8.

Regala vs SandiganBayan, 262 SCRA 112 (1996)

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,

KAPUNAN, J.:

These case touch the very cornerstone of every State's judicial system, upon which the workings of the contentious and
adversarial system in the Philippine legal process are based — the sanctity of fiduciary duty in the client-lawyer relationship.
The fiduciary duty of a counsel and advocate is also what makes the law profession a unique position of trust and confidence,
which distinguishes it from any other calling. In this instance, we have no recourse but to uphold and strengthen the mantle of
protection accorded to the confidentiality that proceeds 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 July 31, 1987 before the Sandiganbayan by the
Republic of the Philippines, through the Presidential Commission on Good Government against Eduardo M. Cojuangco, Jr., as
one of the principal defendants, for the recovery of alleged ill-gotten wealth, which includes shares of stocks in the named
corporations in PCGG Case No. 33 (Civil Case No. 0033), entitled "Republic of the Philippines versus Eduardo Cojuangco, et al."1

Among the dependants named in the case are herein petitioners Teodoro Regala, Edgardo J. Angara, Avelino V. Cruz, Jose C.
Concepcion, Rogelio A. Vinluan, Victor P. Lazatin, Eduardo U. Escueta and Paraja G. Hayudini, and herein private respondent
Raul S. Roco, who all were then partners of the law firm Angara, Abello, Concepcion, Regala and Cruz Law Offices (hereinafter
referred to as the ACCRA Law Firm). ACCRA Law Firm performed legal services for its clients, which included, among others,
the organization and acquisition of business associations and/or organizations, with the correlative and incidental services
where its members acted as incorporators, or simply, as stockholders. More specifically, in the performance of these services,
the members of the law firm delivered to its client documents which substantiate the client's equity holdings, i.e., stock
certificates endorsed in blank representing the shares registered in the client's name, and a blank deed of trust or assignment
covering said shares. In the course of their dealings with their clients, the members of the law firm acquire information
relative to the assets of clients as well as their personal and business circumstances. As members of the ACCRA Law Firm,
petitioners and private respondent Raul Roco admit that they assisted in the organization and acquisition of the companies
included in Civil Case No. 0033, and in keeping with the office practice, ACCRA lawyers acted as nominees-stockholders 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 Third Amended Complaint" and "Third Amended Complaint" which excluded private respondent Raul
S. Roco from the complaint in PCGG Case No. 33 as party-defendant.3Respondent PCGG based its exclusion of private
respondent Roco as party-defendant on his undertaking that he will reveal the identity of the principal/s for whom he acted as
nominee/stockholder in the companies involved in PCGG Case No. 33.4

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

14. Defendants Eduardo Cojuangco, Jr., Edgardo J. Angara, Jose C. Concepcion, Teodoro Regala, Avelino V.
Cruz, Rogelio A. Vinluan, Eduardo U. Escueta, Paraja G. Hayudini and Raul Roco of the Angara Concepcion
Cruz Regala and Abello law offices (ACCRA) plotted, devised, schemed conspired and confederated with each
other in setting up, through the use of the coconut levy funds, the financial and corporate framework and
structures that led to the establishment of UCPB, UNICOM, COCOLIFE, COCOMARK, CIC, and more than twenty
other coconut levy funded corporations, including the acquisition of San Miguel Corporation shares and its
institutionalization through presidential directives of the coconut monopoly. Through insidious means and
machinations, ACCRA, being the wholly-owned investment arm, ACCRA Investments Corporation, became the
holder of approximately fifteen million shares representing roughly 3.3% of the total outstanding capital
stock of UCPB as of 31 March 1987. This ranks ACCRA Investments Corporation number 44 among the top
100 biggest stockholders of UCPB which has approximately 1,400,000 shareholders. On the other hand,
corporate books show the name Edgardo J. Angara as holding approximately 3,744 shares as of February,
1984.5

Page 1 of 11
In their answer to the Expanded Amended Complaint, petitioners ACCRA lawyers alleged that:

4.4 Defendants-ACCRA lawyers' participation in the acts with which their codefendants are charged, was in
furtherance of legitimate lawyering.

4.4.1 In the course of rendering professional and legal services to clients, defendants-ACCRA
lawyers, Jose C. Concepcion, Teodoro D. Regala, Rogelio A. Vinluan and Eduardo U. Escueta,
became holders of shares of stock in the corporations listed under their respective names in
Annex "A" of the expanded Amended Complaint as incorporating or acquiring stockholders
only and, as such, they do not claim any proprietary interest in the said shares of stock.

4.5 Defendant ACCRA-lawyer Avelino V. Cruz was one of the incorporators in 1976 of Mermaid Marketing
Corporation, which was organized for legitimate business purposes not related to the allegations of the
expanded Amended Complaint. However, he has long ago transferred any material interest therein and
therefore denies that the "shares" appearing in his name in Annex "A" of the expanded Amended Complaint
are his assets.6

Petitioner Paraja Hayudini, who had separated from ACCRA law firm, filed a separate answer denying the allegations in the
complaint implicating him in the alleged ill-gotten wealth.7

Petitioners ACCRA lawyers subsequently filed their "COMMENT AND/OR OPPOSITION" dated October 8, 1991 with Counter-
Motion that respondent PCGG similarly grant the same treatment to them (exclusion as parties-defendants) as accorded
private respondent Roco.8 The Counter-Motion for dropping petitioners from the complaint was duly set for hearing on
October 18, 1991 in accordance with the requirements of Rule 15 of the Rules of Court.

In its "Comment," respondent PCGG set the following conditions precedent for the exclusion of petitioners, namely: (a) the
disclosure of the identity of its clients; (b) submission of documents substantiating the lawyer-client relationship; and (c) the
submission of the deeds of assignments petitioners executed in favor of its client covering their respective
shareholdings.9

Consequently, respondent PCGG presented supposed proof to substantiate compliance by private respondent Roco of the
conditions precedent to warrant the latter's exclusion as party-defendant in PCGG Case No. 33, to wit: (a) Letter to respondent
PCGG of the counsel of respondent Roco dated May 24, 1989 reiterating a previous request for reinvestigation by the PCGG in
PCGG Case No. 33; (b) Affidavit dated March 8, 1989 executed by private respondent Roco as Attachment to the letter
aforestated in (a); and (c) Letter of the Roco, Bunag, and Kapunan Law Offices dated September 21, 1988 to the respondent
PCGG in behalf of private respondent Roco originally requesting the reinvestigation and/or re-examination of the evidence of
the PCGG against Roco in its Complaint in PCGG Case No. 33. 10

It is noteworthy that during said proceedings, private respondent Roco did not refute petitioners' contention that he did
actually not reveal the identity of the client involved in PCGG Case No. 33, nor had he undertaken to reveal the identity of the
client for whom he acted as nominee-stockholder. 11

On March 18, 1992, respondent Sandiganbayan promulgated the Resolution, herein questioned, denying the exclusion of
petitioners in PCGG Case No. 33, for their refusal to comply with the conditions required by respondent PCGG. It held:

xxx xxx xxx

ACCRA lawyers may take the heroic stance of not revealing the identity 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 the ACCRA lawyers exists cannot even begin to be debated. The
ACCRA lawyers cannot excuse themselves from the consequences of their acts until they have begun to
establish the basis for recognizing the privilege; the existence and identity of the client.

This is what appears to be the cause for which they have been impleaded by the PCGG as defendants herein.

5. The PCGG is satisfied that defendant Roco has demonstrated his agency and that Roco has apparently
identified his principal, which revelation could show the lack of cause against him. This in turn has allowed
the PCGG to exercise its power both under the rules of Agency and under Section 5 of E.O. No. 14-A in relation
to the Supreme Court's ruling in Republic v. Sandiganbayan (173 SCRA 72).

The PCGG has apparently offered to the ACCRA lawyers the same conditions availed of by Roco; full disclosure
in exchange for exclusion from these proceedings (par. 7, PCGG's COMMENT dated November 4, 1991). The
ACCRA lawyers have preferred not to make the disclosures required by the PCGG.

The ACCRA lawyers cannot, therefore, begrudge the PCGG for keeping them as party defendants. In the same
vein, they cannot compel the PCGG to be accorded the same treatment accorded to Roco.

Neither can this Court.

Page 2 of 11
 WHEREFORE, the Counter Motion dated October 8, 1991 filed by the ACCRA lawyers and joined in by Atty.
Paraja G. Hayudini for the same treatment by the PCGG as accorded to Raul S. Roco is DENIED for lack of
merit. 12

ACCRA lawyers moved for a reconsideration of the above resolution but the same was denied by the respondent
Sandiganbayan. Hence, the ACCRA lawyers filed the petition for certiorari, docketed as G.R. No. 105938, invoking the following
grounds:

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

II

The Honorable Sandiganbayan committed grave abuse of discretion in not considering petitioners ACCRA
lawyers and Mr. Roco as similarly situated and, therefore, deserving of equal treatment.

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

2. Even assuming that Mr. Roco had revealed, or had undertaken to reveal, the identities of
the client(s), the disclosure does not constitute a substantial distinction as would make the
classification reasonable under the equal protection clause.

3. Respondent Sandiganbayan sanctioned favoritism and undue preference in favor of Mr.

III

The Honorable Sandiganbayan committed grave abuse of discretion in not holding that, under the facts of this
case, the attorney-client privilege prohibits petitioners ACCRA lawyers from revealing the identity of their
client(s) and the other information requested by the PCGG.

1. Under the peculiar facts of this case, the attorney-client privilege includes the identity of
the client(s).

2. The factual disclosures required by the PCGG are not limited to the identity of petitioners
ACCRA lawyers' alleged client(s) but extend to other privileged matters.

IV

The Honorable Sandiganbayan committed grave abuse of discretion in not requiring that the dropping of
party-defendants by the PCGG must be based on reasonable and just grounds and with due consideration to
the constitutional right of petitioners ACCRA lawyers to the equal protection of the law.

Petitioner Paraja G. Hayudini, likewise, filed his own motion for reconsideration of the March 18, 1991 resolution which was
denied by respondent Sandiganbayan. Thus, he filed a separate petition for certiorari, docketed as G.R. No. 108113, assailing
respondent Sandiganbayan's resolution on essentially the same grounds averred by petitioners in G.R. No. 105938.

Petitioners contend that the exclusion of respondent Roco as party-defendant in PCGG Case No. 33 grants him a favorable
treatment, on the pretext of his alleged undertaking to divulge the identity of his client, giving him an advantage over them
who are in the same footing as partners in the ACCRA law firm. Petitioners further argue that even granting that such an
undertaking has been assumed by private respondent Roco, they are prohibited from revealing the identity of their principal
under their sworn mandate and fiduciary duty as lawyers to uphold at all times the confidentiality of information obtained
during such lawyer-client relationship.

Respondent PCGG, through its counsel, refutes petitioners' contention, alleging that the revelation of the identity of the client
is not within the ambit of the lawyer-client confidentiality privilege, nor are the documents it required (deeds of assignment)
protected, because they are evidence of nominee status. 13

In his comment, respondent Roco asseverates that respondent PCGG acted correctly in excluding him as party-defendant
because he "(Roco) has not filed an Answer. PCGG had therefore the right to dismiss Civil Case No.0033 as to Roco 'without an
order of court by filing a notice of dismissal'," 14 and he has undertaken to identify his principal. 15

Petitioners' contentions are impressed with merit.

Page 3 of 11
It is quite apparent that petitioners were impleaded by the PCGG as co-defendants to force them to disclose the identity of
their clients. Clearly, respondent PCGG is not after petitioners but the "bigger fish" as they say in street parlance. This ploy is
quite clear from the PCGG's willingness to cut a deal with petitioners — the names of their clients in exchange for exclusion
from the complaint. The statement of the Sandiganbayan in its questioned resolution dated March 18, 1992 is explicit:

ACCRA lawyers may take the heroic stance of not revealing the identity 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 the ACCRA lawyers exists cannot even begin to be debated. The
ACCRA lawyers cannot excuse themselves from the consequences of their acts until they have begun to establish
the basis for recognizing the privilege; the existence and identity of the client.

This is what appears to be the cause for which they have been impleaded by the PCGG as defendants herein.
(Emphasis ours)

In a closely related case, Civil Case No. 0110 of the Sandiganbayan, Third Division, entitled "Primavera Farms, Inc., et al. vs.
Presidential Commission on Good Government" respondent PCGG, through counsel Mario Ongkiko, manifested at the hearing
on December 5, 1991 that the PCGG wanted to establish through the ACCRA that their "so called client is Mr. Eduardo
Cojuangco;" that "it was Mr. Eduardo Cojuangco who furnished all the monies to those subscription payments in corporations
included in Annex "A" of the Third Amended Complaint; that the ACCRA lawyers executed deeds of trust and deeds of
assignment, some in the name of particular persons; some in blank.

We quote Atty. Ongkiko:

ATTY. ONGKIKO:

With the permission of this Hon. Court. I propose to establish through these ACCRA lawyers that, one, their
so-called client is Mr. Eduardo Cojuangco. Second, it was Mr. Eduardo Cojuangco who furnished all the monies
to these subscription payments of these corporations who 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 claim that some of the shares are actually being held by the nominees for
the late President Marcos. Fourth, they also executed deeds of assignment and some of these assignments
have also blank assignees. Again, this is important to our claim that some of the shares are for Mr. Conjuangco
and some are for Mr. Marcos. Fifth, that most of thes e corporations 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 no permits from the
municipal authorities in Makati. Next, actually all their addresses now are care of Villareal Law Office. They
really have no address on records. These are some of the principal things that we would ask of these
nominees stockholders, as they called themselves. 16

It would seem that petitioners are merely standing in for their clients as defendants in the complaint. Petitioners are being
prosecuted solely on the basis of activities and services performed in the course of their duties as lawyers. Quite obviously,
petitioners' inclusion as co-defendants in the complaint is merely being used as leverage to compel them to name their clients
and consequently to enable the PCGG to nail these clients. Such being the case, respondent PCGG has no valid cause of action as
against petitioners and should exclude them from the Third Amended Complaint.

II

The nature of lawyer-client relationship is premised on the Roman Law concepts of locatio conductio operarum(contract of
lease of services) where one person lets his services and another hires them without reference to the object of which the
services are to be performed, wherein lawyers' services may be compensated by honorarium or for
hire, 17 and mandato (contract of agency) wherein a friend on whom reliance could be placed makes a contract in his name, but
gives up all that he gained by the contract to the person who requested him. 18 But the lawyer-client relationship is more than
that of the principal-agent and lessor-lessee.

In modern day perception of the lawyer-client relationship, an attorney is more than a mere agent or servant, because he
possesses special powers of trust and confidence reposed on him by his client. 19 A lawyer is also as independent as the judge
of the court, thus his powers are entirely different from and superior to those of an ordinary agent. 20 Moreover, an attorney
also occupies what may be considered as a "quasi-judicial office" since he is in fact an officer of the Court 21 and exercises his
judgment in the choice of courses of action to be taken favorable to his client.

Thus, in the creation of lawyer-client relationship, there are rules, ethical conduct and duties that breathe life into it, among
those, the fiduciary duty to his client which is of a very delicate, exacting and confidential character, requiring a very high
degree of fidelity and good faith, 22 that is required by reason of necessity and public interest 23 based on the hypothesis that
abstinence from seeking legal 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 that distinguishes him from any other professional
in society. This conception is entrenched and embodies centuries of established and stable
tradition. 25 In Stockton v. Ford,26 the U. S. Supreme Court held:

There are few of the business relations of life involving a higher trust and confidence than that of attorney
and client, or generally speaking, one more honorably and faithfully discharged; few more anxiously guarded

Page 4 of 11
 by the law, or governed by the sterner principles of morality and justice; and it is the duty of the court to
administer them in a corresponding spirit, and to be watchful and industrious, to see that confidence thus
reposed shall not be used to the detriment or prejudice of the rights of the party bestowing it. 27

In our jurisdiction, this privilege takes off from the old Code of Civil Procedure enacted by the Philippine Commission on
August 7, 1901. Section 383 of the Code specifically "forbids counsel, without authority of his client to reveal any
communication made by the client to him or his advice given thereon in the course of professional employment." 28Passed on
into various provisions of the Rules of Court, the attorney-client privilege, as currently worded provides:

Sec. 24. Disqualification by reason of privileged communication. — The following persons cannot testify as to
matters learned in confidence in the following cases:

xxx xxx xxx

An attorney cannot, without the consent of his client, be examined as to any communication made by the
client to him, or his advice given thereon in the course of, or with a view to, professional employment, can an
attorney's secretary, stenographer, or clerk be examined, without the consent of the client and his employer,
concerning any fact the knowledge of which has been acquired in such capacity. 29

Further, Rule 138 of the Rules of Court states:

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

This duty is explicitly mandated in Canon 17 of the Code of Professional Responsibility which provides that:

Canon 17. A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence
reposed in him.

Canon 15 of the Canons of Professional Ethics also demands a lawyer's fidelity to client:

The lawyers owes "entire devotion to the interest of the client, warm zeal in the maintenance and defense of
his rights and the exertion of his utmost learning and ability," to the end that nothing be taken or be withheld
from him, save by the rules of law, legally applied. No fear of judicial disfavor or public popularity should
restrain him from the full discharge of his duty. In the judicial forum the client is entitled to the benefit of any
and every remedy and defense that is authorized by the law of the land, and he may expect his lawyer to
assert every such remedy or defense. But it is steadfastly to be borne in mind that the great trust of the
lawyer is to be performed within and not without the bounds of the law. The office of attorney does not
permit, much less does it demand of him for any client, violation of law or any manner of fraud or chicanery.
He must obey his own conscience and not that of his client.

Considerations favoring confidentially in lawyer-client relationships are many and serve several constitutional and policy
concerns. In the constitutional sphere, the privilege gives flesh to one of the most sacrosanct rights available to the accused,
the right to counsel. If a client were made to choose between legal representation without effective communication and
disclosure and legal representation with all his secrets revealed then he might be compelled, in some instances, to either opt to
stay away from the judicial system or to lose the right to counsel. If the price of disclosure is too high, or if it amounts to self
incrimination, then the flow of information would be curtailed thereby rendering the right practically nugatory. The threat this
represents against another sacrosanct 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 the door to a whole spectrum of legal options
which would otherwise be circumscribed by limited information engendered by a fear of disclosure. An effective lawyer-client
relationship is largely dependent upon the degree of confidence which exists between lawyer and client which in turn requires
a situation which encourages a dynamic and fruitful exchange and flow of information. It necessarily follows that in order to
attain effective representation, the lawyer must invoke the privilege not as a matter of option but as a matter of duty and
professional responsibility.

The question now arises whether or not this duty may be asserted in refusing to disclose the name of petitioners' client(s) in
the case at bar. Under the facts and circumstances obtaining in the instant case, the answer must be in the affirmative.

As a matter of public policy, a client's identity should not be shrouded in mystery 30 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 the name or
identity of this client. 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 is sought to be protected is flesh and blood.

Second, the privilege begins to exist only after the attorney-client relationship has been established. The attorney-client
privilege does not attach until there is a client.

Page 5 of 11
Third, the privilege generally pertains to the subject matter of the relationship.

Finally, due process considerations require that the opposing party should, as a general rule, know his adversary. "A party
suing or sued is entitled to know who his opponent is." 32 He cannot be obliged to grope in the dark against unknown forces. 33

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

1) Client identity is privileged where a strong probability exists that revealing the client's name would implicate that client in
the very activity for which he sought the lawyer's advice.

In Ex-Parte Enzor, 34 a state supreme court reversed a lower court order requiring a lawyer to divulge the name of her client on
the ground that the subject matter of the relationship was so closely related to the issue of the client's identity that the
privilege actually attached to both. In Enzor, the unidentified client, an election official, informed his attorney in confidence
that he had been offered a bribe to violate election laws or that he had accepted a bribe to that end. In her testimony, the
attorney revealed that she had advised her client to count the votes correctly, but averred that she could not remember
whether her client had been, in fact, bribed. The lawyer was cited for contempt for her refusal to reveal his client's identity
before a grand jury. Reversing the lower court's contempt orders, the state supreme court held that under the circumstances
of the case, and under the exceptions described above, even the name of the client was privileged.

U .S. v. Hodge and Zweig,35 involved the same exception, i.e. that client identity is privileged in those instances where a strong
probability exists that the disclosure of the client's identity would implicate the client in the very criminal activity for which
the lawyer's legal advice was obtained.

The Hodge case involved federal grand jury proceedings inquiring into the activities of the "Sandino Gang," a gang involved in
the illegal importation of drugs in the United States. The respondents, law partners, represented key witnesses and suspects
including the leader of the gang, Joe Sandino.

In connection with a tax investigation in November of 1973, the IRS issued summons to Hodge and Zweig, requiring them to
produce documents and information regarding payment received by Sandino on behalf of any other person, and vice versa.
The lawyers refused to divulge the names. The Ninth Circuit of the United States Court of Appeals, upholding non-disclosure
under the facts and circumstances of the case, held:

A client's identity and the nature of that client's fee arrangements may be privileged where the person
invoking the privilege can show that a strong probability exists that disclosure of such information would
implicate that client in the very criminal activity for which legal advice was sought Baird v. Koerner, 279 F. 2d
at 680. While in Baird Owe enunciated this rule as a matter of California law, the rule also reflects federal law.
Appellants contend that the Baird exception applies to this case.

The Baird exception is entirely consonant with the principal policy behind the attorney-client privilege. "In
order to promote freedom of consultation of legal advisors by clients, the apprehension of compelled
disclosure from the legal advisors must be removed; hence, the law must prohibit such disclosure except on
the client's consent." 8 J. Wigmore, supra sec. 2291, at 545. In furtherance of this policy, the client's identity
and the nature of his fee arrangements are, in exceptional cases, protected as confidential communications. 36

2) Where disclosure would open the client to civil liability; his identity is privileged. For instance, the peculiar facts and
circumstances of Neugass v. Terminal Cab Corporation,37 prompted the New York Supreme Court to allow a lawyer's claim to
the effect that he could not reveal the name of his client because this would expose the latter to civil litigation.

In the said case, Neugass, the plaintiff, suffered injury when the taxicab she was riding, owned by respondent corporation,
collided with a second taxicab, whose owner was unknown. Plaintiff brought action both against defendant corporation and
the owner of the second cab, identified in the information only as John Doe. It turned out that when the attorney of defendant
corporation appeared on preliminary examination, the fact was somehow revealed that the lawyer came to know the name of
the owner of the second cab when a man, a client of the insurance company, prior to the institution of legal action, came to him
and reported that he was involved in a car accident. It was apparent under the circumstances that the man was the owner of
the second cab. The state supreme court held that the reports were clearly made to the lawyer in his professional capacity. The
court said:

That his employment came about through the fact that the insurance company had hired him to defend its
policyholders seems immaterial. The attorney is such cases is clearly the attorney for the policyholder when
the policyholder goes to him to report an occurrence contemplating that it would be used in an action or
claim against him. 38

xxx xxx xxx

All communications made by a client to his counsel, for the purpose of professional advice or assistance, are
privileged, whether they relate to a suit pending or contemplated, or to any other matter proper for such
advice or aid; . . . And whenever the communication made, relates to a matter so connected with the
employment as attorney or counsel as to afford presumption that it was the ground of the address by the
client, then it is privileged from disclosure. . .

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 It appears . . . that the name and address of the owner of the second cab came to the attorney in this case as a
confidential communication. His client is not seeking to use the courts, and his address cannot be disclosed on
that theory, nor is the present action pending against him as service of the summons on him has not been
effected. The objections on which the court reserved decision are sustained. 39

In the case of Matter of Shawmut Mining Company,40 the lawyer involved was required by a lower court to disclose whether he
represented certain clients in a certain transaction. The purpose of the court's request was to determine whether the unnamed
persons as interested parties were connected with the purchase of properties involved in the action. The lawyer refused and
brought the question to the State Supreme Court. Upholding the lawyer's refusal to divulge the names of his clients the court
held:

If it can compel the witness to state, as directed by the order appealed from, that he represented certain
persons in the purchase or sale of these mines, it has made progress in establishing by such evidence their
version of the litigation. As already suggested, 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 such employment as such attorney, he knew that they were interested in certain transactions. We
feel sure that under such conditions no case has ever gone to the length of compelling an attorney, at the
instance of a hostile litigant, to disclose not only his retainer, but the nature of the transactions to which it
related, when such information could be made the basis of a suit against his client. 41

3) Where the government's lawyers have no case against an attorney's client unless, by revealing the client's name, the said
name would furnish the only link that would form the chain of testimony necessary to convict an individual of a crime, the
client's name is privileged.

In Baird vs. Korner,42 a lawyer was consulted by the accountants and the lawyer of certain undisclosed taxpayers regarding
steps to be taken to place the undisclosed taxpayers in a favorable position in case criminal charges were brought against them
by the U.S. Internal Revenue Service (IRS).

It appeared that the taxpayers' returns of previous years were probably incorrect and the taxes understated. The clients
themselves were unsure about whether or not they violated tax laws and sought advice from Baird on the hypothetical
possibility that they had. No investigation was then being undertaken by the IRS of the taxpayers. Subsequently, the attorney
of the taxpayers delivered to Baird the sum of $12, 706.85, which had been previously assessed as the tax due, and another
amount of money representing his fee for the advice 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 other clients 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 IRS summons. For Baird's repeated refusal to name his clients he was found guilty of civil contempt. The
Ninth Circuit Court of Appeals held that, a lawyer could not be forced to reveal the names of clients who employed him to pay
sums of money to the government voluntarily in settlement of undetermined income taxes, unsued on, and with no
government audit or investigation into that client's income tax liability pending. The court emphasized the exception that a
client's name is privileged when so much has been revealed concerning the legal services rendered that the disclosure of the
client's identity exposes him to possible investigation and sanction by government agencies. The Court held:

The facts of the instant case bring it squarely within that exception to the general rule. Here money was
received by the government, paid by persons who thereby admitted they had not paid a sufficient amount in
income taxes some one or more years in the past. The names of the clients are useful to the government for
but one purpose — to ascertain which taxpayers think they were delinquent, so that it may check the records
for that one year or several years. The voluntary nature of the payment indicates a belief by the taxpayers
that more taxes or interest or penalties are due than the sum previously paid, if any. It indicates a feeling of
guilt for nonpayment of taxes, though whether it is criminal guilt is undisclosed. 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 the attorney 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 could qualify as exceptions to the general rule.

For example, the content of any client communication to a lawyer lies within the privilege if it is relevant to the subject matter
of the legal problem on which the client seeks legal assistance. 44 Moreover, where the nature of the attorney-client
relationship has been previously disclosed and it is the identity which is intended to be confidential, the identity of the client has
been held to be privileged, since such revelation would otherwise result in disclosure of the entire transaction. 45

Summarizing these exceptions, information relating to the identity of a client may fall within the ambit of the privilege when
the client's name itself has an independent significance, such that disclosure would then reveal client confidences. 46

The circumstances involving the engagement of lawyers in the case at bench, therefore, clearly reveal that the instant case falls
under at least two exceptions to the general rule. First, disclosure of the alleged client's name would lead to establish said
client's connection with the very fact in issue of the case, which is privileged information, because the privilege, as stated
earlier, protects the subject matter or the substance (without which there would be not attorney-client relationship).

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The link between the alleged criminal offense and the legal advice or legal service sought was duly establishes in the case at
bar, by no less than the PCGG itself. The key lies in the three specific conditions laid down by the PCGG which constitutes
petitioners' ticket to non-prosecution should they accede thereto:

(a) the disclosure of the identity of its clients;

(b) submission of documents substantiating the lawyer-client relationship; and

(c) the submission of the deeds of assignment petitioners executed in favor of their clients covering their
respective shareholdings.

From these conditions, particularly the third, we can readily deduce that the clients indeed consulted the petitioners, in their
capacity as lawyers, regarding the financial and corporate structure, framework and set-up of the corporations in question. In
turn, petitioners gave their professional advice in the form of, among others, the aforementioned deeds of assignment covering
their client's shareholdings.

There is no question that the preparation of the aforestated documents was part and parcel of petitioners' legal service to their
clients. More important, it constituted an integral part of their duties as lawyers. Petitioners, therefore, have a legitimate fear
that identifying their clients would implicate them in the very activity for which legal advice had been sought, i.e., the alleged
accumulation of ill-gotten wealth in the aforementioned corporations.

Furthermore, under the third main exception, revelation of the client's name would obviously provide the necessary link for
the prosecution to build its case, where none otherwise exists. It is the link, in the words of Baird, "that would inevitably form
the chain of testimony necessary to convict the (client) of a . . . crime." 47

An important distinction must be made between a case where a client takes on the services of an attorney for illicit purposes,
seeking advice about how to go around the law for the purpose of committing illegal activities and a case where a client thinks
he might have previously committed something illegal and consults his attorney about it. The first case clearly does not fall
within the privilege because the same cannot be invoked for purposes illegal. The second case falls within the exception
because whether or not the act for which the client sought advice turns out to be illegal, his name cannot be used or disclosed
if the disclosure leads to evidence, not yet in the hands of the prosecution, which might lead to possible action against him.

These cases may be readily distinguished, because the privilege cannot be invoked or used as a shield for an illegal act, as in
the first example; while the prosecution may not have a case against the client in the second example and cannot use the
attorney client relationship to build up a case against 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 the second has been stated in
the cases above discussed and are founded on the same policy grounds for which the attorney-client privilege, in general,
exists.

In Matter of Shawmut Mining Co., supra, the appellate court therein stated that "under such conditions no case has ever yet
gone to the length of compelling an attorney, at the instance of a hostile litigant, to disclose not only his retainer, but the nature
of the transactions to which it related, when such information could be made the basis of a suit against his
client." 49 "Communications made to 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 the relation in which the parties stand to each other, are under the
seal of confidence and entitled to protection as privileged communications."50 Where the communicated information, which
clearly falls within the privilege, would suggest possible criminal activity but there would be not much in the information
known to the prosecution which would sustain a charge except that revealing the name of the client would open up other
privileged information which would substantiate the prosecution's suspicions, then the client's identity is so inextricably
linked to the subject matter itself that it falls within the protection. The Baird exception, applicable to the instant case, is
consonant with the principal policy behind the privilege, i.e., that for the purpose of promoting freedom of consultation of legal
advisors by clients, apprehension of compelled disclosure from attorneys must be eliminated. This exception has likewise been
sustained in In re Grand Jury Proceedings51 and Tillotson v. Boughner.52 What these cases unanimously seek to avoid is the
exploitation of the general rule in what may amount to a fishing expedition by the prosecution.

There are, after all, alternative source of information available to the prosecutor which do not depend on utilizing a
defendant's counsel as a convenient and readily available source of information in the building of a case against the latter.
Compelling disclosure of the client's name in circumstances such as the one which exists in the case at bench amounts to
sanctioning fishing expeditions by lazy prosecutors and litigants which we cannot and will not countenance. When the nature
of the transaction would be revealed by disclosure of an attorney's retainer, such retainer is obviously protected by the
privilege. 53 It follows that petitioner attorneys in the instant case owe their client(s) a duty and an obligation not to disclose
the latter's identity which in turn requires them to invoke the privilege.

In fine, the crux of petitioners' objections ultimately hinges on their expectation that if the prosecution has a case against their
clients, the latter's case should be built upon evidence painstakingly gathered by them from their own sources and not 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 name and nature of transaction is so
intimate in this case the it would be difficult to simply dissociate one from the other. In this sense, the name is as much
"communication" as information revealed directly about the transaction in question itself, a communication which is clearly
and distinctly privileged. A lawyer cannot reveal such communication without exposing himself to charges of violating a
principle which forms the bulwark of the entire attorney-client relationship.

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The uberrimei fidei relationship between a lawyer and his client therefore imposes a strict liability for negligence on the
former. The ethical duties owing to the client, including confidentiality, loyalty, competence, diligence as well as the
responsibility to keep clients informed and protect their rights to make decisions have been zealously sustained. In Milbank,
Tweed, Hadley and McCloy v. Boon,54 the US Second District Court rejected the plea of the petitioner law firm that it breached
its fiduciary duty to its client by helping the latter's former agent in closing a deal for the agent's benefit only after its client
hesitated in proceeding with the transaction, thus causing no harm to its client. The Court instead ruled that breaches of a
fiduciary relationship in any context comprise a special breed of cases that often loosen normally stringent requirements of
causation and damages, and found in favor of the client.

To the same effect is the ruling in Searcy, Denney, Scarola, Barnhart, and Shipley P.A. v. Scheller55 requiring strict obligation of
lawyers vis-a-vis clients. In this case, a contingent fee lawyer was fired shortly before the end of completion of his work, and
sought payment quantum meruit of work done. The court, however, found that the lawyer was fired for cause after he sought
to pressure his client into signing a new fee agreement while settlement negotiations were at a critical stage. While the client
found a new lawyer during the interregnum, events forced the client to settle for less than what was originally offered.
Reiterating the principle of fiduciary duty of lawyers to clients in Meinhard v. Salmon56 famously attributed to Justice Benjamin
Cardozo that "Not honesty alone, but the punctilioof an honor the most sensitive, is then the standard of behavior," the US
Court found that the lawyer involved was fired for cause, thus deserved no attorney's fees at all.

The utmost zeal given by Courts to the protection of the lawyer-client confidentiality privilege and lawyer's loyalty to his client
is evident in the duration of the protection, which exists not only during the relationship, but extends even after the
termination of the relationship. 57

Such are the unrelenting duties required by lawyers vis-a-vis their clients because the 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 intellectual and
moral discipline." The Court, no less, is not prepared to accept respondents' position without denigrating the noble profession
that is lawyering, so extolled by Justice Holmes in this wise:

Every calling is great when greatly pursued. But what other gives such scope to realize the spontaneous
energy of one's soul? In what other does one plunge so deep in the stream of life — so share its passions its
battles, its despair, its triumphs, both as witness and actor? . . . But that is not all. What a subject is this in
which we are united — this abstraction called the Law, wherein as in a magic mirror, we see reflected, not
only in our lives, but the lives of all men that have been. When I think on this majestic theme my eyes dazzle.
If we are to speak of the law as our mistress, we who are here know that she is a mistress only to be won with
sustained and lonely passion — only to be won by straining all the faculties by which man is likened to God.

We have no choice but to uphold petitioners' right not to reveal the identity of their clients under pain of the breach of
fiduciary duty owing to their clients, because the facts of the instant case clearly fall within recognized exceptions to the rule
that the client's name is not privileged information.

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

The complaint in Civil Case No. 0033 alleged that the defendants therein, including herein petitioners and Eduardo
Cojuangco, Jr. conspired with each other in setting up through the use of coconut levy funds the financial and
corporate framework and structures that led to the establishment of UCPB, UNICOM and others and that through
insidious means and machinations, ACCRA, using its wholly-owned investment arm, ACCRA Investment Corporation,
became the holder of approximately fifteen million shares representing roughly 3.3% of the total capital stock of
UCPB as of 31 March 1987. The PCGG wanted to establish through the ACCRA lawyers that Mr. Cojuangco is their
client and it was Cojuangco who furnished all the monies to the subscription payment; hence, petitioners acted as
dummies, nominees and/or agents by allowing themselves, among others, to be used as instrument in accumulating
ill-gotten wealth through government concessions, etc., which acts constitute gross abuse of official position and
authority, flagrant breach of public trust, unjust enrichment, violation of the Constitution and laws of the Republic of
the Philippines.

By compelling petitioners, not only to reveal the identity of their clients, but worse, to submit to the PCGG documents
substantiating the client-lawyer relationship, as well as deeds of assignment petitioners executed in favor of its clients
covering their respective shareholdings, the PCGG would exact from petitioners a link "that would inevitably form the
chain of testimony necessary to convict the (client) of a crime."

III

In response to petitioners' last assignment of error, respondents alleged that the private respondent was dropped as
party defendant not only because of his admission that he acted merely as a nominee but also because of his
undertaking to testify to such facts and circumstances "as the interest of truth may require, which includes . . . the
identity of the principal."59

First, as to the bare statement that private respondent merely acted as a lawyer and nominee, a statement made in his
out-of-court settlement with the PCGG, it is sufficient to state that petitioners have likewise made the same claim not
merely out-of-court but also in the Answer to plaintiff's Expanded Amended Complaint, signed by counsel, claiming
that their acts were made in furtherance of "legitimate lawyering."60 Being "similarly situated" in this regard, public

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respondents must show that there exist other conditions and circumstances which would warrant their treating the
private respondent differently from petitioners in the case at bench in order to evade a violation of the equal
protection clause of the Constitution.

To this end, public respondents contend that the primary consideration behind their decision to sustain the PCGG's
dropping of private respondent as a defendant was his promise to disclose the identities of the clients in question.
However, respondents failed to show — and absolute nothing exists in the records of the case at bar — that private
respondent actually revealed the identity of his client(s) to the PCGG. Since the undertaking happens to be the
leitmotif of the entire arrangement between Mr. Roco and the PCGG, an undertaking which is so material as to have
justified PCGG's special treatment exempting the private respondent from prosecution, respondent Sandiganbayan
should have required proof of the undertaking more substantial than a "bare assertion" that private respondent did
indeed comply with the undertaking. Instead, as manifested by the PCGG, only three documents were submitted for
the purpose, two of which were mere requests for re-investigation and one simply disclosed certain clients which
petitioners (ACCRA lawyers) were themselves willing to reveal. These were clients to whom both petitioners and
private respondent rendered legal services while all of them were partners at ACCRA, and were not the clients which
the PCGG wanted disclosed for the alleged questioned transactions.61

To justify the dropping of the private respondent from the case or the filing of the suit in the respondent court without
him, therefore, the PCGG should conclusively show that Mr. Roco was treated as species apart from the rest of the
ACCRA lawyers on the basis of a classification which made substantial distinctions based on real differences. No such
substantial distinctions exist from the records of the case at bench, in violation of the equal protection clause.

The equal protection clause is a guarantee which provides a wall of protection against uneven application of status
and regulations. In the broader sense, the guarantee operates against uneven application of legal norms so
that all persons under similar circumstances would be accorded the same treatment. 62 Those who fall within a
particular class ought to be treated alike not only as to privileges granted but also as to the liabilities imposed.

. . . What is required under this constitutional guarantee is the uniform operation of legal norms so that all
persons under similar circumstances would be accorded the same treatment both in the privileges conferred
and the liabilities imposed. As was noted in a recent decision: "Favoritism and undue preference cannot be
allowed. For the principle is that equal protection and security shall be given to every person under
circumstances, which if not identical are analogous. If law be looked upon in terms of burden or charges,
those that fall within a class should be treated in the same fashion, whatever restrictions cast on some in the
group equally binding the rest.63

We find that the condition precedent required by the respondent PCGG of the petitioners for their exclusion as
parties-defendants in PCGG Case No. 33 violates the lawyer-client confidentiality privilege. The condition also
constitutes a transgression by respondents Sandiganbayan and PCGG of the equal protection clause of the
Constitution.64 It is grossly unfair to exempt one similarly situated litigant from prosecution without allowing the
same exemption to the others. Moreover, the PCGG's demand not only touches upon the question of the identity of
their clients but also on documents related to the suspected transactions, not only in violation of the attorney-client
privilege but also of the constitutional right against self-incrimination. Whichever way one looks at it, this is a fishing
expedition, a free ride at the expense of such rights.

An argument is advanced that the invocation by petitioners of the privilege of attorney-client confidentiality at this
stage of the proceedings is premature and that they should wait until they are called to testify and examine as
witnesses as to matters learned in confidence before they can raise their objections. But petitioners are not mere
witnesses. They are co-principals in the case for recovery of alleged ill-gotten wealth. They have made their position
clear from the very beginning that they are not willing to testify and they cannot be compelled to testify in view of
their constitutional right against self-incrimination and of their fundamental legal right to maintain inviolate the
privilege of attorney-client confidentiality.

It is clear then that the case against petitioners should never be allowed to take its full course in the Sandiganbayan.
Petitioners should not be made to suffer the effects of further litigation when it is obvious that their inclusion in the
complaint arose from a privileged attorney-client relationship and as a means of coercing them to disclose the
identities of their clients. To allow the case to continue with respect to them when this Court could nip the problem in
the bud at this early opportunity would be to sanction an unjust situation which we should not here countenance. The
case hangs as a real and palpable threat, a proverbial Sword of Damocles over petitioners' heads. It should not be
allowed to continue a day longer.

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

WHEREFORE, IN VIEW OF THE FOREGOING, the Resolutions of respondent Sandiganbayan (First Division)
promulgated on March 18, 1992 and May 21, 1992 are hereby ANNULLED and SET ASIDE. Respondent
Sandiganbayan is further ordered to exclude petitioners Teodoro D. Regala, Edgardo J. Angara, Avelino V. Cruz, Jose C.
Concepcion, Victor P. Lazatin, Eduardo U. Escueta and Paraja G. Hayuduni as parties-defendants in SB Civil Case No.
0033 entitled "Republic of the Philippines v. Eduardo Cojuangco, Jr., et al."

SO ORDERED.

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Bellosillo, Melo and Francisco, JJ., concur.

Padilla, Panganiban and Torres, Jr., JJ., concur in the result.

Romero and Hermosisima, Jr., JJ., took no part.

Mendoza, J., is on leave.

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