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Legal Ethics Digest - Reyes Vs Gubatan
Legal Ethics Digest - Reyes Vs Gubatan
LEGAL ETHICS > The Code of Professional Responsibility > To the Clients
FACTS: Atty. Gerald Z. Gubatan (Atty. Gubatan) borrowed money from Rommel N. Reyes (Reyes) and
his company multiple times, as evidenced by a promissory note and an Acknowledgement/Agreement.
The former was employed in the company of the latter as Legal Counsel and Special Assistant, handling
corporate and personal matters. However, Atty. Gubatan failed and refused to pay the said obligations
even after receiving a demand letter. Thereafter, Reyes filed complaints against Atty. Gubatan for
collection of sum of money with damages before the MTC. The latter claimed that there was an
agreement that the loans will be set off against his compensation and professional fees for services
rendered to the company and to Reyes personally, and that he was not compensated for much of said
rendered services. The Integrated Bar of the Philippines board reprimanded Atty. Gubatan for violating
the rule which prohibits lawyers from borrowing money from their clients unless the latter's interests
are fully protected by the nature of the case or by independent advice and found that there was no
sufficient evidence of any subsequent agreement to set-off the loans.
ISSUE: Whether Atty. Gubatan is justified in not paying his obligations on the ground of
non-payment of professional fees.
HELD: No. Atty. Gubatan is not justified in not paying his obligations on the ground of non-payment
of professional fees.
The relationship between lawyers and their clients is inherently imbued with trust and confidence —
and as true as any natural tendency goes, this trust and confidence is susceptible to abuse. The rule
prohibiting lawyers from borrowing from their clients is intended to prevent the lawyer from taking
advantage of his influence over the client as the rule presumes that the client is disadvantaged by the
lawyer's ability to use all legal maneuverings to renege on his obligation.
In this case, 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.
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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:
CANON 7 — A lawyer shall at all times uphold the integrity and dignity of the legal profession, and
support the activities of the integrated bar.
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