LABAGALA vs. SANTIAGO On Issue No.

2
FACTS:
Jose T. Santiago owned a parcel of land in Manila. However, his sisters sued him for
recovery of 2/3 share of the land alleging that he had fraudulently registered it in his
name.
The trial court decided in favor of his sisters.
Jose died intestate. His sisters then filed a complaint before the RTC for recovery of
the 1/3 portion of said property which was in the possession of Ida C. Labagala (who
claimed to be Ida C. Santiago, the daughter of Jose).
The trial court ruled in favor of Labagala. According to the trial court, the said deed
constitutes a valid donation. Even if it were not, petitioner would still be entitled to
Jose's 1/3 portion of the property as Jose's daughter.
When appealed, the Court of Appeals (CA) reversed the decision of the trial court. It
took into account that Ida was born of different parents, as indicated her birth
certificate.
ISSUES:
1. WON respondents may impugn petitioner's filiation in this action for recovery of title
and possession.
No.
The Court ruled that there is no valid sale in this case. Jose did not have the right to
transfer ownership of the entire property to petitioner since 2/3 thereof belonged to his
sisters.
Petitioner could not have given her consent to the contract, being a minor at the time.
Consent of the contracting parties is among the essential requisites of a contract,
including one of sale, absent which there can be no valid contract. Moreover,
petitioner admittedly did not pay any centavo for the property which makes the sale
void. Article 1471 of the Civil Code provides that if the price is simulated, the sale is
void, but the act may be shown to have been in reality a donation, or some other act
or contract.
Neither may the purported deed of sale be a valid deed of donation. Even assuming
that the deed is genuine, it cannot be a valid donation. It lacks the acceptance of the
donee required by Art. 725 of the Civil Code.
Being a minor, the acceptance of the donation should have been made by her father
or mother or her legal representative pursuant to Art. 741 of the same Code. No one
of those mentioned in the law accepted the donation for Ida.

2. WON petitioner is entitled to Jose's 1/3 portion of the property he co-owned with
respondents, through succession, sale, or donation.

HELD:
The Court AFFIRMED the decision of the CA.

On Issue No. 1
Yes.
Article 263 refers to an action to impugn the legitimacy of a child, to assert and prove
that a person is not a man's child by his wife. However, the present respondents are
asserting not merely that petitioner is not a legitimate child of Jose, but that she is not
a child of Jose at all.

A baptismal certificate, a private document, is not conclusive proof of filiation.

Use of a family name certainly does not establish pedigree. Thus, she cannot inherit
from him through intestate succession.
Paragas vs. Heirs of Dominador Balacano, 468 SCRA 717 (2005) Issues: Whether or not Gregorio has executed a perfected Deed of Sale. NO

Facts: Ruling:
 Gregorio Balacano, married to Lorenza Sumigcay, was the registered owner of
Lot 1175-E and Lot 1175-F of the Subd. Plan Psd-38042 [located at Baluarte, NO. Gregorio’s consent was absent in the execution of the Deed of Sale.
Santiago City, Isabela].
 Gregorio and Lorenza had three children, namely: Domingo, Catalino and It is not disputed that when Gregorio signed the deed of sale, Gregorio was seriously
Alfredo, all surnamed Balacano. ill, as he in fact died a week after the deed’s signing. Gregorio died of complications
 Lorenza died on December 11, 1991. Gregorio, on the other hand, died on July caused by cirrhosis of the liver. Gregorio’s death was neither sudden nor immediate;
28, 1996. Petitioners were the grandchildren of Gregorio. he fought at least a month-long battle against the disease until he succumbed to
 Prior to his death, Gregorio was admitted at the Veterans General Hospital in death on July 22, 1996. Given that Gregorio purportedly executed a deed during the
Bayombong, Nueva Vizcaya on June 28, 1996 and stayed there until July 19, last stages of his battle against his disease, we seriously doubt whether Gregorio
1996. He was transferred in the afternoon of July 19, 1996 to the Veterans could have read, or fully understood, the contents of the documents he signed or of
Memorial Hospital in Quezon City where he was confined until his death. the consequences of his act. We note in this regard that Gregorio was brought to the
 Respondents essentially alleged – in asking for the nullification of the deed of Veteran’s Hospital at Quezon City because his condition had worsened on or about
sale – that: (1) their grandfather Gregorio could not have appeared before the the time the deed was allegedly signed. This transfer and fact of death not long after
notary public on July 22, 1996 at Santiago City because he was then confined speak volumes about Gregorio’s condition at that time. We likewise see no conclusive
at the Veterans Memorial Hospital in Quezon City; (2) at the time of the alleged evidence that the contents of the deed were sufficiently explained to Gregorio before
execution of the deed of sale, Gregorio was seriously ill, in fact dying at that he affixed his signature.
time, which vitiated his consent to the disposal of the property; and (3) Catalino
(uncle) manipulated the execution of the deed and prevailed upon the dying Article 24 of the Civil Code tells us that in all contractual, property or other relations,
Gregorio to sign his name on a paper the contents of which he never when one of the parties is at a disadvantage on account of his moral dependence,
understood because of his serious condition. ignorance, indigence, mental weakness, tender age or other handicap, the courts
 Alternatively, they alleged that assuming Gregorio was of sound and disposing must be vigilant for his protection.
mind, he could only transfer a half portion of Lots 1175-E and 1175-F as the
other half belongs to their grandmother Lorenza who predeceased Gregorio – In the case at bar, the Deed of Sale was allegedly signed by Gregorio on his death
they claimed that Lots 1175-E and 1175-F form part of the conjugal partnership bed in the hospital. Gregorio was an octogenarian at the time of the alleged execution
properties of Gregorio and Lorenza. of the contract and suffering from liver cirrhosis at that – circumstances which raise
 Finally, they alleged that the sale to the Spouses Paragas covers only a 5- grave doubts on his physical and mental capacity to freely consent to the contract.
hectare portion of Lots 1175-E and 1175-F leaving a portion of 6,416 square
meters that Catalino is threatening to dispose. They asked for the nullification
of the deed of sale executed by Gregorio and the partition of Lots 1175-E and
1175-F.
 The defendants-appellees denied the material allegations of the complaint.
Additionally, they claimed that: (1) the deed of sale was actually executed by
Gregorio on July 19 (or 18), 1996 and not July 22, 1996; (2) the Notary Public
personally went to the Hospital in Bayombong, Nueva Vizcaya on July 18,
1996 to notarize the deed of sale already subject of a previously concluded
covenant between Gregorio and the Spouses Paragas; (3) at the time Gregorio
signed the deed, he was strong and of sound and disposing mind; (4) Lots
1175-E and 1175-F were Gregorio’s separate capital and the inscription of
Lorenza’s name in the titles was just a description of Gregorio’s marital status;
(5) the entire area of Lots 1175-E and 1175-F were sold to the Spouses
Paragas.
Spouses ANTONIO and LUZVIMINDA GUIANG, petitioners,
vs.
COURT OF APPEALS and GILDA COPUZ, respondents.
FACTS:
The sale of a conjugal property requires the consent of both the husband and the
wife. The absence of the consent of one renders the sale null and void, while the
vitiation thereof makes it merely voidable. Only in the latter case can ratification cure
the defect.
Over the objection of private respondent Gilda Corpuz and while she was in Manila
seeking employment (with the consent of her husband), her husband sold to the
petitioners-spouses Antonio and Luzviminda Guiang one half of their conjugal
peoperty, consisting of their residence and the lot on which it stood.
Upon her return to Cotabato, respondent gathered her children and went back to the
subject property. Petitioners filed a complaint for trespassing. Later, there was an
amicable settlement between the parties. Feeling that she had the shorter end of the
bargain, respondent filed an Amended Complaint against her husband and
petitioners.
The said Complaint sought the declaration of a certain deed of sale, which involved
the conjugal property of private respondent and her husband, null and void.
ISSUE: WON contract without the consent of wife is void
HELD:
YES. Art 124 of the FC rules that In the event that one spouse is incapacitated or
otherwise unable to participate in the administration of the conjugal properties, the
other spouse may assume sole powers of administration. These powers do not
include the powers of disposition or encumbrance which must have the authority of
the court or the written consent of the other spouse. In the absence of such authority
or consent, the disposition or encumbrance shall be void.
Respondent’s consent to the contract of sale of their conjugal property was totally
inexistent or absent. The nullity of the contract of sale is premised on the absence of
private respondent’s consent. To constitute a valid contract, the Civil Code requires
the concurrence of the following elements: (1) cause, (2) object, and (3) consent, the
last element being indubitably absent in the case at bar.
A void contract cannot be ratified.
Neither can the “amicable settlement” be considered a continuing offer that was
accepted and perfected by the parties, following the last sentence of Article 124. The
order of the pertinent events is clear: after the sale, petitioners filed a complaint for
trespassing against private respondent, after which the barangay authorities secured
an “amicable settlement” and petitioners filed before the MTC a motion for its
execution.
The settlement, however, does not mention a continuing offer to sell the property or
an acceptance of such a continuing offer. Its tenor was to the effect that private
respondent would vacate the property. By no stretch of the imagination, can the Court
interpret this document as the acceptance mentioned in Article 124.
PELAYO VS. PEREZ, 495 SCRA 475 (1988)
FACTS:
David Pelayo sold two parcels of agricultural land located in Panabo to Mr. Perez on
January 1988 and the sale is evidenced by a deed of Absolute Sale. Loreza Pelayo,
wife of David and another one whose signature is illegible witnessed the execution of
the deed.
Mrs. Pelayo signed only the third space in the space provided for the witness, Perez
asked Loreza to sign on the first and second pages but the latter refused. As a result,
Mr Perez instituted an action for specific performance and Perez countered that the
lots were given to him by defendant Pelayo in consideration of his services as his
attorney-in fact to make the necessary representation and negotiation with the illegal
occupants-defendants in the ejectment case.
Defendant Pelayo said that the deed was without the consent of Mrs. Perez and
invoked Art 166 of the Civil code to support his argument.
ISSUE:
Did Mrs Pelayo express his consent in the deed of Sale executed by Mrs Pelayo?
HELD:
YES.
The consent need not be expressed. It can be implied. In the present case, although
it appears on the face of the deed of sale that Lorenza signed only as an instrumental
witness, circumstances leading to the execution of said document point to the fact
that Lorenza was fully aware of the sale of their conjugal property and consented to
the sale. The petition of Mr. And Mrs Pelayo was denied.
MERCEDES CALIMLIM-CANULLAS v. WILLELMO FORTUN
Facts: Petitioner Mercedes Calimlim-Canullas and Fernando Canullas were married
in 1962, with 5 children, and were living on a house situated on a land inherited by the
latter. In 1978, Fernando abandoned his family and lived with Corazon Daguines. In
1980, Fernando sold the house and lot to Daguines, who initiated a complaint for
quieting of title. Mercedes resisted, claiming that the house and lot were conjugal
properties, and the sale was null nad void for she had not consented thereto.
Issues:
(1) Whether or not the construction of a conjugal house on the exclusive property of
the husband ipso facto gave the land the character of conjugal property
(2) Whether or not the sale of the lot together with the house and improvements
thereon was valid under the circumstances surrounding the transaction
Held:
(1) Both the land and the building belong to the conjugal partnership but the conjugal
partnership is indebted to the husband for the value of the land. The spouse owning
the lot becomes a creditor of the conjugal partnership for the value of the lot, which
value would be reimbursed at the liquidation of the conjugal partnership. FERNANDO
could not have alienated the house and lot to DAGUINES since MERCEDES had not
given her consent to said sale.
(2) The contract of sale was null and void for being contrary to morals and public
policy.
The sale was made by a husband in favor of a concubine after he had abandoned his
family and left the conjugal home where his wife and children lived and from whence
they derived their support. That sale was subversive of the stability of the family, a
basic social institution which public policy cherishes and protects. The law
emphatically prohibits the spouses from selling property to each other subject to
certain exceptions. Similarly, donations between spouses during marriage are
prohibited. And this is so because if transfers or con conveyances between spouses
were allowed during marriage, that would destroy the system of conjugal partnership,
a basic policy in civil law.
It was also designed to prevent the exercise of undue influence by one spouse over
the other, as well as to protect the institution of marriage, which is the cornerstone of
family law. The prohibitions apply to a couple living as husband and wife without
benefit of marriage, otherwise, "the condition of those who incurred guilt would turn
out to be better than those in legal union." Those provisions are dictated by public
interest and their criterion must be imposed upon the wig of the parties.
RUBIAS vs. BATILLER
(51 SCRA 120); May 29, 1973
FACTS: Petitioner Domingo Rubias, a lawyer, filed a suit to recover the ownership
and possession of certain portions of lot which he bought from his father-in-law
(Francisco Militante) when he was counsel of the latter in a land registration case
involving the lot in question against its present occupant respondent (Isaias Batiller).
Respondent claimed that the complaint does not state a cause of action, the truth of
the matter being that he and his predecessors-in-interest have always been in actual,
open, and continuous possession since time immemorial under claim of ownership of
the portions of the lot in question.
The trial court issued a pre-trial order which stated that during the pre-trial
conference, the parties have agreed that the facts are attendant in the case and that
they will no longer introduce any evidence, testimonial or documentary to prove them.
(Pls. read the full text of the case to be guided on this portion.)
ISSUE: WON the contract of sale between the petitioner and his father-in-law was
void because it was made when plaintiff was counsel of his father-in-law in a land
registration case involving the property in dispute
RULING: YES! Manifestly, plaintiff’s complaint against defendant, to be declared
absolute owner of the land and to be restored to possession thereof with damages
was bereft of any factual or legal basis.
The purchase by a lawyer of the property in litigation from his clients is categorically
prohibited by Article 1491, paragraph 5 of the Civil Code, and that consequently,
plaintiff’s purchase of the property in litigation from his client was void and could
produce no legal effect by virtue of Article 1409, paragraph 7 of the Civil Code which
provides that contracts “ expressly prohibited or declared void by law” are “ inexistent
and void from the beginning” and that “these contracts cannot be ratified”.
The Court cited Director of Lands vs. Abagat (53 Phil 147; March 27, 1929), which the
Court again affirming the invalidity and nullity of the lawyer’s purchase of the land in
litigation from his client, ordered the issuance of writ of possession for the return of
the land by the lawyer to the adverse parties without reimbursement of the price paid
by him and other expenses.
Article 1491 of the Civil Code prohibits certain persons, by reason of the relation of
trust or their peculiar control over the property from acquiring such property in their
trust or control directly or indirectly and even at a public or judicial auction as follows:
a.) guardians, b.) agents, c.) administrators, d.) public officers and employees, judicial
officers and employees, prosecuting attorneys, and lawyers, and e.) others especially
disqualified by law.
THE PHILIPPINE TRUST COMPANY, AS GUARDIAN OF THE PROPERTY OF
THE MINOR, MARIANO L. BERNARDO, PETITIONER, VS. SOCORRO ROLDAN,
FRANCISCO HERMOSO, FIDEL C. RAMOS AND EMILIO CRUZ, RESPONDENTS.
[ G.R. No. L-8477, May 31, 1956 ]
FACTS: Mariano L Bernardo, a minor, inherited from his father, Marcelo Bernardo 17
parcels of land located in Guiguinto, Bulacan. In view of his minority, guardianship
proceedings were instituted on July 27, 1947, where Socorro Roland, surviving
spouse of Marcelo and step-mother of Mariano, was appointed as guardian of the
latter.
Also, Socorro filed a motion asking authority to sell as guardian the 17 parcels for the
sum of P14,700 to his brother-in-law, Dr. Fidel C. Ramos, the purpose of the sale
being allegedly to invest money in a residential house, which the minor desired to
have on Tindalo St., Manila. The motion was granted.
On August 5, 1947 Socorro, as guardian, then executed the proper deed of sale in
favor of Fidel Ramos and on August 12, 1947, she asked for and obtained judicial
confirmation of the sale. However, on August 13, 1947, Fidel Ramos executed in
favor of Socorro personally, a deed of conveyance covering the same 17 parcels for
the sum of P15,000. And on October 21, 1947 Socorro sold 4 out of the 17 parcels to
Emilio Cruz for P3,000, reserving herself the right to repurchase.
On August 10, 1948, petitioner Phil. Trust Co. replaced Socorro as guardian.
Petitioner filed a complaint to annul two contracts regarding the 17 parcels of land: a)
the sale thereof by Socorro, as guardian, to Fidel Ramos; and b) sale thereof by Fidel
Ramos to Socorro personally.
Petitioner contends that the step-mother in effect, sold to herself, the properties of her
ward thus should be annulled as it violates Art. 1459 of the Civil Code prohibiting the
guardian from purchasing “either in person or through the mediation of another” the
property of her ward.
As to the third conveyance, that Socorro had acquired no valid title to convey to Cruz.
The trial court held that Art 1459 was not controlling as there was no proof that
Ramos was a mere intermediary or that the latter agreed with Socorro to but the
parcels of land for her benefit. The Court of Appeals affirmed the judgment, adding
that the minor new the particulars of, and approved the transactions, and that ‘only
clear and positive evidence of fraud and bad faith, and not mere insinuations and
interferences will overcome the presumptions that a sale was concluded in all good
faith for value. Hence, this petition.
ISSUE: Whether the two contracts of sale made by Socorro was valid.
HELD:
No. The court held that even without proof that Socorro had connived with Fidel
Ramos. Remembering the general doctrine that guardianship is a trust of the highest
order, and the trustee cannot be allowed to have any inducement to neglect his
ward's interest and in line with the court's suspicion whenever the guardian acquires
the ward's property we have no hesitation to declare that in this case, in the eyes of
the law, Socorro Roldan took by purchase her ward's parcels thru Dr. Ramos, and
that Article 1459 of the Civil Code applies.
The temptation which naturally besets a guardian so circumstanced, necessitates the
annulment of the transaction, even if no actual collusion is proved (so hard to prove)
between such guardian and the intermediate purchaser. This would uphold a sound
principle of equity and justice.
From both the legal and equitable standpoints these three sales should not be
sustained: the first two for violation of article 1459 of the Civil Code; and the third
because Socorro Roldan could pass no title to Emilio Cruz. The annulment carries
with it (Article 1303 Civil Code) the obligation of Socorro Roldan to return the 17
parcels together with their fruits and the duty of the minor, through his guardian to
repay P14,700 with legal interest.
THE DIRECTOR OF LANDS, petitioner,
vs.
SILVERETRA ABABA, ET AL., claimants, JUAN LARRAZABAL, MARTA C. DE
LARRAZABAL, MAXIMO ABAROQUEZ and ANASTACIA CABIGAS, petitioners-
appellants, ALBERTO FERNANDEZ, adverse claimant-appellee.
FACTS:
• Atty. Alberto Fernandez is the adverse claimant of Lots No. 5600 and 5602 in Cebu.
Fernandez was retained as counsel by petitioner Maximo Abarquez in a civil case for
the annulment of a contract of sale with right of repurchase and for the recovery of the
land for said lots against Agripina Abarquez. The CFI of Cebu ruled against Maximo
so he appealed to the CA.
• Maximo litigated as a pauper in the lower court and engaged the services of
Fernandez on a contingent basis, liable to compensate his lawyer for the appeal by
obliging himself to give 1/2 of whatever he might recover from the 2 lots should the
appeal prosper.
Lots 5600 and 5602 were part of the estate of Maximo’s deceased parents, which
were partitioned to Maximo and Agripina, his sister, as heirs. • Subsequently, CA
annulled the deed of pacto de retro and ruled in favor of Maximo. A TCT was issued
in Maximo’s name over his adjudged share.

Atty. Fernandez waited for Maximo to comply with his obligation under the executed
document by him to deliver 1/2 of the recovered land. Maximo refused to comply with
his obligation and instead offered to sell the whole land to petitioner-spouses
Larrazabal.
Atty. Fernandez took stops to protect his interest by filing to annotate an attorney’s
lien on the TCT and by notifying the Larrazabal spouses of his claim over 1/2 portion
of the land.
Notwithstanding the annotation of the adverse claim, Maximo conveyed by deed of
absolute sale 2/3 of the lands to spouses Larrazabal. Spouses Larrazabal
subsequently filed for cancellation of adverse claim on the new TCT.
Atty. Fernandez filed the present appeal to deny the petition for cancellation of
adverse claim.
ISSUE:
• WON the registration of the adverse claim of Atty. Fernandez was null since his
interest was based on a contract for a contingent fee as Maximo’s counsel, prohibited
under Art 1491 of the NCC?
HELD:
NO. A contract for a contingent fee is valid. There was no contract of sale on the
property which is the subject of litigation.
Art 1491 provides that the following persons cannot acquire by purchase even at a
public or judicial auction, either in person or through the petition of another. (5)
Justices, judges, prosecuting attorneys, clerks of superior and inferior courts and
other employees connected with the administration of justice, the property and rights
in litigation or levied upon an execution before the court within whose jurisdiction or
territory they exercise their respective functions; this prohibition includes the act of
acquiring by assignment and shall apply to lawyers, with respect to the property and
rights which may be the object of any litigation in which they may take part by virtue of
their profession.
Art 1491 only prohibits the sale or assignment between the lawyer and his client, of
property which is the subject of litigation . In other words, for the prohibition to
operate, the sale or transfer of the property must take place during the pendency of
the litigation involving the property.
• Under American Law, the prohibition does not apply to cases where after completion
of litigation the lawyer accepts on account of his fee, an interest the assets realized
by the litigation. There is a clear distraction between such cases and one in which the
lawyer speculates on the outcome of the matter in which he is employed.
• A contract for a contingent fee is not covered by Article 1491 because the transfer or
assignment of the property in litigation takes effect only after the finality of a favorable
judgment. In the instant case, the attorney's fees of Atty. Fernandez, consisting of 1/2
of whatever Maximo might recover from his share in the lots in question, is contingent
upon the success of the appeal.
• Hence, the payment of the attorney's fees, that is, the transfer or assignment of ½ of
the property in litigation will take place only if the appeal prospers. Therefore, the
transfer actually takes effect after the finality of a favorable judgment rendered on
appeal and not during the pendency of the litigation involving the property in question.
• In the present case, there is no iota of proof to show that Atty. Fernandez had
exerted any undue influence or perpetrated fraud on, or had in any manner taken
advantage of his client, Maximo Abarquez. And, the compensation of one-half of the
lots in question is not excessive nor unconscionable considering the contingent
nature of the attorney's fees.
• The contract for a contingent fee, being valid, vested in Atty. Fernandez an interest
or right over the lots in question to the extent of one-half thereof. Said interest
became vested in Atty. Fernandez after the case was won on appeal because only
then did the assignment of the 1/2 portion of the lots in question became effective and
binding.
• The interest or claim cannot be registered as an attorney's charging lien. The lower
court was correct in denying the motion to annotate the attomey's lien. A charging lien
under Section 37, Rule 138 of the Revised Rules of Court is limited only to money
judgments and not to judgments for the annulment of a contract or for delivery of real
property as in the instant case.
• Therefore, as an interest in registered land, the only adequate remedy open to Atty.
Fernandez is to register such interest as an adverse claim.
• The 1/2 interest of Atty. Fernandez in the lots in question should therefore be
respected. Indeed, he has a better right than petitioner-spouses Larrazabal. They
purchased their 2/3 interest in the lots in question with the knowledge of the adverse
claim of Atty. Fernandez. The adverse claim was annotated on the old TCT and was
later annotated on the new TCT issued to them. Having purchased the property with
the knowledge of the adverse claim, they are therefore in bad faith. Consequently,
they are estopped from questioning the validity of the adverse claim.
• The SC AFFIRMED the lower court ruling to deny petition for cancellation of adverse
claim.
FLORENCIO FABILLO v. IAC, GR No. 68838, 1991-03-11
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 Florencio in 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.
A careful scrutiny of the contract shows that the parties intended 40% 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
40% of whatever benefit” Fabillo 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”.
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.

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 San Salvador 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.