Verano vs. Diores, Jr.

A lawyer who commits deceit by exceeding the scope of authority granted by a client, willfully disobeys lawful orders of the Court and the IBP, and is convicted of multiple counts of Estafa — a crime involving moral turpitude — warrants disbarment under Rule 1.01 of the CPR and Section 27, Rule 138 of the Rules of Court, as the totality of infractions demonstrates utter unfitness to continue in the legal profession.

Roman Dela Rosa Verano was the owner of a parcel of land covered by TCT No. T-77901. Atty. Luis Fernan Diores, Jr., a member of the Philippine Bar, was facing numerous criminal charges for Estafa and Violation of B.P. Blg. 22 arising from his operation of a Ponzi scheme. Verano agreed to allow Atty. Diores to use his property as guaranty for bail bonds in certain of those criminal cases, executing a Special Power of Attorney for that limited purpose. The dispute arose when Atty. Diores exceeded the scope of that authority, using the property to secure bail bonds for far more cases than authorized.

On April 11, 2006, Roman Dela Rosa Verano executed a Special Power of Attorney (SPA) in favor of Atty. Luis Fernan Diores, Jr., authorizing the latter to use Verano's parcel of land covered by TCT No. T-77901 as guaranty to obtain a bail bond for particular criminal cases that had been filed against Atty. Diores. The SPA was limited to specific criminal cases; the records did not disclose the exact case numbers or the courts where those cases were filed.

Verano subsequently discovered that Atty. Diores had executed a Memorandum of Agreement (MOA) dated August 31, 2006 with Visayan Surety and Insurance Corporation, using the subject property as guarantee to obtain bail bonds for at least 61 cases of Estafa and Violation of B.P. Blg. 22 filed against him. These included Criminal Case Nos. CBU-48996 and CBU-49706 before the Regional Trial Court, Branch 6, Cebu City. Verano alleged that he never authorized Atty. Diores to enter into the MOA or to use the subject property as collateral for bail bonds in cases beyond those specified in the SPA, causing him great loss and damage.

Meanwhile, the RTC through Presiding Judge Ester M. Veloso promulgated a Joint Judgment dated November 16, 2009 in Criminal Case Nos. CBU-48996, CBU-49706, CBU-50599, CBU-50279, CBU-50335, and CBU-51277, finding Atty. Diores guilty beyond reasonable doubt of six counts of Estafa through false pretenses and fraudulent means under Article 315(2)(a) of the Revised Penal Code by engaging in a Ponzi scheme. He was sentenced in each case to imprisonment ranging from four years and two months of prision correccional as minimum to twenty years of reclusion temporal as maximum, and ordered to pay the offended parties amounts ranging from ₱200,000.00 to ₱3,050,000.00 with legal interest.

Verano thereafter filed a letter-complaint with the Supreme Court on February 2, 2011, charging Atty. Diores with deceit, malpractice, gross ignorance of the law, and violation of the Lawyer's Oath. The Court directed Atty. Diores to file his comment through Resolutions dated March 9, 2011 and November 28, 2011, but he failed to comply despite notice. On July 25, 2012, the Court considered the filing of his comment waived and referred the case to the IBP. At the mandatory conference before the IBP on April 1, 2013, only Verano appeared; Atty. Diores failed to attend despite notice and likewise failed to file his position paper. Verano added in his position paper that Atty. Diores had jumped bail in some of his criminal cases and had failed to serve his sentence in cases that had already become final and executory.

• Deceit/Exceeding Scope of Authority: Whether Atty. Diores committed deceit by using Verano's property to secure bail bonds for criminal cases beyond those authorized in the SPA.
• Willful Disobedience: Whether Atty. Diores' failure to file his comment with the Court, attend the IBP mandatory conference, and file his position paper constitutes willful disobedience of lawful orders warranting disciplinary action.
• Conviction for Crime Involving Moral Turpitude: Whether Atty. Diores' conviction for six counts of Estafa constitutes a crime involving moral turpitude that warrants disbarment.
• Proper Penalty: Whether disbarment is the appropriate penalty given the totality of infractions committed.

• Deceit/Exceeding Scope of Authority: Yes. The SPA authorized use of the property only for specific criminal cases, and Atty. Diores' entry into the MOA with Visayan Surety to secure bail bonds for at least 61 cases beyond those authorized constituted deceit violating Rule 1.01 of the CPR.
• Willful Disobedience: Yes. Atty. Diores' failure to file his comment despite two notices from the Court, failure to attend the IBP mandatory conference, and failure to file his position paper constitute willful disobedience of lawful orders under Section 27, Rule 138 of the Rules of Court.
• Conviction for Crime Involving Moral Turpitude: Yes. Estafa through false pretenses and fraudulent means is a crime involving moral turpitude, and conviction for six counts thereof is a ground for disbarment under Section 27, Rule 138 of the Rules of Court.
• Proper Penalty: Yes. Disbarment is warranted in view of the totality of infractions — deceit, willful disobedience, jumping bail, and conviction for six counts of Estafa — compounded by Atty. Diores' demonstrated propensity to defraud and deceive.

• Deceit/Exceeding Scope of Authority: The SPA executed by Verano empowered Atty. Diores, in his private capacity, to use the subject property as guaranty for his bail bond in some of his criminal cases. This did not grant him carte blanche to use the property to secure bail bonds in other criminal cases not included in the SPA, much less enter into an MOA with Visayan Surety for that purpose. Such act violated the trust granted to him by Verano and cast serious doubt on his moral character. Lawyers are expected to observe the highest degree of good faith, fairness, and candor in both private and professional capacities; any form of deception or fraudulent act violates Canon 1, Rule 1.01 of the CPR and renders the lawyer unfit to continue practicing law.

• Willful Disobedience: A lawyer has the duty to obey lawful orders of a superior court and the IBP. Willful disobedience to such orders, especially those issued by the Supreme Court, is a sufficient ground for disbarment or suspension under Section 27, Rule 138 of the Rules of Court. Atty. Diores failed to file his comment despite two notices from the Court, failed to attend the mandatory conference and file his position paper despite orders from the IBP, and jumped bail in criminal cases filed against him. These acts demonstrate his propensity to willfully disobey the orders of the Court and other judicial authorities, constituting a grave affront to the legal profession.

• Conviction for Crime Involving Moral Turpitude: Estafa, which is an act of defrauding another person whether through abuse of confidence, false pretenses, or other fraudulent acts, is a crime involving moral turpitude. Such conviction is a violation of Rule 1.01 of the CPR and a ground for disbarment or suspension as gross misconduct under Section 27, Rule 138 of the Rules of Court. Atty. Diores was convicted not of one but of six counts of Estafa through false pretenses and fraudulent means under Article 315(2)(a) of the Revised Penal Code, demonstrating a criminal tendency to defraud and deceive people into remitting their money, which the legal profession condemns in the strongest terms.

• Proper Penalty: The Court agreed with and adopted the IBP's recommendation of disbarment in view of the totality of infractions committed, compounded by the conviction for six counts of Estafa. The combination of deceit in exceeding the SPA's scope, willful disobedience of court orders, jumping bail, and multiple convictions for Estafa cemented Atty. Diores' utter unfitness to continue exercising his duties as a lawyer. Disbarment was necessary to protect the trust and confidence of the people in the legal profession.

• Rule 1.01, Code of Professional Responsibility — Prohibition Against Deceitful Conduct — A lawyer shall not engage in unlawful, dishonest, immoral, or deceitful conduct. Lawyers are expected to observe the highest degree of good faith, fairness, and candor in both private and professional capacities. Any form of deception or fraudulent act, whether committed in a private or professional capacity, violates this rule, undermines public trust in the legal profession, and puts the lawyer's moral character into serious doubt, rendering him unfit to practice law. The Court applied this rule to Atty. Diores' unauthorized use of Verano's property beyond the SPA's scope.

• Willful Disobedience as Ground for Disbarment — Willful disobedience of any lawful order of a superior court is a ground for disbarment or suspension under Section 27, Rule 138 of the Rules of Court. A lawyer has the duty to obey lawful orders of the Court and the IBP. Failure to comply with directives to file a comment, attend a mandatory conference, or submit a position paper, despite notice, constitutes willful disobedience penalizable by disbarment.

• Estafa as a Crime Involving Moral Turpitude — Estafa, whether committed through abuse of confidence, false pretenses, or other fraudulent acts, is a crime involving moral turpitude. Conviction for a crime involving moral turpitude is a ground for disbarment or suspension under Section 27, Rule 138 of the Rules of Court. The Court held that conviction for six counts of Estafa through false pretenses under Article 315(2)(a) of the Revised Penal Code demonstrated a criminal tendency to defraud, warranting the ultimate penalty of disbarment.

• Totality of Infractions in Determining Penalty — In determining the appropriate disciplinary penalty, the Court considers the totality of the lawyer's infractions. Where deceit, willful disobedience of court orders, jumping bail, and conviction for multiple counts of a crime involving moral turpitude converge, disbarment is warranted as these acts collectively demonstrate utter unfitness to continue in the practice of law.

• "In dealing with clients or other people, lawyers are expected to observe the highest degree of good faith, fairness and candor, both in their private and professional capacities." — This passage articulates the standard of conduct expected of lawyers in all capacities, forming the basis for finding that Atty. Diores' unauthorized use of Verano's property constituted deceit.

• "While the SPA executed by Verano empowered Atty. Diores, in his private capacity, to use the subject property as guaranty for his bail bond in some of his criminal cases, this did not grant him carte blanche to use the said property to secure bail bonds in his other criminal cases which were not included in the SPA, much less enter into a MOA with Visayan Surety for the said purpose." — This is the ratio decidendi on the deceit issue: an SPA's limited scope does not authorize broader use of the granted property, and exceeding that scope violates the trust reposed by the grantor.

• "Estafa, which is an act of defrauding another person, whether committed through abuse of confidence, false pretenses or other fraudulent acts, is a crime involving moral turpitude which is also a violation of Canon 1, Rule 1.01 of the CPR, and a ground to disbar or suspend a lawyer as gross misconduct under Section 27, Rule 138 of the Rules of Court." — This passage establishes the doctrinal link between Estafa, moral turpitude, and disbarment, and is the controlling formulation applied in this case.

• Kursel vs. Abion, A.C. No. 5951, July 12, 2016, 796 SCRA 328 — Cited for the proposition that any form of deception or fraudulent act by a lawyer, whether in private or professional capacity, violates Rule 1.01 of the CPR and renders the lawyer unfit to practice law. Followed.
• Tan vs. Diamante, 740 Phil. 382 (2014) — Cited alongside Kursel vs. Abion for the same proposition regarding the standard of good faith, fairness, and candor expected of lawyers. Followed.
• Sebastian vs. Cabis, 372 Phil. 673 (1999) — Cited as the source precedent (through Kursel and Tan) for the principle that deceptive or fraudulent conduct undermines trust in the legal profession. Followed.
• De Chavez Blanco vs. Lumasag, Jr., 603 Phil. 59 (2009) — Cited in support of the standard of conduct expected of lawyers. Followed.
• Punla vs. Maravilla-Ona, A.C. No. 11149, August 15, 2017 — Cited for the proposition that willful disobedience of lawful orders of the Court is a ground for disbarment or suspension under Section 27, Rule 138 of the Rules of Court. Followed.
• Moreno vs. Araneta, 496 Phil. 788 (2005) — Cited for the principle that Estafa is a crime involving moral turpitude. Followed.
• Office of the Court Administrator vs. Ruiz, A.M. No. RTJ-13-2361, February 2, 2016, 782 SCRA 630 — Cited in support of the classification of Estafa as a crime involving moral turpitude. Followed.

• Rule 1.01, Canon 1, Code of Professional Responsibility — Provides that "a lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct." Applied to Atty. Diores' unauthorized use of Verano's property beyond the SPA's scope and his conviction for Estafa, both constituting deceitful conduct.
• Section 27, Rule 138, Rules of Court — Enumerates the grounds for disbarment or suspension, including deceit, malpractice, gross misconduct, grossly immoral conduct, conviction of a crime involving moral turpitude, violation of the Lawyer's Oath, and willful disobedience of any lawful order of a superior court. Applied to Atty. Diores on three independent grounds: willful disobedience of Court and IBP orders, conviction for Estafa (a crime involving moral turpitude), and deceit.
• Article 315(2)(a), Revised Penal Code — Defines Estafa through false pretenses and fraudulent means. Atty. Diores was convicted of six counts under this provision by the RTC for engaging in a Ponzi scheme, which conviction was relied upon by the Court as a ground for disbarment.

Chief Justice Maria Lourdes P.A. Sereno, Associate Justice Antonio T. Carpio, Associate Justice Presbitero J. Velasco, Jr., Associate Justice Teresita J. Leonardo-De Castro, Associate Justice Diosdado M. Peralta, Associate Justice Lucas P. Bersamin, Associate Justice Mariano C. Del Castillo, Associate Justice Estela M. Perlas-Bernabe, Associate Justice Francis H. Jardaleza, Associate Justice Alfredo Benjamin S. Caguioa, Associate Justice Samuel R. Martires, Associate Justice Noel Gimenez Tijam, Associate Justice Andres B. Reyes, Jr., and Associate Justice Alexander G. Gesmundo. (Associate Justice Marvic M.V.F. Leonen was on leave.)