G.R. No. A.C. No. 5082; February 17, 2004
MILAGROS N. ALDOVINO, ET AL., complainants vs. ATTY. PEDRO C. PUJALTE, JR., respondent.

FACTS

Complainants, heirs of Arcadia Nicodemus, engaged respondent Atty. Pedro C. Pujalte, Jr. as counsel in a suit for specific performance against their sister. The trial court dismissed the case but ordered the Branch Clerk of Court to withdraw funds from a bank account and deliver the proceeds to all heirs, with both counsels to oversee distribution. On December 1, 1998, the Clerk withdrew P1,335,109.68, divided it into eight shares, and gave two shares to the defendant. The remaining P1,001,332.26, corresponding to the six complainants’ shares, was handed to respondent upon his representation that he was authorized to receive and distribute it.
However, complainants did not receive their money despite demands. Through new counsel, Atty. Francisco Chavez, they demanded turnover. Respondent eventually delivered only P751,332.26, having unilaterally deducted P250,000.00 as his attorney’s fees. Complainants contested this, asserting they had already paid P86,000.00 in fees and were willing to pay an additional P14,000.00 to complete a P100,000.00 total, but never agreed to P250,000.00. Respondent retained the balance of P236,000.00.

ISSUE

Whether respondent violated his fiduciary duties under the Code of Professional Responsibility by failing to promptly deliver client funds and unilaterally appropriating a portion for his fees.

RULING

Yes, respondent is guilty of violating Canon 16 of the Code of Professional Responsibility. The Supreme Court sustained the Integrated Bar of the Philippines’ findings and recommendation. Canon 16 mandates a lawyer to hold in trust all client money and property coming into his possession. Rule 16.03 specifically requires a lawyer to deliver such funds promptly, except that which may be lawfully retained, and to provide a full accounting upon request.
The legal logic is clear: a lawyer’s right to retain money for unpaid fees does not justify unilateral appropriation without the client’s consent. The funds received by respondent from the court officer were indisputably client property held in a fiduciary capacity. His failure to immediately turn over the money upon receipt and his act of deducting a large sum based on a disputed verbal agreement, without prior notice or proper accounting, constituted a breach of trust. The Court emphasized that while a lawyer may apply funds to satisfy lawful fees, this must be done with the client’s conformity or through proper judicial processes, not by self-help. His conduct demonstrated a lack of integrity and propriety, lessening public trust in the legal profession. Accordingly, respondent was suspended from the practice of law for one year and ordered to return the P236,000.00 to complainants.