G.R. No. 79318 ; June 27, 1991
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 ARTURO A. ALAFRIZ, respondents.

FACTS

Private respondent Arturo Alafriz was engaged as counsel for the estate of Angela M. Butte in Civil Case No. V-168, a suit for annulment of title and reconveyance of a 122-hectare property. The initial letter-agreement dated April 4, 1974, stipulated that his attorney’s fees would be “20% of the property” under litigation upon conclusion of the case. The trial court dismissed the complaint on December 10, 1977, restoring possession to the estate. Subsequently, on February 4, 1980, the parties entered into a “Stipulation on attorney’s fees,” which was approved by the probate court. It provided that the fee for Civil Case No. V-168 would be “20% of the net value or proceeds… of the 122.3011 hectares” unless the claimant opted for segregation of 20% of the area. When petitioner Myron C. Papa, the estate’s special administrator, did not pay, Alafriz filed a motion to fix the amount. The Regional Trial Court fixed the fees at P100,000.00, which was affirmed by the Court of Appeals.

ISSUE

Whether the trial court correctly fixed the attorney’s fees at P100,000.00 based on the parties’ stipulation, notwithstanding the petitioner’s contention that payment should await the final settlement of the estate and the deduction of all expenses.

RULING

The Supreme Court affirmed the lower courts’ rulings. The legal logic centers on the interpretation of the contractual stipulation and the demandability of the obligation. The Court held that the obligation to pay attorney’s fees became due and demandable upon the favorable conclusion of Civil Case No. V-168 in 1977, where Alafriz’s services were rendered. The subsequent 1980 stipulation, approved by the probate court, did not alter this condition but merely detailed the computation basis as 20% of the net value or proceeds. The term “net value” implied deduction of expenses related to the property itself, not all estate administration expenses. Petitioner failed to present any such deductible expenses for nearly fourteen years since the case ended. Consequently, the trial court correctly used the property’s agreed value of P500,000.00 as a reasonable basis. The claim was a charge against the estate, not a distribution to heirs, and thus payable before final estate settlement. The lower court’s fixing of the fee at P100,000.00 (20% of P500,000.00) was a proper execution of the stipulation and not a modification thereof.