GR L 33493; (August, 1988) (Digest)
G.R. No. L-33493 August 18, 1988
KAPISANAN NG MANGGAGAWA SA MANILA RAILROAD CO., petitioner, vs. ATTY. GREGORIO FAJARDO & THE COURT OF INDUSTRIAL RELATIONS, respondents.
FACTS
The petitioner union, Kapisanan ng Manggagawa sa Manila Railroad Co., was ordered by the Supreme Court in a prior case (G.R. No. L-19791) to refund to its members the sum of P335,623.26, representing unauthorized monthly collections made from July 1960 to December 1962. The refund action was initiated by a complaint signed by 400 union members, represented by respondent Atty. Gregorio Fajardo. Following the successful litigation, Atty. Fajardo filed a claim for attorney’s fees equivalent to 25% of the total refundable amount.
The Court of Industrial Relations granted his claim in full, ordering the union to pay him P83,905.82. The court ruled that all union members who benefited from the refund award, not just the 400 signatories to the complaint, were liable to pay the attorney’s fees because the litigation secured a benefit for the entire membership. The union filed a motion for partial reconsideration, arguing that Atty. Fajardo could only claim fees from the 400 complainants with whom he had a direct lawyer-client relationship.
ISSUE
Whether the Court of Industrial Relations erred in awarding attorney’s fees to Atty. Fajardo at the rate of 25% of the total refund, chargeable against the benefits of all union members.
RULING
The Supreme Court modified the order of the Court of Industrial Relations. It upheld the principle that a lawyer who successfully prosecutes a case that secures benefits for an entire class, such as all union members, is entitled to reasonable compensation from all beneficiaries, not merely from the named complainants. This aligns with the doctrine established in Union de Empleados de Trenes vs. Kapisanan Ng Mga Manggagawa sa MRRCO and the procedural allowance under Republic Act 875 where a complaint can be filed by only 10% of the membership.
However, the Court found the awarded rate of 25% to be excessive and unreasonable. Citing Section 11, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code, as well as precedents like Galvadores vs. Trajano, the Court held that the standard rate for attorney’s fees in such judicial and administrative proceedings is 10% of the amount awarded. The Court emphasized that, considering the low economic status of the laborer-clientele, the attorney’s fee should not be so large as to diminish the substantive recovery to a mere pittance. Therefore, Atty. Fajardo is entitled to 10% of the total refundable amount, or P33,562.32, payable by the union from the fund to be refunded to the members.