Nakpil Vs Valdes

Nakpil vs. Valdez, 288 SCRA 75 (A.C. No.
2040 March 4, 1998)
FACTS:
In 1965, Jose Nakpil became interested in purchasing a summer residence in Moran Street, Baguio City. For
lack of funds, he requested respondent, Carlos Valdes to purchase the Moran property for him. They agreed that
respondent would keep the property in trust for the Nakpils until the latter could buy it back. Pursuant to their
agreement, respondent obtained two (2) loans from a bank (in the amounts of P65,000.00 and P75,000.00) which he
used to purchase and renovate the property. Title was then issued in respondent's name.
When Jose Nakpil died on 1973, respondent acted as the legal counsel and accountant of his widow,
complainant IMELDA NAKPIL. The ownership of the Moran property became an issue in the intestate proceedings. It
appears that respondent excluded the Moran property from the inventory of Jose's estate. On 1978, respondent
transferred his title to the Moran property to his company, the Caval Realty Corporation.
During the pendency of the action for reconveyance, complainant filed administrative case to disbar the
respondent for excluding the Moran property in the estate's inventory and transferring it to his corporation, for charging
the loan secured to purchase the said excluded property as a liability of the estate, and for representing conflicting
interests when his accounting firm prepared the list of claims of creditors Angel Nakpil and ENORN, Inc. against her
husband's estate which was represent ed by respondent's law firm.
ISSUES:
Whether or not respondent is guilty of misconduct
RULING:
Yes. It ought to follow that respondent's act of excluding the Moran property from the estate which his law firm
was representing shows a lack of fidelity to the cause of his client. If respondent truly believed that the said property
belonged to him, he should have at least informed complainant of his adverse claim. If they could not agree on its
ownership, respondent should have formally presented his claim in the intestate proceedings instead of transferring
the property to his own corporation and concealing it from complainant and the judge in the estate proceedings.
Respondent's misuse of his legal expertise to deprive his client of the Moran property is clearly unethical.
Second, respondent seeks to exculpate himself from this charge by disclaiming knowledge or privity in the
preparation of the list of the estate's liabilities. He theorizes that the inclusion of the loans must have been a mere
error or oversight of his accounting firm. It is clear that the information as to how these two loans should be treated
could have only come from respondent himself as the said loans were in his name. Hence, the supposed error of the
accounting firm in charging respondent's loans against the estate could not have been committed without
respondent's participation. Respondent wanted to "have his cake and eat it too" and subordinated the interest of his
client to his own pecuniary gain. Respondent violated Canon 17 of the Code of Professional Responsibility which
provides that a lawyer owes fidelity to his client's cause and enjoins him to be mindful of the trust and confidence
reposed on him.
As regards the third charge, we hold that respondent is guilty of representing conflicting interests. It is
generally the rule, based on sound public policy, that an attorney cannot represent adverse interests. In the case at
bar, there is no question that the interests of the estate and that of its creditors are adverse to each other.
Respondent's accounting firm prepared the list of assets and liabilities of the estate and, at the same time, computed
the claims of two creditors of the estate. There is clearly a conflict between the interest of the estate which stands as
the debtor, and that of the two claimants who are creditors of the estate.
However, Canon 15, Rule 15.3 explains that representation of conflicting interests may be allowed where the
parties consent to the representation, after full disclosure of facts. The lawyer must explain to his clients the nature
and extent of the conflict and the possible adverse effect must be thoroughly understood by his clients. The fact,
however, that complainant that did not object to the set-up cannot be taken against her as there is nothing in the
records to show that respondent or his law firm explained the legal situation and its consequences to complainant.
Prescinding from these premises, respondent undoubtedly placed his law firm in a position where his loyalty
to his client could be doubted. Thus, violating Canon 15.
Members of the Bar are expected to always live up to the standards embodied in the Code of Professional
Responsibility as the relationship between an attorney and his client is highly fiduciary in nature and demands utmost
fidelity and good faith.
IN VIEW WHEREOF, the Court finds respondent ATTY. CARLOS J. VALDES guilty of misconduct. He is
suspended from the practice of law for a period of one (1) year effective from receipt of this Decision, with a warning
that a similar infraction shall be dealt with more severely in the future.

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Nakpil vs. Valdez, 288 SCRA 75 (A.C. No.

2040 March 4, 1998)

Whether or not respondent is guilty of misconduct

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