Yuhico vs. Gutierrez

Deliberate failure to pay just debts constitutes gross misconduct, and a lawyer cannot justify non-payment by dire financial condition; however, a lawyer already disbarred cannot be disbarred a second time because Philippine laws and jurisprudence do not provide for double or multiple disbarment.

Complainant Manuel C. Yuhico and respondent Atty. Fred L. Gutierrez became acquainted at the Office of the City Prosecutor in Pasig City during hearings of an Estafa complaint against Jose S. Chicharro, whom Gutierrez represented. The present administrative proceeding invoked Rule 1.01 of the Code of Professional Responsibility. Gutierrez had previously been disbarred in Huyssen vs. Atty. Gutierrez for gross misconduct arising from non-payment of just debts and issuance of bouncing checks.

Complainant Manuel C. Yuhico met respondent Atty. Fred L. Gutierrez at the Office of the City Prosecutor in Pasig City on May 4, 2005. Yuhico was there to testify at the preliminary investigation of a Complaint for Estafa against Jose S. Chicharro, who was then being represented by Gutierrez. They eventually became acquainted as they frequently saw each other during the hearings of the case.

On June 24, 2005, Gutierrez phoned Yuhico and asked for a cash loan of ₱30,000.00. Gutierrez claimed that he needed money to pay for the medical expenses of his mother who was seriously ill. Yuhico immediately handed the money. In turn, Gutierrez promised to pay the loan very soon, since he was expecting to collect his attorney’s fees from a Japanese client.

On June 28, 2005, Gutierrez again asked Yuhico for a loan, this time in the amount of ₱60,000.00, allegedly to pay the medical expenses of his wife who was also hospitalized. Yuhico readily issued to Gutierrez an Equitable PCI Bank check amounting to ₱60,000.00. Gutierrez promised to pay his two loans totalling ₱90,000.00 “within a short time.”

On July 12, 2005, Yuhico asked Gutierrez to pay his loans. Gutierrez failed to pay. In a text message at 2:47 p.m., Gutierrez stated that he did not know how to say it as he did not want to think that he may be taking advantage of their friendship; that he had long expected substantial attorney’s fees from his client Ogami from Japan, more or less more than 5m, and its release was delayed due to tax and the law on money laundering; that he estimated it would be collected on or before August 5; and that in the meantime he was in financial difficulty. Later, Gutierrez attempted to borrow money again, claiming that his daughter needed ₱70,000.00 to pay the fees required to take the licensure examination in the U.S. Medical Board. He assured Yuhico that he would pay all his debts on or before August 10, 2005. In another text message at 3:05 p.m., Gutierrez said that his mother died, his wife got sick, and his brother-in-law died; that these events led him to struggling finances; that he tried to sell his car but his buyer backed out; that his immediate problem was the ₱70,000.00 his daughter needed for payment for the U.S. medical board; and that he asked for help again and promised to pay all his debts on or before August 10. Yuhico refused to lend him any amount and instead demanded payment. Gutierrez then sent another text message requesting another week to pay his debts, but he failed to make the payment.

Yuhico repeatedly requested payment of the loans from Gutierrez from August to December 2005. Gutierrez, for numerous times, promised to pay but always failed to do so. At one point, Gutierrez asked Yuhico’s account number and promised to deposit his payment there, but he never deposited the payment. On December 5, 2005, Yuhico’s counsel sent a demand letter to Gutierrez to pay his debts, but to no avail. Yuhico thus filed the instant complaint against Gutierrez before the Integrated Bar of the Philippines-Commission on Bar Discipline.

In his Answer, Gutierrez claimed that Yuhico was the one who offered to lend him money in gratitude for the assistance he extended to Yuhico when the latter was under threat by his clients. He admitted that he accepted the loan due to compelling circumstances. He added that he had no intention of evading his obligation to pay his debts, but he was currently in financial distress and could not pay his debts yet; he claimed he would pay when his financial condition improved. During the proceedings, Gutierrez failed to attend the mandatory conference on two occasions and did not appear at the clarificatory hearing; only complainant’s counsel attended. In his Position Paper, Yuhico manifested that the Supreme Court, in Huyssen vs. Atty. Gutierrez, had already disbarred Gutierrez for gross misconduct due to his failure to pay his debts and issuance of worthless checks.

• Non-Payment of Just Debts: Yuhico alleged that Gutierrez obtained two loans totaling ₱90,000.00 on June 24 and June 28, 2005 and failed to pay despite repeated requests and a demand letter dated December 5, 2005.
• Deceit and Misrepresentation: Yuhico alleged that Gutierrez repeatedly promised to pay, gave excuses, asked for another loan, requested his account number for deposit, and never made payment, showing a pattern of deceit.
• Violation of Rule 1.01: Yuhico filed the complaint for disciplinary action against Gutierrez for violation of Rule 1.01 of the Code of Professional Responsibility.
• Prior Disbarment: Yuhico manifested that Gutierrez had already been disbarred in Huyssen vs. Atty. Gutierrez for gross misconduct due to non-payment of debts and issuance of worthless checks.

• Loan Initiated by Complainant: Gutierrez claimed that Yuhico was the one who offered to lend him money in gratitude for the assistance he extended when Yuhico was under threat by his clients.
• Admission Under Compelling Circumstances: Gutierrez admitted that he accepted the loan due to compelling circumstances.
• No Intent to Evade; Financial Distress: Gutierrez maintained that he had no intention of evading his obligation to pay his debts, but that he was currently in financial distress and could not pay yet; he would pay when his financial condition improved.

• Gross Misconduct for Non-Payment of Just Debts: Whether Atty. Gutierrez’s deliberate failure to pay his just debts and his pattern of deceit constitute gross misconduct under Rule 1.01 of the Code of Professional Responsibility.
• Second Disbarment: Whether Atty. Gutierrez, having already been previously disbarred, may be disbarred anew for the present infraction.
• Restitution: Whether Atty. Gutierrez should be ordered to pay the ₱90,000.00 loan to complainant, with interest.

• Gross Misconduct for Non-Payment of Just Debts: Yes. Deliberate failure to pay just debts constitutes gross misconduct; Gutierrez admitted the loans and non-payment, and his financial distress did not justify the non-payment.
• Second Disbarment: No. Although the infraction calls for disbarment, he had already been previously disbarred; Philippine laws and jurisprudence do not provide for double or multiple disbarment, nor a minimum five-year readmission requirement.
• Restitution: Yes. He was ordered to pay ₱90,000.00 to complainant immediately from receipt of the decision with interest.

• Gross Misconduct for Non-Payment of Just Debts: The Court held that deliberate failure to pay just debts constitutes gross misconduct for which a lawyer may be sanctioned with suspension from the practice of law. Lawyers are instruments for the administration of justice and vanguards of the legal system; they are expected to maintain not only legal proficiency but also a high standard of morality, honesty, integrity, and fair dealing, and must faithfully perform their duties to society, the bar, the courts, and their clients, including prompt payment of financial obligations. In this case, there was no question as to Gutierrez’s guilt: his admission of the loan he contracted and his failure to pay left no room for interpretation. He could not justify his act of non-payment by his dire financial condition; he should not have contracted loans beyond his financial capacity to pay. The Court also noted his propensity of employing deceit and misrepresentations for the purpose of obtaining debts without the intention of paying them. Records showed a pattern of habitually making promises of paying his debts, yet repeatedly failing to deliver; the series of text messages promising to pay while simultaneously giving excuses without actually making good on his promises was clearly reprehensible. His acts demonstrated lack of moral character to satisfy the responsibilities and duties imposed on lawyers as professionals and as officers of the court.
• Second Disbarment: The Court agreed with the findings of the IBP but could not adopt its recommendation to disbar Gutierrez for the second time, considering that Gutierrez had already been previously disbarred. The IBP itself pointed out that there is no double or multiple disbarment in Philippine laws or jurisprudence. Neither is there a law mandating a minimum five-year requirement for readmission, as cited by the IBP. Thus, while Gutierrez’s infraction called for the penalty of disbarment, the Court could not disbar him anew.
• Restitution: The IBP-CBD found Gutierrez guilty of non-payment of just debts and ordered him to return ₱90,000.00 to Yuhico with interest until full payment. The IBP Board of Governors adopted the report and recommendation but modified it as to payment, this time without interest. The Court sustained the findings of the IBP but modified its recommendations, ordering Gutierrez to pay ₱90,000.00 to complainant immediately from receipt of the decision with interest.

• Deliberate Failure to Pay Just Debts Constitutes Gross Misconduct — A lawyer’s deliberate failure to pay just debts is gross misconduct, for which a lawyer may be sanctioned with suspension from the practice of law. The Court applied this to Gutierrez, who admitted contracting ₱90,000.00 in loans and failing to pay despite repeated promises and demands.
• Financial Distress Is Not a Defense to Non-Payment of Just Debts — A lawyer cannot justify non-payment of a debt by his dire financial condition; he should not have contracted loans beyond his financial capacity to pay. The Court applied this to reject Gutierrez’s defense that he could not pay because of financial distress.
• No Double or Multiple Disbarment — Philippine laws and jurisprudence do not provide for double or multiple disbarment; a lawyer already disbarred cannot be disbarred anew for a subsequent infraction. The Court applied this to decline the IBP’s recommendation for a second disbarment.
• Lawyers as Instruments of Justice and Vanguards of the Legal System — Lawyers must maintain not only legal proficiency but also a high standard of morality, honesty, integrity, and fair dealing, and must faithfully perform their duties to society, the bar, the courts, and their clients, including prompt payment of financial obligations. The Court relied on this to characterize Gutierrez’s non-payment as gross misconduct.
• Deceit and Misrepresentation in Obtaining Debts — A pattern of making promises to pay while giving excuses and repeatedly failing to pay demonstrates lack of moral character. The Court applied this to Gutierrez’s series of text messages and broken promises.

• “We have held that deliberate failure to pay just debts constitute gross misconduct, for which a lawyer may be sanctioned with suspension from the practice of law.” — States the controlling rule on the disciplinary consequence of non-payment of just debts.
• “Neither can he justify his act of non-payment of debt by his dire financial condition. Gutierrez should not have contracted loans which are beyond his financial capacity to pay.” — Rejects financial distress as a defense and underscores the lawyer’s duty to avoid obligations beyond capacity.
• “while we agree with the findings of the IBP, we cannot, however, adopt its recommendation to disbar Gutierrez for the second time, considering that Gutierrez had already been previously disbarred. Indeed, as the IBP pointed out, we do not have double or multiple disbarment in our laws or jurisprudence.” — Explains why the Court declined to impose a second disbarment despite affirming the gross misconduct finding.
• “WHEREFORE, Resolution No. XVIII-2008-649 dated December 11, 2008, of the IBP, which found FRED L. GUTIERREZ guilty of GROSS MISCONDUCT, is AFFIRMED. He is ORDERED to PAY the amount of Ninety Thousand Pesos (₱90,000.00) to the complainant immediately from receipt of this decision with interest.” — The dispositive portion, showing the penalty and monetary award.

• Huyssen vs. Atty. Gutierrez, A.C. No. 6707, March 24, 2006, 485 SCRA 244 — Prior disbarment case in which Gutierrez was disbarred for gross misconduct due to non-payment of just debts and issuance of bouncing checks; the Court relied on it to hold that he could not be disbarred anew.
• A-1 Financial Services, Inc. vs. Atty. Laarni N. Valerio, A.C. No. 8390, July 2, 2010 — Cited by the Court for the rule that deliberate failure to pay just debts constitutes gross misconduct.
• Barrientos vs. Libiran-Meteoro, 480 Phil. 661, 671 (2004) — Cited in A-1 Financial Services for the same rule on deliberate failure to pay just debts as gross misconduct.

• Rule 1.01, Code of Professional Responsibility — The complaint was filed for violation of this rule. The Court found Gutierrez’s deliberate non-payment of just debts and pattern of deceit to constitute gross misconduct, sustaining the IBP’s finding.

Per Curiam. No separate concurring opinions are indicated. The decision lists Chief Justice Renato C. Corona; Associate Justices Antonio T. Carpio, Conchita Carpio Morales, Presbitero J. Velasco, Jr., Antonio Eduardo B. Nachura, Arturo D. Brion, Teresita J. Leonardo-De Castro, Diosdado M. Peralta, Lucas P. Bersamin, Roberto A. Abad, Martin S. Villarama, Jr., Jose Catral Mendoza, Jose Portugal Perez, and Maria Lourdes P.A. Sereno. Associate Justice Mariano C. Del Castillo was on official leave.