A.C. No. 13361 – HENRY G. LACIDA, complainant, vs. ATTY. REJOICE S. SUBEJANO, respondent.

CAGUIOA, J.

Rule Synopsis

Unlike in the CPR, the CPRA outlines three exceptions on the prohibition on borrowing of money or property from a client, namely: (a) standard commercial transactions for products or services that the client offers to the public in general; (b) where the lawyer and the client have an existing or prior business relationship; and (c) where there is a contract between the lawyer and the client. In these cases, the client’s interests are safeguarded.

Facts

This case involved a complaint for disbarment filed by Henry Lacida (Lacida) behalf of Megamitch Financial Resources Corporation (Megamitch) against Atty. Rejoice S. Subejano (Subejano).

In 2015, Subejano and Alejandro Rentillosa (Rentillosa) obtained a P15 million loan from Megamitch to finance their business. At that time, Subejano & Ditucalan (SD Law) was Megamitch’s retained legal counsel. Subejano is a founding partner of SD Law.

Lacida alleged that Subejano took advantage of his personal relationship with Megamitch’s Chief Executive Officer, and misrepresented that he and Rentillosa were engaged in the sand and gravel business.

Megamitch released P11.67 million Subejano, and the latter submitted a Loan Contract with Chattel Mortgage. However, Megamitch deemed the same unacceptable. Megamitch also allegedly discovered from the Office of the Treasurer that Subejano had no business record with the city. Megamitch then demanded the return of the amount previously released but Subejano failed to do so. Thus, Megamitch filed an Estafa case against Subejano and Rentillosa, and the instant disbarment complaint against the former.

The IBP Investigating Commissioner (Comm.) found Subejano guilty of violating Canon 16, Rule 16.04 of the Code of Professional Responsibility (CPR), which states that: “A lawyer shall not borrow from his client unless the client’s interests are fully protected by the nature of the case or by independent advice.” The IBP Board of Governors (IBP-BOG) initially adopted the said findings but later granted Subejano’s motion for reconsideration and recommended the dismissal of the complaint.

Issues

Should Subejano be held administratively liable for violating the prohibition on borrowing of money or property from clients?

Ruling and Discussion

No. Subejano should not be held administratively liable for violating the prohibition on borrowing of money or property from clients for lack of sufficient basis.

The Court shall resolve the present case in accordance with the provisions of the the Court shall resolve the present case in accordance with the provisions of the CPRA, which was adopted in April 2023. Its transitory provisions provide that it shall apply retroactively to all pending cases.

Unlike in the CPR, the CPRA outlines three exceptions on the prohibition on borrowing of money or property from a client, namely: (a) standard commercial transactions for products or services that the client offers to the public in general; (b) where the lawyer and the client have an existing or prior business relationship; and (c) where there is a contract between the lawyer and the client. In these cases, the client’s interests are safeguarded.

Here, the Court finds that the loan transaction between Megamitch and Subejano falls within the above-stated exceptions.

The subject loan is a standard commercial transaction relating to the business of Megamitch. Both parties alleged that Megamitch is engaged in the lending business.
Megamitch had an existing business relationship with Subejano when they entered the subject loan transaction in January 2015. Subejano alleged that he obtained a loan from Megamitch in 2014, which he fully paid in 2016. Megamitch did not dispute said allegation.
The parties’ allegations prove that a contract of loan was perfected between Megamitch and Subejano, notwithstanding the former’s refusal to sign the Loan Agreement with Chattel Mortgage submitted by the latter. The claim for repayment and complaint for Estafa were based on the said loan.

dispositive

Complaint dismissed.