A.C. No.
5804            July 1, 2003 Respondent pointed out that his relationship to Aurelio
BENEDICTO HORNILLA and ATTY. FEDERICO D.
RICAFORT, complainants,
vs.
ATTY. ERNESTO S. SALUNAT, respondent.
On November 21, 1997, Benedicto Hornilla and
Federico D. Ricafort filed an administrative
complaint1 with the Integrated Bar of the Philippines
(IBP) Commission on Bar Discipline, against
respondent Atty. Ernesto S. Salunat for illegal and
unethical practice and conflict of interest. They
alleged that respondent is a member of the ASSA
Law and Associates, which was the retained counsel
of the Philippine Public School Teachers Association
(PPSTA). Respondent’s brother, Aurelio S. Salunat,
was a member of the PPSTA Board which approved
respondent’s engagement as retained counsel of
PPSTA.
Complainants, who are members of the PPSTA, filed
an intra-corporate case against its members of the
Board of Directors for the terms 1992-1995 and 1995-
1997 before the Securities and Exchange
Commission, which was docketed as SEC Case No.
05-97-5657, and a complaint before the Office of the
Ombudsman, docketed as OMB Case No. 0-97-0695,
for unlawful spending and the undervalued sale of real
property of the PPSTA. Respondent entered his
appearance as counsel for the PPSTA Board
members in the said cases. Complainants contend
that respondent was guilty of conflict of interest
because he was engaged by the PPSTA, of which
complainants were members, and was being paid out
of its corporate funds where complainants have
contributed. Despite being told by PPSTA members of
the said conflict of interest, respondent refused to
withdraw his appearance in the said cases.
Moreover, complainants aver that respondent violated
Rule 15.062 of the Code of Professional Responsibility
when he appeared at the meeting of the PPSTA
Board and assured its members that he will win the
PPSTA cases.
In his Answer,3 respondent stressed that he entered
his appearance as counsel for the PPSTA Board
Members for and in behalf of the ASSA Law and
Associates. As a partner in the said law firm, he only
filed a "Manifestation of Extreme Urgency" in OMB
Case No. 0-97-0695.4 On the other hand, SEC Case
No. 05-97-5657 was handled by another partner of
the firm, Atty. Agustin V. Agustin. Respondent claims
that it was complainant Atty. Ricafort who instigated,
orchestrated and indiscriminately filed the said cases
against members of the PPSTA and its Board.
S. Salunat was immaterial; and that when he entered
into the retainer contract with the PPSTA Board, he
did so, not in his individual capacity, but in
representation of the ASSA Law Firm. He denied that
he ensured the victory of the PPSTA Board in the
case he was handling. He merely assured the Board
that the truth will come out and that the case before
the Ombudsman will be dismissed for lack of
jurisdiction, considering that respondents therein are
not public officials, but private employees. Anent the
SEC case, respondent alleged that the same was
being handled by the law firm of Atty. Eduardo de
Mesa, and not ASSA.
By way of Special and Affirmative Defenses,
respondent averred that complainant Atty. Ricafort
was himself guilty of gross violation of his oath of
office amounting to gross misconduct, malpractice
and unethical conduct for filing trumped-up charges
against him and Atty. De Mesa. Thus, he prayed that
the complaint against him be dismissed and, instead,
complainant Ricafort be disciplined or disbarred.
The complainant was docketed as CBD Case No. 97-
531 and referred to the IBP Commission on Bar
Discipline. After investigation, Commissioner Lydia A.
Navarro recommended that respondent be suspended
from the practice of law for six (6) months. The Board
of Governors thereafter adopted Resolution No. XV-
3003-230 dated June 29, 2002, approving the report
and recommendation of the Investigating
Commissioner.
Respondent filed with this Court a Motion for
Reconsideration of the above Resolution of the IBP
Board of Governors.
The pertinent rule of the Code of Professional
Responsibility provides:
RULE 15.03. – A lawyer shall not represent conflicting
interests except by written consent of all concerned
given after a full disclosure of the facts.
There is conflict of interest when a lawyer represents
inconsistent interests of two or more opposing parties .
The test is "whether or not in behalf of one client, it is
the lawyer’s duty to fight for an issue or claim, but it is
his duty to oppose it for the other client. In brief, if he
argues for one client, this argument will be opposed
by him when he argues for the other client."5 This rule
covers not only cases in which confidential
communications have been confided, but also those
in which no confidence has been bestowed or will be
used.6 Also, there is conflict of interests if the
acceptance of the new retainer will require the
attorney to perform an act 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 through their connection.7 Another test of the
inconsistency of interests is whether the acceptance
of a new relation will prevent an attorney from the 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.8
In this jurisdiction, a corporation’s board of directors is
understood to be that body which (1) exercises all
powers provided for under the Corporation Code; (2)
conducts all business of the corporation; and (3)
controls and holds all property of the corporation. 9 Its
members have been characterized as trustees or
directors clothed with a fiduciary character. 10 It is
clearly separate and distinct from the corporate entity
itself.
Where corporate directors have committed a breach
of trust either by their frauds, ultra vires acts, or
negligence, and the corporation is unable or unwilling
to institute suit to remedy the wrong, a stockholder
may sue on behalf of himself and other stockholders
and for the benefit of the corporation, to bring about a
redress of the wrong done directly to the corporation
and indirectly to the stockholders.11 This is what is
known as a derivative suit, and settled is the doctrine
that in a derivative suit, the corporation is the real
party in interest while the stockholder filing suit for the
corporation’s behalf is only nominal party. The
corporation should be included as a party in the suit. 12
Having thus laid a suitable foundation of the basic
legal principles pertaining to derivative suits, we come
now to the threshold question: can a lawyer engaged
by a corporation defend members of the board of the
same corporation in a derivative suit? On this issue,
the following disquisition is enlightening:
The possibility for conflict of interest here is
universally recognized. Although early cases found
joint representation permissible where no conflict of
interest was obvious, the emerging rule is against
dual representation in all derivative actions. Outside
counsel must thus be retained to represent one of the
defendants. The cases and ethics opinions differ on
whether there must be separate representation from
the outset or merely from the time the corporation
seeks to take an active role. Furthermore, this
restriction on dual representation should not be
waivable by consent in the usual way; the corporation
should be presumptively incapable of giving valid
consent.13 (underscoring ours)
In other jurisdictions, the prevailing rule is that a
situation wherein a lawyer represents both the
corporation and its assailed directors unavoidably
gives rise to a conflict of interest. The interest of the
corporate client is paramount and should not be
influenced by any interest of the individual corporate
officials.14 The rulings in these cases have persuasive
effect upon us. After due deliberation on the wisdom
of this doctrine, we are sufficiently convinced that a
lawyer engaged as counsel for a corporation cannot
represent members of the same corporation’s board
of directors in a derivative suit brought against them.
To do so would be tantamount to representing
conflicting interests, which is prohibited by the Code
of Professional Responsibility.
In the case at bar, the records show that SEC Case
No. 05-97-5657, entitled "Philippine Public School
Teacher’s Assn., Inc., et al. v. 1992-1995 Board of
Directors of the Philippine Public School Teacher’s
Assn. (PPSTA), et al.," was filed by the PPSTA
against its own Board of Directors. Respondent
admits that the ASSA Law Firm, of which he is the
Managing Partner, was the retained counsel of
PPSTA. Yet, he appeared as counsel of record for the
respondent Board of Directors in the said case.
Clearly, respondent was guilty of conflict of interest
when he represented the parties against whom his
other client, the PPSTA, filed suit.
In his Answer, respondent argues that he only
represented the Board of Directors in OMB Case No.
0-97-0695. In the said case, he filed a Manifestation
of Extreme Urgency wherein he prayed for the
dismissal of the complaint against his clients, the
individual Board Members. By filing the said pleading,
he necessarily entered his appearance
therein.15 Again, this constituted conflict of interests,
considering that the complaint in the Ombudsman,
albeit in the name of the individual members of the
PPSTA, was brought in behalf of and to protect the
interest of the corporation.
Therefore, respondent is guilty of representing
conflicting interests. Considering however, that this is
his first offense, we find the penalty of suspension,
recommended in IBP Resolution No. XV-2002-230
dated June 29, 2002, to be too harsh. Instead, we
resolve to admonish respondent to observe a higher
degree of fidelity in the practice of his profession.
ACCORDINGLY, respondent Atty. Ernesto Salunat is
found GUILTY of representing conflicting interests
and is ADMONISHED to observe a higher degree of
fidelity in the practice of his profession. He is further
WARNED that a repetition of the same or similar acts
will be dealt with more severely.
SO ORDERED.

Administrative Case No. 4943       January 26, 2001
DIANA D. DE GUZMAN, complainant,
vs.
ATTY. LOURDES I. DE DIOS, respondent.
The case before the Court is a complaint 1 for
disbarment against Atty. Lourdes I. De Dios on the
ground of violation of Canon 15, Rule 15.03 of the
Code of Professional Responsibility, for representing
conflicting interests, and of Article 1491 Civil Code, for
acquiring property in litigation.
In 1995, complainant engaged the services of
respondent as counsel in order to form a corporation,
which would engage in hotel and restaurant business
in Olongapo City.
1âwphi1.nêt
On January 10, 1996, with the assistance of Atty. De
Dios, complainant registered Suzuki Beach Hotel, Inc.
(SBHI) with the Securities and Exchange
Commission.2 Complainant paid respondent a monthly
retainer fee of P 5,000.00.
On December 15, 1997, the corporation required
complainant to pay her unpaid subscribed shares of
stock amounting to two million two hundred and thirty
five thousand pesos (P2,235,000.00) or 22,350
shares, on or before December 30, 1997.
On January 29, 1998,3 complainant received notice of
the public auction sale of her delinquent shares and a
copy of a board resolution dated January 6, 1998
authorizing such sale. 4 Complainant soon learned that
her shares had been acquired by Ramon del Rosario,
one of the incorporators of SBHI. The sale ousted
complainant from the corporation completely. While
respondent rose to be president of the corporation,
complainant lost all her life's savings invested therein.
Complainant alleged that she relied on the advice of
Atty. de Dios and believed that as the majority
stockholder, Atty. de Dios would help her with the
management of the corporation.
Complainant pointed out that respondent appeared as
her counsel and signed pleadings in a case where
complainant was one of the parties.5 Respondent,
however, explained that she only appeared because
the property involved belonged to SBHI. Respondent
alleged that complainant misunderstood the role of
respondent as legal counsel of Suzuki Beach Hotel,
Inc. Respondent manifested that her appearance as
counsel for complainant Diana de Guzman was to
protect the rights and interest of SBHI since the latter
was the real owner of the land in controversy.
Respondent further said that the land on which the
resort was established belonged to the Japanese
incorporators, not to complainant. The relationship of
the complainant and the Japanese investors turned
sour because complainant misappropriated the funds
and property of the corporation. To save the
corporation from bankruptcy, respondent advised all
concerned stockholders that it was proper to call for
the payment of unpaid subscriptions and subsequent
sale of the delinquent shares. These led to the auction
of the unpaid shares of complainant and hence, the
ouster of complainant from the corporation.
Meantime, Mr. Del Rosario transferred one hundred
(100) shares to respondent in payment of legal
services as evidenced by a Deed of Waiver and
Transfer of Corporate Shares of Stock.
On October 22, 1999, the Integrated Bar of the
Philippines issued a resolution 6 finding that the acts of
respondent were not motivated by ill will as she acted
in the best interest of her client, SBHI. The IBP found
that complainant failed to present convincing proof of
her attorney-client relationship with respondent other
than the pleadings respondent filed in the trial court
where complainant was one of the parties.
We disagree.
We find merit in the complaint. There are certain facts
presented before us that created doubt on the
propriety of the declaration of delinquent shares and
subsequent sale of complainant's entire subscription.
Complainant subscribed to 29,800 shares equivalent
to two million nine hundred and eighty thousand
pesos (P2,980,000.00). She was the majority
stockholder. Out of the subscribed shares, she paid
up seven hundred forty-five thousand pesos
(P745,000.00) during the stage of incorporation.
How complainant got ousted from the corporation
considering the amount she had invested in it is
beyond us. Granting that the sale of her delinquent
shares was valid, what happened to her original
shares? This, at least, should have been explained.
Respondent claims that there was no attorney-client
relationship between her and complainant. The claim
has no merit. It was complainant who retained
respondent to form a corporation. She appeared as
counsel in behalf of complainant.
There was evidence of collusion between the board of
directors and respondent. Indeed, the board of
directors now included respondent as the president,
Ramon del Rosario as secretary, Hikoi Suzuki as
chairman, Agnes Rodriguez as treasurer and
Takayuki Sato as director.7 The present situation
shows a clear case of conflict of interest of the
respondent.

Lawyers must conduct themselves, especially in their

dealings with their clients and the public at large, with
honesty and integrity in a manner beyond reproach. 8

We said:

"To say that lawyers must at all times uphold

and respect the law is to state the obvious, but
such statement can never be
overemphasized. Considering that, 'of all
classes and professions, [lawyers are] most
sacredly bound to uphold the law,' it is
imperative that they live by the law.
Accordingly, lawyers who violate their oath
and engage in deceitful conduct have no
place in the legal profession." 9

Clearly, respondent violated the prohibition against

representing conflicting interests and engaging in
unlawful, dishonest, immoral or deceitful conduct.10

As a lawyer, respondent is bound by her oath to do no

falsehood or consent to its commission and to
conduct herself as a lawyer according to the best of
her knowledge and discretion. The lawyer's oath is a
source of obligations and violation thereof is a ground
for suspension, disbarment,11 or other disciplinary
action.12 The acts of respondent Atty. de Dios are
clearly in violation of her solemn oath as a lawyer that
this Court will not tolerate.

WHEREFORE, the Court finds respondent. Atty.

Lourdes I. de Dios remiss in her sworn duty to her
client, and to the bar. The Court
hereby SUSPENDS her from the practice of law for
six (6) months, with warning that a repetition of the
charges will be dealt with more severely.

Let a copy of this decision be entered in the personal

records of respondent as an attorney and as a
member of the Bar, and furnish the Bar Confidant, the
Integrated Bar of the Philippines, and the Court
Administrator for circulation to all courts in the
country.1âwphi1.nêt

SO ORDERED.

A.C. No. 6160             March 30, 2006
NESTOR PEREZ , Complainant,
vs.
ATTY. DANILO DE LA TORRE, Respondent.
In a letter-complaint  dated July 30, 2003 addressed
1 recommendation by increasing the period of
to then Chief Justice Hilario G. Davide, Jr.,
complainant Nestor Perez charged respondent Atty.
Danilo de la Torre with misconduct or conduct
unbecoming of a lawyer for representing conflicting
interests.
Perez alleged that he is the barangay captain of
Binanuaanan, Calabanga, Camarines Sur; that in
December 2001, several suspects for murder and
kidnapping for ransom, among them Sonny Boy Ilo
and Diego Avila, were apprehended and jailed by the
police authorities; that respondent went to the
municipal building of Calabanga where Ilo and Avila
were being detained and made representations that
he could secure their freedom if they sign the
prepared extrajudicial confessions; that unknown to
the two accused, respondent was representing the
heirs of the murder victim; that on the strength of the
extrajudicial confessions, cases were filed against
them, including herein complainant who was
implicated in the extrajudicial confessions as the
mastermind in the criminal activities for which they
were being charged.
Respondent denied the accusations against him. He
explained that while being detained at the Calabanga
Municipal Police Jail, Avila sought his assistance in
drafting an extrajudicial confession regarding his
involvement in the crimes of kidnapping for ransom,
murder and robbery. He advised Avila to inform his
parents about his decision to make an extrajudicial
confession, apprised him of his constitutional rights
and of the possibility that he might be utilized as a
state-witness.
Respondent claimed that when Ilo sought his
assistance in executing his extrajudicial confession,
he conferred with Ilo in the presence of his parents;
and only after he was convinced that Ilo was not
under undue compulsion did he assist the accused in
executing the extrajudicial confession.
The complaint was referred to the Integrated Bar of
the Philippines (IBP) for investigation, report and
recommendation.2 On August 16, 2005, the
Investigating Commissioner submitted his report with
the following recommendation:
WHEREFORE, it is respectfully recommended that
Atty. Danilo de la Torre be suspended for one (1) year
from the practice of the legal profession for violation of
Rule 15.03 of the Code of Professional Responsibility.
RESPECTFULLY SUBMITTED.
The Board of Governors of the IBP modified the
suspension to two years.
In finding the respondent guilty of representing
conflicting interests, the Investigating Commissioner
opined that:
In administrative proceedings, the complainant has
the burden of proving, by substantial evidence, the
allegations in his complaint. The complainant was
able to prove by substantial evidence his charge
against Atty. de la Tor[r]e. The respondent admitted
that his services as a lawyer were retained by both
Avila and Ilo. Perez was able to show that at the time
that Atty. de la Torre was representing the said two
accused, he was also representing the interest of the
victim’s family. This was declared by the victim’s
daughter, Vicky de Chavez, who testified before
Branch 63 of the Regional Trial Court of Camarines
Sur that her family retained the services of Atty.
Danilo de la Torre to prosecute the case against her
father’s killers. She even admitted that she was
present when Atty. de la Torre met with and advised
Avila and Ilo on one occasion. This is proof that the
respondent consciously offered his services to Avila
and Ilo despite the fact that he was already
representing the family of the two accused’s victim. It
may not even be improbable that respondent
purposely offered to help the accused in order to
further his other clients’ interest. The respondent
failed to deny these facts or offer competent evidence
to refute the said facts despite the ample opportunity
given him.
Under Rule 15.03 of the Code of Professional
Responsibility, a lawyer shall not represent conflicting
interests except by written consent of all concerned
given after a full disclosure of the facts. Respondent is
therefore duty bound to refrain from representing two
parties having conflicting interests in a controversy.
By doing precisely the foregoing, and without any
proof that he secured the written consent of both
parties after explaining to them the existing conflict of
interest, respondent should be sanctioned.
We agree with the findings of the IBP except for the
recommended penalty.
There is conflict of interests when a lawyer represents
inconsistent interests of two or more opposing parties.
The test is "whether or not in behalf of one client, it is
the lawyer’s duty to fight for an issue or claim, but it is
his duty to oppose it for the other client. In brief, if he
argues for one client, this argument will be opposed
by him when he argues for the other client." This rule
covers not only cases in which confidential
communications have been confided, but also those
in which no confidence has been bestowed or will be
used.3
There is a representation of conflicting interests 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 through their connection.4
The prohibition against representing conflicting
interest is founded on principles of public policy and
good taste. In the course of a lawyer-client
relationship, the lawyer learns all the facts connected
with the client’s case, including the weak and strong
points of the case. The nature of that relationship is,
therefore, one of trust and confidence of the highest
degree. It behooves lawyers not only to keep inviolate
the client’s confidence, but also to avoid the
appearance of impropriety and double-dealing for only
then can litigants be encouraged to entrust their
secrets to their lawyers, which is of paramount
importance in the administration of justice.5
whereby they admitted their participation in various
serious criminal offenses knowing fully well that he
was retained previously by the heirs of one of the
victims. Respondent, who presumably knows the
intricacies of the law, should have exercised his better
judgment before conceding to accused’s choice of
counsel. It did not cross his mind to inhibit himself
from acting as their counsel and instead, he even
assisted them in executing the extrajudicial
confession.
Considering that this is respondent’s first infraction,
disbarment as sought by the complaint is deemed to
be too severe. Under the present circumstances, we
find that a suspension from the practice of law for
three years is warranted.
WHEREFORE, Atty. Danilo de la Torre is found
GUILTY of violation of Rule 15.03 of the Code of
Professional Responsibility for representing conflicting
interests. He is SUSPENDED for THREE YEARS
from the practice of law, effective upon his receipt of
this Decision. He is WARNED that a repetition of the
same or similar acts will be dealt with more severely.
Let copies of this Decision be entered in the record of
respondent and served on the IBP, as well as on the
Court Administrator who shall circulate it to all courts
for their information and guidance.
SO ORDERED.

To negate any culpability, respondent explained that

he did not offer his legal services to accused Avila
and Ilo but it was the two accused who sought his
assistance in executing their extrajudicial confessions.
Nonetheless, he acceded to their request to act as
counsel after apprising them of their constitutional
rights and after being convinced that the accused
were under no compulsion to give their confession.

The excuse proferred by the respondent does not

exonerate him from the clear violation of Rule 15.03 of
the Code of Professional Responsibility which
prohibits a lawyer from representing conflicting
interests except by written consent of all concerned
given after a full disclosure of the facts.

As found by the IBP, at the time respondent was

representing Avila and Ilo, two of the accused in the
murder of the victim Resurreccion Barrios, he was
representing the family of the murder victim. Clearly,
his representation of opposing clients in the murder
case invites suspicion of double-dealing and infidelity
to his clients.

What is unsettling is that respondent assisted in the

execution by the two accused of their confessions

G.R. Nos. 115439-41 July 16, 1997
PEOPLE OF THE PHILIPPINES, petitioner,
vs.
HONORABLE SANDIGANBAYAN, MANSUETO V.
HONRADA, CEFERINO S. PAREDES, JR. and
GENEROSO S. SANSAET, respondents.
Through the special civil action for certiorari at bar,
petitioner seeks the annulment of the resolution of
respondent Sandiganbayan, promulgated on
December 22, 1993, which denied petitioner's motion
for the discharge of respondent Generoso S. Sansaet
to be utilized as a state witness, and its resolution of
March 7, 1994 denying the motion for reconsideration
of its preceding disposition.
1
The records show that during the dates material to
this case, respondent Honrada was the Clerk of Court
and Acting Stenographer of the First Municipal Circuit
Trial Court, San Francisco-Bunawan-Rosario in
Agusan del Sur. Respondent Paredes was
successively the Provincial Attorney of Agusan del
Sur, then Governor of the same province, and is at
present a Congressman. Respondent Sansaet was a
practicing attorney who served as counsel for
Paredes in several instances pertinent to the criminal
charges involved in the present recourse.
The same records also represent that sometime in
1976, respondent Paredes applied for a free patent
over Lot No. 3097-A, Pls-67 of the Rosario Public
Land Subdivision Survey. His application was
approved and, pursuant to a free patent granted to
him, an original certificate of title was issued in his
favor for that lot which is situated in the poblacion of
San Francisco, Agusan del Sur.
However, in 1985, the Director of Lands filed an
action  for the cancellation of respondent Paredes'
2
patent and certificate of title since the land had been
designated and reserved as a school site in the
aforementioned subdivision survey. The trial court
rendered judgment  nullifying said patent and title after
3
finding that respondent Paredes had obtained the
same through fraudulent misrepresentations in his
application. Pertinently, respondent Sansaet served
as counsel of Paredes in that civil case.4
Consequent to the foregoing judgment of the trial
court, upon the subsequent complaint of the
Sangguniang Bayan and the preliminary investigation
conducted thereon, an information for perjury  was5
filed against respondent Paredes in the Municipal
Circuit Trial Court.  On November 27, 1985, the
6
Provincial Fiscal was, however, directed by the
Deputy Minister of Justice to move for the dismissal of
the case on the ground inter alia of prescription,
hence the proceedings were terminated.  In this
7
criminal case, respondent Paredes was likewise
represented by respondent Sansaet as counsel.
Nonetheless, respondent Sansaet was thereafter
haled before the Tanodbayan for preliminary
investigation on the charge that, by using his former
position as Provincial Attorney to influence and induce
the Bureau of Lands officials to favorably act on his
application for free patent, he had violated Section
3(a) of Republic Act No. 3019, as amended. For the
third time, respondent Sansaet was Paredes' counsel
of record therein.
On August 29, 1988, the Tanodbayan, issued a
resolution  recommending the criminal prosecution of
8
respondent Paredes. Atty. Sansaet, as counsel for his
aforenamed co-respondent, moved for
reconsideration and, because of its legal significance
in this case, we quote some of his allegations in that
motion:
. . . respondent had been charged already by the
complainants before the Municipal Circuit Court of
San Francisco, Agusan del Sur, went to jail on
detention in 1984 under the same set of facts and the
same evidence . . . but said case after arraignment,
was ordered dismissed by the court upon
recommendation of the Department of Justice. Copy
of the dismissal order, certificate of arraignment and
the recommendation of the Department of Justice are
hereto attached for ready reference; thus the filing of
this case will be a case of double jeopardy for
respondent herein . . .   (Emphasis supplied.)
9
A criminal case was subsequently filed with the
Sandiganbayan   charging respondent Paredes with a
10
violation of Section 3 (a) of Republic Act No. 3019, as
amended. However, a motion to quash filed by the
defense was later granted in respondent court's
resolution of August 1, 1991   and the case was
11
dismissed on the ground of prescription.
On January 23, 1990, one Teofilo Gelacio, a taxpayer
who had initiated the perjury and graft charges
against respondent Paredes, sent a letter to the
Ombudsman seeking the investigation of the three
respondents herein for falsification of public
documents.   He claimed that respondent Honrada, in
12
conspiracy with his herein co-respondents, simulated
and certified as true copies certain documents
purporting to be a notice of arraignment, dated July 1,
1985, and transcripts of stenographic notes
supposedly taken during the arraignment of Paredes
on the perjury charge.   These falsified documents
13
were annexed to respondent Paredes' motion for
reconsideration of the Tanodbayan resolution for the
filing of a graft charge against him, in order to support
his contention that the same would constitute double
jeopardy.
In support of his claim, Gelacio attached to his letter a
certification that no notice of arraignment was ever
received by the Office of the Provincial Fiscal of
Agusan del Sur in connection with that perjury case;
and a certification of Presiding Judge Ciriaco Ariño
that said perjury case in his court did not reach the
arraignment stage since action thereon was
suspended pending the review of the case by the
Department of Justice.  14
Respondents filed their respective counter-affidavits,
but Sansaet subsequently discarded and repudiated
the submissions he had made in his counter-affidavit.
In a so-called Affidavit of Explanations and
Rectifications,   respondent Sansaet revealed that
15
Paredes contrived to have the graft case under
preliminary investigation dismissed on the ground of
double jeopardy by making it appear that the perjury
case had been dismissed by the trial court after he
had been arraigned therein.
For that purpose, the documents which were later
filed by respondent Sansaet in the preliminary
investigation were prepared and falsified by his co-
respondents in this case in the house of respondent
Paredes. To evade responsibility for his own
participation in the scheme, he claimed that he did so
upon the instigation and inducement of respondent
Paredes. This was intended to pave the way for his
discharge as a government witness in the
consolidated cases, as in fact a motion therefor was
filed by the prosecution pursuant to their agreement.
Withal, in a resolution   dated February 24, 1992, the
16
Ombudsman approved the filing of falsification
charges against all the herein private respondents.
The proposal for the discharge of respondent Sansaet
as a state witness was rejected by the Ombudsman
on this evaluative legal position:
. . . Taking his explanation, it is difficult to believe that
a lawyer of his stature, in the absence of deliberate
intent to conspire, would be unwittingly induced by
another to commit a crime. As counsel for the
accused in those criminal cases, Atty. Sansaet had
control over the case theory and the evidence which
the defense was going to present. Moreover, the
testimony or confession of Atty. Sansaet falls under
the mantle of privileged communication between the
lawyer and his client which may be objected to, if
presented in the trial.
The Ombudsman refused to reconsider that
resolution   and, ostensibly to forestall any further
17
controversy, he decided to file separate informations
for falsification of public documents against each of
the herein respondents. Thus, three criminal
cases,   each of which named one of the three private
18
respondents here as the accused therein, were filed in
the graft court. However, the same were consolidated
for joint trial in the Second Division of the
Sandiganbayan.
As stated at the outset, a motion was filed by the
People on July 27, 1993 for the discharge of
respondent Sansaet as a state witness. It was
submitted that all the requisites therefor,
as provided in Section 9, Rule 119 of the Rules of
Court, were satisfied insofar as respondent Sansaet
was concerned. The basic postulate was that, except
for the eyewitness testimony of respondent Sansaet,
there was no other direct evidence to prove the
confabulated falsification of documents by
respondents Honrada and Paredes.
Unfortunately for the prosecution, respondent
Sandiganbayan, hewing to the theory of the attorney-
client privilege adverted to by the Ombudsman and
invoked by the two other private respondents in their
opposition to the prosecution's motion, resolved to
deny the desired discharge on this ratiocination:
From the evidence adduced, the opposition was able
to establish that client and lawyer relationship existed
between Atty. Sansaet and Ceferino Paredes, Jr.,
before, during and after the period alleged in the
information. In view of such relationship, the facts
surrounding the case, and other confidential matter
must have been disclosed by accused Paredes, as
client, to accused Sansaet, as his lawyer in his
professional capacity. Therefore, the testimony of
Atty. Sansaet on the facts surrounding the offense
charged in the information is privileged. 
19
Reconsideration of said resolution having been
likewise denied,   the controversy was elevated to this
20
Court by the prosecution in an original action for the
issuance of the extraordinary writ of certiorari against
respondent Sandiganbayan.
The principal issues on which the resolution of the
petition at bar actually turns are therefore (1) whether
or not the projected testimony of respondent Sansaet,
as proposed state witness, is barred by the attorney-
client privilege; and (2) whether or not, as a
consequence thereof, he is eligible for discharge to
testify as a particeps criminis. accomplice
As already stated, respondent Sandiganbayan ruled
that due to the lawyer-client relationship which existed
between herein respondents Paredes and Sansaet
during the relevant periods, the facts surrounding the
case and other confidential matters must have been
disclosed by respondent Paredes, as client, to
respondent Sansaet, as his lawyer. Accordingly, it
found "no reason to discuss it further since Atty.
Sansaet cannot be presented as a witness against
accused Ceferino S. Paredes, Jr. without the latter's
consent."  21
The Court is of a contrary persuasion. The attorney-
client privilege cannot apply in these cases, as the
facts thereof and actuations of both respondents
therein constitute an exception to the rule. For a
clearer understanding of that evidential rule, we will
first sweep aside some distracting mental cobwebs in
these cases.
1. It may correctly be assumed that there was a
confidential communication made by Paredes to
Sansaet in connection with Criminal Cases Nos.
17791-93 for falsification before respondent court, and
this may reasonably be expected since Paredes was
the accused and Sansaet his counsel therein. Indeed,
the fact that Sansaet was called to witness the
preparation of the falsified documents by Paredes and
Honrada was as eloquent a communication, if not
more, than verbal statements being made to him by
Paredes as to the fact and purpose of such
falsification. It is significant that the evidentiary rule on
this point has always referred to "any communication,"
without distinction or qualification. 22
In the American jurisdiction from which our present
evidential rule was taken, there is no particular mode
by which a confidential communication shall be made
by a client to his attorney. The privilege is not
confined to verbal or written communications made by
the client to his attorney but extends as well to
information communicated by the client to the attorney
by other means.  23
Nor can it be pretended that during the entire process,
considering their past and existing relations as
counsel and client and, further, in view of the purpose
for which such falsified documents were prepared, no
word at all passed between Paredes and Sansaet on
the subject matter of that criminal act. The clincher for
this conclusion is the undisputed fact that said
documents were thereafter filed by Sansaet in behalf
of Paredes as annexes to the motion for
reconsideration in the preliminary investigation of the
graft case before the Tanodbayan.   Also, the acts
24
and words of the parties during the period when the
documents were being falsified were necessarily
confidential since Paredes would not have invited
Sansaet to his house and allowed him to witness the
same except under conditions of secrecy and
confidence.
2. It is postulated that despite such complicity of
Sansaet at the instance of Paredes in the criminal act
for which the latter stands charged, a distinction must
be made between confidential communications
relating to past crimes already committed, and future
crimes intended to be committed, by the client.
Corollarily, it is admitted that the announced intention
of a client to commit a crime is not included within the
confidences which his attorney is bound to respect.
Respondent court appears, however, to believe that in
the instant case it is dealing with a past crime, and
that respondent Sansaet is set to testify on alleged
criminal acts of respondents Paredes and Honrada
that have already been committed and consummated.
The Court reprobates the last assumption which is
flawed by a somewhat inaccurate basis. It is true
that by now, insofar as the falsifications to be testified
to in respondent court are concerned, those crimes
were necessarily committed in the past. But for the
application of the attorney-client privilege, however,
the period to be considered is the date when the
privileged communication was made by the client to
the attorney in relation to either a crime committed in
the past or with respect to a crime intended to be
committed in the future. In other words, if the client
seeks his lawyer's advice with respect to a crime that
the former has theretofore committed, he is given the
protection of a virtual confessional seal which the
attorney-client privilege declares cannot be broken by
the attorney without the client's consent. The same
privileged confidentiality, however, does not attach
with regard to a crime which a client intends to commit
thereafter or in the future and for purposes of which
he seeks the lawyer's advice.
Statements and communications regarding the
commission of a crime already committed, made by a
party who committed it, to an attorney, consulted as
such, are privileged communications. Contrarily, the
unbroken stream of judicial dicta is to the effect that
communications between attorney and client having
to do with the client's contemplated criminal acts, or in
aid or furtherance thereof, are not covered by the
cloak of privileges ordinarily existing in reference to
communications between attorney and
client.   (Emphases supplied.)
25
3. In the present cases, the testimony sought to be
elicited from Sansate as state witness are the
communications made to him by physical acts and/or
accompanying words of Parades at the time he and
Honrada, either with the active or passive participation
of Sansaet, were about to falsify, or in the process of
falsifying, the documents which were later filed in the
Tanodbayan by Sansaet and culminated in the
criminal charges now pending in respondent
Sandiganbayan. Clearly, therefore, the confidential
communications thus made by Paredes to Sansaet
were for purposes of and in reference to the crime of
falsification which had not yet been committed in the
past by Paredes but which he, in confederacy with his
present co-respondents, later committed. Having
been made for purposes of a future offense, those
communications are outside the pale of the attorney-
client privilege.
4. Furthermore, Sansaet was himself a conspirator in
the commission of that crime of falsification which he,
Paredes and Honrada concocted and foisted upon the
authorities. It is well settled that in order that a
communication between a lawyer and his client may
be privileged, it must be for a lawful purpose or in
furtherance of a lawful end. The existence of an
unlawful purpose prevents the privilege from
attaching.   In fact, it has also been pointed out to the
26
Court that the "prosecution of the honorable relation
of attorney and client will not be permitted under the
guise of privilege, and every communication made to
an attorney by a client for a criminal purpose is a
conspiracy or attempt at a conspiracy which is not
only lawful to divulge, but which the attorney under
certain circumstances may be bound to disclose at
once in the interest of justice." 
27
It is evident, therefore, that it was error for respondent
Sandiganbayan to insist that such unlawful
communications intended for an illegal purpose
contrived by conspirators are nonetheless covered by
the so-called mantle of privilege. To prevent a
conniving counsel from revealing the genesis of a
crime which was later committed pursuant to a
conspiracy, because of the objection thereto of his
conspiring client, would be one of the worst travesties
in the rules of evidence and practice in the noble
profession of law.
II On the foregoing premises, we now proceed to the
consequential inquiry as to whether respondent
Sansaet qualifies, as a particeps criminis, for
discharge from the criminal prosecution in order to
testify for the State. Parenthetically, respondent court,
having arrived at a contrary conclusion on the
preceding issue, did not pass upon this second aspect
and the relief sought by the prosecution which are
now submitted for our resolution in the petition at bar.
We shall, however, first dispose likewise of some
ancillary questions requiring preludial clarification.
1. The fact that respondent Sandiganbayan did not
fully pass upon the query as to whether or not
respondent Sansaet was qualified to be a state
witness need not prevent this Court from resolving
that issue as prayed for by petitioner. Where the
determinative facts and evidence have been
submitted to this Court such that it is in a position to
finally resolve the dispute, it will be in the pursuance
of the ends of justice and the expeditious
administration thereof to resolve the case on the
merits, instead of remanding it to the trial court. 
28
2. A reservation is raised over the fact that the three
private respondents here stand charged in three
separate informations. It will be recalled that in its
resolution of February 24, 1992, the Ombudsman
recommended the filing of criminal charges for
falsification of public documents against all the
respondents herein. That resolution was affirmed but,
reportedly in order to obviate further controversy, one
information was filed against each of the three
respondents here, resulting in three informations for
the same acts of falsification.
This technicality was, however, sufficiently explained
away during the deliberations in this case by the
following discussion thereof by Mr. Justice Davide, to
wit:
Assuming no substantive impediment exists to block
Sansaet's discharge as state witness, he can,
nevertheless, be discharged even if indicted under a
separate information. I suppose the three cases were
consolidated for joint trial since they were all raffled to
the Second Division of the Sandiganbayan. Section 2,
Rule XV of the Revised Rules of the Sandiganbayan
allows consolidation in only one Division of cases
arising from the same incident or series of incidents,
or involving common questions of law and fact.
Accordingly, for all legal intents and purposes,
Sansaet stood as co-accused and he could be
discharged as state witness. It is of no moment that
he was charged separately from his co-accused.
While Section 9 of Rule 119 of the 1985 Rules of
Criminal Procedure uses the word jointly, which was
absent in the old provision, the consolidated and joint
trial has the effect of making the three accused co-
accused or joint defendants, especially considering
that they are charged for the same offense. In criminal
law, persons indicted for the same offense and tried
together are called joint defendants.
As likewise submitted therefor by Mr. Justice
Francisco along the same vein, there having been a
consolidation of the three cases, the several actions
lost their separate identities and became a single
action in which a single judgment is rendered, the
same as if the different causes of action involved had
originally been joined in a single action.  29
Indeed, the former provision of the Rules referring to
the situation "(w)hen two or more persons are
charged with the commission of a certain offense"
was too broad and indefinite; hence the word "joint"
was added to indicate the identity of the charge and
the fact that the accused are all together charged
therewith substantially in the same manner in point of
commission and time. The word "joint" means
"common to two or more," as "involving the united
activity of two or more," or "done or produced by two
or more working together," or "shared by or affecting
two or more.   Had it been intended that all the
30
accused should always be indicted in one and the
same information, the Rules could have said so with
facility, but it did not so require in consideration of the
circumstances obtaining in the present case and the
problems that may arise from amending the
information. After all, the purpose of the Rule can be
achieved by consolidation of the cases as an
alternative mode.
2. We have earlier held that Sansaet was a
conspirator in the crime of falsification, and the rule is
that since in a conspiracy the act of one is the act of
all, the same penalty shall be imposed on all
members of the conspiracy. Now, one of the
requirements for a state witness is that he "does not
appear to be the most guilty."   not that he must be
31
the least guilty   as is so often erroneously framed or
32
submitted. The query would then be whether an
accused who was held guilty by reason of
membership in a conspiracy is eligible to be a state
witness.
To be sure, in People vs. Ramirez, et al.   we find
33
this obiter:
It appears that Apolonio Bagispas was the real
mastermind. It is believable that he persuaded the
others to rob Paterno, not to kill him for a promised
fee. Although he did not actually commit any of the
stabbings, it was a mistake to discharge Bagispas as
a state witness. All the perpetrators of the offense,
including him, were bound in a conspiracy that made
them equally guilty.
However, prior thereto, in People vs. Roxas, et
al.,   two conspirators charged with five others in
34
three separate informations for multiple murder were
discharged and used as state witnesses against their
confederates. Subsequent thereto, in Lugtu, et
al. vs. Court of Appeals, et al.,   one of the co-
35
conspirators was discharged from the information
charging him and two others with the crime of estafa.
The trial court found that he was not the most guilty
as, being a poor and ignorant man, he was easily
convinced by his two co-accused to open the account
with the bank and which led to the commission of the
crime.
On appeal, this Court held that the finding of
respondent appellate court that Lugtu was just as
guilty as his co-accused, and should not be
discharged as he did not appear to be not the most
guilty, is untenable. In other words, the Court took into
account the gravity or nature of the acts committed by
the accused to be discharged compared to those of
his co-accused, and not merely the fact that in law the
same or equal penalty is imposable on all of them.
Eventually, what was just somehow assumed but not
explicity articulated found expression in People
vs. Ocimar, et al.,   which we quote in extenso:
36
Ocimar contends that in the case at bar Bermudez
does not satisfy the conditions for the discharge of a
co-accused to become a state witness. He argues
that no accused in a conspiracy can lawfully be
discharged and utilized as a state witness, for not one
of them could satisfy the requisite of appearing not to
be the most guilty. Appellant asserts that since
accused Bermudez was part of the conspiracy, he is
equally guilty as the others.
We do not agree. First, there is absolute necessity for
the testimony of Bermudez. For, despite the
presentation of four (4) other witnesses, none of them
could positively identify the accused except Bermudez
who was one of those who pulled the highway heist
which resulted not only in the loss of cash, jewelry
and other valuables, but even the life of Capt.
Cañeba, Jr. It was in fact the testimony of Bermudez
that clinched the case for the prosecution. Second,
without his testimony, no other direct evidence was
available for the prosecution to prove the elements of
the crime. Third, his testimony could be, as indeed it
was, substantially corroborated in its material points
as indicated by the trial court in its well-reasoned
decision. Fourth, he does not appear to be the most
guilty. As the evidence reveals, he was only invited to
a drinking party without having any prior knowledge of
the plot to stage a highway robbery. But even
assuming that he later became part of the conspiracy,
he does not appear to be the most guilty. What the
law prohibits is that the most guilty will be set free
while his co-accused who are less guilty will be sent
to jail. And by "most guilty" we mean the highest
degree of culpability in terms of participation in the
commission of the offense and not necessarily the
severity of the penalty imposed. While all the accused
may be given the same penalty by reason of
conspiracy, yet one may be considered least guilty if
We take into account his degree of participation in the
perpetration of the offense. Fifth, there is no evidence
that he has at any time been convicted of any offense
involving moral turpitude.
Thus, We agree with the observations of the Solicitor
General that the rule on the discharge of an accused
to be utilized as state witness clearly looks at his
actual and individual participation in the commission
of the crime, which may or may not have been
perpetrated in conspiracy with the other accused.
Since Bermudez was not individually responsible for
the killing committed on the occasion of the robbery
except by reason of conspiracy, it cannot be said then
that Bermudez appears to be the most guilty. Hence,
his discharge to be a witness for the government is
clearly warranted. (Emphasis ours.)
The rule of equality in the penalty to be imposed upon
conspirators found guilty of a criminal offense is
based on the concurrence of criminal intent in their
minds and translated into concerted physical action
although of varying acts or degrees of depravity.
Since the Revised Penal Code is based on the
classical school of thought, it is the identity of
the mens rea which is considered the predominant
consideration and, therefore, warrants the imposition
of the same penalty on the consequential theory that
the act of one is thereby the act of all.
Also, this is an affair of substantive law which should
not be equated with the procedural rule on the
discharge of particeps criminis. This adjective device
is based on other considerations, such as the need for
giving immunity to one of them in order that not all
shall escape, and the judicial experience that the
candid admission of an accused regarding his
participation is a guaranty that he will testify truthfully.
For those reasons, the Rules provide for certain
qualifying criteria which, again, are based on judicial
experience distilled into a judgmental policy.
III The Court is reasonably convinced, and so holds,
that the other requisites for the discharge of
respondent Sansaet as a state witness are present
and should have been favorably appreciated by the
Sandiganbayan.
Respondent Sansaet is the only cooperative
eyewitness to the actual commission of the
falsification charged in the criminal cases pending
before respondent court, and the prosecution is faced
with the formidable task of establishing the guilt of the
two other co-respondents who steadfastly deny the
charge and stoutly protest their innocence. There is
thus no other direct evidence available for the
prosecution of the case, hence there is absolute
necessity for the testimony of Sansaet whose
discharge is sought precisely for that purpose. Said
respondent has indicated his conformity thereto and
has, for the purposes required by the Rules, detailed
the substance of his projected testimony in his
Affidavit of Explanation and Rectifications.
His testimony can be substantially corroborated on its
material points by reputable witnesses, identified in
the basic petition with a digest of their prospective
testimonies, as follows: Judge Ciriaco C. Ariño,
Municipal Circuit Trial Court in San Francisco, Agusan
del Sur; Provincial Prosecutor and Deputized
Ombudsman Prosecutor Claudio A. Nistal; Teofilo
Gelacio, private complainant who initiated the criminal
cases through his letter-complaint; Alberto Juvilan of
the Sangguniang Bayan of San Fernando, Agusan del
Sur, who participated in the resolution asking their
Provincial Governor to file the appropriate case
against respondent Paredes, and Francisco Macalit,
who obtained the certification of non-arraignment from
Judge Ariño.
On the final requirement of the Rules, it does not
appear that respondent Sansaet has at any time been
convicted of any offense involving moral turpitude.
Thus, with the confluence of all the requirements for
the discharge of this respondent, both the Special
Prosecutor and the Solicitor General strongly urge
and propose that he be allowed to testify as a state
witness.
This Court is not unaware of the doctrinal rule that, on
this procedural aspect, the prosecution may propose
but it is for the trial court, in the exercise of its sound
discretion, to determine the merits of the proposal and
make the corresponding disposition. It must be
emphasized, however, that such discretion should
have been exercised, and the disposition taken on a
holistic view of all the facts and issues herein
discussed, and not merely on the sole issue of the
applicability of the attorney-client privilege.
This change of heart and direction respondent
Sandiganbayan eventually assumed, after the
retirement of two members of its Second
Division   and
37
the reconstitution thereof. In an inversely anticlimactic
Manifestation and Comment   dated June 14, 1995,
38
as required by this Court in its resolution on
December 5, 1994, the chairman and new members
thereof   declared:
39
4) That the questioned Resolutions of December 22,
1993 and March 7, 1994 upon which the Petition
for Certiorari filed by the prosecution are based, was
penned by Associate Justice Narciso T. Atienza and
concurred in by the undersigned and Associate
Justice Augusto M. Amores;
5) That while the legal issues involved had been
already discussed and passed upon by the Second
Division in the aforesaid Resolution, however, after
going over the arguments submitted by the Solicitor-
General and re-assessing Our position on the matter,
We respectfully beg leave of the Honorable Supreme
Court to manifest that We are amenable to setting
aside the questioned Resolutions and to grant the
prosecution's motion to discharge accused Generoso
Sansaet as state witness, upon authority of the
Honorable Supreme Court for the issuance of the
proper Resolution to that effect within fifteen (15) days
from notice thereof.
WHEREFORE, the writ of certiorari prayed for is
hereby granted SETTING ASIDE the impunged
resolutions and ORDERING that the present reliefs
sought in these cases by petitioner be allowed and
given due course by respondent Sandiganbayan.
SO ORDERED.
A.C. No. 5655           January 23, 2006
VALERIANA U. DALISAY, Complainant,
vs.
ATTY. MELANIO MAURICIO, JR., Respondent.
At bar is a motion for reconsideration of our
Decision dated April 22, 2005 finding Atty. Melanio
"Batas" Mauricio, Jr., respondent, guilty of
malpractice and gross misconduct and imposing
upon him the penalty of suspension from the
practice of law for a period of six (6) months.
A brief revisit of facts is imperative, thus:
On October 13, 2001, Valeriana U. Dalisay,
complainant, engaged respondent’s services as
counsel in Civil Case No. 00-044, entitled "Lucio
De Guzman, etc., complainants, v. Dalisay U.
Valeriana, respondent," pending before the
Municipal Trial Court, Branch 1, Binangonan, Rizal.
Notwithstanding his receipt of documents and
attorney’s fees in the total amount of P56,000.00
from complainant, respondent never rendered legal
services for her. As a result, she terminated the
attorney-client relationship and demanded the
return of her money and documents, but
respondent refused.
On January 13, 2004, Investigating Commissioner
Lydia A. Navarro of the Integrated Bar of the
Philippines (IBP) Commission on Bar Discipline,
found that "for the amount of P56,000.00 paid by
the complainant x x x, no action had been taken
nor any pleadings prepared by the respondent
except his alleged conferences and opinions
rendered when complainant frequented his law
office." She recommended that respondent be
required to refund the amount of P56,000.00 to the
complainant, and surprisingly, that the complaint be
dismissed.
On February 27, 2004, the IBP Board of Governors
passed Resolution No. XVI-2004-121, adopting and
approving in toto Commissioner Navarro’s Report
and Recommendation.
On April 22, 2005, we rendered the assailed
Decision.
Incidentally, upon learning of our Decision,
respondent went to the MTC, Branch I,
Binangonan, Rizal to verify the status of Civil Case
No. 00-044. There, he learned of the trial court’s
Decision dated December 6, 2001 holding that "the
tax declarations and title" submitted by complainant
"are not official records of the Municipal Assessor
and the Registry of Deed." Thereupon, respondent
filed a Sworn Affidavit Complaint 1 against
complainant charging her with violations of Article
1712 and 172,3 and/or Article 1824 of the Revised
Penal Code. He alleged that complainant offered
tampered evidence.
In this motion for reconsideration, respondent
raises the following arguments:
First, complainant did not engage his services as
counsel in Civil Case No. 00-044. She hired him for
the purpose of filing two new petitions, a petition for
declaration of nullity of title and a petition for review
of a decree.
Second, Civil Case No. 00-044 was "considered
submitted for decision" as early as August 6, 2001,
or more than two months prior to October 13, 2001,
the date he was engaged as counsel, hence, "he
could not have done anything anymore" about it.
Third, complainant refused to provide him with
documents related to the case, preventing him from
doing his job.
And fourth, complainant offered tampered
evidence in Civil Case No. 00-004, prompting him
to file falsification cases against her.
In her opposition to the motion, complainant
contends that: (1) respondent violated the principle
of confidentiality between a lawyer and his client
when he filed falsification charges against
her; (2) respondent should have returned her
money; (3) respondent should have verified the
authenticity of her documents earlier if he really
believed that they are falsified; and (4) his refusal to
return her money despite this Court’s directive
constitutes contempt.
We deny respondent’s motion for reconsideration.
It is axiomatic that no lawyer is obliged to act either
as adviser or advocate for every person who may
wish to become his client. He has the right to
decline employment. But once he accepts money
from a client, an attorney-client relationship is
established, giving rise to the duty of fidelity to the
client’s cause.5 From then on, he is expected to be
mindful of the trust and confidence reposed in him.
He must serve the client with competence and
diligence, and champion the latter’s cause with
wholehearted devotion.6
Respondent assumed such obligations when he
received the amount of P56,000.00 from
complainant and agreed to handle Civil Case No.
00-044. Unfortunately, he had been remiss in the
performance of his duties. As we have ruled earlier,
"there is nothing in the records to show that he
(respondent) entered his appearance as
counsel of record for complainant in Civil Case
No. 00-044." Neither is there any evidence nor
pleading submitted to show that he initiated new
petitions.
With ingenuity, respondent now claims that
"complainant did not engage his services for
Civil Case No. 00-044" but, instead, she engaged
him for the filing of two new petitions. This is
obviously a last-ditch attempt to evade culpability.
Respondent knows very well that if he can
successfully disassociate himself as complainant’s
counsel in Civil Case No.00-044, he cannot be held
guilty of any dereliction of duties.
But respondent’s current assertion came too late in
the day. He is already bound by his previous
statements. In his Verified Comment on the
Affidavit-Complaint,7 he categorically stated that
complainant engaged his services in Civil Case No.
00-044, originally handled by Atty. Oliver Lozano,
thus:
4.a. Complainant was referred to the
Respondent by Atty. Oliver Lozano.
4.b. The referral intrigued Respondent no end,
simply because Atty. Oliver Lozano is a bright
lawyer and is very much capable of handling
Civil Case No. 00-044.
4.c. Respondent-out of respect from Atty. Oliver
Lozano – did not inquire the reason for the
referral. But he was made to understand that he
was being referred because Atty. Oliver Lozano
believed that Respondent would be in a better
position to prosecute and/or defend the
Complainant in Civil Case No. 00-044.
5.c. Complainant went to the law office of
Respondent on October 13, 2001 and demanded
that he provides her with free legal service.
5.e. Respondent, however, told Complainant
that the case (Civil Case No. 00-044) would not
entitle her to a free legal service and advised
her to just re-engage the services of Atty. Oliver
Lozano.
5.f. Undaunted, Complainant asked Respondent to
assess her case and how she and her lawyer
should go prosecuting and/or defending her
position therein.
5.g. Honestly believing that Complainant was
no longer represented by counsel in Civil Case
No. 00-044 at that time, Respondent gave his
professional opinion on the factual and legal
matters surrounding the said case.
5.h. Apparently impressed with the opinion of
the Respondent, Complainant became even
more adamant in asking the former to represent
her in Civil Case No. 00-044.
5.i. Respondent then told Complainant that she
would be charged as a regular client is she insists
in retaining his services.
5.j. It was at this juncture that Complainant asked
Respondent about his fees.
5.k. After re-assessing Civil Case No. 00-044,
Respondent told Complainant that he will have
to charge her with an acceptance fee of One
Hundred Thousand Pesos (P100,000.00), aside
form being charged for papers/pleadings that
may have to be prepared and filed in court in
connection with the aforesaid case.
5.n. A few days after, Respondent got a call from
Atty. Oliver Lozano. The said Atty. Oliver Lozano
interceded for and in behalf of Complainant and
asked that the acceptance fee that Respondent
was charging the Complainant be reduced.
5.r. Complainant then returned to the office of the
Respondent on October 20, 2001. The latter then
informed the former of his conversation with Atty.
Oliver Lozano and his (respondent’s) decision to
reduce the acceptance fee.
5.s. Complainant was very grateful at the time,
even shedding a tear or two simply because
Respondent had agreed to handle her case at a
greatly reduced acceptance fee.
Statements of similar tenor can also be found in
respondent’s Memorandum8 filed with the IBP.
Undoubtedly, respondent’s present version is a
flagrant departure from his previous pleadings. This
cannot be countenanced. A party should decide
early what version he is going to advance. A
change of theory in the latter stage of the
proceedings is objectionable, not due to the strict
application of procedural rules, but because it is
contrary to the rules of fair play, justice and due
process.9 The present administrative case was
resolved by the IBP on the basis of respondent’s
previous admission that complainant engaged his
legal services in Civil Case No. 00-044. He cannot
now unbind himself from such admission and its
consequences. In fact, if anything at all has been
achieved by respondent’s inconsistent assertions, it
is his dishonesty to this Court.
At any rate, assuming arguendo that complainant
indeed engaged respondent’s services in filing the
two (2) new petitions, instead of Civil Case No. 00-
044, still, his liability is unmistakable. There is
nothing in the records to show that he filed any
petition. The ethics of the profession demands that,
in such a case, he should immediately return the
filing fees to complainant. In Pariñas v.
Paguinto,10 we held that "a lawyer shall account
for all money or property collected from the
client. Money entrusted to a lawyer for a
specific purpose, such as for filing fee, but not
used for failure to file the case must
immediately be returned to the client on
demand." Per records, complainant made repeated
demands, but respondent is yet to return the
money.
Neither do we find merit in respondent’s second
argument. The fact that Civil Case No. 00-044 was
already "submitted for decision" does not justify his
inaction. After agreeing to handle Civil Case No.
00-044, his duty is, first and foremost, to enter his
appearance. Sadly, he failed to do this simple task.
He should have returned complainant’s
money. Surely, he cannot expect to be paid for
doing nothing.
In his third argument, respondent attempts to evade
responsibility by shifting the blame to complainant.
He claims that she refused to provide him with
documents vital to the case. He further claims that
he would be violating the Code of Professional
Responsibility by handling a case without adequate
preparation. This is preposterous. When a lawyer
accepts a case, his acceptance is an implied
representation that he possesses the requisite
academic learning, skill and ability to handle the
case.11 As a lawyer, respondent knew where to
obtain copies of the certificates of title. As a matter
of fact, he admitted that his Law Office, on its own,
managed to verify the authenticity of complainant’s
title. It bears reiterating that respondent did not take
any action on the case despite having been paid for
his services. This is tantamount to abandonment of
his duties as a lawyer and taking undue advantage
of his client.
Finally, in an ironic twist of fate, respondent
became the accuser of complainant. In his fourth
argument, respondent accuses her of offering
falsified documentary evidence in Civil Case No.
00-004, prompting him to file falsification cases
against her. He thus justifies his inability to render
legal services to complainant.
Assuming that complainant indeed offered falsified
documentary evidence in Civil Case No. 00-044,
will it be sufficient to exonerate respondent? We
believe not. First, Canon 19 outlines the procedure
in dealing with clients who perpetrated fraud in the
course of a legal proceeding. Consistent with its
mandate that a lawyer shall represent his client with
zeal and only within the bounds of the law, Rule
19.02 of the same Canon specifically provides:
Rule 19.02 – A lawyer who has received
information that his clients has, in the course of the
representation, perpetrated a fraud upon a person
or tribunal, shall promptly call upon the client to
rectify the same, and failing which he shall
terminate the relationship with such client in
accordance with the Rules of Court.
As a lawyer, respondent is expected to know this
Rule. Instead of inaction, he should have
confronted complainant and ask her to rectify her
fraudulent representation. If complainant refuses,
then he should terminate his relationship with her.
Let a copy of this Resolution be attached to his
personal record and copies furnished the Integrated
Bar of the Philippines and the Office of the Court
Administrator for dissemination to all courts.
SO ORDERED.

Understandably, respondent failed to follow the

above-cited Rule. This is because there is no truth
to his claim that he did not render legal service to
complainant because she falsified the documentary
evidence in Civil Case No.00-044. This brings us to
the second reason why we cannot sustain his
fourth argument. The pleadings show that he
learned of the alleged falsification long after
complainant had terminated their attorney-client
relationship. It was a result of his active search for
a justification of his negligence in Civil Case No.
00-044. As a matter of fact, he admitted that he
verified the authenticity of complainant’s title only
after the "news of his suspension spread in the
legal community." To our mind, there is absurdity
in invoking subsequent knowledge of a fact as
justification for an act or omission that is fait
accompli.

Obviously, in filing falsification charges against

complainant, respondent was motivated by
vindictiveness.

In fine, let it be stressed that the authority of an

attorney begins with his or her retainer.12 It gives
rise to a relationship between an attorney and a
client that is highly fiduciary in nature and of a very
delicate, exacting, and confidential character,
requiring a high degree of fidelity and good faith. 13 If
much is demanded from an attorney, it is because
the entrusted privilege to practice law carries with it
the correlative duties not only to the client but also
to the court, to the bar, and to the public. A lawyer
who performs his duty with diligence and candor
not only protects the interest of his client; he also
serves the ends of justice, does honor to the bar,
and helps maintain the respect of the community to
the legal profession.14 Indeed, law is an exacting
goddess demanding of her votaries not only
intellectual but also moral discipline.

WHEREFORE, we DENY respondent’s motion for

reconsideration. Our Decision dated April 22, 2005
is immediately executory. Respondent is directed to
report immediately to the Office of the Bar
Confidant his compliance with our Decision.

A.C. No. 2040 March 4, 1998
IMELDA A. NAKPIL, complainant,
vs.
ATTY. CARLOS J. VALDES, respondent.
The friendship of JOSE NAKPIL and respondent
CARLOS J. VALDES dates back to the '50s during
their school days in De La Salle and the Philippine
Law School. Their closeness extended to their
families and respondent became the business
consultant, lawyer and accountant of the Nakpils.
In 1965, Jose Nakpil became interested in purchasing
a summer residence in Moran Street, Baguio
City.  For lack of funds, he requested respondent to
1
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.
It was the Nakpils who occupied the Moran summer
house. When Jose Nakpil died on July 8, 1973,
respondent acted as the legal counsel and accountant
of his widow, complainant IMELDA NAKPIL. On
March 9, 1976, respondent's law firm, Carlos J.
Valdes & Associates, handled the proceeding for the
settlement of Jose's estate. Complainant was
appointed as administratrix of the estate.
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 February 13, 1978,
respondent transferred his title to the Moran property
to his company, the Caval Realty Corporation.
On March 29, 1979, complainant sought to recover
the Moran property by filing with the then Court of
First Instance (CFI) of Baguio City an action for
reconveyance with damages against respondent and
his corporation. In defense, respondent claimed
absolute ownership over the property and denied that
a trust was created over it.
During the pendency of the action for reconveyance,
complainant filed this administrative case to disbar the
respondent. She charged that respondent violated
professional ethics when he:
I. Assigned to his family corporation the Moran
property (Pulong Maulap) which belonged to the
estate he was settling as its lawyer and auditor.
II. Excluded the Moran property from the "inventory of
real estate properties" he prepared for a client-estate
and, at the same time, charged the loan secured to
purchase the said excluded property as a liability of
the estate, all for the purpose of transferring the title to
the said property to his family corporation.
III. Prepared and defended monetary claims against
the estate that retained him as its counsel and
auditor.2
On the first charge, complainant alleged that she
accepted respondent's offer to serve as lawyer and
auditor to settle her husband's estate. Respondent's
law firm then filed a petition for settlement of the
estate of the deceased Nakpil but did not include the
Moran property in the estate's inventory. Instead,
respondent transferred the property to his corporation,
Caval Realty Corporation, and title was issued in its
name. Complainant accused respondent of
maliciously appropriating the property in trust knowing
that it did not belong to him. She claimed that
respondent has expressly acknowledged that the said
property belonged to the late Nakpil in his
correspondences  with the Baguio City Treasurer and
3
the complainant.
On the second charge, complainant alleged that
respondent's auditing firm (C. J. Valdes & Co., CPAs)
excluded the Moran property from the inventory of her
husband's estate, yet included in the claims against
the estate the amounts of P65,000.00 and
P75,000.00, which respondent represented as her
husband's loans applied "probably for the purchase of
a house and lot in Moran Street, Baguio City."
As to the third charge, complainant alleged that
respondent's law firm (Carlos J. Valdes and
Associates) filed the petition for the settlement of her
husband's estate in court, while respondent's auditing
firm (C.J. Valdes & Co., CPAs) acted as accountant of
both the estate and two of its creditors. She claimed
that respondent represented 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 represented by
respondent's law firm. Complainant averred that there
is no distinction between respondent's law and
auditing firms as respondent is the senior and
controlling partner of both firms which are housed in
the same building.
We required respondent to answer the charges
against him. In his ANSWER,   respondent initially
4
asserted that the resolution of the first and second
charges against him depended on the result of the
pending action in the CFI for reconveyance which
involved the issue of ownership of the Moran property.
On the merit of the first charge, respondent reiterated
his defense in the reconveyance case that he did not
hold the Moran property in trust for the Nakpils as he
is its absolute owner. Respondent explained that the
Nakpils never bought back the Moran property from
him, hence, the property remained to be his and was
rightly excluded from the inventory of Nakpil's estate.
As to the second charge, respondent denied
preparing the list of claims against the estate which
included his loans of P65,000.00 and P75,000.00 for
the purchase and renovation of the Moran property. In
charging his loans against the estate, he stressed that
the list drawn up by his accounting firm merely stated
that the loans in respondent's name were applied
"probably for the purchase of the house and lot in
Moran Street, Baguio City." Respondent insisted that
this was not an admission that the Nakpils owned the
property as the phrase "probably for the purchase" did
not imply a consummated transaction but a projected
acquisition.
Respondent also disclaimed knowledge or privity in
the preparation of a letter (Exhibit "H") of his
accounting firm to the Baguio City treasurer remitting
the real estate taxes for the Moran property on behalf
of the Nakpils. He contended that the letter could be a
mere error or oversight.
Respondent averred that it was complainant who
acknowledged that they did not own the Moran
property for: (1) complainant's February 1979
Statement of Assets and Liabilities did not include the
said property, and; (2) complainant, as administratrix,
signed the Balance Sheet of the Estate where the
Moran property was not mentioned.
Respondent admitted that complainant retained the
services of his law and accounting firms in the
settlement of her husband's estate.  However, he
5
pointed out that he has resigned from his law and
accounting firms as early as 1974. He alleged that it
was Atty. Percival Cendaña (from the law firm Carlos
Valdes & Associates) who filed the intestate
proceedings in court in 1976.
As to the third charge, respondent denied there was a
conflict of interest when his law firm represented the
estate in the intestate proceedings while his
accounting firm (C.J. Valdes & Co., CPAs) served as
accountant of the estate and prepared the claims of
creditors Angel Nakpil and ENORN, Inc. against the
estate. He proffered the following reasons for his
thesis: First, the two claimants were closely related to
the late Nakpil. Claimant ENORN, Inc. is a family
corporation of the Nakpils of which the late Nakpil was
the President. Claimant Angel Nakpil is a brother of
the late Nakpil who, upon the latter's death, became
the President of ENORN, Inc. These two claimants
had been clients of his law and accounting firms even
during the lifetime of Jose Nakpil. Second, his alleged
representation of conflicting interests was with the
knowledge and consent of complainant as
administratrix. Third, there was no conflict of interests
between the estate and the claimants for they had
forged a modus vivendi, i.e., that the subject claims
would be satisfied only after full payment of the
principal bank creditors. Complainant, as
administratrix, did not controvert the claims of Angel
Nakpil and ENORN, Inc. Complainant has started
paying off the claims of Angel Nakpil and ENORN,
Inc. after satisfying the banks' claims. Complainant
did not assert that their claims caused prejudice to the
estate. Fourth, the work of Carlos J. Valdes & Co. as
common auditor redounded to the benefit of the
estate for the firm prepared a true and accurate
amount of the claim. Fifth, respondent resigned from
his law and accounting firms as early as August 15,
1974.  He rejoined his accounting firm several years
6
later. He submitted as proof the SEC's certification of
the filing of his accounting firm of an Amended
Articles of Partnership. Thus, it was not he but Atty.
Percival Cendaña, from the firm Carlos J. Valdes &
Associates, who filed the intestate proceedings in
court. On the other hand, the claimants were
represented by their own counsel Atty. Enrique O.
Chan. Sixth, respondent alleged that in the remote
possibility that he committed a breach of professional
ethics, he committed such "misconduct" not as a
lawyer but as an accountant who acted as common
auditor of the estate and its creditors. Hence, he
should be held accountable in another forum.
On November 12, 1979, complainant submitted her
REPLY.  She maintained that the pendency of the
7
reconveyance case is not prejudicial to the
investigation of her disbarment complaint against
respondent for the issue in the latter is not the
ownership of the Moran property but the ethics and
morality of respondent's conduct as a CPA-lawyer.
Complainant alleged that respondent's Annexes to his
Reply (such as the Statement of Assets & Liability of
the Nakpils and the Balance Sheet of the Estate)
which showed that complainant did not claim
ownership of the Moran property were all prepared by
C.J. Valdes & Co. as accountant of the estate of Jose
Nakpil and filed with the intestate court by C.J. Valdes
& Associates as counsel for the estate. She averred
that these Annexes were not proofs that respondent
owned the Moran property but were part of
respondent's scheme to remove the property from the
estate and transfer it to his family
corporation. Complainant alleged that she signed the
documents because of the professional counsel of
respondent and his firm that her signature thereon
was required. Complainant charged respondent with
greed for coveting the Moran property on the basis of
defects in the documents he himself prepared..
Complainant urged that respondent cannot disown
unfavorable documents (the list of claims against the
estate and the letter regarding Nakpil's payment of
realty tax on the Moran property) which were
prepared by his law and accounting firms and invoke
other documents prepared by the same firms which
are favorable to him. She averred that respondent
must accept responsibility not just for some, but for all
the representations and communications of his firms.
Complainant refuted respondent's claim that he
resigned from his firms from March 9, 1976 to
"several years later." She alleged that none of the
documents submitted as evidence referred to his
resignation from his law firm. The documents merely
substantiated his resignation from his accounting firm.
In his REJOINDER,  respondent insisted that
8
complainant cannot hold him liable for representing
the interests of both the estate and the claimants
without showing that his action prejudiced the estate.
He urged that it is not per se anomalous for
respondent's accounting firm to act as accountant for
the estate and its creditors. He reiterated that he is
not subject to the jurisdiction of this Court for he acted
not as lawyer, but as accountant for both the estate
and its claimants.
He alleged that his accounting firm merely prepared
the list of claims of the creditors Angel Nakpil and
ENORN, Inc. Their claims were not defended by his
accounting or law firm but by Atty. Enrique Chan. He
averred that his law firm did not oppose these claims
as they were legitimate and not because they were
prepared by his accounting firm. He emphasized that
there was no allegation that the claims were
fraudulent or excessive and that the failure of
respondent's law firm to object to these claims
damaged the estate.
In our January 21, 1980 Resolution,  we deferred
9
further action on the disbarment case until after
resolution of the action for reconveyance between the
parties involving the issue of ownership by the then
CFI of Baguio. Complainant moved for
reconsideration on the ground that the issue of
ownership pending with the CFI was not prejudicial to
her complaint which involved an entirely different
issue, i.e., the unethical acts of respondent as a CPA-
lawyer. We granted her motion and referred the
administrative case to the Office of the Solicitor
General (OSG) for investigation, report and
recommendation.  10
In 1983, the CFI of Baguio dismissed the action for
reconveyance. The trial court ruled that respondent
held the Moran property in trust for the Nakpils but
found that complainant waived her right over it.
On appeal, the Court of Appeals reversed the trial
court. The appellate court held that respondent was
the absolute owner of the Moran property. The
Decision was elevated to this Court.
On February 18, 1986, during the pendency of
complainant's appeal to this Court, the OSG
submitted its Report   on
11
the disbarment
complaint. The OSG relied heavily on the decision of
the Court of Appeals then pending review by this
Court. The OSG found that respondent was not put on
notice of complainant's claim over the property. It
opined that there was no trust agreement created
over the property and that respondent was the
absolute owner thereof. Thus, it upheld respondent's
right to transfer title to his family corporation. It also
found no conflict of interests as the claimants were
related to the late Jose Nakpil. The OSG
recommended the dismissal of the administrative
case.
Prefatorily, we note that the case at bar presents a
novel situation as it involves the disbarment of a CPA-
lawyer for his demeanor in his accounting profession
and law practice in connection with the property of his
client.
As a rule, a lawyer is not barred from dealing with his
client but the business transaction must be
characterized with utmost honesty and good
faith.   The measure of good faith which an attorney is
12
required to exercise in his dealings with his client is a
much higher standard than is required in business
dealings where the parties trade at "arms
length."   Business transactions between an attorney
13
and his client are disfavored and discouraged by the
policy of the law. Hence, courts carefully watch these
transactions to assure that no advantage is taken by a
lawyer over his client. This rule is founded on public
policy for, by virtue of his office, an attorney is in an
easy position to take advantage of the credulity and
ignorance of his client. Thus, no presumption of
innocence or improbability of wrongdoing is
considered in an attorney's favor.  14
In the case at bar, we cannot subscribe to the findings
of the OSG in its Report. These findings were based
mainly on the decision of the Court
of Appeals in the action for reconveyance which was
reversed by this Court in 1993.  15
As to the first two charges, we are bound by the
factual findings of this Court in the aforementioned
reconveyance case.   It is well-established that
16
respondent offered to the complainant the services of
his law and accounting firms by reason of their close
relationship dating as far back as the '50s. She
reposed her complete trust in respondent who was
the lawyer, accountant and business consultant of her
late husband. Respondent and the late Nakpil agreed
that the former would purchase the Moran property
and keep it in trust for the latter. In violation of the
trust agreement, respondent claimed absolute
ownership over the property and refused to sell the
property to complainant after the death of Jose Nakpil.
To place the property beyond the reach of
complainant and the intestate court, respondent later
transferred it to his corporation.
Contrary to the findings of the OSG, respondent
initially acknowledged and respected the trust
nature of the Moran property. Respondent's bad faith
in transferring the property to his family corporation is
well discussed in this Court's Decision,  thus:
17
. . . Valdes (herein respondent) never repudiated the
trust during the lifetime of the late Jose Nakpil. On the
contrary, he expressly recognized it. . . . (H)e
repudiated the trust when (he) excluded Pulong
Maulap from the list of properties of the late Jose
Nakpil submitted to the intestate court in 1973. . . .
The fact that there was no transfer of ownership
intended by the parties . . . can be bolstered by Exh.
"I-2," an annex to the claim filed against the estate
proceedings of the late Jose Nakpil by his brother,
Angel Nakpil, which was prepared by Carlos J. Valdes
& Co., the accounting firm of herein respondent.
Exhibit "I-2," which is a list of the application of the
proceeds of various FUB loans contracted as of 31
December 1973 by the late Jose Nakpil, . . . contains
the two (2) loans contracted in the name of
respondent. If ownership of Pulong Maulap was
already transferred or ceded to Valdes, these loans
should not have been included in the list.
Indeed, as we view it, what the parties merely agreed
to under the arrangement outlined in Exh. "J" was that
respondent Valdes would . . . "take over the total loan
of P140,000.00 and pay all of the interests due on the
notes" while the heirs of the late Jose Nakpil would
continue to live in the disputed property for five (5)
years without remuneration save for regular
maintenance expenses. This does not mean,
however, that if at the end of the five-year period
petitioner (Nakpil) failed to reimburse Valdes for his
advances, . . . Valdes could already automatically
assume ownership of Pulong Maulap. Instead, the
remedy of respondents Carlos J. Valdes and Caval
Realty Corporation was to proceed against the estate
of the late Jose M. Nakpil and/or the property itself."
(emphasis supplied)
In the said reconveyance case, we further ruled that
complainant's documentary evidence (Exhibits "H", "J"
and "L"), which she also adduced in this
administrative case, should estop respondent from
claiming that he bought the Moran property for
himself, and not merely in trust for Jose Nakpil. 18
It ought to follow that respondent's act of excluding
the Moran property from the estate which his law firm
was representing evinces 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.
To make matters worse, respondent, through his
accounting firm, charged the two loans of P65,000.00
and P75,000.00 as liability of the estate, after said
loans were obtained by respondent for the purchase
and renovation of the property which he claimed for
himself. 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. It is
highly improper to represent both sides of an
issue.   The proscription against representation of
19
conflicting interests finds application where the
conflicting interests arise with respect to the same
general matter   and is applicable however slight such
20
adverse interest may be. It applies although the
attorney's intentions and motives were honest and he
acted in good faith.   However, representation of
21
conflicting interests may be allowed where the parties
consent to the representation, after full disclosure of
facts. Disclosure alone is not enough for the clients
must give their informed consent to such
representation. 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.  22
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. In fact, at one instance,
respondent's law firm questioned the claims of
creditor Angel Nakpil against the estate.
To exculpate himself, respondent denies that he
represented complainant in the intestate proceedings.
He points out that it was one Atty. Percival Cendaña,
from his law firm Carlos J. Valdes & Associates, who
filed the intestate case in court. However, the fact that
he did not personally file the case and appear in court
is beside the point. As established in the records of
this case and in the reconveyance case,   respondent
23
acted as counsel and accountant of complainant after
the death of Jose Nakpil. Respondent's defense that
he resigned from his law and accounting firms as
early as 1974 (or two years before the filing of the
intestate case) is unworthy of merit. Respondent's
claim of resignation from his law firm is not supported
by any documentary proof. The documents on
record   only show respondent's resignation from his
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accounting firm in 1972 and 1974. Even these
documents reveal that respondent returned to his
accounting firm on July 1, 1976 and as of 1978, the
intestate proceedings for the settlement of Jose's
estate had not yet been terminated. It does not
escape us that when respondent transferred the
Moran property to his corporation on February 13,
1978, the intestate proceedings was still pending in
court. Thus, the succession of events shows that
respondent could not have been totally ignorant of the
proceedings in the intestate case.
Respondent claims that complainant knew that his law
firm Carlos J. Valdes & Associates was the legal
counsel of the estate   and his accounting firm, C.J.
25
Valdes & Co., CPAs, was the auditor of both the
estate and the two claimants against it.   The fact,
26
however, that complainant, as administratrix, 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. Thus,
her silence regarding the arrangement does not
amount to an acquiescence based on an informed
consent.
We also hold that the relationship of the claimants to
the late Nakpil does not negate the conflict of interest.
When a creditor files a claim against an estate, his
interest is per se adverse to the estate. As correctly
pointed out by complainant, if she had a claim against
her husband's estate, her claim is still adverse and
must be filed in the intestate proceedings.
Prescinding from these premises, respondent
undoubtedly placed his law firm in a position where
his loyalty to his client could be doubted. In the estate
proceedings, the duty of respondent's law firm was to
contest the claims of these two creditors but which
claims were prepared by respondent's accounting
firm. Even if the claims were valid and did not
prejudice the estate, the set-up is still undesirable.
The test to determine whether there is a conflict of
interest in the representation is probability, not
certainty of conflict. It was respondent's duty to inhibit
either of his firms from said proceedings to avoid the SO ORDERED
probability of conflict of interest.

Respondent advances the defense that assuming

there was conflict of interest, he could not be charged
before this Court as his alleged "misconduct" pertains
to his accounting practice.

We do not agree. Respondent is a CPA-lawyer who

is actively practicing both professions. He is the senior
partner of his law and accounting firms which carry his
name. In the case at bar, complainant is not charging
respondent with breach of ethics for being the
common accountant of the estate and the two
creditors. He is charged for allowing his accounting
firm to represent two creditors of the estate and, at the
same time, allowing his law firm to represent the
estate in the proceedings where these claims were
presented. The act is a breach of professional ethics
and undesirable as it placed respondent's and his law
firm's loyalty under a cloud of doubt. Even granting
that respondent's misconduct refers to his
accountancy practice, it would not prevent this Court
from disciplining him as a member of the Bar. The rule
is settled that a lawyer may be suspended or
disbarred for ANY misconduct, even if it pertains to
his private activities, as long as it shows him to be
wanting in moral character, honesty, probity or good
demeanor.   Possession of good moral character is
27

not only a prerequisite to admission to the bar but also

a continuing requirement to the practice of law.

Public confidence in law and lawyers may be eroded

by the irresponsible and improper conduct of a
member of the bar. Thus, a lawyer should determine
his conduct by acting in a manner that would promote
public confidence in the integrity of the legal
profession. 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 the case at bar, respondent exhibited less
28

than full fidelity to his duty to observe candor, fairness

and loyalty in his dealings and transactions with his
clients.  29

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.

Let copies of this Decision be furnished all courts, as

well as the Integrated Bar of the Philippines and the
Office of the Bar Confidant.