Rule 130- Attorney-Client
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
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Rule 130- Attorney-Client

contracts subject to draft attached to bill of lading in full Very soon after the aforesaid contract became effective, the
payment of such shipment. plaintiff requested the defendant company to give him a
similar selling agency for Japan. To this request the defendant
It is understood that the purchasers of the products of
company, through its president, Wm. Anderson, replied,
the Lucio mine are to pay freight from the mine carriers to
under date of November 27, 1920, as follows:
destination and are to be responsible for all freight, insurance
and other charges, providing said shipment has been In re your request for Japanese agency, will say, that we are
accepted by their inspectors. willing to give you, the same commission on all sales made by
you in Japan, on the same basis as your Australian sales, but
All contracts taken with responsible firms are to be under the
we do not feel like giving you a regular agency for Japan until
same conditions as with municipal governments.
you can make some large sized sales there, because some
All contracts will be subject to delays caused by the acts of other people have given us assurances that they can handle
God, over which the parties hereto have no control. our Japanese sales, therefore we have decided to leave this
agency open for a time.
It is understood and agreed that we agree to load all ships,
steamers, boats or other carriers prompty and without delay Meanwhile the plaintiff had embarked for San Francisco and
and load not less than 1,000 tons each twenty-four hours upon arriving at that port he entered into an agreement with
after March 1, 1921, unless we so notify you specifically prior Ludvigsen & McCurdy, of that city, whereby said firm was
to that date we are prepared to load at that rate, and it is also constituted a subagent and given the sole selling rights for
stipulated that we shall not be required to ship orders of the bituminous limestone products of the defendant
5,000 tons except on 30 days notice and 10,000 tons except company for the period of one year from November 11, 1920,
on 60 days notice. on terms stated in the letter Exhibit K. The territory assigned
to Ludvigsen & McCurdy included San Francisco and all
If your sales in the United States reach five thousand tons on territory in California north of said city. Upon an earlier
or before May 1, 1921, you are to have sole rights for this voyage during the same year to Australia, the plaintiff had
territory also for one year additional and should your sales in already made an agreement with Frank B. Smith, of Sydney,
the second year reach or exceed ten thousand tons you are to whereby the latter was to act as the plaintiff's sales agent for
have the option to renew the agreement for this territory on bituminous limestone mined at the defendant's quarry in
the same terms for an additional two years. Leyte, until February 12, 1921. Later the same agreement was
extended for the period of one year from January 1, 1921.
Should your sales equal exceed ten thousand (10,000) tons in
(Exhibit Q.)
the year ending October 1, 1921, or twenty thousand
(20,000) tons by May 1, 1922, then this contract is to be On February 5, 1921, Ludvigsen & McCurdy, of San Francisco,
continued automatically for an additional three years ending addressed a letter to the plaintiff, then in San Francisco,
April 30, 1925, under the same terms and conditions as above advising hi that he might enter an order for six thousand tons
stipulated. of bituminous limestone to be loaded at Leyte not later than
May 5, 1921, upon terms stated in the letter Exhibit G. Upon
The products of the other mines can be sold by you in the
this letter the plaintiff immediately indorsed his acceptance.
aforesaid territories under the same terms and conditions as
the products of the Lucio mine; scale of prices to be mutually The plaintiff then returned to Manila; and on March 2, 1921,
agreed upon between us. Anderson wrote to him from Cebu, to the effect that the
company was behind with construction and was not then
LEYTE ASPHALT & MINERAL OIL CO., LTD.
able to handle big contracts. (Exhibit FF.) On March 12,
By (Sgd.) WM. ANDERSON
Anderson was in Manila and the two had an interview in the
President
Manila Hotel, in the course of which the plaintiff informed
(Sgd.) W. C. A. PALMER Anderson of the San Francisco order. Anderson thereupon
Secretary said that, owing to lack of capital, adequate facilities had not
been provided by the company for filling large orders and
Approved by Board of Directors, suggested that the plaintiff had better hold up in the matter
October 1, 1920. of taking orders. The plaintiff expressed surprise at this and
(Sgd.) WM. ANDERSON told Anderson that he had not only the San Francisco order
President (which he says he exhibited to Anderson) but other orders for
Accepted. large quantities of bituminous limestone to be shipped to
(Sgd.) JAMES D. BARTON Australia and Shanghai. In another interview on the same
Witness D. G. MCVEAN Anderson definitely informed the plaintiff that the contracts
which be claimed to have procured would not be filled.
Upon careful perusal of the fourth paragraph from the end of
this letter it is apparent that some negative word has been Three days later the plaintiff addressed a letter (Exhibit Y) to
inadvertently omitted before "prepared," so that the full the defendant company in Cebu, in which he notified the
expression should be "unless we should notify you specifically company to be prepared to ship five thousand tons of
prior to that date that we are unprepared to load at that bituminous limestone to John Chapman Co., San Francisco,
rate," or "not prepared to load at that rate." loading to commence on May 1, and to proceed at the rate of

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Rule 130- Attorney-Client
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
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Rule 130- Attorney-Client
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
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Rule 130- Attorney-Client
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.
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Rule 130- Attorney-Client
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.
Gibbs and McDonough for petitioner.
Guevara, Francisco and Recto for 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
6
Rule 130- Attorney-Client
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
7
Rule 130- Attorney-Client
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
8
Rule 130- Attorney-Client

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.

Avanceña, C.J., Villamor, Ostrand, Johns and Romualdez,

JJ., concur.

9
Rule 130- Attorney-Client
Hickman v. Taylor
No. 47
Argued November 13, 1946
Decided January 13, 1947
329 U.S. 495
CERTIORARI TO THE CIRCUIT COURT OF APPEALS
FOR THE THIRD CIRCUIT
Syllabus
Under the Federal Rules of Civil Procedure, plaintiff in a suit
in a federal district court against certain tug owners to
recover for the death of a seaman in the sinking of the tug
filed numerous interrogatories directed to the defendants,
including one inquiring whether any statements of members
of the crew were taken in connection with the accident and
requesting that exact copies of all such written statements be
attached and that the defendant "set forth in detail the exact
provisions of any such oral statements or reports." There was
no showing of necessity or other justification for these
requests. A public hearing had been held before the United
States Steamboat Inspectors at which the survivors of the
accident had been examined and their testimony recorded
and made available to all interested parties. Defendants
answered all other interrogatories, stating objective facts and
giving the names and addresses of witnesses, but declined to
summarize or set forth the statements taken from witnesses,
on the ground that they were "privileged matter obtained in
preparation for litigation." After a hearing on objections to
the interrogatories, the District Court held that the requested
matters were not privileged and decreed that they be
produced and that memoranda of defendants' counsel
containing statements of fact by witnesses either be
produced or submitted to the court for determination of
those portions which should be revealed to plaintiff.
Defendants and their counsel refused, and were adjudged
guilty of contempt.
Held:
1. In these circumstances, Rules 26, 33 and 34 of the Federal
Rules of Civil Procedure do not require the production as of
right of oral and written statements of witnesses secured by
an adverse party's counsel in the course of preparation for
possible litigation after a claim has arisen. Pp. 329 U. S. 509-
514.
2. Since plaintiff addressed simple interrogatories to adverse
parties, did not direct them to such parties or their counsel by
way of deposition under Rule 26, and it does not appear that
he filed a
Page 329 U. S. 496
motion under Rule 34 for a court order directing the
production of the documents in question, he was proceeding
primarily under Rule 33, relating to interrogatories to parties.
P. 329 U. S. 504.
3. Rules 33 and 34 are limited to parties, thereby excluding
their counsel or agents. P. 329 U. S. 504.
4. Rule 33 did not permit the plaintiff to obtain, as adjuncts to
interrogatories addressed to defendants, memoranda and
statements prepared by their counsel after a claim had arisen.
P. 329 U. S. 504.
5. The District Court erred in holding defendants in contempt
for failure to produce that which was in the possession of
their counsel, and in holding their counsel in contempt for
failure to produce that which he could not be compelled to
produce under either Rule 33 or Rule 34. P. 329 U. S. 505.
6. Memoranda, statements, and mental impressions
prepared or obtained from interviews with witnesses by
counsel in preparing for litigation after a claim has arisen are
not within the attorney-client privilege, and are not protected
from discovery on that basis. P. 329 U. S. 508.
7. The general policy against invading the privacy of an
attorney's course of preparation is so essential to an orderly
working of our system of legal procedure that a burden rests
on the one who would invade that privacy to establish
adequate reasons to justify production through a subpoena
or court order. P. 329 U. S. 512.
8. Rule 30(b) gives the trial judge the requisite discretion to
make a judgment as to whether discovery should be allowed
as to written statements secured from witnesses; but, in this
case, there was no ground for the exercise of that discretion
in favor of plaintiff. P. 329 U. S. 512.
9. Under the circumstances of this case, no showing of
necessity could be made which would justify requiring the
production of oral statements made by witnesses to
defendants' counsel, whether presently in the form of his
mental impressions or in the form of memoranda. P. 329 U. S.
512.
153 F.2d 212 affirmed.
A District Court adjudged respondents guilty of contempt for
failure to produce, in response to interrogatories, copies of
certain written statements and memoranda prepared by
counsel in connection with pending litigation. 4 F.R.D. 479.
The Circuit Court of Appeals reversed. 153 F.2d 212. This
Court granted certiorari. 328 U.S. 876. Affirmed, p. 329 U. S.
514.
Page 329 U. S. 497
MR. JUSTICE MURPHY delivered the opinion of the Court.
This case presents an important problem under the Federal
Rules of Civil Procedure as to the extent to which a party may
inquire into oral and written statements of witnesses, or
other information, secured by an adverse party's counsel in
the course of preparation for possible litigation after a claim
has arisen. Examination into a person's files and records,
including those resulting from the professional activities of an
attorney, must be judged with care. It is not without reason
that various safeguards have been established to preclude
unwarranted excursions into the privacy of a man's work. At
the same time, public policy supports reasonable and
necessary inquiries. Properly to balance these competing
interests is a delicate and difficult task.
Page 329 U. S. 498
10
Rule 130- Attorney-Client
On February 7, 1943, the tug "J. M. Taylor" sank while
engaged in helping to tow a car float of the Baltimore & Ohio
Railroad across the Delaware River at Philadelphia. The
accident was apparently unusual in nature, the cause of it still
being unknown. Five of the nine crew members were
drowned. Three days later, the tug owners and the
underwriters employed a law firm, of which respondent
Fortenbaugh is a member, to defend them against potential
suits by representatives of the deceased crew members and
to sue the railroad for damages to the tug.
A public hearing was held on March 4, 1943, before the
United States Steamboat Inspectors at which the four
survivors were examined. This testimony was recorded and
made available to all interested parties. Shortly thereafter,
Fortenbaugh privately interviewed the survivors and took
statements from them with an eye toward the anticipated
litigation; the survivors signed these statements on March 29.
Fortenbaugh also interviewed other persons believed to have
some information relating to the accident, and in some cases
he made memoranda of what they told him. At the time
when Fortenbaugh secured the statements of the survivors,
representatives of two of the deceased crew members had
been in communication with him. Ultimately claims were
presented by representatives of all five of the deceased; four
of the claims, however, were settled without litigation. The
fifth claimant, petitioner herein, brought suit in a federal
court under the Jones Act on November 26, 1943, naming as
defendants the two tug owners, individually and as partners,
and the railroad.
One year later, petitioner filed 39 interrogatories directed to
the tug owners. The 38th interrogatory read:
"State whether any statements of the members of the crews
of the Tugs 'J. M. Taylor' and 'Philadelphia' or of any other
vessel were taken in connection with the towing of the car
float and the sinking of the Tug 'John M. Taylor.'
Page 329 U. S. 499
Attach hereto exact copies of all such statements if in writing,
and if oral, set forth in detail the exact provisions of any such
oral statements or reports."
Supplemental interrogatories asked whether any oral or
written statements, records, reports, or other memoranda
had been made concerning any matter relative to the towing
operation, the sinking of the tug, the salvaging and repair of
the tug, and the death of the deceased. If the answer was in
the affirmative, the tug owners were then requested to set
forth the nature of all such records, reports, statements, or
other memoranda.
The tug owners, through Fortenbaugh, answered all of the
interrogatories except No. 38 and the supplemental ones just
described. While admitting that statements of the survivors
had been taken, they declined to summarize or set forth the
contents. They did so on the ground that such requests called
"for privileged matter obtained in preparation for litigation,"
and constituted "an attempt to obtain indirectly counsel's
private files." It was claimed that answering these requests
"would involve practically turning over not only the complete
files, but also the telephone records and, almost, the
thoughts, of counsel."
In connection with the hearing on these objections,
Fortenbaugh made a written statement and gave an informal
oral deposition explaining the circumstances under which he
had taken the statements. But he was not expressly asked in
the deposition to produce the statements. The District Court
for the Eastern District of Pennsylvania, sitting en banc, held
that the requested matters were not privileged. 4 F.R.D. 479.
The court then decreed that the tug owners and Fortenbaugh,
as counsel and agent for the tug owners forthwith
"answer Plaintiff's 38th interrogatory and supplemental
interrogatories; produce all written statements of witnesses
obtained by Mr. Fortenbaugh, as counsel and agent for
Defendants;
Page 329 U. S. 500
state in substance any fact concerning this case which
Defendants learned through oral statements made by
witnesses to Mr. Fortenbaugh, whether or not included in his
private memoranda, and produce Mr. Fortenbaugh's
memoranda containing statements of fact by witnesses or to
submit these memoranda to the Court for determination of
those portions which should be revealed to Plaintiff."
Upon their refusal, the court adjudged them in contempt and
ordered them imprisoned until they complied.
The Third Circuit Court of Appeals, also sitting en banc,
reversed the judgment of the District Court. 153 F.2d 212. It
held that the information here sought was part of the "work
product of the lawyer," and hence privileged from discovery
under the Federal Rules of Civil Procedure. The importance of
the problem, which has engendered a great divergence of
views among district courts, [Footnote 1] led us to grant
certiorari. 328 U.S. 876.
The pretrial deposition-discovery mechanism established by
Rules 26 to 37 is one of the most significant innovations of
the Federal Rules of Civil Procedure. Under the prior federal
practice, the pretrial functions of notice-giving, issue-
formulation, and fact-revelation were performed primarily
and inadequately by the pleadings. [Footnote 2] Inquiry into
the issues and the facts before trial was
Page 329 U. S. 501
narrowly confined, and was often cumbersome in method.
[Footnote 3] The new rules, however, restrict the pleadings to
the task of general notice-giving, and invest the deposition-
discovery process with a vital role in the preparation for trial.
The various instruments of discovery now serve (1) as a
device, along with the pretrial hearing under Rule 16, to
narrow and clarify the basic issues between the parties, and
(2) as a device for ascertaining the facts, or information as to
the existence or whereabouts of facts, relative to those issues.
Thus, civil trials in the federal courts no longer need be
carried on in the dark. The way is now clear, consistent with
recognized privileges, for the parties to obtain the fullest
possible knowledge of the issues and facts before trial.
[Footnote 4]
11
Rule 130- Attorney-Client
There is an initial question as to which of the deposition-
discovery rules is involved in this case. Petitioner, in filing his
interrogatories, thought that he was proceeding under Rule
33. That rule provides that a party may serve upon any
adverse party written interrogatories to be answered by the
party served. [Footnote 5] The District Court proceeded
Page 329 U. S. 502
on the same assumption in its opinion, although its order to
produce and its contempt order stated that both Rules 33
and 34 were involved. Rule 34 establishes a procedure
whereby, upon motion of any party showing good cause
therefor and upon notice to all other parties, the court may
order any party to produce and permit the inspection and
copying or photographing of any designated documents, etc.,
not privileged, which constitute or contain evidence material
to any matter involved in the action and which are in his
possession, custody, or control. [Footnote 6]
The Circuit Court of Appeals, however, felt that Rule 26 was
the crucial one. Petitioner, it said, was proceeding by
interrogatories, and, in connection with those interrogatories,
wanted copies of memoranda and statements secured from
witnesses. While the court believed that Rule 33 was involved
at least as to the defending tug owners, it stated that this rule
could not be used as the basis for condemning Fortenbaugh's
failure to disclose or produce
Page 329 U. S. 503
the memoranda and statements, since the rule applies only
to interrogatories addressed to adverse parties, not to their
agents or counsel. And Rule 34 was said to be inapplicable
since petitioner was not trying to see an original document
and to copy or photograph it, within the scope of that rule.
The court then concluded that Rule 26 must be the one really
involved. That provides that the testimony of any person,
whether a party or not, may be taken by any party by
deposition upon oral examination or written interrogatories
for the purpose of discovery or for use as evidence, and that
the deponent may be examined regarding any matter, not
privileged, which is relevant to the subject matter involved in
the pending action, whether relating to the claim or defense
of the examining party or of any other party, including the
existence, description, nature, custody, condition and
location of any books, documents or other tangible things.
[Footnote 7]
Page 329 U. S. 504
The matter is not without difficulty in light of the events that
transpired below. We believe, however, that petitioner was
proceeding primarily under Rule 33. He addressed simple
interrogatories solely to the individual tug owners, the
adverse parties, as contemplated by that rule. He did not, and
could not under Rule 33, address such interrogatories to their
counsel, Fortenbaugh. Nor did he direct these interrogatories
either to the tug owners or to Fortenbaugh by way of
deposition; Rule 26 thus could not come into operation. And
it does not appear from the record that petitioner filed a
motion under Rule 34 for a court order directing the
production of the documents in question. Indeed, such an
order could not have been entered as to Fortenbaugh, since
Rule 34, like Rule 33, is limited to parties to the proceeding,
thereby excluding their counsel or agents.
Thus, to the extent that petitioner was seeking the
production of the memoranda and statements gathered by
Fortenbaugh in the course of his activities as counsel,
petitioner misconceived his remedy. Rule 33 did not permit
him to obtain such memoranda and statements as adjuncts
to the interrogatories addressed to the individual tug owners.
A party clearly cannot refuse to answer interrogatories on the
ground that the information sought is solely within the
knowledge of his attorney. But that is not this case. Here,
production was sought of documents prepared by a party's
attorney after the claim has arisen. Rule 33 does not make
provision for such production, even when sought in
connection with permissible interrogatories. Moreover, since
petitioner was also foreclosed from securing them through an
order under Rule 34, his only recourse was to take
Fortenbaugh's deposition under Rule 26 and to attempt to
force Fortenbaugh to produce the materials by use of a
subpoena duces tecum in accordance with Rule 45. Holtzoff,
"Instruments of Discovery under the Federal Rules of Civil
Procedure," 41
Page 329 U. S. 505
Mich.L.Rev. 205, 220. But, despite petitioner's faulty choice of
action, the District Court entered an order, apparently under
Rule 34, commanding the tug owners and Fortenbaugh, as
their agent and counsel, to produce the materials in question.
Their refusal led to the anomalous result of holding the tug
owners in contempt for failure to produce that which was in
the possession of their counsel, and of holding Fortenbaugh
in contempt for failure to produce that which he could not be
compelled to produce under either Rule 33 or Rule 34.
But, under the circumstances, we deem it unnecessary and
unwise to rest our decision upon this procedural irregularity,
an irregularity which is not strongly urged upon us and which
was disregarded in the two courts below. It matters little at
this later stage whether Fortenbaugh fails to answer
interrogatories filed under Rule 26 or under Rule 33 or
whether he refuses to produce the memoranda and
statements pursuant to a subpoena under Rule 45 or a court
order under Rule 34. The deposition-discovery rules create
integrated procedural devices. And the basic question at
stake is whether any of those devices may be used to inquire
into materials collected by an adverse party's counsel in the
course of preparation for possible litigation. The fact that the
petitioner may have used the wrong method does not
destroy the main thrust of his attempt. Nor does it relieve us
of the responsibility of dealing with the problem raised by
that attempt. It would be inconsistent with the liberal
atmosphere surrounding these rules to insist that petitioner
now go through the empty formality of pursuing the right
procedural device only to reestablish precisely the same basic
problem now confronting us. We do not mean to say,
however, that there may not be situations in which the
failure to proceed in accordance with a specific rule would be
important or decisive. But, in the present circumstances, for
the purposes of this decision, the procedural
Page 329 U. S. 506
12
Rule 130- Attorney-Client
irregularity is not material. Having noted the proper
procedure, we may accordingly turn our attention to the
substance of the underlying problem.
In urging that he has a right to inquire into the materials
secured and prepared by Fortenbaugh, petitioner emphasizes
that the deposition-discovery portions of the Federal Rules of
Civil Procedure are designed to enable the parties to discover
the true facts, and to compel their disclosure wherever they
may be found. It is said that inquiry may be made under these
rules, epitomized by Rule 26, as to any relevant matter which
is not privileged, and, since the discovery provisions are to be
applied as broadly and liberally as possible, the privilege
limitation must be restricted to its narrowest bounds. On the
premise that the attorney-client privilege is the one involved
in this case, petitioner argues that it must be strictly confined
to confidential communications made by a client to his
attorney. And, since the materials here in issue were secured
by Fortenbaugh from third persons, rather than from his
clients, the tug owners, the conclusion is reached that these
materials are proper subjects for discovery under Rule 26.
As additional support for this result, petitioner claims that to
prohibit discovery under these circumstances would give a
corporate defendant a tremendous advantage in a suit by an
individual plaintiff. Thus, in a suit by an injured employee
against a railroad or in a suit by an insured person against an
insurance company, the corporate defendant could pull a
dark veil of secrecy over all the pertinent facts it can collect
after the claim arises merely on the assertion that such facts
were gathered by its large staff of attorneys and claim agents.
At the same time, the individual plaintiff, who often has
direct knowledge of the matter in issue and has no counsel
until some time after his claim arises, could be compelled to
disclose all the intimate details of his case. By endowing with
Page 329 U. S. 507
immunity from disclosure all that a lawyer discovers in the
course of his duties, it is said, the rights of individual litigants
in such cases are drained of vitality, and the lawsuit becomes
more of a battle of deception than a search for truth.
But framing the problem in terms of assisting individual
plaintiffs in their suits against corporate defendants is
unsatisfactory. Discovery concededly may work to the
disadvantage as well as to the advantage of individual
plaintiffs. Discovery, in other words, is not a one-way
proposition. It is available in all types of cases at the behest of
any party, individual or corporate, plaintiff or defendant. The
problem thus far transcends the situation confronting this
petitioner. And we must view that problem in light of the
limitless situations where the particular kind of discovery
sought by petitioner might be used.
We agree, of course, that the deposition-discovery rules are
to be accorded a broad and liberal treatment. No longer can
the time-honored cry of "fishing expedition" serve to
preclude a party from inquiring into the facts underlying his
opponent's case. [Footnote 8] Mutual knowledge of all the
relevant facts gathered by both parties is essential to proper
litigation. To that end, either party may compel the other to
disgorge whatever facts he has in his possession. The
deposition-discovery procedure simply advances the stage at
which the disclosure can be compelled from the time of trial
to the period preceding it, thus reducing the possibility of
surprise. But discovery, like all matters of procedure, has
ultimate and necessary boundaries. As indicated by Rules
30(b) and (d) and 31(d), limitations inevitably arise when it
can be shown
Page 329 U. S. 508
that the examination is being conducted in bad faith or in
such a manner as to annoy, embarrass, or oppress the person
subject to the inquiry. And, as Rule 26(b) provides, further
limitations come into existence when the inquiry touches
upon the irrelevant or encroaches upon the recognized
domains of privilege.
We also agree that the memoranda, statements, and mental
impressions in issue in this case fall outside the scope of the
attorney-client privilege, and hence are not protected from
discovery on that basis. It is unnecessary here to delineate
the content and scope of that privilege as recognized in the
federal courts. For present purposes, it suffices to note that
the protective cloak of this privilege does not extend to
information which an attorney secures from a witness while
acting for his client in anticipation of litigation. Nor does this
privilege concern the memoranda, briefs, communications,
and other writings prepared by counsel for his own use in
prosecuting his client's case, and it is equally unrelated to
writings which reflect an attorney's mental impressions,
conclusions, opinions, or legal theories.
But the impropriety of invoking that privilege does not
provide an answer to the problem before us. Petitioner has
made more than an ordinary request for relevant,
nonprivileged facts in the possession of his adversaries or
their counsel. He has sought discovery as of right of oral and
written statements of witnesses whose identity is well known
and whose availability to petitioner appears unimpaired. He
has sought production of these matters after making the
most searching inquiries of his opponents as to the
circumstances surrounding the fatal accident, which inquiries
were sworn to have been answered to the best of their
information and belief. Interrogatories were directed toward
all the events prior to, during, and subsequent to the sinking
of the tug. Full and honest answers to such broad inquiries
would necessarily have included all
Page 329 U. S. 509
pertinent information gleaned by Fortenbaugh through his
interviews with the witnesses. Petitioner makes no
suggestion, and we cannot assume, that the tug owners or
Fortenbaugh were incomplete or dishonest in the framing of
their answers. In addition, petitioner was free to examine the
public testimony of the witnesses taken before the United
States Steamboat Inspectors. We are thus dealing with an
attempt to secure the production of written statements and
mental impressions contained in the files and the mind of the
attorney Fortenbaugh without any showing of necessity or
any indication or claim that denial of such production would
unduly prejudice the preparation of petitioner's case or cause
him any hardship or injustice. For aught that appears, the
essence of what petitioner seeks either has been revealed to
13
Rule 130- Attorney-Client
him already through the interrogatories or is readily available
to him direct from the witnesses for the asking.
The District Court, after hearing objections to petitioner's
request, commanded Fortenbaugh to produce all written
statements of witnesses and to state in substance any facts
learned through oral statements of witnesses to him.
Fortenbaugh was to submit any memoranda he had made of
the oral statements, so that the court might determine what
portions should be revealed to petitioner. All of this was
ordered without any showing by petitioner, or any
requirement that he make a proper showing, of the necessity
for the production of any of this material or any
demonstration that denial of production would cause
hardship or injustice. The court simply ordered production on
the theory that the facts sought were material and were not
privileged as constituting attorney-client communications.
In our opinion, neither Rule 26 nor any other rule dealing
with discovery contemplates production under such
circumstances. That is not because the subject matter is
privileged or irrelevant, as those concepts are used in these
Page 329 U. S. 510
rules. [Footnote 9] Here is simply an attempt, without
purported necessity or justification, to secure written
statements, private memoranda, and personal recollections
prepared or formed by an adverse party's counsel in the
course of his legal duties. As such, it falls outside the arena of
discovery and contravenes the public policy underlying the
orderly prosecution and defense of legal claims. Not even the
most liberal of discovery theories can justify unwarranted
inquiries into the files and the mental impressions of an
attorney.
Historically, a lawyer is an officer of the court, and is bound to
work for the advancement of justice while faithfully
protecting the rightful interests of his clients. In performing
his various duties, however, it is essential that a lawyer work
with a certain degree of privacy, free from unnecessary
intrusion by opposing parties and their counsel.
Page 329 U. S. 511
Proper preparation of a client's case demands that he
assemble information, sift what he considers to be the
relevant from the irrelevant facts, prepare his legal theories,
and plan his strategy without undue and needless
interference. That is the historical and the necessary way in
which lawyers act within the framework of our system of
jurisprudence to promote justice and to protect their clients'
interests. This work is reflected, of course, in interviews,
statements, memoranda, correspondence, briefs, mental
impressions, personal beliefs, and countless other tangible
and intangible ways -- aptly though roughly termed by the
Circuit Court of Appeals in this case as the "work product of
the lawyer." Were such materials open to opposing counsel
on mere demand, much of what is now put down in writing
would remain unwritten. An attorney's thoughts, heretofore
inviolate, would not be his own. Inefficiency, unfairness, and
sharp practices would inevitably develop in the giving of legal
advice and in the preparation of cases for trial. The effect on
the legal profession would be demoralizing. And the interests
of the clients and the cause of justice would be poorly served.
We do not mean to say that all written materials obtained or
prepared by an adversary's counsel with an eye toward
litigation are necessarily free from discovery in all cases.
Where relevant and nonprivileged facts remain hidden in an
attorney's file, and where production of those facts is
essential to the preparation of one's case, discovery may
properly be had. Such written statements and documents
might, under certain circumstances, be admissible in
evidence, or give clues as to the existence or location of
relevant facts. Or they might be useful for purposes of
impeachment or corroboration. And production might be
justified where the witnesses are no longer available or can
be reached only with difficulty. Were production of written
statements and documents to be precluded under
Page 329 U. S. 512
such circumstances, the liberal ideals of the deposition-
discovery portions of the Federal Rules of Civil Procedure
would be stripped of much of their meaning. But the general
policy against invading the privacy of an attorney's course of
preparation is so well recognized and so essential to an
orderly working of our system of legal procedure that a
burden rests on the one who would invade that privacy to
establish adequate reasons to justify production through a
subpoena or court order. That burden, we believe, is
necessarily implicit in the rules as now constituted. [Footnote
10]
Rule 30(b), as presently written, gives the trial judge the
requisite discretion to make a judgment as to whether
discovery should be allowed as to written statements secured
from witnesses. But, in the instant case, there was no room
for that discretion to operate in favor of the petitioner. No
attempt was made to establish any reason why Fortenbaugh
should be forced to produce the written statements. There
was only a naked, general demand for these materials as of
right, and a finding by the District Court that no recognizable
privilege was involved. That was insufficient to justify
discovery under these circumstances, and the court should
have sustained the refusal of the tug owners and
Fortenbaugh to produce.
But, as to oral statements made by witnesses to Fortenbaugh,
whether presently in the form of his mental impressions or
memoranda, we do not believe that any showing of necessity
can be made under the circumstances of this case so as to
justify production. Under ordinary conditions, forcing an
attorney to repeat or write out all that witnesses have told
him and to deliver the account
Page 329 U. S. 513
to his adversary gives rise to grave dangers of inaccuracy and
untrustworthiness. No legitimate purpose is served by such
production. The practice forces the attorney to testify as to
what he remembers or what he saw fit to write down
regarding witnesses' remarks. Such testimony could not
qualify as evidence, and to use it for impeachment or
corroborative purposes would make the attorney much less
14
Rule 130- Attorney-Client

an officer of the court and much more an ordinary witness.

The standards of the profession would thereby suffer.

Denial of production of this nature does not mean that any

material, nonprivileged facts can be hidden from the
petitioner in this case. He need not be unduly hindered in the
preparation of his case, in the discovery of facts, or in his
anticipation of his opponents' position. Searching
interrogatories directed to Fortenbaugh and the tug owners,
production of written documents and statements upon a
proper showing, and direct interviews with the witnesses
themselves all serve to reveal the facts in Fortenbaugh's
possession to the fullest possible extent consistent with
public policy. Petitioner's counsel frankly admits that he
wants the oral statements only to help prepare himself to
examine witnesses and to make sure that he has overlooked
nothing. That is insufficient under the circumstances to
permit him an exception to the policy underlying the privacy
of Fortenbaugh's professional activities. If there should be a
rare situation justifying production of these matters,
petitioner's case is not of that type.

We fully appreciate the widespread controversy among the

members of the legal profession over the problem raised by
this case. [Footnote 11] It is a problem that rests on what

Page 329 U. S. 514

has been one of the most hazy frontiers of the discovery

process. But, until some rule or statute definitely prescribes
otherwise, we are not justified in permitting discovery in a
situation of this nature as a matter of unqualified right. When
Rule 26 and the other discovery rules were adopted, this
Court and the members of the bar in general certainly did not
believe or contemplate that all the files and mental processes
of lawyers were thereby opened to the free scrutiny of their
adversaries. And we refuse to interpret the rules at this time
so as to reach so harsh and unwarranted a result.

We therefore affirm the judgment of the Circuit Court of

Appeals.

Affirmed.

15
Rule 130- Attorney-Client
Upjohn Co. v. United States
No. 79-886
Argued November 5, 1980
Decided January 13, 1981
449 U.S. 383
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
Syllabus
When the General Counsel for petitioner pharmaceutical
manufacturing corporation (hereafter petitioner) was
informed that one of its foreign subsidiaries had made
questionable payments to foreign government officials in
order to secure government business, an internal
investigation of such payments was initiated. As part of this
investigation, petitioner's attorneys sent a questionnaire to
all foreign managers seeking detailed information concerning
such payments, and the responses were returned to the
General Counsel. The General Counsel and outside counsel
also interviewed the recipients of the questionnaire and
other company officers and employees. Subsequently, based
on a report voluntarily submitted by petitioner disclosing the
questionable payments, the Internal Revenue Service (IRS)
began an investigation to determine the tax consequences of
such payments and issued a summons pursuant to 26 U.S.C. §
762 demanding production of, inter alia, the questionnaires
and the memoranda and notes of the interviews. Petitioner
refused to produce the documents on the grounds that they
were protected from disclosure by the attorney-client
privilege and constituted the work product of attorneys
prepared in anticipation of litigation. The United States then
filed a petition in Federal District Court seeking enforcement
of the summons. That court adopted the Magistrate's
recommendation that the summons should be enforced, the
Magistrate having concluded, inter alia, that the attorney-
client privilege had been waived, and that the Government
had made a sufficient showing of necessity to overcome the
protection of the work product doctrine. The Court of
Appeals rejected the Magistrate's finding of a waiver of the
attorney-client privilege, but held that, under the so-called
"control group test," the privilege did not apply
"[t]o the extent that the communications were made by
officers and agents not responsible for directing [petitioner's]
actions in response to legal advice . . . for the simple reason
that the communications were not the 'client's'.'"
The court also held that the work product doctrine did not
apply to IRS summonses.
Held:
1. The communications by petitioner's employees to counsel
are covered by the attorney-client privilege insofar as the
responses to the
Page 449 U. S. 384
questionnaires and any notes reflecting responses to
interview questions are concerned. Pp. 449 U. S. 389-397.
(a) The control group test overlooks the fact that such
privilege exists to protect not only the giving of professional
advice to those who can act on it, but also the giving of
information to the lawyer to enable him to give sound and
informed advice. While in the case of the individual client the
provider of information and the person who acts on the
lawyer's advice are one and the same, in the corporate
context, it will frequently be employees beyond the control
group (as defined by the Court of Appeals) who will possess
the information needed by the corporation's lawyers. Middle-
level -- and indeed lower-level -- employees can, by actions
within the scope of their employment, embroil the
corporation in serious legal difficulties, and it is only natural
that these employees would have the relevant information
needed by corporate counsel if he is adequately to advise the
client with respect to such actual or potential difficulties.
Pp. 449 U. S. 390-392.
(b) The control group test thus frustrates the very purpose of
the attorney-client privilege by discouraging the
communication of relevant information by employees of the
client corporation to attorneys seeking to render legal advice
to the client. The attorney's advice will also frequently be
more significant to noncontrol employees than to those who
officially sanction the advice, and the control group test
makes it more difficult to convey full and frank legal advice to
the employees who will put into effect the client
corporation's policy. P. 449 U. S. 392.
(c) The narrow scope given the attorney-client privilege by
the Court of Appeals not only makes it difficult for corporate
attorneys to formulate sound advice when their client is
faced with a specific legal problem, but also threatens to limit
the valuable efforts of corporate counsel to ensure their
client's compliance with the law. Pp. 449 U. S. 392-393.
(d) Here, the communications at issue were made by
petitioner's employees to counsel for petitioner, acting as
such, at the direction of corporate superiors in order to
secure legal advice from counsel. Information not available
from upper-echelon management was needed to supply a
basis for legal advice concerning compliance with securities
and tax laws, foreign laws, currency regulations, duties to
shareholders, and potential litigation in each of these areas.
The communications concerned matters within the scope of
the employees' corporate duties, and the employees
themselves were sufficiently aware that they were being
questioned in order that the corporation could obtain legal
advice. Pp. 449 U. S. 394-395
2. The work product doctrine applies to IRS summonses.
Pp. 449 U. S. 397-402.
(a) The obligation imposed by a tax summons remains subject
to the traditional privileges and limitations, and nothing in
the language
Page 449 U. S. 385
or legislative.history of the IRS summons provisions suggests
an intent on the part of Congress to preclude application of
the work product doctrine. P. 449 U. S. 398.
(b) The Magistrate applied the wrong standard when he
concluded that the Government had made a sufficient
16
Rule 130- Attorney-Client
showing of necessity to overcome the protections of the work
product doctrine. The notes and memoranda sought by the
Government constitute work product based on oral
statements. If they reveal communications, they are
protected by the attorney-client privilege. To the extent they
do not reveal communications, they reveal attorneys' mental
processes in evaluating the communications. As Federal Rule
of Civil Procedure 6, which accords special protection from
disclosure to work product revealing an attorney's mental
processes, and Hickman v. Taylor, 329 U. S. 495, make clear,
such work product cannot be disclosed simply on a showing
of substantial need or inability to obtain the equivalent
without undue hardship. P. 449 U. S. 401.
600 F.2d 1223, reversed and remanded.
REHNQUIST, J., delivered the opinion of the Court, in which
BRENNAN, STEWART, WHITE, MARSHALL, BLACKMUN,
POWELL, and STEVENS, JJ., joined, and in Parts I and III of
which BURGER, C.J., joined. BURGER, C.J., filed an opinion
concurring in part and concurring in the
judgment, post, p. 449 U. S. 402.
Page 449 U. S. 386
JUSTICE REHNQUIST delivered the opinion of the Court.
We granted certiorari in this case to address important
questions concerning the scope of the attorney-client
privilege in the corporate context and the applicability of the
work product doctrine in proceedings to enforce tax
summonses. 445 U.S. 925. With respect to the privilege
question, the parties and various amici have described our
task as one of choosing between two "tests" which have
gained adherents in the courts of appeals. We are acutely
aware, however, that we sit to decide concrete cases, and not
abstract propositions of law. We decline to lay down a broad
rule or series of rules to govern all conceivable future
questions in this area, even were we able to do so. We can
and do, however, conclude that the attorney-client privilege
protects the communications involved in this case from
compelled disclosure, and that the work product doctrine
does apply in tax summons enforcement proceedings.
I period."
Petitioner Upjohn Co. manufactures and sells
pharmaceuticals here and abroad. In January, 1976,
independent accountants conducting an audit of one of
Upjohn's foreign subsidiaries discovered that the subsidiary
made payments to or for the benefit of foreign government
officials in order to secure government business. The
accountants so informed petitioner Mr. Gerard Thomas,
Upjohn's Vice President, Secretary, and General Counsel.
Thomas is a member of the Michigan and New York Bars, and
has been Upjohn's General Counsel for 20 years. He
consulted with outside counsel and R. T. Parfet, Jr., Upjohn's
Chairman of the Board. It was decided that the company
would conduct an internal investigation of what were termed
"questionable payments." As part of this investigation, the
attorneys prepared a letter containing a questionnaire which
was sent to "All Foreign General and Area Managers" over
the Chairman's signature. The letter
Page 449 U. S. 387
began by noting recent disclosures that several American
companies made "possibly illegal" payments to foreign
government officials, and emphasized that the management
needed full information concerning any such payments made
by Upjohn. The letter indicated that the Chairman had asked
Thomas, identified as "the company's General Counsel,"
"to conduct an investigation for the purpose of determining
the nature and magnitude of any payments made by the
Upjohn Company or any of its subsidiaries to any employee or
official of a foreign government."
The questionnaire sought detailed information concerning
such payments. Managers were instructed to treat the
investigation as "highly confidential" and not to discuss it
with anyone other than Upjohn employees who might be
helpful in providing the requested information. Responses
were to be sent directly to Thomas. Thomas and outside
counsel also interviewed the recipients of the questionnaire
and some 33 other Upjohn officers or employees as part of
the investigation.
On March 26, 1976, the company voluntarily submitted a
preliminary report to the Securities and Exchange
Commission on Form 8-K disclosing certain questionable
payments. [Footnote 1] A copy of the report was
simultaneously submitted to the Internal Revenue Service,
which immediately began an investigation to determine the
tax consequences of the payments. Special agents conducting
the investigation were given lists by Upjohn of all those
interviewed and all who had responded to the questionnaire.
On November 23, 1976, the Service issued a summons
pursuant to 26 U.S.C. § 7602 demanding production of:
"All files relative to the investigation conducted under the
supervision of Gerard Thomas to identify payments to
employees of foreign governments and any political
Page 449 U. S. 388
contributions made by the Upjohn Company or any of its
affiliates since January 1, 1971, and to determine whether
any funds of the Upjohn Company had been improperly
accounted for on the corporate books during the same
"The records should include but not be limited to written
questionnaires sent to managers of the Upjohn Company's
foreign affiliates, and memorandums or notes of the
interviews conducted in the United States and abroad with
officers and employees of the Upjohn Company and its
subsidiaries."
App. 17a-18a. The company declined to produce the
documents specified in the second paragraph on the grounds
that they were protected from disclosure by the attorney-
client privilege and constituted the work product of attorneys
prepared in anticipation of litigation. On August 31, 1977, the
United States filed a petition seeking enforcement of the
summons under 26 U.S.C. § 7402(b) and 7604(a) in the
United States District Court for the Western District of
Michigan. That court adopted the recommendation of a
Magistrate who concluded that the summons should be
enforced. Petitioners appealed to the Court of Appeals for
the Sixth Circuit, which rejected the Magistrate's finding of a
17
Rule 130- Attorney-Client
waiver of the attorney-client privilege, 600 F.2d 1223, 1227, n.
12, but agreed that the privilege did not apply
"[t]o the extent that the communications were made by
officers and agents not responsible for directing Upjohn's
actions in response to legal advice . . . , for the simple reason
that the communications were not the 'client's.'"
Id. at 1225. The court reasoned that accepting petitioners'
claim for a broader application of the privilege would
encourage upper-echelon management to ignore unpleasant
facts and create too broad a "zone of silence." Noting that
Upjohn's counsel had interviewed officials such as the
Chairman and President, the Court of Appeals remanded to
the District Court so that a determination of who was
Page 449 U. S. 389
within the "control group" could be made. In a concluding
footnote, the court stated that the work product doctrine "is
not applicable to administrative summonses issued under 26
U.S.C. § 7602." Id. at 1228, n. 13.
II
Federal Rule of Evidence 501 provides that
"the privilege of a witness . . . shall be governed by the
principles of the common law as they may be interpreted by
the courts of the United States in light of reason and
experience."
The attorney-client privilege is the oldest of the privileges for
confidential communications known to the common law. 8 J.
Wigmore, Evidence § 2290 (McNaughton rev.1961). Its
purpose is to encourage full and frank communication
between attorneys and their clients, and thereby promote
broader public interests in the observance of law and
administration of justice. The privilege recognizes that sound
legal advice or advocacy serves public ends and that such
advice or advocacy depends upon the lawyer's being fully
informed by the client. As we stated last Term in Trammel v.
United States, 445 U. S. 40, 445 U. S. 51 (1980):
"The lawyer-client privilege rests on the need for the
advocate and counselor to know all that relates to the client's
reasons for seeking representation if the professional mission
is to be carried out."
And in Fisher v. United States, 425 U. S. 391, 425 U. S.
403 (1976), we recognized the purpose of the privilege to be
"to encourage clients to make full disclosure to their
attorneys." This rationale for the privilege has long been
recognized by the Court, see Hunt v. Blackburn, 128 U. S.
464, 128 U. S. 470 (1888) (privilege "is founded upon the
necessity, in the interest and administration of justice, of the
aid of persons having knowledge of the law and skilled in its
practice, which assistance can only be safely and readily
availed of when free from the consequences or the
apprehension of disclosure"). Admittedly complications in the
application of the privilege arise when the client is a
corporation, which, in theory, is an artificial creature of the
Page 449 U. S. 390
law, and not an individual; but this Court has assumed that
the privilege applies when the client is a corporation, United
States v. Louisville Nashville R. Co., 236 U. S. 318, 236 U. S.
336 (1915), and the Government does not contest the
general proposition.
The Court of Appeals, however, considered the application of
the privilege in the corporate context to present a "different
problem," since the client was an inanimate entity, and
"only the senior management, guiding and integrating the
several operations, . . . can be said to possess an identity
analogous to the corporation as a whole."
600 F.2d at 1226. The first case to articulate the so-called
"control group test" adopted by the court below, Philadelphia
v. Westinghouse Electric Corp., 210 F.Supp. 483, 485 (ED
Pa.), petition for mandamus and prohibition denied sub nom.
General Electric Co. v. Kirkpatrick, 312 F.2d 742 (CA3
1962), cert. denied, 372 U.S. 943 (1963), reflected a similar
conceptual approach:
"Keeping in mind that the question is, is it the corporation
which is seeking the lawyer's advice when the asserted
privileged communication is made?, the most satisfactory
solution, I think, is that, if the employee making the
communication, of whatever rank he may be, is in a position
to control or even to take a substantial part in a decision
about any action which the corporation may take upon the
advice of the attorney, . . . then, in effect, he is (or personifies)
the corporation when he makes his disclosure to the lawyer,
and the privilege would apply."
(Emphasis supplied.) Such a view, we think, overlooks the fact
that the privilege exists to protect not only the giving of
professional advice to those who can act on it, but also the
giving of information to the lawyer to enable him to give
sound and informed advice. See Trammel, supra at 445 U. S.
51; Fisher, supra at 425 U. S. 403. The first step in the
resolution of any legal problem is ascertaining the factual
background and sifting through the facts
Page 449 U. S. 391
with an eye to the legally relevant. See ABA Code of
Professional Responsibility, Ethical Consideration 4-1:
"A lawyer should be fully informed of all the facts of the
matter he is handling in order for his client to obtain the full
advantage of our legal system. It is for the lawyer in the
exercise of his independent professional judgment to
separate the relevant and important from the irrelevant and
unimportant. The observance of the ethical obligation of a
lawyer to hold inviolate the confidences and secrets of his
client not only facilitates the full development of facts
essential to proper representation of the client, but also
encourages laymen to seek early legal assistance."
See also Hickman v. Taylor, 329 U. S. 495, 329 U. S. 511 (1947).
In the case of the individual client, the provider of
information and the person who acts on the lawyer's advice
are one and the same. In the corporate context, however, it
will frequently be employees beyond the control group as
defined by the court below -- "officers and agents . . .
18
Rule 130- Attorney-Client
responsible for directing [the company's] actions in response
to legal advice" -- who will possess the information needed by
the corporation's lawyers. Middle-level -- and indeed lower-
level employees can, by actions within the scope of their
employment, embroil the corporation in serious legal
difficulties, and it is only natural that these employees would
have the relevant information needed by corporate counsel if
he is adequately to advise the client with respect to such
actual or potential difficulties. This fact was noted
in Diversified Industries, Inc. v. Meredith, 572 F.2d 596 (CA8
1978) (en banc):
"In a corporation, it may be necessary to glean information
relevant to a legal problem from middle management or non-
management personnel as well as from top executives. The
attorney dealing with a complex legal problem"
"is thus faced with a 'Hobson's choice.' If he interviews
employees not having 'the very highest authority,'
Page 449 U. S. 392
their communications to him will not be privileged. If, on the
other hand, he interviews only those employees with 'the
very highest authority,' he may find it extremely difficult, if
not impossible, to determine what happened."
Id. at 608-609 (quoting Weinschel, Corporate Employee
Interviews and the Attorney-Client Privilege, 12 B.C.Ind. &
Com.L.Rev. 873, 876 (1971)). The control group test adopted
by the court below thus frustrates the very purpose of the
privilege by discouraging the communication of relevant
information by employees of the client to attorneys seeking
to render legal advice to the client corporation. The
attorney's advice will also frequently be more significant to
noncontrol group members than to those who officially
sanction the advice, and the control group test makes it more
difficult to convey full and frank legal advice to the employees
who will put into effect the client corporation's policy. See,
e.g., Duplan Corp. v. Deering Milliken, Inc., 397 F.Supp. 1146,
1164 (SC 1974) ("After the lawyer forms his or her opinion, it
is of no immediate benefit to the Chairman of the Board or
the President. It must be given to the corporate personnel
who will apply it").
The narrow scope given the attorney-client privilege by the
court below not only makes it difficult for corporate attorneys
to formulate sound advice when their client is faced with a
specific legal problem, but also threatens to limit the valuable
efforts of corporate counsel to ensure their client's
compliance with the law. In light of the vast and complicated
array of regulatory legislation confronting the modern
corporation, corporations, unlike most individuals,
"constantly go to lawyers to find out how to obey the law,"
Burnham, The Attorney-Client Privilege in the Corporate
Arena, 24 Bus.Law. 901, 913 (1969), particularly since
compliance with the law in this area is hardly an instinctive
matter, see, e.g., United States v. United States Gypsum
Co., 438 U. S. 422, 438 U. S. 440-441 (1978) ("the behavior
proscribed by the [Sherman] Act is
Page 449 U. S. 393
often difficult to distinguish from the gray zone of socially
acceptable and economically justifiable business conduct").
[Footnote 2] The test adopted by the court below is difficult
to apply in practice, though no abstractly formulated and
unvarying "test" will necessarily enable courts to decide
questions such as this with mathematical precision. But if the
purpose of the attorney-client privilege is to be served, the
attorney and client must be able to predict with some degree
of certainty whether particular discussions will be protected.
An uncertain privilege, or one which purports to be certain
but results in widely varying applications by the courts, is
little better than no privilege at all. The very terms of the test
adopted by the court below suggest the unpredictability of its
application. The test restricts the availability of the privilege
to those officers who play a "substantial role" in deciding and
directing a corporation's legal response. Disparate decisions
in cases applying this test illustrate its
unpredictability. Compare, e.g., Hogan v. Zletz, 43 F.R.D. 308,
315-316 (ND Okla.1967), aff'd in part sub nom. Natta v.
Hogan, 392 F.2d 686 (CA10 1968) (control group includes
managers and assistant managers of patent division and
research and development department), with Congoleum
Industries, Inc. v. GAF Corp., 49 F.R.D. 82, 83-85 (ED
Pa.1969), aff'd, 478 F.2d 1398 (CA3 1973) (control group
includes only division and corporate vice-presidents, and not
two directors of research and vice-president for production
and research).
Page 449 U. S. 394
The communications at issue were made by Upjohn
employees [Footnote 3] to counsel for Upjohn, acting as such,
at the direction of corporate superiors in order to secure legal
advice from counsel. As the Magistrate found,
"Mr. Thomas consulted with the Chairman of the Board and
outside counsel, and thereafter conducted a factual
investigation to determine the nature and extent of the
questionable payments and to be in a position to give leal
advice to the company with respect to the payments."
(Emphasis supplied.) 78-1 USTC 9277, pp. 83,598, 83,599.
Information, not available from upper-echelon management,
was needed to supply a basis for legal advice concerning
compliance with securities and tax laws, foreign laws,
currency regulations, duties to shareholders, and potential
litigation in each of these areas. [Footnote 4] The
communications concerned matters within the scope of the
employees' corporate duties, and the employees themselves
were sufficiently aware that they were being questioned in
order that the corporation could obtain legal advice. The
questionnaire identified Thomas as "the company's General
Counsel" and referred in its opening sentence to the possible
illegality of payments such as the ones on which information
was sought. App. 40a. A statement of policy accompanying
the questionnaire clearly indicated the legal implications of
the investigation. The policy statement was issued "in order
that there be no uncertainty in the future as to the policy
with respect to the practices which are the subject of this
investigation."
Page 449 U. S. 395
It began "Upjohn will comply with all laws and regulations,"
and stated that commissions or payments "will not be used as
a subterfuge for bribes or illegal payments" and that all
19
Rule 130- Attorney-Client
payments must be "proper and legal." Any future agreements
with foreign distributors or agents were to be approved "by a
company attorney," and any questions concerning the policy
were to be referred "to the company's General
Counsel." Id. at 165a-166a. This statement was issued to
Upjohn employees worldwide, so that even those
interviewees not receiving a questionnaire were aware of the
legal implications of the interviews. Pursuant to explicit
instructions from the Chairman of the Board, the
communications were considered "highly confidential" when
made, id. at 39a, 43a, and have been kept confidential by the
company. [Footnote 5] Consistent with the underlying
purposes of the attorney-client privilege, these
communications must be protected against compelled
disclosure.
The Court of Appeals declined to extend the attorney-client
privilege beyond the limits of the control group test for fear
that doing so would entail severe burdens on discovery and
create a broad "zone of silence" over corporate affairs.
Application of the attorney-client privilege to
communications such as those involved here, however, puts
the adversary in no worse position than if the
communications had never taken place. The privilege only
protects disclosure of communications; it does not protect
disclosure of the underlying facts by those who
communicated with the attorney:
"[T]he protection of the privilege extends only
to communications, and not to facts. A fact is one thing and a
communication concerning that fact is an entirely different
Page 449 U. S. 396
thing. The client cannot be compelled to answer the question,
'What did you say or write to the attorney?' but may not
refuse to disclose any relevant fact within his knowledge
merely because he incorporated a statement of such fact into
his communication to his attorney."
Philadelphia v. Westinghouse Electric Corp., 205 F.Supp. 830,
831 (ED Pa.1962). See also Diversified Industries, 572 F.2d at
611; State ex rel. Dudek v. Circuit Court, 34 Wis.2d 559, 580,
150 N.W.2d 387, 399 (1967) ("the courts have noted that a
party cannot conceal a fact merely by revealing it to his
lawyer"). Here, the Government was free to question the
employees who communicated with Thomas and outside
counsel. Upjohn has provided the IRS with a list of such
employees, and the IRS has already interviewed some 25 of
them. While it would probably be more convenient for the
Government to secure the results of petitioner's internal
investigation by simply subpoenaing the questionnaires and
notes taken by petitioner's attorneys, such considerations of
convenience do not overcome the policies served by the
attorney-client privilege. As Justice Jackson noted in his
concurring opinion in Hickman v. Taylor, 329 U.S. at 329 U. S.
516: "Discovery was hardly intended to enable a learned
profession to perform its functions . . . on wits borrowed from
the adversary."
Needless to say, we decide only the case before us, and do
not undertake to draft a set of rules which should govern
challenges to investigatory subpoenas. Any such approach
would violate the spirit of Federal Rule of Evidence
501. SeeS.Rep. No. 93-1277, p. 13 (1974) ("the recognition of
a privilege based on a confidential relationship . . . should be
determined on a case-by-case basis"); Trammel, 445 U.S.
at 445 U. S. 47; United States v. Gillock, 445 U. S. 360, 445 U.
S. 367(1980). While such a "case-by-case" basis may to some
slight extent undermine desirable certainty in the boundaries
of the attorney-client
Page 449 U. S. 397
privilege, it obeys the spirit of the Rules. At the same time,
we conclude that the narrow "control group test" sanctioned
by the Court of Appeals in this case cannot, consistent with
"the principles of the common law as . . . interpreted . . . in
the light of reason and experience," Fed.Rule Evid. 501,
govern the development of the law in this area.
III
Our decision that the communications by Upjohn employees
to counsel are covered by the attorney-client privilege
disposes of the case so far as the responses to the
questionnaires and any notes reflecting responses to
interview questions are concerned. The summons reaches
further, however, and Thomas has testified that his notes and
memoranda of interviews go beyond recording responses to
his questions. App. 27a-28a, 91a-93a. To the extent that the
material subject to the summons is not protected by the
attorney-client privilege as disclosing communications
between an employee and counsel, we must reach the ruling
by the Court of Appeals that the work product doctrine does
not apply to summonses issued under 26 U.S.C. § 7602.
[Footnote 6]
The Government concedes, wisely, that the Court of Appeals
erred and that the work product doctrine does apply to IRS
summonses. Brief for Respondents 16, 48. This doctrine was
announced by the Court over 30 years ago in Hickman v.
Taylor, 329 U. S. 495 (1947). In that case, the Court rejected
"an attempt, without purported necessity or justification, to
secure written statements, private memoranda and personal
recollections prepared or formed by an adverse party's
counsel in the course of his legal duties."
Id. at 329 U. S. 510. The Court noted that "it is essential that a
lawyer work with
Page 449 U. S. 398
a certain degree of privacy," and reasoned that, if discovery
of the material sought were permitted,
"much of what is now put down in writing would remain
unwritten. An attorney's thoughts, heretofore inviolate,
would not be his own. Inefficiency, unfairness and sharp
practices would inevitably develop in the giving of legal
advice and in the preparation of cases for trial. The effect on
the legal profession would be demoralizing. And the interests
of the clients and the cause of justice would be poorly
served."
Id. at 329 U. S. 511. The "strong public policy" underlying the
work product doctrine was reaffirmed recently in United
States v. Nobles, 422 U. S. 225, 422 U. S. 236-240 (1975), and
20
Rule 130- Attorney-Client
has been substantially incorporated in Federal Rule of Civil
Procedure 26(b)(3). [Footnote 7]
As we stated last Term, the obligation imposed by a tax
summons remains "subject to the traditional privileges and
limitations." United States v. Euge, 444 U. S. 707, 444 U. S.
714 (1980). Nothing in the language of the IRS summons
provisions or their legislative history suggests an intent on the
part of Congress to preclude application of the work product
doctrine. Rule 26(b)(3) codifies the work product doctrine,
and the Federal Rules of Civil Procedure are made applicable
Page 449 U. S. 399
to summons enforcement proceedings by Rule 81(a)(3). See
Donaldson v. United States, 400 U. S. 517, 400 U. S.
528 (1971). While conceding the applicability of the work
product doctrine, the Government asserts that it has made a
sufficient showing of necessity to overcome its protections.
The Magistrate apparently so found, 78-1 USTC � 9277, p.
83,605. The Government relies on the following language
in Hickman:
"We do not mean to say that all written materials obtained or
prepared by an adversary's counsel with an eye toward
litigation are necessarily free from discovery in all cases.
Where relevant and nonprivileged facts remain hidden in an
attorney's file, and where production of those facts is
essential to the preparation of one's case, discovery may
properly be had. . . . And production might be justified where
the witnesses are no longer available or can be reached only
with difficulty."
329 U.S. at 329 U. S. 511. The Government stresses that
interviewees are scattered across the globe, and that Upjohn
has forbidden its employees to answer questions it considers
irrelevant. The above-quoted language
from Hickman, however, did not apply to "oral statements
made by witnesses . . . whether presently in the form of [the
attorney's] mental impressions or memoranda." Id. at 329 U.
S. 512. As to such material, the Court did
"not believe that any showing of necessity can be made
under the circumstances of this case so as to justify
production. . . . If there should be a rare situation justifying
production of these matters, petitioner's case is not of that
type."
Id. at 329 U. S. 512-513. See also Nobles, supra at 422 U. S.
252-253 (WHITE, J., concurring). Forcing an attorney to
disclose notes and memoranda of witnesses' oral statements
is particularly disfavored, because it tends to reveal the
attorney's mental processes, 329 U.S. at 329 U. S. 513 ("what
he saw fit to write down regarding witnesses'
remarks"); id. at 329 U. S. 516-517 ("the statement would be
his [the
Page 449 U. S. 400
attorney's] language, permeated with his inferences")
(Jackson, J., concurring). [Footnote 8]
Rule 26 accords special protection to work product revealing
the attorney's mental processes. The Rule permits disclosure
of documents and tangible things constituting attorney work
product upon a showing of substantial need and inability to
obtain the equivalent without undue hardship. This was the
standard applied by the Magistrate, 78-1 USTC � 9277, p.
83,604. Rule 26 goes on, however, to state that,
"[i]n ordering discovery of such materials when the required
showing has been made, the court shall protect against
disclosure of the mental impressions, conclusions, opinions or
legal theories of an attorney or other representative of a
party concerning the litigation."
Although this language does not specifically refer to
memoranda based on oral statements of witnesses,
the Hickmancourt stressed the danger that compelled
disclosure of such memoranda would reveal the attorney's
mental processes. It is clear that this is the sort of material
the draftsmen of the Rule had in mind as deserving special
protection. See Notes of Advisory Committee on 1970
Amendment to Rules, 28 U.S.C.App. p. 442 ("The
subdivision . . . goes on to protect against disclosure the
mental impressions, conclusions, opinions, or legal
theories . . . of an attorney or other representative of a party.
The Hickman opinion drew special attention to the need for
protecting an attorney against discovery of memoranda
prepared from recollection of oral interviews. The courts
have steadfastly safeguarded against disclosure of lawyers'
mental impressions and legal theories. . . .").
Page 449 U. S. 401
Based on the foregoing, some courts have concluded that no
showing of necessity can overcome protection of work
product which is based on oral statements from
witnesses. See, e.g., In re Grand Jury Proceedings, 473 F.2d
840, 848 (CA8 1973) (personal recollections, notes, and
memoranda pertaining to conversation with witnesses); In re
Grand Jury Investigation, 412 F.Supp. 943, 949 (ED Pa.1976)
(notes of conversation with witness "are so much a product
of the lawyer's thinking and so little probative of the witness's
actual words that they are absolutely protected from
disclosure"). Those courts declining to adopt an absolute rule
have nonetheless recognized that such material is entitled to
special protection.See, e.g., In re Grand Jury
Investigation, 599 F.2d 1224, 1231 (CA3 1979) ("special
considerations . . . must shape any ruling on the
discoverability of interview memoranda . . . ; such documents
will be discoverable only in a rare situation'"); cf. In re Grand
Jury Subpoena, 599 F.2d 504, 511-512 (CA2 1979).
We do not decide the issue at this time. It is clear that the
Magistrate applied the wrong standard when he concluded
that the Government had made a sufficient showing of
necessity to overcome the protections of the work product
doctrine. The Magistrate applied the "substantial need" and
"without undue hardship" standard articulated in the first
part of Rule 26(b)(3). The notes and memoranda sought by
the Government here, however, are work product based on
oral statements. If they reveal communications, they are, in
this case, protected by the attorney-client privilege. To the
extent they do not reveal communications, they reveal the
attorneys' mental processes in evaluating the
communications. As Rule 26 and Hickman make clear, such
work product cannot be disclosed simply on a showing of
21
Rule 130- Attorney-Client

substantial need and inability to obtain the equivalent

without undue hardship.

While we are not prepared at this juncture to say that such

material is always protected by the work product rule, we

Page 449 U. S. 402

think a far stronger showing of necessity and unavailability by

other means than was made by the Government or applied
by the Magistrate in this case would be necessary to compel
disclosure. Since the Court of Appeals thought that the work
product protection was never applicable in an enforcement
proceeding such as this, and since the Magistrate whose
recommendations the District Court adopted applied too
lenient a standard of protection, we think the best procedure
with respect to this aspect of the case would be to reverse
the judgment of the Court of Appeals for the Sixth Circuit and
remand the case to it for such further proceedings in
connection with the work product claim as are consistent
with this opinion.

Accordingly, the judgment of the Court of Appeals is reversed,

and the case remanded for further proceedings.

It is so ordered.

22
Rule 130- Attorney-Client
[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.
23
Rule 130- Attorney-Client

For that purpose, the documents which were later filed by Reconsideration of said resolution having been likewise
respondent Sansaet in the preliminary investigation were denied,[20] the controversy was elevated to this Court by the
prepared and falsified by his co-respondents in this case in prosecution in an original action for the issuance of the
the house of respondent Paredes. To evade responsibility for extraordinary writ of certiorari against respondent
his own participation in the scheme, he claimed that he did so Sandiganbayan.
upon the instigation and inducement of respondent
The principal issues on which the resolution of the petition at
Paredes. This was intended to pave the way for his discharge
bar actually turns are therefore (1) whether or not the
as a government witness in the consolidated cases, as in fact
projected testimony of respondent Sansaet, as proposed
a motion therefor was filed by the prosecution pursuant to
state witness, is barred by the attorney-client privilege; and
their agreement.
(2) whether or not, as a consequence thereof, he is eligible
Withal, in a resolution[16] dated February 24, 1992, the for discharge to testify as a particeps criminis.
Ombudsman approved the filing of falsification charges
I
against all the herein private respondents. The proposal for
the discharge of respondent Sansaet as a state witness was As already stated, respondent Sandiganbayan ruled that due
rejected by the Ombudsman on this evaluative legal position: to the lawyer-client relationship which existed between
herein respondents Paredes and Sansaet during the relevant
x x x Taking his explanation, it is difficult to believe that a
periods, the facts surrounding the case and other confidential
lawyer of his stature, in the absence of deliberate intent to
matters must have been disclosed by respondent Paredes, as
conspire, would be unwittingly induced by another to commit
client, to respondent Sansaet, as his lawyer. Accordingly, it
a crime. As counsel for the accused in those criminal cases,
found no reason to discuss it further since Atty. Sansaet
Atty. Sansaet had control over the case theory and the
cannot be presented as a witness against accused Ceferino S.
evidence which the defense was going to present. Moreover,
Paredes, Jr. without the latters consent.[21]
the testimony or confession of Atty. Sansaet falls under the
mantle of privileged communication between the lawyer and The Court is of a contrary persuasion. The attorney-client
his client which may be objected to, if presented in the trial. privilege cannot apply in these cases, as the facts thereof and
the actuations of both respondents therein constitute an
The Ombudsman refused to reconsider that resolution [17] and,
exception to the rule. For a clearer understanding of that
ostensibly to forestall any further controversy, he decided to
evidential rule, we will first sweep aside some distracting
file separate informations for falsification of public
mental cobwebs in these cases.
documents against each of the herein respondents. Thus,
three criminal cases,[18] each of which named one of the three 1. It may correctly be assumed that there was a confidential
private respondents here as the accused therein, were filed in communication made by Paredes to Sansaet in connection
the graft court.However, the same were consolidated for with Criminal Cases Nos. 17791-93 for falsification before
joint trial in the Second Division of the Sandiganbayan. respondent court, and this may reasonably be expected since
Paredes was the accused and Sansaet his counsel
As stated at the outset, a motion was filed by the People on
therein. Indeed, the fact that Sansaet was called to witness
July 27, 1993 for the discharge of respondent Sansaet as a
the preparation of the falsified documents by Paredes and
state witness. It was submitted that all the requisites therefor,
Honrada was as eloquent a communication, if not more, than
as provided in Section 9, Rule 119 of the Rules of Court, were
verbal statements being made to him by Paredes as to the
satisfied insofar as respondent Sansaet was concerned. The
fact and purpose of such falsification. It is significant that the
basic postulate was that, except for the eyewitness testimony
evidentiary rule on this point has always referred to any
of respondent Sansaet, there was no other direct evidence to
communication, without distinction or qualification.[22]
prove the confabulated falsification of documents by
respondents Honrada and Paredes. In the American jurisdiction from which our present
evidential rule was taken, there is no particular mode by
Unfortunately for the prosecution, respondent
which a confidential communication shall be made by a client
Sandiganbayan, hewing to the theory of the attorney-client
to his attorney.The privilege is not confined to verbal or
privilege adverted to by the Ombudsman and invoked by the
written communications made by the client to his attorney
two other private respondents in their opposition to the
but extends as well to information communicated by the
prosecutions motion, resolved to deny the desired discharge
client to the attorney by other means.[23]
on this ratiocination:
Nor can it be pretended that during the entire process,
From the evidence adduced, the opposition was able to
considering their past and existing relations as counsel and
establish that client and lawyer relationship existed between
client and, further, in view of the purpose for which such
Atty. Sansaet and Ceferino Paredes, Jr., before, during and
falsified documents were prepared, no word at all passed
after the period alleged in the information. In view of such
between Paredes and Sansaet on the subject matter of that
relationship, the facts surrounding the case, and other
criminal act. The clincher for this conclusion is the undisputed
confidential matter must have been disclosed by accused
fact that said documents were thereafter filed by Sansaet in
Paredes, as client, to accused Sansaet, as his lawyer in his
behalf of Paredes as annexes to the motion for
professional capacity. Therefore, the testimony of Atty.
reconsideration in the preliminary investigation of the graft
Sansaet on the facts surrounding the offense charged in the
case before the Tanodbayan.[24]Also, the acts and words of
information is privileged.[19]
the parties during the period when the documents were
24
Rule 130- Attorney-Client
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.
25
Rule 130- Attorney-Client
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
26
Rule 130- Attorney-Client

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.
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;
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.
SO ORDERED.
27
Rule 130- Attorney-Client
Narvasa, C.J., Padilla, Davide, Jr., Romero, Bellosillo, Melo,
Puno, Vitug, Kapunan, Mendoza, Francisco and Panganiban,
JJ., concur.
Hermosisima, Jr. and Torres, Jr., JJ., on leave.
G.R. No. L-9231 January 6, 1915
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. Of the very essence of the veil of secrecy which
surrounds communications 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.)
28
Rule 130- Attorney-Client

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.

Arellano, C.J., Torres, Carson and Araullo, JJ., concur.

Moreland, J., concurs in the result.

29
Rule 130- Attorney-Client
[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
30
Rule 130- Attorney-Client
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
31
Rule 130- Attorney-Client
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
32
Rule 130- Attorney-Client
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
33
Rule 130- Attorney-Client
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
34
Rule 130- Attorney-Client
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]
35
Rule 130- Attorney-Client
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
36
Rule 130- Attorney-Client
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,
37
Rule 130- Attorney-Client
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]
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.
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
38
Rule 130- Attorney-Client

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.

Bellosillo, Melo, and Francisco, JJ., concur.

Vitug, J., see separate opinion.

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

Davide, Jr. and Puno, JJ., see dissenting opinion.

Narvasa, C.J., and Regalado, J., joins Justice Davide in his

dissent.

Romero, J., no part. Related to PCGG Commissioner when

Civil Case No. 0033 was filed.

Hermosisima, Jr., J., no part. Participated in Sandiganbayan

deliberations thereon.

Mendoza, J., on leave.

39
Rule 130- Attorney-Client
G.R. Nos. 169823-24 September 11, 2013
HERMINIO T. DISINI, Petitioner,
vs.
THE HON. SANDIGANBAYAN, FIRST DIVISION, AND THE
PEOPLE OF THE PHILIPPINES, Respondents.
x-----------------------x
G.R. Nos. 174764-65
HERMINIO T. DISINI, Petitioner,
vs.
SANDIGANBAYAN, FIRST DIVISION, AND THE PEOPLE OF THE
PHILIPPINES, Respondents.
DECISION
BERSAMIN, J.:
The Sandiganbayan has exclusive original jurisdiction over the
criminal action involving petitioner notwithstanding that he is
a private individual considering that his criminal prosecution
is intimately related to the recovery of ill-gotten wealth of the
Marcoses, their immediate family, subordinates and close
associates.
The Case
Petitioner Herminio T. Disini assails via petition for certiorari
there solutions promulgated by the Sandiganbayan in
Criminal Case No. 28001and Criminal Case No. 28002, both
entitled People v. Herminio T. Disini, on January 17, 2005
(denying his motion to quash the informations)1 and August
10, 2005 (denying his motion for reconsideration of the
denial of his motion to quash),2 alleging that the
Sandiganbayan (First Division) thereby committed grave
abuse of discretion amounting to lack or excess of jurisdiction.
Antecedents
The Office of the Ombudsman filed two informations dated
June 30,2004 charging Disini in the Sandiganbayan with
corruption of public officials, penalized under Article 212 in
relation to Article 210 of the Revised Penal Code (Criminal
Case No. 28001), and with a violation of Section 4(a) of
Republic Act 3019 (R.A. No. 3019), also known as the Anti-
Graft and Corrupt Practices Act (Criminal Case No. 28002).
The accusatory portions of the informations read as follows:
Criminal Case No. 28001
That during the period from 1974 to February 1986, in Manila,
Philippines, and within the jurisdiction of this Honorable
Court, accused HERMINIO T. DISINI, conspiring together and
confederating with the then President of the Philippines
Ferdinand E. Marcos, did then and there, willfully, unlawfully
and feloniously offer, promise and give gifts and presents to
said Ferdinand E. Marcos, consisting of accused DISINI’s
ownership of two billion and five hundred (2.5 billion) shares
of stock in Vulcan Industrial and Mining Corporation and four
billion (4 billion)shares of stock in The Energy Corporation,
with both shares of stock having then a book value of
₱100.00 per share of stock, and subcontracts, to Engineering
and Construction Company of Asia, owned and controlled by
said Ferdinand E. Marcos, on the mechanical and electrical
construction work on the Philippine Nuclear Power Plant
Project("Project") of the National Power Corporation at
Morong, Bataan, all for and in consideration of accused Disini
seeking and obtaining for Burns and Roe and Westinghouse
Electrical Corporation (Westinghouse), the contracts to do
the engineering and architectural design and to construct,
respectively, the Project, as in fact said Ferdinand E. Marcos,
taking undue advantage of his position and committing the
offense in relation to his office and in consideration of the
aforesaid gifts and presents, did award or cause to be
awarded to said Burns and Roe and Westinghouse, the
contracts to do the engineering and architectural design and
to construct the Project, respectively, which acts constitute
the crime of corruption of public officials.
CONTRARY TO LAW.3
Criminal Case No. 28002
That during the period 1974 to February 1986, in Manila,
Philippines, and within the jurisdiction of the Honorable
Court, accused HERMINIO T. DISINI, conspiring together and
confederating with the then President of the Philippines,
Ferdinand E. Marcos, being then the close personal friend
and golfing partner of said Ferdinand E. Marcos, and being
further the husband of Paciencia Escolin-Disini who was the
first cousin of then First Lady Imelda Romualdez-Marcos and
family physicianof the Marcos family, taking advantage of
such close personal relation, intimacy and free access, did
then and there, willfully, unlawfully and criminally, in
connection with the Philippine Nuclear Power Plant
(PNPP)Project ("PROJECT") of the National Power Corporation
(NPC) at Morong, Bataan, request and receive from Burns and
Roe, a foreign consultant, the total amount of One Million U.S.
Dollars ($1,000,000.00),more or less, and also from
Westinghouse Electric Corporation(WESTINGHOUSE), the
total amount of Seventeen Million U.S.
Dollars($17,000,000.00), more or less, both of which entities
were then having business, transaction, and application with
the Government of the Republic of the Philippines, all for and
in consideration of accused DISINI securing and obtaining, as
accused Disini did secure and obtain, the contract for the said
Burns and Roe and Westinghouse to do the engineering and
architectural design, and construct, respectively, the said
PROJECT, and subsequently, request and receive subcontracts
for Power Contractors, Inc. owned by accused DISINI, and
Engineering and Construction Company of Asia (ECCO-Asia),
owned and controlled by said Ferdinand E. Marcos, which
stated amounts and subcontracts constituted kickbacks,
commissions and gifts as material or pecuniary advantages,
for securing and obtaining, as accused DISINI did secure and
obtain, through the direct intervention of said Ferdinand E.
Marcos, for Burns and Roe the engineering and architectural
contract, and for Westinghouse the construction contract, for
the PROJECT.
CONTRARY TO LAW.4
On August 2, 2004, Disini filed a motion to quash, 5 alleging
that the criminal actions had been extinguished by
prescription, and that the informations did not conform to
the prescribed form. The Prosecution opposed the motion to
quash.6
40
Rule 130- Attorney-Client

On September 16, 2004, Disini voluntarily submitted himself 1. Preliminary Considerations

for arraignment to obtain the Sandiganbayan’s favorable
action on his motion for permission to travel abroad. 7 He
then entered a plea of not guilty to both informations.
As stated, on January 17, 2005, the Sandiganbayan (First
Division) promulgated its first assailed resolution denying the
motion to quash.8
Disini moved for the reconsideration of the resolution dated
January 17, 2005,9 but the Sandiganbayan (First Division)
denied his motion on August 10, 2005 through the second
assailed resolution.10
Issues
To properly resolve this case, reference is made to the ruling
of the Court in G.R. No. 175730 entitled Herminio Disini v.
Sandiganbayan,12 which involved the civil action for
reconveyance, reversion, accounting, restitution, and
damages (Civil Case No. 0013 entitled Republic v. HerminioT.
Disini, et al.) filed by the Presidential Commission on Good
Government(PCGG) against Disini and others.13 The amended
complaint in Civil Case No. 0013 alleged that Disini had acted
in unlawful concert with his co-defendants in acquiring and
accumulating ill-gotten wealth through them is appropriation
of public funds, plunder of the nation’s wealth, extortion,
embezzlement, and other acts of corruption,14 as follows:

Undaunted, Disini commenced this special civil action for 4. Defendant HERMINIO T. DISINI is a close associate of
certiorari, alleging that: defendant Ferdinand E. Marcos and the husband of the first
cousin of Defendant Imelda R. Marcos. By reason of this
A. THE RESPONDENT COURT HAS NO JURISDICTION OVER relationship xxx defendant Herminio Disini obtained
THEOFFENSES CHARGED. staggering commissions from the Westinghouse in exchange
for securing the nuclear power plant contract from the
1. THE RESPONDENT COURT GRAVELY ERRED WHEN ITRULED
Philippine government.
THAT SECTION 4, PARAGRAPHS (A) AND (B) OFREPUBLIC ACT
NO. 8249 DO NOT APPLY SINCE THEINFORMATIONS WERE xxxx
"FILED PURSUANT TO E.O. NOS. 1,2, 14 AND 14-A".
13. Defendants Herminio T. Disini and Rodolfo Jacob, by
2. THE RESPONDENT COURT GRAVELY ERRED WHEN themselves and/or in unlawful concert, active collaboration
ITASSUMED JURISDICTION WITHOUT HAVING MET and willing participation of defendants Ferdinand E. Marcos
THEREQUISITE UNDER SECTION 4 OF R.A. 8249 THAT and Imelda R. Marcos, and taking undue advantage of their
THEACCUSED MUST BE A PUBLIC OFFICER. association and influence with the latter defendant spouses
in order to prevent disclosure and recovery of ill-gotten
B. THE RESPONDENT COURT ACTED WITH SUCH GRAVEABUSE
assets, engaged in devices, schemes, and stratagems such as:
OF DISCRETION WHEN IT EFFECTIVELY IGNORED,
DISREGARDED, AND DENIED PETITIONER’SCONSTITUTIONAL xxxx
AND STATUTORY RIGHT TOPRESCRIPTION.
(c) unlawfully utilizing the Herdis Group of Companies and
1. THE RESPONDENT COURT GRAVELY ERRED Asia Industries, Inc. as conduits through which defendants
INDETERMINING THE APPLICABLE PRESCRIPTIVE PERIOD. received, kept, and/or invested improper payments such as
unconscionably large commissions from foreign corporations
2. THE RESPONDENT COURT GRAVELY ERRED
like the Westinghouse Corporation; (d) secured special
INDETERMINING THE COMMENCEMENT OF
concessions, privileges and/or benefits from defendants
THEPRESCRIPTIVE PERIOD.
Ferdinand E. Marcos and Imelda R. Marcos, such as a contract
3. THE RESPONDENT COURT GRAVELY ERRED awarded to Westinghouse Corporation which built an
INDETERMINING THE POINT OF INTERRUPTION OF inoperable nuclear facility in the country for a scandalously
THEPRESCRIPTIVE PERIOD. exorbitant amount that included defendant’s staggering
commissions – defendant Rodolfo Jacob executed for HGI the
C. BY MERELY ASSUMING THE PRESENCE OF contract for the aforesaid nuclear plant;15
GLARINGLYABSENT ELEMENTS IN THE OFFENSES CHARGED
TOUPHOLD THE ‘SUFFICIENCY’ OF THE INFORMATIONS Through its letter dated April 8, 1991,16 the PCGG transmitted
INCRIMINAL CASE NOS. 28001 AND 28002, THE the records of Criminal Case No. 28001 and Criminal Case No.
RESPONDENTCOURT DEMONSTRATED ITS PREJUDGMENT 28002 to then Ombudsman Conrado M. Vasquez for
OVER THE SUBJECT CASES AND ACTED WITH GRAVE ABUSE appropriate action, to wit:
OF ITSDISCRETION.
In line with the decision of the Supreme Court in the case of
D. THE RESPONDENT COURT ACTED WITH GRAVE ABUSE EduardoM. Cojuangco, Jr. versus the PCGG (G.R. Nos. 92319–
OFDISCRETION IN REFUSING TO QUASH THE 92320) dated October 2, 1990, we are hereby transmitting to
INFORMATIONSDESPITE THEIR UTTER FAILURE TO COMPLY your Office for appropriate action the records of the attached
WITH THEPRESCRIBED FORM, THUS EFFECTIVELY DENYING criminal case which we believe is similar to the said
THEACCUSED HIS CONSTITUTIONAL AND STATUTORY Cojuangco case in certain aspects, such as: (i) some parts or
RIGHTTO BE INFORMED OF THE NATURE AND CAUSE OF elements are also parts of the causes of action in the civil
THEACCUSATION AGAINST HIM.11 complaints[-]filed with the Sandiganbayan; (ii) some
properties or assets of the respondents have been
Ruling sequestered; (iii) some of the respondents are also party
The petition for certiorari has no merit. defendants in the civil cases.

41
Rule 130- Attorney-Client
Although the authority of the PCGG has been upheld by the
Supreme Court, we are constrained to refer to you for proper
action the herein-attached case in view of the suspicion that
the PCGG cannot conduct an impartial investigation in cases
similar to that of the Cojuangco case. x x x
Ostensibly, the PCGG’s letter of transmittal was adverting to
the ruling in Cojuangco, Jr. v. Presidential Commission on
Good Government (Cojuangco, Jr.),17 viz:
x x x The PCGG and the Solicitor General finding a prima facie
basis filed a civil complaint against petitioner and intervenors
alleging substantially the same illegal or criminal acts subject
of the subsequent criminal complaints the Solicitor General
filed with the PCGG for preliminary investigation. x x x.
Moreover, when the PCGG issued the sequestration and
freeze orders against petitioner’s properties, it was on the
basis of a prima facie finding that the same were ill-gotten
and/or were acquired in relation to the illegal disposition of
coconut levy funds. Thus, the Court finds that the PCGG
cannot possibly conduct the preliminary investigation of said
criminal complaints with the "cold neutrality of an impartial
judge," as it has prejudged the matter. x x x18
xxxx
The Court finds that under the circumstances of the case, the
PCGG cannot inspire belief that it could be impartial in the
conduct of the preliminary investigation of the aforesaid
complaints against petitioner and intervenors. It cannot
possibly preside in the said preliminary investigation with an
even hand.
The Court holds that a just and fair administration of justice
can be promoted if the PCGG would be prohibited from
conducting the preliminary investigation of the complaints
subject of this petition and the petition for intervention and
that the records of the same should be forwarded to the
Ombudsman, who as an independent constitutional officer
has primary jurisdiction over cases of this nature, to conduct
such preliminary investigation and take appropriate
action.19 (Bold emphasis supplied)
It appears that the resolutions of the Office of the
Ombudsman, following its conduct of the preliminary
investigation on the criminal complaints thus transmitted by
the PCGG, were reversed and set aside by the Court in
Presidential Commission on Good Government v. Desierto,20
with the Court requiring the Office of the Ombudsman to file
the informations that became the subject of Disini’s motion
to quash in Criminal Case No.28001 and Criminal Case No.
28002.
2. Sandiganbayan has exclusive and original jurisdiction over
the offenses charged
Disini challenges the jurisdiction of the Sandiganbayan over
the offenses charged in Criminal Case No. 28001 and Criminal
Case No. 28002.He contends that: (1) the informations did
not allege that the charges were being filed pursuant to and
in connection with Executive Order (E.O.) Nos.1, 2, 14 and 14-
A; (2) the offenses charged were not of the nature
contemplated by E.O. Nos. 1, 2, 14 and 14-A because the
allegations in the informations neither pertained to the
recovery of ill-gotten wealth, nor involved sequestration
cases; (3) the cases were filed by the Office of the
Ombudsman instead of by the PCGG; and (4) being a private
individual not charged as a co-principal, accomplice or
accessory of a public officer, he should be prosecuted in the
regular courts instead of in the Sandiganbayan.
The Office of the Solicitor General (OSG) counters that the
Sandiganbayan has jurisdiction over the offenses charged
because Criminal Case No. 28001 and Criminal Case No.
28002 were filed within the purview of Section 4 (c) of R.A.
No. 8249; and that both cases stemmed from the criminal
complaints initially filed by the PCGG pursuant to its mandate
under E.O. Nos. 1, 2, 14 and 14-A to investigate and file the
appropriate civil or criminal cases to recover ill-gotten wealth
not only of the Marcoses and their immediately family but
also of their relatives, subordinates and close associates.
We hold that the Sandiganbayan has jurisdiction over
Criminal Case No. 28001 and Criminal Case No. 28002.
Presidential Decree (P.D.) No. 1606 was the law that
established the Sandiganbayan and defined its jurisdiction.
The law was amended by R.A. No. 7975 and R.A. No. 8249.
Under Section 4 of R.A. No. 8249, the Sandiganbayan was
vested with original and exclusive jurisdiction over all cases
involving:
a. Violations of Republic Act No. 3019, as amended,
otherwise known as the Anti-Graft and Corrupt Practices Act,
Republic Act No.1379, and Chapter II, Section 2, Title VII,
Book II of the Revised Penal Code, where one or more of the
accused are officials occupying the following positions in the
government whether in a permanent, acting or interim
capacity, at the time of the commission of the offense:
xxxx
b. Other offenses or felonies whether simple or complexed
with other crimes committed by the public officials and
employees mentioned in subsection (a) of this section in
relation to their office.
c. Civil and criminal cases filed pursuant to and in connection
with Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986.
(Bold emphasis supplied)
In cases where none of the accused are occupying positions
corresponding to salary grade ‘27’ or higher, as prescribed in
the said Republic Act No. 6758, or military or PNP officers
mentioned above, exclusive original jurisdiction thereof shall
be vested in the proper regional trial court, metropolitan trial
court, municipal trial court and municipal circuit trial court, as
the case may be, pursuant to their respective jurisdiction as
provided in Batas Pambansa Blg. 129, as amended.
xxxx
In case private individuals are charged as co-principals,
accomplices or accessories with the public officers or
employees, including those employed in government-owned
or controlled corporations, they shall be tried jointly with said
public officers and employees in the proper courts which shall
exercise exclusive jurisdiction over them. x x x x
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Rule 130- Attorney-Client
It is underscored that it was the PCGG that had initially filed
the criminal complaints in the Sandiganbayan, with the Office
of the Ombudsman taking over the investigation of Disini only
after the Court issued in Cojuangco, Jr. the directive to the
PCGG to refer the criminal cases to the Office of the
Ombudsman on the ground that the PCGG would not be an
impartial office following its finding of a prima facie case
being established against Disini to sustain the institution of
Civil Case No. 0013.
Also underscored is that the complaint in Civil Case No. 0013
and the informations in Criminal Case No. 28001 and Criminal
Case No. 28002involved the same transaction, specifically the
contracts awarded through the intervention of Disini and
President Marcos in favor of Burns & Roe to do the
engineering and architectural design, and Westinghouse to
do the construction of the Philippine Nuclear Power Plant
Project (PNPPP). Given their sameness in subject matter, to
still expressly aver in Criminal Case No.28001 and Criminal
Case No. 28002 that the charges involved the recovery of ill-
gotten wealth was no longer necessary.21 With Criminal Case
No.28001 and Criminal Case No. 28002 being intertwined
with Civil Case No.0013, the PCGG had the authority to
institute the criminal prosecutions against Disini pursuant to
E.O. Nos. 1, 2, 14 and 14-A.
That Disini was a private individual did not remove the
offenses charged from the jurisdiction of the Sandiganbayan.
Section 2 of E.O. No.1, which tasked the PCGG with assisting
the President in "the recovery of all ill-gotten wealth
accumulated by former President Ferdinand E. Marcos, his
immediate family, relatives, subordinates and close
associates, whether located in the Philippines or abroad,
including the takeover or sequestration of all business
enterprises and entities owned or controlled by them, during
his administration, directly or through nominees, by taking
undue advantage of their public office and/or using their
powers, authority, influence, connections or relationship,"
expressly granted the authority of the PCGG to recover ill-
gotten wealth covered President Marcos’ immediate family,
relatives, subordinates and close associates, without
distinction as to their private or public status.
Contrary to Disini’s argument, too, the qualifying clause
found in Section 4 of R.A. No. 824922 applied only to the cases
listed in Subsection 4aand Subsection 4b of R.A. No. 8249, the
full text of which follows:
xxxx
a. Violations of Republic Act No. 3019, as amended,
otherwise known as the Anti-Graft and Corrupt Practices Act,
Republic Act No.1379, and Chapter II, Section 2, Title VII,
Book II of the Revised Penal Code, where one or more of the
accused are officials occupying the following positions in the
government whether in a permanent, acting or interim
capacity, at the time of the commission of the offense:
(1) Officials of the executive branch occupying the positions
of regional director and higher, otherwise classified as Grade
‘27’ and higher, of the Compensation and Position
Classification Act of 1989(Republic Act No. 6758), specifically
including:
(a) Provincial governors, vice-governors, members of the
sangguniang panlalawigan and provincial treasurers,
assessors, engineers and other provincial department heads;
(b) City mayors, vice-mayors, members of the sangguniang
panlungsod, city treasurers, assessors engineers and other
city department heads;
(c) Officials of the diplomatic service occupying the position
of consul and higher;
(d) Philippine army and air force colonels, naval captains, and
all officers of higher rank;
(e) Officers of the Philippine National Police while occupying
the position of provincial director and those holding the rank
of senior superintendent or higher;
(f) City and provincial prosecutors and their assistants, and
officials and prosecutors in the Office of the Ombudsman and
special prosecutor;
(g) Presidents, directors or trustees, or managers of
government-owned or -controlled corporations, state
universities or educational institutions or foundations;
(2) Members of Congress and officials thereof classified as
Grade‘27’ and up under the Compensation and Position
Classification Act of 1989;
(3) Members of the judiciary without prejudice to the
provisions of the Constitution;
(4) Chairmen and members of Constitutional Commissions,
without prejudice to the provisions of the Constitution; and
(5) All other national and local officials classified as Grade
‘27’and higher under the Compensation and Position
Classification Act of 1989. b. Other offenses or felonies
whether simple or complexed with other crimes committed
by the public officials and employees mentioned in
subsection a of this section in relation to their office. (bold
emphasis supplied)
xxxx
Unquestionably, public officials occupying positions classified
as Grade 27 or higher are mentioned only in Subsection 4a
and Subsection 4b,signifying the plain legislative intent of
limiting the qualifying clause to such public officials. To
include within the ambit of the qualifying clause the persons
covered by Subsection 4c would contravene the exclusive
mandate of the PCGG to bring the civil and criminal cases
pursuant to and in connection with E.O. Nos. 1, 2, 14 and 14-
A. In view of this, the Sandiganbayan properly took
cognizance of Criminal Case No. 28001 and Criminal Case No.
28002 despite Disini’s being a private individual, and despite
the lack of any allegation of his being the co-principal,
accomplice or accessory of a public official in the commission
of the offenses charged.
3. The offenses charged in the informations have not yet
prescribed
In resolving the issue of prescription, the following must be
considered, namely: (1) the period of prescription for the
offense charged;(2) the time when the period of prescription
43
Rule 130- Attorney-Client
starts to run; and (3) the time when the prescriptive period is
interrupted.23
The information in Criminal Case No. 28001 alleged that Disini
had offered, promised and given gifts and presents to
Ferdinand E. Marcos; that said gifts were in consideration of
Disini obtaining for Burns & Roe and Westinghouse Electrical
Corporation (Westinghouse) the contracts, respectively, to do
the engineering and architectural design of and to construct
the PNPPP; and that President Marcos did award or cause to
be awarded the respective contracts to Burns & Roe and
Westinghouse, which acts constituted the crime of corruption
of public officials.24
The crime of corruption of public officials charged in Criminal
Case No. 28001 is punished by Article 212 of the Revised
Penal Code with the" same penalties imposed upon the
officer corrupted."25 Under the second paragraph of Article
210 of the Revised Penal Code (direct bribery),26 if the gift
was accepted by the officer in consideration of the execution
of an act that does not constitute a crime, and the officer
executes the act, he shall suffer the penalty of prision mayor
in its medium and minimum periods and a fine of not less
than three times the value of the gift. Conformably with
Article 90 of the Revised Penal Code,27 the period of
prescription for this specie of corruption of public officials
charged against Disini is 15 years.
As for Criminal Case No. 28002, Disini was charged with a
violation of Section 4(a) of R.A. No. 3019. By express
provision of Section 11 of R.A. No. 3019, as amended by Batas
Pambansa Blg. 195, the offenses committed under R.A. No.
3019 shall prescribe in 15 years. Prior to the amendment, the
prescriptive period was only 10 years. It became settled in
People v. Pacificador,28 however, that the longer prescriptive
period of 15years would not apply to crimes committed prior
to the effectivity of Batas Pambansa Blg. 195, which was
approved on March 16, 1982, because the longer period
could not be given retroactive effect for not being favorable
to the accused. With the information alleging the period from
1974 to February1986 as the time of the commission of the
crime charged, the applicable prescriptive period is 10 years
in order to accord with People v. Pacificador .
For crimes punishable by the Revised Penal Code, Article 91
thereof provides that prescription starts to run from the day
on which the crime is discovered by the offended party, the
authorities, or their agents. As to offenses punishable by R.A.
No. 3019, Section 2 of R.A. No. 332629 states:
Section 2. Prescription shall begin to run from the day of the
commission of the violation of the law, and if the same be not
known at the time, from the discovery thereof and the
institution of judicial proceedings for its investigation and
punishment.
The prescription shall be interrupted when proceedings are
instituted against the guilty person, and shall begin to run
again if the proceedings are dismissed for reasons not
constituting double jeopardy.
The ruling on the issue of prescription in Presidential Ad Hoc
Fact-Finding Committee on Behest Loans v. Desierto30 is also
enlightening, viz:
Generally, the prescriptive period shall commence to run on
the day the crime is committed. That an aggrieved person
"entitled to an action has no knowledge of his right to sue or
of the facts out of which his right arises," does not prevent
the running of the prescriptive period. An exception to this
rule is the "blameless ignorance" doctrine, incorporated in
Section 2 of Act No. 3326. Under this doctrine, "the statute of
limitations runs only upon discovery of the fact of the
invasion of a right which will support a cause of action. In
other words, the courts would decline to apply the statute of
limitations where the plaintiff does not know or has no
reasonable means of knowing the existence of a cause of
action." It was in this accord that the Court confronted the
question on the running of the prescriptive period in People v.
Duque which became the cornerstone of our 1999 Decision in
Presidential Ad Hoc Fact-Finding Committee on Behest Loans
v. Desierto (G.R. No. 130149), and the subsequent cases
which Ombudsman Desierto dismissed, emphatically, on the
ground of prescription too. Thus, we held in a catena of cases,
that if the violation of the special law was not known at the
time of its commission, the prescription begins to run only
from the discovery thereof, i.e., discovery of the unlawful
nature of the constitutive act or acts.
Corollary, it is safe to conclude that the prescriptive period
for the crime which is the subject herein, commenced from
the date of its discovery in 1992 after the Committee made
an exhaustive investigation. When the complaint was filed in
1997, only five years have elapsed, and, hence, prescription
has not yet set in. The rationale for this was succinctly
discussed in the 1999 Presidential Ad Hoc Fact-Finding
Committee on Behest Loans, that "it was well-high impossible
for the State, the aggrieved party, to have known these
crimes committed prior to the 1986EDSA Revolution, because
of the alleged connivance and conspiracy among involved
public officials and the beneficiaries of the loans." In yet
another pronouncement, in the 2001 Presidential Ad Hoc
Fact-Finding Committee on Behest Loans v. Desierto (G.R. No.
130817), the Court held that during the Marcos regime, no
person would have dared to question the legality of these
transactions. (Citations omitted)31
Accordingly, we are not persuaded to hold here that the
prescriptive period began to run from 1974, the time when
the contracts for the PNPP Project were awarded to Burns &
Roe and Westinghouse. Although the criminal cases were the
offshoot of the sequestration case to recover ill-gotten
wealth instead of behest loans like in Presidential Ad Hoc
Fact-Finding Committee on Behest Loans v. Desierto, the
connivance and conspiracy among the public officials
involved and the beneficiaries of the favors illegally extended
rendered it similarly well-nigh impossible for the State, as the
aggrieved party, to have known of the commission of the
crimes charged prior to the EDSA Revolution in 1986.
Notwithstanding the highly publicized and widely-known
nature of the PNPPP, the unlawful acts or transactions in
relation to it were discovered only through the PCGG’s
exhaustive investigation, resulting in the establishment of a
prima facie case sufficient for the PCGG to institute Civil Case
No. 0013 against Disini. Before the discovery, the PNPPP
contracts, which partook of a public character, enjoyed the
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Rule 130- Attorney-Client
presumption of their execution having been regularly done in
the course of official functions.32
Considering further that during the Marcos regime, no person
would have dared to assail the legality of the transactions, it
would be unreasonable to expect that the discovery of the
unlawful transactions was possible prior to 1986.
We note, too, that the criminal complaints were filed and
their records transmitted by the PCGG to the Office of the
Ombudsman on April 8, 1991for the conduct the preliminary
investigation.33 In accordance with Article 91 of the
Revised Penal Code34 and the ruling in Panaguiton, Jr. v.
Department of Justice,35 the filing of the criminal complaints
in the Office of the Ombudsman effectively interrupted the
running of the period of prescription. According to
Panaguiton:36
In Ingco v. Sandiganbayan and Sanrio Company Limited v. Lim,
which involved violations of the Anti-Graft and Corrupt
Practices Act(R.A. No. 3019) and the Intellectual Property
Code (R.A. No. 8293),which are both special laws, the Court
ruled that the prescriptive period is interrupted by the
institution of proceedings for preliminary investigation
against the accused. In the more recent case of Securities and
Exchange Commission v. Interport Resources Corporation,
the Court ruled that the nature and purpose of the
investigation conducted by the Securities and Exchange
Commission on violations of the Revised Securities Act,
another special law, is equivalent to the preliminary
investigation conducted by the DOJ in criminal cases, and
thus effectively interrupts the prescriptive period.
The following disquisition in the Interport Resources case is
instructive, thus:
While it may be observed that the term "judicial proceedings"
in Sec. 2 of Act No. 3326 appears before" investigation and
punishment" in the old law, with the subsequent change in
set-up whereby the investigation of the charge for purposes
of prosecution has become the exclusive function of the
executive branch, the term "proceedings" should now be
understood either executive or judicial in character: executive
when it involves the investigation phase and judicial when it
refers to the trial and judgment stage. With this clarification,
any kind of investigative proceeding instituted against the
guilty person which may ultimately lead to his prosecution
should be sufficient to toll prescription.
Indeed, to rule otherwise would deprive the injured party the
right to obtain vindication on account of delays that are not
under his control.
The prevailing rule is, therefore, that irrespective of whether
the offense charged is punishable by the Revised Penal Code
or by a special law, it is the filing of the complaint or
information in the office of the public prosecutor for
purposes of the preliminary investigation that interrupts the
period of prescription. Consequently, prescription did not yet
set in because only five years elapsed from 1986, the time of
the discovery of the offenses charged, up to April 1991, the
time of the filing of the criminal complaints in the Office of
the Ombudsman.
The informations were sufficient in form and substance
It is axiomatic that a complaint or information must state
every single fact necessary to constitute the offense charged;
otherwise, a motion to dismiss or to quash on the ground
that the complaint or information charges no offense may be
properly sustained. The fundamental test in determining
whether a motion to quash may be sustained based on this
ground is whether the facts alleged, if hypothetically
admitted, will establish the essential elements of the offense
as defined in the law.37 Extrinsic matters or evidence aliunde
are not considered.38
The test does not require absolute certainty as to the
presence of the elements of the offense; otherwise, there
would no longer be any need for the Prosecution to proceed
to trial.
The informations in Criminal Case No. 28001 (corruption of
public officials) and Criminal Case No. 28002 (violation of
Section 4(a) of RA No.3019) have sufficiently complied with
the requirements of Section 6, Rule110 of the Rules of Court,
viz:
Section 6. Sufficiency of complaint or information. — A
complaint or information is sufficient if it states the name of
the accused; the designation of the offense given by the
statute; the acts or omissions complained of as constituting
the offense; the name of the offended party; the
approximate date of the commission of the offense; and the
place where the offense was committed.
When the offense is committed by more than one person, all
of them shall be included in the complaint or information.
The information in Criminal Case No. 28001 alleging
corruption of public officers specifically put forth that Disini,
in the period from 1974 to February 1986 in Manila,
Philippines, conspiring and confederating with then President
Marcos, willfully, unlawfully and feloniously offered,
promised and gave gifts and presents to President Marcos,
who, by taking undue advantage of his position as President,
committed the offense in relation to his office, and in
consideration of the gifts and presents offered, promised and
given by Disini, President Marcos caused to be awarded to
Burns & Roe and Westinghouse the respective contracts to
do the engineering and architectural design of and to
construct the PNPPP. The felonious act consisted of causing
the contracts for the PNPPP to be awarded to Burns & Roe
and Westinghouse by reason of the gifts and promises
offered by Disini to President Marcos.
The elements of corruption of public officials under Article
212 of the Revised Penal Code are:
1. That the offender makes offers or promises, or gives gifts
or presents to a public officer; and
2. That the offers or promises are made or the gifts or
presents are given to a public officer under circumstances
that will make the public officer liable for direct bribery or
indirect bribery.
The allegations in the information for corruption of public
officials, if hypothetically admitted, would establish the
45
Rule 130- Attorney-Client

essential elements of the crime. The information stated that:

(1) Disini made an offer and promise, and gave gifts to
President Marcos, a public officer; and (2) in consideration of
the offers, promises and gifts, President Marcos, in causing
the award of the contracts to Burns & Roe and Westinghouse
by taking advantage of his position and in committing said act
in relation to his office, was placed under circumstances that
would make him liable for direct bribery.39

The second element of corruption of public officers simply

required the public officer to be placed under circumstances,
not absolute certainty, that would make him liable for direct
or indirect bribery. Thus, even without alleging that President
Marcos received or accepted Disini’s offers, promises and
gifts – an essential element in direct bribery – the allegation
that President Marcos caused the award of the contracts to
Burns & Roe and Westinghouse sufficed to place him under
circumstances of being liable for direct bribery.

The sufficiency of the allegations in the information charging

the violation of Section 4(a) of R.A. No. 3019 is similarly
upheld. The elements of the offense under Section 4(a) of R.A.
No. 3019 are:

1. That the offender has family or close personal relation with

a public official;

2. That he capitalizes or exploits or takes advantage of such

family or close personal relation by directly or indirectly
requesting or receiving any present, gift, material or
pecuniary advantage from any person having some business,
transaction, application, request or contract with the
government;

3. That the public official with whom the offender has family
or close personal relation has to intervene in the business
transaction, application, request, or contract with the
government.

The allegations in the information charging the violation of

Section 4(a) of R.A. No. 3019, if hypothetically admitted,
would establish the elements of the offense, considering that:
(1) Disini, being the husband of Paciencia Escolin-Disini, the
first cousin of First Lady Imelda Romualdez-Marcos, and at
the same time the family physician of the Marcoses, had
close personal relations and intimacy with and free access to
President Marcos, a public official; (2) Disini, taking
advantage of such family and close personal relations,
requested and received $1,000,000.00 from Burns & Roe and
$17,000,000.00 from Westinghouse, the entities then having
business, transaction, and application with the Government
in connection with the PNPPP; (3) President Marcos, the
public officer with whom Disini had family or close personal
relations, intervened to secure and obtain for Burns & Roe
the engineering and architectural contract, and for
Westinghouse the construction of the PNPPP.

WHEREFORE, the Court DISMISSES the petition for certiorari;

AFFIRMS the resolutions promulgated on January 17, 2005
and August 10, 2005 by the Sandiganbayan (First Division) in
Criminal Case No. 28001 and Criminal Case No. 28002; and
DIRECTS petitioner to pay the costs of suit.

SO ORDERED.

46