FABILLO V. IAC • Juliana Fabillo, in her last will and testament dated Aug. 16, 1957, bequeathed to her brother, Florencio, a house and lot in San Salvador, Palo, Leyte and to his husband Gregorio D. Brioso a piece of land in Pugahanay, Palo, Leyte. • After Justina’s death, Florencio filed a petition for the probate of said will. • Florencio sought the assistance of Atty. Alfredo M. Murillo in recovering the San Salvador property. • Florencio and Murillo entered into a contract, stipulating therein that Murillo shall represent Florencioin the conclusion of the two cases, and in consideration of Murillo’s legal services, he shall be paid, in case of success 40% of what he may acquire from the favorable judgment. o In case that the properties are sold, mortgaged or leased, Murillo shall be entitled to 40% of the purchase price, proceeds of the mortgage, or rentals, respectively. • Pursuant to the said contract, Murillo filed a civil case against Gregorio D. Brioso to recover the SanSalvador property. However, the case was terminated when the parties entered into a compromise agreement declaring Florencio as the lawful owner of not only the San Salvador property but also of the parcel of land located at Pugahanay. • As a result, Murillo proceeded to implement the contract of services between him and Florencio by taking possession and exercising rights of ownership over 40% of said properties. • In 1966, Florencio claimed exclusive right of ownership over the two properties and refused to give to Murillo his share of the properties. • Murillo filed in the CFI a complaint for ownership of the parcel of land. ISSUE: WON THE CONTRACT OF SERVICES VIOLATED THE PROVISION OF ART. 1491, NCC.HELD:NO! The contract of services did not violate Art. 1491, NCC. • The said prohibition applies only if the sale or assignment of the property takes place during the pendency of the litigation involving the client’s property. • Thus, the contract between the a lawyer and a client stipulating a contingent fee is not covered by said prohibition under Art. 1491(5), CC because the payment of said fee is not made during the pendency of the litigation but only after the judgment was rendered final. • As long as the lawyer did not exert undue influence on his client, that no fraud is committed or implication applied, or that the compensation is clearly not excessive as to amount to extortion, a contract for contingent fee is valid and enforceable. • However, the Court disagrees that the contingent fee stipulated by the parties is 40% of the properties subject of the litigation. o A careful scrutiny of the contract shows that the parties intended 40% of the value of the properties as Murillo’s contingent fee. o This is borne out by the stipulation that “in case of success of any or both cases,” Murillo shall be paid “the sum equivalent to 40% of whatever benefit” Fasbillo would derive from favorable judgments. •
Moreover, the herein contract was vague with respect to a situation wherein the properties are neither sold, mortgaged nor leased because Murillo is allowed “to have the option of occupying or leasing to any interested party 40% of the house and lot”. o Had the parties intended that Murillo should be the lawful owner of 40% of the properties, it would have been stipulated in the contract considering that the Fabillos would part with actual portions of their properties and cede the same to Murillo. • The ambiguity of said provision should be resolved against Murillo as it was him who drafted the contract. o This is in consonance with the rule of interpretation that, in construing a contract of professional services between a lawyer and a client, a construction as would be more favorable to the client should be adopted even if it would prejudice the lawyer.
