G.R. No.

L-10439           October 17, 1916

GAN TIANGCO, plaintiff-appellee,
vs.
SILVINO PABINGUIT, defendant-ppellant.

ARELLANO, C.J.:

Facts:

Candida Acabo was the owner of six parcels of land, of the following
dimensions: The first, 8 hectares; the second, 40 ares; the third and fourth,
each 20 ares; the fifth, 40 ares; and the sixth parcel, 20 ares.

These lands were sold on June 12, 1911, by their owner Candida Acabo, to
one Gan Tingco, for P500. .

But the purchaser Gan Tingco was unable to take possession of the six
parcels, for they were in the possession of Silvino Pabinguit, who alleges
certain rights therein. He claims to have purchased them for P375 from
Faustino Abad; that Abad yhad become their owner through purchase from
Henry Gardner; that the latter, in turn, had owned tyhem by reason of having
purchased them for P555 at a public auctiona held in the barrio of Martelo,
municipality of Tayasan, on MArch 20, 1907. A document was presented
which is a copy of the deputy sheriff said he kept of the proceedings had by
virtue of a writ of execution issued by the justice of the peace of Guijulngan, in
whcih the latter directed him to make a demand upon Candida Acabo to
comply with the judgment rendered against her as a result of the complaint,
filed by Silvestre Basaltos, and further ordering him, in case of her failure to
comply tehrewith, to levy upon "fixtures and other chattels and to collect the
amounts ordered, that is, P157.50, plus P300 for losses damages, the proper
costs and those of this execution. In the return the deputy sheriff begins by
saying that he made demand upon Candida Acabo and that the latter stated
that she had neither corn nor money; that he levied upon three plow
carabaos, one brood caraballa and the six parcles of land in question, for their
identity was expressly admitted; that their sale was announced for the 20th of
March, 1907 (but the return does not show the signature of the woman upon
whom the demand was made, nor does it disclose any evidence whatever to
show that the owner of this property had any knowledge of this attachment or
levy); that on March 20, 1907, he proceeded to sell at public auction all the
property levied upon; that the jsutice of the peace who ordered the execution,
Henry Gardner, himself appeared as the highest bidder and offered P280 for
the four carabaos and P275 for all the coconut groves, that, is the six parcels
of land measuring nine hectares and a fraction in area, containing bearing fruit
trees, or a total sum of P555, which the said successful bidder then and there
paid over; and, finally, that the same justice of the peace, Gardner, the
highest bidder, himself received the sum of P157.50, the remainder of the
proceeds from the execution sale after deduction of the costs, as the person
authrized so to do by the plaintiff Silvestre Basaltos; and that Gardner alone,
not Basaltos nor the judgment debtor Candida Acabo, signed the record of the
proceedings. Afterwards the deputy sheriff certified that the costs of the
execution amounted to P52.50, and that there was a surplus of P45 to
Candida Acabo's credit, which was to be delivered to her after settlement of
the matter of the certificates of ownership and the arrangment of the trabsfer
of the carabaos. These proceedings were signed only by the deputy sheriff
and recite that "by authorization of Candida Acabo I have delivered the sum of
P29 as the true balance in favor of the Said Candida Acabo, of the P45
mentione in the precedeing statement, from which latter sum there has been
deducted the amount of P16 which was paid to the treasusrer of this
municipality on the following accounts: Fine, P8; certificate of ownership, P4;
and certificate of transfer, P4." In that manner was the record closed and it
was not signed by any other person than the deputy sheriff, ALejandro
Sanchez.

The jusrice of the peace, Gardner, and the deputy sheriff, Sanchez, were
summoned to appear in the trial court on March 18, 1914. Sanchez did not put
in an appearance, and on being required by telegraph to explain the reason
and show why he should not be punished for contempt of court, he wired
back, saying: "From 12th to 18th instant was making investigations attempted
rape and theft. Will arrive there Monday, 23d. Will have enough time to finish
investigation," and on the day for the hearing he presented the document
Exhibit 3, referred to in the preceding paragragh.

Henry Gardner, in testifying for the defense, stated that the deputy sheriff had
executed in Gardner's favor a certificate of his purchase at auction sale, but
witness did not know where the document was and did not need it because
he, in turn, has sold everything he had purchased at that sale; that he was
formerly justice of the peace of the municipality of Guijulngan, of Tayasan,
and knew of a complaint by Silvestre Basaltos against Candida Acabo; that
afterwards when the auction was held, he took part therein, but that as he
subsequently learned that he was forbidden to do so, he sold what he had
purchased to Faustino Abad, Candida Acabo's son, who was but a boy at the
time; that the writ of execution was returnmed to him and he made a record of
that matter; that he had it in the justice of the peace court and left it there
when he ceased to hold office, in 1909.

Faustino Abad testified that Henry Gardner did actually sell to him for P275
the coconut groves which Gardner had purchased at auction; that it was true
that on April 29, 1907, witness was only 19 years old; that he knew that the
coconut groves were those that had belonged to his mother Candida Acabo;
and that he, in turn, sold the said coconut groves to Silvino Pabinguit for
P375, on June 19 of the same year. Both Gardner's deed of sale to Abad and
the latter's to Pabinguit were certified by the same deputy sheriff ALejandro
Sanchez as notary public of the municipality of Tayasan.

This same Alejandro Sanchez, being then the justice of the peace of Tayasan,
testified as a witness for the defense. He began by recognizing the aforesaid
deeds as having been certified by him in his capacity of notary public of
Tayasan, and afterwards stated that he had something to do with a writ of
execution issued by the justice of the peace of Guijulngan, Henry Gardner,
upon certain real estate belonging to Candida Acabo (it odes not so appear in
the writ, wherein only fixtures and other chattels are referred to); that, in
consideration of the P555 which Gardner paid at the time of the auction,
witness, without any reservation whatsoever, delivered to Gardner the
carabaos and lands knocked down to him at the sale; and that after he had
received from Gardner the purchase price he returned it to him, just as he
would have delivered it to the plaintiff Silvestre Basaltos, of whom Gardner
claimed to be the representative duly authorized as such by this plaintiff.

Candida Acabo testified that Alejandro Sanchez, while sheriff of Tayasan, did
not take possession of her lands by reason of the levy; that the only property
which he levied upon was four carabaos, and she did not know whether they
had been sold at auction; and that Sanchez had not told her that he lands had
been levied upon, or that they had been sold at auction.

Silvino Pabinguit testified that in the month of February he was in Guijilngan

searching for the record of the auction sale of Candida Acabo's property; that
four persons made the search; and . . . the record was not found. This last
statement was made by Alejandro Sanchez.

The Court of First Instance of Oriental NEgros rendered judgment in behalf of

the plaintiff, Gan Tingco, declaring him the owner of the lands described in the
complaint, and ordered the defendant, Silvino Pabinguit, to restore the plaintiff
to their possession. No express finfding was made as to the costs.

The defendant appealed, with the right to a review of the evidence. The
appeal was heard by this court, it having been brought it by bill of exceptions.

The appellant alleges that the trial court erred in holding that, notwithstanding
the sale of the lands in question at public auction, Candida Acabo did not
cease to be the owner of these properties, because there were certain
irregularities and defects in the said auction.

In the judgment appealed from several of these defects are specified and it is
unnecessary to treat of them in detail. With respect to the legality of the
proceedings had up to the time of the sale of the lands, there is certainly room
for doubt. No evidence is found that Silvestre Basaltos filed any complaint
against Candida Acabo before the justice of the peace court of Guijulngan
and that any judgment was rendered on January 2, 1907, enabling the plaintiff
to recover from the defendant 150 cavanes of corn, or in default thereof the
sum of P157.50, and in addition P300 for losses and damages and court
costs. Only the writ of execution appears in the record. The original copy of
the return to the wirt of execution was not presented, because it was not
found; there was offered in evidence only what the sheriff said was a copy of
the return, and he delayed as long in presenting it as he did in obeting the
summons of the court to appear as a witness. No copy of that judgment was
delivered to the judgment debtor, in violation of the provisions of section 446
of Act No. 190. The sheriff sold lands belonging to the judgment debtor, and it
does not appear that the provisions of section 445 of the same Act were
complied with, to wit, that if real estate be levied upon and sold by virtue of the
execution, the clerk must record the execution and the officer's return thereon
and certify the same under his hand, as true copies, in a book to be called the
"Execution Book." The justice of peace, in his writ, certainly did not order the
levy upon ior sale of real estate, but only fixtures and other chattles; but the
sheriff's return includes real estate levied upon and solt at public auction. The
purchaser at public auction, the same justice of the peace, could not exhibit
the instrument which he said the sheriff executed in his behalf, because, as
he said, he did not know where it was and that he did not need it. We are not
sure that Candida Acabo, a simple country woman, was not despoiled of her
lands under the pretexts of debt, judgment, and execution.

Leaving out of account that things which should have been proven at trial
were not proven, it is a positive fact that Henry Gardner, justice of peace of
Guijulngan, was the purchaser at public auction of Candida Acabo's lands
and carabaos levied upon as a result of the judgment, and that he delivered
the price of the sale, P555, to the sheriff; but hte latter returned this sum to the
justice of the peace, who said that he wea authorized by Silvestre Basaltos,
the supposed creditor, to receive the same. At the finish the sheriff delivered
nothing to the owner Acabo, all the proceeds of the auction sale having been
expended in one way or another without the consent of the judgment debtor
appearing of record.

Aside from everything else, the trial court was impressed by the circumstance
that in the public auction the purchaser was the justice of the peace himself.
This, in the judge's opinion, was unauthorized, because article 1459, No. 5, of
the Civil Code, prohibits judges from acquring by purchase, even at pub;ic or
judicial sale, either in person or by an agent, any property or rights litigated in
the court in the jurisdiction or territory within which they exercise their
respective duties; this prohibition includes taking of property by assignment.

The appellant alleges that the property purchased by justice of the peace
Gardner was not the subject of litigation in the justice court; that the action
was to recover a certain sum of money, and that he had ordered the property
sold on execution.

This raises, therefore, a question as to the true meaning of paragraph 5 of

article 1459 of the Civil Code. lawphil.net

The Ley de Bases, in accordance with which the Civil Code was enacted,
provides as follows, in Base No. 26:

The forms, requirements and conditions of each particular contract shall be

determined and defined subject to the general list of obligations and their
effects, with the understanding that the legislation in force and the legal
principles evolved therefrom by judicial decisions, etc., etc., shall serve as
basis.

One of the bodies of law which conastitute the legislation now in force in
the Novisima Recopilacion. In Law 4, Title 14, Book 5 of the same is found the
following provision: "We order that in public auctions held by direction of our
alcaldes, neither the latter nor any person whomsoever in their name shall bid
in anything sold at such public auctions." The word alcaldes means judges.
The caption of Title 14 is "Alcaldes or Provincial Judges," and the entire title
deals with the exercise of judicial jurisdiction. Prior to the enactment of the
Civil Code, the Penal Code was also in force. Article 400 of the latter
prohinits, under penalty, any judge from taking part, either directly, or
indirectly, in any operation of exchange, trade or porfit with respect to things
not the product of his own property, within the territory over which he
exercises jurisdiction. Judging from the legal oprecedents on which the Civil
Code is based, it would not seem too much to conclude that the said article of
the Civil Code does not make any distinction between property in litigation. In
effect, it appears to be as delicate a matter for a judge to take part in the sale
of property that had been the subject of ligitgation in his court, as to intervene
in auction of property which, though not directly litigated in his court, is
nevertheless levied upon and sold as the result of a writ of execution issued
by him. What the law intends to avoid is the improper interference with an
interest of a judge in a thing levied upon and sold by his order.

If under the law Gardner was prohibited from acquiring the ownership of
Acabo's lands, then he could not have transmitted to Faustino Abad the right
of ownership that he did not possess; nor could Abad, to whom this alleged
ownership had not been transmitte, have conveyed the same to Pabinguit.
What Gardner should have done in view of the fact that the sale, as he finally
acknowledged, was void, was to claim the price that had been deposited in
court, and the justice of the peace of Guijulngan should have declared the
auction void and have ordered a new sale to be held, besides correcting the
errors that had been committed in the proceedings. To the reasons already
stated, there is to be added the additional one, with respect to the sale made
by Faustino Abad to Silvino Pabinguit, that Abad was a minor at the time — a
circumstance that deprived him of capacity to sell (Civil Code, art. 1263).
Abad had no ownership to transmit to anyone and, besides, he had no
personality to enable him to contract by himself, on account of his lack of legal
age.

Sanchez, the sheriff, the sole notary who certified all these deeds of
conveyance in order that Pabinguit might become owner of those coconut
lands with which his own lands adjoined, was in such a hurry that, as he
testified at the trial, on the very same day of the auction he had already
executed in behalf of Henry Gardner the final deed of sale of the said lands,
without allowing time for their possible redemption. Section 466 of Act No. 190
prescribes that if redemption has not been requested, this deed is to be
executed within the twelve months subsequent to the sale.

This court finds no reason whatever why it should not affirm the judgment
appealed from. It is therefore hereby affirmed with the costs of this instance
against the appellant. So ordered..
G.R. No. L-68838             March 11, 1991

FLORENCIO FABILLO and JOSEFA TANA (substituted by their heirs

Gregorio Fabillo, Roman Fabillo, Cristeta F. Maglinte and Antonio
Fabillo), petitioners,
vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT (Third Civil
Case Division) and ALFREDO MURILLO (substituted by his heirs Fiamita
M. Murillo, Flor M. Agcaoili and Charito M. Babol), respondents.

FERNAN, C.J.:

Facts:

In the instant petition for review on certiorari, petitioners seek the reversal of
the appellate court's decision interpreting in favor of lawyer Alfredo M. Murillo
the contract of services entered into between him and his clients, spouses
Florencio Fabillo and Josefa Taña.

In her last will and testament dated August 16, 1957, Justina Fabillo
bequeathed to her brother, Florencio, a house and lot in San Salvador Street,
Palo, Leyte which was covered by tax declaration No. 19335, and to her
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. On June
2, 1962, the probate court approved the project of partition "with the
reservation that the ownership of the land declared under Tax Declaration No.
19335 and the house erected thereon be litigated and determined in a
separate proceedings."2

Two years later, Florencio sought the assistance of lawyer Alfredo M. Murillo
in recovering the San Salvador property. Acquiescing to render his services,
Murillo wrote Florencio the following handwritten letter:

Dear Mr. Fabillo:

I have instructed my stenographer to prepare the complaint and

file the same on Wednesday if you are ready with the filing fee
and sheriffs fee of not less than P86.00 including transportation
expenses.

Considering that Atty. Montilla lost this case and the present
action is a revival of a lost case, I trust that you will gladly give
me 40% of the money value of the house and lot as a contigent
(sic) fee in case of a success. When I come back I shall prepare
the contract of services for your signature.

Thank you.
 Cordially yours,
(Sgd.) Alfredo M. Murillo
Aug. 9, 19643

Thirteen days later, Florencio and Murillo entered into the following contract:

CONTRACT OF SERVICES

KNOW ALL MEN BY THESE PRESENTS:

That I, FLORENCIO FABILLO, married to JOSEFA TANA, of

legal age, Filipino citizen and with residence and postal address
at Palo, Leyte, was the Petitioner in Special Proceedings No.
843, entitled "In the Matter of the Testate Estate of the late
Justina Fabillo, Florencio Fabillo, Petitioner" of the Court of First
Instance of Leyte;

That by reason of the Order of the Court of First Instance of

Leyte dated June 2, 1962, my claim for the house and lot
mentioned in paragraph one (1) of the last will and testament of
the late Justina Fabillo, was denied altho the will was probated
and allowed by the Court;

That acting upon the counsel of Atty. Alfredo M. Murillo, I have

cause(d) the preparation and filing of another case, entitled
"Florencio Fabillo vs. Gregorio D. Brioso," which was docketed
as Civil Case No. 3532 of the Court of First Instance of Leyte;

That I have retained and engaged the services of Atty.

ALFREDO M. MURILLO, married and of legal age, with
residence and postal address at Santa Fe, Leyte to be my
lawyer not only in Social Proceedings No. 843 but also in Civil
Case No. 3532 under the following terms and conditions;

That he will represent me and my heirs, in case of my demise in

the two cases until their successful conclusion or until the case
is settled to my entire satisfaction;

That for and in consideration for his legal services, in the two
cases, I hereby promise and bind myself to pay Atty. ALFREDO
M. MURILLO, in case of success in any or both cases the sum
equivalent to FORTY PER CENTUM (40%) of whatever benefit I
may derive from such cases to be implemented as follows:

If the house and lot in question is finally awarded to me or a part

of the same by virtue of an amicable settlement, and the same is
sold, Atty. Murillo, is hereby constituted as Atty. in-fact to sell
and convey the said house and lot and he shall be given as his
compensation for his services as counsel and as attorney-in-fact
 the sum equivalent to forty per centum of the purchase price of
the house and lot;

If the same house and lot is just mortgage(d) to any person,

Atty. Murillo shall be given the sum equivalent to forty per
centum (40%) of the proceeds of the mortgage;

If the house and lot is leased to any person, Atty. Murillo shall be
entitled to receive an amount equivalent to 40% (FORTY PER
CENTUM) of the rentals of the house and lot, or a part thereof;

If the house and lot or a portion thereof is just occupied by the

undersigned or his heirs, Atty. Murillo shall have the option of
either occupying or leasing to any interested party FORTY PER
CENT of the house and lot.

Atty. Alfredo M. Murillo shall also be given as part of his

compensation for legal services in the two cases FORTY PER
CENTUM of whatever damages, which the undersigned can
collect in either or both cases, provided, that in case I am
awarded attorney's fees, the full amount of attorney's fees shall
be given to the said Atty. ALFREDO M. MURILLO;

That in the event the house and lot is (sic) not sold and the
same is maintained by the undersigned or his heirs, the costs of
repairs, maintenance, taxes and insurance premiums shall be
for the account of myself or my heirs and Attorney Murillo, in
proportion to our rights and interest thereunder that is forty per
cent shall be for the account of Atty. Murillo and sixty per cent
shall be for my account or my heirs.

IN WITNESS HEREOF, I hereby set unto my signature below

this 22nd day of August 1964 at Tacloban City.

(Sgd.) FLORENCIO FABILLO

(Sgd.) JOSEFA T. FABILLO

WITH MY CONFORMITY:

(Sgd.) ALFREDO M. MURILLO

(Sgd.) ROMAN T. FABILLO (Sgd.) CRISTETA F. MAGLINTE

(Witness) (Witness)4

Pursuant to said contract, Murillo filed for Florencio Fabillo Civil Case No.
3532 against Gregorio D. Brioso to recover the San Salvador property. The
case was terminated on October 29, 1964 when the court, upon the parties'
joint motion in the nature of a compromise agreement, declared Florencio
Fabillo as the lawful owner not only of the San Salvador property but also the
Pugahanay parcel of land.
Consequently, Murillo proceeded to implement the contract of services
between him and Florencio Fabillo by taking possession and exercising rights
of ownership over 40% of said properties. He installed a tenant in the
Pugahanay property.

Sometime in 1966, Florencio Fabillo claimed exclusive right over the two
properties and refused to give Murillo his share of their produce. 5 Inasmuch as
his demands for his share of the produce of the Pugahanay property were
unheeded, Murillo filed on March 23, 1970 in the then Court of First Instance
of Leyte a complaint captioned "ownership of a parcel of land, damages and
appointment of a receiver" against Florencio Fabillo, his wife Josefa Taña,
and their children Ramon (sic) Fabillo and Cristeta F. Maglinte.6

Murillo prayed that he be declared the lawful owner of forty per cent of the two
properties; that defendants be directed to pay him jointly and severally
P900.00 per annum from 1966 until he would be given his share of the
produce of the land plus P5,000 as consequential damages and P1,000 as
attorney's fees, and that defendants be ordered to pay moral and exemplary
damages in such amounts as the court might deem just and reasonable.

In their answer, the defendants stated that the consent to the contract of
services of the Fabillo spouses was vitiated by old age and ailment; that
Murillo misled them into believing that Special Proceedings No. 843 on the
probate of Justina's will was already terminated when actually it was still
pending resolution; and that the contingent fee of 40% of the value of the San
Salvador property was excessive, unfair and unconscionable considering the
nature of the case, the length of time spent for it, the efforts exerted by
Murillo, and his professional standing.

They prayed that the contract of services be declared null and void; that
Murillo's fee be fixed at 10% of the assessed value of P7,780 of the San
Salvador property; that Murillo be ordered to account for the P1,000 rental of
the San Salvador property which he withdrew from the court and for the
produce of the Pugahanay property from 1965 to 1966; that Murillo be
ordered to vacate the portion of the San Salvador property which he had
occupied; that the Pugahanay property which was not the subject of either
Special Proceedings No. 843 or Civil Case No. 3532 be declared as the
exclusive property of Florencio Fabillo, and that Murillo be ordered to pay
moral damages and the total amount of P1,000 representing expenses of
litigation and attorney's fees.

In its decision of December 2, 1975,7 the lower court ruled that there was
insufficient evidence to prove that the Fabillo spouses' consent to the contract
was vitiated. It noted that the contract was witnessed by two of their children
who appeared to be highly educated. The spouses themselves were old but
literate and physically fit.

In claiming jurisdiction over the case, the lower court ruled that the complaint
being one "to recover real property from the defendant spouses and their
heirs or to enforce a lien thereon," the case could be decided independent of
the probate proceedings. Ruling that the contract of services did not violate
Article 1491 of the Civil Code as said contract stipulated a contingent fee, the
court upheld Murillo's claim for "contingent attorney's fees of 40% of the value
of recoverable properties." However, the court declared Murillo to be the
lawful owner of 40% of both the San Salvador and Pugahanay properties and
the improvements thereon. It directed the defendants to pay jointly and
severally to Murillo the amount of P1,200 representing 40% of the net produce
of the Pugahanay property from 1967 to 1973; entitled Murillo to 40% of the
1974 and 1975 income of the Pugahanay property which was on deposit with
a bank, and ordered defendants to pay the costs of the suit.

Both parties filed motions for the reconsideration of said decision: Fabillo,
insofar as the lower court awarded 40% of the properties to Murillo and the
latter insofar as it granted only P1,200 for the produce of the properties from
1967 to 1973. On January 29, 1976, the lower court resolved the motions and
modified its decision thus:

ACCORDINGLY, the judgment heretofore rendered is modified to read as

follows:

(a) Declaring the plaintiff as entitled to and the true and lawful owner of forty
percent (40%) of the parcels of land and improvements thereon covered by
Tax Declaration Nos. 19335 and 6229 described in Paragraph 5 of the
complaint;

(b) Directing all the defendants to pay jointly and severally to the plaintiff the
sum of Two Thousand Four Hundred Fifty Pesos (P2,450.00) representing
40% of the net produce of the Pugahanay property from 1967 to 1973;

(c) Declaring the plaintiff entitled to 40% of the 1974 and 1975 income of said
riceland now on deposit with the Prudential Bank, Tacloban City, deposited by
Mr. Pedro Elona, designated receiver of the property;

(d) Ordering the defendants to pay the plaintiff the sum of Three Hundred
Pesos (P 300.00) as attorney's fees; and

(e) Ordering the defendants to pay the costs of this suit.

SO ORDERED.

In view of the death of both Florencio and Justina Fabillo during the pendency
of the case in the lower court, their children, who substituted them as parties
to the case, appealed the decision of the lower court to the then Intermediate
Appellate Court. On March 27, 1984, said appellate court affirmed in toto the
decision of the lower court.8

The instant petition for review on certiorari which was interposed by the

Fabillo children, was filed shortly after Murillo himself died. His heirs likewise
substituted him in this case. The Fabillos herein question the appellate court's
interpretation of the contract of services and contend that it is in violation of
Article 1491 of the Civil Code.

The contract of services did not violate said provision of law. Article 1491 of
the Civil Code, specifically paragraph 5 thereof, prohibits lawyers from
acquiring by purchase even at a public or judicial 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 client's property.9

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.10

As long as the lawyer does not exert undue influence on his client, that no
fraud is committed or imposition applied, or that the compensation is clearly
not excessive as to amount to extortion, a contract for contingent fee is valid
and enforceable.11 Moreover, contingent fees were impliedly sanctioned by
No. 13 of the Canons of Professional Ethics which governed lawyer-client
relationships when the contract of services was entered into between the
Fabillo spouses and Murillo.12

However, we disagree with the courts below that the contingent fee stipulated
between the Fabillo spouses and Murillo is forty percent of the properties
subject of the litigation for which Murillo appeared for the Fabillos. A careful
scrutiny of the contract shows that the parties intended forty percent of
the value of the properties as Murillo's contingent fee. 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 forty per centum of whatever benefit" Fabillo
would derive from favorable judgments. The same stipulation was earlier
embodied by Murillo in his letter of August 9, 1964 aforequoted.

Worth noting are the provisions of the contract which clearly states that in
case the properties are sold, mortgaged, or leased, Murillo shall be entitled
respectively to 40% of the "purchase price," "proceeds of the mortgage," or
"rentals." The contract is vague, however, with respect to a situation wherein
the properties are neither sold, mortgaged or leased because Murillo is
allowed "to have the option of occupying or leasing to any interested party
forty per cent of the house and lot." Had the parties intended that Murillo
should become the lawful owner of 40% of the properties, it would have been
clearly and unequivocally 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, however, should be resolved against Murillo
as it was he himself who drafted the contract.13 This is in consonance with the
rule of interpretation that, in construing a contract of professional services
between a lawyer and his client, such construction as would be more
favorable to the client should be adopted even if it would work prejudice to the
lawyer.14 Rightly so because of the inequality in situation between an attorney
who knows the technicalities of the law on the one hand and a client who
usually is ignorant of the vagaries of the law on the other hand.15

Considering the nature of the case, the value of the properties subject matter
thereof, the length of time and effort exerted on it by Murillo, we hold that
Murillo is entitled to the amount of Three Thousand Pesos (P3,000.00) as
reasonable attorney's fees for services rendered in the case which ended on a
compromise agreement. In so ruling, we uphold "the time-honored legal
maxim that a lawyer shall at all times uphold the integrity and dignity of the
legal profession so that his basic ideal becomes one of rendering service and
securing justice, not money-making. For the worst scenario that can ever
happen to a client is to lose the litigated property to his lawyer in whom all
trust and confidence were bestowed at the very inception of the legal
controversy."16

WHEREFORE, the decision of the then Intermediate Appellate Court is

hereby reversed and set aside and a new one entered (a) ordering the
petitioners to pay Atty. Alfredo M. Murillo or his heirs the amount of P3,000.00
as his contingent fee with legal interest from October 29, 1964 when Civil
Case No. 3532 was terminated until the amount is fully paid less any and all
amounts which Murillo might have received out of the produce or rentals of
the Pugahanay and San Salvador properties, and (b) ordering the receiver of
said properties to render a complete report and accounting of his receivership
to the court below within fifteen (15) days from the finality of this decision.
Costs against the private respondent.