Adm. Case No.

5020 December 18, 2001

JUNIO v. GRUPO

Ponente: Mendoza, J.
Topic: Disbarment; Borrowing/lending money to/from a client

FACTS OF THE CASE:

A complaint for disbarment was filed by petitioner Junio against respondent Atty. Grupo for
alleged malpractice and gross misconduct committed by the latter.

Petitioner’s contention: Respondent’s services was engaged by petitioner for the redemption
of a parcel of land, registered under the name of her parents, located at Concepcion, Loay,
Bohol. Petitioner alleged that, in view of the case, petitioner entrusted P25,000.00 to respondent
which is to be used for the redemption of the said property. Respondent received the amount
evidenced by an acknowledgment receipt. It was further argued by petitioner that respondent
was not able to redeem the property which caused the loss of her right to redeem such property.

Petitioner demanded from respondent the return of the money entrusted to him considering that
the latter has failed to redeem the property. However, despite repeated demands, respondent
refused to return the money, without justifiable cause.

Respondent’s answer: Respondent admitted that he received the money from petitioner.
However, he alleges that the property “could not really be redeemed anymore”, and that
petitioner knew such fact because of the latter’s knowledge that the mortgage contract had
already expired. According to respondent, the money entrusted to him was an effort to persuade
the mortgagees to allow petitioner to redeem the land, which subsequently failed.

Upon such failure, respondent claims that he was allowed by petitioner to use the money
entrusted to him in the meantime because of his urgent need to defray his children’s educational
expenses. According to respondent, this was a private request, and not in his professional
capacity. A promissory note was executed by respondent which was then received by petitioner.

Further, respondent alleges that the services was purely gratuitous, and that he did not ask for
any fees, taking into consideration that petitioner served as household helpers for respondent’s
family. Taking this into consideration, he argues that there was no attorney-client relationship
when such agreement (loan) was executed.

ISSUE/S:
1. Whether or not there was an attorney-client relationship between Atty. Grupo and Junio
2. Whether or not Atty. Grupo violated the Code of Professional Responsibility when he
borrowed (loaned) money from petitioner
HELD + RATIO:

1. Yes. There was an attorney-client relationship between Atty. Grupo and Junio.

Citing the case of Hilado v. David, the Court ruled that, “[t]o constitute professional employment,
it is not essential that the client should have employed the attorney professionally on any
previous occassion.” Further, it is not necessary that any fee was paid, charged, or promised.
The Court further held that “[i]f a person, in respect to his business affairs or troubles of any
kind, consults with his attorney in his professional capacity with the view to obtaining
professional advice or assistance, and the attorney voluntarily permits or acquiesces in such
consultation, then the professional employment must be regarded as established.”

2. Yes. Atty. Grupo is guilty of violating the Code of Professional Responsibility.

It should be noted that the evidence established shows that the respondent was allowed to
borrow the money from petitioner. It was also shown that the money previously entrusted to
Atty. Grupo was later converted into a loan. Thus, Atty. Grupo is not guilty of malversation or
embezzlement.

However, Atty. Grupo is still liable for violating Rule 16.04 of the Code of Professional
Responsibility which prohibits lawyers from borrowing money from their clients except when the
client’s interests are protected by the nature of the case or by independent advice. In the case
at bar, respondent’s liability is not only limited to his failure to give security for the loan, but also
for his failure to fulfill such obligation within a reasonable time. This failure, the Court ruled, “only
underscores his blatant disregard of his obligation which reflects on his honesty and candor. A
lawyer is bound to observe candor, fairness, and loyalty in all his dealings and transactions with
his client.”

“WHEREFORE, the Court finds petitioner guilty of violation of Rule 16.04 of the Code of
Professional Responsibility and orders him suspended from the practice of law for a period of
one (1) month and to pay to respondent, within 30 days from notice, the amount of P25,000.00
with interest at the legal rate, computed from December 12, 1996.”