A.C. No. 12839, November 03, 2020) ROMMEL N. REYES, COMPLAINANT, VS. ATTY. GERALD Z. GUBATAN, RESPONDENT.

10. ROMMEL N. REYES, COMPLAINANT, VS. ATTY. GERALD Z.
GUBATAN,
RESPONDENT. A.C. No. 12839, November 03, 2020
FACTS:
Reyes alleged that he is the President and Chairman of Integra Asia Konstruct, Inc.
(Coiporation). He and Atty. Gubatan have been friends since they were schoolmates in college
and because of this friendship, he agreed to lend money to Atty. Gubatan on six different
occasions.
Despite the fact that the foregoing promissory notes and an acknowledgment/agreement were all
duly signed and executed by Atty. Gubatan, he failed and refused to pay his obligations to Reyes
and the Corporation.
On March 13, 2009, Reyes sent a demand letter to Atty. Gubatan demanding the settlement of
his loans amounting to P769,014.00 inclusive of interest. Atty. Gubatan still failed to pay. Hence,
on September 15, 2009, Reyes filed the instant complaint. In addition, Reyes and the Corporation
also filed two complaints against Atty. Gubatan for collection of sum of money with damages
before the Metropolitan Trial Court in Quezon City (MTC).
Aside from his work in the Corporation, Atty. Gubatan claimed that he was asked by Reyes to
handle the latter's numerous personal cases. Since Atty. Gubatan only started his law practice in
2006, he claimed that Reyes graciously volunteered to give him several loans as evidenced by
promissory notes and an acknowledgment/agreement. Moreover, he claimed that when these
instruments of indebtedness were signed, he and Reyes agreed that the amounts stated therein
would set off against the former's compensation and professional fees for services rendered to
Reyes and the Corporation.
On June 18, 2019, the IBP Board stated that there is no dispute that Atty. Gubatan obtained
several loans from Reyes and the Corporation. However, he abused the trust and confidence
reposed on him by the latter through his persistent refusal to settle his obligations despite
demands.
The IBP Board also emphasized that there is a lawyer-client relationship in this case as Atty.
Gubatan was retained as a lawyer for the Corporation and as Reyes' counsel for his personal
cases. Despite this, Atty. Gubatan still borrowed money from his clients whose interests, by the
lack of any security of the loan, were not fully protected.
The IBP Board also found no sufficient evidence of any subsequent agreement to set-off the
loans with Atty. Gubatan's compensation for professional services. Further, the very act of Reyes
and the Corporation in filing cases for collection of sum of money with damages against Atty.
Gubatan counters his allegation of offsetting of credit.
ISSUE:
Whether or not Atty. Gubatan is liable in violating Code of Professional Responsibility?
RULING:
Yes, Atty. Gubatan is liable in violating Code of Professional Responsibility specifically Canon
7 and 16.
In this case, as correctly found by the IBP, there is no doubt that Atty. Gubatan obtained several
loans from Reyes and the Corporation, which are evidenced by promissory notes and an
acknowledgment/agreement. These loans appear to have been contracted during the existence of
a lawyer-client relationship among the parties, when Atty. Gubatan was employed by the
Corporation and retained as legal consultant and special assistant to the president. Consequently,
Atty. Gubatan clearly violated the following provisions of the CPR:
CANON 16 — A lawyer shall hold in trust all moneys and properties of his client that may come
into his possession.
RULE 16.04 A lawyer shall not borrow money from his client unless the client's interests are
fully protected by the nature of the case or by independent advice. Neither shall a lawyer lend
money to a client except, when in the interest of justice, he has to advance necessary expenses in
a legal matter he is handling for the client. (Emphasis supplied)
Further, in unduly borrowing money from Reyes and the Corporation and refusing to pay the
same, Atty. Gubatan abused the trust and confidence reposed in him by his clients. In doing so,
he failed to uphold the integrity and dignity of the legal profession, in contravention of Canon 7
of the CPR, which provides that a lawyer shall at all times uphold the integrity and dignity of the
legal profession, and support the activities of the integrated bar.
Atty. Gubatan himself does not deny the existence of these loans and the fact that they remain
unpaid. These contentions of respondent for not paying are unmeritorious. On this note, the
Court agrees with the IBP Board's pronouncements
In this regard, the Court notes that when he testified in the collection case before the MTC,
Reyes admitted that he did not pay Atty. Gubatan for legal services rendered to him and the
Company. He claimed that Atty. Gubatan volunteered his legal services without payment in view
of the many favors he extended to the latter. This is belied by Atty. Gubatan, who claims that he
should be paid for the services he had rendered to Reyes and the Corporation.
As for the penalty, the IBP Board recommended that Atty. Gubatan be reprimanded. The Court
disagrees. Jurisprudence holds that the deliberate failure to pay just debts constitutes gross
misconduct for which a lawyer may be sanctioned with suspension from the practice of law. In
the instant case, the Court finds it proper to impose on Atty. Gubatan the penalty of suspension
from the practice of law for three (3) months.

A.C. No. 12839, November 03, 2020) ROMMEL N. REYES, COMPLAINANT, VS. ATTY. GERALD Z. GUBATAN, RESPONDENT.

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A.C. No. 12839, November 03, 2020) ROMMEL N. REYES, COMPLAINANT, VS. ATTY. GERALD Z. GUBATAN, RESPONDENT.

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10. ROMMEL N. REYES, COMPLAINANT, VS. ATTY. GERALD Z.

Whether or not Atty. Gubatan is liable in violating Code of Professional Responsibility?

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