MYRON C. PAPA, AS SPECIAL ADMINISTRATOR OF THE ESTATE OF THE LATE ANGELA MONTENEGRO BUTTE, PETITIONER, VS. MAURA M. ALONZO, PURITA M. ONGKIKO AND FRANCISCA A. MONTENEGRO, AND AR…

In this petition for review on certiorari, petitioner
assails the decision*** of the
Court of Appeals, dated 22 July 1987,
rendered in CA-G.R. CV No. 02270, affirming two (2) orders**** of the
Regional Trial Court of Echague, Isabela.  Branch XXIV, dated 5 August 1983^[1]
and 7 November 1983,^[2]
which fixed the attorney’s fees, subject of this case, in the amount of
P100.000.00.

The records of this case show the following antecedent facts:

1.   On 4
March 1974, a complaint (for: 
annulment of title and reconveyance of a
parcel of agricultural land consisting of 122.3011 hectares in Cordon, Isabela, covered by OCT No. P-5617 in the name of Angela M.
Butte) was filed before the Court of First Instance of Isabela,
docketed as Civil Case No. V-168, against Ramon Papa, Jr., the special
administrator of the estate of the said deceased Butte;
that herein private respondent Arturo Alafriz was
then engaged as counsel for Ramon Papa, Jr.^[3]

2.   In the letter-agreement dated 4 April 1974, Ramon Papa, Jr. agreed
to pay respondent Alafriz and Associates upon the
conclusion of the case “20% of the property (sic)” under litigation as the
attorney’s fees;^[4]
said agreement states as follows:

“We ask that we be paid an initial retainer of P7,500.00 and
that upon conclusion of the case, we will charge as our professional fees 20%
of the property, including services before the Court of Appeals if taken on
appeal, provided all expenses by way of trans­portation, transcript of
stenographic notes, legal fees of the Court, etc., shall be for your
account.”^[5]

3.   On 10
December 1977, the lower court rendered a decision dismissing the
complaint (in CV No. V-168) and restoring possession of the land to the estate
of Angela M. Butte (now represented by petitioner Myron C. Papa as the new
special administrator, having substituted Ramon Papa, Jr. after the latter’s
death).^[6]

4.   Under date of 27 March 1978, the law firm of respondent Alafriz made of record before the lower court the lien for
professional services rendered to the estate of Angela Butte;^[7]
that the said recording was granted by the court a quo in its
order dated 19 April 1978.^[8]

5.   On 18
April 1978, respondent Alafriz filed a
petition before the lower court seeking the payment of professional fees based
on the letter-agreement dated 4 April
1974, manifesting that the current value of the property could not
be less than P400,000.00.^[9]
In the order dated 12 June 1978, the court a quo granted the
parties therein a period of not more than sixty (60) days within which to
notify the court of the result of whatever agreement/settlement they may arrive
at regarding the attorney’s fees being claimed by the former counsel of the
estate (now herein private respondent Alafriz).^[10]

6.   Under date of 4 February 1980, the parties entered into an agreement on the
matter of attorney’s fees due and payable to the law firm of Alafriz and Associates in the various cases handled by the
same for the estate of Angela Butte, the said agreement being entitled
“Stipu­lation on attorney’s fees due Arturo A. Alafriz
for, professional services rendered the estate of Angela M. Butte.” This
stipulation was filed with the Court of First Instance of Rizal,
Quezon City,
Branch IX, in Special Proceedings No. Q-17910, entitled “Testate Estate of
Angela M. Butte, Myron C. Papa, Executor” and was approved by the said
court, acting as the probate court, on 7
April 1980.^[11]
As to the attorney’s fees in Civil Case No. V-168, the stipulation provides:

“COME NOW the parties in the above-entitled proceeding and to
this Honorable Court respectfully submit the following stipulation with respect
to fees due the claimant, Atty. Arturo A. Alafriz,
for professional services rendered to the Estate, object of his claim dated
July 3, 1978:

7.   When petitioner Myron C. Papa did not pay
attorney’s fees to private respondent Alafriz (as the
former counsel of the estate of Butte),
the latter filed with the court a quo (in CV No. V-168) a motion
dated 16 June 1983, to fix
the amount of attorney’s fees on the basis of the stipulation, and to issue the
corresponding writ of execution.^[13]

8.   In the order dated 5 August 1983 (rendered in CV No. V-168), the
lower court fixed the attorney’s fees claimed by the law firm of private
respondent Alafriz, in the amount of P100,000.00, and
ordered the issuance of the corresponding writ of execution to enforce the
claim for attorney’s fees.^[14]
In the order dated 7 November 1983, the lower court denied the motion for
reconsideration of the order of 5 August 1983, filed by Myron C. Papa; that the
court a quo, however, recalled and set aside that portion of the
earlier order directing the issuance of a writ of execution, and ordered
implementation only upon the finality of the said order.^[15]

9.   On appeal by petitioner (docketed CA-G.R. CV
No. 02270), respondent appellate court rendered the decision (now assailed)
dated 22 July 1987 affirming the two (2) orders of the court a quo
dated 5 August and 7 November 1983.

In  the present recourse,
petitioner raises the following issues:^[16]

“1)  Whether or not, the stipulation of the
parties fixing the attorney’s fees of private respondent to (sic) 20% of the
net value or proceeds, i.e., after any and all expenses, which was duly
approved by the probate court, shall prevail;

“2)  Or whether the motion of the claimant
(private respondent) to fix attorney’s fees, notwithstanding the parties’
compromise agreement or stipulation, should be considered;

“3)  And whether or not, the decision of
respondent Court of Appeals affirming the orders of the lower court dated
August 5, 1983 (Annex ‘C’ hereof), November 7, 1983 (Annex ‘D’ hereof),
enforcing the claim for attorney’s fees by issuing the writ of execution,
despite the agreement or stipulation of the parties, is a reversible
error.”

The respondent appellate court affirmed the questioned orders of
the lower court fixing the attorney’s fees for private respondent in the sum of
P100,000.00, which is 20% of P500.000.00. 
Petitioner contends that the amount of P500,000.00 used as the basis of
the 20% rate, is the gross value of the subject property which,
he claims, is contrary to paragraphs (C) and (C-1) of the stipulation dated 4
February 1980 which provides that the basis of the rate is the net value
of the property, that is, after “any all (sic) expenses” incurred in
relation thereto have been deducted from the gross value.

We hold for the private respondent.

Settled is the rule that when the terms of a contract are clear
and leave no doubt as to the intention of the contracting parties, then the
literal meaning of the stipulations shall control.  It is also settled rule that in order to
ascertain the intention of the parties, their contemporaneous and subsequent
acts shall be principally considered.^[17]

There is no question in this case that the compromise contained
in the stipulation dated 4 February 1980, not being contrary to law, public
order, public policy, morals or good customs, is a valid contract between the
herein parties.^[18]
The terms of paragraphs (C) and (C-1) of said stipulation are quite clear,
hence, the literal meaning thereof should control.

Under the stipulation, there are two (2) options by which the
attorney’s fees shall be paid — first, payment in sum of money at the rate
of 20% of the net value, meaning, net proceeds of the subject property; or second, by acquiring 20% of the total area of the said property, all
expenses for the subdivision thereof to be borne by respondent Alafriz.  The terms
of said provisions clearly give to private respondent the choice as to the mode
or manner of payment of his attorney’s fees.

There is no question that private respondent has chosen the first
option.  The dispute centers on the
interpretation or application of the first part of paragraph (C-1) which
provides that the attorney’s fees for the services rendered in handling Civil
Case No. V-168 shall be 20% of net value of the subject property, “net
value” being explained as value after all expenses that may have been
incurred by reason of such property, shall have been deducted from the value of
the property.

The lower court in its order dated 5 August 1983, as affirmed by respondent Court of Appeals,
placed the value of the subject property at P500.000.00 taking into
consideration the past valuation of the said property, its location and area,
and the fact that such assessment was never controverted
by petitioner Myron C. Papa.^[19]
The court a quo charged the 20% attorney’s fees against the said
value.

In this petition, petitioner does not question the valuation of
the property at P500,000.00.  But he
asserts that the sum of P500,000.00 is a gross value, not net
value.  He claims that to arrive
at the net value, expenses for the payment of taxes, agent’s commission,
attorney’s fees of lawyers of the estate, administration expenses incurred by the
estate and fees over said land, as well as any other expenses should first be
deducted from the value of the property;^[20]
and that, therefore, the amount of the attorney’s fees could be determined only
at the time of the distribution or closure of the estate.^[21]

Thus, the main question is whether the lower court, as well as
respondent Court of Appeals, correctly used he amount of P500,000.00 as the
basis of the 20% attorney’s fees of private respondent.

We answer in the affirmative.

In affirming that the 20% attorney’s fees may be based on the
property value of P500,000.00, respondent Court of Appeals, in its assailed
decision, disagreed with the interpretation of the petitioner that the
attorney’s fees of respondent.  Alafriz should be paid only after all the obligations
against the estate of Angela M. Butte, including debts, are first fully
paid.  It stated that,

“The time of payment of the attorney’s fee as stipulated is
‘upon conclusion of the case’, meaning Civil Case No. V-168 for annulment of
title and reconveyance, not the proceedings for the
settlement of the estate of Angela M. Butte. 
There is nothing in the agreement that would even remotely suggest that
the 20% shall be taken from the net residue or distributive shares of the
heirs.  If appellant’s interpretation of
the stipulation on attorney’s fees were to be followed to its logical
conclusion, the attorney’s fees of Alafriz &
Associates will not be paid until all the obligations against the estate,
including the debts, are first paid, in which case, the amount said counsel may
recover will depend to a certain extent on the residue of the estate.  So that if nothing of the estate remains
after the payment of all its obligations, the lawyers will get nothing for
their professional services.  Such interpretation
is not sanctioned by either the letter or spirit of the stipulation.”21

We agree with the foregoing observation of the respon­dent court
that paragraph (C-1) means that the payment of the 20% attorney’s fees shall be
made upon the conclusion of Civil Case No. V-168, and that said attorney’s fees
are not to be taken only from the net residue of the estate or distributive
shares of the heirs in connection with the estate proceedings in Special
Proceedings No. Q-17910.^[22]

Under the letter-agreement dated 4 April 1974, it is agreed that the attorney’s fees shall
be “20% of the property (sic)”, and that this shall be paid
“upon conclusion of the case.” 
It is noted that Civil Case No. V-168, where the attorney’s fees are
claimed, was filed in March 1974, and that the decision therein was rendered
(in favor of the estate of Butte) in December 1977; that in April 1978 the
lower court made of record the lien for professional services rendered by
private respondent Alafriz in said case; that in
February 1980, paragraphs (C) and (C-1) were agreed upon, which stipulation was
approved by the probate court in
April 1980.  It is thus reasonable to
assume that when private respondent agreed in February 1980 to attorney’s fees
of 20% of the net value, he actually meant 20% of the value of the property, as
agreed as early as April 1974.  Besides,
the right to such attorney’s fees had already vested as early as December 1977
when Civil Case No. V-168 was concluded in favor of the Butte
estate, private respondent’s client. 
Moreover, assuming that the value of the property has to be reduced by
expenses in connection therewith, as observed however by the court a quo^[23]
the records of this case do not show any
allegation on the part of the petitioner as to any expense incurred regarding
the subject property.

Considering that, at the initial stage of the proceedings in
Civil Case No. V-168, it was agreed that the payment of the attorney’s fees shall be “upon the conclusion of
the case” (per letter dated 4
April 1974), and taking into account that the decision in said case
was rendered in December 1977 (or almost fourteen [14] years ago), more than
reasonable time from the conclusion of Civil Case No. V-168 has lapsed, and
yet, petitioner has failed to show the expenses to be deducted from the value
of the subject property.  It seems but
fair to conclude that petitioner is no longer presenting expenses in relation
to the property.  Therefore, the payment
of attorney’s fees claimed by respondent Alafriz,
became due and demandable upon the conclusion of the litigation in Civil Case
No. V-168, or within a reasonable time thereafter and in accordance with the
20% of value of the property, agreed in April 1974.  The demandability
of the obligation to pay attorney’s fees in Civil Case No. V-168 became even
more compelling when the probate court in Sp. Proc. No. Q-17910 approved the
stipulation dated 4 February 1980.

All told, the intention of the parties in the case at bar is
quite clear to the effect that the 20% attorney’s fees shall be paid not upon
the conclusion of the estate proceedings in Special Proceedings No. Q-17910,
but upon the conclusion of Civil Case No. V-168 wherein respondent’s services
were rendered, and that the basis of the 20% attorney’s fees shall be the value
of the property.  Assuming that the value
has to be reduced by expenses relating to the property as expressed in the
stipulation of 4 February 1980,
petitioner has not presented any expenses for a period of almost fourteen (14) long years from the termination
of Civil Case No. V-168.  Consequently,
the sum of P500,000.00 as the
value of the property appears to have been correctly used as the basis of the
20% attorney’s fees for services rendered by private respondent in said Civil
Case No. V-168.

WHEREFORE, the Petition is DENIED.  The decision of the respondent Court of
Appeals, dated 22 July 1987,
rendered in CA-G.R. CV. No. 02270, affirming the two (2) orders of the Regional
Trial Court of Echague, Isabela,
Branch XXIV, dated 5 August 1983
and 7 November 1983, issued
in Civil Case No. V-168, is hereby AFFIRMED. 
Without pronouncement as to costs.

SO ORDERED.

Melencio-Herrera, (Chairman), Paras, and Regalado, JJ., concur.

Sarmiento, J., on leave.

* Original records, pp. 111 and
347

** Ibid., p. 1

*** Penned by Justice Santiago M. Kapunan; concurred in by Justices Reynato
S. Puno, and Alfredo Marigomen
(Rollo, p. 29).

**** Penned by Judge Procoro J. Donato.

^[1]
Rollo, pp. 39-42

^[2]
Rollo, pp. 44-45

^[3]
Rollo, p. 22

^[4]
Rollo, p. 22

^[5]
Rollo, p. 28

^[6]
Rollo, p. 23

^[7]
Rollo, p. 35 and 39

^[8]
Rollo, p. 39

^[9]
Rollo, p. 23 and 39

^[10]
Rollo, p. 40

^[11]
Rollo, pp. 23, 32-34, and 40-41

^[12]
Rollo, pp. 23, 33, and 40-41

^[13]
Rollo, pp. 23, and 37-38

^[14]
Rollo, pp. 11, 21, 24 and 39

^[15]
Rollo, p. 45

^[16]
Rollo. pp. 12-13

^[17]
Sy vs. Court of Appeals, G.R. No. 58100,
July 31, 1984,
131 SCRA 116

^[18]
Pasay City Government vs. CFI of Manila, G.R. No. L-32162, September
28, 1984, 132 SCRA
156

^[19]
Rollo. p. 41

^[20]
Rollo. p. 15

^[21]
Rollo. p. 27

21 Rollo.
p. 28

^[22]
Section 1, Rule 90 of the Rules of Court reads:

“SECTION 1. When order for distribution of residue made. – When
the debts, funeral charges, and expenses of administration, the allowance to
the widow, and inhe­ritance tax, if any, chargeable to the estate in accorda­nce
with law, have been paid, the court, on the appli­cation of the executor, or
administrator, or of a person interested in the estate, and after hearing upon notice, shall assign the residue of
the estate to the persons entitled to the same, naming them and the
proportions, or parts, ‘to which each is entitled, x x
x.”

^[23]
Rollo, p. 44