PROVINCE OF CEBU, PETITIONER, VS. HONORABLE INTERMEDIATE APPELLATE COURT AND ATTY. PABLO P. GARCIA, RESPONDENTS.

This is a petition to review the decision of the respondent
Intermediate Appellate Court in A.C. G.R. CV No. 66502 entitled
“Governor Rene Espina, et. al. v. Mayor Sergio Osmena, Jr., et. al., Atty.
Pablo P. Garcia v. Province of Cebu“^[1] affirming with modification the order of
the Court of First Instance of Cebu, Branch VII,
granting respondent Pablo P. Garcia’s claim for compensation for
services rendered as counsel in behalf of the respondent Province of Cebu.

The facts of the case are not in dispute.  On
February 4, 1964, while then incumbent Governor Rene Espina was on official business in Manila, the
Vice-Governor, Priscillano Almendras and three (3) members of the Provincial Board
enacted Resolution No. 188, donating to the City of Cebu 210 province-owned lots all located in the City of
Cebu, with an aggregate area of over 380 hectares, and
authorizing the Vice-Governor to sign the deed of donation on
behalf of the province.  The deed of donation was immediately
executed in behalf of the Province of
Cebu by
Vice-Governor Almendras and accepted in behalf of the
City of Cebu by Mayor Sergio Osmena, Jr.  The document of donation was
prepared and notarized by a private lawyer.  The donation was later
approved by the Office of the President through Executive Secretary Juan Cancio.

According to the questioned deed of donation the lots donated were
to be sold by the City of Cebu to raise funds that would be
used to finance its public improvement projects.  The City of
Cebu was
given a period of one (1) year from August 15, 1964 within which to dispose of the donated
lots.

Upon his return from Manila, Governor Espina denounced as illegal and immoral the action of his
colleagues in donating practically all the patrimonial property of the province
of Cebu, considering that the latter’s income was less
than one-fourth (¼) of that of the City of Cebu.

To prevent the sale or disposition of the lots, the officers and
members of the Cebu Mayor’s League (in behalf of their
respective municipalities) along with some taxpayers, including Atty. Garcia,
filed a case seeking to have the donation declared illegal, null, and
void.  It was alleged in the complaint that the plaintiffs were
filing it for and in behalf of the
Province of Cebu in the nature of a
derivative suit.  Named defendants in the suit were the City of
Cebu, City
Mayor Sergio Osmena, Jr. and the Cebu provincial officials responsible for the
donation of the province-owned lots.  The case was docketed as
Civil Case No. R-8669 of the Court of First Instance of Cebu and assigned to Branch VI thereof.

Defendants
City of Cebu and City Mayor Osmena, Jr. filed a motion to dismiss the case on the ground
that plaintiffs did not have the legal capacity to sue.

Subsequently, in an order, dated May, 1965, the court dismissed
Case No. R-8669 on the ground that plaintiffs were not the
real parties in interest in the case.  Plaintiffs filed a
motion for reconsideration of the order of dismissal.  This motion
was denied by the Court.

Meanwhile, Cebu City Mayor Sergio Osmena, Jr. announced that he would borrow funds from the
Philippine National Bank (PNB) and would use the donated lots as
collaterals.  In July, 1965, the City of
Cebu
advertised the sale of all the lots remaining unsold. 
Thereupon, Governor Espina,
apprehensive that the lots would be irretrievably lost by the
Province of
Cebu,
decided to go to court.  He engaged the services of
respondent Garcia in filing and prosecuting the case in his behalf and in behalf
of the Province of
Cebu.

Garcia filed the complaint for the annulment of the deed of
donation with an application for the issuance of a writ of preliminary
injunction, which application was granted on the same day, August 6, 1965.

The complaint was later amended to implead Cebu City Mayor Carlos P.
Cuizon as additional defendant in view of Fiscal Numeriano Capangpangan’s
manifestation stating that on September
9, 1965, Sergio Osmena, Jr. filed his
certificate of candidacy for senator, his position/office having been assumed by
City Mayor Carlos P. Cuizon.

Sometime in 1972, the Provincial Board passed a
resolution authorizing the Provincial Attorney, Alfredo G. Baguia, to enter his appearance for the
Province of Cebu and for the incumbent
Governor, Vice-Governor and members of the Provincial Board in this case.

On January 30,
1973, Alfredo G. Baguia, Provincial
Attorney of the Province of
Cebu,
entered his appearance as additional counsel for the
Province of Cebu and as counsel for Governor
Osmundo Rama, Vice-Governor
Salutario Fernandez and Board Members Leonardo Enad, Guillermo Legazpi, and Rizalina Migallos.

On January 31,
1973, Atty. Baguia filed a complaint in
intervention stating that intervenors
Province of Cebu and Provincial Board of Cebu were joining or uniting with original plaintiff, former
Governor of Cebu, Rene Espina.  They adopted his causes of action,
claims, and position stated in the original complaint filed before the court on
August 6, 1965.

On June 25,
1974, a compromise agreement was reached between the
province of Cebu and the city of
Cebu.  On July 15, 1974, the court approved the
compromise agreement and a decision was rendered on its basis.

On December 4,
1974, the court issued an order directing the issuance of a writ of
execution to implement the decision dated July 15, 1974, to wit:

“1.  Ordering the City of
Cebu to
return and deliver to the Province of
Cebu all
the lots enumerated in the second paragraph hereof;

“2.  Ordering the Province of Cebu to pay the amount of One Million Five Hundred Thousand
Pesos (P1,500,000.00) to the City of Cebu for
and in consideration of the return by the latter to the former of the
aforesaid lots;

“3.  Declaring the retention by the City of Cebu of the eleven (11) lots mentioned in paragraph No. 1 of
the compromise agreement, namely, Lot Nos. 1141, 1261, 1268, 1269, 1272, 1273,
917, 646-A, 646-A-4-0 and 10107-C;

“4.  Ordering the City of Cebu or the City Treasurer to turn over to the Province of
Cebu the amount of P187,948.93 mentioned in Annex “A”
of the defendants manifestation dated October 21, 1974;

“5.  Declaring the City of Cebu and all its present and past officers completely free
from liabilities to third persons in connection with the aforementioned lots,
which liabilities if any, shall be assumed by the Province of Cebu;

“6.  Ordering the Register of Deeds of the City of
Cebu to cancel the certification of titles in the name
of the City of Cebu covering the lots enumerated in
the second paragraph of this order and to issue new ones in lieu thereof in the
name of the Province of Cebu.”

For services rendered in Civil Case No. 238-BC, CFI of Cebu, respondent Pablo P. Garcia filed through counsel a
Notice of Attorney’s Lien, dated April
14, 1975, praying that his statement of claim of attorney’s lien in
said case be entered upon the records thereof, pursuant to Section 37, Rule 138
of the Rules of Court.

To said notice,
petitioner
Province of Cebu filed through counsel, its opposition dated
April 23, 1975, stating that
the payment of attorney’s fees and reimbursement of incidental expenses are not
allowed by law and settled jurisprudence to be paid by the Province. 
A rejoinder to this opposition was filed by private respondent
Garcia.

After hearing, the Court of First Instance of Cebu, then presided over by Judge Alfredo Marigomen, rendered judgment dated May 30, 1979, in favor of private respondent and
against petitioner
Province of Cebu, declaring that the former is entitled to
recover attorney’s fees on the basis of quantum meruit and fixing the
amount thereof at P30,000.00.

Both parties appealed from the decision to the Court of
Appeals.  In the case of private respondent, however, he appealed
only from that portion of the decision which fixed his attorney’s fees at
P30,000.00 instead of at 30% of the value of the
properties involved in the litigation as stated in his original claim.

On October 18, 1985, the Intermediate Appellate Court rendered a
decision affirming the findings and conclusions of the trial court that the
private respondent is entitled to recover attorney’s fees but fixing the amount
of such fees at 5% of the market value of the properties involved in the
litigation as of the date of the filing of the claim in 1975.  The
dispositive portion of the decision reads:

“WHEREFORE, except for the aforementioned modication that the compensation for the services rendered
by the Claimant Atty. Pablo P. Garcia is fixed at five percent (5%) of the total
fair market value of the lots in question, the order appealed from
is hereby affirmed in all other respects.”

Both parties went to the Supreme Court with private respondent
questioning the fixing of his attorney’s fees at 5% instead of 30% of the value
of the properties in litigations as prayed for in his claims. However, the
private respondent later withdrew his petition in G.R. No. 72818 with the
following explanation:

“That after a long and serious reflection and reassessment of his
position and intended course of action and, after seeking the views of his
friends, petitioner has come to the definite conclusion that prosecuting his
appeal would only result in further delay in the final disposition of his claim
(it has been pending for the last 10 years — 4 in the CFI and 6 in the Court of
Appeals, later Intermediate Appellate Court) and that it would be more prudent
and practicable to accept in full the decision of the Intermediate Appellate
Court.”

Hence, only the petition of the
Province of Cebu is pending before this
Court.

The matter of representation of a municipality by a private
attorney has been settled in Ramos v. Court of Appeals (108 SCRA
728).  Collaboration of a private law firm with the fiscal and the
municipal attorney is not allowed.  Section 1683 of the Revised
Administrative Code provides:

“Section 1683.  Duty of fiscal to represent provinces and provincial subdivisions in
litigation.  — The provincial fiscal shall represent the
province and any municipality, or municipal district thereof in any court,
except in cases whereof original jurisdiction is vested in the Supreme Court or
in cases where the municipality, or municipal district
in question is a party adverse to the provincial government or to some other
municipality, or municipal district in the same province.  When the
interests of a provincial government and of any political division thereof are
opposed, the provincial fiscal shall act on behalf of the province.

“When the provincial fiscal is disqualified to serve any
municipality or other political subdivision of a province, a special attorney
may be employed by its council.”

The above provision, complemented by Section 3 of the Local
Autonomy Law, is clear in providing that only the provincial fiscal and the
municipal attorney can represent a province or municipality in its
lawsuits.  The provision is mandatory.  The
municipality’s authority to employ a private lawyer is expressly
limited only to situations where the provincial fiscal is
disqualified to represent it (De Guia v. The Auditor
General, 44 SCRA 169; Municipality of Bocaue, et al.
v. Manotok, 93 Phil. 173; Enriquez, Sr., v. Honorable Gimenez, 107
Phil. 932) as when he represents the province against a
municipality.

The lawmaker, in requiring that the local government should be
represented in its court cases by a government lawyer, like its municipal
attorney and the provincial fiscal, intended that the local government should
not be burdened with the expenses of hiring a private lawyer.  The
lawmaker also assumed that the interests of the municipal corporation would be
best protected if a government lawyer handles its litigations.  It
is to be expected that the municipal attorney and the fiscal would be faithful
and dedicated to the corporation’s interests, and that, as civil service
employees, they could be held accountable for any misconduct or dereliction of
duty (See Ramos v. Court of Appeals, supra).

However, every rule is not without an exception, Ibi quid generaliter conceditur; inest haec exceptio, si non aliquid sit contra jus
fasque (Where anything is granted generally, this exception is
implied; that nothing shall he contrary to law and right). 
Indeed, equity, as well as the exceptional situation facing us in the
case at bar, require a departure from the established
rule.

The petitioner anchors its opposition to private respondent’s
claim for compensation on the grounds that the employment of claimant as counsel
for the Province of Cebu by then Governor Rene Espina was unauthorized and violative of Section 1681 to 1683 in relation to Section
1679 of the Revised Administrative Code and that the claim for attorney’s fees
is beyond the purview of Section 37, Rule 138 of the Rules of Court.

It is argued that Governor Espina was
not authorized by the Provincial Board, through a board resolution, to employ
Atty. Pablo P. Garcia as counsel of the
Province of Cebu.

Admittedly, this is so.

However, the circumstances obtaining in the case at bar are such
that the rule cannot be applied.  The Provincial Board would never
have given such authorization.  The decision of the respondent
court elucidates the matter thus:

“xxx The provisions of Sections 1681 to 1683 of the Revised
Administrative Code contemplate a normal situation where the adverse party of
the province is a third person as in the case of Enriquez v.
Auditor General, 107 Phil. 932.  In the present case, the
controversy involved an intramural fight between the Provincial
Governor on one hand and the members of the Provincial Board on the other
hand.  Obviously it is unthinkable for the Provincial Board to
adopt a resolution authorizing the Governor to employ Atty. Garcia to act as
counsel for the Province of Cebu for the purpose of
filing and prosecuting a case against the members to the same Provincial
Board.  According to the claimant Atty. Garcia, how can Governor
Espina be expected to secure
authority from the Provincial Board to employ claimant as counsel for the
Province of Cebu when the very officials
from whom authority is to be sought are the same officials to be sued. 
It is simply impossible that the Vice-Governor and the
members of the Provincial Board would pass a resolution
authorizing Governor Espina to hire a lawyer to file a
suit against themselves.

xxx

xxx

xxx

“Under Section 2102 of the Revised Administrative Code it is the
Provincial Board upon whom is vested the authority ‘to
direct, in its discretion, the bringing or defense of civil suits on behalf of
the Provincial Governor _____’.  Considering that the members of
the Provincial Board are the very ones involved in this case, they cannot be
expected to direct the Provincial Fiscal the filing of the suit on behalf of the
provincial government against themselves.  Moreover, as argued by
the claimant, even if the Provincial Fiscal should side with the Governor in the
bringing of this suit, the Provincial Board whose members are made defendants in
this case, can simply frustrate his efforts by
directing him to dismiss the case or by refusing to appropriate funds for the
expenses of the litigation.

“xxx Consequently, there could have been no occasion for the
exercise by the Provincial Fiscal of his powers and duties since the members of
the Provincial Board would not have directed him to file a suit against
them.”

A situation obtains, therefore, where the Provincial Governor, in
behalf of the Province of
Cebu, seeks
redress against the very members of the body, that is, the Provincial Board,
which, under the law, is to provide it with legal assistance.  A
strict application of the provisions of the Revised Administrative Code on the
matter would deprive the plaintiffs in the court below of redress for a valid
grievance.  The provincial board authorization
required by law to secure the services of special counsel becomes an impossibility.  The decision of the
respondent court is grounded in equity — a correction applied to law, where on
account of the general comprehensiveness of the law, particular exceptions not
being provided against, something is wanting to render
it perfect.

It is also argued that the employment of claimant was violative of sections 1681 to 1683 of the Revised
Administrative Code because the Provincial Fiscal who was the only competent
official to file this case was not disqualified to act for the
Province of Cebu.

Respondent counsel’s representation of the
Province of Cebu became necessary because of
the Provincial Board’s failure or refusal to direct the bringing of the action
to recover the properties it had donated to the City of
Cebu.  The Board more
effectively disqualified the Provincial Fiscal from representing the
Province of Cebu when it directed the Fiscal
to appear for its members in Civil Case No. R-8669 filed by Atty. Garcia, and
others, to defend its actuation in passing and approving Provincial Board
Resolution No. 186.  The answer of the Provincial Fiscal on behalf
of the Vice-Governor and the Provincial Board members filed in Civil Case No.
R-8669, (Exhibit “K”) upholds the validity and legality of the donation. 
How then could the Provincial Fiscal represent the
Province of Cebu in the suit to recover the
properties in question?  How could Governor Espina be represented by the Provincial Fiscal or seek
authorization from the Provincial Board to employ special counsel? 
Nemo tenetur ad impossibile (The law obliges no
one to perform an impossibility).  Neither could a prosecutor be
designated by the Department of Justice.  Malacanang had already approved the questioned donation.

Anent the question of liability for respondent counsel’s services,
the general rule that an attorney cannot recover his fees from one who did not
employ him or authorize his employment, is subject to its own exception.

Until the contrary is clearly shown, an attorney is presumed to be
acting under authority of the litigant whom he purports to represent (Azotes
v. Blanco, 78 Phil. 739) His authority to appear for and represent
petitioner in litigation, not having been questioned in the lower court, it will
be presumed on appeal that counsel was properly authorized to file the complaint
and appear for his client.  (Republic v. Philippine Resources
Development Corporation, 102 Phil. 960) Even where an attorney is employed
by an unauthorized person to represent a client, the latter will be bound where
it has knowledge of the fact that it is being represented by an attorney in a
particular litigation and takes no prompt measure to repudiate the assumed
authority.  Such acquiescence in the employment of an attorney as
occurred in this case is tantamount to ratification (Tan Lua v.
O’Brien, 55 Phil. 53).  The act of the successor provincial
board and provincial officials in allowing respondent Atty. Pablo P. Garcia to
continue as counsel and in joining him in the suit led the counsel to believe
his services were still necessary.

We apply a rule in the law of municipal corporations, “that a
municipality may become obligated upon an implied contract to pay the reasonable
value of the benefits accepted or appropriated by it as to which it has the
general power to contract.  The doctrine of implied municipal
liability has been said to apply to all cases where money or other property of a
party is received under such circumstances that the general law, independent of
express contract implies an obligation upon the municipality to do justice with
respect to the same.” (38 Am. Jur. Sec. 515, p. 193):

“The obligation of a municipal corporation upon the doctrine of an
implied contract does not connote an enforceable obligation.  Some
specific principle or situation of which equity takes cognizance must be the
foundation of the claim.  The principle of liability rests upon the
theory that the obligation implied by law to pay does not originate
in the unlawful contract, but arises from considerations outside it. 
The measure of recovery is the benefit received by the
municipal corporation.  The amount of the loan, the value of the
property or services, or the compensation specified in the contract, is not the
measure.  If the price named in the invalid contract is
shown to be entirely fair and reasonable not only in view of the labor
done, but also in reference to the benefits conferred, it may be taken as the
true measure of recovery.”

The petitioner can not set up the plea
that the contract was ultra vires and still retain benefits thereunder.  Having regarded the contract as
valid for purposes of reaping some benefits, the petitioner is estopped to question its validity for the purposes of
denying answerability.

The trial court discussed the services of respondent Garcia as
follows:

“xxx Thus because of his effort in the filing of this case and in
securing the issuance of the injunction preventing the City of Cebu and Sergio Osmena, Jr., from
selling or disposing the lots to third parties, on the part of the members of
the Provincial Board from extending the date of the automatic reversion beyond
August 15, 1965, on the part of the Register of Deeds — from effecting the
transfer of title of any of the donated lots to any vendee or transferee, the
disposition of these lots by the City of Cebu to third
parties was frustrated and thus:  saved these lots for their
eventual recovery by the province of Cebu.”

Actually it was Governor Espina who filed the case against
Cebu
City and Mayor Osmena.  Garcia just happened to be the
lawyer.  Still Atty. Garcia is entitled to compensation. 
To deny private respondent compensation for his professional services
would amount to a deprivation of property without due process of law (Cristobal v. Employees’ Compensation
Commission, 103 SCRA 329).

The petitioner alleges that although they do not deny Atty.
Garcia’s services for Governor Espina (who ceased to
be such Governor of Cebu on September 13, 1969) and
the original plaintiffs in the case, “it cannot be said with candor and fairness
that were it not for his services the lots would have already been lost to the
province forever, because the donation itself he was trying to enjoin and annul
in said case was subject to a reversion clause under which lots remaining undisposed of by the City as of August 15, 1965
automatically reverted to the province and only about 17 lots were disposed of
by August 15, 1965.” We quote respondent counsel’s comment with approval:

xxx

xxx

xxx

“While it is true that the donation was subject to a reversion
clause, the same clause gave the Provincial Board the discretion to extend the
period of reversion beyond August 15,
1965 (see paragraph 3 of donation).

“With the known predisposition of the majority of the members of the
Provincial Board, there would have been no impediment to the extension of the
reversion date to beyond August 15,
1965.  Once the date of reversion is extended, the
disposition of all the donated lots would be only a matter of
course.”

We have carefully reviewed the records of this case and conclude
that 30% or even 5% of properties already worth P120,000,000.00 in 1979 as compensation for the private
respondent’s services is simply out of the question.  The case
handled by Atty. Garcia was decided on the basis of a compromise agreement where
he no longer participated.  The decision was rendered after
pre-trial and without any hearing on the merits.

The factual findings and applicable law in this petition are
accurately discussed in the exhaustive and well-written Order of then Trial
Judge, now Court of Appeals Justice Alfredo Marigomen.  We agree with his determination of
reasonable fees for the private lawyer on the basis of
quantum meruit.  The trial court fixed the compensation at
P30,000.00 and ordered reimbursement of actual expenses
in the amount of P289.43.

WHEREFORE, the questioned October 18, 1985 decision of the Intermediate Appellate
Court is set aside.  The Order of the Trial Court dated May 30, 1979 is REINSTATED.

SO
ORDERED.

Fernan, (Chairman), Alampay, Paras, and Padilla,
JJ., concur.

Bidin, J., no part.

---

^[1] The decision was penned by Justice
Marcelino R. Veloso with
Justices Porfirio V. Sison,
Abdulwahid Bidin, and Ramon
B. Britanico concurring.