THE DIRECTOR OF LANDS V.

ABABA
G.R. No. L-26096 | February 27, 1979 | Makasiar, J. HELD:

DOCTRINE/S: No, Article 1491 prohibits only the sale or assignment between the lawyer and his client, of
property which is the subject of litigation. The prohibition in said article applies only to a
FACTS: sale or assignment to the lawyer by his client of the property which is the subject of litigation.
 Atty. Alberto Fernandez was a retained counsel by Maximo Abarquez (petitioner) for For the prohibition to operate, the sale of the property must take place during the pendency of
the annulment of a contract of sale with right of repurchase and for the recovery of the the litigation involving the property.
land which was the subject matter of the case.
 May 29, 1961: the CFI of Cebu rendered a decision adverse to the petitioner and so he Likewise, under American Law, the prohibition does not apply to cases where after completion
appealed to the CA of litigation the lawyer accepts on account of his fee, an interest the assets realized by the
 June 10, 1961: In order to compensate his lawyer, petitioner executed a document litigation. There is a clear distraction between such cases and one in which the lawyer speculates
wherein he obliged himseld to give his lawyer ½ of whatever he might recover from on the outcome of the matter in which he is employed.
the subject lands should the appeal prosper
o Petitioner was litigating as a pauper in the lower court and engaged in the A contract for a contingent fee is not covered by Article 1491 because the transfer or
services of his lawyer on a contingent basis assignment of the property in litigation takes effect only after the finality of a favorable
 The real Property sought to be recovered in Civil Case No. R6573 was actually the judgment. In the instant case, the attorney's fees of Atty. Fernandez, consisting of one-half (1/2)
share of the petitioner in Lots 5600 and 5602, which were part of the estate of his of whatever Maximo Abarquez might recover from his share in the lots in question, is contingent
deceased parents and which were partitioned the heirs which included petitioner and upon the success of the appeal. Hence, the payment of the attorney's fees, that is, the transfer or
his elder sister Agripina Abarquez (defendant) assignment of one-half (1/2) of the property in litigation will take place only if the appeal
o This was pursuant to a project of partition approved by the Court that prospers. Therefore, the transfer actually takes effect after the finality of a favorable judgment
provided that said lots will be divided into three equal parts (1/3 shall be rendered on appeal and not during the pendency of the litigation involving the property in
given to Maximo). question. Consequently, the contract for a contingent fee is not covered by Article 1491.
 Agripina claims a part over the share of petitioner based on an
instrument which to him was a mere acknowledgment of the Spouses Larrazabal, having purchased the property with the knowledge of the adverse claim,
receipt of P700 his sister gave to him as consideration for the care they are therefore in bad faith. Consequently, they are estopped from questioning the validity of
of their father and not an instrument of pacto de retro. the adverse claim.
 CA reversed the decision of the lower court and annulled the deed of pacto de retro.
o MR was filed by Agripina but was denied. WHEREFORE, THE DECISION OF THE LOWER COURT DENYING THE PETITION FOR
o TCT was issued to Maximo THE CANCELLATION OF THE ADVERSE CLAIM SHOULD BE, AS IT IS HEREBY
 The case having been resolved and title having been issued to petitioner, adverse AFFIRMED, WITH COSTS AGAINST PETITIONER-APPELLANTS JUAN LARRAZABAL
claimant waited for petitioner to comply with the obligation under the document AND MARTA C. DE LARRAZABAL.
executed by him by delivering the one-half (½) portion of the said parcels of land. SO ORDERED.
o Petitioner refused to comply with his obligation and instead offered to sell
the whole parcels of land to petitioner-spouses Juan Larrazabal and Marta C.
de Larrazabal
o Adverse claimant (Atty. Fernandez) immediately took steps to protect his
interest by filing with the trial court a motion to annotate his attorney's lien
and by notifying the prospective buyers of his claim over the one-half
portion of the parcels of land.
 He also filed an affidavit of adverse claim with the Register of
Deeds
 Despite these, Maximo still sold 2/3 of the land to Spouses Larrazabal to which the
adverse claim of Atty. Fernandez appeared on the new TCT.
o Such annotation was subject to a cancellation proceedings filed by Spouses
Larrazabal but was denied by the lower court.
 On appeal, petitioners contend that a contract for a contingent fee violates Article 1491
since it involves an assignment of a property subject of litigation.

ISSUE/S:
 Whether or not the contract for a contingent fee as basis of the interest of Atty.
Fernandez is prohibited by Article 1491 of the Civil Code. (NO)