G.R. No. 169079 ; February 12, 2007
FRANCISCO RAYOS, Petitioner, vs. ATTY. PONCIANO G. HERNANDEZ, Respondent.

FACTS

Petitioner Francisco Rayos engaged respondent Atty. Ponciano Hernandez as counsel in a damages case against NAPOCOR. After a lengthy litigation culminating in a final Supreme Court decision, a writ of execution was issued. NAPOCOR issued a check for Php 1,060,800.00 payable to Rayos, which was received by Atty. Hernandez. Rayos demanded the check, asserting he had dismissed Hernandez as counsel prior to its issuance. Hernandez refused, claiming a right to retain the funds to secure payment for his attorney’s fees under a contingent fee contract allegedly granting him 60% of the award.
Rayos filed a motion in the RTC, which ordered Hernandez to deliver the check to the sheriff for turnover to Rayos. Hernandez initially defied the order but later deposited Php 502,838.79 in a bank account in Rayos’s name. Rayos received this amount but filed a disbarment complaint for Hernandez’s failure to surrender the remaining balance of Php 557,961.21.

ISSUE

Whether respondent Atty. Ponciano Hernandez committed professional misconduct warranting disciplinary action for his refusal to promptly deliver the client’s funds upon demand and a court order.

RULING

Yes, the Supreme Court found respondent guilty of misconduct. The core of the ruling rests on the fiduciary nature of the lawyer-client relationship and the specific rules governing the handling of client funds. A lawyer is a trustee of money collected for his client and must deliver it upon demand. Hernandez’s justification for retention—to secure his fees—was legally untenable. The Court emphasized that a lawyer’s retaining lien applies only to papers and documents in his possession, not to money collected for the client. His proper remedy was a separate action to recover his fees, not the unilateral withholding of the client’s monetary award.
Furthermore, Hernandez’s defiance of the RTC order to deliver the check constituted willful disobedience, undermining the administration of justice. While the Court acknowledged his right to compensation, his method of asserting it violated his ethical duties. The contingent fee contract, even if valid, did not justify his actions. The Supreme Court modified the IBP’s dismissal, suspending Atty. Hernandez from the practice of law for one year and ordering him to return the excess amount retained, with legal interest, to Rayos. The decision underscores that a lawyer’s zeal for his fees must yield to his paramount duty to uphold the law and act as a responsible officer of the court.