Florencio Fabillo v IAC

Doctrine:

Facts:
In her last will and testament, Justina Fabillo bequeathed to her brother, Florencio, a house and lot in San
Salvador Street, Palo, Leyte, and to her husband, Gregorio Brioso, a piece of land in Pugahanay, Palo, Leyte.
o After Justinas death, Florencio filed a petition for the probate1 of the said will.
Probate court approved the project of partition, with the reservation that the ownership of the land
and the house erected thereon be litigated and determined in a separate proceeding.
Two years later, Florencio sought the assistance of Atty. Alfredo Murillo in recovering the San Salvador property.
o Atty. Murillo wrote Florencio that the latter will give 40% of the money value of the house and lot as a
contingent, in case it is a success, considering that the present action is a revival of a lost case.
Then, Florencio and Murillo entered in a contract in which it reiterated that 40% of the sum equivalent of
whatever benefit that would be received by the former would be given to the latter.
When they won the case and had Florencio declared lawful owner of not only the San Salvador property, but also
the Pugahanay parcel of land, Atty. Murillo proceeded to implement the contract of services by taking possession
and exercising rights of ownership over 40% of said properties.
o He installed a tenant in the Pugahanay property.
Florencio claimed exclusive right over the two properties and refused to give Murillo his share of their produce.
o Inasmuch as his demands for his share of the produce of the Pugahanay property were unheeded, Murillo
filed with CFI Leyte for ownership of a parcel of land, damages, and appointment of a receiver against
Florencio Fabillo, his wife, and their children.
The Fabillo spouses contended that their consent to the contract of services was vitiated by old
age and ailment, and that Murillo misled them into believing that the special proceeding on the
probate of Justinas will was already terminated, when it was still pending resolution.
CFI also ruled that the contract of services did not violate Article 1491 of the Civil Code, as the contract
stipulated a contingent fee, and the court upheld Murillos claim for contingent attorneys fees of 40% of the
value of the recoverable properties. At the same time, it declared Murillo to be the lawful owner of 40% of both
the San Salvador and Pugahanay properties and the improvements thereon.
In view of the death of Florencio and Justina Fabillo during the pendency of the case, their children, who
substituted them as parties to the case, appealed the decision to the IAC, which affirmed in toto the decision of
CFI.
Hence, the present petition before the SC.

Issue:
W/N the contract of services is violative of Article 1491 of the Civil Code

H/R:
No.
o Article 1491 of the Civil Code, specifically paragraph 5 thereof, prohibits lawyers from acquiring by
purchase even at a public auction, properties and rights which are the objects of litigation in which they
may take part by virtue of their profession.
The said prohibition, however, applies only if the sale or assignment of the property takes place
during the pendency of the litigation involving the clients property.
o Hence, a contract between a lawyer and his client stipulating a contingent fee is not covered by said
prohibition under Article 1491(5) of the Civil Code, because the payment of said fee is not made during
the pendency of the litigation but only after judgment has been rendered in the case handled by the
lawyer.
In fact, under the 1988 Code of Professional Responsibility, a lawyer may have a lien over funds
and property of his client and may apply so much thereof as may be necessary to satisfy his
lawful fees and disbursements.

1
the official proving of a will