G.R. No. L-9231 January 6, 1915
Of the very essence of the veil of secrecy which surrounds communications
UY CHICO, plaintiff-appellant,
vs.
THE UNION LIFE ASSURANCE SOCIETY, LIMITED, ET AL., defendants-appellees.
Beaumont and Tenney for appellant.
Bruce, Lawrence, Ross and Block for appellees.
TRENT, J.:
An appeal from a judgment dismissing the complaint upon the merits, with costs.
The plaintiff seeks to recover the face value of two insurance policies upon a stock of
dry goods destroyed by fire. It appears that the father of the plaintiff died in 1897, at
which time he was conducting a business under his own name, Uy Layco. The plaintiff
and his brother took over the business and continued it under the same name, "Uy
Layco." Sometime before the date of the fire, the plaintiff purchased his brother's interest
in the business and continued to carry on the business under the father's name. At the
time of the fire "Uy Layco" was heavily indebted and subsequent thereto the creditors of
the estate of the plaintiff's father. During the course of these proceedings, the plaintiff's
attorney surrendered the policies of insurance to the administrator of the estate, who
compromised with the insurance company for one-half their face value, or P6,000. This
money was paid into court and is now being held by the sheriff. The plaintiff now brings
this action, maintaining that the policies and goods insured belonged to him and not to
the estate of his deceased father and alleges that he is not bound by the compromise
effected by the administrator of his father's estate.
The defendant insurance company sought to show that the plaintiff had agreed to
compromise settlement of the policies, and for that purpose introduced evidence
showing that the plaintiff's attorney had surrendered the policies to the administrator with
the understanding that such a compromise was to be effected. The plaintiff was asked,
while on the witness stand, if he had any objection to his attorney's testifying concerning
the surrender of the policies, to which he replied in the negative. The attorney was then
called for that purpose. Whereupon, counsel for the plaintiff formally withdrew the waiver
previously given by the plaintiff and objected to the testimony of the attorney on the
ground that it was privileged. Counsel, on this appeal, base their argument of the
proposition that a waiver of the client's privilege may be withdrawn at any time before
acted upon, and cite in support thereof Ross vs. Great Northern Ry. Co., (101 Minn.,
122; 111 N. W., 951). The case of Natlee Draft Horse Co. vs. Cripe and Co. (142 Ky.,
810), also appears to sustain their contention. But a preliminary question suggest itself,
Was the testimony in question privileged?
Our practice Act provides: "A lawyer must strictly maintain inviolate the confidence and
preserve the secrets of his client. He shall not be permitted in any court, without the
consent of his client, given in open court, to testify to any facts imparted to him by his
client in professional consultation, or for the purpose of obtaining advice upon legal
matters." (Sec. 31, Act No. 190.)
A similar provision is inserted in section 383, No. 4, of the same Act. It will be noted that
the evidence in question concerned the dealings of the plaintiff's attorney with a third
person.
made between attorney and client, is that such communications are not intended for the
information of third persons or to be acted upon by them, put of the purpose of advising
the client as to his rights. It is evident that a communication made by a client to his
attorney for the express purpose of its being communicated to a third person is
essentially inconsistent with the confidential relation. When the attorney has faithfully
carried out his instructions be delivering the communication to the third person for whom
it was intended and the latter acts upon it, it cannot, by any reasoning whatever, be
classified in a legal sense as a privileged communication between the attorney and his
client. It is plain that such a communication, after reaching the party for whom it was
intended at least, is a communication between the client and a third person, and that the
attorney simply occupies the role of intermediary or agent. We quote from but one case
among the many which may be found upon the point:
The proposition advanced by the respondent and adopted by the trial court,
that one, after fully authorizing his attorney, as his agent, to enter into contract
with a third party, and after such authority has been executed and relied on,
may effectively nullify his own and his duly authorized agent's act by closing
the attorney's mouth as to the giving of such authority, is most startling. A
perilous facility of fraud and wrong, both upon the attorney and the third party,
would result. The attorney who, on his client's authority, contracts in his behalf,
pledges his reputation and integrity that he binds his client. The third party may
well rely on the assurance of a reputable lawyer that he has authority in fact,
though such assurance be given only by implication from the doing of the act
itself. It is with gratification, therefore, that we find overwhelming weight of
authority, against the position assumed by the court below, both in states
where the privilege protecting communications with attorneys is still regulated
by the common law and in those where it is controlled by statute, as in
Wisconsin. (Koeber vs. Sommers, 108 Wis., 497; 52 L. R. A., 512.)
Other cases wherein the objection to such evidence on the ground of privilege has been
overruled are: Henderson vs. Terry (62 Tex., 281); Shove vs. Martin (85 Minn., 29); In
re Elliott (73 Kan., 151); Collins vs. Hoffman (62 Wash., 278); Gerhardt vs. Tucker (187
Mo., 46). These cases cover a variety of communications made by an authority in behalf
of his client to third persons. And cases wherein evidence of the attorney as to
compromises entered into by him on behalf of his client were allowed to be proved by
the attorney's testimony are not wanting. (Williams vs. Blumenthal, 27 Wash., 24;
Koeber vs. Sommers, supra.)
It is manifest that the objection to the testimony of the plaintiff's attorney as to his
authority to compromise was properly overruled. The testimony was to the effect that
when the attorney delivered the policies to the administrator, he understood that there
was a compromise to be effected, and that when he informed the plaintiff of the
surrender of the policies for that purpose the plaintiff made no objection whatever. The
evidence is sufficient to show that the plaintiff acquiesced in the compromise settlement
of the policies. Having agreed to the compromise, he cannot now disavow it and
maintain an action for the recovery of their face value.
For the foregoing reasons the judgment appealed from is affirmed, with costs. So
ordered.
G.R. No. L-21237 March 22, 1924
JAMES D. BARTON, plaintiff-appellee,
vs.
LEYTE ASPHALT & MINERAL OIL CO., LTD., defendant-appellant.
Block, Johnston & Greenbaum and Ross, Lawrence & Selph for appellant.
Frank B. Ingersoll for appellee.
STREET, J.:
This action was instituted in the Court of First Instance of the City of Manila by
James D. Barton, to recover of the Leyte Asphalt & Mineral Oil Co., Ltd., as
damages for breach of contract, the sum of $318,563.30, United States currency,
and further to secure a judicial pronouncement to the effect that the plaintiff is
entitled to an extension of the terms of the sales agencies specified in the contract
Exhibit A. The defendant answered with a general denial, and the cause was heard
upon the proof, both documentary and oral, after which the trial judge entered a
judgment absolving the defendant corporation from four of the six causes of action
set forth in the complaint and giving judgment for the plaintiff to recover of said
defendant, upon the first and fourth causes of action, the sum of $202,500, United
States currency, equivalent to $405,000, Philippine currency, with legal interest
from June 2, 1921, and with costs. From this judgment the defendant company
appealed.
The plaintiff is a citizen of the United States, resident in the City of Manila, while the
defendant is a corporation organized under the law of the Philippine Islands with its
principal office in the City of Cebu, Province of Cebu, Philippine Islands. Said
company appears to be the owner by a valuable deposit of bituminous limestone
and other asphalt products, located on the Island of Leyte and known as
the Lucio mine. On April 21, 1920, one William Anderson, as president and general
manager of the defendant company, addressed a letter Exhibit B, to the plaintiff
Barton, authorizing the latter to sell the products of the Lucio mine in the
Commonwealth of Australia and New Zealand upon a scale of prices indicated in
said letter.
In the third cause of action stated in the complaint the plaintiff alleges that during
the life of the agency indicated in Exhibit B, he rendered services to the defendant
company in the way of advertising and demonstrating the products of the defendant
and expended large sums of money in visiting various parts of the world for the
purpose of carrying on said advertising and demonstrations, in shipping to various
parts of the world samples of the products of the defendant, and in otherwise
carrying on advertising work. For these services and expenditures the plaintiff
sought, in said third cause of action, to recover the sum of $16,563.80, United
States currency. The court, however, absolved the defendant from all liability on
this cause of action and the plaintiff did not appeal, with the result that we are not
now concerned with this phase of the case. Besides, the authority contained in said
Exhibit B was admittedly superseded by the authority expressed in a later letter,
Exhibit A, dated October 1, 1920. This document bears the approval of the board of
directors of the defendant company and was formally accepted by the plaintiff. As it
supplies the principal basis of the action, it will be quoted in its entirety.
(Exhibit A)
CEBU, CEBU, P. I.
October 1, 1920.
JAMES D. BARTON, Esq.,
Cebu Hotel City.
DEAR SIR: — You are hereby given the sole and exclusive sales agency for our
bituminous limestone and other asphalt products of the Leyte Asphalt and Mineral
Oil Company, Ltd., May first, 1922, in the following territory:
Australia Saigon Java
New Zealand India China
Tasmania Sumatra Hongkong
Siam and the Straits Settlements, also in the United States of America until May 1,
1921.
As regard bituminous limestone mined from the Lucio property. No orders for less
than one thousand (1,000) tons will be accepted except under special agreement
with us. All orders for said products are to be billed to you as follows:
Per ton
In 1,000 ton lots ........................................... P15
In 2,000 ton lots ........................................... 14
In 5,000 ton lots ........................................... 12
In 10,000 ton lots .......................................... 10
with the understanding, however that, should the sales in the above territory equal
or exceed ten thousand (10,000) tons in the year ending October 1, 1921, then in
that event the price of all shipments made during the above period shall be ten
pesos (P10) per ton, and any sum charged to any of your customers or buyers in
the aforesaid territory in excess of ten pesos (P10) per ton, shall be rebated to you.
Said rebate to be due and payable when the gross sales have equalled or
exceeded ten thousand (10,000) tons in the twelve months period as hereinbefore
described. Rebates on lesser sales to apply as per above price list.
You are to have full authority to sell said product of the Lucio mine for any sum see
fit in excess of the prices quoted above and such excess in price shall be your extra
and additional profit and commission. Should we make any collection in excess of
the prices quoted, we agree to remit same to your within ten (10) days of the date
of such collections or payments.
All contracts taken with municipal governments will be subject to inspector before
shipping, by any authorized representative of such governments at whatever price
may be contracted for by you and we agree to accept such contracts subject to
draft attached to bill of lading in full payment of such shipment.
It is understood that the purchasers of the products of the Lucio mine are to pay
freight from the mine carriers to destination and are to be responsible for all freight,
insurance and other charges, providing said shipment has been accepted by their
inspectors.
All contracts taken with responsible firms are to be under the same conditions as
with municipal governments.
All contracts will be subject to delays caused by the acts of God, over which the
parties hereto have no control.
It is understood and agreed that we agree to load all ships, steamers, boats or
other carriers prompty and without delay and load not less than 1,000 tons each
twenty-four hours after March 1, 1921, unless we so notify you specifically prior to
that date we are prepared to load at that rate, and it is also stipulated that we shall
not be required to ship orders of 5,000 tons except on 30 days notice and 10,000
tons except on 60 days notice.
If your sales in the United States reach five thousand tons on or before May 1,
1921, you are to have sole rights for this territory also for one year additional and
should your sales in the second year reach or exceed ten thousand tons you are to
have the option to renew the agreement for this territory on the same terms for an
additional two years.
Should your sales equal exceed ten thousand (10,000) tons in the year ending
October 1, 1921, or twenty thousand (20,000) tons by May 1, 1922, then this
contract is to be continued automatically for an additional three years ending April
30, 1925, under the same terms and conditions as above stipulated.
The products of the other mines can be sold by you in the aforesaid territories
under the same terms and conditions as the products of the Lucio mine; scale of
prices to be mutually agreed upon between us.
LEYTE ASPHALT & MINERAL OIL CO., LTD.
By (Sgd.) WM. ANDERSON
President
(Sgd.) W. C. A. PALMER
Secretary
Approved by Board of Directors,
October 1, 1920.
(Sgd.) WM. ANDERSON
President
Accepted.
(Sgd.) JAMES D. BARTON
Witness D. G. MCVEAN
Upon careful perusal of the fourth paragraph from the end of this letter it is
apparent that some negative word has been inadvertently omitted before
"prepared," so that the full expression should be "unless we should notify you
specifically prior to that date that we are unprepared to load at that rate," or "not
prepared to load at that rate."
Very soon after the aforesaid contract became effective, the plaintiff requested the
defendant company to give him a similar selling agency for Japan. To this request
the defendant company, through its president, Wm. Anderson, replied, under date
of November 27, 1920, as follows:
In re your request for Japanese agency, will say, that we are willing to give
you, the same commission on all sales made by you in Japan, on the
same basis as your Australian sales, but we do not feel like giving you a
regular agency for Japan until you can make some large sized sales there,
because some other people have given us assurances that they can
handle our Japanese sales, therefore we have decided to leave this
agency open for a time.
Meanwhile the plaintiff had embarked for San Francisco and upon arriving at that
port he entered into an agreement with Ludvigsen & McCurdy, of that city, whereby
said firm was constituted a subagent and given the sole selling rights for the
bituminous limestone products of the defendant company for the period of one year
from November 11, 1920, on terms stated in the letter Exhibit K. The territory
assigned to Ludvigsen & McCurdy included San Francisco and all territory in
California north of said city. Upon an earlier voyage during the same year to
Australia, the plaintiff had already made an agreement with Frank B. Smith, of
Sydney, whereby the latter was to act as the plaintiff's sales agent for bituminous
limestone mined at the defendant's quarry in Leyte, until February 12, 1921. Later
the same agreement was extended for the period of one year from January 1,
1921. (Exhibit Q.)
On February 5, 1921, Ludvigsen & McCurdy, of San Francisco, addressed a letter
to the plaintiff, then in San Francisco, advising hi that he might enter an order for
six thousand tons of bituminous limestone to be loaded at Leyte not later than May
5, 1921, upon terms stated in the letter Exhibit G. Upon this letter the plaintiff
immediately indorsed his acceptance.
The plaintiff then returned to Manila; and on March 2, 1921, Anderson wrote to him
from Cebu, to the effect that the company was behind with construction and was
not then able to handle big contracts. (Exhibit FF.) On March 12, Anderson was in
Manila and the two had an interview in the Manila Hotel, in the course of which the
plaintiff informed Anderson of the San Francisco order. Anderson thereupon said
that, owing to lack of capital, adequate facilities had not been provided by the
company for filling large orders and suggested that the plaintiff had better hold up in
the matter of taking orders. The plaintiff expressed surprise at this and told
Anderson that he had not only the San Francisco order (which he says he exhibited
to Anderson) but other orders for large quantities of bituminous limestone to be
shipped to Australia and Shanghai. In another interview on the same Anderson
definitely informed the plaintiff that the contracts which be claimed to have procured
would not be filled.
Three days later the plaintiff addressed a letter (Exhibit Y) to the defendant
company in Cebu, in which he notified the company to be prepared to ship five
thousand tons of bituminous limestone to John Chapman Co., San Francisco,
loading to commence on May 1, and to proceed at the rate of one thousand tons
per day of each twenty-four hours, weather permitting.
On March 5, 1921, Frank B. Smith, of Sydney, had cabled the plaintiff an order for
five thousand tons of bituminous limestone; and in his letter of March 15 to the
defendant, the plaintiff advised the defendant company to be prepared to ship
another five thousand tons of bituminous limestone, on or about May 6, 1921, in
addition to the intended consignment for San Francisco. The name Henry E. White
was indicated as the name of the person through whom this contract had been
made, and it was stated that the consignee would be named later, no destination
for the shipment being given. The plaintiff explains that the name White, as used in
this letter, was based on an inference which he had erroneously drawn from the
cable sent by Frank B. Smith, and his intention was to have the second shipment
consigned to Australia in response to Smith's order.
It will be noted in connection with this letter of the plaintiff, of March 15, 1921, that
no mention was made of the names of the person, or firm, for whom the shipments
were really intended. The obvious explanation that occurs in connection with this is
that the plaintiff did not then care to reveal the fact that the two orders had
originated from his own subagents in San Francisco and Sydney.
To the plaintiff's letter of March 15, the assistant manager of the defendant
company replied on March, 25, 1921, acknowledging the receipt of an order for five
thousand tons of bituminous limestone to be consigned to John Chapman Co., of
San Francisco, and the further amount of five thousand tons of the same material
to be consigned to Henry E. White, and it was stated that "no orders can be
entertained unless cash has been actually deposited with either the International
Banking Corporation or the Chartered Bank of India, Australia and China, Cebu."
(Exhibit Z.)
To this letter the plaintiff in turn replied from Manila, under date of March, 1921,
questioning the right of the defendant to insist upon a cash deposit in Cebu prior to
the filling of the orders. In conclusion the plaintiff gave orders for shipment to
Australia of five thousand tons, or more, about May 22, 1921, and ten thousand
tons, or more, about June 1, 1921. In conclusion the plaintiff said "I have arranged
for deposits to be made on these additional shipments if you will signify your ability
to fulfill these orders on the dates mentioned." No name was mentioned as the
purchaser, or purchases, of these intended Australian consignments.
Soon after writing the letter last above-mentioned, the plaintiff embarked for China
and Japan. With his activities in China we are not here concerned, but we note that
in Tokio, Japan, he came in contact with one H. Hiwatari, who appears to have
been a suitable person for handling bituminous limestone for construction work in
Japan. In the letter Exhibit X, Hiwatari speaks of himself as if he had been
appointed exclusive sales agent for the plaintiff in Japan, but no document
expressly appointing him such is in evidence.
While the plaintiff was in Tokio he procured the letter Exhibit W, addressed to
himself, to be signed by Hiwatari. This letter, endited by the plaintiff himself,
contains an order for one thousand tons of bituminous limestone from the quarries
of the defendant company, to be delivered as soon after July 1, 1921, as possible.
In this letter Hiwatari states, "on receipt of the cable from you, notifying me of date
you will be ready to ship, and also tonnage rate, I will agree to transfer through the
Bank of Taiwan, of Tokio, to the Asia Banking Corporation, of Manila, P. I., the
entire payment of $16,000 gold, to be subject to our order on delivery of documents
covering bill of lading of shipments, the customs report of weight, and prepaid
export tax receipt. I will arrange in advance a confirmed or irrevocable letter of
credit for the above amounts so that payment can be ordered by cable, in reply to
your cable advising shipping date."
In a letter, Exhibit X, of May 16, 1921, Hiwatari informs the plaintiff that he had
shown the contract, signed by himself, to the submanager of the Taiwan Bank who
had given it as his opinion that he would be able to issue, upon request of Hiwatari,
a credit note for the contracted amount, but he added that the submanager was not
personally able to place his approval on the contract as that was a matter beyond
his authority. Accordingly Hiwatari advised that he was intending to make further
arrangements when the manager of the bank should return from Formosa.
In the letter of May 5, 1921, containing Hiwatari's order for one thousand tons of
bituminous limestone, it was stated that if the material should prove satisfactory
after being thoroughly tested by the Paving Department of the City of Tokio, he
would contract with the plaintiff for a minimum quantity of ten thousand additional
tons, to be used within a year from September 1, 1921, and that in this event the
contract was to be automatically extended for an additional four years. The
contents of the letter of May 5 seems to have been conveyed, though imperfectly,
by the plaintiff to his attorney, Mr. Frank B. Ingersoll, of Manila; and on May 17,
1921, Ingersoll addressed a note to the defendant company in Cebu in which he
stated that he had been requested by the plaintiff to notify the defendant that the
plaintiff had accepted an order from Hiwatari, of Tokio, approved by the Bank of
Taiwan, for a minimum order of ten thousand tons of the stone annually for a period
of five years, the first shipment of one thousand tons to be made as early after July
1 as possible. It will be noted that this communication did not truly reflect the
contents of Hiwatari's letter, which called unconditionally for only one thousand
tons, the taking of the remainder being contingent upon future eventualities.
It will be noted that the only written communications between the plaintiff and the
defendant company in which the former gave notice of having any orders for the
sale of bituminous limestone are the four letters Exhibit Y, AA, BB, and II. In the
first of these letters, dated March 15, 1921, the plaintiff advises the defendant
company to be prepared to ship five thousand tons of bituminous limestone, to be
consigned to John Chapman, Co., of San Francisco, to be loaded by March 5, and
a further consignment of five thousand tons, through a contract with Henry E.
White, consignees to be named later. In the letter Exhibit BB dated May 17, 1921,
the plaintiff's attorney gives notice of the acceptance by plaintiff of an order from
Hiwatari, of Tokio, approved by the Bank of Taiwan, for a minimum of ten thousand
annually for a period of five years, first shipment of a thousand tons to be as early
after July 1 as possible. In the letter Exhibit H the plaintiff gives notice of an
"additional" (?) order from H. E. White, Sydney, for two lots of bituminous limestone
of five thousand tons each, one for shipment not later than June 30, 1921, and the
other by July 20, 1921. In the same letter thousand tons from F. B. Smith, to be
shipped to Brisbane, Australia, by June 30, and a similar amount within thirty days
later.
After the suit was brought, the plaintiff filed an amendment to his complaint in which
he set out, in tabulated form, the orders which he claims to have received and upon
which his letters of notification to the defendant company were based. In this
amended answer the name of Ludvigsen & McCurdy appears for the first time; and
the name of Frank B. Smith, of Sydney, is used for the first time as the source of
the intended consignments of the letters, Exhibits G, L, M, and W, containing the
orders from Ludvigen & McCurdy, Frank B. Smith and H. Hiwatari were at no time
submitted for inspection to any officer of the defendant company, except possibly
the Exhibit G, which the plaintiff claims to have shown to Anderson in Manila on
March, 12, 1921.
The different items conspiring the award which the trial judge gave in favor of the
plaintiff are all based upon the orders given by Ludvigsen & McCurdy (Exhibit G),
by Frank B. Smith (Exhibit L and M), and by Hiwatari in Exhibit W; and the
appealed does not involve an order which came from Shanghai, China. We
therefore now address ourselves to the question whether or not the orders
contained in Exhibit G, L, M, and W, in connection with the subsequent notification
thereof given by the plaintiff to the defendant, are sufficient to support the judgment
rendered by the trial court.
The transaction indicated in the orders from Ludvigsen, & McCurdy and from Frank
B. Smith must, in our opinion, be at once excluded from consideration as
emanating from persons who had been constituted mere agents of the plaintiff. The
San Francisco order and the Australian orders are the same in legal effect as if
they were orders signed by the plaintiff and drawn upon himself; and it cannot be
pretended that those orders represent sales to bona fide purchasers found by the
plaintiff. The original contract by which the plaintiff was appointed sales agent for a
limited period of time in Australia and the United States contemplated that he
should find reliable and solvent buyers who should be prepared to obligate
themselves to take the quantity of bituminous limestone contracted for upon terms
consistent with the contract. These conditions were not met by the taking of these
orders from the plaintiff's own subagents, which was as if the plaintiff had bought
for himself the commodity which he was authorized to sell to others. Article 267 of
the Code of Commerce declares that no agent shall purchase for himself or for
another that which he has been ordered to sell. The law has placed its ban upon a
broker's purchasing from his principal unless the latter with full knowledge of all the
facts and circumstances acquiesces in such course; and even then the broker's
action must be characterized by the utmost good faith. A sale made by a broker to
himself without the consent of the principal is ineffectual whether the broker has
been guilty of fraudulent conduct or not. (4 R. C. L., 276-277.) We think, therefore,
that the position of the defendant company is indubitably sound in so far as it rest
upon the contention that the plaintiff has not in fact found any bona fide purchasers
ready and able to take the commodity contracted for upon terms compatible with
the contract which is the basis of the action.
It will be observed that the contract set out at the beginning of this opinion contains
provisions under which the period of the contract might be extended. That privilege
was probably considered a highly important incident of the contract and it will be
seen that the sale of five thousand tons which the plaintiff reported for shipment to
San Francisco was precisely adjusted to the purpose of the extension of the
contract for the United States for the period of an additional year; and the sales
reported for shipment to Australia were likewise adjusted to the requirements for
the extention of the contract in that territory. Given the circumstances surrounding
these contracts as they were reported to the defendant company and the
concealment by the plaintiff of the names of the authors of the orders, -- who after
all were merely the plaintiff's subagents, — the officers of the defendant company
might justly have entertained the suspicion that the real and only person behind
those contracts was the plaintiff himself. Such at least turns out to have been the
case.
Much energy has been expended in the briefs upon his appeal over the contention
whether the defendant was justified in laying down the condition mentioned in the
letter of March 26, 1921, to the effect that no order would be entertained unless
cash should be deposited with either the International Banking Corporation of the
Chartered Bank of India, Australia and China, in Cebu. In this connection the
plaintiff points to the stipulation of the contract which provides that contracts with
responsible parties are to be accepted "subject to draft attached to bill of lading in
full payment of such shipment." What passed between the parties upon this point
appears to have the character of mere diplomatic parrying, as the plaintiff had no
contract from any responsible purchaser other than his own subagents and the
defendant company could no probably have filled the contracts even if they had
been backed by the Bank of England.
Upon inspection of the plaintiff's letters (Exhibit Y and AA), there will be found
ample assurance that deposits for the amount of each shipment would be made
with a bank in Manila provided the defendant would indicated its ability to fill the
orders; but these assurance rested upon no other basis than the financial
responsibility of the plaintiff himself, and this circumstance doubtless did not
escape the discernment of the defendant's officers.
With respect to the order from H. Hiwatari, we observe that while he intimates that
he had been promised the exclusive agency under the plaintiff for Japan,
nevertheless it does not affirmatively appear that he had been in fact appointed to
be such at the time he signed to order Exhibit W at the request of the plaintiff. It
may be assumed, therefore, that he was at that time a stranger to the contract of
agency. It clearly appears, however, that he did not expect to purchase the
thousand tons of bituminous limestone referred to in his order without banking
assistance; and although the submanager of the Bank of Taiwan had said
something encouraging in respect to the matter, nevertheless that official had
refrained from giving his approval to the order Exhibit W. It is therefore not shown
affirmatively that this order proceeds from a responsible source.
The first assignment of error in the appellant's brief is directed to the action of the
trial judge in refusing to admit Exhibit 2, 7, 8, 9 and 10, offered by the defendant,
and in admitting Exhibit E, offered by the plaintiff. The Exhibit 2 is a letter dated
June 25, 1921, or more than three weeks after the action was instituted, in which
the defendant's assistant general manager undertakes to reply to the plaintiff's
letter of March 29 proceeding. It was evidently intended as an argumentative
presentation of the plaintiff's point of view in the litigation then pending, and its
probative value is so slight, even if admissible at all, that there was no error on the
part of the trial court in excluding it.
Exhibit 7, 8, 9 and 10 comprise correspondence which passed between the parties
by mail or telegraph during the first part of the year 1921. The subject-matter of this
correspondence relates to efforts that were being made by Anderson to dispose of
the controlling in the defendant corporation, and Exhibit 9 in particular contains an
offer from the plaintiff, representing certain associates, to but out Anderson's
interest for a fixed sum. While these exhibits perhaps shed some light upon the
relations of the parties during the time this controversy was brewing, the bearing of
the matter upon the litigation before us is too remote to exert any definitive
influence on the case. The trial court was not in error in our opinion in excluding
these documents.
Exhibit E is a letter from Anderson to the plaintiff, dated April 21, 1920, in which
information is given concerning the property of the defendant company. It is stated
in this letter that the output of the Lucio (quarry) during the coming year would
probably be at the rate of about five tons for twenty-four hours, with the equipment
then on hand, but that with the installation of a model cableway which was under
contemplation, the company would be able to handle two thousand tons in twenty-
four hours. We see no legitimate reason for rejecting this document, although of
slight probative value; and her error imputed to the court in admitting the same was
not committed.
Exhibit 14, which was offered in evidence by the defendant, consists of a carbon
copy of a letter dated June 13, 1921, written by the plaintiff to his attorney, Frank B.
Ingersoll, Esq., of Manila, and in which plaintiff states, among other things, that his
profit from the San Francisco contract would have been at the rate of eigthy-five
cents (gold) per ton. The authenticity of this city document is admitted, and when it
was offered in evidence by the attorney for the defendant the counsel for the
plaintiff announced that he had no objection to the introduction of this carbon copy
in evidence if counsel for the defendant would explain where this copy was
secured. Upon this the attorney for the defendant informed the court that he
received the letter from the former attorneys of the defendant without explanation of
the manner in which the document had come into their possession. Upon this the
attorney for the plaintiff made this announcement: "We hereby give notice at this
time that unless such an explanation is made, explaining fully how this carbon copy
came into the possession of the defendant company, or any one representing it, we
propose to object to its admission on the ground that it is a confidential
communication between client and lawyer." No further information was then given
by the attorney for the defendant as to the manner in which the letter had come to
his hands and the trial judge thereupon excluded the document, on the ground that
it was a privileged communication between client and attorney.
We are of the opinion that this ruling was erroneous; for even supposing that the
letter was within the privilege which protects communications between attorney and
client, this privilege was lost when the letter came to the hands of the adverse
party. And it makes no difference how the adversary acquired possession. The law
protects the client from the effect of disclosures made by him to his attorney in the
confidence of the legal relation, but when such a document, containing admissions
of the client, comes to the hand of a third party, and reaches the adversary, it is
admissible in evidence. In this connection Mr. Wigmore says:
The law provides subjective freedom for the client by assuring him of
exemption from its processes of disclosure against himself or the attorney
or their agents of communication. This much, but not a whit more, is
necessary for the maintenance of the privilege. Since the means of
preserving secrecy of communication are entirely in the client's hands, and
since the privilege is a derogation from the general testimonial duty and
should be strictly construed, it would be improper to extend its prohibition
to third persons who obtain knowledge of the communications. One who
overhears the communication, whether with or without the client's
knowledge, is not within the protection of the privilege. The same rule
ought to apply to one who surreptitiously reads or obtains possession of a
document in original or copy. (5 Wigmore on Evidence, 2d ed., sec. 2326.)
Although the precedents are somewhat confusing, the better doctrine is to the
effect that when papers are offered in evidence a court will take no notice of how
they were obtained, whether legally or illegally, properly or improperly; nor will it
form a collateral issue to try that question. (10 R. C. L., 931; 1 Greenl. Evid., sec.
254a; State vs. Mathers, 15 L. R. A., 268; Gross vs. State, 33 L. R. A., [N. S.], 477,
note.)
Our conclusion upon the entire record is that the judgment appealed from must be
reversed; and the defendant will be absolved from the complaint. It is so ordered,
without special pronouncement as to costs of either instance.
Araullo, C.J., Johnson, Avanceña, Ostrand, Johns and Romualdez, JJ., concur.
Separate Opinions
MALCOLM, J., dissenting:
An intensive scrutiny of every phase of this case leads me to the conclusion that
the trial judge was correct in his findings of fact and in his decision. Without
encumbering the case with a long and tedious dissent, I shall endeavor to explain
my point of view as briefly and clearly as possible.
A decision must be reached on the record as it is and not on a record as we would
like to have it. The plaintiff and the defendant deliberately entered into a contract,
the basis of this action. The plaintiff, proceeding pursuant to this contract, spent
considerable effort and used considerable money to advance the interests of the
defendant and to secure orders for its products. These orders were submitted to
the president of the defendant company personally and later formally by writing.
Prior to the institution of the suit, the only objection of the defendant was that the
money should be deposited with either the International Banking Corporation or the
Chartered Bank of India, Australia and China at Cebu, a stipulation not found in the
contract.
A reasonable deduction, therefore, is that the plaintiff presented orders under
circumstances which were a substantial compliance with the terms of the contract
with the defendant, and which insured to the defendant payment for its deliveries
according to the price agreed upon, and that as the defendant has breached its
contract, it must respond in damages.
The current running through the majority opinion is that the order emanated from
subagents of the plaintiff, and that no bona fide purchasers were ready and able to
take the commodity contracted for upon terms compatible with the contract. The
answer is, in the first place, that the contract nowhere prohibits the plaintiff to
secure subagents. The answer is, in the second place, that the orders were so
phrased as to make the persons making them personally responsible. The
Ludvigsen & McCurdy order from San Francisco begins: "You can enter our order
for 6,000 tons of bituminous limestone as per sample submitted, at $10 gold per
ton, f. o. b., island of Leyte, subject to the following terms and conditions:
* * * "(Exhibit G). The Smith order from Australia contains the following: "It is
therefore with great pleasure I confirm the booking of the following orders, to be
shipped at least within a week of respective dates: . . ." (Exhibit L). The Japan order
starts with the following sentence: "You can enter my order for 1,000 tons of 1,000
kilos each of bituminous limestone from the quarries of the Leyte Asphalt and
Mineral Oil Co. . . ." (Exhibit W.)
But the main point of the plaintiff which the majority decision misses entirely centers
on the proposition that the orders were communicated by the plaintiff to the
defendant, and that the only objection the defendant had related to the manner of
payment. To emphasize this thought again, let me quote the reply of the defendant
to the plaintiff when the defendant acknowledge receipts of the orders placed by
the plaintiff. The letter reads: "In reply to same we have to advice you that no
orders can be entertained unless cash has been actually deposited with either the
International Banking Corporation or the Chartered Bank of India, Australia and
China, Cebu." (Exhibit Y.) Prior to the filing of suit, the defendant company never at
any time raised any questioned as to whether the customers secured by plaintiff
were "responsible firms" within the meaning of the contract, and never secured any
information whatsoever as to their financial standing. Consequently, defendant is
now estopped by its conduct from raising new objections for rejection of the orders.
(Mechem on Agency, section 2441.)
The majority decision incidentally takes up for consideration assignments of error 1
and 2 having to do with either the admission or the rejection by the trial court of
certain exhibits. Having in mind that the Court reverses the court a quo on the facts,
what is said relative to these two assignments is absolutely unnecessary for a
judgment, and even as obiter dicta, contains unfortunate expressions. Exhibit 14,
for example, is a letter addressed by the plaintiff to his lawyer and probably merely
shown to the counsel of the defendant during negotiations to seek a compromise.
Whether that exhibit be considered improperly rejected or not would not change the
result one iota.
The rule now announced by the Court that it makes no difference how the
adversary acquired possession of the document, and that a court will take no notice
of how it was obtained, is destructive of the attorney's privilege and constitutes and
obstacle to attempts at friendly compromise. In the case of Uy Chico vs. Union Life
Assurance Society ([1915], 29 Phil., 163), it was held that communications made by
a client to his attorney for the purpose of being communicated to others are not
privileged if they have been so communicated. But here, there is no intimation that
Exhibit 14 was sent by the client to the lawyer for the purpose of being
communicated to others. The Supreme Court of Georgia in the case of Southern
Railway Co. vs. White ([1899], 108 Ga., 201), held that statements in a letter to a
party's attorney handed by the latter to the opponent's attorney, are confidential
communications and must be excluded.
Briefly, the decision of the majority appears to me to be defective in the following
particulars: (1) It sets aside without good reason the fair findings of fact as made by
the trial court and substitutes therefor other findings not warranted by the proof; (2)
it fails to stress plaintiff's main argument, and (3) it lay downs uncalled for rules
which undermine the inviolability of a client's communications to his attorney.
 [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.
DECISION
KAPUNAN, J.:
These cases 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 defendants 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.[3] Respondent 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]
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 co-
defendants 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 clients
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:
x x x.
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.
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:
I
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. Roco in violation of the equal protection
clause.
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.
I
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 PCGGs 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. (Underscoring 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. Cojuangco and some are for Mr. Marcos. Fifth, that
most of these 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 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.[28] Passed 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
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 attorneys 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
clients 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 lawyer 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 confidentiality 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 clients 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 his 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.
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 clients name would implicate that client in the very
activity for which he sought the lawyers 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 clients 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 clients identity before a
grand jury. Reversing the lower courts 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 lawyers 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 clients identity and the nature of that clients 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 clients
consent. 8 J. Wigmore, supra sec. 2291, at 545. In furtherance of this policy, the
clients 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 lawyers 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 in 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]
x x x 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; x x x
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. xxx.
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 courts 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 lawyers 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 governments lawyers have no case against an attorneys client
unless, by revealing the clients 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
clients 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 Bairds 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 clients income tax liability
pending. The court emphasized the exception that a clients name is privileged when
so much has been revealed concerning the legal services rendered that the
disclosure of the clients 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 clients 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 no attorney-client relationship).
The link between the alleged criminal offense and the legal advice or legal
service sought was duly established 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 clients
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 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 prosecutions suspicions, then the clients
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 Proceedings[51] 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 sources 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 that 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.
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. Scheller[55] 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. Salmon[56] famously attributed to
Justice Benjamin Cardozo that "Not honesty alone, but the punctilio of 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 of lawyers vis-a-vis their clients
because the law, which the lawyers are sworn to uphold, in the words of Oliver
Wendell Holmes,[58] "xxx 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? x x x 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 clients 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 Investments 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 allege 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 their 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 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 absolutely 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 a 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 statutes 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.
x x x. 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]
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 PCGGs 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, *Rogelio A. Vinluan, 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.

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 PCGGs 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.
G.R. No. 34098 September 17, 1930
ORIENT INSURANCE COMPANY, petitioner,
vs.
E. P. REVILLA, Judge of First Instance of Manila, and TEAL MOTOR CO.,
INC., respondents.
STREET, J.:
This is an original petition for writs of certiorari and mandamus filed in this court by
the Orient Insurance Company against the respondent judge of the Court of First
Instance of Manila and the Teal Motor Co., Inc. The object of the petition is to
obtain an order requiring the respondent judge to permit the attorney for the
petitioner to examine a letter (Exhibits 49 and 49-Act) part of which has been read
into the record in the course of the examination of one of the witnesses testifying
for the plaintiff in the case of Teal Motor Co., Inc. vs. Orient Insurance Company,
now pending in the Court of First Instance of the City of Manila, civil case No.
35825, with which, for purposes of trial, have been consolidated several other
cases of similar character. The cause is now before us for resolution upon the
complaint and answer interposed by the two respondents.
The respondent Teal Motor Co., Inc. is plaintiff in a civil action instituted in the
Court of First Instance of Manila (civil case No. 35825) for the purpose of
recovering upon two fire insurance policies issued by the Orient Insurance
Company, aggregating P60,000, upon a stock of merchandise alleged to be of the
value of P414,513.56, which, with the exception of salvage valued at about
P50,000, was destroyed by a fire on or about January 6, 1929. In one of the
clauses of the policies sued upon is a stipulation to the effect that all benefit under
the policy would be forfeited if, in case of loss, the claim should be rejected by the
insurer and action or suit should not be commenced within three months after such
rejection. In the answer of the Orient Insurance Company, interposed in the civil
case mentioned, it is alleged, by way of defense, that the company rejected the
claim on April 15, 1929, that notice of such rejection was given to the plaintiff by
letter on the same day, and that suit was not instituted on the policy until August 3,
1929, which was more than three months after the rejection of the claim.
In a replication to the answer of the defendant, containing the foregoing and other
defenses, the plaintiff admitted that the adjusters of the defendant company had, on
April 15, 1929, notified the plaintiff that the Orient Insurance Company would not
pay the claim, basing refusal upon alleged incendiarism and fraud on the part of the
plaintiff; and by way of avoidance, it was alleged in the replication that, after
notification of denial of liability by the insurance company, one E. E. Elser, as
representative of the company, expressly requested the plaintiff to defer judicial
action until after the following July 31, stating that three were great possibilities that
an extrajudicial compromise might be arranged in the matter; and it was further
asserted, in the replication, that the plaintiff had deferred action, relying upon this
request.
It will thus be seen that the reason for the admitted delay in the institution of the
action is an important issue in the case, or case, now in course of trial.
It further appears that while case No. 35825 was in course of trial, as it still is,
before the respondent judge, in the Court of First Instance of Manila, the witness E.
M. Bachrach, president of the Teal Motor Co., Inc., while being examined in chief
by the attorneys for the plaintiff, and speaking of the circumstances surrounding the
institution of the action, said that he had reported certain conversations to plaintiff's
attorneys, and he added: "I waited for about a week longer and not having heard
anything about it, in the meantime, on the 13th of July, I received a letter from our
attorneys, Guevara, Francisco & Recto, urging me to file these cases." The
attorney for the defendant, Orient Insurance Company, thereupon interposed,
saying: "I ask that the witness be required to produce the letter referred to from Mr.
Guevara, or else his answer be stricken out. (To the witness) Have you got the
letter there?" The witness replied that he had the letter with him and that he had no
objection to show that part of the letter in which Guevara urged him to proceed with
the cases. Upon being asked about the other part of the letter, the witness said that
the other part contained private matter, "between the attorney and ourselves,"
meaning between the Teal Motor Co., Inc., and its attorneys. Thereupon the
attorney for the defendant, Orient Insurance Company, said he would like to see
the letter, inquiring as to its date. The witness replied that it bore date of July 13,
1929; and upon the court inquiring whether the witness had any objection to the
reading of the letter by the attorney for the defendant, the witness replied that he
wished to consult with his attorney. Upon this the attorney for the adversary party,
the Orient Insurance Company, suggested that he would like to have the letter
marked without his reading it, and it was accordingly marked as Exhibit 49. The
attorney then said: "In view of the production of the letter, I withdraw the objection
to the statement of the witness as to its contents," and he added: "I now ask the
permission of the court to read the letter for my information." The court thereupon
inquired of the attorney for the Teal Motor Co., Inc., whether he had any objection,
and the attorney observed that he would have no objection to the disclosing of that
part of the letter which referred exactly to the point of the urging of the filing of the
complaints, and he added: "Unfortunately, the other part of the letter being a
communication between a client and attorney, I don't think, if your Honor please, it
can be disclosed without the consent of both."
In the course of the colloquy which thereupon unsued between the attorney for the
plaintiff and the attorney for the defendant, it was stated by the attorney for the
plaintiff that only a part of the letter had anything to do with the urging of the
presentation of the complaints in the cases to which the witness had testified, and
that the other part of the letter referred to the contract of fees, or retaining of the
services of plaintiff's attorneys in connection with said cases, a matter, so the
attorney suggested, entirely distinct from the urging of the presentation of the
cases. The attorney for the defendant thereupon insisted before the court that,
inasmuch as all the letter refers to the case then in court, the entire document
should be exhibited, in conformity with the rule that when part of a document is
offered in evidence, the entire document must be presented.
Upon this the respondent judge ruled as follows: "Objection of the counsel for the
plaintiff and the witness, Mr. Barchrach, to the showing or reading of the whole
letter in the record is sustained, and it is ordered that only that part of the letter
which has been referred to by Mr. Bachrach in his testimony be read and
transcribed into the record." To this ruling the attorney for the defendant excepted
and the respondent judge then said: "Let that part of the letter pointed out by Mr.
Bachrach be transcribed in the record;" whereupon the following part of the letter
was read out in court and incorporated in the transcript.
July 13, 1929
DEAR SIR: As you know, your attorney Mr. Basilio Francisco has turned
over to us, prior to his departure, all the papers in connection with the
insurance claim of the Teal Motor Co., Inc., on destroyed or burned
merchandise, and everything is now ready for filing of the corresponding
complaints in the Court of First Instance.
When the matter above quoted had been thus read into the record, the attorney for
the defendant made the following observation: "In view of the fact that counsel for
the plaintiff has just now read into the record and presented as evidence a part of
the letter of July 13, I now request that the entire letter be produced." This request
was overruled by the court, and the attorney for the defendant excepted. After
further discussion, upon the suggestion of the attorney for the defendant and by
agreement of the counsel for both parties, the second page of the letter was
marked 49-A by the clerk court.
The incident was renewed when it came at turn of the attorney for the defendant to
cross-examine the same witness E. M. Bachrach, when the attorney for the
defendant, having ascertained from the witness that he still had the letter in his
possession, and that he had not answered it in writing, formally offered the letter in
evidence. The attorney for the plaintiff again objected, on the ground that the letter
was of a privileged nature and that it was the personal property of the witness.
Thereupon the court, receiving the letter in hand from the witness, observed that he
had already ruled upon it, and after further discussion, the court sustained the
objection of the attorney for the plaintiff and refused to admit in evidence so much
of the letter as had not already been read into the record. The attorney for the
defendant again excepted.
At a later stage of the trial the attorney interposed a formal motion for
reconsideration of the ruling of the court in refusing to admit the letter in evidence,
or the part of it not already incorporated in the record. The court, however, adhered
to its original ruling, and the attorney for the defendant excepted. Another incident
that might be noted, though not alleged as a ground of relief in the petition before
us, but set forth in the answer of the respondents, is that the attorney for the
defendant procured a subpoena duces tecum to be issued by the clerk of court
requiring the attorneys for the plaintiff to produce in court certain papers including
the letter which gave rise to the present controversy. The court, on motion of the
attorneys for the plaintiff, quashed said subpoena.
The essential character of this incident, which we have perhaps narrated with
unnecessary prolixity, is readily discernible. A witness for the plaintiff made an oral
statement as to the substance of part of a letter which had been received by the
plaintiff from its attorney, and when the fact was revealed that the communication
had been made by letter, the attorney for the defendant requested that the witness
be required to produce the letter in court, and if not, that his answer should be
stricken out. This in legal effect was a demand for the production of "the best
evidence," it being a well-known rule of law that a witness cannot be permitted to
give oral testimony as to the contents of a paper writing which can be produced in
court. In response to this request that portion of the letter to which the witness had
supposedly referred was read into the record.
The respondent judge appears to have considered that the excerpt from the letter
thus incorporated in the record was either proof of the defendant, its production
having been demanded by defendant's counsel, or that at least the legal
responsibility for the incorporation of said excerpt into the record was attributable to
the defendant. We are unable to accept this view. The incorporation of this excerpt
from the letter was a necessary support of the oral statement which the witness had
made, and if this basis for such statement had not been laid by the incorporation of
the excerpt into the record, the oral statement of the witness concerning the tenor
of the letter should properly have been stricken out. But instead of withdrawing the
oral statement of the witness concerning the nature of the written communication,
the witness produced the letter and the part of it already quoted was read into the
record. The excerpt in question must therefore be considered as proof submitted by
the plaintiff; and there can be no question that, part of the letter having been
introduced in behalf of the plaintiff, the whole of the letter could properly be
examined by the other party, in accordance with the express provision of section
283 of the Code of Civil Procedure.
It was stated in the court by the attorney for the plaintiff, in opposing the
introduction of other portions of the letter in proof, that the other parts were
privileged, because they related to the terms of employment between attorney and
client, or to the fee to be paid to the attorney. With respect to this point it is difficult
to see how a contract for fees could be considered privileged. Irrelevant it might,
under certain circumstances, certainly be, but not privileged. Of course contracts
between attorneys and clients are inherently personal and private matters, but they
are a constant subject of litigation, and contracts relating to fees are essentially not
of privileged nature. Privilege primarily refers to communications from client to
attorney, an idea which of course includes communications from attorney to client
relative to privileged matters.
But, even supposing that the matter contained in the letter and withheld from the
inspection of the adversary was originally of a privileged nature, the privilege was
waived by the introduction in evidence of part of the letter. The provision in section
283 of the Code of Civil Procedure making the whole of a declaration, conversation,
or writing admissible when part has been given in evidence by one party, makes no
exception as to privileged matter; and the jurisprudence on the subject does not
recognize any exception. Practically every feature of the question now under
consideration was involved in the case of Western Union Tel. Co. vs. Baltimore &
Ohio Tel. Co. (26 Fed., 55), which in 1885 came before Wallace, J., a distinguished
jurist presiding in the Federal Circuit Court of the Southern District of New York.
The substance of the case is well stated in the note to Kelly vs. Cummens (20 Am.
& Eng. Ann. Cases, 1283, 1287), from which we quote as follows:
In Western Union Tel. Co. vs. Baltimore, etc., Tel. Co. (26 Fed., 55), it
appeared that upon a motion in the cause, which was in equity for a
preliminary injunction, one of the questions involved was whether a
 reissued patent upon which the suit was founded was obtained for the
legitimate purpose of correcting mistake or inadvertence in the
specification and claims of the original, or whether it was obtained merely
for the purpose of expanding the claims of the original in order to
subordinate to the reissue certain improvements or inventions made by
others after the grant of the original patent and before the application for
the reissue. To fortify its theory of the true reasons for obtaining the
reissue, the complainant upon that motion embodied in affidavits extracts
from communications made by a patent expert and attorney in the office of
the solicitor general of the complainant, to the president and the vice-
president of the complainant, when the subject of applying for a reissue
was under consideration by the officers of the complainant, and while the
proceedings for a reissue were pending. After the cause had proceeded to
the taking of proofs for final hearing the defendant sought to introduce in
evidence the original communications, extracts from which were used by
the complainant upon the motion for an injunction, on the ground that the
parts of the communication which were not disclosed had an important
bearing upon the history of the application for a reissue, and indicated that
it was not made for any legitimate purpose. The complainant resisted the
efforts of the defendant to have the original communications admitted, on
the ground that they were privileged as made to its officers by its attorney,
but it was held that the defendant was entitled to introduce them in
evidence, the court saying: "The question, then, is whether the
complainant can shelter itself behind its privilege to insist upon the privacy
of the communications between its attorney and its other officers as
confidential communications, when it has itself produced fragmentary part
of them, and sought to use them as a weapon against the defendant to
obtain the stringent remedy of a preliminary injunction. Assuming that the
communications addressed to the president and vice-president of the
complainant by Mr. Buckingham were communications made to the
complainant by its attorney, and as such privileged at the option of the
complainant, it was competent for the complainant to waive its privilege. It
would hardly be contended that the complainant could introduce extracts
from these communications as evidence in its own behalf for the purpose
of a final hearing, and yet withhold the other parts if their production were
required by the defendant. A party cannot waive such a privilege partially.
He cannot remove the seal of secrecy from so much of the privileged
communications as makes for his advantage, and insist that it shall not be
removed as to so much as makes to the advantage of his adversary, or
may neutralize the effect of such as has been introduced. Upon the
principle it would seem that it cannot be material at what stage of the
proceedings in a suit a party waives his right to maintain the secrecy of
privileged communication. All the proceedings in the cause are constituent
parts of the controversy, and it is not obvious how any distinction can
obtain as to the effect of waiver when made by a party for the purpose of
obtaining temporary relief and when made by him to obtain final relief."
From the foregoing decision and other cases contained in the note referred to, we
are led to the conclusion that the attorney for the defendant in the court below was
entitled to examine the whole of the letter (Exhibit 49 and 49-A), with a view to the
introduction in evidence of such parts thereof as may be relevant to the case on
trial, and the respondent judge was in error in refusing to permit the inspection of
the letter by said attorney.
It is suggested in the argument for the respondents that the question of the
admissibility in evidence of the parts of the letter not already read into the record
was prematurely raised, and that the attorney for the defendant should have waited
until it became his turn to present evidence in chief, when, as is supposed, the
question could have been properly raised. We are of the opinion, however, that if
the attorney for the defendant had a right to examine the letter, it should have been
produced when he asked for it on the cross-examination of the witness who had the
letter in his possession. Besides, in the lengthy discussions between court and
attorneys, occuring at different times, there was not the slightest suggestion from
the court that the parts of the letter which were held inadmissible would be admitted
at any time. Furthermore, the action of the court in quashing the subpoena duces
tecum for the production of the letter shows that the court meant to rule that the
letter could not be inspected at all by the attorney for the defendant.
Objection is also here made by the attorney for the respondents to the use of the
writ of mandamus for the purpose of correcting the error which is supposed to have
been committed. The situation presented is, however, one where the herein
petitioner has no other remedy. The letter which the petitioner seeks to examine
has been ruled inadmissible, as to the parts not introduced in evidence by the
defendant in the court below, and the respondent judge had not permitted the
document to become a part of the record in such a way that the petitioner could
take advantage of the error upon appeal to this court. It is idle to discuss whether
other remedy would be speedy or adequate when there is no remedy at all. This
court is loath, of course, to interfere in course of the trial of a case in a Court of First
Instance, as such interference might frequently prolong unduly the litigation in that
court. But this case has been pending before the respondent judge for a
considerable period of time, and undoubtedly the probatory period will be
necessarily extended much longer. Under these circumstances, the action of this
court in entertaining the present application will either be conductive to the speedy
determination of case, or at least will not appreciably extend the proceedings.
It goes without saying that the subject matter of the contention is of a nature which
makes the use of the writ of mandamus appropriate, since the right from the
exercise of which the petitioner is excluded is one to which it is entitled under the
law and the duty to be performed is one pertaining to the respondent judge in his
official capacity.
From what has been said it follows that the writ of mandamus prayed for will be
granted, and the respondent judge is directed to permit the attorney for the
defendant (petitioner here) to inspect the letter (Exhibit 49 and 49-A) with a view to
the introduction in evidence of such parts thereof as may be relevant to the issues
made by the pleadings in civil case No. 35825 and other cases which have been
consolidated with it for trial. So ordered, with costs against the respondent Teal
Motor Co., Inc.
 [G.R. Nos. 115439-41. July 16, 1997]
PEOPLE OF THE PHILIPPINES, petitioner, vs. HONORABLE
SANDIGANBAYAN, MANSUETO V. HONRADA, CEFERINO S.
PAREDES, JR. and GENEROSO S. SANSAET, respondents.
DECISION
REGALADO, J.:
Through the special civil action for certiorari at bar, petitioner seeks the
annulment of the resolution of respondent Sandiganbayan, promulgated on
December 22, 1993, which denied petitioners motion for the discharge of respondent
Generoso S. Sansaet to be utilized as a state witness, and its resolution of March 7,
1994 denying the motion for reconsideration of its preceding disposition. [1]
The records show that during the dates material to this case, respondent
Honrada was the Clerk of Court and Acting Stenographer of the First Municipal
Circuit Trial Court, San Francisco-Bunawan-Rosario in Agusan del Sur. Respondent
Paredes was successively the Provincial Attorney of Agusan del Sur, then Governor
of the same province, and is at present a Congressman. Respondent Sansaet was
a practicing attorney who served as counsel for Paredes in several instances
pertinent to the criminal charges involved in the present recourse.
The same records also represent that sometime in 1976, respondent Paredes
applied for a free patent over Lot No. 3097-A, Pls-67 of the Rosario Public Land
Subdivision Survey. His application was approved and, pursuant to a free patent
granted to him, an original certificate of title was issued in his favor for that lot which
is situated in the poblacion of San Francisco, Agusan del Sur.
However, in 1985, the Director of Lands filed an action [2] for the cancellation of
respondent Paredes patent and certificate of title since the land had been designated
and reserved as a school site in the aforementioned subdivision survey. The trial
court rendered judgment[3] nullifying said patent and title after finding that respondent
Paredes had obtained the same through fraudulent misrepresentations in his
application. Pertinently, respondent Sansaet served as counsel of Paredes in that
civil case.[4]
Consequent to the foregoing judgment of the trial court, upon the subsequent
complaint of the Sangguniang Bayan and the preliminary investigation conducted
thereon, an information for perjury[5] was filed against respondent Paredes in the
Municipal Circuit Trial Court.[6] On November 27, 1985, the Provincial Fiscal was,
however, directed by the Deputy Minister of Justice to move for the dismissal of the
case on the ground inter alia of prescription, hence the proceedings were
terminated.[7] In this criminal case, respondent Paredes was likewise represented by
respondent Sansaet as counsel.
Nonetheless, respondent* Paredes was thereafter haled before the
Tanodbayan for preliminary investigation on the charge that, by using his former
position as Provincial Attorney to influence and induce the Bureau of Lands officials
to favorably act on his application for free patent, he had violated Section 3(a) of
Republic Act No. 3019, as amended. For the third time, respondent Sansaet was
Paredes counsel of record therein.
On August 29, 1988, the Tanodbayan, issued a resolution [8] recommending the
criminal prosecution of respondent Paredes. Atty. Sansaet, as counsel for his
aforenamed co-respondent, moved for reconsideration and, because of its legal
significance in this case, we quote some of his allegations in that motion:
x x x respondent had been charged already by the complainants before the Municipal
Circuit Court of San Francisco, Agusan del Sur, went to jail on detention in 1984 under
the same set of facts and the same evidence x x x but said case after arraignment, was
ordered dismissed by the court upon recommendation of the Department of Justice. Copy of
the dismissal order, certificate of arraignment and the recommendation of the Department
of Justice are hereto attached for ready reference; thus the filing of this case will be a case
of double jeopardy for respondent herein x x x.[9] (Italics supplied.)
A criminal case was subsequently filed with the Sandiganbayan [10] charging
respondent Paredes with a violation of Section 3(a) of Republic Act No. 3019, as
amended. However, a motion to quash filed by the defense was later granted in
respondent courts resolution of August 1, 1991 [11] and the case was dismissed on
the ground of prescription.
On January 23, 1990, one Teofilo Gelacio, a taxpayer who had initiated the
perjury and graft charges against respondent Paredes, sent a letter to the
Ombudsman seeking the investigation of the three respondents herein for
falsification of public documents.[12] He claimed that respondent Honrada, in
conspiracy with his herein co-respondents, simulated and certified as true copies
certain documents purporting to be a notice of arraignment, dated July 1, 1985, and
transcripts of stenographic notes supposedly taken during the arraignment of
Paredes on the perjury charge.[13] These falsified documents were annexed to
respondent Paredes motion for reconsideration of the Tanodbayan resolution for the
filing of a graft charge against him, in order to support his contention that the same
would constitute double jeopardy.
In support of his claim, Gelacio attached to his letter a certification that no notice
of arraignment was ever received by the Office of the Provincial Fiscal of Agusan del
Sur in connection with that perjury case; and a certification of Presiding Judge Ciriaco
Ario that said perjury case in his court did not reach the arraignment stage since
action thereon was suspended pending the review of the case by the Department of
Justice.[14]
Respondents filed their respective counter-affidavits, but Sansaet subsequently
discarded and repudiated the submissions he had made in his counter-affidavit. In a
so-called Affidavit of Explanations and Rectifications,[15] respondent Sansaet
revealed that Paredes contrived to have the graft case under preliminary
investigation dismissed on the ground of double jeopardy by making it that the perjury
case had been dismissed by the trial court after he had been arraigned therein.
For that purpose, the documents which were later filed by respondent Sansaet
in the preliminary investigation were prepared and falsified by his co-respondents in
this case in the house of respondent Paredes. To evade responsibility for his own
participation in the scheme, he claimed that he did so upon the instigation and
inducement of respondent Paredes. This was intended to pave the way for his
discharge as a government witness in the consolidated cases, as in fact a motion
therefor was filed by the prosecution pursuant to their agreement.
 Withal, in a resolution[16] dated February 24, 1992, the Ombudsman approved
the filing of falsification charges against all the herein private respondents. The
proposal for the discharge of respondent Sansaet as a state witness was rejected by
the Ombudsman on this evaluative legal position:
x x x Taking his explanation, it is difficult to believe that a lawyer of his stature, in the
absence of deliberate intent to conspire, would be unwittingly induced by another to commit
a crime. As counsel for the accused in those criminal cases, Atty. Sansaet had control over
the case theory and the evidence which the defense was going to present. Moreover, the
testimony or confession of Atty. Sansaet falls under the mantle of privileged
communication between the lawyer and his client which may be objected to, if presented in
the trial.
The Ombudsman refused to reconsider that resolution [17] and, ostensibly to
forestall any further controversy, he decided to file separate informations for
falsification of public documents against each of the herein respondents. Thus, three
criminal cases,[18] each of which named one of the three private respondents here as
the accused therein, were filed in the graft court.However, the same were
consolidated for joint trial in the Second Division of the Sandiganbayan.
As stated at the outset, a motion was filed by the People on July 27, 1993 for
the discharge of respondent Sansaet as a state witness. It was submitted that all the
requisites therefor, as provided in Section 9, Rule 119 of the Rules of Court, were
satisfied insofar as respondent Sansaet was concerned. The basic postulate was
that, except for the eyewitness testimony of respondent Sansaet, there was no other
direct evidence to prove the confabulated falsification of documents by respondents
Honrada and Paredes.
Unfortunately for the prosecution, respondent Sandiganbayan, hewing to the
theory of the attorney-client privilege adverted to by the Ombudsman and invoked by
the two other private respondents in their opposition to the prosecutions motion,
resolved to deny the desired discharge on this ratiocination:
From the evidence adduced, the opposition was able to establish that client and lawyer
relationship existed between Atty. Sansaet and Ceferino Paredes, Jr., before, during and
after the period alleged in the information. In view of such relationship, the facts
surrounding the case, and other confidential matter must have been disclosed by accused
Paredes, as client, to accused Sansaet, as his lawyer in his professional capacity. Therefore,
the testimony of Atty. Sansaet on the facts surrounding the offense charged in the
information is privileged.[19]
Reconsideration of said resolution having been likewise denied, [20] the
controversy was elevated to this Court by the prosecution in an original action for the
issuance of the extraordinary writ of certiorari against respondent Sandiganbayan.
The principal issues on which the resolution of the petition at bar actually turns
are therefore (1) whether or not the projected testimony of respondent Sansaet, as
proposed state witness, is barred by the attorney-client privilege; and (2) whether or
not, as a consequence thereof, he is eligible for discharge to testify as a particeps
criminis.
I
As already stated, respondent Sandiganbayan ruled that due to the lawyer-
client relationship which existed between herein respondents Paredes and Sansaet
during the relevant periods, the facts surrounding the case and other confidential
matters must have been disclosed by respondent Paredes, as client, to respondent
Sansaet, as his lawyer. Accordingly, it found no reason to discuss it further since
Atty. Sansaet cannot be presented as a witness against accused Ceferino S.
Paredes, Jr. without the latters consent.[21]
The Court is of a contrary persuasion. The attorney-client privilege cannot apply
in these cases, as the facts thereof and the actuations of both respondents therein
constitute an exception to the rule. For a clearer understanding of that evidential rule,
we will first sweep aside some distracting mental cobwebs in these cases.
1. It may correctly be assumed that there was a confidential communication
made by Paredes to Sansaet in connection with Criminal Cases Nos. 17791-93 for
falsification before respondent court, and this may reasonably be expected since
Paredes was the accused and Sansaet his counsel therein. Indeed, the fact that
Sansaet was called to witness the preparation of the falsified documents by Paredes
and Honrada was as eloquent a communication, if not more, than verbal statements
being made to him by Paredes as to the fact and purpose of such falsification. It is
significant that the evidentiary rule on this point has always referred to any
communication, without distinction or qualification. [22]
In the American jurisdiction from which our present evidential rule was taken,
there is no particular mode by which a confidential communication shall be made by
a client to his attorney.The privilege is not confined to verbal or written
communications made by the client to his attorney but extends as well to information
communicated by the client to the attorney by other means. [23]
Nor can it be pretended that during the entire process, considering their past
and existing relations as counsel and client and, further, in view of the purpose for
which such falsified documents were prepared, no word at all passed between
Paredes and Sansaet on the subject matter of that criminal act. The clincher for this
conclusion is the undisputed fact that said documents were thereafter filed by
Sansaet in behalf of Paredes as annexes to the motion for reconsideration in the
preliminary investigation of the graft case before the Tanodbayan. [24]Also, the acts
and words of the parties during the period when the documents were being falsified
were necessarily confidential since Paredes would not have invited Sansaet to his
house and allowed him to witness the same except under conditions of secrecy and
confidence.
2. It is postulated that despite such complicity of Sansaet at the instance of
Paredes in the criminal act for which the latter stands charged, a distinction must be
made between confidential communications relating to past crimes already
committed, and future crimes intended to be committed, by the client. Corollarily, it is
admitted that the announced intention of a client to commit a crime is not included
within the confidences which his attorney is bound to respect. Respondent court
appears, however, to believe that in the instant case it is dealing with a past crime,
and that respondent Sansaet is set to testify on alleged criminal acts of respondents
Paredes and Honrada that have already been committed and consummated.
 The Court reprobates the last assumption which is flawed by a somewhat
inaccurate basis. It is true that by now, insofar as the falsifications to be testified to
in respondent court are concerned, those crimes were necessarily committed in the
past. But for the application of the attorney-client privilege, however, the period to be
considered is the date when the privileged communication was made by the client to
the attorney in relation to either a crime committed in the past or with respect to a
crime intended to be committed in the future. In other words, if the client seeks his
lawyers advice with respect to a crime that the former has theretofore committed, he
is given the protection of a virtual confessional seal which the attorney-client privilege
declares cannot be broken by the attorney without the clients consent. The same
privileged confidentiality, however, does not attach with regard to a crime which a
client intends to commit thereafter or in the future and for purposes of which he seeks
the lawyers advice.
Statements and communications regarding the commission of a crime already
committed, made by a party who committed it, to an attorney, consulted as such,
are privilegedcommunications. Contrarily, the unbroken stream of judicial dicta is to
the effect that communications between attorney and client having to do with the
clients contemplated criminal acts, or in aid or furtherance thereof, are not covered
by the cloak of privileges ordinarily existing in reference to communications between
attorney and client.[25] (Emphases supplied.)
3. In the present cases, the testimony sought to be elicited from Sansaet as
state witness are the communications made to him by physical acts and/or
accompanying words of Paredes at the time he and Honrada, either with the active
or passive participation of Sansaet, were about to falsify, or in the process of
falsifying, the documents which were later filed in the Tanodbayan by Sansaet and
culminated in the criminal charges now pending in respondent
Sandiganbayan. Clearly, therefore, the confidential communications thus made by
Paredes to Sansaet were for purposes of and in reference to the crime of falsification
which had not yet been committed in the past by Paredes but which he, in
confederacy with his present co-respondents, later committed. Having been made
for purposes of a future offense, those communications are outside the pale of the
attorney-client privilege.
4. Furthermore, Sansaet was himself a conspirator in the commission of that
crime of falsification which he, Paredes and Honrada concocted and foisted upon the
authorities. It is well settled that in order that a communication between a lawyer and
his client may be privileged, it must be for a lawful purpose or in furtherance of a
lawful end. The existence of an unlawful purpose prevents the privilege from
attaching.[26] In fact, it has also been pointed out to the Court that the prosecution of
the honorable relation of attorney and client will not be permitted under the guise of
privilege, and every communication made to an attorney by a client for a criminal
purpose is a conspiracy or attempt at a conspiracy which is not only lawful to divulge,
but which the attorney under certain circumstances may be bound to disclose at once
in the interest of justice.[27]
It is evident, therefore, that it was error for respondent Sandiganbayan to insist
that such unlawful communications intended for an illegal purpose contrived by
conspirators are nonetheless covered by the so-called mantle of privilege. To prevent
a conniving counsel from revealing the genesis of a crime which was later committed
pursuant to a conspiracy, because of the objection thereto of his conspiring client,
would be one of the worst travesties in the rules of evidence and practice in the noble
profession of law.
II
On the foregoing premises, we now proceed to the consequential inquiry as to
whether respondent Sansaet qualifies, as a particeps criminis, for discharge from the
criminal prosecution in order to testify for the State. Parenthetically, respondent
court, having arrived at a contrary conclusion on the preceding issue, did not pass
upon this second aspect and the relief sought by the prosecution which are now
submitted for our resolution in the petition at bar. We shall, however, first dispose
likewise of some ancillary questions requiring preludial clarification.
1. The fact that respondent Sandiganbayan did not fully pass upon the query
as to whether or not respondent Sansaet was qualified to be a state witness need
not prevent this Court from resolving that issue as prayed for by petitioner. Where
the determinative facts and evidence have been submitted to this Court such that it
is in a position to finally resolve the dispute, it will be in the pursuance of the ends of
justice and the expeditious administration thereof to resolve the case on the merits,
instead of remanding it to the trial court.[28]
2. A reservation is raised over the fact that the three private respondents here
stand charged in three separate informations. It will be recalled that in its resolution
of February 24, 1992, the Ombudsman recommended the filing of criminal charges
for falsification of public documents against all the respondents herein. That
resolution was affirmed but, reportedly in order to obviate further controversy, one
information was filed against each of the three respondents here, resulting in three
informations for the same acts of falsification.
This technicality was, however, sufficiently explained away during the
deliberations in this case by the following discussion thereof by Mr. Justice Davide,
to wit:
Assuming no substantive impediment exists to block Sansaets discharge as state witness, he
can, nevertheless, be discharged even if indicted under a separate information. I suppose the
three cases were consolidated for joint trial since they were all raffled to the Second
Division of the Sandiganbayan. Section 2, Rule XV of the Revised Rules of the
Sandiganbayan allows consolidation in only one Division of cases arising from the same
incident or series of incidents, or involving common questions of law and fact. Accordingly,
for all legal intents and purposes, Sansaet stood as co-accused and he could be discharged as
state witness. It is of no moment that he was charged separately from his co-accused. While
Section 9 of Rule 119 of the 1985 Rules of Criminal Procedure uses the word jointly, which
was absent in the old provision, the consolidated and joint trial has the effect of making the
three accused co-accused or joint defendants, especially considering that they are charged
for the same offense. In criminal law, persons indicted for the same offense and tried
together are called joint defendants.
As likewise submitted therefor by Mr. Justice Francisco along the same vein,
there having been a consolidation of the three cases, the several actions lost their
separate identities and became a single action in which a single judgment is
rendered, the same as if the different causes of action involved had originally been
joined in a single action.[29]
 Indeed, the former provision of the Rules referring to the situation (w)hen two
or more persons are charged with the commission of a certain offense was too broad
and indefinite; hence the word joint was added to indicate the identity of the charge
and the fact that the accused are all together charged therewith substantially in the
same manner in point of commission and time. The word joint means common to two
or more, as involving the united activity of two or more, or done or produced by two
or more working together, or shared by or affecting two or more. [30] Had it been
intended that all the accused should always be indicted in one and the same
information, the Rules could have said so with facility, but it did not so require in
consideration of the circumstances obtaining in the present case and the problems
that may arise from amending the information. After all, the purpose of the Rule can
be achieved by consolidation of the cases as an alternative mode.
2. We have earlier held that Sansaet was a conspirator in the crime of
falsification, and the rule is that since in a conspiracy the act of one is the act of all,
the same penalty shall be imposed on all members of the conspiracy. Now, one of
the requirements for a state witness is that he does not appear to be the most
guilty.[31] not that he must be the least guilty[32] as is so often erroneously framed or
submitted. The query would then be whether an accused who was held guilty by
reason of membership in a conspiracy is eligible to be a state witness.
To be sure, in People vs. Ramirez, et al.[33] we find this obiter:
It appears that Apolonio Bagispas was the real mastermind. It is believable that he
persuaded the others to rob Paterno, not to kill him for a promised fee. Although he did not
actually commit any of the stabbings, it was a mistake to discharge Bagispas as a state
witness. All the perpetrators of the offense, including him, were bound in a conspiracy that
made them equally guilty.
However, prior thereto, in People vs. Roxas, et al.,[34] two conspirators charged
with five others in three separate informations for multiple murder were discharged
and used as state witnesses against their confederates. Subsequent thereto, in
Lugtu, et al. vs. Court of Appeals, et al.,[35] one of the co-conspirators was discharged
from the information charging him and two others with the crime of estafa. The trial
court found that he was not the most guilty as, being a poor and ignorant man, he
was easily convinced by his two co-accused to open the account with the bank and
which led to the commission of the crime.
On appeal, this Court held that the finding of respondent appellate court that
Lugtu was just as guilty as his co-accused, and should not be discharged as he did
not appear to be not the most guilty, is untenable. In other words, the Court took into
account the gravity or nature of the acts committed by the accused to be discharged
compared to those of his co-accused, and not merely the fact that in law the same
or equal penalty is imposable on all of them.
Eventually, what was just somehow assumed but not explicitly articulated found
expression in People vs. Ocimar, et al.,[36] which we quote in extenso:
Ocimar contends that in the case at bar Bermudez does not satisfy the conditions for the
discharge of a co-accused to become a state witness. He argues that no accused in a
conspiracy can lawfully be discharged and utilized as a state witness, for not one of them
could satisfy the requisite of appearing not to be the most guilty. Appellant asserts that since
accused Bermudez was part of the conspiracy, he is equally guilty as the others.
We do not agree. First, there is absolute necessity for the testimony of Bermudez. For,
despite the presentation of four (4) other witnesses, none of them could positively identify
the accused except Bermudez who was one of those who pulled the highway heist which
resulted not only in the loss of cash, jewelry and other valuables, but even the life of Capt.
Caeba, Jr. It was in fact the testimony of Bermudez that clinched the case for the
prosecution. Second, without his testimony, no other direct evidence was available for the
prosecution to prove the elements of the crime. Third, his testimony could be, as indeed it
was, substantially corroborated in its material points as indicated by the trial court in its
well-reasoned decision. Fourth, he does not appear to be the most guilty. As the evidence
reveals, he was only invited to a drinking party without having any prior knowledge of the
plot to stage a highway robbery. But even assuming that he later became part of the
conspiracy, he does not appear to be the most guilty. What the law prohibits is that the most
guilty will be set free while his co-accused who are less guilty will be sent to jail. And by
most guilty we mean the highest degree of culpability in terms of participation in the
commission of the offense and not necessarily the severity of the penalty imposed. While all
the accused may be given the same penalty by reason of conspiracy, yet one may be
considered least guilty if We take into account his degree of participation in the
perpetration of the offense. Fifth, there is no evidence that he has at any time been convicted
of any offense involving moral turpitude.
xxx
Thus, We agree with the observations of the Solicitor General that the rule on the discharge
of an accused to be utilized as state witness clearly looks at his actual and individual
participation in the commission of the crime, which may or may not have been perpetrated
in conspiracy with the other accused. Since Bermudez was not individually responsible for
the killing committed on the occasion of the robbery except by reason of conspiracy, it
cannot be said then that Bermudez appears to be the most guilty. Hence, his discharge to be
a witness for the government is clearly warranted. (Italics ours.)
The rule of equality in the penalty to be imposed upon conspirators found guilty
of a criminal offense is based on the concurrence of criminal intent in their minds and
translated into concerted physical action although of varying acts or degrees of
depravity. Since the Revised Penal Code is based on the classical school of thought,
it is the identity of the mens rea which is considered the predominant consideration
and, therefore, warrants the imposition of the same penalty on the consequential
theory that the act of one is thereby the act of all.
Also, this is an affair of substantive law which should not be equated with the
procedural rule on the discharge of particeps criminis. This adjective device is based
on other considerations, such as the need for giving immunity to one of them in order
that not all shall escape, and the judicial experience that the candid admission of an
accused regarding his participation is a guaranty that he will testify truthfully. For
those reasons, the Rules provide for certain qualifying criteria which, again, are
based on judicial experience distilled into a judgmental policy.
III
 The Court is reasonably convinced, and so holds, that the other requisites for
the discharge of respondent Sansaet as a state witness are present and should have
been favorably appreciated by the Sandiganbayan.
Respondent Sansaet is the only cooperative eyewitness to the actual
commission of the falsification charged in the criminal cases pending before
respondent court, and the prosecution is faced with the formidable task of
establishing the guilt of the two other co-respondents who steadfastly deny the
charge and stoutly protest their innocence. There is thus no other direct evidence
available for the prosecution of the case, hence there is absolute necessity for the
testimony of Sansaet whose discharge is sought precisely for that purpose. Said
respondent has indicated his conformity thereto and has, for the purposes required
by the Rules, detailed the substance of his projected testimony in his Affidavit of
Explanations and Rectifications.
5) That while the legal issues involved had been already discussed and passed upon by the
Second Division in the aforesaid Resolution, however, after going over the arguments
submitted by the Solicitor-General and re-assessing Our position on the matter, We
respectfully beg leave of the Honorable Supreme Court to manifest that We are amenable to
setting aside the questioned Resolutions and to grant the prosecutions motion to discharge
accused Generoso Sansaet as state witness, upon authority of the Honorable Supreme Court
for the issuance of the proper Resolution to that effect within fifteen (15) days from notice
thereof.
WHEREFORE, the writ of certiorari prayed for is hereby granted SETTING
ASIDE the impugned resolutions and ORDERING that the present reliefs sought in
these cases by petitioner be allowed and given due course by respondent
Sandiganbayan.

His testimony can be substantially corroborated on its material points by

reputable witnesses, identified in the basic petition with a digest of their prospective
testimonies, as follows: Judge Ciriaco C. Ario, Municipal Circuit Trial Court in San
Francisco, Agusan del Sur; Provincial Prosecutor and Deputized Ombudsman
Prosecutor Claudio A. Nistal; Teofilo Gelacio, private complainant who initiated the
criminal cases through his letter-complaint; Alberto Juvilan of the Sangguniang
Bayan of San Fernando, Agusan del Sur, who participated in the resolution asking
their Provincial Governor to file the appropriate case against respondent Paredes,
and Francisco Macalit, who obtained the certification of non-arraignment from Judge
Ario.
On the final requirement of the Rules, it does not appear that respondent
Sansaet has at any time been convicted of any offense involving moral
turpitude. Thus, with the confluence of all the requirements for the discharge of this
respondent, both the Special Prosecutor and the Solicitor General strongly urge and
propose that he be allowed to testify as a state witness.
This Court is not unaware of the doctrinal rule that, on this procedural aspect,
the prosecution may propose but it is for the trial court, in the exercise of its sound
discretion, to determine the merits of the proposal and make the corresponding
disposition. It must be emphasized, however, that such discretion should have been
exercised, and the disposition taken on a holistic view of all the facts and issues
herein discussed, and not merely on the sole issue of the applicability of the attorney-
client privilege.
This change of heart and direction respondent Sandiganbayan eventually
assumed, after the retirement of two members of its Second Division [37]and the
reconstitution thereof. In an inversely anticlimactic Manifestation and
Comment [38] dated June 14, 1995, as required by this Court in its resolution on
December 5, 1994, the chairman and new members thereof [39]declared:

4) That the questioned Resolutions of December 22, 1993 and March 7, 1994 upon which
the Petition for Certiorari filed by the prosecution are based, was penned by Associate
Justice Narciso T. Atienza and concurred in by the undersigned and Associate Justice
Augusto M. Amores;
 [G.R. No. 91114. September 25, 1992.]
NELLY LIM, Petitioner, v. THE COURT OF APPEALS, HON. MANUEL D.
VICTORIO, as Presiding Judge of RTC-Rosales, Pangasinan, Branch 53, and
JUAN SIM, Respondents.
Quisumbing, Torres & Evangelista for Petitioner.
Bince, Oficiana & Dancel for Private Respondent.
SYLLABUS
1. REMEDIAL LAW; ACTIONS; EVIDENCE; PRIVILEGED COMMUNICATIONS;
PHYSICIAN-PATIENT PRIVILEGE; RATIONAL BEHIND THE RULE. — This rule
on the physician-patient privilege is intended to facilitate and make safe full and
confidential disclosure by the patient to the physician of all facts, circumstances
and symptoms, untrammeled by apprehension of their subsequent and enforced
disclosure and publication on the witness stand, to the end that the physician may
form a correct opinion, and be enabled safely and efficaciously to treat his patient.
It rests in public policy and is for the general interest of the community.
2. ID.; ID.; ID.; ID.; ID.; SUBJECT TO WAIVER. — Since the object of the privilege
is to protect the patient, it may be waived if no timely objection is made to the
physician’s testimony.
3. ID.; ID.; ID.; ID.; ID.; REQUISITES. — In order that the privilege may be
successfully claimed, the following requisites must concur: "1. the privilege is
claimed in a civil case; 2. the person against whom the privilege is claimed is one
duly authorized to practice medicine, surgery or obstetrics; 3. such person acquired
the information while he was attending to the patient in his professional capacity; 4.
the information was necessary to enable him to act in that capacity; and 5. the
information was confidential, and, if disclosed, would blacken the reputation
(formerly character) of the patient.
4. ID.; ID.; ID.; ID.; CONDITIONS. — These requisites conform with the four (4)
fundamental conditions necessary for the establishment of a privilege against the
disclosure of certain communications, to wit: "1. The communications must
originate in a confidence that they will not be disclosed. 2. This element of
confidentiality must be essential to the full and satisfactory maintenance of the
relation between the parties. 3. The relation must be one which in the opinion of the
community ought to be sedulously fostered 4. The injury that would inure to the
relation by the disclosure of the communications must be greater than the benefit
thereby gained for the correct disposal of litigation.
5. ID.; ID.; ID.; ID.; PHYSICIAN-PATIENT PRIVILEGE; SCOPE. — The physician
may be considered to be acting in his professional capacity when he attends to the
patient for curative, preventive, or palliative treatment. Thus, only disclosures which
would have been made to the physician to enable him "safely and efficaciously to
treat his patient" are covered by the privilege. It is to be emphasized that "it is the
tenor only of the communication that is privileged. The mere fact of making a
communication, as well as the date of a consultation and the number of
consultations, are therefore not privileged from disclosure, so long as the subject
communicated is not stated.
6. ID.; ID.; ID.; BURDEN OF PROOF AND PRESUMPTIONS; ONE WHO CLAIMS
PRIVILEGED COMMUNICATIONS MUST PROVE REQUISITES THEREOF. —
One who claims this privilege must prove the presence of these aforementioned
requisites.
7. ID.; ID.; ID.; PRIVILEGED COMMUNICATIONS; PHYSICIAN-PATIENT
PRIVILEGE; INFORMATION GATHERED IN PRESENCE OF THIRD PARTIES,
NOT PRIVILEGED. — There is authority to the effect that information elicited
during consultation with a physician in the presence of third parties removes such
information from the mantle of the privilege: "Some courts have held that the casual
presence of a third person destroys the confidential nature of the communication
between doctor and patient and thus destroys the privilege, and that under such
circumstances the doctor may testify. Other courts have reached a contrary result.
8. ID.; ID.; ID.; ID.; ID.; PRIVILEGED, WAIVED IN CASE AT BAR. — while it may
be true that counsel for the petitioner opposed the oral request for the issuance of a
subpoena ad testificandum to Dr. Acampado and filed a formal motion for the
quashal of the said subpoena a day before the witness was to testify, the petitioner
makes no claim in any of her pleadings that her counsel had objected to any
question asked of the witness on the ground that it elicited an answer that would
violate the privilege, despite the trial court’s advise that said counsel may interpose
his objection to the testimony "once it becomes apparent that the testimony, sought
to be elicited is covered by the privileged communication rule." The particular
portions of the stenographic notes of the testimony of Dr. Acampado quoted in the
petitioner’s Petition and Memorandum, and in the private respondent’s
Memorandum, do not at all show that any objections were interposed. Even
granting ex gratia that the testimony of Dr. Acampado could be covered by the
privilege, the failure to seasonably object thereto amounted to a waiver thereof.
DECISION
DAVIDE, JR., J.:
This petition brings into focus the rule on the confidentiality of the physician-patient
relationship. Petitioner urges this Court to strike down as being violative thereof the
resolution of public respondent Court of Appeals in C.A.-G.R. SP No. 16991
denying due course to a petition to annul the order of the trial court allowing a
Psychiatrist of the National Mental Hospital to testify as an expert witness and not
as an attending physician of petitioner.
The parties are in agreement as to the following facts:
Petitioner and private respondent are lawfully married to each other.
On 25 November 1987, private respondent filed with Branch 53 of the Regional
Trial Court (RTC) of Pangasinan a petition for annulment of such marriage on the
ground that petitioner has been allegedly suffering from a mental illness called
schizophrenia "before, during and after the marriage and until the present." After
the issues were joined and the pre-trial was terminated, trial on the merits ensued.
Private respondent presented three (3) witnesses before taking the witness stand
himself to testify on his own behalf. On 11 January 1989, private respondent’s
counsel announced that he would present as his next witness the Chief of the
Female Services of the National Mental Hospital, Dr. Lydia Acampado, a Doctor of
Medicine who specializes in Psychiatry. Said counsel forthwith orally applied for the
issuance of a subpoena ad testificandum requiring Dr. Acampado to testify on 25
January 1989. Petitioner’s counsel opposed the motion on the ground that the
testimony sought to be elicited from the witness is privileged since the latter had
examined the petitioner in a professional capacity and had diagnosed her to be
suffering from schizophrenia. Over such opposition, the subpoena was issued on
12 January 1989.
On 24 January 1989, petitioner’s counsel filed an urgent omnibus motion to quash
the subpoena and suspend the proceedings pending resolution of the motion.
Before Dr. Acampado took the witness stand on 25 January 1989, the court heard
this urgent motion. Movant argued that having seen and examined the petitioner in
a professional capacity, Dr. Acampado is barred from testifying under the rule on
the confidentiality of a physician-patient relationship. Counsel for private
respondent contended, however, that Dr. Acampado would be presented as an
expert witness and would not testify on any information acquired while attending to
the petitioner in a professional capacity. The trial court, per respondent Judge,
denied the motion and allowed the witness to testify. Dr. Acampado thus took the
witness stand, was qualified by counsel for private respondent as an expert witness
and was asked hypothetical questions related to her field of expertise. She neither
revealed the illness she examined and treated the petitioner for nor disclosed the
results of her examination and the medicines she had prescribed.
Since petitioner’s counsel insisted that the ruling of the court on the motion be
reduced to writing, respondent Judge issued the following Order on the same
date:jgc:chanrobles.com.ph
"In his omnibus motion filed with the Court only yesterday, January 24, 1989,
petitioner seeks to prevent Dr. Lydia Acampado from testifying because she saw
and examined respondent Nelly Lim in her professional capacity perforce her
testimony is covered by the privileged (sic) communication rule.
Petitioner contends that Dr. Acampado is being presented as an expert witness and
that she will not testify on any information she acquired in (sic) attending to Nelly
Lim in her professional capacity.
Based on the foregoing manifestation of counsel for petitioner, the Court denied the
respondent’s motion and forthwith allowed Dr. Acampado to testify. However, the
Court advised counsel for respondent to interpose his objection once it becomes
apparent that the testimony sought to be elicited is covered by the privileged
communication rule.
On the witness box, Dr. Acampado answered routinary (sic) questions to qualify her
as an expert in psychiatry; she was asked to render an opinion as to what kind of
illness (sic) are stelazine tablets applied to; she was asked to render an opinion on
a (sic) hypothetical facts respecting certain behaviours of a person; and finally she
admitted she saw and treated Nelly Lim but she never revealed what illness she
examined and treated her (sic); nor (sic) the result of her examination of Nelly Lim,
nor (sic) the medicines she prescribed.
WHEREFORE, the omnibus motion dated January 19, 1989 is hereby DENIED." 1
On 3 March 1989, petitioner filed with the public respondent Court of Appeals a
petition 2 for certiorariand prohibition, docketed therein as C.A.-G.R. SP No. 16991,
to annul the aforesaid order of respondent Judge on the ground that the same was
issued with grave abuse of discretion amounting to lack of jurisdiction, and to
prohibit him from proceeding with the reception of Dr. Acampado’s testimony.
On 18 September 1989, the Court of Appeals promulgated a resolution 3 denying
due course to the petition on the ground that "the petitioner failed in establishing the
confidential nature of the testimony given by or obtained from Dr. Acampado when
she testified on January 25, 1989." Hence, the respondent Judge committed no
grave abuse of discretion. In support thereof, the respondent Court discussed the
conditions which would render as inadmissible testimonial evidence between a
physician and his patient under paragraph (c), Section 24, Rule 130 of the Revised
Rules of Court and made the following findings:jgc:chanrobles.com.ph
"The present suit is a civil case for annulment of marriage and the person whose
testimony is sought to be stopped as a privileged communication is a physician,
who was summoned by the patient in her professional capacity for curative remedy
or treatment. The divergence in views is whether the information given by the
physician in her testimony in open court on January 25, 1989 was a privileged
communication. We are of the opinion that they do not fall within the realm of a
privileged communication because the information were (sic) not obtained from the
patient while attending her in her professional capacity and neither were (sic) the
information necessary to enable the physician to prescribe or give treatment to the
patient Nelly Lim. And neither does the information obtained from the physician
tend to blacken the character of the patient or bring disgrace to her or invite
reproach. Dr. Acampado is a Medical Specialist II and in-charge (sic) of the Female
Service of the National Center for Mental Health a fellow of the Philippine
Psychiatrist Association and a Diplomate of the Philippine Board of Psychiatrists.
She was summoned to testify as an expert witness and not as an attending
physician of petitioner.
After a careful scrutiny of the transcript of Dr. Acampado’s testimony, We find no
declaration that touched (sic) or disclosed any information which she has acquired
from her patient, Nelly Lim, during the period she attended her patient in a
professional capacity. Although she testified that she examined and interviewed the
patient, she did not disclose anything she obtained in the course of her
examination, interview and treatment of her patient. Given a set of facts and asked
a hypothetical question, Dr. Acampado rendered an opinion regarding the history
and behaviour of the fictitious character in the hypothetical problem. The facts and
conditions alleged in the hypothetical problem did not refer and (sic) had no bearing
to (sic) whatever information or findings the doctor obtained from attending the (sic)
patient. A physician is not disqualified to testify as an expert concerning a patient’s
ailment, when he can disregard knowledge acquired in attending such patient and
make answer solely on facts related in (sic) the hypothetical question. (Butler v.
Role, 242 Pac. 436; Supreme Court of Arizona Jan. 7, 1926). Expert testimony of a
physician based on hypothetical question (sic) as to cause of illness of a person
whom he has attended is not privileged, provided the physician does not give
testimony tending to disclose confidential information related to him in his
professional capacity while attending to the patient. (Crago v. City of Cedar Rapids,
98 NW 354, see Jones on Evidence, Vol. 3, p. 843, 3rd Ed.).
The rule on privilege (sic) communication in the relation of physician and patient
proceeds from the fundamental assumption that the communication to deserve
protection must be confidential in their origin. Confidentiality is not to be blindly
implied from the mere relation of physician and patient. It might be implied
according to circumstances of each case, taking into consideration the nature of the
ailment and the occasion of the consultation. The claimant of the privilege has the
burden of establishing in each instance all the facts necessary to create the
privilege, including the confidential nature of the information given." 4
Her motion to reconsider the resolution having been denied, petitioner took this
recourse under Rule 45 of the Rules of Court. In her view, the respondent Court of
Appeals "seriously erred" :
"I.
. . . in not finding that all the essential elements of the rule on physician-patient
privileged communication under Section 21, Rule 130 of the Rules of Court
(Section 24, Rule 130 of the Revised Rules of Evidence) exist in the case at bar.
II.
. . . in believing that Dr. Acampado ‘was summoned as an expert witness and not
as an attending physician of petitioner.’
III.
. . . in concluding that Dr. Acampado made ‘no declaration that touched (sic) or
disclosed any information which she has acquired from her patient, Nelly Lim,
during the period she attended her patient in a professional capacity.’
IV.
. . . in declaring that ‘the petitioner failed in establishing the confidential nature of
the testimony given by or obtained from Dr. Acampado.’" 5
We gave due course to the petition and required the parties to submit their
respective Memoranda 6 after the private respondent filed his Comment 7 and the
petitioner submitted her reply 8 thereto. The parties subsequently filed their
separate Memoranda.
The petition is devoid of any merit. Respondent Court of Appeals committed no
reversible error in its challenged resolution.
The law in point is paragraph (c), Section 24 of the Revised Rules on Evidence
which reads:jgc:chanrobles.com.ph
"SECTION 24. Disqualification by reason of privileged communication. — The
following persons cannot testify as to matters learned in confidence in the following
cases:
x x x
(c) A person authorized to practice medicine, surgery or obstetrics cannot in a civil
case, without the consent of the patient, be examined as to any advice or treatment
given by him or any information which he may have acquired in attending such
patient in a professional capacity, which information was necessary to enable him
to act in that capacity, and which would blacken the reputation of the
patient." chanrobles virtual lawlibrary
This is a reproduction of paragraph (c), Section 21, Rule 130 of the 1964 Revised
Rules of Court with two (2) modifications, namely: (a) the inclusion of the phrase
"advice or treatment given by him," and (b) substitution of the word reputation for
the word character. Said Section 21 in turn is a reproduction of paragraph (f),
Section 26, Rule 123 of the 1940 Rules of Court with a modification consisting in
the change of the phrase "which would tend to blacken" in the latter to "would
blacken." 9 Verily, these changes affected the meaning of the provision. Under the
1940 Rules of Court, it was sufficient if the information would tend to blacken the
character of the patient. In the 1964 Rules of Court, a stricter requirement was
imposed; it was imperative that the information would blacken such character. With
the advent of the Revised Rules on Evidence on 1 July 1989, the rule was relaxed
once more by the substitution of the word character with the word reputation. There
is a distinction between these two concepts." ‘Character’ is what a man is, and
‘reputation’ is what he is supposed to be in what people say he is.’Character’
depends on attributes possessed, and ‘reputation’ on attributes which others
believe one to possess. The former signifies reality and the latter merely what is
accepted to be reality at present." 10
This rule on the physician-patient privilege is intended to facilitate and make safe
full and confidential disclosure by the patient to the physician of all facts,
circumstances and symptoms, untrammeled by apprehension of their subsequent
and enforced disclosure and publication on the witness stand, to the end that the
physician may form a correct opinion, and be enabled safely and efficaciously to
treat his patient. 11 It rests in public policy and is for the general interest of the
community. 12
Since the object of the privilege is to protect the patient, it may be waived if no
timely objection is made to the physician’s testimony. 13
In order that the privilege may be successfully claimed, the following requisites
must concur:jgc:chanrobles.com.ph
"1. the privilege is claimed in a civil case;
2. the person against whom the privilege is claimed is one duly authorized to
practice medicine, surgery or obstetrics;
3. such person acquired the information while he was attending to the patient in his
professional capacity;
4. the information was necessary to enable him to act in that capacity; and
5. the information was confidential, and, if disclosed, would blacken the reputation
(formerly character) of the patient." 14
These requisites conform with the four (4) fundamental conditions necessary for the
establishment of a privilege against the disclosure of certain communications, to
wit:jgc:chanrobles.com.ph
"1. The communications must originate in a confidence that they will not be
disclosed.
2. This element of confidentiality must be essential to the full and satisfactory
maintenance of the relation between the parties.
3. The relation must be one which in the opinion of the community ought to be
sedulously fostered
4. The injury that would inure to the relation by the disclosure of the
communications must be greater than the benefit thereby gained for the correct
disposal of litigation." 15
The physician may be considered to be acting in his professional capacity when he
attends to the patient for curative, preventive, or palliative treatment. Thus, only
disclosures which would have been made to the physician to enable him "safely
and efficaciously to treat his patient" are covered by the privilege. 16 It is to be
emphasized that "it is the tenor only of the communication that is privileged. The
mere fact of making a communication, as well as the date of a consultation and the
number of consultations, are therefore not privileged from disclosure, so long as the
subject communicated is not stated." 17
One who claims this privilege must prove the presence of these aforementioned
requisites. 18
Our careful evaluation of the submitted pleadings leads Us to no other course of
action but to agree with the respondent Court’s observation that the petitioner failed
to discharge that burden. In the first place, Dr. Acampado was presented and
qualified as an expert witness. As correctly held by the Court of Appeals, she did
not disclose anything obtained in the course of her examination, interview and
treatment of the petitioner; moreover, the facts and conditions alleged in the
hypothetical problem did not refer to and had no bearing on whatever information or
findings the doctor obtained while attending to the patient. There is, as well, no
showing that Dr. Acampado’s answers to the questions propounded to her relating
to the hypothetical problem were influenced by the information obtained from the
petitioner. Otherwise stated, her expert opinion excluded whatever information or
knowledge she had about the petitioner which was acquired by reason of the
physician-patient relationship existing between them. As an expert witness, her
testimony before the trial court cannot then be excluded. The rule on this point is
summarized as follows:chanrobles virtual lawlibrary
"The predominating view, with some scant authority otherwise, is that the statutory
physician-patient privilege, though duly claimed, is not violated by permitting a
physician to give expert opinion testimony in response to a strictly hypothetical
question in a lawsuit involving the physical mental condition of a patient whom he
has attended professionally, where his opinion is based strictly upon the
hypothetical facts stated, excluding and disregarding any personal professional
knowledge he may have concerning such patient. But in order to avoid the bar of
the physician-patient privilege where it is asserted in such a case, the physician
must base his opinion solely upon the facts hypothesized in the question, excluding
from consideration his personal knowledge of the patient acquired through the
physician and patient relationship. If he cannot or does not exclude from
consideration his personal professional knowledge of the patient’s condition he
should not be permitted to testify as to his expert opinion." 19
Secondly, it is quite clear from Dr. Acampado’s testimony that the petitioner was
never interviewed alone. Said interviews were always conducted in the presence of
a third party, thus:jgc:chanrobles.com.ph
"Q I am asking you, doctor, whom did you interview?
A I interviewed the husband first, then the father and after having the history, I
interviewed the patient, Nelly.
Q How many times did Juan Sim and Nelly Lim go to your office?
A Now, the two (2) of them came three (3) times. As I have stated before, once in
the month of April of 1987 and two (2) times for the month of June 1987, and after
that, since July of 1987, it was the father of Nelly, Dr. Lim, who was bringing Nelly
to me until November of 1987.
Q Now, Dr. Lim is a fellow physician?
A Yes, I understand.
Q Was there anything that he told you when he visited with you in a clinic?
A I would say that there was none. Even if I asked information about Nelly, I could
not get anything from Dr. Lim.
Q Now, when Dr. Lim and his daughter went to your clinic, was there any doctor
who was also present during that interview?
A No, sir, I don’t remember any." 20
There is authority to the effect that information elicited during consultation with a
physician in the presence of third parties removes such information from the mantle
of the privilege:jgc:chanrobles.com.ph

"Some courts have held that the casual presence of a third person destroys the
confidential nature of the communication between doctor and patient and thus
destroys the privilege, and that under such circumstances the doctor may testify.
Other courts have reached a contrary result." 21

Thirdly, except for the petitioner’s sweeping claim — that" (T)he information given
by Dr. Acampado brings disgrace and invite (sic) reproach to petitioner by falsely
making it appear in the eyes of the trial court and the public that the latter was
suffering from a mental disturbance called schizophrenia — which caused, and
continues to cause, irreparable injury to the name and reputation of petitioner and
her family," 22 — which is based on a wrong premise, nothing specific or concrete
was offered to show that indeed, the information obtained from Dr. Acampado
would blacken the former’s "character" (or "reputation"). Dr. Acampado never
disclosed any information obtained from the petitioner regarding the latter’s ailment
and the treatment recommended therefor.

Finally, while it may be true that counsel for the petitioner opposed the oral request
for the issuance of a subpoena ad testificandum to Dr. Acampado and filed a formal
motion for the quashal of the said subpoena a day before the witness was to testify,
the petitioner makes no claim in any of her pleadings that her counsel had objected
to any question asked of the witness on the ground that it elicited an answer that
would violate the privilege, despite the trial court’s advise that said counsel may
interpose his objection to the testimony "once it becomes apparent that the
testimony, sought to be elicited is covered by the privileged communication rule."
The particular portions of the stenographic notes of the testimony of Dr. Acampado
quoted in the petitioner’s Petition 23 and Memorandum, 24 and in the private
respondent’s Memorandum, 25 do not at all show that any objections were
interposed. Even granting ex gratia that the testimony of Dr. Acampado could be
covered by the privilege, the failure to seasonably object thereto amounted to a
waiver thereof.

WHEREFORE, the instant petition is DENIED for lack of merit.

G.R. No. 108854 June 14, 1994
MA. PAZ FERNANDEZ KROHN, petitioner,
vs.
COURT OF APPEALS and EDGAR KROHN, JR., respondents.
Cruz, Durian, Agabin, Atienza, Alday and Tuason for petitioner.
Oscar F. Martinez for private respondent.
BELLOSILLO, J.:
A confidential psychiatric evaluation report is being presented in evidence before
the trial court in a petition for annulment of marriage grounded on psychological
incapacity. The witness testifying on the report is the husband who initiated the
annulment proceedings, not the physician who prepared the report.
The subject of the evaluation report, Ma. Paz Fernandez Krohn, invoking the rule
on privileged communication between physician and patient, seeks to enjoin her
husband from disclosing the contents of the report. After failing to convince the trial
court and the appellate court, she is now before us on a petition for review
on certiorari.
On 14 June 1964, Edgar Krohn, Jr., and Ma. Paz Fernandez were married at the
Saint Vincent de Paul Church in San Marcelino, Manila. The union produced three
children, Edgar Johannes, Karl Wilhelm and Alexandra. Their blessings
notwithstanding, the relationship between the couple developed into a stormy one.
In 1971, Ma. Paz underwent psychological testing purportedly in an effort to ease
the marital strain. The effort however proved futile. In 1973, they finally separated in
fact.
In 1975, Edgar was able to secure a copy of the confidential psychiatric report on
Ma. Paz prepared and signed by Drs. Cornelio Banaag, Jr., and Baltazar Reyes.
On 2 November 1978, presenting the report among others, he obtained a decree
("Conclusion") from the Tribunal Metropolitanum Matrimoniale in Manila nullifying
his church marriage with Ma. Paz on the ground of "incapacitas assumendi onera
conjugalia due to lack of due discretion existent at the time of the wedding and
thereafter." 1 On 10 July 1979, the decree was confirmed and pronounced "Final
and Definite." 2
Meanwhile, on 30 July 1982, the then Court of First Instance (now Regional Trial
Court) of Pasig, Br. II, issued an order granting the voluntary dissolution of the
conjugal partnership.
On 23 October 1990, Edgar filed a petition for the annulment of his marriage with
Ma. Paz before the trial court. 3 In his petition, he cited the Confidential Psychiatric
Evaluation Report which Ma. Paz merely denied in her Answer as "either
unfounded or irrelevant." 4
At the hearing on 8 May 1991, Edgar took the witness stand and tried to testify on
the contents of the Confidential Psychiatric Evaluation Report. This was objected to
on the ground that it violated the rule on privileged communication between
physician and patient. Subsequently, Ma. Paz filed a Manifestation expressing her
"continuing objection" to any evidence, oral or documentary, "that would thwart the
physician-patient privileged communication rule," 5 and thereafter submitted a
Statement for the Record asserting among others that "there is no factual or legal
basis whatsoever for petitioner (Edgar) to claim 'psychological incapacity' to annul
their marriage, such ground being completely false, fabricated and merely an
afterthought." 6 Before leaving for Spain where she has since resided after their
separation, Ma. Paz also authorized and instructed her counsel to oppose the suit
and pursue her counterclaim even during her absence.
On 29 May 1991, Edgar opposed Ma. Paz' motion to disallow the introduction of the
confidential psychiatric report as evidence, 7 and afterwards moved to strike out
Ma. Paz' Statement for the Record. 8
On 4 June 1991, the trial court issued an Order admitting the Confidential
Psychiatric Evaluation Report in evidence and ruling that —
. . . the Court resolves to overrule the objection and to sustain the
Opposition to the respondent's Motion; first, because the very
issue in this case is whether or not the respondent had been
suffering from psychological incapacity; and secondly, when the
said psychiatric report was referred to in the complaint, the
respondent did not object thereto on the ground of the supposed
privileged communication between patient and physician. What
was raised by the respondent was that the said psychiatric report
was irrelevant. So, the Court feels that in the interest of justice
and for the purpose of determining whether the respondent as
alleged in the petition was suffering from psychological
incapacity, the said psychiatric report is very material and may be
testified to by petitioner (Edgar Krohn, Jr.) without prejudice on
the part of the respondent to dispute the said report or to cross-
examination first the petitioner and later the psychiatrist who
prepared the same if the latter will be presented. 9
On 27 November 1991, the trial court denied the Motion to Reconsider Order dated
June 4, 1991, and directed that the Statement for the Record filed by Ma. Paz be
stricken off the record. A subsequent motion for reconsideration filed by her
counsel was likewise denied.
Counsel of Ma. Paz then elevated the issue to respondent Court of Appeals. In a
Decision promulgated 30 October 1992, the appellate court dismissed the petition
for certiorari. 10 On 5 February 1993, the motion to reconsider the dismissal was
likewise denied. Hence, the instant petition for review.
Petitioner now seeks to enjoin the presentation and disclosure of the contents of
the psychiatric report and prays for the admission of her Statement for the Record
to form part of the records of the case. She argues that since
Sec. 24, par. (c), Rule 130, of the Rules of Court 11 prohibits a physician from
testifying on matters which he may have acquired in attending to a patient in a
professional capacity, "WITH MORE REASON should be third person (like
respondent-husband in this particular instance) be PROHIBITED from testifying on
privileged matters between a physician and patient or from submitting any medical
report, findings or evaluation prepared by a physician which the latter has acquired
as a result of his confidential and privileged relation with a patient." 12 She says that
the reason behind the prohibition is —
. . . to facilitate and make safe, full and confidential disclosure by
a patient to his physician of all facts, circumstances and
symptoms, untrammeled by apprehension of their subsequent
and enforced disclosure and publication on the witness stand, to
the end that the physician may form a correct opinion, and be
enabled safely and efficaciously to treat his patient. 13
She further argues that to allow her husband to testify on the contents of the
psychiatric evaluation report "will set a very bad and dangerous precedent because
it abets circumvention of the rule's intent in preserving the sanctity, security and
confidence to the relation of physician and his patient." 14 Her thesis is that what
cannot be done directly should not be allowed to be done indirectly.
Petitioner submits that her Statement for the Record simply reiterates under oath
what she asserted in her Answer, which she failed to verify as she had already left
for Spain when her Answer was filed. She maintains that her "Statement for the
Record is a plain and simple pleading and is not as it has never been intended to
take the place of her testimony;" 15 hence, there is no factual and legal basis
whatsoever to expunge it from the records.
Private respondent Edgar Krohn, Jr., however contends that "the rules are very
explicit: the prohibition applies only to a physician. Thus . . . the legal prohibition to
testify is not applicable to the case at bar where the person sought to be barred
from testifying on the privileged communication is the husband and not the
physician of the petitioner." 16In fact, according to him, the Rules sanction his
testimony considering that a husband may testify against his wife in a civil case
filed by one against the other.
Besides, private respondent submits that privileged communication may be waived
by the person entitled thereto, and this petitioner expressly did when she gave her
unconditional consent to the use of the psychiatric evaluation report when it was
presented to the Tribunal Metropolitanum Matrimoniale which took it into account
among others in deciding the case and declaring their marriage null and void.
Private respondent further argues that petitioner also gave her implied consent
when she failed to specifically object to the admissibility of the report in her Answer
where she merely described the evaluation report as "either unfounded or
irrelevant." At any rate, failure to interpose a timely objection at the earliest
opportunity to the evidence presented on privileged matters may be construed as
an implied waiver.
With regard to the Statement for the Record filed by petitioner, private respondent
posits that this in reality is an amendment of her Answer and thus should comply
with pertinent provisions of the Rules of Court, hence, its exclusion from the
records for failure to comply with the Rules is proper.
The treatise presented by petitioner on the privileged nature of the communication
between physician and patient, as well as the reasons therefor, is not doubted.
Indeed, statutes making communications between physician and patient privileged
are intended to inspire confidence in the patient and encourage him to make a full
disclosure to his physician of his symptoms and condition. 17 Consequently, this
prevents the physician from making public information that will result in humiliation,
embarrassment, or disgrace to the patient. 18 For, the patient should rest assured
with the knowledge that the law recognizes the communication as confidential, and
guards against the possibility of his feelings being shocked or his reputation
tarnished by their subsequent disclosure. 19 The physician-patient privilege creates
a zone of privacy, intended to preclude the humiliation of the patient that may follow
the disclosure of his ailments. Indeed, certain types of information communicated in
the context of the physician-patient relationship fall within the constitutionally
protected zone of privacy, 20 including a patient's interest in keeping his mental
health records confidential. 21 Thus, it has been observed that the psychotherapist-
patient privilege is founded upon the notion that certain forms of antisocial behavior
may be prevented by encouraging those in need of treatment for emotional
problems to secure the services of a psychotherapist.
Petitioner's discourse while exhaustive is however misplaced. Lim v. Court of
Appeals 22 clearly lays down the requisites in order that the privilege may be
successfully invoked: (a) the privilege is claimed in a civil case; (b) the person
against whom the privilege is claimed is one duly authorized to practice medicine,
surgery or obstetrics; (c) such person acquired the information while he was
attending to the patient in his professional capacity; (d) the information was
necessary to enable him to act in that capacity; and, (e) the information was
confidential and, if disclosed, would blacken the reputation (formerly character) of
the patient.
In the instant case, the person against whom the privilege is claimed is not one duly
authorized to practice medicine, surgery or obstetrics. He is simply the patient's
husband who wishes to testify on a document executed by medical practitioners.
Plainly and clearly, this does not fall within the claimed prohibition. Neither can his
testimony be considered a circumvention of the prohibition because his testimony
cannot have the force and effect of the testimony of the physician who examined
the patient and executed the report.
Counsel for petitioner indulged heavily in objecting to the testimony of private
respondent on the ground that it was privileged. In his Manifestation before the trial
court dated 10 May 1991, he invoked the rule on privileged communications but
never questioned the testimony as hearsay. It was a fatal mistake. For, in failing to
object to the testimony on the ground that it was hearsay, counsel waived his right
to make such objection and, consequently, the evidence offered may be admitted.

The other issue raised by petitioner is too trivial to merit the full attention of this
Court. The allegations contained in the Statement for the Records are but
refutations of private respondent's declarations which may be denied or disproved
during the trial.

The instant appeal has taken its toll on the petition for annulment. Three years have
already lapsed and private respondent herein, as petitioner before the trial court,
has yet to conclude his testimony thereat. We thus enjoin the trial judge and the
parties' respective counsel to act with deliberate speed in resolving the main action,
and avoid any and all stratagems that may further delay this case. If all lawyers are
allowed to appeal every perceived indiscretion of a judge in the course of trial and
include in their appeals depthless issues, there will be no end to litigations, and the
docket of appellate courts will forever be clogged with inconsequential cases.
Hence, counsel should exercise prudence in appealing lower court rulings and
raise only legitimate issues so as not to retard the resolution of cases. Indeed,
there is no point in unreasonably delaying the resolution of the petition and
prolonging the agony of the wedded couple who after coming out from a storm still
have the right to a renewed blissful life either alone or in the company of each
other. 23

WHEREFORE, the instant petition for review is DENIED for lack of merit. The
assailed Decision of respondent Court of Appeals promulgated on 30 October 1992
is AFFIRMED.

SO ORDERED.
G.R. No. 70054 July 8, 1986
BANCO FILIPINO, petitioner,
vs.
MONETARY BOARD, ET AL., respondents.
Ramon Quisumbing and Norberto Quisumbing and Emmanuel Pelaez for
petitioner.
Inigo B. Regalado, Jr. counsel for Central Bank.
Sycip, Salazar, Feliciano & Hernandez for respondents.
RESOLUTION
On November 4, 1985, Petitioner Bank filed in the instant case a "Motion to Pay
Back Salaries to All BF Officers and Employees from February to August 29, 1985"
in connection with its "Opposition to Respondents" Motion for Reconsideration or
for Clarification of the Resolution of the Court En Banc of October 8, 1985." On
November 7, 1985, this Court referred said motion to pay back salaries to Branch
136 (Judge Ricardo Francisco, presiding) of the Makati Regional Trial Court, which
this Court had earlier directed under our Resolution of October 8, 1985 issued in
G.R. No. 77054, to conduct hearings on the matter of the closure of petitioner Bank
and its alleged pre-planned liquidation.
On January 22, 1986, said Regional Trial Court, after considering the petitioner's
motion of November 4, 1985, the respondents' opposition thereto dated January
15, 1986; the petitioner's Reply dated January 16, 1986, and the respondents'
Rejoinder dated January 20, 1986, issued an order directing
the respondents herein "to pay all officers and employees of petitioner their back
salaries and wages corresponding to the period from February to August 29, 1985."
On February 4, 1986, respondents herein filed with this Court an "Appeal from, or
Petition to Set Aside, order to Pay Back Salaries dated 22 January 1986" praying
for the reversal and setting aside of the aforestated trial court's Order dated
January 22, 1986. This was formally opposed by Petitioner when it filed its "Answer
to Appeal (re: back salaries)" on February 26, 1986. A month later, on March 26,
1986, respondents filed their "Reply to the Answer" which petitioner traversed in a
"Rejoinder to the Reply" dated April 2, 1986.
In a normal situation, no controversy would be expected in the matter of the
payment of said back salaries because in the instant case, the party praying for the
same is the employer Bank. The attendant circumstances here present have,
however, created a peculiar situation. There is resistance to the claim because the
management of the assets of the Bank has been transferred to the Respondents'
Receiver who perceived that the directive to pay back salaries after closure of the
Bank would be dissipation of the banks' assets to the prejudice of its various
creditors.
There is, however, in this case a significant matter that deserves consideration of
this Court and which must be viewed from the stand-point of equity. What stands
out is that, regardless of whether the employees of Banco Filipino worked or not
after January 25, 1985, there is the uncontested manifestation found in BF's
Answer to the Appeal, dated February 26, 1986 (Vol. IV of Case Records) that:
2. In the fact the receiver/liquidator Carlota Valenzuela had paid
Union employees of petitioner BF back salaries for no work from
January 25, 1985 up to June, 1985. .. (Emphasis supplied)
All employees, thereto, of petitioner Banco Filipino who have not yet received their
back salaries corresponding to the period from January 25, 1985 up to June, 1985
manifestly deserve and ought to be similarly paid by the respondent Monetary
Board. It is but fair that the issue whether or not the employees of petitioner Bank
had actually worked during said period should now be discounted considering this
voluntary act of respondent Monetary Board which would remove by estoppel any
impediment to the receipt by all bank employees of their back salaries from January
25, 1985 up to June, 1985, assuming that some of them have not yet received the
same.
As the remaining period from June, 1985 to August, 1985, involves but a minimal
period only of two (2) months, and considering the unfortunate plight of the
numerous employees who now invoke the symphathetic concern of this Court, and
inasmuch as the appealed Order for the payment of back salaries is only for a
limited period or up to August, 1985, the appealed order of November 7, 1985 may
be sustained.
Petitioner BF and its stockholders have long put on record their consent to this
patment of back salaries of its separated officers and employees. It is also averred
that BF intends to reopen its bank and branches, and the payment of back salaries
to its employees, no less would help in the preservation of its personnel which is
the bank's most important assest, apart from doing justice to those aggrieved
employees. It is mentioned that the Central Bank Liquidator has now more than a
billion pesos in cash of Banco Filipino since it continued to receive payments from
BF borrowers some P1.5 million a day. It is also said that with the deposits of
petitioner BF with the Bank of PI, there is money sufficient to allow the withdrawal
of the sums needed to pay the salaries of the employees who have been now out
of work for over a year. Apparently, no substantial prejudice for the payment of the
distressed employees of the bank for only a specified limited period until the other
issues in the consolidated consideration.
WHEREFORE, ruling that the Order of November 7, 1985 of Judge Ricardo
Francisco, granting salary to the officers and employees of Banco Filipino for the
period from February, 1985 to August 29, 1985, may now be deemed moot and
academic insofar as it relates to the period from January 25, 1985 to June, 1985 up
to August, 1985, covers but a minimal span of two (2) months, the Court
RESOLVES, for the reasons of equity, to allow the aforestated Order to remain
undisturbed and to DISMISS the appeal therefrom. This Order is immediately held
executory.
Gutierrez Jr., J., took no part. (6) Annexes"A","B",and"C"of the joint report of Mr. Tiaoqui, Mr. Aurellano, and Mrs.
Valenzuela;

(7) Schedule of devaluation of CB premises of Paseo de Roxas of same report;

G.R. No. 70054 July 8, 1986
BANCO FILIPINO vs. MONETARY BOARD (8) Schedule of BF's realizable assets from P5,159.44 B to P3,909.23 B as of
January 25, 1985;
Republic of the Philippines
(9) Documents listed in BF's letter to Mrs. Carlota Valenzuela dated October 25,
SUPREME COURT 1985.

Manila
EN BANC
G.R. No. 70054 July 8, 1986
BANCO FILIPINO, petitioner,
vs.
MONETARY BOARD, ET AL., respondents.
RESOLUTION
Subject of this "Petition to Set Aside Order to Produce Documents dated 17
February 1986" is the Order of Branch 136, Regional Trial Court, Makati, granting
the motion of the petitioner herein, based on Section 1, Rule 27, of the Rules of
Court, for the production, inspection, and copying of certain papers and records
which are claimed as needed by the Petitioner Bank for the preparation of its
comments, objections, and exceptions to the Conservator's report dated January 8,
1985, and Receiver's Report dated March 19, 1985. The documents now asked to
be produced, inspected, and copied are the following:
(1) Copies of tapes and transcripts of the Monetary Board (MB) deliberations on the
closure of Banco Filipino (BF) and its meeting on July 27, 1984, and March 22,
1985;
(2) Copies of the letter and reports of first conservator, Mr. Basilio Estanislao, to the
MB and to Central Bank Governor Jose Fernandez;
(3) Papers showing computations of all the interests and penalties charged by the
CB against BF;
(4) Schedule of recommended valuation of reserves per Mr. Tiaoqui's report dated
March 19, 1985;
(5) Adjustment per Annex "C" of Mr. Tiaoqui's report;
In issuing the challenged order, the court below took the view that the Supreme
Court's resolution referring to it the matters relative to the bank's closure does not
preclude the petitioner from availing of this mode of discovery as an additional
means of preparing for the hearing. It considered the documents sought to be
produced as not privileged because these constitute or contain evidence material to
the issues into by the Court. These materials are said to comprise of records of the
administrative proceedings conducted by respondent's officials and representatives
from the inception of and preparation of the challenged reports and the resolution
placing petitioner under receivership and thereafter under liquidation as it is the
regularity and impartiality of these administrative proceedings which are being
assailed by the petitioner, the trial court saw no reason why said documents should
be thus concealed from it.
Respondents Monetary Board and Central Bank take exception to the said order
and pray in their petition before this Court for the reversal and setting aside of the
same. The grounds recited in support of their petition are the following:
(1) The ratiocination of the trial court is wholly in error because the proceedings
before it do not at all deal with either the administrative proceedings conducted by
the respondents or the regularity and impartiality of the CB actions on BF; it does
so simply upon the charge that no "hearing" was given BF prior to those actions of
closure and liquidation. However, no such prior hearing had been called as none is
required by the law and by the Supreme Court decisions in force to this date (Rural
Bank of Lucena, Inc. vs. Arca, 15 SCRA 66, and Rural Bank of Bato vs. IAC, G.R.
65642, Oct. 15, 1984).
(2) The tapes and transcripts of the Monetary Board deliberations are confidential
pursuant to Sections 13 and 15 of the Central Bank Act.
Sec. 13. Withdrawal of persons having a personal
interest. Whenever any member attending a meeting of the
Monetary Board has a material personal interest, directly or
indirectly, in the discussion or resolution of any given matter, said
member shall not participate in the discussion or resolution of the
matter and must retire from the meeting during the deliberation
thereon. The subject matter, when resolved, and the fact that a
member had a personal interest in it, shall be made available to
 the public. The minutes of the meeting shall note the withdrawal
of the member concerned. (As amended by PD No. 1827).
Sec. 15. Responsibility. — Any member of the Monetary Board or
officer or employee of the Central Bank who wilfully violates this
Act or who is guilty of gross negligence in the performance of his
duties shall be held liable for any loss or injury suffered by the
Bank as a result of such violation or negligence. Similar
responsibility shall apply to the disclosure of any information of a
confidential nature about the discussion or resolutions of the
Monetary Board, except as required in Section 13 of this Act, or
about the operations of the Bank, and to the use of such
information for personal gain or to the detriment of the
Government, the Bank or third parties. (As amended by
Presidential Decree No. 72). (Italics supplied).
(3) The Monetary Board deliberations were necessarily held subsequent t• the
submission of the CB reports. They did not enter into the making of those reports
and can have no materiality to any question of fact that may be raised in relation to
their contents.
On April 16, 1986, Petitioner Banco Filipino filed its Comment on Respondent's
petition to set aside the order for the production of the documents. In said pleading,
the petitioner bank assails the respondent's petition on the following grounds:
(1) There is no reason why Banco Filipino should not be furnished the documents,
particularly Nos. 3 to 9 of its motion, when these are merely attachments to the
Supervision and Examination Sector, Dept. It (SES) Reports, copies of which were
given to it pursuant to a Supreme Court order.
(2) The Supreme Court in its referral of October 8, 1985 to the RTC Makati
intended full evidence taking of the proceeding for judicial review of administrative
action filed with the Supreme Court, the trial court being better equipped for
evidence taking.
(3) The respondents cannot claim privilege in refusing to produce the Central Bank
records because it is based only on the generalized interest in confidentiality.
Petitioner cites as a precedent the doctrine established in the case of U.S. vs.
Nixon, 418 U.S. 683, 713, which states that "when the ground for asserting
privilege as to subpoenaed materials sought for use in a criminal case is based
only on the generalized interest in confidentiality, it cannot prevail over the
fundamental demands of due process of law."
(4) The requested documents and records of the Central Bank are material and
relevant because BF is entitled to prove from the CB records (a) that Governor
Fernandez closed BF without a MB resolution and without examiner's reports on
the financial position of BF; (b) that a MB resolution was later made to legalize the
BF closure but it had no supporting examiner's report; (c) that the earlier reports did
not satisfy respondent Governor Fernandez and he ordered the examiners and the
conservator, Gilberto Teodoro, to "improve" them; and (d) that the reports were
then fabricated.
Petitioner adds that what respondents fear is disclosure of their proceedings
because petitioner has accused the CB governor of (a) covering 51% of its
stockholding, (b) encashing BF securities in trickles as fuel a run, (c) appointing a
conservator when the President ordered the MB to grant petitioner a P 3 Billion
credit line, (d) replacing Estanislao with Gilberto Teodoro when the former wanted
to resume normal operations of BF, and (e) changing the conservatorship to
receivership when it appointed Carlota Valenzuela as receiver again without
hearing.
On May 13, 1986, Respondent Monetary Board filed their Reply to Petitioner
Bank's Comment dated April 15, 1986. Respondents argue that:
(1) The case of U.S. vs. Nixon and the other decisions cited by petitioner are
inapplicable because-
a) The authorities cited refer only to a claim of privilege based
only on the generalized interest of confidentiality or on an
executive privilege that is merely presumptive. On the other
hand, the so-called MB deliberations are privileged
communications pursuant to Section 21, Rule 130 of the Rules of
Court because statements and opinions expressed in the
deliberation of the members of the MB are specifically vested
with confidentiality under Secs. 13 and 15 of the Central Bank
Act. The "public interest" requirement for non-disclosure is
evident from the fact that the statute punishes any disclosure of
such deliberations.
b) Petitioner has not in the least shown any relevance or need to
produce the alleged MB deliberations. What petitioner intends to
prove are not "issues" raised in the pleadings of the main
petition.
(2) Petitioner is interested, not in discovering evidence, but in
practicing oppression by the forced publication of the MB
members' confidential statements at board meetings.
(3) The so-called deliberations of the Monetary Board are in truth
merely the individual statements and expressions of opinion of its
members. They are not statements or opinions that can be
imputed to the board itself or to the Central Bank. The transcripts
of stenographic notes on the deliberations of the MB are not
official records of the CB; they are taken merely to assist the
Secretary of the MB in the preparation of the minutes of the
meetings. And as advertedly also, the tape recordings are not
available as these are used over and over again.
The motion for the production of the subject documents was filed by petitioner
pursuant to Section 1, Rule 27, of the Rules of Court. It has been held that "a party
is ordinarily entitled to the production of books, documents and papers which are
material and relevant to the establishment of his cause of action or defense"
(General Electric Co. vs. Superior Court in and for Alameda County, 45 C. 2d 879,
cited in Martin, Rules of Court, 3rd edition, Vol. 2, p. 104). "The test to be applied
by the trial judge in determining the relevancy of documents and the sufficiency of
their description is one of reasonableness and practicability" (Line Corp. of the
Philippines vs. Moran, 59 Phil. 176, 180). "On the ground of public policy, the rules
providing for production and inspection of books and papers do not authorize the
production or inspection of privileged matter, that is, books, papers which because
of their confidential and privileged character could not be received in evidence" (27)
CJS 224). "In passing on a motion for discovery of documents, the courts should be
liberal in determining whether or not documents are relevant to the subject matter
of action" (Hercules Powder Co. vs. Haas Co., U.S. Dist. Ct. Oct. 26, 1944, 9 Fed.
Rules Service, 659, cited in Moran, Comments on the Rules of Court, 1979 Ed. Vol.
2, p. 102). Likewise, "any statute declaring in general terms that official records are
confidential should be liberally construed, to have an implied exception for
disclosure when needed in a court of justice" (Wigmore on Evidence, Vol. VIII, p.
801, citing the case of Marbury vs. Madison, 1 Cr. 137,143).
In the light of the jurisprudence above-cited, this Court holds that no grave abuse of
discretion was committed by the court below in granting petitioner's motion for the
production of the documents enumerated herein. We accept the view taken by the
court below that the documents are not privileged and that these constitute or
contain evidence material to the issues being inquired into by the Court.
With respect to Items Nos. 3 to 9, these are the annexes to the Supervision and
Examination Sector, Dept. II (SES) Reports submitted to the Central Bank and
Monetary Board which were taken into consideration by said respondents in closing
petitioner bank. A copy of the SES Reports was furnished to the petitioner. We,
therefore, fail to see any proper reason why the annexes thereto should be
withheld. Petitioner cannot adequately study and properly analyze the report
without the corresponding annexes. Pertinent and relevant, these could be useful
and even necessary to the preparation by petitioner of its comment, objections and
exceptions to the Conservator's reports and receiver's reports.
Regarding copies of the letter and reports of first Conservator, Mr. Basilio
Estanislao, to the Monetary Board and to Central Bank Governor Fernandez (Item
No. 2) these appear relevant as petitioner has asserted that the above-named
Conservator had in fact wanted to resume normal operations of Banco Filipino but
then he was thereafter replaced by Mr. Gilberto Teodoro. The letter and reports
could be favorable or adverse to the case of petitioner but whatever the result may
be, petitioner should be allowed to photocopy the same.
As to the tapes and transcripts of the Monetary Board deliberations on the closure
of Banco Filipino and its meetings on July 27, 1984, and March 22, 1985, (Item No.
1), respondents contend that "it is obvious from the requirement (Sections 13 and
15 of the Central Bank Act) that the subject matter (of the deliberations), when
resolved. . . shall be made available to the public but the deliberations themselves
are not open to disclosure but are to be kept in confidence." This Court, however,
sees it in a different light. The deliberations may be confidential but not necessarily
absolute and privileged. There is no specific provision in the Central Bank Act, even
in Sections 13 and 15 thereof, which prohibits absolutely the courts from
conducting an inquiry on said deliberations when these are relevant or material to a
matter subject of a suit pending before it. The disclosure is here not intended to
obtain information for personal gain. There is no indication that such disclosure
would cause detriment to the government, to the bank or to third parties.
Significantly, it is the bank itself here that is interested in obtaining what it considers
as information useful and indispensably needed by it to support its position in the
matter being inquired to by the court below.
On the other hand, respondents cite Section 21, Rule 130, Rules of Court which
states:
Section 21. Privileged Communications. The following persons
cannot testify as to matters learned in confidence in the following
cases:
xxx xxx xxx
(e) A public officer cannot be examined during his term of office
or afterwards, as to communications made to him in official
confidence, when the court finds that the public interest would
suffer by disclosure.
But this privilege, as this Court notes, is intended not for the protection of public
officers but for the protection of public interest (Vogel vs. Gruaz 110 U.S. 311 cited
in Moran, Comments on the Rules of Court, 1980 Ed. Vol. 5, p. 211). Where there
is no public interest that would be prejudiced, this invoked rule will not be
applicable.
The rule that a public officer cannot be examined as to
communications made to him in official confidence does not
apply when there is nothing to show that the public interest would
suffer by the disclosure question. ... ,( Agnew vs. Agnew,'52 SD
472, cited in Martin Rules of Court of the Philippines, Third
Edition, Vol. 5, p. 199).
In the case at bar, the respondents have not established that public interest would
suffer by the disclosure of the papers and documents sought by petitioner.
Considering that petitioner bank was already closed as of January 25, 1985, any
disclosure of the aforementioned letters, reports, and transcripts at this time pose
no danger or peril to our economy. Neither will it trigger any bank run nor
compromise state secrets. Respondent's reason for their resistance to the order of
production are tenuous and specious. If the respondents public officials acted
rightfully and prudently in the performance of their duties, there should be nothing
at all that would provoke fear of disclosure
On the contrary, public interests will be best served by the disclosure of the
documents. Not only the banks and its employees but also its numerous depositors
and creditors are entitled to be informed as to whether or not there was a valid and
legal justification for the petitioner's bank closure. It will be well to consider that—

Public interest means more than a mere curiosity; it means

something in which the public, the community at large, has some
pecuniary interest by which their legal rights or liabilities are
affected (State vs. Crocket, 206, p. 816 cited in Words and
Phrases, Vol. 35, p. 229).

IN VIEW OF ALL THE FOREGOING, the order to produce documents dated

February 17, 1986 issued by the court below in S.C.- G.R. No. 70054, is hereby
affirmed, except as to the copies of the tapes relative to the Monetary Board
deliberations on the closure of Banco Filipino on January 25, 1985 and its meetings
on July 27, 1984, and March 22, 1985 and only if such tapes are actually no longer
available taking into account respondent Monetary Board's manifestations that the
tape recording of the deliberations of that Board are, for purposes of economy,
used over and over again inasmuch as these tapes are not required to be kept or
stored. (See Respondent's Reply, dated May 12, 1986; Rollo, Vol. IV, pp. 1288-
1289).