De Guia v. Auditor General
REITERATIONFacts
The Antecedents: The municipality of Mondragon was sued by G.A. Machineries, Inc. in the Court of First Instance of Bulacan. The municipality filed a counterclaim and was awarded P42,000.00 plus damages. The plaintiff appealed to the Court of Appeals. The municipal council passed a resolution authorizing the mayor to hire counsel on a contingent fee basis not exceeding 15%. The mayor and Atty. Gabriel de Guia agreed on a 15% contingent fee based on whatever the municipality could recover. The municipal council confirmed this agreement. Procedural History: Atty. de Guia filed the brief for the municipality in the Court of Appeals, which substantially affirmed the lower court's decision, awarding the municipality P42,000.00 with legal interest and P600.00 attorney's fees. The judgment became final and executory, and the plaintiff paid P51,159.00. The municipal council authorized the payment of 15% of this amount, P7,673.85, to Atty. de Guia as his contingent fee. However, the provincial auditor disallowed this payment, citing Section 1683 of the Revised Administrative Code and the absence of a legally appointed Municipal Attorney. The Auditor General sustained this disallowance, citing a Justice Department ruling and reiterating that municipalities cannot hire private counsel unless the provincial fiscal is disqualified. The Petition: Atty. de Guia appealed the Auditor General's decision, arguing that his contract was valid and that the respondents acted beyond their authority in disallowing his claim.
Issue(s)
Whether the municipality of Mondragon had the legal authority to hire the services of a private attorney on a contingent fee basis. Whether Section 1683 of the Revised Administrative Code, as applied to municipal corporations, was impliedly repealed by the Local Autonomy Act.
Ruling
The Supreme Court affirmed the decision of the Auditor General, upholding the disallowance in audit of petitioner's claim for contingent attorney's fees. The Court ruled that the municipality lacked the legal authority to engage the services of private counsel under the circumstances presented.
Ratio Decidendi
On the authority of the municipality to hire private counsel: The Court held that Section 1683 of the Revised Administrative Code expressly limits a municipality's authority to employ private counsel only to situations where the provincial fiscal is disqualified to represent it. The record did not show any disqualification of the provincial fiscal of Northern Samar. Therefore, the municipality's contracting of petitioner's services as private counsel was without authority of law. The Court reiterated its ruling in Enriquez vs. Gimenez, which emphasized that a provincial fiscal's opinion or refusal to handle a case, if not based on legal grounds for disqualification, does not justify engaging private counsel. The municipality should have requested the Secretary of Justice to appoint an acting provincial fiscal in such a scenario. In this case, there was no showing that the provincial fiscal's assistance was even sought, let alone that he was disqualified. On the implied repeal of Section 1683 by the Local Autonomy Act: The Court found this contention to be without merit. Even if the Local Autonomy Act authorized municipalities to create the position of a municipal attorney, this did not grant them the power to hire private attorneys on a contingent fee basis for specific cases when the provincial fiscal was not disqualified. The municipality's action of contracting the legal services of petitioner as a private attorney for a specific appeal on a contingent fee basis remained without authority of law, regardless of the Local Autonomy Act. Therefore, the respondents did not err in disallowing the claim.
Main Doctrine
A municipality cannot hire the services of a private attorney on a contingent fee basis if the provincial fiscal is not disqualified to represent it, as mandated by Section 1683 of the Revised Administrative Code. The Local Autonomy Act does not grant municipalities the power to hire private counsel in such circumstances.