G.R. No. 118746 September 7, 1995
Atty. Wilfredo Taganas, petitioner, vs. National Labor Relations Commission, Melchor Escultura, et al., respondents.

FACTS

Petitioner Atty. Wilfredo Taganas represented private respondents, who were janitors, in a labor case for illegal dismissal and monetary claims. Their agreement stipulated a contingent fee equivalent to fifty percent of any judgment award, plus a per-hearing appearance fee. The Labor Arbiter ruled in favor of the private respondents, awarding them reinstatement, backwages, and other monetary benefits. The decision was affirmed on appeal.
During execution, petitioner moved to enforce his attorney’s charging lien based on the 50% contingent fee. The private respondents contested the fee as excessive, though four of them had earlier expressed conformity to it. The Labor Arbiter found the fee unreasonable and reduced it to ten percent of the award, except for the four consenting clients.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in reducing the petitioner’s contingent attorney’s fee from fifty percent to ten percent of the judgment award.

RULING

The Supreme Court ruled that the NLRC did not commit grave abuse of discretion. While contingent fee arrangements are generally valid, they remain subject to judicial supervision and scrutiny to ensure reasonableness. The Court emphasized that the determination of a reasonable fee must consider the circumstances of the case, including the importance of the subject matter, the extent of services, the lawyer’s standing, and notably, the client’s financial capacity.
The Court found the stipulated fifty percent fee to be excessive and unconscionable given that the clients were low-wage earners seeking to recover basic labor claims such as backwages and allowances. The reduction was proper and in line with the compassionate justice required in labor cases. Furthermore, the fee is governed by Article 111 of the Labor Code, which sets a ceiling on recovery of attorney’s fees in claims for wages, and the Court may fix a lower amount when warranted.
The manifestation of conformity by four clients did not validate the unreasonable agreement, as an unconscionable contract cannot be ratified. The NLRC correctly applied the ten percent rate uniformly. As an officer of the court, a lawyer’s professional fees are subject to judicial control to prevent injustice. The petition was denied for lack of merit.