Ethical Boundaries: Don't Borrow Money From Your Clients!

In essence, borrowing money from a client transcends the delicate boundaries of professional conduct because of its inherently personal undertaking. We are all aware, by experience, that morphing professional and personal affairs together is not the best approach to any matter. Mixing the two can lead to conflict of interest, breaches of trust, and ethical dilemmas. The act of borrowing money, even from friends, often lead to strained relations and ruined friendships. Moreso between a lawyer and his or her client in which their ties are supposed to be embraided with utmost trust and professionalism.

In the case of Villafuerte vs. Atty. Tajanlangit (A.C. No. 7619, December 6, 2023), the Supreme Court suspended a lawyer for his act of borrowing money from his client. Notably, Atty. Tajanlangit was not excused from sanctions despite the fact that he was able to fully pay the loan. According to the facts, Atty. Tajanlangit assisted Ms. Villafuerte in her pursuit for the death benefit claims of her late husband. After retrieving the said benefits, Atty. Tajanlangit, who was experiencing financial difficulties at that time, borrowed the amount of Php 300,000.00 from Ms. Villafuerte, and they agreed that the loan will be paid by installments.

Over time, Atty. Tajanlangit made several payments to the loan amounting to a total of Php 208,000.00. However, despite partially fulfilling his loan obligations, Atty. Tajanlangit received a complaint for disbarment filed by Ms. Villafuerte. At that time, Atty. Tajanlangit’s debt was almost fully paid with a remaining balance of only Php 1,000.00. When the complaint reached the Supreme Court, Atty. Tajanlangit was adjudged liable for violating the Code of Professional Responsibility and Accountability and was suspended from practicing law for a period of six (6) months.

It is interesting to note that from a civil standpoint, there should be no liability on the part of Atty. Tajanlangit, having fully paid his loan obligation to Ms. Villafuerte. But from a professional point of view, the Supreme Court held that the act of borrowing money from a client per se is an unethical practice for lawyers. It does not matter if the lawyer repaid the loan or secured it with a valuable collateral, the act of soliciting funds from a client pervades the professional boundaries in the lawyer-client relationship. The prohibition is grounded not only on ethical considerations, but also on the broader scope of public interest imbued in every lawyer-client relationship. Lawyers have the duty to act in the best interest of their clients. Borrowing money from a client runs counter to that policy and can even create a conflict of interest, as the lawyer may feel an unhealthy pressure to prioritize repaying the loan rather than rendering objective legal advice or representation.

The Supreme Court held that the rule against borrowing money by a lawyer from his client is intended to prevent the lawyer from taking advantage of his influence over his client. There is a presumption that clients may feel compelled to lend money to their lawyers due to their relationship, potentially putting them at a disadvantage. In the case of Atty. Tajanlangit, the Supreme Court appears to have strictly applied this rule against him despite the fact that the loan was fully repaid. Some may argue that the penalty of suspension is a bit too harsh given the circumstance of repayment by Atty. Tajanlangit. A lesser penalty of reprimand or admonishment appears to be a more appropriate penalty.

However, the reservation stems from a broader sense of justice; one that seeks to protect the image and reputation of the legal profession, and not one to compensate the loss of an aggrieved client. As such, in disciplinary cases against lawyers, the Supreme Court views the lawyer as an officer of the court, and not as a civil defendant. Therefore, the circumstance of reparation is taken lightly against Atty. Tajanlangit considering that what is at stake is the name and goodwill of the legal profession. Punishment in administrative cases against lawyers is grounded on acts that serves to undermine the public trust in lawyers and, by extension, tarnishes the reputation of the legal profession. Indeed, a glooming perception of impropriety emanates once a loan is transacted between a lawyer and the client. Even if the lawyer believes he or she can maintain objectivity, the very act of borrowing money from a client can be viewed as exploiting the lawyer-client relationship for personal gain,

Moreover, while acknowledging that Atty. Tajanlangit’s financial difficulties are a valid concern, it’s imperative to highlight that our ethical rules strictly prohibit him from borrowing money from a client no matter the circumstance. Despite his genuine need, it’s essential to adhere to these regulations to maintain the integrity and trust of the legal profession. I believe that we, as lawyers, must consider this case as a significant reminder on the uncompromising stance of the Supreme Court against unethical practices, even if they were seemingly done behind legitimate concerns. It reminds us of our duty to uphold the highest standards of integrity in any situation, whether in professional or personal dealings with our clients. To this end, we must avoid any actions that may potentially erode the trust and confidence bestowed upon us by virtue of the lawyer-client relationship and exemplify our stance as professionals with fiduciary responsibility.