38 Junio v Grupo

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SECOND DIVISION

[A.C. No. 5020. December 18, 2001.]

ROSARIO JUNIO, complainant , vs.

ATTY. SALVADOR M. GRUPO, respondent .

Ongkiko Kalaw Manhit & Acorda Law Offices forcomplainant.

SYNOPSIS

A complaint for disbarment was filed against respondent Atty. Salvador M. Grupo for malpractice and grossmisconduct. Complainant Rosario N. Junio alleged thatshe engaged the services of respondent then a privatepractitioner, for the redemption of a parcel of landcovered by Transfer Certificate of Title No. 20394

registered in the name of her parents, spouses Rogelioand Rufina Nietes, and located at Concepcion, Loay,Bohol. Complainant entrusted to respondent the amountof P25,000.00 in cash to be used in the redemption of theaforesaid property. Respondent, however, for no validreason did not redeem the property; as a result of whichthe right of redemption was lost and the property waseventually forfeited. Despite repeated demands made by

complainant and without justifiable cause, respondenthad continuously refused to refund the money entrustedto him. In his Answer, petitioner admitted receiving theamount in question for the purpose for which it wasgiven. After he failed to redeem the property he



requested the complainant that he be allowed, in themeantime, to avail of the money because he had anurgent need for some money a himself to help defray hischildren's educational expenses. According torespondent, it was a personal request and a privatematter between respondent and complainant.Respondent also alleged that he executed a promissorynote for the amount.

The Supreme Court found respondent guilty of violationof Rule 16.04 of the Code of Professional Responsibilityand ordered him suspended from the practice of law for a

period of one (1) month and to pay to respondent, within30 days from notice, the amount of P25,000.00 withinterest at the legal rate, computed from December 12,1996. According to the Court, respondent's liability is notfor misappropriation or embezzlement but for violation ofRule 16.04 of the Code of Professional Responsibilitywhich forbids lawyers from borrowing money from theirclients unless the latter's interests are protected by thenature of the case or by independent advice.Respondent's liability is compounded by the fact that notonly did he not give any security for the payment of theamount loaned to him but that he has also refused to paythe said amount. His claim that he could not pay the loan"because circumstances . . . did not allow it" and that,because of the passage of time, "he somehow forgot

about his obligation" only underscored his blatantdisregard of his obligation which reflects on his honestyand candor. HDAaIc

SYLLABUS



LEGAL ETHICS; ATTORNEYS; THE CODE OFPROFESSIONAL RESPONSIBILITY FORBIDSLAWYERS FROM BORROWING MONEY FROM THEIRCLIENTS UNLESS THE LATTER'S INTERESTS AREPROTECTED BY THE NATURE OF THE CASE OR BYINDEPENDENT ADVICE; CASE A BAR. — It wouldindeed appear from the records of the case thatrespondent was allowed to borrow the money previouslyentrusted to him by complainant for the purpose ofsecuring the redemption of the property belonging tocomplainant's parents. Respondent, however, did not

give adequate security for the loan and subsequentlyfailed to settle his obligation. Although complainantdenied having loaned the money to respondent, the factis that complainant accepted the promissory note givenher by respondent on December 12, 1996. In effect,complainant consented to and ratified respondent's useof the money. It is noteworthy that complainant did notattach this promissory note to her complaint nor explain

the circumstances surrounding its execution. She onlymentioned it in her demand letter of March 12, 1998(Annex B), in which she referred to respondent'sundertaking to pay her the P25,000.00 on or beforeJanuary 1997. Under the circumstances and in view ofcomplainant's failure to deny the promissory note, theCourt is constrained to give credence to respondent'sclaims that the money previously entrusted to him by

complainant was later converted into a loan.Respondent's liability is thus not for misappropriation orembezzlement but for violation of Rule 16.04 of the Codeof Professional Responsibility which forbids lawyers fromborrowing money from their clients unless the latter'sinterests are protected by the nature of the case or by



independent advice. In this case, respondent's liability iscompounded by the fact that not only did he not give anysecurity for the payment of the amount loaned to him butthat he has also refused to pay the said amount. Hisclaim that he could not pay the loan "becausecircumstances . . . did not allow it" and that, because ofthe passage of time, "he somehow forgot about hisobligation" only underscores his blatant disregard of hisobligation which reflects on his honesty and candor. Alawyer is bound to observe candor, fairness, and loyaltyin all his dealings and transactions with his client.

D E C I S I O N

MENDOZA, J p:

This is a complaint for disbarment filed against Atty.Salvador M. Grupo for malpractice and grossmisconduct.

Complainant Rosario N. Junio alleged that —

3. Sometime in 1995, [she] engaged theservices of [respondent], then a privatepractitioner, for the redemption of a parcel ofland covered by Transfer Certificate of TitleNo. 20394 registered in the name of herparents, spouses Rogelio and Rufina Nietes,and located at Concepcion, Loay, Bohol.

4. On 21 August 1995, [complainant]entrusted to [respondent] the amount ofP25,000.00 in cash to be used in theredemption of the aforesaid property.



Respondent received the said amount asevidenced by an acknowledgment receipt, acopy of which is being hereto attached as Annex "A".

5. Notwithstanding the foregoing and for novalid reason, respondent did not redeem theproperty; as a result of which the right ofredemption was lost and the property waseventually forfeited.

6. Because of respondent's failure to redeemthe property, complainant had demanded

[the] return of the money which she entrustedto the former for the above-stated purpose.

7. Despite repeated demands made by thecomplainant and without justifiable cause,respondent has continuously refused torefund the money entrusted to him. 1

In his Answer, petitioner admitted receiving the amount in

question for the purpose for which it was given. However,he alleged that —

6. The subject land for which the money ofcomplainant was initially intended to beapplied could really not be redeemedanymore . .;

7. Complainant knew the mortgageagreement between her parents and themortgage-owner had already expired, andwhat respondent was trying to do was a sortof [a] desperate, last-ditch attempt topersuade the said mortgagee to relent andgive back the land to the mortgagors with the



tender of redemption; but at this point, themortgagee simply would not budge anymore.For one reason or another, he would nolonger accept the sum offered;

8. By the time that complainant was to returnto Manila, it was already a foregone matterthat respondent's efforts did not succeed. And so, when transaction failed, respondentrequested the complainant that he beallowed, in the meantime, to avail of themoney because he had an urgent need forsome money himself to help defray hischildren's educational expenses. It was reallya personal request, a private matter betweenrespondent and complainant, thus,respondent executed a promissory note forthe amount, a copy of which is probably stillin the possession of the complainant. CSEHcT

9. . . . [T]he family of the complainant and

that of the respondent were very close andintimate with each other. Complainant, aswell as two of her sisters, had servedrespondent's family as household helpers formany years when they were still in Manila,and during all those times they were treatedwith respect, affection, and equality. Theywere considered practically part of

respondent's own family.

That is why, when complainant requested . . .assistance regarding the problem of themortgaged property which complainantwanted to redeem, respondent had nosecond-thoughts in extending a lending hand



. . . .

Respondent did not ask for any fee. Hisservices were purely gratuitous; his acts

[were] on his own and by his own. It wasmore than pro bono; it was not even forcharity; it was simply an act of a friend for afriend. It was just lamentably unfortunate thathis efforts failed.

xxx xxx xxx

Of course, respondent accepts his fault,

because, indeed, there were occasions whencomplainant's sisters came to respondent toask for the payment in behalf of complainant,and he could not produce the moneybecause the circumstances somehow, did notallow it. [I]t does not mean that respondentwill not pay, or that he is that morallydepraved as to wilfully and deliberatelyre[nege] in his obligation towards thecomplainant. 2

Complainant filed a reply denying that respondentinformed her of his failure to redeem the property andthat respondent requested her to instead lend the moneyto him. 3

The case was thereafter referred to the Integrated Bar of

the Philippines (IBP) for investigation, report, andrecommendation. However, while two hearings were setfor this purpose, both were postponed at the instance ofrespondent. For this reason, on August 28, 2000,complainant asked the Investigating Commissioner 4 toconsider the case submitted for decision on the basis of



the pleadings theretofore filed. Respondent was requiredto comment on complainant's motion, but he failed to doso. Consequently, the case was considered submitted forresolution.

In his report, dated January 5, 2001, the InvestigatingCommissioner found respondent liable for violation ofRule 16.04 of the Code of Professional Responsibilitywhich forbids lawyers from borrowing money from theirclients unless the latter's interests are "protected by thenature of the case or by independent advice." TheInvestigating Commissioner found that respondent failed

to pay his client's money. However, in view ofrespondent's admission of liability and "plea formagnanimity," the Investigating Commissionerrecommended that respondent be simply reprimandedand ordered to pay the amount of P25,000.00 loan plusinterest at the legal rate.

In its Resolution No. XIV-2001-183, dated April 29, 2001,the IBP Board of Governors adopted and approved theInvestigating Commissioner's findings. However, itordered —

[R]espondent . . . suspended indefinitely fromthe practice of law for the commission of anact which falls short of the standard of the

norm of conduct required of every attorneyand . . . ordered [him] to return to thecomplainant the amount of P25,000.00 plusinterest at the legal rate from the time thesaid amount was misappropriated, until fullpayment; provided that the total suspension



shall be at least one (1) year from the date ofsaid full payment HETDAa

On July 4, 2001, respondent filed a motion for

reconsideration alleging that —

(a) there was no actual hearing of the casewherein respondent could have fullyventilated and defended his position;

(b) the subject Resolution gravely modifiedthe Report and Recommendation ofthe Trial Commissioner, Hon. Pedro

Magpayo, Jr., . . . such that theresultant sanctions that are orderedimposed are too leonine, unjust andcruel;

(c) that the factual circumstances attendingthe matter which gave rise to thecomplaint were not rightly or fairlyappreciated. 5

He argues that the Court should adopt the report andrecommendation of the IBP InvestigatingCommissioner.

In its resolution of August 15, 2001, the Court resolved totreat respondent's motion for reconsideration as apetition for review of IBP Resolution No. XIV 2001-183and required complainant to comment on the petition.

In her comment, complainant states that her primaryinterest is to recover the amount of P25,000.00 withinterest and that she is leaving it to the Court to decidewhether respondent deserves the penalty recommendedby the IBP. 6



The Court resolves to partially grant the petition. In hisreport and recommendation, Investigating CommissionerMagpayo, Jr. made the following findings:

In his Answer, the respondent ADMITS all theallegations in paragraph 4 of the complaintwhich avers:

4. On 21 August 1995, complainantentrusted to respondent the amount ofP25,000.00 in cash to be used in theredemption of the aforesaid property(parcel of land covered by TCT No.20394 registered in the name ofcomplainant's parents located atConcepcion, Loay, Bohol).Respondent received the said amountas evidenced by an acknowledgmentreceipt (Annex A).

By way of confession and avoidance, the

respondent, . . . however, contended thatwhen the mortgagee refused to accept thesum tendered as the period of redemptionhad already expired, he requested thecomplainant to allow him in the meantime touse the money for his children's educationalexpenses[,] to which request the complainantallegedly acceded and respondent evenexecuted a promissory note (please see 4thpar. of Annex "B" of complaint).

Respondent takes further refuge in theintimate and close relationship existingbetween himself and the complainant's familyon the basis of which his legal services were



purely gratuitous or "simply an act of a friendfor a friend" with "no consideration involved."Unfortunately, his efforts to redeem theforeclosed property, as already stated, did

not produce the desired result because themortgagee "would not budge anymore" and"would not accept the sum offered."

Thus, the respondent concluded that therewas, strictly speaking, no attorney-client[relationship] existing between them. Rather,right from the start[,] everything was sort ofpersonal, he added.

Granting to the respondent the benefit of thedoubt, we shall assume that there was inreality a loan in the amount of P25,000.00.This is likewise confirmed by the execution ofa promissory note on 12 December 1996 bythe respondent who "undertook to pay Mrs.Junio on or before January 1997" (Annex B

of complaint). Moreover, the demand letter of12 March 1998 (Annex B) mentions of"reimbursement of the sum received" andinterest of "24% per annum until fully paid"giving the impression that the fundspreviously intended to be used for therepurchase of a certain property (Annex A ofcomplaint) was converted into a loan with the

consent of the complainant who gave way tothe request of the respondent "to help defrayhis children's educational expenses" (par. 8of Answer).

Be that as it may, the duty and obligation torepay the loan remains unshaken. Having



utilized the sum to fulfill his "urgent need forsome money," it is but just and proper that hereturn the amount borrowed together withinterest.

Five (5) years had already passed sincerespondent retained the cash for his ownpersonal use. But notwithstanding the sameand his firm promise "to pay Mrs. Junio on orbefore January 1997" he has notdemonstrated any volition to settle hisobligation to his creditor[,] althoughadmittedly "there w[ere] occasions whencomplainant's sister came to respondent toask for the payment in behalf ofcomplainant," worse, "the passage of timemade respondent somehow forgot about theobligation."

A lawyer shall not borrow money from hisclient unless the client's interests are fully

protected by the nature of the case or byindependent advice (Rule 16.04, Code ofProfessional Responsibility). This rule isintended to prevent the lawyer from takingadvantage of his influence over the client.

This rule is especially significant in the instantcase where the respondent enjoys animmense ascendancy over the complainant

who, "as well as two of his sisters, hadserved respondent's family as householdhelpers for many years."

Having gained dominance over thecomplainant by virtue of such long relation of



master and servant, the respondent tookadvantage of his influence by not returningthe money entrusted to him. Instead, heimposed his will on the complainant and

borrowed her funds without giving adequatesecurity therefor and mindless of the interestof the complainant caIETS

In the light of the foregoing, . . . respondenthas committed an act which falls short of thestandard of the norm of conduct required ofevery attorney. If an ordinary borrower ofmoney is required by the law to repay theloan failing which he may be subjected tocourt action, it is more so in the case of alawyer whose conduct serves as an example.7

It would indeed appear from the records of the case thatrespondent was allowed to borrow the money previouslyentrusted to him by complainant for the purpose of

securing the redemption of the property belonging tocomplainant's parents. Respondent, however, did notgive adequate security for the loan and subsequentlyfailed to settle his obligation. Although complainantdenied having loaned the money to respondent, the factis that complainant accepted the promissory note givenher by respondent on December 12, 1996. In effect,complainant consented to and ratified respondent's use

of the money. It is noteworthy that complainant did notattach this promissory note to her complaint nor explainthe circumstances surrounding its execution. She onlymentioned it in her demand letter of March 12, 1998(Annex B), in which she referred to respondent'sundertaking to pay her the P25,000.00 on or before



January 1997. Under the circumstances and in view ofcomplainant's failure to deny the promissory note, theCourt is constrained to give credence to respondent'sclaims that the money previously entrusted to him bycomplainant was later converted into a loan.

Respondent's liability is thus not for misappropriation orembezzlement but for violation of Rule 16.04 of the Codeof Professional Responsibility which forbids lawyers fromborrowing money from their clients unless the latter'sinterests are protected by the nature of the case or byindependent advice. In this case, respondent's liability is

compounded by the fact that not only did he not give anysecurity for the payment of the amount loaned to him butthat he has also refused to pay the said amount. Hisclaim that he could not pay the loan "becausecircumstances . . . did not allow it" and that, because ofthe passage of time, "he somehow forgot about hisobligation" only underscores his blatant disregard of hisobligation which reflects on his honesty and candor. Alawyer is bound to observe candor, fairness, and loyaltyin all his dealings and transactions with his client. 8

Respondent claims that complainant is a close personalfriend and that in helping redeem the property ofcomplainant's parents, he did not act as a lawyer but asa friend, hence there is no client-attorney relationshipbetween them. This contention has no merit. As

explained in Hilado v . David , 9

To constitute professional employment it isnot essential that the client should haveemployed the attorney professionally on anyprevious occasion . . . It is not necessary that



any retainer should have been paid, promised, or charged for ; neither is it materialthat the attorney consulted did not afterwardundertake the case about which the

consultation was had. If a person, in respectto his business affairs or troubles of any kind,consults with his attorney in his professionalcapacity with the view to obtaining

professional advice or assistance, and theattorney voluntarily permits or acquiesces insuch consultation, then the professionalemployment must be regarded as established

. . .

Considering the foregoing, the InvestigatingCommissioner's recommendation to impose onrespondent the penalty of reprimand and restitution of theamount loaned by him is clearly inadequate. On the otherhand, the penalty of indefinite suspension with restitutionimposed by the IBP Board of Governors is too harsh in

view of respondent's apparent lack of intent to defraudcomplainant and of the fact that this appears to be hisfirst administrative transgression. It is the penaltyimposed in Igual v . Javier 10 which applies to this case. Inthat case, this Court ordered the respondent suspendedfor one month from the practice of law and directed himto pay the amount given him by his clients within 30 daysfrom notice for his failure to return the money in question

notwithstanding his admission that he did not use themoney for the filing of the appellee's brief, as agreed bythem, because of an alleged quarrel with his clients.

Anent petitioner's allegation regarding the lack of hearing



during the IBP investigation, suffice it to say that hewaived such right when he failed to comment onpetitioner's motion to submit the case for resolution onthe basis of the pleadings theretofore filed despite duenotice to him, not to mention the fact that it was he whohad requested the postponement of the two hearingsscheduled by the Investigating Commissioner.

WHEREFORE, the Court finds petitioner guilty ofviolation of Rule 16.04 of the Code of ProfessionalResponsibility and orders him suspended from thepractice of law for a period of one (1) month and to pay to

complainant within 30 days from notice, the amount ofP25,000.00 with interest at the legal rate, computed fromDecember 12, 1996.

SO ORDERED.

Bellosillo, Quisumbing and De Leon Jr ., JJ ., concur.

Buena, J ., on official business abroad.

Footnotes

1. Comment, pp. 1-2, Rollo, pp. 1-2.

2. Answer, pp. 1-3; Rollo, pp. 32-34

3. Reply, p. 5; id , p. 50.

4. Pedro A. Magpayo, Jr.

5. Motion For Reconsideration, p. 1.

6. Comment to the Motion for Reconsideration, p. 2.



7. Report and Recommendation, pp. 2-5.

8. CODE OF PROFESSIONAL RESPONSIBILITY, Canon15.

9. 84 Phil. 569, 576 (1949), citing 5 Jones Commentarieson Evidence 4118-4119 (italics added).

10. 254 SCRA 416 (1996).

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38 Junio v Grupo

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