Title
Province of Cebu vs. Intermediate Appellate Court
Case
G.R. No. 72841
Decision Date
Jan 29, 1987
Province of Cebu donated 380 hectares to Cebu City; Governor Espina contested, hiring Atty. Garcia. SC upheld P30,000 attorney’s fees for Garcia, citing equity and quantum meruit.
unauthorized services
counsel
donation

Case Summary (G.R. No. 72841)

Factual Background and the Initiation of Litigation

Upon his return, Governor Espina denounced the donation as illegal and immoral, particularly in light of the province’s finances. To prevent the sale or disposition of the lots, officers and members of the Cebu Mayor’s League and taxpayers, including Atty. Garcia, filed a case to declare the donation illegal, null, and void. The complaint alleged that the plaintiffs were filing the action in a derivative suit for and in behalf of the Province of Cebu. The case was docketed as Civil Case No. R-8669 of the CFI of Cebu, Branch VI, with the City of Cebu, City Mayor Sergio Osmena, Jr., and responsible provincial officials named as defendants.

The defendants moved to dismiss on the ground of lack of legal capacity of the plaintiffs. The CFI dismissed the case in May 1965 for failure of the plaintiffs to be real parties in interest. The plaintiffs’ motion for reconsideration was denied. Meanwhile, the City of Cebu proceeded to practical steps to realize the donation’s benefit. Mayor Osmena announced plans to borrow funds from the Philippine National Bank (PNB) and to use the lots as collateral. In July 1965, the City advertised the sale of the remaining unsold lots.

Engagement of Atty. Pablo P. Garcia and the Pursuit of the Case

Fearing irretrievable loss of the lots to the province, Governor Espina decided to go to court and engaged the services of Atty. Pablo P. Garcia to file and prosecute the action for and in behalf of the Province of Cebu. Atty. Garcia filed a complaint for annulment of the deed of donation and sought a writ of preliminary injunction. The application was granted on August 6, 1965. The complaint was amended to implead City Mayor Carlos P. Cuizon as additional defendant after Sergio Osmena, Jr. filed his certificate of candidacy for senator and his position was assumed by Cuizon.

The Provincial Board later passed a resolution authorizing the Provincial Attorney, Alfredo G. Baguia, to appear for the Province of Cebu and for the governor, vice-governor, and members of the Provincial Board in the case. On January 30, 1973, Baguia entered his appearance as additional counsel and as counsel for the indicated provincial officials. Atty. Baguia then filed a complaint in intervention on January 31, 1973, alleging that the intervenors, the Province of Cebu and the Provincial Board, adopted the causes of action and positions earlier stated by the original plaintiff, former Governor Rene Espina.

A compromise agreement between the Province of Cebu and the City of Cebu was reached on June 25, 1974. On July 15, 1974, the court approved the compromise and rendered a decision based on it. On December 4, 1974, the CFI ordered execution to implement the decision, which required, among others, the return and delivery of specified lots to the Province of Cebu and payment of P1,500,000.00 to the City as consideration for the return of the lots, while declaring retention of certain lots by the City and allocating certain monetary turnover, cancellation of city titles, and issuance of new titles to the province.

Attorney’s Lien, Trial Court Ruling, and Issues on Appeal

After the compromise-based decision, Atty. Garcia filed a Notice of Attorney’s Lien on April 14, 1975 in relation to Civil Case No. 238-BC (CFI Cebu), invoking Section 37, Rule 138 of the Rules of Court. The Province of Cebu opposed the lien on April 23, 1975, asserting that payment of attorney’s fees and reimbursement of incidental expenses were not allowed by law and settled jurisprudence to be paid by the province.

After hearing, the CFI, then presided over by Judge Alfredo Marigomen, rendered a judgment dated May 30, 1979 in favor of Atty. Garcia. The trial court declared that Garcia was entitled to recover attorney’s fees on the basis of quantum meruit and fixed the attorney’s fees at P30,000.00. Both parties appealed to the Court of Appeals, but Atty. Garcia limited his appeal to the amount fixed, arguing it should be 30% of the value of the properties involved, consistent with his original claim.

On October 18, 1985, the Intermediate Appellate Court issued a decision affirming the entitlement to attorney’s fees but modifying the amount by fixing it at five percent (5%) of the total fair market value of the lots as of the date of filing of the claim in 1975. The parties thereafter brought the matter to the Supreme Court. Atty. Garcia later withdrew his petition in G.R. No. 72818, leaving only the Province of Cebu’s petition pending.

The Province’s Contentions and the Claimed Statutory Bar

The Province anchored its opposition on two principal grounds. First, it argued that the employment of Atty. Garcia by then Governor Espina was unauthorized and violated provisions of the Revised Administrative Code, specifically Sections 1681 to 1683, in relation to Section 1679. It contended that Governor Espina lacked authority from the Provincial Board to employ Atty. Pablo P. Garcia as counsel for the Province. Second, it asserted that the claim for attorney’s fees was beyond the reach of Section 37, Rule 138 of the Rules of Court.

The Court recounted that the matter of municipal representation by private counsel had been addressed in Ramos v. Court of Appeals (108 SCRA 728), and that collaboration of private law firms with the fiscal and municipal attorney was not allowed. It emphasized that Section 1683 of the Revised Administrative Code mandates representation of a province or municipality by the provincial fiscal in court, subject to limited exceptions, and it treated this as a mandatory framework. Complemented by Section 3 of the Local Autonomy Law, the Court held the statutory regime made government lawyers the proper representatives, with the limited allowance for special counsel occurring only when the provincial fiscal is disqualified.

Equity and the “Impossibility” Exception Applied to Provincial Board Authorization

Despite recognizing the general rule requiring provincial fiscal and municipal attorney representation, the Court sustained the lower courts’ departure from strict application under the exceptional circumstances. It agreed that the provincial board authorization was not in the record as a proper condition for hiring a private counsel. Yet it held that the realities of the dispute made strict compliance unworkable. The Court explained that the controversy was an intramural fight within the provincial government—between the provincial governor on one hand and the members of the Provincial Board on the other. It found it unthinkable that the Provincial Board would pass a resolution authorizing the Governor to hire counsel to sue the Board members themselves.

The Court further reasoned that under Section 2102 of the Revised Administrative Code, authority to direct, in its discretion, the bringing or defense of civil suits on behalf of the provincial governor rested with the Provincial Board. Since the Board members were the very persons against whom the suit would be directed, they could not be expected to direct the provincial fiscal to file the action against themselves. The Court also noted the risk of frustration by refusal to appropriate funds or by directing dismissal. It treated this as a situation where the law’s normal machinery could not function, invoking the maxim nemo tenetur ad impossibile—the law obliges no one to perform an impossibility.

Accordingly, the Court accepted that strict application would deprive the plaintiffs of any practical remedy for a grievance. It characterized the departure from the established rule as grounded in equity, a correction applied to avoid an unjust or impossible result when the general statutory provisions did not contemplate the specific internal conflict.

Authority to Sue, Presumed Employment, and Ratification by Conduct

The Court addressed the Province’s argument that Garcia’s employment was unauthorized and therefore should defeat his recovery. It reiterated the general rule that an attorney cannot recover fees from one who did not employ him or authorize his employment. However, it identified exceptions to that rule and found those exceptions applicable.

First, it held that unless the contrary is clearly shown, an attorney is presumed to be acting under authority of the litigant he purports to represent, citing Azotes v. Blanco (78 Phil. 739). It further held that representation was not questioned in the lower court, so on appeal the presumption stands that counsel was properly authorized to file the complaint and appear for his client, citing Republic v. Philippine Resources Development Corporation (102 Phil. 960).

Second, the Court held that even if an attorney was employed by an unauthorized person, the client would still be bound where it had knowledge of the representation and failed to repudiate it promptly. It treated acquiescence as tantamount to ratification, citing Tan Lua v. O’Brien (55 Phil. 53). It found that the successor provincial board and officials allowed Garcia to continue and even joined him in the suit, supporting Garcia’s belief that his services remained necessary and that the Province effectively accepted the representation.

Implied Municipal Liability and Estoppel from Denying Validity After Accepting Benefits

The Court also addressed the Province’s broader effort to avoid liability on the theory that the underlying arrangement was ultra vires. It invoked a doctrine in municipal corporations law that a municipality may become obligated upon an implied contract to pay the reasonable value of benefits accepted or appropriated under circumstances where justice requires payment. It explained that implied municipal liability rests on considerations outside the unlawful contract, and that the measure of recovery is the benefit received, not the price named in the invalid contract. It cited 38 Am. Jur. Sec. 515, p. 193 for the articulated principles.

The Court then applied estoppel. It held that the Province could not

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