Case Summary (A.C. No. 13361)
Loan Application and Misrepresentation Allegations
On January 19, 2015, Atty. Subejano and Alejandro Rentillosa applied for a loan of PHP 15,000,000.00 from Megamitch to support their business in Iligan City and Lanao del Norte. At the time, SD Law was providing legal services to Megamitch. The complaint alleges that Subejano leveraged his personal connection with Megamitch's CEO, Alain De Schouwer, to misrepresent their engagement in a sand and gravel business to secure the loan. Consequently, Megamitch authorized disbursements totaling PHP 11,679,900.00 to Subejano, under the understanding that a formal loan contract and necessary collateral would be provided, which did not occur.
Discovery of Misrepresentation
Upon submission of an unacceptable loan contract with chattel mortgage, Megamitch discovered through the Office of the Treasurer of Iligan City that Subejano had no legitimate business records, contrary to his claims. Consequently, Megamitch refused to disburse the remaining loan amount and demanded a refund of the funds already issued. The situation escalated with Megamitch filing an Estafa criminal case against Subejano and Rentillosa, alongside the current disbarment complaint.
Respondent's Defense
Atty. Subejano acknowledged obtaining the loan but denied any wrongdoing. He claimed that he had entered the loan in his individual capacity and asserted that Megamitch's interests were safeguarded, as they submitted a business proposal and feasibility study for evaluation, received inspections of purchased equipment, and made several payments before business setbacks hindered full compliance with the loan agreement.
Investigating Commission's Findings
The Investigating Commissioner found Subejano guilty of violating Canon 16, Rule 16.04 of the Code of Professional Responsibility. This provision prohibits lawyers from borrowing from clients unless the client's interests are adequately protected. The Commissioner's recommendations included a five-year suspension from practicing law due to this violation.
IBP Board of Governors' Resolution
The IBP-BOG adopted the Commissioner's findings but reduced the penalty to a six-month suspension. Subejano’s arguments in his Motion for Reconsideration highlighted that he was not acting as Megamitch's legal counsel in the loan matter, and asserted that protections were in place to ensure that Megamitch was not disadvantaged.
Compromise Agreement and Subsequent Proceedings
A Compromise Agreement was reached between Subejano and Megamitch, wherein he agreed to settle the outstanding loan obligation. The complainant did not oppose Subejano’s motions but requested revocation of the complaint should he fail to comply with the terms of the agreement. Ultimately, the IBP-BOG recommended dismissing the disbarment complaint in 2021, recognizing Subejano's payments and ongoing efforts to resolve the financial obligations.
Court's Ruling on Dismissal
The Court endorsed the IBP-BOG's recommendation to dismiss the complaint, noting the existence of a lawyer-client relationship but insufficient grounds for administrative liability connected to the b
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Background of the Case
- The complaint for disbarment was filed by Henry G. Lacida on behalf of Megamitch Financial Resources Corporation (Megamitch) against respondent Atty. Rejoice S. Subejano.
- The case arose in connection with a loan obtained by respondent from Megamitch.
- On January 19, 2015, respondent and Mr. Alejandro Rentillosa applied for a PHP 15,000,000.00 loan from Megamitch to augment their business capitalization in Iligan City and Lanao del Norte.
- At that time, respondent was a founding partner of Subejano & Ditucalan (SD Law), Megamitch’s retained legal counsel.
Allegations and Claims Against the Respondent
- Respondent allegedly took advantage of his personal relationship with Megamitch’s CEO, Mr. Alain De Schouwer, to secure the loan.
- Misrepresentations were made that respondent and Rentillosa were engaged in the sand and gravel business in Iligan City and Lanao del Norte.
- Megamitch released PHP 11,679,900.00 to respondent on the agreement he would execute a loan contract and provide security.
- The submitted Loan Contract with Chattel Mortgage was deemed unacceptable by Megamitch.
- Megamitch discovered respondent had no business record with Iligan City, contrary to representations, and refused to release the loan balance.
- Megamitch demanded return of the released funds, which respondent ignored.
- Megamitch filed a criminal case for Estafa and the present disbarment case against respondent.
Respondent's Defense
- Respondent admitted obtaining the loan for their business venture.
- He asserted a prior loan of PHP 500,000.00 from Megamitch had been fully repaid by December 2016.
- Denied any misrepresentations or deceit to secure the loan.
- A business proposal and feasibility study were submitted and evaluated by Megamitch officers.
- Loan proceeds were used to purchase heavy equipment, inspected by Megamitch, and proof of purchase was submitted.
- Respondent made several payments but was unable to fully comply due to the failure of the business venture caused by unfavorable political climate.
- Maintained he was not evading obligations and was making efforts to repay Megamitch.
Investigating Commissioner's Findings and Recommendations
- Investig