Regala vs Sandiganbayan (1996) (PDF)

8/10/2019 Regala vs Sandiganbayan (1996) (PDF)

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 105938 September 20, 1996

TEODORO R. REGALA, EDGARDO J . ANGARA, AVELINO V. CRUZ, JOSE C.CONCEPCION, ROGELIO A. VINLUAN, VICTOR P. LAZATIN and EDUARDO U.ESCUETA, petitioners,vs.THE HONORABLE SANDIGANBAYAN, First Division, REPUBLIC OF THE PHILIPPINES,ACTING THROUGH THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT,and RAUL S. ROCO, respondents.

G.R. No. 108113 September 20, 1996

PARAJA G. HAYUDINI, petitioner,vs.THE SANDIGANBAYAN and THE REPUBLIC OF THE PHILIPPINES, respondents.

KAPUNAN, J.:

These case touch the very cornerstone of every State's judicial system, uponwhich the workings of the contentious and adversarial system in the Philippinelegal process are based the sanctity of fiduciary duty in the client-lawyerrelationship. The fiduciary duty of a counsel and advocate is also what makesthe law profession a unique position of trust and confidence, which distinguishesit from any other calling. In this instance, we have no recourse but to upholdand strengthen the mantle of protection accorded to the confidentiality thatproceeds from the performance of the lawyer's duty to his client.

The facts of the case are undisputed.

The matters raised herein are an offshoot of the institution of the Complaint on J uly 31, 1987 before the Sandiganbayan by the Republic of the Philippines,through the Presidential Commission on Good Government against Edua rdo M.Cojuangc o, J r., as one of the principa l defendants, for the recovery of allegedill-gotten wealth, which includes shares of stocks in the named corporations in


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PCGG Case No. 33 (Civil Case No. 0033), entitled "Republic of the Philippinesversus Edua rdo C ojuangco, et al." 1

Among the dependants named in the case are herein petitioners TeodoroRega la, Edgardo J . Angara, Avelino V. C ruz, J ose C . Concepc ion, Rogelio A.

Vinluan, Victor P. Lazatin, Eduardo U. Escueta and Paraja G. Hayudini, andherein private respondent Raul S. Roco, who all were then partners of the lawfirm Angara, Abello, Concepcion, Regala and Cruz Law Offices (hereinafterreferred to as the ACCRA Law Firm). ACCRA Law Firm performed lega l servicesfor its c lients, which included, among others, the organization and acquisition ofbusiness associations and/or orga nizations, with the c orrelative and incidentalservices where its members ac ted as incorporators, or simply, as stoc kholders.More specifically, in the performance of these services, the members of the lawfirm delivered to its client documents which substantiate the c lient's equityholdings, i .e ., stoc k certifica tes endorsed in blank representing the shares

registered in the client's name, and a blank deed of trust or assignment coveringsaid shares. In the c ourse of their dea lings with their c lients, the members of thelaw firm acquire information relative to the assets of clients as well as theirpersonal and business circumstanc es. As members of the ACCRA Law Firm,petitioners and private respondent Raul Roco admit that they assisted in theorganization and acquisition of the companies included in C ivil Case No. 0033,and in keeping with the office practice, ACCRA lawyers acted as nominees-stoc kholders of the said corporations involved in sequestration proceedings. 2

On August 20, 1991, respondent Presidential Commission on Good Government(hereinafter referred to as respondent PCGG) filed a "Motion to Admit ThirdAmended C omplaint" and "Third Amended C omplaint" which excluded privaterespondent Raul S. Roc o from the c omplaint in PCGG Case No. 33 as pa rty-defendant. 3 Respondent PCGG based its exclusion of private respondent Rocoas party-defendant on his undertaking that he will reveal the identity of theprincipal/s for whom he acted as nominee/stockholder in the companiesinvolved in PCGG Case No. 33. 4

Petitioners were included in the Third Amended Complaint on the strength ofthe following allegations:

14. Defendants Eduardo Cojuangco, J r., Edgardo J . Angara, J oseC. Concepcion, Teodoro Regala, Avelino V. Cruz, Rogelio A.Vinluan, Eduardo U. Escueta, Paraja G. Hayudini and Raul Roco ofthe Angara Concepcion Cruz Regala and Abello law offices(ACCRA) plotted, devised, schemed conspired and confederatedwith each other in setting up, through the use of the coconut levyfunds, the financial and corporate framework and structures thatled to the establishment of UCPB, UNICOM, COCOLIFE,


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COCOMARK, CIC, and more than twenty other coconut levyfunded corporations, including the acquisition of San MiguelCorporation shares and its institutionalization through presidentialdirec tives of the c oc onut monopoly. Through insidious means andmac hinations, AC CRA, being the wholly-owned investment arm,

ACCRA Investments Corporation, became the holder ofapproximately fifteen million shares representing roughly 3.3% of thetotal outstanding c apital stoc k of UCPB as of 31 March 1987. Thisranks AC CRA Investments Corporation number 44 among the top100 biggest stoc kholders of UCPB which has approximately1,400,000 shareholders. On the other hand, corporate books showthe name Edgardo J . Angara as holding approximately 3,744 sharesas of February, 1984. 5

In their answer to the Expa nded Amended Complaint, petitioners AC CRA

lawyers alleged that:4.4 Defendants-ACCRA lawyers' participation in the acts with whichtheir codefendants are charged, was in furtherance of legitimatelawyering.

4.4.1 In the course of rendering professional and legalservices to c lients, defenda nts-AC CRA lawyers, J ose C .Concepcion, Teodoro D. Regala, Rogelio A. Vinluanand Eduardo U. Escueta, became holders of shares ofstock in the corporations listed under their respectivenames in Annex "A" of the expanded AmendedComplaint as incorporating or acquiring stockholdersonly and, as such, they do not claim any proprietaryinterest in the said shares of stoc k.

4.5 Defendant ACCRA-lawyer Avelino V. Cruz was one of theincorporators in 1976 of Mermaid Marketing C orporation, which wasorganized for legitimate business purposes not related to theallegations of the expanded Amended Complaint. However, hehas long ago transferred any material interest therein and therefore

denies that the "shares" appearing in his name in Annex "A" of theexpa nded Amended C omplaint are his assets. 6

Petitioner Paraja Hayudini, who had separated from ACCRA law firm, filed aseparate answer denying the allegations in the complaint implicating him in thealleged ill-gotten wea lth. 7


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of their acts until they have begun to establish the basis forrec ognizing the privilege; the existence a n d identity of the c lient.

This is what appears to be the cause for which they have beenimpleaded by the PC GG as defendants herein.

5. The PC GG is satisfied that defendant Roco ha s demonstrated hisagency and that Roco has apparently identified his principal, whichrevelation could show the lac k of c ause aga inst him. This in turn hasallowed the PCGG to exercise its power both under the rules ofAgency and under Section 5 of E.O. No. 14-A in relation to theSupreme Court's ruling in Rep ub lic v . Sa n d ig a n b a y a n (173 SCRA 72).

The PC GG has apparently offered to the ACCRA lawyers the sameconditions availed of by Roco; full disclosure in exchange forexclusion from these proc eedings (pa r. 7, PCGG's COMMENT datedNovember 4, 1991). The ACCRA lawyers have preferred not tomake the disclosures required by the PCGG.

The AC CRA lawyers cannot, therefore, begrudge the PCGG forkeeping them as party defendants. In the same vein, they cannotcompel the PCGG to be accorded the same treatment accordedto Roco.

Neither can this Court.

WHEREFORE, the Counter Motion dated October 8, 1991 filed by theAC CRA lawyers and joined in by Atty. Paraja G . Hayudini for thesame treatment by the PCGG as accorded to Raul S. Roco isDENIED for lac k of merit. 12

ACCRA lawyers moved for a rec onsideration of the above resolution but thesame was denied by the respondent Sandiganbayan. Hence, the ACCRAlawyers filed the petition for c er t io ra ri , docketed as G.R. No. 105938, invoking thefollowing grounds:

I

The Honorable Sandiganbayan gravely abused its discretion insubjec ting petitioners ACCRA lawyers who undisputably acted aslawyers in serving as nominee-stockholders, to the strict applicationof the law of agency.

II


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The Honorable Sandiganbayan committed grave abuse ofdiscretion in not considering petitioners ACC RA lawyers and Mr.Roco as similarly situated and, therefore, deserving of equaltreatment.

1. There is absolutely no evidence that Mr. Roco hadrevealed, or had undertaken to reveal, the identities ofthe client(s) for whom he acted as nominee-stoc kholder.

2. Even assuming that Mr. Roco had revealed, or hadundertaken to revea l, the identities of the c lient(s), thedisclosure does not constitute a substantial distinctionas would make the classification reasonable under theequal protection clause.

3. Respondent Sandiganbayan sanctioned favoritismand undue preference in favor of Mr. Roco in violationof the equal protection clause.

III

The Honorable Sandiganbayan committed grave abuse ofdiscretion in not holding that, under the fac ts of this case, theattorney-client privilege prohibits petitioners ACCRA lawyers fromrevealing the identity of their client(s) and the other information

requested by the PCGG.

1. Under the pec uliar facts of this case, the a ttorney-client privilege includes the identity of the client(s).

2. The factual disc losures required by the PC GG are notlimited to the identity of petitioners ACCRA lawyers'alleged client(s) but extend to other privileged matters.

IV

The Honorable Sandiganbayan committed grave abuse ofdiscretion in not requiring that the dropping of party-defendants bythe PCGG must be based on reasonable and just grounds and withdue consideration to the constitutional right of petitioners ACCRAlawyers to the equa l protec tion of the law.


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Petitioner Paraja G. Hayudini, likewise, filed his own motion for rec onsideration ofthe March 18, 1991 resolution which was denied by respondent Sandiganbayan.

Thus, he filed a separate petition for c er t io ra ri , docketed as G.R. No. 108113,assailing respondent Sandiganbayan's resolution on essentially the samegrounds averred by petitioners in G.R. No. 105938.

Petitioners contend that the exclusion of respondent Roc o as pa rty-defendant inPCGG Case No. 33 grants him a favorable trea tment, on the p retext of hisalleged undertaking to divulge the identity of his client, giving him anadvantage over them who are in the same footing as partners in the ACCRAlaw firm. Petitioners further argue that even granting that such an undertakinghas been assumed by private respondent Roco, they are prohibited fromrevealing the identity of their principal under their sworn mandate and fiduciaryduty as lawyers to uphold at all times the confidentiality of information obtainedduring such lawyer-client relationship.

Respondent PCGG, through its counsel, refutes petitioners' contention, allegingthat the revelation of the identity of the c lient is not within the ambit of thelawyer-client confidentiality privilege, nor are the documents it required (deedsof a ssignment) protec ted, bec ause they are evidence of nominee status. 13

In his comment, respondent Roc o a sseverates that respondent PCGG actedcorrectly in excluding him as party-defendant because he "( Roco ) ha s no t f ileda n A n sw e r . PC G G ha d the re fore the rig ht to d ism iss Civil C a se No . 0033 as toRo c o 'witho ut a n o rd e r o f c ou rt b y f iling a no t ic e o f d ism issa l' ," 14 and he hasundertaken to identify his principal. 15

Petitioners' contentions are impressed with merit.

I

It is quite apparent that petitioners were impleaded by the PC GG as co-defendants to force them to disclose the identity of their clients. Clea rly,respondent PCGG is not after petitioners but the "bigger fish" as they say in streetparlanc e. This ploy is quite c lea r from the PC GG's willingness to c ut a dea l withpetitioners the names of their clients in exchange for exclusion from the

complaint. The statement of the Sandiganbayan in its questioned resolutiondated March 18, 1992 is explicit:

AC CRA lawyers may take the heroic stanc e of not revea ling theidentity of the client for whom they have acted, i .e , their principal,and that will be their choice. But until they do identify their clients,considerations of whether or not the privilege claimed by theACCRA lawyers exists cannot even begin to be debated. Th e


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AC CRA la w yers c a nno t excu se the m se lves f rom the c on seq uen c esof the i r ac ts unt i l they have begun to es tabl i sh the bas is forre c o g nizing the p riv ileg e ; t he e xist enc e a nd id en t ity o f t he c lien t .

This is w ha t ap p ea rs t o b e the c a use fo r wh ic h they ha ve b ee n

im p le a d e d b y t h e PC G G a s d e f e n d a n t s h e re in . (Emphasis ours)

In a closely related case, C ivil Case No. 0110 of the Sandiganbayan, ThirdDivision, entitled "Primavera Farms, Inc., et al. vs. Presidential C ommission onGood Government" respondent PCGG, through counsel Mario Ongkiko,manifested at the hearing on December 5, 1991 that the PCGG wanted toestablish through the ACCRA that their "so called c lient is Mr. EduardoCojuangco;" that "it was Mr. Eduardo Cojuangc o who furnished all the monies tothose subscription payments in corporations included in Annex "A" of the ThirdAmended Complaint; that the ACCRA lawyers executed deeds of trust and

deeds of assignment, some in the name of pa rticular persons; some in blank.We quote Atty. Ongkiko:

ATTY. ONG KIKO:

With the permission of this Hon. C ourt. I propose to establish throughthese ACCRA lawyers that, one, their so-called c lient is Mr. EduardoCojuangco. Second, it was Mr. Eduardo Cojuangco who furnishedall the monies to these subscription payments of these corporationswho are now the petitioners in this case. Third, that these lawyers

executed deeds of trust, some in the name of a particular person,some in blank. Now, these blank deeds are important to our claimthat some of the shares are actually being held by the nominees forthe late President Marcos. Fourth, they also executed deeds ofassignment and some of these assignments have also blankassignees. Again, this is important to our claim that some of theshares are for Mr. Conjuangc o a nd some are for Mr. Marcos. Fifth,that most of thes e c orporations are really just paper corporations.Why do we say that? One: There are no really fixed sets of officers,no fixed sets of directors at the time of incorporation and even up

to 1986, which is the crucial year. And not only that, they have nopermits from the municipa l authorities in Makati. Next, ac tually alltheir addresses now are care of Villareal Law Office. They reallyhave no address on records. These are some of the principal thingsthat we would ask of these nominees stockholders, as they calledthemselves. 16


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It would seem that petitioners are merely standing in for their clients asdefendants in the complaint. Petitioners are being prosecuted solely on thebasis of activities and services performed in the course of their duties as lawyers.Quite obviously, petitioners' inclusion as co-defendants in the complaint ismerely being used as leverage to compel them to name their clients and

consequently to enable the PCGG to nail these c lients. Such being the case,respondent PCGG has no valid cause of action as against petitioners andshould exclude them from the Third Amended Complaint.

II

The nature of lawyer-client relationship is premised on the Roman Law conceptsof lo c a t io c o n d u c t io o p e ra ru m (contract of lease of services) where one personlets his services and another hires them without reference to the object of whichthe services are to be performed, wherein lawyers' services may be

compensated byhonorar ium

or for hire,17

andm a n d a t o

(contract of agency)wherein a friend on whom reliance could be placed makes a contract in hisname, but gives up all that he gained by the contract to the person whorequested him. 18 But the lawyer-c lient relationship is more than that of theprincipal-agent and lessor-lessee.

In modern day perception of the lawyer-client relationship, an attorney is morethan a mere agent or servant, because he possesses special powers of trust andconfidence reposed on him by his client. 19 A lawyer is also as independent asthe judge of the c ourt, thus his powers are entirely different from and superior tothose of an ordinary agent. 20 Moreover, an attorney also occupies what maybe considered as a "quasi-judicial office" since he is in fact an officer of theCourt 21 and exercises his judgment in the choice of courses of action to betaken favorable to his client.

Thus, in the creation of lawyer-client relationship, there are rules, ethical conductand duties that breathe life into it, among those, the fiduciary duty to his clientwhich is of a very delicate, exacting a nd c onfidential character, requiring a veryhigh degree of fidelity and good faith, 22 that is required by rea son of necessityand public interest 23 based on the hypothesis that abstinence from seekinglegal advice in a good cause is an evil which is fatal to the administration of

justice.24

It is also the strict sense of fidelity of a lawyer to his client thatdistinguishes him from any other professional in society. Thisconception is entrenched and embodies centuries of establishedand stable tradition. 25 In Stoc k ton v . Fo rd , 26 the U. S. Supreme C ourtheld:


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There a re few of the business relations of life involving a higher trustand confidence than that of attorney and client, or generallyspeaking, one more honorably and faithfully discharged; few moreanxiously guarded by the law, or governed by the sterner principlesof morality and justice; and it is the duty of the c ourt to administer

them in a corresponding spirit, and to be watchful and industrious,to see that confidence thus reposed shall not be used to thedetriment or prejudice of the rights of the party bestowing it. 27

In our jurisdiction, this privilege takes off from the old C ode of C ivil Procedureena cted by the Philippine C ommission on August 7, 1901. Sec tion 383 of theCode spec ifica lly "forbids counsel, without authority of his c lient to reveal anycommunication made by the client to him or his advice given thereon in thecourse of professional employment." 28 Passed on into various provisions of theRules of C ourt, the a ttorney-client privilege, as currently worded provides:

Sec. 24. Disqualification by reason of privileged communication. The following persons cannot testify as to matters learned inconfidenc e in the following c ases:

xxx xxx xxx

An attorney cannot, without the consent of his client, be examinedas to any communication made by the client to him, or his advicegiven thereon in the course of, or with a view to, professionalemployment, can an attorney's secretary, stenographer, or clerk beexamined, without the consent of the client and his employer,concerning any fact the knowledge of which has been acquired insuch capacity. 29

Further, Rule 138 of the Rules of Court states:

Sec . 20. It is the duty of an attorney: (e) to maintain inviolate theconfidence, and at every peril to himself, to preserve the secrets ofhis client, and to accept no compensation in connection with hisclient's business except from him or with his knowledge and

approval. This duty is explicitly manda ted in Canon 17 of the Code of ProfessionalResponsibility which provides that:

Canon 17. A lawyer owes fidelity to the c ause of his client and heshall be mindful of the trust and confidence reposed in him.


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Canon 15 of the C anons of Professional Ethics also demands a lawyer's fidelity toclient:

The lawyers owes "entire devotion to the interest of the c lient, warmzeal in the maintenance and defense of his rights and the exertion

of his utmost learning and ability," to the end that nothing be takenor be withheld from him, save by the rules of law, legally applied.No fear of judicial disfavor or public popularity should restrain himfrom the full discharge of his duty. In the judicial forum the c lient isentitled to the benefit of any and every remedy and defense that isauthorized by the law of the land, and he may expect his lawyer toassert every such remedy or defense. But it is steadfastly to beborne in mind that the great trust of the lawyer is to be performedwithin and not without the bounds of the law. The office of a ttorneydoes not permit, much less does it demand of him for any client,

violation of law or any manner of fraud or chicanery. He must obeyhis own conscience a nd not that of his client.

Considerations favoring confidentially in lawyer-client relationships are manyand serve several constitutional and policy concerns. In the constitutionalsphere, the privilege gives flesh to one of the most sacrosanct rights available tothe accused, the right to counsel. If a client were made to choose betweenlegal representation without effective communication and disclosure and legalrepresentation with all his sec rets revealed then he might be compelled, in someinstanc es, to either opt to stay away from the judicial system or to lose the rightto counsel. If the price of disc losure is too high, or if it amounts to selfincrimination, then the flow of information would be curtailed thereby renderingthe right practically nugatory. The threat this represents against anothersacrosanct individual right, the right to be presumed innocent is at once self-evident.

Encouraging full disclosure to a lawyer by one seeking legal services opens thedoor to a whole spectrum of legal options which would otherwise becircumscribed by limited information engendered by a fear of disclosure. Aneffective lawyer-client relationship is largely dependent upon the degree ofconfidence which exists between lawyer and client which in turn requires a

situation which encourages a dynamic and fruitful exchange and flow ofinformation. It necessarily follows that in order to a ttain effec tive representation,the lawyer must invoke the privilege not as a matter of option but as a matter ofduty and professional responsibility.

The question now arises whether or not this duty may be asserted in refusing todisclose the name of petitioners' client(s) in the case at bar. Under the facts and


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circumstances obtaining in the instant case, the answer must be in theaffirmative.

As a matter of public policy, a c lient's identity should not be shrouded in mystery30 Under this premise, the general rule in our jurisdiction as well as in the United

States is that a lawyer may not invoke the privilege and refuse to divulge thename or identity of this c lient. 31

The reasons advanced for the general rule are well established.

First, the court has a right to know that the client whose privileged information issought to be protec ted is flesh and blood.

Second, the privilege begins to exist only after the attorney-client relationshiphas been established. The attorney-client privilege does not attach until there isa client.

Third, the privilege generally pertains to the su b je c t m a t t e r of the relationship.

Finally, due process considerations require that the opposing party should, as ageneral rule, know his adversary. "A party suing or sued is entitled to know whohis opponent is." 32 He cannot be obliged to grope in the dark aga inst unknownforces. 33

Notwithstanding these considerations, the general rule is however qualified bysome important exceptions.

1) C lient identity is privileged where a strong p robability exists that revea ling theclient's name would implicate that client in the very activity for which he soughtthe lawyer's advice.

In Ex-Pa rte Enzor , 34 a state supreme court reversed a lower court order requiringa lawyer to divulge the name of her c lient on the ground that the subjec t matterof the relationship was so closely related to the issue of the client's identity thatthe privilege actually attached to both. In En zor, the unidentified client, anelection official, informed his attorney in confidence that he had been offered abribe to violate election laws or that he had accepted a bribe to that end. Inher testimony, the attorney revealed that she had advised her client to countthe votes correc tly, but averred that she could not remember whether her c lienthad been, in fact, bribed. The lawyer was cited for contempt for her refusal torevea l his client's identity before a grand jury. Reversing the lower court'scontempt orders, the state supreme court held that under the circumstances ofthe case, and under the exceptions described above, even the name of theclient was privileged.


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U .S . v . Ho d g e a n d Zw e ig , 35 involved the same exception, i .e . that client identityis privileged in those instances where a strong probability exists that thedisclosure of the client's identity would implicate the client in the very criminalactivity for which the lawyer's legal advice was ob tained.

The H o d g e case involved federal grand jury proceedings inquiring into theactivities of the "Sandino Gang," a gang involved in the illegal importation ofdrugs in the United States. The respondents, law partners, represented keywitnesses and suspects including the leader of the ga ng, J oe Sandino.

In connection with a tax investigation in November of 1973, the IRS issuedsummons to Hodge and Zweig, requiring them to produce doc uments andinformation regarding payment received by Sandino on behalf of any otherperson, and vice versa. The lawyers refused to divulge the names. The NinthCircuit of the United States Court of Appea ls, upholding non-disclosure under

the fac ts and c ircumstances of the case, held:A client's identity and the nature of that client's fee arrangementsmay be privileged where the person invoking the privilege canshow that a strong probability exists that disclosure of suchinformation would implicate that client in the very criminal activityfor which legal advice was sought Ba ird v . Koerner , 279 F. 2d at 680.While in Baird Owe enunc iated this rule as a matter of Californialaw, the rule also reflects federal law. Appellants contend that theBa ird exception applies to this case.

The Ba ird exception is entirely consonant with the principal policybehind the attorney-client privilege. "In order to promote freedomof consultation of legal advisors by clients, the apprehension ofcompelled disclosure from the legal advisors must be removed;henc e, the law must prohibit such disc losure except on the client'sconsent." 8 J . Wigmore, sup ra sec . 2291, at 545. In furtherance of thispolicy, the c lient's identity and the nature of his fee arrangementsare, in exceptional cases, protected as confidentialcommunications. 36

2) Where disclosure would open the c lient to civil liability; his identity is privileged.For instance, the peculiar facts and circumstances of Ne ug a ss v . Termina l C a bC o r p o r a t i o n , 37 prompted the New York Supreme C ourt to a llow a lawyer's claimto the effect that he could not reveal the name of his client because this wouldexpose the latter to civil litigation.

In the said c ase, Neuga ss, the plaintiff, suffered injury when the taxicab she wasriding, owned by respondent corporation, collided with a second taxicab,


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If it can compel the witness to state, as directed by the orderappealed from, that he represented certain persons in thepurchase or sale of these mines, it has made progress in establishingby such evidence their version of the litigation. As alreadysuggested, such testimony by the witness would compel him to

disclose not only that he was attorney for certain people, but that,as the result of communications made to him in the course of suchemployment as such attorney, he knew that they were interested incertain transactions. We feel sure that under such conditions nocase has ever gone to the length of compelling an attorney, at theinstance of a hostile litigant, to disclose not only his retainer, but thenature of the transactions to which it related, when suchinformation could be made the basis of a suit against his c lient. 41

3) Where the government's lawyers have no case against an a ttorney's c lient

unless, by revealing the client's name, the said name would furnish the only linkthat would form the chain of testimony necessary to convict an individual of acrime, the client's name is privileged.

In Ba ird vs . Ko rne r , 42 a lawyer was consulted by the accountants and the lawyerof certain undisclosed taxpayers regarding steps to be taken to place theundisclosed taxpayers in a favorable position in case criminal charges werebrought against them by the U.S. Internal Revenue Service (IRS).

It appeared that the taxpayers' returns of previous years were probablyincorrect and the taxes understated. The clients themselves were unsure aboutwhether or not they violated tax laws and sought advice from Baird on thehypothetical possibility that they had. No investigation was then beingundertaken by the IRS of the taxpayers. Subsequently, the attorney of thetaxpayers delivered to Baird the sum of $12, 706.85, which had been previouslyassessed as the tax due, and another amount of money representing his fee forthe a dvice given. Baird then sent a check for $12,706.85 to the IRS in Baltimore,Maryland, with a note explaining the payment, but without naming his clients.

The IRS demanded that Baird identify the lawyers, accountants, and otherclients involved. Baird refused on the ground that he did not know their names,and declined to name the attorney and accountants because this constituted

privileged communication. A petition was filed for the enforcement of the IRSsummons. For Baird's repeated refusal to name his c lients he was found guilty ofcivil contempt. The Ninth Circuit Court of Appeals held that, a lawyer could notbe forced to reveal the names of clients who employed him to pay sums ofmoney to the government voluntarily in settlement of undetermined incometaxes, unsued on, and with no government audit or investigation into thatclient's income tax liability pending. The court emphasized the exception that aclient's name is privileged when so much has been revealed concerning the


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lega l services rendered that the d isc losure of the client's identity exposes him topossible investigation and sanction by government agencies. The Court held:

The facts of the instant case bring it squarely within that exceptionto the general rule. Here money was received by the government,

paid by persons who thereby admitted they had not paid asufficient amount in income taxes some one or more years in thepast. The names of the clients are useful to the government for butone purpose to ascertain which taxpayers think they weredelinquent, so that it may check the records for that one year orseveral years. The voluntary nature of the payment indicates abelief by the taxpayers that more taxes or interest or penalties aredue than the sum previously paid, if any. It indicates a feeling ofguilt for nonpayment of taxes, though whether it is criminal guilt isundisclosed. But it may well be the link that could form the chain of

testimony necessary to convict an individual of a federal crime.Certainly the payment and the feeling of guilt are the reasons theattorney here involved was employed to advise his clients what,under the circumstances, should be done. 43

Apart from these principal exceptions, there exist other situations which couldqualify as exceptions to the general rule.

For example, the content of any client communication to a lawyer lies within theprivilege if it is relevant to the subject matter of the legal problem on which theclient seeks lega l assistanc e. 44 Moreover, where the na tu re of the attorney-client relationship has been previously disclosed and it is the id e nti ty w hic h isin t e n d e d t o b e c o n f id e n t ia l , the identity of the client has been held to beprivileged, since such revelation would otherwise result in disclosure of the entiretransaction. 45

Summarizing these exceptions, information relating to the identity of a c lientmay fall within the ambit of the privilege when the c lient's name itself has anindependent significance, such that disclosure would then reveal clientconfidences. 46

The c ircumstances involving the enga gement of lawyers in the c ase at bench,therefore, clearly reveal that the instant case falls under at least two exceptionsto the general rule. First, disclosure of the alleged client's name would lead toestablish said client's connection with the very fact in issue of the case, which isprivileged information, because the privilege, as stated earlier, protects thesubject matter or the substance (without which there would be not attorney-client relationship).


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These cases may be readily distinguished, because the privilege cannot beinvoked or used as a shield for an illegal act, as in the first example; while theprosecution may not have a case against the client in the second example andcannot use the attorney c lient relationship to build up a case aga inst the latter.

The reason for the first rule is that it is not within the professional character of a

lawyer to give advice on the commission of a crime. 48 The reason for thesec ond has been stated in the c ases above discussed and a re founded on thesame policy grounds for which the attorney-client privilege, in general, exists.

In M a t t e r o f Sh a w m u t M i n in g C o ., sup ra , the appellate court therein stated that"under such conditions no case has ever yet gone to the length of compellingan attorney, at the instanc e of a hostile litigant, to disclose not only his retainer,but the nature of the transactions to which it related, when such informationcould be made the basis of a suit against his client." 49 "Communications madeto an attorney in the course of any personal employment, relating to the subject

thereof, and which may be supposed to be drawn out in consequence of therelation in which the parties stand to each other, are under the seal ofconfidence and entitled to protection as privileged communications." 50 Wherethe communicated information, which clearly falls within the privilege, wouldsuggest possible c riminal ac tivity but there would be not much in the informationknown to the prosecution which would sustain a charge except that revealingthe name of the client would open up other privileged information which wouldsubstantiate the prosec ution's suspicions, then the c lient's identity is soinextricably linked to the subjec t matter itself that it falls within the protec tion.

The Baird exception, applicable to the instant case, is consonant with theprincipal policy behind the privilege, i .e ., that for the purpose of promotingfreedom of consultation of legal advisors by clients, apprehension of compelleddisclosure from attorneys must be eliminated. This exception has likewise beensustained in In r e G ra nd Ju ry Proc ee d ing s 51 and Tillo tso n v . Bo u g h n e r . 52 Whatthese cases unanimously seek to avoid is the exploitation of the general rule inwhat may amount to a fishing expedition by the prosec ution.

There a re, after all, alternative source of information available to the prosec utorwhich do not depend on utilizing a defendant's counsel as a convenient andreadily available source of information in the building of a case against thelatter. Compelling disc losure of the c lient's name in circumstanc es such as the

one which exists in the case at bench amounts to sanctioning fishing expeditionsby lazy prosecutors and litigants which we cannot and will not countenance.When the nature of the transaction would be revealed by disclosure of anattorney's retainer, such retainer is obviously protected by the privilege. 53 Itfollows that petitioner attorneys in the instant case owe their client(s) a duty andan obligation not to disclose the latter's identity which in turn requires them toinvoke the privilege.


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In fine, the crux of petitioners' objections ultimately hinges on their expectationthat if the prosecution has a case against their clients, the latter's case should bebuilt upon evidence painstakingly ga thered by them f ro m the ir o w n sou rc e s andnot from compelled testimony requiring them to reveal the name of their clients,information which unavoidably reveals much about the nature of the

transaction which may or may not be illegal. The logical nexus between nameand nature of transaction is so intimate in this case the it would be difficult tosimply dissociate one from the other. In this sense, the name is as much"communication" as information revealed directly about the transaction inquestion itself, a c ommunication which is clea rly and distinctly privileged . Alawyer cannot revea l such c ommunication without exposing himself to c hargesof violating a principle which forms the bulwark of the entire attorney-clientrelationship.

The uberr imei f ide i relationship between a lawyer and his client therefore

imposes a strict liability for negligence on the former. The ethical duties owing tothe client, including confidentiality, loyalty, competence, diligence as well asthe responsibility to keep clients informed and protect their rights to makedecisions have been zealously sustained. In Milb a nk , Tw ee d , Ha d ley a ndM c C lo y v . Boon , 54 the US Sec ond District Court rejec ted the plea of thepetitioner law firm that it breached its fiduciary duty to its client by helping thelatter's former agent in closing a deal for the agent's benefit only after its clienthesitated in proceeding with the transaction, thus causing no harm to its client.

The C ourt instead ruled that breaches of a fiduc iary relationship in any contextcomprise a special breed of cases that often loosen normally stringentrequirements of c ausation a nd damages, and found in favor of the c lient.

To the same effec t is the ruling in Se a rc y, Denn e y, Sc a ro la , Ba rnha rt , a nd Ship le yP .A . v . Sc he lle r 55 requiring strict obligation of lawyers vis-a -vis c lients. In this case,a contingent fee lawyer was fired shortly before the end of completion of hiswork, and sought payment q u a n t u m m e ru it of work done. The court, however,found that the lawyer was fired for cause after he sought to pressure his clientinto signing a new fee agreement while settlement negotiations were at acritical stage. While the client found a new lawyer during the in ter regnum ,events forced the client to settle for less than what was originally offered.Reiterating the principle of fiduciary duty of lawyers to c lients in M e in h a rd v .

Sa lm o n 56

famously attributed to J ustice Benjamin Cardozo that "Not honestyalone, but the p unc t ilio of an honor the most sensitive, is then the standard ofbeha vior," the US Court found that the lawyer involved was fired for cause, thusdeserved no attorney's fees at all.

The utmost zeal given by Courts to the protection of the lawyer-clientconfidentiality privilege and lawyer's loyalty to his client is evident in the duration


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of the protection, which exists not only during the relationship, but extends evenafter the termination of the relationship. 57

Such are the unrelenting duties required by lawyers vis-a -vis their clients becausethe law, which the lawyers are sworn to uphold, in the words of Oliver Wendell

Holmes, 58 ". . . is an exacting goddess, demanding of her votaries in intellectualand moral discipline." The C ourt, no less, is not prepared to accept respondents'position without denigrating the noble profession that is lawyering, so extolled by

J ustice Holmes in this wise:

Every calling is great when greatly pursued. But what other givessuch scope to realize the spontaneous energy of one's soul? In whatother does one plunge so deep in the stream of life so share itspassions its battles, its despair, its triumphs, both as witness andactor? . . . But that is not all. What a subject is this in which we are

united this abstraction called the Law, wherein as in a magicmirror, we see reflec ted, not only in our lives, but the lives of a ll menthat have been. When I think on this majestic theme my eyesdazzle. If we are to speak of the law as our mistress, we who arehere know that she is a mistress only to be won with sustained andlonely passion only to be won by straining all the faculties bywhich man is likened to God.

We have no choice but to uphold petitioners' right not to reveal the identity oftheir clients under pain of the breach of fiduciary duty owing to their clients,because the fac ts of the instant case clea rly fall within rec ognized exceptions tothe rule that the c lient's name is not privileged information.

If we were to sustain respondent PCGG that the lawyer-client confidentialprivilege under the circumstances obtaining here does not cover the identity ofthe client, then it would expose the lawyers themselves to possible litigation bytheir clients in view of the strict fiduciary responsibility imposed on them in theexercise of their duties.

The complaint in Civil Case No. 0033 alleged that the defendants therein,including herein petitioners and Eduardo C ojuangco, J r. conspired with

each other in setting up through the use of coconut levy funds thefinancial and corporate framework and structures that led to theestablishment of UCPB, UNICOM and others and that through insidiousmeans and machinations, AC CRA, using its wholly-owned investment arm,ACCRA Investment Corporation, became the holder of approximatelyfifteen million shares representing roughly 3.3% of the total capital stoc k ofUCPB as of 31 March 1987. The PC GG wanted to establish through theACCRA lawyers that Mr. Cojuangco is their client and it was Cojuangco


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who furnished all the monies to the subscription payment; henc e,petitioners acted as dummies, nominees and/or agents by allowingthemselves, among others, to be used as instrument in accumulating ill-gotten wealth through government concessions, etc., which actsconstitute gross abuse of official position and authority, flagrant breach of

public trust, unjust enrichment, violation of the C onstitution and laws of theRepublic of the Philippines.

By compelling petitioners, not only to reveal the identity of their clients, butworse, to submit to the PC GG documents substantiating the c lient-lawyerrelationship, as well as deeds of assignment petitioners executed in favorof its clients covering their respec tive shareholdings, the PC GG wouldexac t from petitioners a link "that would inevitab ly form the chain oftestimony nec essary to convict the (c lient) of a crime."

IIIIn response to petitioners' last assignment of error, respondents allegedthat the private respondent was dropped as party defendant not onlybecause of his admission that he acted merely as a nominee but alsobec ause of his undertaking to testify to such facts and circumstanc es "asthe interest of truth may require, which includes . . . the identity of theprincipal." 59

First, as to the bare statement that private respondent merely acted as alawyer and nominee, a statement made in his out-of-court settlement withthe PC GG, it is sufficient to state that petitioners have likewise made thesame claim not merely out-of-court but also in the Answer to plaintiff'sExpa nded Amended Complaint, signed by counsel, claiming that theiracts were made in furtherance of "legitimate lawyering." 60 Being "similarlysituated" in this regard, public respondents must show that there existother conditions and circumstances which would warrant their treatingthe private respondent differently from petitioners in the case at bench inorder to evade a violation of the equal protection clause of theConstitution.

To this end, public respondents contend that the primary considerationbehind their decision to sustain the PCGG's dropping of privaterespondent as a defendant was his promise to d isc lose the identities ofthe clients in question. However, respondents failed to show andabsolute nothing exists in the rec ords of the case a t bar that privaterespondent ac tually revea led the identity of his client(s) to the PC GG.Since the undertaking happens to be the leitmotif of the entirearrangement between Mr. Roco and the PCGG, an undertaking which is


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so material as to have justified PC GG's spec ial trea tment exempting theprivate respondent from prosecution, respondent Sandiganbayan shouldhave required proof of the undertaking more substantial than a "bareassertion" that private respondent did indeed comply with theundertaking. Instead, a s manifested by the PC GG, only three doc uments

were submitted for the purpose, two of which were mere requests for re-investigation and one simply disc losed certain clients which petitioners(ACCRA lawyers) were themselves willing to reveal. These were clients towhom both petitioners and private respondent rendered legal serviceswhile a ll of them were partners at AC CRA, and were not the c lients whichthe PCGG wanted disclosed for the alleged questioned transactions. 61

To justify the dropping of the private respondent from the case or the filingof the suit in the respondent court without him, therefore, the PC GGshould conclusively show that Mr. Roco was treated as species apart from

the rest of the ACCRA lawyers on the basis of a classification which madesubstantial distinctions based on rea l differenc es. No such substantialdistinctions exist from the rec ords of the case a t bench, in violation of theequal protection clause.

The equal protection clause is a guarantee which provides a wall ofprotection against uneven application of status and regulations. In thebroader sense, the guarantee operates against uneven a p p l i c a t i o n oflegal norms sothat all persons under similar circumstances would be accorded the sametreatment. 62 Those who fall within a pa rticular class ought to be trea tedalike not only as to privileges granted but also as to the liabilities imposed.

. . . What is required under this constitutional guarantee is theuniform operation of legal norms so that all persons under similarcircumstances would be accorded the same treatment both in theprivileges conferred and the liabilities imposed. As was noted in arecent decision: "Favoritism and undue preference cannot beallowed. For the principle is that equal protection and security shallbe given to every person under circumstances, which if notidentical are a nalogous. If law be looked upon in terms of burden or

charges, those that fall within a class should be treated in the samefashion, whatever restrictions cast on some in the group equallybinding the rest. 63

We find that the condition precedent required by the respondent PCGGof the petitioners for their exclusion as parties-defendants in PCGG CaseNo. 33 violates the lawyer-client confidentiality privilege. The conditionalso c onstitutes a transgression by respondents Sandiganbayan and


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PCGG of the equal protection clause of the Constitution. 64 It is grosslyunfair to exempt one similarly situated litigant from prosecution withoutallowing the same exemption to the others. Moreover, the PC GG'sdemand not only touches upon the question of the identity of their clientsbut also on documents related to the suspected transactions, not only in

violation of the attorney-client privilege but also of the constitutional rightagainst self-incrimination. Whichever way one looks at it, this is a fishingexpedition, a free ride at the expense of such rights.

An argument is advanced that the invocation by petitioners of theprivilege of attorney-client confidentiality at this stage of the proceedingsis premature a nd that they should wa it until they are c alled to testify andexamine as witnesses as to matters lea rned in confidenc e before theycan raise their objec tions. But petitioners are not mere witnesses. They areco-principals in the case for recovery of alleged ill-gotten wealth. They

have made their position clear from the very beginning that they are notwilling to testify and they cannot be compelled to testify in view of theirconstitutional right against self-incrimination and of their funda mentallega l right to maintain inviolate the privilege of attorney-clientconfidentiality.

It is clear then that the c ase against petitioners should never be a llowedto take its full course in the Sandiganbayan. Petitioners should not bemade to suffer the effects of further litigation when it is obvious that theirinclusion in the complaint arose from a privileged attorney-clientrelationship and as a means of coercing them to disclose the identities oftheir clients. To allow the case to continue with respec t to them when thisCourt could nip the problem in the bud at this ea rly opportunity would beto sanction an unjust situation which we should not here countenance.

The case hangs as a rea l and pa lpa ble threat, a proverbial Sword ofDamocles over petitioners' heads. It should not be allowed to continue aday longer.

While we are aware of respondent PCGG's legal mandate to recover ill-gotten wealth, we will not sanction acts which violate the equalprotection guarantee and the right against self-incrimination and subvert

the lawyer-client c onfidentiality privilege.

WHEREFORE, IN VIEW OF THE FOREGOING, the Resolutions of respondentSandiganbayan (First Division) promulgated on March 18, 1992 and May21, 1992 are hereby ANNULLED and SET ASIDE. RespondentSandiganbayan is further ordered to exclude petitioners Teodoro D.Rega la, Edgardo J . Angara, Avelino V. C ruz, J ose C . Concepc ion, VictorP. Lazatin, Eduardo U. Escueta and Paraja G. Hayuduni as parties-


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defendants in SB Civil Case No. 0033 entitled "Republic of the Philippines v.Eduardo Cojuangc o, J r., et al."

SO ORDERED.

Be llo sillo , Me lo a nd Fra nc isc o , JJ ., c o nc ur.

Pa d illa , Pa ng a niba n a nd To rre s, Jr. , JJ. , c o nc ur in th e re sult .

Ro m e ro a nd Hermo sisim a , Jr. , JJ. , to o k no p a rt .

M e nd o za , J., is o n lea ve .

Separate Opinions

VITUG, J ., concurring:

The legal profession, despite all the unrestrained calumny hurled aga inst it,is still the noblest of professions. It exists upon the thesis that, in an orderlysociety that is opposed to a ll forms of anarchy, it so occupies, as it should,an exalted position in the proper dispensation of justice. In time, principleshave evolved that would help ensure its effective ministration. Theprotection of confidentiality of the lawyer-client relationship is one, and ithas since been an accepted firmament in the profession. It allows thelawyer and the c lient to institutionalize a unique relationship based on fulltrust and confidence essential in a justice system that works on the basis ofsubstantive and procedural due process. To be sure, the rule is not withoutits pitfalls, and demands against it may be strong, but these problems are,in the ultimate analysis, no more than mere tests of vigor that have madeand will make that rule endure.

I see in the case before us, given the attendant circumstances alreadydetailed in the p o n e n c i a , a situation of the Republic attempting toestablish a case not on what it perceives to be the strength of its own


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evidenc e but on wha t it could elicit from a counsel aga inst his client. I findit unreasonable for the Sandiganbayan to compel petitioners to breachthe trust reposed on them and succumb to a thinly disguised threat ofincrimination.

Accordingly, I join my other colleague who vote for the GRANT of thepetition.

DAVIDE, J R., J.: dissenting

The impressive presentation of the case in the p o n e n c ia of Mr. J usticeKapunan makes difficult the espousal of a dissenting view. Nevertheless, Ido not hesitate to express that view bec ause I strongly feel that this Courtmust confine itself to the key issue in this spec ial civil action for c e rt io ra ri ,v iz ., whether or not the Sandiganbayan acted with grave abuse ofdiscretion in not excluding the defendants, the petitioners herein, from the

Third Amended Complaint in Civil Case No. 0033. That issue, unfortunately,has been simply buried under the avalanche of authorities upholding thesanctity of lawyer-client relationship which appears to me to beprematurely invoked.

From the undisputed facts disclosed by the pleadings and summarized inthe p o n e n c i a , I cannot find my way clear to a conclusion that theSandiganbayan committed grave abuse of discretion in not acting

favorably on the petitioners' prayer in their Comment to the PC GG'sMotion to Admit Third Amended Complaint.

The prerogative to determine who shall be made defendants in a civilcase is initially vested in the plaintiff, or the PC GG in this case. The controlof the C ourt comes in only when the issue of "interest" ( 2, Rule 3, Rules ofCourt) as, e.g., whether an indispensable party has not been joined, orwhether there is a misjoinder of parties ( 7, 8, and 9, Id .), is raised.

In the case below, the PCGG decided to drop or exclude from thecomplaint original co-defendant Raul Roco because he had allegedlycomplied with the c ondition prescribed by the PCGG, v iz ., undertake thathe will reveal the identity of the principals for whom he acted asnominee/stockholder in the companies involved in PCGG Case No. 0033.In short, there was an agreement or compromise settlement between thePCGG and Roc o. Ac cordingly, the PCGG submitted a Third AmendedComplaint without Roco as a defendant. No obstacle to such anagreement has been insinuated. If Roco's revelation violated the


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confidentiality of a lawyer-client relationship, he would be solelyanswerable therefor to his principals/clients and, probably, to this Court inan appropriate disciplinary action if warranted. There is at all no showingthat Civil Case No. 0033 cannot further be proceeded upon or that any

judgment therein cannot be binding without Roc o remaining as a

defendant. Ac cordingly, the admission of the Third Amended Complaintcannot be validly withheld by the Sandiganbayan.

Are the petitioners, who did not file a formal motion to be excluded butonly made the request to that effec t as a rider to their Comment to theMotion to Admit Third Amended Complaint, entitled to be excluded fromthe Third Amended Complaint such that denial thereof would constitutegrave abuse of discretion on the Sandiganbayan's part? To me, theanswer is clearly in the nega tive.

The petitioners seek to be accorded the same benefit granted to or to besimilarly treated as Roco. Reason and logic dictate that they cannot,unless they too would make themselves like Roco. Otherwise stated, theymust first voluntarily adopt for themselves the factual milieu created byRoco and must bind themselves to perform certain obligations as Roco. Itis prec isely for this that in response to the petitioners' comment on theaforementioned Motion to Admit Third Amended Complaint the PCGGmanifested that it is willing to accord the petitioners the treatment it gaveRoco provided they would do what Roco had done, that is, disclose theidentity of their principals/clients and submit documents substantiatingtheir claimed lawyer-client relationship with the said principals/c lients, aswell as copies of deeds of assignments the petitioners executed in favor oftheir principals/c lients. The petitioners did not do so bec ause theybelieved that compliance thereof would breach the sanctity of theirfiduciary duty in a lawyer-client relationship.

It, indeed, appears that Roco has complied with his obligation as aconsideration for his exclusion from the Third Amended Complaint. TheSandiganbayan found that

5. The PC GG is satisfied that defendant Roco ha s demonstrated his

agency and that Roco has apparently identified his principal, whichrevelation could show the lack of action against him. This in turn hasallowed the PCGG to exercise its power both under the rules ofagency and under Section 5 of E.O. No. 14-1 in relation to theSupreme Court's ruling in Rep ub lic v . Sa n d ig a n b a y a n (173 SCRA 72).

As a matter of fact, the PCGG presented evidence to substantiate Roco'scompliance. The p o n e n c ia itself so stated, thus:


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. . . respondent PCGG presented evidence to substantiatecompliance by private respondent Roco of the conditionsprecedent to warrant the latter's exclusion as party-defendant inPCGG Case No. 33, to wit: (a) Letter to respondent PCGG of thecounsel of respondent Roco dated May 24, 1989 reiterating a

previous request for reinvestiga tion by the PC GG in PCGG Case No.33; (b) Affidavit dated March 8, 1989 executed by privaterespondent Roco as Attachment to the letter aforestated in (a);and (c) Letter of Roco, Bunag, and Kapunan Law Offices datedSeptember 21, 1988 to the respondent in behalf of privaterespondent Roc o originally requesting the reinvestiga tion and/or re-examination of evidence by the PCGG it Complaint in PCGG CaseNo. 33. ( Id ., 5-6).

These are the pieces of evidence upon which the Sandiganbayan

founded its conc lusion that the PC GG was satisfied with Roc o'scompliance. The petitioners have not assailed such finding as arbitrary.

The p o n e n c ia ' s observation then that Roco did not refute the petitioners'contention that he did not comply with his obligation to disclose theidentity of his principals is entirely irrelevant.

In view of their adamantine position, the petitioners did not, therefore,allow themselves to be like Roco. They cannot claim the same trea tment,much less compel the PCGG to drop them as defendants, for nothingwhatsoever. They have no right to make such a demand for until theyshall have complied with the conditions imposed for their exclusion, theycannot be excluded except by way of a motion to dismiss based on thegrounds allowed by law (e.g., those enumerated in 1, Rule 16, Rules ofCourt). The ru le o f c o nf id en t ia lity un d er the la w yer-c lien t re la t io nship is no ta c a use to e xc lud e a p a rty. It is m ere ly a g rou nd fo r d isq ua lif ic a t ion o f aw itne ss ( 24, Rule 130, Rules of C ourt) a n d m a y o n ly b e in v o ke d a t t h ea p p ro p ria t e t im e , i .e ., when a lawyer is under compulsion to answer aswitness, as when, having taken the witness stand, he is questioned as tosuch c onfidential communicator or advice, or is being otherwise judiciallycoerced to produce, through su b p o e n a d u c e s t e c u m or otherwise, letters

or other documents containing the same privileged matter. But none ofthe lawyers in this case is being req uired to t est ify ab ou t or o the rw iser e v e a l "any [confidential] communication made by the client to him, orhis advice given thereon in the c ourse of, or with a view to, professionalemployment." What they are being asked to do, in line with their claimthat they had done the acts ascribed to them in pursuance of theirprofessional relation to their clients, is to identify the latter to the PCGGand the C ourt; but this, o nly if the y so c ho o se in order to be dropped from


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the complaint, such identification being the condition under which thePC GG has expressed willingness to exclude them from the a ction. Therevelation is entirely optional, discretionary, on their part. The a ttorney-client privilege is not therefor applicable.

Thus, the Sandiganbayan did not commit any abuse of discretion when itdenied the petitioners' prayer for their exclusion as party-defendantsbecause they did not want to abide with any of the conditions set by thePCGG. There would have been abuse if the Sandiganbayan granted theprayer because then it would have capriciously, whimsically, arbitrarily,and oppressively imposed its will on the PCGG.

Aga in, what the petitioners want is their exclusion from the Third AmendedComplaint or the dismissal of the c ase insofar as they are concernedbecause either they are invested with immunity under the principle of

confidentiality in a lawyer-client relationship, or the c laims against them inCivil Case No. 0033 are barred by such principle.

Even if we ha ve to accommodate this issue, I still submit that the lawyer-c lient privilege provides the petitioners no refuge. They a re sued asprincipa l defenda nts in C ivil Case No. 0033, a case of the rec overy ofalleged ill-gotten wea lth. Conspiracy is imputed to the petitioners therein.In short, they a re, a llegedly, conspirators in the c ommission of the a c tscomplained of for being nominees of certain pa rties.

Their inclusion as defendants in justified under 15, Article XI of theConstitution which provides that the right of the State to recoverproperties unlawfully acquired by public officials or employees, from themor from their nominees or transferees, shall not be barred by prescription,laches or estoppel and E.O. No. 1 of 28 February 1986, E.O. No. 2 of 12March 1986, E.O. No. 14 of 7 May 1986, and the Rules and Regulations ofthe PC GG. Furthermore, 2, Rule 110 of the Rules of C ourt requires thatthe complaint or information should be "aga inst all persons who appear tobe responsible for the offense involved."

Hypothetically admitting the allegations in the complaint in Civil Case No.

0033, I find myself unable to agree with the majority opinion that thepetitioners are immune from suit or that they have to be excluded asdefendants, or that they cannot be compelled to reveal or disclose theidentity of their principals, all bec ause of the sacred lawyer-clientprivilege.

This privilege is well put in Rule 130 of the Rules of Court, to wit:


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24. Disq ua lif ic a t ion b y rea son o f p riv ileg ed c om m unic a t ion . Thefollowing persons cannot testify as to matters learned in confidencein the following c ases:

xxx xxx xxx

(b) An attorney cannot, without the consent of his client, beexamined as to any communication made by the client to him, orhis advice given thereon in the course of, or with a view to,professional employment, nor can an attorney's sec retary,stenographer, or clerk be examined, without the consent of theclient and his employer, concerning any fact the knowledge ofwhich has been acquired in such capacity.

The majority seeks to expand the scope of the Philippine rule on thelawyer-client privilege by copious citations of American jurisprudenc ewhich includes in the privilege the identity of the client under theexceptional situations narrated therein. From the plethora of cases cited,two facts stand out in bold relief. Firstly, the issue of privilege contestedtherein arose in grand jury proceedings on different States, which arepreliminary proceedings before the filing of the case in court, and we arenot even told what evidentiary rules apply in the said hearings. In thepresent case, the privilege is invoked in the c ourt where it was alrea dyfiled and presently pends, and we have the foregoing specific rulesabove-quoted. Secondly, and more important, in the cases cited by themajority, the lawyers concerned were merely advocating the cause oftheir clients but were not indicted for the charges against their said clients.Here, the c ounsel themselves are co-defendants duly charged in court asco-c onspirators in the offenses charged. The c ases cited by the majorityevidently do not apply to them.

Hence, I wish to repeat and underscore the fact that the lawyer-clientprivilege is not a shield for the commission of a crime or against theprosecution of the lawyer therefor. I quote, with emphases supplied, from81 AM J UR 2d, Witnesses, 393 to 395, pages 356-357:

393. Effec t of unlawful purpose. The existence of an unlawful purpose prevents the attorney-clientprivilege from attaching. The attorney-client privilege does notgenerally exist where the representation is sought to further c rim ina lo r f r audu len t conduct e i ther pas t , present , or fu ture . Thus, aconfidence rec eived by an attorney in order to advance a criminalor fraudulent purpose is beyond the scope of the privilege.


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Observa t ion : The common-law rule that the privilegeprotecting confidential communications betweenattorney and client is lost if the relation is abused by aclient who seeks legal assistance to perpetrate a crimeor fraud has been c odified.

394. Attorney participation.

The attorney-client privilege cannot be used to protect a client inthe perpetration of a crime in c o n c e rt w it h t h e a t t o rn e y, e v e nw he re t he a t to rne y is no t a w a re o f h is c lien t ' s p urp o se . The reasonfor the rule is that it is no t w ith in the p ro fessio na l c ha ra c ter of ala w yer to g ive a d v ised on the c om m ission o f c rim e . Professionalresponsibility does not countenance the use of the attorney-clientprivilege as a subterfuge, and all conspiracies, either active or

passive, which are calculated to hinder the administration of justicewill vitiate the privilege. In some jurisdictions, however, thisexception to the rule of privilege in confined to such intended actsin violation of the law as are mala in se, as distinguished from thosewhich are merely mala prohibita.

395. Communication in contemplation of crime.

Communications between attorney and client having to do withthe client's contemplated criminal acts, or in aid or furtherancethereof, are not covered by the cloak of privilege ordinarily existingin reference to communications between attorney and client. But,the mere charge of illegality, not supported by evidence, will notdefeat the privilege; there must be at least p rim a f a c ie evidencethat the illegality has some foundation in fact.

Underhill also states:

There are many other cases to the same effect, for the rule isp rost it u t ion o f t he hon orab le re l a t ion o f a t to rney a nd c lien t w ill no tb e p e rmit t ed und e r the g u ise o f p riv ileg e , and eve ry

c o m m u n ic a t io n m a d e t o a n a t t o r ne y b y a c lie n t f o r a c rim in a lp u rp ose i s a c on sp ira c y o r a t t em p t a t a c on sp ira c y w h ic h is no t on lyl awfu l t o d ivu lge , bu t wh ich the a t to rney unde r ce r t a inc irc um sta nc es m a y be b oun d to d isc lose a t onc e in the in t e re st o f

ju st ic e . In accordance with this rule, where a forged will or otherfalse instrument has come into possession of an attorney throughthe instrumentality of the accused, with the hope and expectationthat the attorney would take some action in reference thereto, and


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bec ause it cannot be the solicitor's business to further any criminalobject. I f t he c l i en t does no t avow h i s ob jec t , he r eposes noc o n f i d e n c e , for the state of facts which is the foundation of thesupposed confidenc e does not exist. The solicitor's advice isobtained by a fraud."

So, in Sta nd a rd F . Ins . C o . v . Sm ith ha rt (1919) 183 Ky 679, 211 SW 441,5 ALR 972, the c ourt said: "The reason of the principle which holdssuch communications not to be privileged is that it is not within theprofessional character of a lawyer to give advice upon suchsubjects, and that it is no part of the profession of an attorney orcounselor at law to be advising persons as to how they may commitcrimes or frauds, or how they may escape the consequences ofcontemplated crimes and frauds. If the crime or fraud has alreadybeen committed and finished, a client may advise with an attorney

in regard to it, and communicate with him freely, and thecommunications cannot be divulged as evidence without theconsent of the client, because it is a part of the business and duty ofthose engaged in the practice of the profession of law, whenemployed and relied upon for that purpose, to give advice to thosewho ha ve made infractions of the laws; and, to enable the attorneyto properly advise and to properly represent the client in court orwhen prosecutions are threatened, it is conducive to theadministration of justice that the c lient shall be free tocommunicate to his attorney all the facts within his knowledge, andthat he may be assured that a communication made by him shallnot be used to his prejudice."

The protec tion which the law affords to communications betweenattorney and client has reference to those which are legitimatelyand properly within the scope of a lawful employment, and doesnot extend to communications made in contemplation of a crime,or perpetration of a fraud. Strong v . A b n e r (1937) 368 Ky 502, 105 SW(2d) 599.

The c ourt in People v . Va n Alstine (1885) 57 Mic h 69, 23 NW 594, in

holding not privileged communications to an attorney having fortheir object the c ommunication of a crime, said: " The y then p a rt a keo f t h e n a t u re o f a c o n sp ira c y, o r a t t e m p t e d c o n sp ira c y, a n d it is n o ton ly l awfu l t o d ivu lge such communica t ions , bu t unde r ce r t a inc irc u m st a n c e s it m ig h t b e c o m e t h e d u t y o f t h e a t t o rn e y t o d o so . The inte re sts o f p ub lic just ic e re q uire tha t no suc h shield fro mm er it ed expo sure sha ll b e in t e rpo sed to p ro te c t a p e r son w ho t a kesc ou nse l ho w h e c a n sa fe ly c om m it a c rim e . The r e la t ion o f a t to rne y


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have his lips closed, and might place him in a very serious positionof being suspected to be a party to the fraud, and without hishaving an opportunity of exculpating himself . . . There is noprivilege in the case which I have suggested of a party consultinganother, a professional man, as to what may afterwards turn out to

be a crime or fraud, and the best mode of accomplishing it."

In G a rsid e v . O u t r a m (1856) 3 J ur NS (Eng) 39, although the questionof privilege a s to communications between attorney and c lient wasnot involved, the question directly involved being the competencyof a c lerk in a business establishment to testify as to c ertaininformation which he acquired while working in the establishment,the court strongly approved of a view as stated arguendo forplaintiff, in An ne sle y v . Anglesea (1743) 17 How St Tr (Eng) 1229, asfollows: "I shall claim leave to consider whether an attorney may be

examined as to any matter which came to his knowledge as anattorney. If he is employed as an attorney in any unlawful or wickedact, his duty to the public obliges him to disclose it; no privateobligations can dispense with that universal one which lies on everymember of society to discover every design which may be formed,contrary to the laws of society, to destroy the public welfare. For thisreason, I a p p reh end tha t if a sec re t w h ic h is c on t ra ry to the p ub licg oo d , suc h a s a d esig n to c om m it t rea son , murde r, o r p e r ju ry,c o m e s t o t h e k n o w le d g e o f a n a t t o rn e y, e v e n in a c a u se w h e re h eis c on c e rned , t he o b lig a t ion to th e p ub lic m ust d isp en se w ith thep riva t e o b lig a t ion to the c lien t ."

The court in M c M a n n u s v . State (1858) 2 Head (Tenn) 213, said; "Itwould be monstrous to hold that if counsel was asked and obtainedin reference to a contemplated crime that the lips of the attorneywould be sealed, when the facts might become important to theends of justice in the prosecution of crime. In such a case therelation cannot be taken to exist. Public policy would forbid it."

And the court in La n u m v . Patterson (1909) 151 Ill App 36, observedthat this rule was not in contravention of sound public policy, but on

the contrary, tended to the maintenance of a higher standard ofprofessional ethics by preventing the relation of attorney and clientfrom operating as a cloa k for fraud.

Communications of a client to an attorney are not privileged if theywere a request for advice as to how to commit a fraud, it being insuch a case not only the a ttorney's privilege, but his duty, to d isclosethe fac ts to the c ourt. W ill v . To rna b e lls & C o . (1907) 3 Porto Rico Fed


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Rep 125. The court said: "We say this notwithstanding the commentsof opposing counsel as to the indelicacy of his position because ofhis being now on the opposite side of the issue that arose as aconsequence of the communication he testifies about, and isinterested in the cause to the extent of a large contingent fee, as

he confesses."

The objec t of prohibiting the disclosure of confidentialcommunications is to protect the client, and not to make theattorney an accomplice or permit him to aid in the commission of acrime. Peo p le vs . Petersen (1901) 60 App Div 118, NYS 941.

The seal of personal confidence can never be used to cover atransaction which is in itself a crime. Peo p le v . Farmer (1909) 194 NY251, 87 NE 457.

As to d isclosing the identity of a client, 81 AM J UR 2d, Witnesses, 410 and411, pages 366-368, states:

410. Name or identity of client.

Disc lo sure o f a c lie nt 's id e nti ty is ne c e ssa ry p ro o f of th e e xiste nc e o fthe a t to rne y-c lien t re la t ionship a nd is no t p riv ileg ed informa t io n .

Thus, the attorney-client privilege is inapplicable even though theinformation was communicated confidentially to the attorney in hisprofessional capacity and, in some cases, in spite of the fact that

the attorney may have been sworn to secrecy, where an inquiry isdirec ted to a n attorney as to the name or identity of his client. Thisgeneral rule applies in c riminal cases, as well as in c ivil actions.Whe re a n und isc losed c lien t is a p a rty to a n a c t ion , t he o p p osingp a rt y h a s a rig h t t o k n o w w i th w h o m h e i s c o n t e n d in g o r w h o t h ere a l p a rty in inte re st is, if no t the no m ina l a d ve rsa ry .

411. Disclosure of identity of c lient as brea ch of confidentiality.

The revelation of the identification of a client is not usuallyconsidered privileged, except where so much has been divulgedwith regard to to legal services rendered or the a dvice sought, thatto reveal the client's name would be to disclose the wholerelationship and confidential communications. However, evenwhere the subject matter of the attorney-client relationship hasalready been revealed, the client's name has been deemedprivileged.


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Where d isclosure of the identity of a c lient might harm the c lient bybeing used against him under circumstances w h e re t h e re a re n ocoun te rva i l i ng f ac to r s , then the identity is protected by theattorney-client privilege.

In criminal proceedings, a client's name may be privileged ifinformation already obtained by the tribunal, combined with theclient's identity, might expose him to criminal prosecution for actssubsequent to, and bec ause of, which he had sought the advice ofhis attorney.

Although as a general rule, the identity of a defendant in a criminalprosecution is a matter of public record and, thus, not covered bythe a ttorney-client privilege, where the a ttorney has surrendered tothe authorities physical evidence in his possession by way of the

attorney-client relationship, the state must prove the connectionbetween the piece of physical evidence and the defendantwithout in any way relying on the testimony of the client's attorneywho initially rec eived the evidenc e and, thus, the attorney may notbe called to the stand and asked to disclose the identity of theclient. However, an attorney cannot refuse to reveal the identity ofa person who asked him to deliver stolen property to the policedepartment, whether a bona fide attorney-client relationship existsbetween them, inasmuch as the transaction was not a legal serviceor done in the attorney's professional capacity.

Distinc tion : Where an attorney was informed by a maleclient that his female acquaintance was possiblyinvolved in [a] his-and-run accident, the identity of thefemale did not come within scope of attorney-clientprivilege although the identity of the male client wasprotec ted. (emphases supplied)

WIGMORE explains why the identity of a client is not within the lawyer-c lient privilege in this manner:

2313. Id e nt ity o f c lien t o r p urp o se o f su it . The identity of theattorney's client or the name of the real party in interest will seldombe a matter communicated in confidence because the procedureof litigation ordinarily presupposes a disclosure of these facts.Furthermore, so far as a client may in fact desire secrec y and maybe able to secure action without appearing as a party to theproceedings, it would be improper to sanction such a wish. Everylit ig a nt is in just ic e en t it le d to know the id e nt ity o f h is o p p o ne nts . He


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c a n n o t b e o b lig e d t o st ru g g l e in t h e d a rk a g a in st u n kn o w n f o rc e s .He has by anticipation the right, in later proceedings, if desired, toenforce the lega l responsibility of those who may have maliciouslysued or prosecuted him or fraudulently evaded his claim. He has asmuch right to a sk the attorney "Who fees your fee?" as to a sk the

witness (966 sup ra ). "Who maintains you during this trial?" upon theanalogy of the principle already examined (2298 sup ra ), theprivilege c annot be used to evade a client's responsibility for theuse of legal process. An d if it is ne c essa ry for the p urp o se to m a ke ap la in e x c e p t io n t o t h e ru le o f c o n f id e n c e , t h e n it m u st b e m a d e .(Wigmore on Evidence, vol. 8, (1961), p. 609; emphases supplied).

In 114 ALR, 1322, we also find the following statement:

1. N a m e o r id e n t it y .

As is indicated in 28 R.C .L. p. 563, it appears that the rule makingcommunications between attorney and client privileged fromdisclosure ordinarily does not apply where the inquiry is confined tothe fact of the attorney's employment and the name of the personemploying him, since the privilege presupposes the relationship ofclient and a ttorney, and therefore does not attach to its crea tion.

At the present stage of the proceedings below, the petitioners have notshown that they are so situated with respect to their principals as to bringthem within any of the exceptions established by American jurisprudenc e.

There will be full opportunity for them to establish that fac t at the trialwhere the broader perspectives of the case shall have been presentedand can be better appreciated by the court. The insistence for theirexclusion from the case is understandable, but the rea sons for the hastyresolution desired is naturally suspec t.

We do not even have to go beyond our shores for an authority that thelawyer-client privilege cannot be invoked to prevent the disclosure of ac lient's identity where the lawyer and the c lient are c onspirators in thecommission of a crime or a fraud. Under our jurisdiction, lawyers are

manda ted not to counsel or abet ac tivities aimed a t defiance of the lawor at lessening c onfidenc e in the legal system (Rule 1.02, Canon 1, Codeof Professional Responsibility) and to employ only fair and honest means toattain the lawful objectives of his client (Rule 19.01, Canon 19, Id .). Andunder the Canons of Professional Ethics, a lawyer must steadfastly bear inmind that his great trust is to be performed within and not without thebounds of the law (Canon 15, Id .), that he advances the honor of hisprofession and the best interest of his client when he renders service or


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gives advice tending to impress upon the c lient and his undertaking exactcompliance with the strictest principles of moral law (Canon 32, Id .). Thesecanons strip a lawyer of the lawyer-client privilege whenever he c onspireswith the c lient in the c ommission of a crime or a fraud.

I then vote to DENY, for want of merit, the instant petition.

Na rva sa , C .J. a nd Reg a la d o , J. , concur.

PUNO, J. , dissenting:

This is an important petition for c e rt io ra ri to annul the resolutions of therespondent Sa n d ig a n b a y a n denying petitioners' motion to be excludedfrom the Complaint for recovery of alleged ill-gotten wealth on theprincipal ground that as lawyers they cannot be ordered to reveal theidentity of their client.

First, we fast forward the facts. The Presidential C ommission on G oodGovernment (PCGG) filed Civil Case No. 33 before the Sa n d ig a n b a y a n aga inst Edua rdo M. Cojuangc o, J r., for the rec overy of alleged ill-gottenwealth. Sued as co-defendants are the petitioners in the cases at bar lawyers Teodoro Regala, Edgardo J . Angara, Avelino V. Cruz, J oseConcepcion, Rogelio A. Vinluan, Victor P. Lazatin, Eduardo Escueta andParaja Hayudini. Also included as a co-defendant is lawyer Raul Roco,now a duly elected senator of the Republic. All co-defendants were thenpartners of the law firm, Angara, Abello, Concepcion, Regala and Cruz

Law Offices, better known as the ACCRA Law Firm. The C omplaint againstCojuangc o, J r., and the petitioners alleged, int e r alia , v iz :

xxx xxx xxx

The wrongs committed by defendants ac ting singly or collec tivelyand in unlawful concert with one another, include themisappropriation and theft of public funds, plunder of the nation'swealth, extortion, blackmail, bribery, embezzlement and other actsof c orruption, betrayal of public trust and brazen abuse of power asmore fully described (in the subsequent paragraphs of thecomplaint), all at the expense and to the grave and irreparableda mage of Plaintiff and the Filipino people.

Defendants Eduardo Cojuangc o, J r., Edgardo J . Angara, J ose C .Concepcion, Teodoro D. Regala, Avelino V. Cruz, Regalio A.Vinluan, Eduardo U. Escueta, Paraja G. Hayudini and Raul S. Rocoof Angara, Concepcion, Cruz, Regala, and Abello law offices


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(ACCRA) plotted, devised, schemed, conspired and confederatedwith each other in setting up, through the use of the coconut levyfunds, the financial and corporate framework and structures thatled to the establishment of UCPB, UNICOM, COCOLIFE,COCOMARK, CIC and more than twenty other coconut levy

funded corporations, including the acquisition of the San MiguelCorporation shares and the institutionalization through presidentialdirectives of the coconut monopoly. through insidious means andmachinations, AC CRA, using its wholly-owned investment arm,ACCRA Investments Corporation, became the holder ofapproximately fifteen million shares representing roughly 3.3% of thetotal outstanding c apital stoc k of UCPB as of 31 March 1987. Thisranks AC CRA Investments Corporation number 44 among the top100 biggest stoc kholders of UCPB which has approximately1,400,000 shareholders. On the other hand, corporate books show

the name Edgardo J . Angara as holding approximately 3,744 sharesas of 7 J une 1984.

In their Answer, petitioners alleged that the legal services offered andmade available by their firm to its c lients include: (a) organizing andacquiring business orga nizations, (b) a c ting as incorporators orstockholders thereof, and (c) delivering to clients the correspondingdocuments of their equity holdings ( i .e ., certificates of stock endorsed inblank or blank deeds of trust or assignment). They claimed that theiractivities were "in furtherance of legitimate lawyering."

In the c ourse of the proceed ings in the Sandiganbayan, the PC GG filed aMotion to Admit Third Amended C omplaint and the Third AmendedComplaint excluding lawyer Roco as party defendant. Lawyer Roco wasexcluded on the basis of his promise to reveal the identity of the principalsfor whom he acted as nominee/stockholder in the companies involved inthe c ase.

The Sandiganbayan ordered petitioners to comment on the motion. Intheir Comment, petitioners demanded that they be extended the sameprivilege as their co-defendant Roco. They prayed for their exclusion from

the complaint. PCGG agreed but set the following c onditions: (1)disclosure of the identity of their client; (2) submission of documentssubstantiating their lawyer-client relationship; and (3) submission of thedeeds of assignment petitioners executed in favor of their client coveringtheir respective shareholdings. The same conditions were imposed onlawyer Roco.


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Petitioners refused to c omply with the PC GG conditions contending thatthe attorney-client privilege gives them the right not to reveal the identityof their client. They also alleged that lawyer Roco was excluded thoughhe did not in fac t reveal the identity of his c lients. On March 18, 1992, theSandiganba yan denied the exclusion of petitioners in Case No. 33. It held:

xxx xxx xxx

AC CRA lawyers may take the heroic stanc e of not revea ling theidentity of the client for whom they have acted, i .e ., their principa l,and that will be their choice. But until they do identify their clients,considerations of whether or not the privilege claimed by theAC CRA lawyers exists cannot even begin to the deba

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