Regala vs Sandiganbayan (1996)
Summary Cases:
● Regala vs. Sandiganbayan, PCGG and Raul Roco 262 SCRA 122
Subject: No Cause of Action to Include Petitioners (ACCRA lawyers) in the Complaint; Lawyer-Client
Relationship is not an ordinary agency; Attorney-Client Privilege; Disclosure of Client's Identity; Invoking
Attorney-Client Privilege to Conceal Criminal Activities of Client; Equal Protection; Right against
Self-Incrimination
Facts:
A complaint was filed before the Sandiganbayan by the Republic, thru the PCGG, against Eduardo M.
Cojuangco, Jr., for the recovery of alleged ill-gotten wealth, which includes shares of stocks in the
named corporations
Included among the defendants were petitioner lawyers (Regala, et al) , who were all then partners of
the law firm Angara, Abello, Concepcion, Regala and Cruz Law Offices (ACCRA Law Firm). 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 the Sandiganbayan case, and in keeping with
the office practice, ACCRA lawyers acted as nominees-stockholders of the said corporations involved in
sequestration proceedings. The complaint alleged that ACCRA lawyers assisted in the setting up,
through the use of the coconut levy funds, the financial and corporate structures that led to the
establishment of UCPB and more than twenty other coconut levy funded corporations, including the
acquisition of San Miguel Corporation shares. 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.
The ACCRA lawyers countered that they had no proprietary interest over the shares listed under their
respective names and their participation as incorporators was merely in the course of rendering their
professional and legal services.
PCGG filed a Motion to Admit Third Amended Complaint which excluded private respondent Raul S.
Roco from the complaint as party-defendant. The exclusion of Roco as defendant is based on his
undertaking that he will reveal the identity of the principal/s for whom he acted as nominee/stockholder in
the companies involved.
ACCRA lawyers subsequently filed a Counter-Motion that PCGG similarly grant the same treatment to
them (exclusion as parties-defendants) as accorded private respondent Roco.
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.
The Sandiganbayan promulgated the questioned Resolution denying the exclusion of petitioners for their
refusal to comply with the conditions required by PCGG. Hence, the ACCRA lawyers filed the petition for
certiorari.
PCGG argues 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
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they are evidence of nominee status.
Held:
No Cause of Action to Include Petitioners (ACCRA lawyers) in the Complaint
1. Petitioners are being prosecuted solely on the basis of activities and services performed in the
course of their duties as lawyers. Quite obviously, petitioners' inclusion as co-defendants in the
complaint is merely being used as leverage to compel them to name their clients and
consequently to enable the PCGG to nail these clients. Such being the case, respondent PCGG
has no valid cause of action as against petitioners and should exclude them from the Third
Amended Complaint.
Lawyer-Client Relationship is not an ordinary agency,
2. 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, 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. But the lawyer-client
relationship is more than that of the principal-agent and lessor-lessee.
3. 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. 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. Moreover, an attorney also
occupies what may be considered as a "quasi-judicial office" since he is in fact an officer of the
Court and exercises his judgment in the choice of courses of action to be taken favorable to his
client.
4. 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, that is
required by reason of necessity and public interest 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.
Attorney-Client Privilege
5. It is the strict sense of fidelity of a lawyer to his client that distinguishes him from any other
professional in society.
6. Section 24 of the Rules of Court, provides: “An attorney cannot, without the consent of his
client, be examined as to any communication made by the client to him, or his advice given
thereon in the course of, or with a view to, professional employment, can an attorney's secretary,
stenographer, or clerk be examined, without the consent of the client and his employer,
concerning any fact the knowledge of which has been acquired in such capacity.”
7. The lawyer's fiduciary duty to his client is likewise embodied in Section 20, Rule 138 of the
Rules of Court, Canon 17 of the Code of Professional Responsibility, Canon 15 of the Canons of
Professional Ethics.
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8. 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.
9. 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.
As a general rule, disclosure of the client's identity is not covered by the Attorney-Client Privilege
10. As a matter of public policy, a client's identity should not be shrouded in mystery. 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.
11. 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
Exceptions exist when the identity of the client is covered by the Attorney-Client Privilege
12. The general rule is however qualified by some important exceptions:
(a) Client identity is privileged where a strong probability exists that revealing the client's name
would implicate that client in the very activity for which he sought the lawyer's advice.
(b) Where disclosure would open the client to civil liability, his identity is privileged.
(c) Where the government's lawyers have no case against an attorney's client unless, by
revealing the client's name, the said name would furnish the only link that would form the chain
of testimony necessary to convict an individual of a crime, the client's name is privileged.
13. 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. 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.
14. Summarizing these exceptions, information relating to the identity of a client may fall within
the ambit of the privilege when the client's name itself has an independent significance, such that
disclosure would then reveal client confidences.
The present case falls under the exceptions
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15. 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).
16. The preparation of the deeds of assignments (which were required to be surrendered to the
PCGG as a condition for their exclusion in the complaint) 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.
17. 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."
18. 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."
19. There are, after all, alternative sources of information available to the prosecutor which do
not depend on utilizing a defendant's counsel as a convenient and readily available source of
information in the building of a case against the latter. Compelling disclosure of the client's name
in circumstances such as the one which exists in the case at bench amounts to sanctioning
fishing expeditions by lazy prosecutors and litigants which we cannot and will not countenance.
When the nature of the transaction would be revealed by disclosure of an attorney's retainer,
such retainer is obviously protected by the privilege. 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.
20. 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.
Invoking Attorney-Client Privilege to Conceal Criminal Activities of Client
21. 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.
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22. 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. The reason for the second has
been e founded on the same policy grounds for which the attorney-client privilege, in general,
exists.
23. 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."
"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." Where the communicated information, which clearly falls within
the privilege, would suggest possible criminal activity but there would be not much in the
information known to the prosecution which would sustain a charge except that revealing the
name of the client would open up other privileged information which would substantiate the
prosecution's suspicions, then the client's identity is so inextricably linked to the subject matter
itself that it falls within the protection.
Violation of Equal Protection
24. The primary consideration behind PCGG's decision to sustain the dropping of private
respondent Roco 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 Mr. Roco 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 him from prosecution, respondent Sandiganbayan should have required proof of the
undertaking more substantial than a "bare assertion" that Mr. Roco did indeed comply with the
undertaking.
25. To justify the dropping of the Mr. Roco from the case or the filing of the suit in the
Sandiganbayan 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.
26. 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.
Right against Self-Incrimination
27. 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
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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.
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