GR 161390; (April, 2008) (Digest)
G.R. No. 161390 ; April 16, 2008
RAUL H. SESBREÑO, petitioner, vs. HON. COURT OF APPEALS, PROVINCE OF CEBU, GOV. EDUARDO R. GULLAS, THE PROVINCIAL TREASURER, THE PROVINCIAL AUDITOR, THE PROVINCIAL ENGINEER PATROCINIO BACAY (sued both in their official and personal capacities), respondents.
FACTS
Petitioner Raul H. Sesbreño was hired by caminero employees to prosecute their cases for reinstatement and back salaries against the Province of Cebu, under a written agreement granting him a 30% contingent fee. During the litigation, he registered his charging lien. The parties eventually entered into a Compromise Agreement, approved by the Supreme Court, wherein the Province agreed to pay the camineros’ back salaries and recognized the petitioner’s registered charging lien. Notably, the Compromise Agreement also stipulated that an advance payment to the employees would be payable through their counsel, Atty. Sesbreño. Subsequently, when a partial writ of execution was issued, the Province of Cebu, instead of complying with the court’s directive for partial payment which would have withheld funds for the attorney’s fees, directly paid the full adjudicated claims to the camineros. This bypassed the petitioner and effectively deprived him of his fee.
ISSUE
Whether the Province of Cebu is liable for damages to petitioner Sesbreño for its act of directly paying his clients, the camineros, in disregard of his registered charging lien and the terms of the court-approved Compromise Agreement.
RULING
Yes, the Province of Cebu is liable for damages. The Supreme Court reversed the Court of Appeals and reinstated the trial court’s decision holding the Province liable. The legal logic is anchored on the nature of a charging lien and the Province’s contractual and legal obligations. A charging lien is a right to have the attorney’s fees deducted from the judgment proceeds before the client receives them; it attaches to the judgment and is enforceable against the judgment debtor. By registering his lien, Sesbreño gave constructive notice to the Province. The Compromise Agreement, approved by the Court, was a binding contract that expressly acknowledged this lien and even stipulated payments through counsel. The Province, as a party to this agreement, had a clear obligation to respect the lien. Its act of directly and fully paying the camineros constituted a breach of this contractual duty. This breach made the recovery of his fees from his clients more difficult, thereby causing actual damage to the petitioner. The Province cannot evade liability by claiming it merely paid its obligation to the employees, as its duty was modified by the court-approved agreement which incorporated the attorney’s interest. Consequently, the Province is liable for the actual damages representing the uncollected attorney’s fees, with interest. However, the provincial officials were not held personally liable as they acted in their official capacity.