MARIA ELENA MORENO, COMPLAINANT, VS. ATTY. ERNESTO ARANETA, RESPONDENT.

Moreno versus Araneta

The Case

This is an administrative complaint for disbarment filed by Maria Elena Moreno against Attorney Ernesto Araneta, charging him with deceit and nonpayment of debts. The complainant alleged that Araneta endorsed to her a treasury warrant that was later dishonored, and that he borrowed money from her and repaid her with two checks drawn against a closed account. The case matters because it shows how the Supreme Court treats the issuance of worthless checks by a member of the Bar — not as a mere private debt, but as gross misconduct reflecting on moral integrity — and because it illustrates the rule that conviction by final judgment of a crime involving moral turpitude warrants disbarment.

Procedural History

The complaint, dated 25 September 1972, was filed directly with the Supreme Court. On 1 December 1972, the Court referred the case to the Solicitor General for investigation, report, and recommendation. Hearings were set in January 1973, but Araneta failed to appear despite notice, and an ex parte hearing was conducted on 24 January 1973 with Moreno testifying. Araneta appeared only on 27 February 1973 to ask for postponement, and on 28 May 1973 he filed a joint motion for postponement. Nothing further was heard from him.

On 14 September 1988, the records were forwarded to the Integrated Bar of the Philippines Commission on Bar Discipline under Rule 139-B of the Rules of Court. Notices could not be served on Araneta because he no longer resided at his given address and his whereabouts were unknown. After two scheduled hearings where no one appeared, the case was submitted for resolution. On 28 December 1988, Commissioner Concepcion Buencamino submitted her report recommending a three-month suspension. The IBP Board of Governors adopted the report but increased the suspension to six months. On 15 October 2002, the records were transmitted back to the Supreme Court. On 8 July 2003, the Office of the Bar Confidant filed a report noting that Araneta had been convicted by final judgment of estafa through falsification of a commercial document and had been indefinitely suspended by the Court. The case then came before the Supreme Court for final action.

Facts

Moreno alleged two causes of action. First, that Araneta endorsed to her Treasury Warrant Number B-02997354, issued by the Land Registration Commission in favor of Lira, Incorporated, purportedly as its president, in consideration of 2,177 pesos; the warrant was dishonored almost a year later. Second, that Araneta borrowed 5,000 pesos from her in October 1972 and another 6,000 pesos in May 1972, promising to return the amounts promptly. When he failed to pay the aggregate 11,000 pesos, he issued two Bank of America checks in her favor — one dated 30 June 1972 for 6,000 pesos and another dated 15 July 1972 for 5,000 pesos. When Moreno tried to encash them, both were dishonored and returned marked "Account Closed." A demand letter from her lawyer was ignored.

Araneta denied the allegations. He claimed it was Moreno who sought to borrow 2,500 pesos from him, and that to accommodate her he endorsed the treasury warrant worth 2,177 pesos, which he had received from Lira, Incorporated as part of his attorney's fees, and gave her an additional 323 pesos in cash. He denied borrowing any amount, and admitted issuing the two checks but claimed he gave them to Moreno only so she could show her bank that she had money coming to her. He said he warned her the checks came from a closed account and could not be encashed, and that he asked her to issue an 11,000-peso check to offset the two checks.

Moreno countered that the 11,000-peso check belonged to Philippine Leasing Corporation, which she managed after her father passed away. She claimed she had signed the check in blank in 1969 when she fell seriously ill and gave it to Araneta, who was then helping her manage the corporation, and that he falsely filled it up to turn the tables on her. The investigating commissioner found no cause to fault Araneta on the first cause of action, but found that his act of issuing the two checks, knowing the account was closed, was abhorrent and against the exacting standards of morality and decency required of a member of the Bar.

Issues

• Whether or not the complainant sufficiently proved that Araneta failed to pay his debts.
• Whether or not the issuance of worthless checks by a lawyer constitutes gross misconduct warranting disciplinary sanction.
• Whether or not Araneta's prior conviction by final judgment of a crime involving moral turpitude justifies the penalty of disbarment.

Applicable Provisions

Rule 139-B, Section 12(b) of the Rules of Court provides:

If the Board, by the vote of a majority of its total membership determines that the respondent should be suspended from the practice of law or disbarred, it shall issue a resolution setting forth its findings and recommendations which, together with the whole records of the case, shall forthwith be transmitted to the Supreme Court for final action.

This provision governs the procedure by which the Integrated Bar of the Philippines transmits its findings and recommendations to the Supreme Court for final action, which is how this case reached the Court.

Ruling

On the first issue, the Court held that whether or not the complainant sufficiently proved that Araneta failed to pay his debts is irrelevant, because by his own admission he issued two checks in favor of Moreno knowing fully well that they were drawn against a closed account.

On the second issue, the Court held that the issuance of worthless checks constitutes gross misconduct. Even though Batas Pambansa Blg. 22 had not yet been passed at the time, the Court agreed with the Integrated Bar of the Philippines that the act was abhorrent and against the exacting standards of morality and decency required of a member of the Bar, and that it belittles the confidence of the public in him and reflects upon his integrity and morality. The Court explained that the effect transcends the private interests of the parties directly involved and touches the interests of the community at large, since the circulation of valueless commercial papers can pollute the channels of trade and commerce, injure the banking system, and eventually hurt the welfare of society and the public interest. The Court also held that the act of issuing a check knowing at the time of issuance that there are insufficient funds or credit with the drawee bank is a manifestation of moral turpitude.

On the third issue, the Court noted that Araneta had in the intervening time been found guilty by final judgment of estafa through falsification of a commercial document, a crime involving moral turpitude, for which he had been indefinitely suspended. The Court defined moral turpitude as including everything done contrary to justice, honesty, modesty, or good morals, and as an act of baseness, vileness, or depravity in the private duties a man owes his fellow men or society. Considering that he had previously committed a similarly fraudulent act, and that this case likewise involves moral turpitude, the Court was constrained to impose a more severe penalty. The Court held that disbarment is the appropriate penalty for conviction by final judgment of a crime involving moral turpitude, and that by his conviction the respondent has proved himself unfit to protect the administration of justice.

Doctrine

A lawyer's issuance of worthless checks constitutes gross misconduct, because the mischief it creates is not only a wrong to the payee but also an injury to the public, polluting the channels of trade and commerce and injuring the banking system. The act of issuing a check knowing at the time of issuance that the drawer has insufficient funds or credit with the drawee bank is a manifestation of moral turpitude. Moral turpitude includes everything done contrary to justice, honesty, modesty, or good morals, and involves an act of baseness, vileness, or depravity in the private duties a man owes his fellow men or society. Conviction by final judgment of a crime involving moral turpitude warrants disbarment, and a lawyer who has been so convicted has proved himself unfit to protect the administration of justice.

Disposition

The Supreme Court disbarred Attorney Ernesto Araneta and ordered his name stricken from the Roll of Attorneys, with copies of the decision entered in his record and furnished to the Integrated Bar of the Philippines and the Office of the Court Administrator for circulation to all courts.

Remember This

The single line worth memorizing: the issuance of a worthless check by a lawyer is gross misconduct and a manifestation of moral turpitude, and conviction by final judgment of a crime involving moral turpitude warrants disbarment. Examiners like to use this case in legal ethics and disbarment questions involving worthless checks, moral turpitude, and the appropriate disciplinary penalty.