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FABILLO v.

IAC
FACTS:
Florencio Fabillo contracted the services of Atty. Murillo to revive a lost case over his inheritance from
his deceased sister Justinia. He sought to acquire the San Salvador and Pugahanay Properties that his
sister left behind, against the latters husband. They entered into a contract where a contingent fee in
favor of Atty. Murillo in case the case was won was agreed upon. The fee was for 40% of the value of
whatever benefit Florencio may derive from the suit such as if the properties were sold, rented, or
mortgaged. It was vague, however, regarding the fee in case Florencio or his heirs decide to occupy the
house allowing Atty. Murillo the option to occupy or lease 40% of the said house and lot. A
compromise agreement was entered into where Florencio acquired both the San Salvador and
Pugahanay Properties. Atty. Murillo installed a tenant in the Pugahanay Property; later on Florencio
claimed exclusive rights over the properties invoking Art. 1491 of the Civil Code. Florencio and Atty.
Murillo both died and were succeeded by their respective heirs.

ISSUE:
W/N contingent fees agreed upon are valid

HELD:
Contingent fees are not contemplated by the prohibition in Art. 1491 disallowing lawyers to purchase
properties of their clients under litigation. The said prohibition applies only during the pendency of the
litigation. Payment of the contingent fee is made after the litigation, and is thus not covered by the
prohibition. For as long as there is no fraud or undue influence, or as long as the fees are not exorbitant,
the same is valid and enforceable. It is even recognized by the Cannons of Professional Ethics.

However, considering that the contract is vague on the matter of division of the shares if Florencio
occupies the property; the ambiguity is to be construed against Atty. Murillo being the one who drafted
the contract and being a lawyer more knowledgeable about the law. The Court thus, invoking the time-
honored principle that a lawyer shall uphold the dignity of the legal profession, ordered only a
contingent fee of P 3,000.00 as reasonable attorneys fees.

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