Facts:

• Petitioners: Modesta Borcena, Antonio Gimeno, Jr., Estela Gimeno, Rolando Gimeno, Edgardo Gimeno, and Anelia Gimeno.
• Respondents include Atty. Gil P. de Guzman, their former lawyer.
• Engagement date: July 6, 1981, for legal action against the Metropolitan Waterworks and Sewerage System (MWSS) for property damages.
• Fee agreement: 20% of total claim as attorney's fees plus 5% for representation and miscellaneous expenses (totaling 25%).
• Atty. de Guzman filed a complaint (Civil Case No. SM-1208) against defendants for unlawful entry and property damage.
• Defendants were declared in default; a motion for preliminary attachment was granted, resulting in checks totaling P852,000.00 from MWSS.
• Petitioners expressed dissatisfaction with Atty. de Guzman's handling of the checks, which he failed to deposit.
• On March 17, 1983, petitioners terminated Atty. de Guzman's services due to grievances, including failure to return checks.
• Atty. de Guzman contested the termination and filed a lien for his fees.
• The lower court ruled the termination unjustified and fixed Atty. de Guzman's fees at P177,500.00 plus 20% of future awards.
• Petitioners appealed, bringing the case to the Supreme Court.

Issue:

• (Unlock)

Ruling:

• The Supreme Court granted the petition, reversing the Intermediate Appellate Court's decision.
• Atty. Gil de Guzman is entitled to P10,000.00 as reasonabl...(Unlock)

Ratio:

• The Supreme Court found the attorney's fee stipulation in the contract to be unconscionable and unreasonable.
• The Court emphasized that attorney compensation must be reasonable and not exploitative.
• Petitioners had justifiable g...continue reading