[A.C. No. 2040.

March 4, 1998]

IMELDA A. NAKPIL, complainant, vs. ATTY. CARLOS J. VALDES, respondent.

(PUNO, J)

76 NAKPIL v VALDES

Facts:

Jose Nakpil was interested in a piece of property which is a summer house situated in Moran,

Baguio. He went into an agreement with Atty. Carlos Valdes for the latter to buy the property in

trust for Nakpil until he could buy it back. Valdes did buy the property by contracting 2 loans in

the amounts of P75,000.00 and P65,000.00 which he used to purchase and renovate the

property . The lands’ titles were transferred to Valdes name and the Nakpils were the ones who

occupied the Property

When Jose Nakpil died, respondent Valdes acted as legal counsel and accountant of the

complainant his widow Imelda Nakpil for the settlement of the estate of Jose Nakpil.

Later on, Valdes exclude the property in Baguio from the list of assets of Jose Nakpil and

actually

transferred the property to his company, the Caval Realty Corporation while including the loans

he contracted.

Imelda did was to filed a suit for reconveyance in the Court of First Instance (CFI). While the

case was pending, Imelda also filed an administrative complaint for disbarment against Valdes.

The CFI dismissed the action for reconveyance because the CFI’s interpretation was that the

complainant waived her right over the property. The Court of Appeals (CA) reversed the CFI and

held that the respondent was the absolute owner of the property . The complaint for

reconveyance went up to the Supreme Court.

Issue:

Whether or not Atty. Valdes should be administratively sanctioned for his acts, namely:

-Excluding the property in Baguio from the estate of Jose Nakpil;

-Including his loans as claims on the estate; and

-Apparently, representing conflicting interests when his accounting firm prepared the list of
claims of

creditors Angel Nakpil and ENORN against the estate of Jose Nakpil, which was represented by

his law

firm.

Held:

The SC found Valdes guilty of misconduct and suspends him for 1 year.

The Court held that the first two acts clearly show that Valdes broke the trust reposed on him by

Imelda Nakpil when the latter agreed to use his professional services as a lawyer and an

accountant. It was clear that Jose Nakpil and Atty. Came to an agreement that the latter would

be buying the property in trust for Jose. By his act of excluding the property from the estate and

including the loans he contracted (and used for his own benefit) as claims, Valdes took for

granted the trust formed between Jose and him (they had a close relationship since the 50’s),

which was the basis for Imelda’s decision to use his services. As to the third charge, we hold

respondent guilty of representing conflicting interests . An Attorney cannot represent adverse

interests except when the parties consent to the representation which the client must give their

informed consent too such representation, which in this case did not happen. 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

SYNOPSISRespondent herein offered to the complainant the services of his law andaccounting firm by
reason of their close relationship dating back during the school daysof the complainant's deceased
husband with that of the respondent. She reposed her complete trust in respondent who was the
lawyer, accountant and business consultantof her late husband. Respondent and the late Jose Nakpil
agreed that the former wouldpurchase the Moran property in Baguio City and keep it in trust for the
latter. In violationof the trust agreement, respondent claimed absolute ownership over the property
andrefused to sell the property to complainant after the death of Jose Nakpil. To place theproperty
beyond the reach of complainant and the intestate proceedings, respondentlater transferred it to his
corporation. The complainant sought to recover the Moranproperty by filing with the then Court of First
Instance of Baguio City an action for reconveyance with damages against respondent and his
corporation. However, the CFIof Baguio dismissed the case, and on appeal, the Court of Appeals held
that therespondent was the absolute owner of the Moran property. The case was, however,reversed by
the Supreme Court. During the pendency of the action for reconveyance,complainant filed this
administrative case to disbar the respondent. She charged therespondent for violation of professional
ethics.The Supreme Court found respondent Carlos J. Valdes guilty of misconduct. Hewas suspended
from the practice of law for a period of one year effective from receipt
of the decision. Respondent herein violated Canon 17 of the Code of ProfessionalResponsibility
which provides that a lawyer owes fidelity to his client's cause andenjoins him to be mindful of the trust
and confidence reposed on him. In the case at bar,there is no question that the interests of the estate
and that of its creditors are adverseto 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.