REGALA V. SANDIGANBAYAN 1996Petitioners: Teodoro Regala, Edgardo Angara, Avelino Cruz, Jose Concepcion, Rogelio Vinluan, Victor Lazatin, Eduardo Escueta, Paraja HayudiniRespondents: Sandiganbayan, Presidential Commission on Good Government, Raul RocoTopic: Rule 15.02 (Privileged Communication)

Facts The matters of the instant case are an offshoot of the complaint before the

Sandiganbayan by the Presidential Commission on Good Government (PCGG) against Eduardo M. Cojuangco, Jr. as one of the principal defendants for the recovery of alleged ill-gotten wealth (Civil Case No. 0033), which includes shares of stocks in certain corporations.

o The complaint alleged that petitioners and Cojuangco 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. ACCRA, using its wholly-owned investment arm ACCRA Investments Corporation, became the holder of about 15M shares or 3.3% of the total capital stock of UCPB.

o PCGG wanted to establish that Cojuangco is their client and that it was he who furnished all the monies to the subscription payment. Petitioners were therefore dummies used as instruments in accumulating ill-gotten wealth through government concessions.

Among the defendants were petitioners Teodoro Regala, Edgardo Angara, Avelino Cruz, Eduardo Escueta, and Paraja Hayudini, as well as private respondent Raul Roco, who were all partners of ACCRA Law Firm. ACCRA performed legal services for its clients, particularly the delivery of its client documents which substantiate the client’s equity holdings (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). The the course of said dealings, the members of the firm acquire information relative to the assets of the clients, as well as their personal and business circumstances. They admit that they assisted in the organization and acquisition of the companies in CC33, and acted as nominees-stockholders of said corporations involved in the sequestration proceedings.

PCGG filed a Third Amended Complaint wherein they excluded Roco as party-defendant, based on his undertaking that he will reveal the identity of the principal/s for whom he acted as nominee-stockholder. The conditions for exclusion were: a) the disclosure of the identity of their clients; b) submission of documents substantiating the lawyer-client relationship; and c) submission of deeds of assignments they executed in favor of their clients covering their respective shareholdings.

Petitioners filed a Comment/Opposition seeking to be granted the same treatment as that granted to Roco.

PCGG presented proof of Roco’s compliance, but Roco himself did not refute petitioners’ contention that he did not actually reveal the identity of the client involved in CC33, nor had he undertaken to reveal the identity of the client for whom he acted as nominee-stockholder.

The Sandiganbayan denied petitioners’ exclusion from CC33, due to their refusal to comply with PCGG’s aforementioned conditions.

The ACCRA lawyers moved for reconsideration, but this was denied, hence this petition for certiorari. They contend that Roco’s exclusion granted him favorable treatment. Moreover, they argue that they prohibited from revealing the identity of their principal under their worn mandate and fiduciary duty as lawyers to uphold at all times the confidentiality of information obtained during such lawyer-client relationship.

PCGG, on the other hand, avers 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 (i.e. the deeds of assignment) protected, as they are evidence of nominee status.

I. W/N petitioners should be excluded as party-defendants in CC33 – YES The PCGG impleaded them to force them to disclose the identity of their clients, in order

to enable them to go after the “bigger fish.” It would seem that petitioners are merely standing in for their clients as defendants in the complaint, and are being prosecuted solely on the basis of activities and services performed in the course of their duties as lawyers. Their inclusion as defendants is being used as leverage to compel them to name their clients, and as such, there is no valid cause of action.

The nature of lawyer-client relationship is premised on the Roman Law concepts of location conduction operarum (contract of lease of services, wherein one person lets his services and other hires him without reference to the object of which the services are to be performed) and mandato (contract of agency, wherein a friend on whom reliance can be placed makes a contract in his name but gives up all he gained to the person who requested him). In modern perception, an attorney is more than an agent or servant, as he possesses special powers of trust and confidence. He has a fiduciary duty to his client, which is of a delicate, exacting and confidential character, requiring a high degree of fidelity and good faith.

The privileged communication arising from a lawyer-client confidentiality is protected in Section 24, Rule 130 ROC (disqualification by reason of privileged communication). A lawyer’s fiduciary duty is also embodied in Canon 17 CPR, which states that “A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him.”

This confidentiality is rooted in a person’s right to counsel. Encouraging full disclosure to a lawyer is only effective when coupled with confidentiality.

As a matter of public policy, a client’s identity should not be shrouded in mystery. A lawyer may therefore generally not invoke the privilege and refuse to divulge the name or identity of his client. This is due to the fact that, 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 only after the attorney-client relationship has been established. Third, the privilege generally pertains to the subject matter of the relationship. Last, due process considerations entail that the opposition should know his adversary.

However, there are certain exceptions to the rule for when the client’s name itself has an independent significance, such that disclosure would then reveal client confidences:

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

o It is privileged where disclosure would open the client to civil liability.o Where the government’s lawyers have no case against an attorney’s client unless,

by revealing the client’s name, the said name would furnish the only link that would form the chain of testimony necessary to convict an individual of a crime, the client’s name is privileged.

The instant case falls under the first and third exceptions. Disclosure of the client’s name would lead to establish said client’s connection with the very fact in issue of the case.

o The third condition of PCGG (deeds of assignment) shows that the clients consulted the petitioners, in their capacity as lawyers, regarding the financial and corporate structure, framework and setup of the corporations in question. The preparation of the deeds was part and parcel of petitioners’ legal service to their clients, thus giving way to 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 corporations.

o The revelation of the client’s name would provide the necessary link for the prosecution to build its case, where none otherwise exists. It would form the chain of testimony necessary to convict the client of a crime.

There are alternative sources of information, and as such, the Court cannot sanction PCGG’s fishing expedition. They must use evidence from their own sources and not from compelled testimony requiring lawyers to reveal the name of their clients.

II. W/N petitioners were denied equal protection – YES Petitioners claim that their acts were made in furtherance of legitimate lawyering, and

they are therefore similarly situated as Roco. PCGG must therefore show that there exist other conditions and circumstances which would warrant their treating Roco differently from the petitioners. PCGG failed to do this, and they failed to show that Roco actually revealed the identity of his client.

Those who fall within a particular class ought to be treated alike not only as to privileges granted but also as to liabilities imposed. The Sandiganbayan therefore transgressed the equal protection clause.

HELD: The Sandiganbayan resolutions are hereby annulled.

J. Davide (dissenting) Roco did comply with PCGG’s conditions, as found by the Sandiganbayan. Petitioners are

therefore not similarly situated. They cannot demand to be excluded until they also complied with PCGG’s conditions.

The rule of confidentiality under the lawyer-client relationship is not cause to exclude a party. It is merely a ground for disqualification of a witness, and may only be invoked at the appropriate time, i.e. when a lawyer is under compulsion to answer as a witness. None of the lawyers here have been required to testify about or reveal confidential communication made by the client to him.

Moreover, they are being sued as principal defendants, and conspiracy is imputed to them. They are conspirators in the commission of the acts complained of for being nominees of certain parties.

Presently, the lawyers have not shown why they should fall under the exceptions of American jurisprudence. They will have such opportunity at the trial where the broader perspectives of the case shall have been presented and can be better appreciated by the court.

J. Puno (dissenting) The attorney-client privilege can never be used as a shield to commit a crime or a fraud.

However, a mere allegation that a lawyer conspired with his client will not defeat the privilege. To defeat it, there must be prima facie evidence that it has foundation in fact.

PCGG has since conceded that petitioners are entitled to invoke the attorney-client privilege if they reveal their client’s identity. What must therefore be determined is whether the privilege includes the right not to divulge the identity of a client. As a general rule, the privilege does not include the right of non-disclosure of client identity, but it admits of certain exceptions.

The majority is incorrect in holding that petitioners need not prove they fall within said exceptions. The privilege is not a magic mantra whose invocation will automatically drape he who invokes it with its protection. The person claiming the privilege must present underlying facts demonstrating the existence of the privilege. If the facts can only be presented by revealing the very information sought to be protected, then the procedure is for the lawyer to move for an inspection of the evidence in an in camera and ex parte hearing. Petitioners have not adduced such evidence.

The first and third exceptions under which the majority categorizes the petitioners are not self-executory but need factual basis for successful invocation. “The very activity for which the client sought the lawyer’s advice” is a question of fact which must first be

established before there can be any ruling that the exception can be invoked. The same should be decided ahead and independently of their claim to equal protection of the law.