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Imelda Nakpil vs IAC, Carlos Valdes Secured Transactions Pactum Commissorium Carlos Valdes acquired title over a Baguio

o Summer residence named Pulong Maulap but this was actually in behalf of Jose Nakpil who arranged that while he does not have the money to pay Valdes the title remains under Valdes name, thereby creating a trust. The property cost P150k, P75k of which was paid by Valdes. Valdes borrowed P75k from First United Bank to pay off the remainder of the balance and another P65k for the residences maintenance. After Nakpil died, Valdes denied the existence of a trust relationship and he claims that the property is his. Imelda assailed this. Valdes however agreed that Imelda and her coheirs can stay in the property under a usufruct free from any encumbrance for 5 years. And in a letter sent to Imelda, should they fail to reimburse Valdes for his advances, the property is considered sold to him. Valdes denied that there is a pactum commissorium existing because he said there is no creditor-debtor relationship between him and Imelda. And that there is no trust relationship between him and the dead Nakpil. ISSUE: Whether or not there is a pactum commissorium existing. HELD: Yes. The SC ruled that as per the letters send by Valdes to Imelda, he acknowledged that he took out loans in favor of the late Nakpil so that Pulong Maulap may be acquired, and that Nakpil will reimburse him later. Therefore, a trust relationship really exists. As per the letters as well, there exists a debtor-creditor relationship between Valdes and Imelda hence the provision which states that non reimbursement constitutes the selling of the land to Valdes is void. Imelda can still have the property be reconveyed to her but only after she has reimbursed Valdes advances to the property (within 10 years).

Malpractice Nakpil vs. Atty. Carlos J. Valdes March 4, 1998 A lawyer violated the trust and confidence of the client when he represented conflicting interest. He represented the creditors when his accounting firm prepared and computed the claims of the creditors while his law firm represented the estate. Case references: Buted vs. Hernando, 203 SCRA 1 Maturan vs. Gonzales, March 12, 1998 Conflict of interest (Pormento vs. Pontevedra, March 31, 2005)

A lawyer has to disclose to his client all the circumstances of his relations to the parties in connection with the controversy which might influence the client in the selection of counsel. It is unprofessional to represent conflicting interests except by express consent of all concerned given after full disclosure of the facts. Tests to determine if there is conflicting interests: 1. If the acceptance of the new retainer will require the attorney to do anything which will injuriously affect his first client in any matter in which he represents him and also whether he will be called upon in his new relation, to use against his first client any knowledge acquired thru their connection; 2. Whether the acceptance of a new relation will prevent an attorney from full discharge of his duty of undivided fidelity and loyalty to his client or invite suspicion of unfaithfulness or double dealing in the performance thereof. Reason for prohibition The reason for the prohibition is found in the relation of attorney and client, which is one of trust and confidence of the highest degree. A lawyer becomes familiar with all the facts connected with his clients case. He learns from his client the weak points of the action as well as the strong ones. Such knowledge must be considered sacred and guarded with care. No opportunity must be given him to take advantage of his clients secrets. A lawyer must have the fullest confidence of his client. For, if the confidence is abused, the profession will suffer by the loss thereof. The prohibition applies however slight such adverse interest may be (Nakpil vs. Valdes, 286 SCRA 758). The essence of the rule is to maintain inviolate the clients confidence or to refrain from obtaining anything which will injuriously affect in any matter in which he previously represented him.