the Auditor General and the Central Bank Auditor.
Respondents challenged both the legality of petitioner’s contract with the Central Bank and the propriety of mandamus as a remedy.
The Court treated the petition as an appropriate means to enforce the Auditor General’s duty to approve and pass in audit where the constitutional and factual conditions for ministerial approval were met.

Key Factual Allegations

The Central Bank’s then Governor Miguel Cuaderno asked petitioner, a practicing lawyer, to cooperate with the Central Bank’s legal counsel in defending the Central Bank and its Monetary Board in Civil Case No. 41226, an action for certiorari, mandamus, quo warrant and damages filed by R. Marino Corpus.
Petitioner entered his appearance as counsel for the respondents in Civil Case No. 41226 and argued the matter on specified dates in 1959, 1960, and submitted multiple pleadings, including motions to dismiss, a rejoinder, and additional legal arguments.
The Central Bank’s Monetary Board Resolution No. 1283 authorized the Governor to designate petitioner as counsel to collaborate with the Central Bank’s legal counsel and to arrange petitioner’s fee with the amount to be charged for handling the case.
Petitioner proposed fees consisting of a retainer’s fee of P10,000 and a per diem of P300 for every hearing or trial, with an additional fee of P5,000 in case of appeal to the Supreme Court.
The Governor accepted the proposal as to the retainer and per diem effective as of petitioner’s entry of appearance on September 1, 1959.
The trial court dismissed Civil Case No. 41226 on June 14, 1960, on motion of the respondents represented by petitioner.
Petitioner sent the Central Bank his bill for the retainer’s fee of P10,000 on January 10, 1960.
The Auditor General communicated on June 10, 1960 that he would not object to the P10,000 retainer if paid not in lump sum, but in installments keyed to milestones in the case, with the remaining balance to be paid fully if no appeal followed.
The Auditor General expressed that the P300 per diem was excessive and “may not be allowed in audit,” which led to the mandamus petition.
Petitioner sought audit approval for the retainer fee of P10,000 and a per diem aggregating P3,300 corresponding to eleven (11) hearings he attended.
Respondents alleged that P6,000 had already been paid on account of the retainer fee and they disputed the legality and audit approval of the remaining amounts claimed.

Contract Legality Dispute

Respondents alleged that the Central Bank had no authority to enter into petitioner’s compensation contract and that the Monetary Board lacked power to confirm it.
Respondents further claimed that the Central Bank’s legal staff already represented both the Central Bank and its Monetary Board in Civil Case No. 41226, and that the Government had its corporate counsel.
Respondents argued that, pursuant to section 1664 of the Revised Administrative Code, the authority to engage special counsel for the Republic of the Philippines was vested in the Solicitor General with approval of the Secretary of Justice.
The Court noted that respondents’ defenses were inconsistent because they both assailed the legality of the contract and admitted, through their answer, that P6,000 had already been paid under the retainer arrangement.
The Court treated the prior payment of P6,000 and respondents’ reliance on it in their pleadings as an implied admission of the contract’s legality.
The Court also emphasized that the Auditor General’s June 10, 1960 communication objected only to the mode of payment for the retainer fee and questioned only the excessiveness of the per diem.

Applicability of Section 1664

The Court addressed respondents’ reliance on section 1664 of the Revised Administrative Code, which allows the Solicitor General, upon opinion that public interest requires it and with approval of the Department Head, to employ attorneys in the name of the Government of the Republic of the Philippines for duties he discharges.
The Court held that the petitioner’s services did not fall under the category contemplated by section 1664 because petitioner was retained in the name of the Ce