CEFERINO INCIONG, PETITIONER, VS. HONORABLE EUFEMIO DOMINGO, CHAIRMAN, COMMISSION ON AUDIT, RESPONDENTS.

For failure of the Philippine Sugar Commission (PHILSUCOM), now
Philippine Sugar Refineries Corporation, to pay real estate taxes due on its
sugar refinery situated at Barangay Caloocan, Balayan, Batangas, the Provincial
Treasurer of Batangas scheduled the sale of said refinery at public auction on
March 6, 1986. To restrain the sale,
PHILSUCOM filed a petition for prohibition in the Court of Appeals against the
Provincial Treasurer and Provincial Assessor of Balayan, Batangas. The petition was docketed as CA GR SP No.
08467.

On March 5, 1986, the Court of Appeals issued a restraining order
directing respondents therein to maintain the status quo.

Meanwhile, Barangay Caloocan thru herein petitioner Atty.
Ceferino Inciong filed a Motion for Intervention alleging that it (Barangay
Caloocan) is an indispensable party in the case as it has a 10% share of the
property tax sought to be collected from PHILSUCOM.

Thereafter, Barangay Caloocan filed an Answer to PHILSUCOM’s
Petition as well as a motion for reconsideration of the restraining order of
March 5, 1986.

On December 24, 1986, PHILSUCOM and the Municipal Treasurer of
Balayan, Batangas entered into an Amnesty Compromise Agreement pursuant to and
in conformity with Executive Order No. 42 dated August 22, 1986. The agreement was submitted to the Court of
Appeals and the case was accordingly dismissed.

PHILSUCOM paid the amount of P7,199,887.51 to the Municipal
Treasurer. Out of this amount, the
Municipal Treasurer allocated to Barangay Caloocan as its share 10% or a total
of P719,988.75.

Consequently, Atty. Ceferino Inciong filed a case for payment of
attorney’s fees against the Province of Batangas, Municipality of Balayan and
Barangay Caloocan, before the Regional Trial Court, Branch XI, Balayan,
Batangas. The case was docketed as
Civil Case No. 1878.

On August 9, 1989, the Regional Trial Court rendered judgment in
favor of Atty. Ceferino Inciong, the pertinent portion of which reads:

“From the foregoing testimony and the supporting exhibits – D
and D-1, it is gathered and established that indeed, the plaintiff attorney was
requested and has acted as counsel for defendant Barangay Caloocan and rendered
his utmost in prosecuting the case. As
a result of his efforts and zeal in pursuing the case, defendant Barangay
Caloocan was awarded the claim asked for, when finally the Philsucom acceded to a compromise agreement. Plaintiff’s counsel, assistance and services
should therefore be recognized. That he
acted as counsel is established as even defendant Barangay Caloocan failed to
deny the relationship and services rendered by failing to file its answer.

“However, there was no formal contract as to the amount due
the plaintiff by way of attorney’s fees. Somewhere in his testimony plaintiff suggest that TEN PERCENT (10%) of
the barangay share on the amount paid, be fair and just renumeration for all
the expenses and services he rendered, which the Court finds such amount to be
fair, proper and just, taking into consideration, the professional standing of
the plaintiff as a lawyer, the time and efforts he exerted, the importance of
the case. The law mandates that an
attorney shall be entitled to have and recover from his client no more than a
reasonable compensation for his services, with a view to the importance of the
subject matter of the controversy, the extent of the services rendered and the
professional standing of the attorney.

“The Court finds that a TEN PERCENT (10%) of what defendant
Barangay Caloocan was awarded is fair and reasonable amount for the legal
services of the plaintiff counsel.

“WHEREFORE, partial judgment in the case is hereby rendered.

‘1. Ordering the
defendant Barangay Caloocan of the Municipality of Balayan, Batangas, to pay
the plaintiff and by way of attorney’s fees, the amount equivalent to a TEN
PERCENT (10%) of the amount awarded to said defendant barangay.

‘2. Ordering defendant barangay to pay the costs of suit.’

“SO ORDERED..” (p. 8, Rollo)

This decision has long become final, hence, a writ of execution
was issued. But, when the Withdrawal
Voucher was presented for audit to satisfy the writ of execution, the
Provincial Auditor of Batangas referred the matter en consulta to
the Director, COA Regional Trial Office No. IV.

In a 2nd Indorsement dated October 3, 1990, the COA
Director referred the Auditor’s query to respondent Chairman, Commission on
Audit, with the information among others, that the request of the Barangay
Captain of Caloocan for petitioner’s legal assistance was not taken up nor
approved by the Sangguniang Barangay nor was there any showing that it was
approved by the Solicitor General and concurred in by COA as required under COA
Circular No. 86-255, dated April 2, 1986.

In a 3rd Indorsement dated December 12, 1990, respondent
Chairman Eufemio Domingo, Commission on Audit, in reply to the query stated
that the hiring of petitioner by the Punong Barangay did not carry with it the
approval of the Sangguniang Barangay as required under Section 91 (1-1) of the
B.P. 337, nor was there any appropriation therefore; the hiring was not
approved by the Solicitor General and concurred in by COA.

Hence, the instant petition.

Required to comment, the Office of the Solicitor General filed a
Manifestation and Motion stating that after a careful study of this case, it is
unable to agree with the position of respondent Chairman Eufemio Domingo in his
3rd Indorsement disallowing payment of attorney’s fees to petitioner
Atty. Ceferino Inciong by Barangay Caloocan. (p. 35, Rollo)

The Office of the Solicitor General was thus allowed to withdraw
its appearance and the Comment for respondent was filed by COA’s Legal Office.

The petition was given due course in Our Resolution dated July
30, 1991.

We grant the petition.

As correctly stated by the Office of the Solicitor General, the
position of respondent Chairman of the COA disallowing payment of attorney’s
fees to petitioner Atty. Ceferino Inciong is not proper, in the light of the
following considerations.

(1) The employment
by Barangay Caloocan of petitioner as its counsel, even if allegedly
unauthorized by the Sangguniang Barangay, is binding on Barangay Caloocan as it
took no prompt measure to repudiate petitioner’s employment (Province of Cebu
v. Intermediate Appellate Court, 147 SCRA 447).

(2) The Decision
dated August 9, 1989 of Branch XI, Regional Trial Court, Balayan, Batangas in
Civil Case No. 1878, directing Barangay Caloocan to pay attorney’s fees to
petitioner, has become final and executory and is binding upon Barangay
Caloocan (Mercado v. Court of Appeals, 162 SCRA 75).

(3) COA Circular
No. 86-255 cannot diminish the substantive right of petitioner to recover
attorney’s fees under the final and executory Decision dated August 9, 1989 of
the Regional Trial Court.

In its Comment, the
respondent, thru the COA Legal Office states that PHILSUCOM paid the amount of
P7,199,887.51 to the Municipal Treasurer under the Amnesty Compromise
Agreement. Out of this amount, the
Municipal Treasurer allocated to Barangay Caloocan as its share the amount of
P719,988.75. This allocation is erroneous
because pursuant to Republic Act No. 5447, Barangay Caloocan should only share
from the basic tax which is 50% of what PHILSUCOM paid because the other half
should go to the Special Education Fund. Under the said Republic Act No. 5447, the rightful share of Barangay
Caloocan should be P359,994.38 only.

Thus, respondent prays that in the event the Court orders the
payment of attorney’s fees to petitioner this amount of P359,994.38 should be
made as the basis therefor.

WHEREFORE, the petition is GRANTED and respondent is
ordered to direct the payment of attorney’s fees to petitioner Atty. Ceferino
Inciong in an amount equivalent to 10% of P359,994.38

SO ORDERED.

Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin,
Griño-Aquino, Medialdea, Regalado, Davide, Jr., Romero, Nocon, and Bellosillo, JJ., concur.