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

A.C. No. 2040. March 4, 1998 PUNO, J.

Doctrine: ​It is generally the rule which is based on public policy, that an attorney cannot
represent adverse interests. It is highly improper to represent both sides of an issue. This is
applicable no matter how slight the adverse interest be. EXCEPTION: if the parties consent the
representation AFTER full disclosure of facts where the lawyer fully explains to his clients the
nature and extent of conflict and possible adverse effect which must be thoroughly understood by
his clients.

Facts:
Jose Nakpil, deceased husband of Imelda Nakpil, complainant, and respondent Carlo Valdes
were friends for a long time. Their closeness extended to their families and Valdes even became
the business consultant, lawyer, and accountant of Nakpil.

Nakpil wanted to purchase a summer residence (Moran) in Baguio but he lacked funds so he
requested Valdes to purchase the Moran property for him. They agreed that Valdes will keep the
property in trust for Nakpil until he can buy it back. To purchase, Valdes loaned from the bank
65k and 75k. He purchased property and it was named after him.

July 8, 1973: Nakpil died. Valdes acted as the legal counsel and accountant of Imelda, wife. The
law firm of Valdes handled the proceeding for settlement of Nakpil’s estate (where Angel Nakpil
(brother of Jose, and ENORN inc. are claimants also).

Ownership of Moran property became an issue in the proceedings because Valdes excluded
Moran property from the inventory of Nakpil’s estate.

Feb. 13, 1978: Valdes transferred the property to his company, Caval Realty Corp.

March 29, 1979: Imelda filed an action with for reconveyance with damages to recover the
Moran property. Valdes claims that he is the absolute owner of the property and denied that a
trust was created over it.

During pendency of ^ action, Imelda filed an admin case to disbar Valdes alleging that there was
a conflict of interest & misconduct when Valdes’ accounting firm excluded from inventory the
property but included in claims against the estate 65k and 75k. Valdes denies and claims that he
resigned from his law and accounting firm.

Jan 21, 1980: admin case referred to Solicitor General

1983: CFI Baguio dismissed action for reconveyance (there was a trust of Moran property
between the party but Nakpil waived her right); CA reversed RTC ruling saying that Valdes is
the owner
Feb 18, 1986: During pendency of appeal to SC, OSG submitted report recommending dismissal
of the admin case. They followed the ruling of CA that Valdes is the owner of the property, there
was no trust agreement hence, Valdes has the right to transfer the property.

Issue: W/N there is a conflict of interest

Decision: GUILTY OF MISCONDUCT. SUSPENDED FOR 1 YEAR

Ratio:
1. YES. It is generally the rule which is based on public policy, that an attorney cannot
represent adverse interests. It is highly improper to represent both sides of an issue. The
proscription against representation of conflicting interests applies in cases where the
interests arise with respect to the same general matter. This is applicable no matter how
slight the conflict of interest may be.
a. Applies even though the intention and motive were honest and acted in good faith.
b. EXCEPTION: may be allowed if the parties consent the representation AFTER
full disclosure of facts where the lawyer fully explains to his clients the nature and
extent of conflict and possible adverse effect which must be thoroughly
understood by his clients.
c. Application to case: no question of the adverse interests of Nakpil (and 2 other
claimants) and Valdes. When a creditor files a claim against an estate, his interest
is per se adverse to the estate.
i. TEST to determine if there is conflict: probability of conflict and not
certainty.
ii. In this case, it was Valdes’ duty to inhibit his firms from the proceedings
to avoid probability of conflict. There is a breach of professional ethics as
it placed Valdes and his law firms’ loyalty under doubt.
2. Additional:
a. Contention that he is a CPA-Lawyer who practices both profession so Court does
not have jurisdiction: not valid argument; he is not charged for breach of ethics
for being an accountant but he is charged for allowing his firm to represent 2
creditors (angel and enorn), AND allow his firm to represent the estate in
proceedings where the claims were presented.
b. Resignation claim (so claim niya di na siya affiliated): unworthy of merit;
resignation from law firm is not supported by documentary proof