A-1 FINANCIAL SERVICES, INC.,COMPLAINANT, VS. ATTY. LAARNI N. VALERIO, RESPONDENT.

A-1 Financial Services versus Valerio

The Case

This is an administrative case for disbarment or disciplinary action filed by A-1 Financial Services, Inc., a financing corporation, against Attorney Laarni N. Valerio, a member of the Bar. The complainant alleges that the respondent obtained a loan, secured it with a postdated check, and then failed to pay her debt after the check was dishonored for insufficient funds, and that she thereafter ignored both the criminal proceedings and the disciplinary proceedings against her. The case matters because it fixes the rule that a lawyer's deliberate failure to pay just debts and issuance of worthless checks amount to gross misconduct, and that defiance of lawful orders in the course of proceedings aggravates the penalty.

Procedural History

The complainant first filed a criminal case for violation of Batas Pambansa Blg. 22 against the respondent before the trial court. The respondent failed to appear at her arraignment despite due notice, a warrant of arrest was issued, and she posted no bail. The complainant then filed an administrative complaint before the Integrated Bar of the Philippines Commission on Bar Discipline. The Commission required an answer, but the respondent filed none; her mother wrote a letter claiming the respondent had been diagnosed with schizophrenia. The respondent failed to attend the mandatory conference and submitted no position paper. The Commission on Bar Discipline issued a Report and Recommendation finding her guilty of gross misconduct and recommending a two-year suspension. The Integrated Bar of the Philippines Board of Governors adopted and approved the report with modification, imposing instead a one-year suspension. The matter reached the Supreme Court as an administrative case, and the Court, by resolution, gave the respondent and her mother a final opportunity to submit a notarized medical certificate and medical records to support the claim of schizophrenia. No such documents were ever submitted, and the Court resolved the case on the records.

Facts

On November 13, 2001, A-1 Financial Services, Inc. granted the loan application of Attorney Valerio in the amount of 50,000 pesos. To secure payment, the respondent issued a postdated check dated April 1, 2002, in the same amount of 50,000 pesos.

When the check was presented for payment on its maturity date, it was dishonored because of insufficient funds. Despite repeated demands, the respondent failed to pay the whole amount of her obligation. On November 10, 2003, the complainant filed a criminal case for violation of Batas Pambansa Blg. 22. The respondent's arraignment was scheduled for August 31, 2004, but she failed to appear despite due notice. A warrant of arrest was issued, and she posted no bail. The complainant even wrote her a letter calling attention to the warrant and requesting that she submit to the jurisdiction of the court, which letter she received, yet she refused to abide by the court's orders and notices.

On January 18, 2006, the complainant filed the administrative complaint before the Integrated Bar of the Philippines. The respondent never filed an answer. Her mother wrote to explain that her daughter had been diagnosed with schizophrenia and undertook to settle the obligation, but the respondent again failed to attend the mandatory conference and submitted no position paper. The Commission on Bar Discipline gave no credence to the medical certificate because the mother never appeared to affirm its truthfulness and never presented the physician who issued it. The Commission found that the respondent's failure to obey court processes showed a lack of respect for authority and rendered her morally unfit to be a member of the Bar.

Issues

• Whether or not the respondent's deliberate failure to pay a just debt and her issuance of a worthless check constitute gross misconduct warranting disciplinary sanction.
• Whether or not the respondent's claim of schizophrenia, supported only by a medical certificate submitted by her mother, excuses her from liability and from the consequences of her defiance of court and Commission orders.
• Whether or not the penalty of suspension should be sustained, and for how long.

Applicable Provisions

Canon 1 of the Code of Professional Responsibility provides:

Canon 1 -- A lawyer shall uphold the constitution, obey the laws of the land and promote respect for law and for legal processes.

This Canon anchors the ruling that a lawyer who issues a worthless check and defies lawful orders violates her duty to obey the laws and to promote respect for legal processes.

Rule 1.01 of the Code of Professional Responsibility provides:

Rule 1.01 -- A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct.

This Rule supplies the standard against which the respondent's dishonest issuance of a bad check and her evasion of her obligation is measured.

Section 3, Rule 138 of the Rules of Court is invoked by the Court through its citation of prior jurisprudence, and it provides the basis for discipline where a lawyer flouts lawful orders:

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 by the Court from its earlier ruling, ties the respondent's non-appearance and non-compliance to a violation of her oath of office.

Ruling

On the first issue, the Court sustained the findings of the Commission on Bar Discipline. Relying on its earlier ruling in Barrientos versus Libiran-Meteoro, the Court held that the deliberate failure to pay just debts and the issuance of worthless checks constitute gross misconduct for which a lawyer may be suspended from the practice of law. The Court stressed that lawyers are instruments for the administration of justice and vanguards of the legal system, expected to maintain not only legal proficiency but also a high standard of morality, honesty, integrity and fair dealing, and to faithfully perform their duties to society, to the Bar, to the courts and to their clients, which include the prompt payment of financial obligations. The Court noted that the existence of the loan was never denied, that the respondent's partial payments of the loan and interest proved the obligation, and that even her mother acknowledged it.

On the second issue, the Court found the claim of schizophrenia unmeritorious. It refused to take the medical certificate at face value, considering the mother's failure to prove its contents or to present the physician who issued it. The Court also found the respondent's conduct during the proceedings a matter of serious concern: she failed to answer the complaint, failed to attend the disciplinary hearings despite due notice, and ignored the proceedings before the court by failing to answer and to appear at her arraignment. This conduct, the Court held, runs counter to the Code of Professional Responsibility and violates the lawyer's oath, which imposes upon every member of the Bar the duty to delay no man for money or malice.

On the third issue, the Court noted that in Lao versus Medel and Rangwani versus Dino it had imposed a one-year suspension for the deliberate failure to pay just debts and the issuance of worthless checks. Nevertheless, it deemed it reasonable to affirm the two-year suspension recommended by the Commission on Bar Discipline, because, aside from issuing worthless checks and failing to pay her debts, the respondent had also shown wanton disregard of the orders of the Integrated Bar of the Philippines and of the Court in the course of the proceedings.

Doctrine

A Bar candidate should retain these rules. First, 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, because such conduct violates Canon 1 and Rule 1.01 of the Code of Professional Responsibility. Second, a lawyer's failure to answer the complaint against her and her failure to appear at the investigation are evidence of flouting resistance to lawful orders of the court and show despiciency for her oath of office, in violation of Section 3, Rule 138 of the Rules of Court. Third, a medical certificate offered to excuse a lawyer's non-compliance is not taken at face value where its contents are unproven and the issuing physician is never presented. Fourth, the penalty is aggravated where, beyond the bad check and the unpaid debt, the lawyer shows wanton disregard of the orders of the Integrated Bar of the Philippines and of the Court.

Disposition

The Court affirmed the resolution of the Integrated Bar of the Philippines with modification, found Attorney Laarni N. Valerio guilty of gross misconduct and violation of the Code of Professional Responsibility, suspended her for two years from the practice of law effective upon receipt of the decision, warned her that a repetition would be dealt with more severely, and ordered that copies be furnished to the Office of the Bar Confidant, the Integrated Bar of the Philippines, and the Office of the Court Administrator.

Remember This

The single line worth memorizing is that the deliberate failure to pay just debts and the issuance of worthless checks constitute gross misconduct, and defiance of lawful orders aggravates the penalty. Examiners like to use this case in legal ethics to test the lawyer's duty under Canon 1 and Rule 1.01 to obey the laws and promote respect for legal processes, and to test the aggravation of penalties for contumacious conduct.