Province of Cebu v. Honorable Intermediate Appellate Court
MODIFICATIONFacts
The Antecedents: The Vice-Governor and members of the Provincial Board of Cebu enacted Resolution No. 188, donating 210 province-owned lots to the City of Cebu, with the Vice-Governor signing the deed of donation. The donation was approved by the Office of the President. Governor Rene Espina denounced the donation as illegal and immoral. Subsequently, a case was filed by the Cebu Mayor's League and some taxpayers, including Atty. Pablo P. Garcia, seeking to declare the donation null and void, alleging it was a derivative suit for the Province of Cebu. This case was dismissed for lack of legal capacity to sue. Procedural History: Governor Espina, fearing the loss of the lots, engaged Atty. Garcia to file a case for the annulment of the deed of donation, which was granted a preliminary injunction. The case was later amended to implead the new City Mayor. The Provincial Board eventually authorized the Provincial Attorney to appear for the Province, and the Provincial Attorney filed a complaint in intervention, joining the original plaintiff's cause of action. A compromise agreement was reached between the Province and the City, approved by the court, leading to the return of most lots to the Province in exchange for P1,500,000.00 and the retention of eleven lots by the City. Atty. Garcia then filed a notice of attorney's lien for services rendered. The Province opposed this, citing legal prohibitions against paying private counsel. The Court of First Instance (CFI) ruled in favor of Atty. Garcia, granting him attorney's fees on the basis of quantum meruit amounting to P30,000.00. Both parties appealed to the Intermediate Appellate Court (IAC). The IAC affirmed the entitlement to attorney's fees but modified the amount to 5% of the market value of the properties as of 1975. The Petition: The Province of Cebu filed a petition for review with the Supreme Court, questioning the IAC's decision. The private respondent, Atty. Garcia, initially appealed the IAC's decision regarding the amount of attorney's fees but later withdrew his petition.
Issue(s)
Whether the Province of Cebu is liable for attorney's fees to respondent Atty. Pablo P. Garcia for services rendered in filing and prosecuting the case for the annulment of the deed of donation. Whether the employment of Atty. Garcia by Governor Espina was authorized and valid under the Revised Administrative Code. Whether the Province of Cebu can be held liable on the basis of quantum meruit and implied contract despite the alleged lack of formal authorization.
Ruling
The Supreme Court reinstated the Order of the Trial Court dated May 30, 1979, which awarded attorney's fees to Atty. Pablo P. Garcia in the amount of P30,000.00 on the basis of quantum meruit. The decision of the Intermediate Appellate Court was set aside.
Ratio Decidendi
On the Province's liability for attorney's fees: The Court held that while the general rule prohibits a province from employing private counsel when the provincial fiscal is available, an exception exists in cases of intramural disputes where the provincial board, whose members are involved in the controversy, cannot be expected to authorize the provincial fiscal to file suit against them. In such exceptional circumstances, equity demands that the province be held liable for the reasonable value of services rendered by a private lawyer who successfully protected the province's patrimonial properties. The Court found that the services of Atty. Garcia were necessary to prevent the irretrievable loss of the donated lots due to the conflict between the Governor and the Provincial Board. The Court applied the principle of implied municipal liability, stating that a municipality may become obligated upon an implied contract to pay for benefits accepted or appropriated, even without an express contract, when the general law implies an obligation to do justice. The Province could not set up the plea that the contract was ultra vires and still retain the benefits derived from the services rendered. On the authorization and validity of employment: The Court acknowledged that Governor Espina was not formally authorized by the Provincial Board through a resolution to employ Atty. Garcia. However, it found that such authorization was an impossibility given that the members of the Provincial Board were the very ones being sued and were responsible for the questioned donation. The Court cited Nemo tenetur ad impossibile (the law obliges no one to perform an impossibility), emphasizing that the Provincial Board could not be expected to direct the Provincial Fiscal to file a suit against themselves. Furthermore, the Provincial Fiscal's position was compromised as he had filed an answer upholding the validity of the donation on behalf of the Provincial Board members. The Court also noted that the subsequent Provincial Board and officials allowed Atty. Garcia to continue as counsel, which implied ratification of his services. On liability based on quantum meruit and implied contract: The Court affirmed that Atty. Garcia was entitled to compensation on the basis of quantum meruit, meaning the reasonable value of his services. The Court found that his efforts in filing the case and securing the injunction were instrumental in preventing the sale of the lots to third parties and ensuring their eventual recovery by the Province. To deny him compensation would amount to a deprivation of property without due process of law. The Court also invoked the doctrine of implied municipal liability, stating that the Province, having benefited from the services rendered, could not escape liability by simply claiming the employment was unauthorized. The Court found that the services rendered were essential and that the Province retained the benefit of the recovered lots.
Main Doctrine
A province may be held liable for attorney's fees on the basis of quantum meruit and implied contract, even if the employment of the lawyer was not formally authorized, when such employment was necessitated by an intramural dispute within the provincial government and the services rendered resulted in a benefit to the province, preventing a loss of its patrimonial properties.