A-1 Financial Services, Inc. vs. Atty. Valerio

A lawyer who deliberately fails to pay just debts and issues worthless checks, and who further shows wanton disregard of court and IBP orders in the course of disciplinary and criminal proceedings, is guilty of gross misconduct warranting suspension from the practice of law for two years.

A-1 Financial Services, Inc. is a financing corporation that extends loans to individual borrowers. Atty. Laarni N. Valerio was a member of the Philippine Bar who obtained a personal loan from the complainant. The administrative complaint was filed under the disciplinary jurisdiction of the Integrated Bar of the Philippines over members of the legal profession, predicated on violations of Batas Pambansa Blg. 22 and the Code of Professional Responsibility.

On November 13, 2001, A-1 Financial Services, Inc., a financing corporation, granted Atty. Laarni N. Valerio's loan application in the amount of ₱50,000.00. To secure payment of the obligation, Atty. Valerio issued a postdated check — Check No. 0000012725, dated April 1, 2002, in the amount of ₱50,000.00. Upon presentation at the bank on its maturity date, the check was dishonored for insufficient funds. Despite repeated demands, Atty. Valerio failed to pay the full amount of her obligation, though she had made partial payments of the loan and interest prior to the filing of the complaint — conduct the Court later treated as proof that the obligation existed and was acknowledged.

On November 10, 2003, complainant filed a B.P. 22 case against Atty. Valerio, docketed as Criminal Case No. 124779. Her arraignment was scheduled for August 31, 2004, but she failed to appear despite due notice. A warrant of arrest was subsequently issued, but Atty. Valerio posted no bail. On November 22, 2004, complainant sent a letter to Atty. Valerio calling her attention to the warrant and requesting that she submit to the court's jurisdiction by posting bail; the letter was received, as evidenced by postal registry return cards. Despite court orders and notices, Atty. Valerio refused to abide.

On January 18, 2006, complainant filed an administrative complaint before the IBP. The IBP-CBD required Atty. Valerio to file an answer on January 26, 2006, but she filed no responsive pleading. In a letter dated March 16, 2006, respondent's mother, Gorgonia N. Valerio, explained that her daughter had been diagnosed with schizophrenia and thus could not properly respond to the complaint; she also undertook to personally settle her daughter's obligation. On September 13, 2007, the IBP-CBD directed Atty. Valerio to appear at a mandatory conference, which she again failed to attend. The IBP then ordered the parties to submit position papers on November 15, 2007, but no position paper was submitted by Atty. Valerio.

The IBP-CBD, in its Report and Recommendation dated September 16, 2008, recommended a two-year suspension, giving no credence to the medical certificate submitted by respondent's mother due to the latter's failure to appear before the IBP-CBD hearings to affirm its truthfulness or present the issuing physician. The IBP Board of Governors adopted and approved the recommendation with modification on December 11, 2008, reducing the suspension to one year. The Supreme Court, by Resolution dated December 15, 2009, directed Atty. Valerio and/or her mother to submit a duly notarized medical certificate and/or certified medical records to support the claim of schizophrenia within a non-extendible period of ten days from receipt. The resolution was received on January 6, 2010, but no medical certificate or records were submitted despite the lapse of considerable time.

• Medical Incapacity: Through her mother, Gorgonia N. Valerio, respondent maintained that she had been diagnosed with schizophrenia, which prevented her from properly responding to the administrative complaint against her.
• Settlement Undertaking: Respondent's mother likewise acknowledged her daughter's obligation and undertook to personally settle the same.

• Gross Misconduct: Whether respondent is guilty of gross misconduct warranting disciplinary sanction for issuing a worthless check and deliberately failing to pay a just debt.
• Medical Defense: Whether the claim of schizophrenia excuses respondent's failure to respond to the complaint and participate in the proceedings.
• Procedural Misconduct: Whether respondent's failure to obey court and IBP processes — including non-appearance at arraignment, non-filing of pleadings, and disregard of orders — constitutes additional misconduct.
• Proper Penalty: Whether the proper penalty is the IBP-CBD's recommended two-year suspension or the IBP Board of Governors' reduced one-year suspension.

• Gross Misconduct: Yes. The deliberate failure to pay just debts and the issuance of worthless checks constitute gross misconduct for which a lawyer may be sanctioned with suspension from the practice of law, pursuant to Canon 1 and Rule 1.01 of the Code of Professional Responsibility.
• Medical Defense: No. The medical certificate could not be taken on its face, respondent's mother having failed to prove its contents or present the issuing physician, and no duly notarized medical certificate or certified medical records were submitted despite the Court's express directive and grant of additional time.
• Procedural Misconduct: Yes. Respondent's failure to answer the complaint, attend IBP hearings, appear at her arraignment, and obey court orders constitutes flouting resistance to lawful orders in violation of Section 3, Rule 138 of the Rules of Court and the lawyer's oath.
• Proper Penalty: Two years. The IBP-CBD's recommended penalty was affirmed over the IBP Board of Governors' reduced one-year suspension, the Court deeming the increased sanction reasonable in light of respondent's wanton disregard of IBP and Court orders in addition to the issuance of worthless checks and non-payment of debts.

• Gross Misconduct: The existence of the loan obligation was not denied; respondent's act of making partial payments of the loan and interest prior to the filing of the complaint sufficed as proof that the obligation existed and was acknowledged. Her mother likewise acknowledged the obligation. Under established jurisprudence, the deliberate failure to pay just debts and the issuance of worthless checks constitute gross misconduct. Lawyers are expected to maintain not only legal proficiency but also a high standard of morality, honesty, integrity, and fair dealing, as embodied in Canon 1 and Rule 1.01 of the Code of Professional Responsibility, which respectively require lawyers to uphold the constitution, obey the laws of the land, promote respect for law and legal processes, and refrain from unlawful, dishonest, immoral, or deceitful conduct. The issuance of a check that was dishonored for insufficient funds, coupled with deliberate non-payment despite repeated demands, satisfied the standard for gross misconduct.

• Medical Defense: The medical certificate submitted by respondent's mother could not be credited. The IBP-CBD gave it no credence because the mother failed to appear before the IBP-CBD hearings to affirm the truthfulness of its contents or present the physician who issued it. The Court itself provided respondent a further opportunity to substantiate the claim by directing the submission of a duly notarized medical certificate and/or certified medical records within a non-extendible ten-day period. Despite receipt of notice on January 6, 2010, and the lapse of considerable time, no such documents were submitted. The claim of schizophrenia thus remained unsubstantiated and could not excuse respondent's conduct.

• Procedural Misconduct: Respondent's conduct throughout the proceedings demonstrated a pattern of disregard for lawful authority. She failed to answer the administrative complaint, failed to attend the mandatory conference set by the IBP-CBD, submitted no position paper, and ignored the criminal proceedings by failing to appear at her arraignment despite due notice and refusing to post bail despite the issuance of a warrant of arrest. Such conduct violated the lawyer's oath, which imposes upon every member of the Bar the duty to delay no man for money or malice, and ran counter to the precepts of the Code of Professional Responsibility. Under Section 3, Rule 138 of the Rules of Court, failure to answer a complaint and failure to appear at investigation are evidence of flouting resistance to lawful orders of the court and illustrate disregard for the oath of office.

• Proper Penalty: Under prevailing jurisprudence, the deliberate failure to pay just debts and the issuance of worthless checks typically warrant a one-year suspension. However, the Court deemed it reasonable to affirm the IBP-CBD's recommended two-year suspension because, aside from issuing worthless checks and failing to pay her debts, respondent had also shown wanton disregard of IBP and Court orders throughout the proceedings. The aggravating factor of procedural misconduct justified a penalty exceeding the baseline sanction.

• Gross Misconduct from Issuance of Worthless Checks and Non-Payment of Just Debts — The deliberate failure to pay just debts and the issuance of worthless checks constitute gross misconduct for which a lawyer may be sanctioned with suspension from the practice of law. Lawyers are expected to maintain not only legal proficiency but also a high standard of morality, honesty, integrity, and fair dealing, as embodied in Canon 1 and Rule 1.01 of the Code of Professional Responsibility. In this case, the doctrine was applied to uphold a two-year suspension, the Court finding the baseline one-year penalty insufficient where the respondent also exhibited wanton disregard of IBP and Court orders.

• Disregard of Lawful Orders as Aggravating Misconduct — A lawyer's failure to answer a complaint and failure to appear at investigation constitute evidence of flouting resistance to lawful orders of the court and illustrate disregard for the oath of office, in violation of Section 3, Rule 138 of the Rules of Court. In this case, the doctrine was applied as an aggravating factor justifying an increased penalty beyond the standard one-year suspension for issuance of worthless checks and non-payment of debts.

• "[T]he deliberate failure to pay just debts and the issuance of worthless checks constitute gross misconduct, for which a lawyer may be sanctioned with suspension from the practice of law." — This passage, quoted from Barrientos vs. Libiran-Meteoro, states the controlling rule on when non-payment of debts and issuance of bad checks rise to the level of gross misconduct warranting disciplinary action against a member of the Bar.

• "[A lawyer's] failure to answer the complaint against him and his failure to appear at the investigation are evidence of his flouting resistance to lawful orders of the court and illustrate his despiciency for his oath of office in violation of Section 3, Rule 138 of the Rules of Court." — This passage, quoted from Ngayan vs. Tugade, defines the doctrinal basis for treating procedural non-compliance as independent professional misconduct, and was relied upon to aggravate the penalty in this case.

• "[W]e deem it reasonable to affirm the sanction imposed by the IBP-CBD, i.e., Atty. Valerio was ordered suspended from the practice of law for two (2) years, because, aside from issuing worthless checks and failing to pay her debts, she has also shown wanton disregard of the IBP's and Court Orders in the course of the proceedings." — This passage articulates the ratio decidendi for the modified penalty, establishing that wanton disregard of lawful orders aggravates the baseline sanction for gross misconduct arising from worthless checks and non-payment of debts.

• Barrientos vs. Libiran-Meteoro, 480 Phil. 661 (2004) — Controlling precedent followed for the proposition that deliberate failure to pay just debts and issuance of worthless checks constitute gross misconduct warranting suspension from the practice of law, and for the standard of morality and fair dealing expected of lawyers under Canon 1 and Rule 1.01 of the Code of Professional Responsibility.

• Ngayan vs. Tugade, A.C. No. 2490, Feb. 7, 1991, 193 SCRA 779 — Followed for the rule that a lawyer's failure to answer a complaint and failure to appear at investigation constitute flouting resistance to lawful orders and violation of Section 3, Rule 138 of the Rules of Court.

• Lao vs. Medel, 453 Phil. 115 — Followed for the proposition that deliberate failure to pay just debts and issuance of worthless checks constitute gross misconduct for which a lawyer may be sanctioned with one-year suspension, serving as the baseline penalty against which the increased two-year sanction in this case was measured.

• Rangwani vs. Dino, 486 Phil. 8 (2004) — Followed as a comparable case where a one-year suspension was imposed on a lawyer found guilty of gross misconduct for issuing bad checks in payment of a piece of property, the title to which was only entrusted to him by the complainant.

• Wong vs. Atty. Moya, A.C. No. 6972, Oct. 17, 2008, 569 SCRA 256 — Cited in support of the two-year suspension imposed by the IBP-CBD.

• Canon 1, Code of Professional Responsibility — "A lawyer shall uphold the constitution, obey the laws of the land and promote respect for law and for legal processes." Applied to hold that respondent's issuance of a worthless check, non-payment of a just debt, and disregard of court and IBP processes violated the duty to obey the laws and promote respect for legal processes.

• Rule 1.01, Code of Professional Responsibility — "A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct." Applied to characterize respondent's conduct as dishonest and deceitful, constituting gross misconduct.

• Section 3, Rule 138, Rules of Court — Governs the investigation and discipline of attorneys. Applied through Ngayan vs. Tugade to hold that respondent's failure to answer the complaint and failure to appear at investigation constituted flouting resistance to lawful orders and disregard for the lawyer's oath.

• Batas Pambansa Blg. 22 — The Bouncing Checks Law. The subject of the criminal case filed against respondent (Criminal Case No. 124779) and the underlying conduct that gave rise to the administrative complaint, though the administrative case was decided on grounds of gross misconduct under the Code of Professional Responsibility rather than on the B.P. 22 charge itself.

Chief Justice Renato C. Corona, Associate Justice Antonio T. Carpio, Associate Justice Conchita Carpio Morales, Associate Justice Presbitero J. Velasco, Jr., Associate Justice Antonio Eduardo B. Nachura, Associate Justice Teresita J. Leonardo-De Castro (on leave), Associate Justice Arturo D. Brion (on leave), Associate Justice Lucas P. Bersamin, Associate Justice Mariano C. Del Castillo, Associate Justice Roberto A. Abad, Associate Justice Martin S. Villarama, Jr., Associate Justice Jose Portugal Perez, and Associate Justice Jose Catral Mendoza.