Title
Agaton vs. Court of Appeals
Case
G.R. No. 93941
Decision Date
Jun 26, 1992
Attorney Agaton sought contingent fees from Solidbank after a settlement, but courts ruled he was not entitled as the agreed foreclosure condition was unmet.
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Case Digest (G.R. No. 93941)

Facts:

Parties Involved:

  • Petitioner: Niceforo S. Agaton (Attorney)
  • Respondents: The Hon. Court of Appeals, Hon. Jose C. De Guzman (RTC Judge, Br. 93, Q.C.), and Consolidated Bank & Trust Co. (Solidbank).

Background:
On September 21, 1981, Insular Bank of Asia and America (IBAA) and Solidbank extended a five-year credit accommodation of P13,000,000 to Hitachi-Union, Inc. (HITACHI), secured by a real estate mortgage and a surety undertaking by Leonardo Ty.

Loan Default and Legal Action:
Due to HITACHI’s failure to repay, IBAA filed for extrajudicial foreclosure of the mortgage in 1985. HITACHI filed an injunction case (Civil Case No. Q-44439) against IBAA, Solidbank, and the sheriffs of Quezon City, seeking to halt the foreclosure.

Retention of Counsel:
Solidbank and IBAA retained Attorney Niceforo S. Agaton as their common counsel. Agaton proposed a fee structure consisting of a fixed fee (P150,000) and a contingent fee (P550,000), payable only if Solidbank successfully foreclosed the real estate mortgage.

Counter-Proposal by Solidbank:
Solidbank countered with a fixed fee of P100,000 and a contingent fee of P250,000, payable only upon successful foreclosure and registration of the Sheriff’s Certificate of Sale. Agaton accepted this counter-proposal without objection.

Settlement and Compromise:
During the proceedings, Leonardo Ty negotiated a settlement, leading to a compromise agreement and a Judgment by Compromise on January 6, 1986.

Post-Judgment Claim for Contingent Fees:
Agaton filed a claim for his contingent fee, arguing that the settlement effectively fulfilled the contingency. Solidbank opposed, stating the foreclosure condition was never met.

Trial Court Decision:
The trial court initially granted Agaton’s claim but later reversed its decision upon Solidbank’s motion for reconsideration, holding that the stipulated contingency (foreclosure) did not occur.

Issue:

  1. Whether Agaton is entitled to the contingent fee despite the non-occurrence of the stipulated contingency (foreclosure of the real estate mortgage).
  2. Whether the settlement and compromise agreement satisfy the condition for the payment of the contingent fee.

Ruling:

The petition for review was DENIED. The Court of Appeals and the Supreme Court upheld the trial court’s decision, finding that Agaton is not entitled to the contingent fee because the agreed-upon condition (foreclosure of the real estate mortgage) did not occur.

Ratio:

  1. Binding Nature of Contract Terms: The terms of the written contract between Agaton and Solidbank are binding. The contingent fee was explicitly conditioned on the foreclosure of the real estate mortgage and registration of the Sheriff’s Certificate of Sale, neither of which occurred.

  2. Literal Interpretation of Stipulations: The courts must follow the literal meaning of contract stipulations (Article 1370, Civil Code). The terms of the agreement were clear and unambiguous, leaving no room for interpretation.

  3. No Implied Agreement for Alternative Contingencies: The contract did not provide for alternative contingencies (e.g., settlement or compromise) that would trigger the payment of the contingent fee.

  4. Judicial Construction Unnecessary: The stipulation is self-explanatory, and no extrinsic evidence is needed to interpret it.

The Supreme Court emphasized that the parties are bound by the explicit terms of their agreement, and Agaton’s claim for the contingent fee was rightly denied since the stipulated condition was not fulfilled.


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