Case Digest Files

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 172227 June 29, 2011
SPOUSES WILFREDO PALADA and BRIGIDA PALADA,* Petitioners,

vs.
SOLIDBANK CORPORATION and SHERIFF MAYO DELA CRUZ, Respondents.
DECISION
DEL CASTILLO, J.:
Allegations of bad faith and fraud must be proved by clear and convincing evidence.1
This Petition for Review on Certiorari2 under Rule 45 of the Rules of Court assails the January
11, 2006 Decision3 of the Court of Appeals (CA) in CA-G.R. CV No. 84236 which dismissed the
complaint filed by the petitioners against the respondents and declared as valid the real estate
mortgage and certificate of sale. Also assailed is the April 12, 2006 Resolution4 which denied
the motion for reconsideration thereto.
Factual Antecedents
In February or March 1997, petitioners, spouses Wilfredo and Brigida Palada, applied for a ₱3
million loan broken down as follows: ₱1 million as additional working capital under the bills
discounting line; ₱500,000.00 under the bills purchase line; and ₱1.5 million under the time
loan from respondent Solidbank Corporation (bank).5
On March 17, 1997, petitioners received from the bank the amount of ₱1 million as additional
working capital evidenced by a promissory note6 and secured by a real estate mortgage7 in
favor of the bank covering several real properties situated in Santiago City.8
Due to the failure of petitioners to pay the obligation, the bank foreclosed the mortgage and
sold the properties at public auction.9
On August 19, 1999, petitioners filed a Complaint10 for nullity of real estate mortgage and
sheriff’s certificate of sale11 with prayer for damages, docketed as Civil Case No. 35-2779,
against the bank and respondent Sheriff Mayo dela Cruz (sheriff) before the Regional Trial Court
(RTC) of Santiago City, Branch 35.12 Petitioners alleged that the bank, without their knowledge
and consent, included their properties covered by Transfer Certificate of Title (TCT) Nos. T-
225131 and T-225132,13 among the list of properties mortgaged; that it was only when they
received the notice of sale from the sheriff in August 1998 that they found out about the
inclusion of the said properties; that despite their objection, the sheriff proceeded with the
auction sale; and that the auction sale was done in Santiago City in violation of the stipulation
on venue in the real estate mortgage.14
The bank, in its Answer,15 denied the material allegations of the Complaint and averred that
since petitioners were collaterally deficient, they offered TCT Nos. T-237695, T-237696, T-
225131 and T-225132 as additional collateral;16 that although the said properties were at that
time mortgaged to the Philippine National Bank (PNB), the bank accepted the offer and caused
the annotation of the mortgage in the original copies with the Register of Deeds with the
knowledge and consent of petitioners;17 and that when petitioners’ obligation to PNB was
extinguished, they delivered the titles of the four properties to the bank.18
Ruling of the Regional Trial Court
On October 21, 2004, the RTC rendered a Decision19 declaring the real estate mortgage void
for lack of sufficient consideration. According to the RTC, the real estate mortgage lacks
consideration because the loan contract was not perfected due to the failure of the bank to
deliver the full ₱3 million to petitioners.20 The RTC also found the bank guilty of fraud and bad
faith, thereby ordering it to pay petitioners moral and exemplary damages, and attorney’s fees.
The RTC ruled:
Furthermore, it appears that the defendant unilaterally changed the term and condition of their
loan contract by releasing only P1M of the P3M approved loan. The defendant, in so doing,
violated their principal contract of loan in bad faith, and should be held liable therefor.
Likewise, the defendant bank acted in bad faith when it made it appear that the mortgage was
executed by the plaintiffs on June 16, 1997, when the document was acknowledged before
Atty. German Balot, more so, when it made it appear that the mortgage was registered with the
Register of Deeds allegedly on the same date, when in truth and in fact, the plaintiffs executed
said mortgage sometime [in] March, 1997, obviously much earlier than June 16, 1997; for, if
indeed the mortgage was executed on said date, June 16, 1997, it should have been written on
the mortgage contract itself. On the contrary, the date and place of execution [were left blank].
Amazingly, defendant claims that it was the plaintiffs who [had the] mortgage notarized by
Atty. Balot; such claim however is contrary or against its own interest, because, the defendant
should be the most interested party in the genuineness and due execution of material
important papers and documents such as the mortgage executed in its favor to ensure the
protection of its interest embodied in said documents, and the act of leaving the notarization of
such a very important document as a mortgage executed in its favor is contrary to human
nature and experience, more so against its interest; hence, the claim is untrue.
Moreover, the defendant also appears to have been motivated by bad faith amounting to fraud
when it was able to register the mortgage with the Register of Deeds at the time when the
collateral certificates of titles were still in the custody and possession of another mortgagee
bank (PNB) due also to an existing/subsisting mortgage covering the same. Definitely, the
defendant resorted to some machinations or fraudulent means in registering the contract of
mortgage with the Register of Deeds. This should not be countenanced.
Thus, on account of defendant’s bad faith, plaintiffs suffered mental anguish, serious anxiety,
besmirched reputation, wounded feelings, moral shock and social humiliation, which entitle
them to the award of moral damages, more so, that it was shown that defendants’ bad faith
was the proximate cause of these damages plaintiffs suffered.
xxxx
WHEREFORE, with all the foregoing considerations, judgment is hereby rendered in favor of the
plaintiffs and against the defendant as follows:
1. DECLARING as null and void the undated real estate mortgage between the plaintiffs and the
defendant, appearing as Doc. No. 553; Page No. 29; Book No. 28; Series of 1997; (Exhibits "B"
for the plaintiffs, Exhibit "1" for the defendant);
2. Likewise DECLARING as null and void the Sheriff’s Foreclosure and the Certificate of Sale,
dated October 7, 1998 (Exhibit "F" to "F-3");
3. ORDERING the defendant to pay the plaintiffs the following damages:
a) Php 1,000,000.00, moral damages;
b) Php 500,000.00, exemplary damages; and
c) Php 50,000.00, Attorney’s fee; and
4. ORDERING the defendant to pay the cost of litigation, including plaintiffs’ counsel’s court
appearance at Php1,500.00 each.
SO ORDERED.21
Ruling of the Court of Appeals
On appeal, the CA reversed the ruling of the RTC. The CA said that based on the promissory
note and the real estate mortgage contract, the properties covered by TCT Nos. T-225131 and
T-225132 were mortgaged to secure the loan in the amount of ₱1 million, and not the ₱3
million loan applied by petitioners.22 As to the venue of the auction sale, the CA declared that
since the properties subject of the case are in Santiago City, the holding of the auction sale in
Santiago City was proper23 pursuant to Sections 124 and 225 of Act No. 3135.26 The CA
likewise found no fraud or bad faith on the part of the bank to warrant the award of damages
by the RTC, thus:
The List of Properties Mortgaged printed at the dorsal side of the real estate mortgage contract
particularly includes the subject parcels of land covered by TCT No. T-225132 and TCT No. T-
225131. Below the enumeration, the signatures of [petitioners] clearly appear. The document
was notarized before Notary Public German M. Balot. We therefore find no cogent reason why
the validity of the real estate mortgage covering the two subject properties should not be
sustained.
Settled is the rule in our jurisdiction that a notarized document has in its favor the presumption
of regularity, and to overcome the same, there must be evidence that is clear, convincing and
more than merely preponderant; otherwise the document should be upheld. Clearly, the
positive presumption of the due execution of the subject real estate mortgage outweighs
[petitioners’] bare and unsubstantiated denial that the parcels of land covered by TCT Nos. T-
225132 and T-225131 were among those intended to secure the loan of One Million Pesos.
Their imputation of fraud among the officials of [the bank] is weak and unpersuasive. x x x
xxxx
We also note why despite the alleged non-approval of [petitioners’] application for additional
loan, the owner’s copy of TCT Nos. T-225131 and T-225132 remained in the possession of [the
bank]. [Petitioners’] claim that they were still hoping to obtain an additional loan in the future
appears to this court as a weak explanation. The continued possession by the bank of the
certificates of title merely supports the bank’s position that the parcels of land covered by
these titles were actually mortgaged to secure the payment of the One Million Peso loan.
xxxx
WHEREFORE, in view of the foregoing, the assailed decision of the Regional Trial Court, Branch
35 of Santiago City in Civil Case No. 35-2779 is hereby ANNULLED and SET ASIDE and a new one
entered:
(1) DISMISSING the complaint filed by the plaintiffs-appellees against the defendants-
appellants; and
(2) Declaring VALID the questioned real estate mortgage and certificate of sale.
SO ORDERED.27
On February 1, 2006, petitioners moved for reconsideration but the CA denied the same in its
Resolution dated April 12, 2006.28
Issues
Hence, the present recourse, where petitioners allege that:
(A)
THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN ANNULLING OR
REVERSING THE FINDINGS OF BRANCH 35, REGIONAL TRIAL COURT OF SANTIAGO CITY THEREBY
IN EFFECT DISMISSING THE COMPLAINT FILED BY THE PETITIONERS AGAINST RESPONDENTS
SOLIDBANK CORPORATION AND SHERIFF MAYO DELA CRUZ.
(B)
THE COURT OF APPEALS ERRED IN DECLARING VALID THE REAL ESTATE MORTGAGE EXECUTED
BETWEEN THE PETITIONERS AND RESPONDENT SOLIDBANK CORPORATION AND IN SUSTAINING
THE VALIDITY OF THE CERTIFICATE OF SALE ISSUED BY RESPONDENT SHERIFF MAYO DELA CRUZ.
(C)
THE COURT OF APPEALS ERRED IN MISAPPRECIATING THE
FINDINGS OF FACTS OF BRANCH 35, REGIONAL TRIAL COURT OF SANTIAGO CITY.29
Simply put, the core issue in this case is the validity of the real estate mortgage and the auction
sale.
Petitioners’ Arguments
Petitioners echo the ruling of the RTC that the real estate mortgage and certificate of sale are
void because the bank failed to deliver the full amount of the loan. They likewise impute bad
faith and fraud on the part of the bank in including TCT Nos. T-225131 and T-225132 in the list
of properties mortgaged. They insist that they did not sign the dorsal portion of the real estate
mortgage contract, which contains the list of properties mortgaged, because at that time the
dorsal portion was still blank;30 and that TCT Nos. T-225131 and T-225132 were not intended
to be included in the list of mortgaged properties because these titles were still mortgaged with
the PNB at the time the real estate mortgage subject of this case was executed.31 Moreover,
they claim that they delivered the titles of these properties to the bank as additional collateral
for their additional loans, and not for the ₱1 million loan.32
Respondent bank’s Arguments
The bank denies petitioners’ allegations of fraud and bad faith and argues that the real estate
mortgage which was properly notarized enjoys the presumption of regularity.33 It maintains
that TCT Nos. T-225131 and T-225132 were mortgaged as additional collateral for the ₱1 million
loan.34
Our Ruling
The petition is bereft of merit.
The loan contract was perfected.
Under Article 193435 of the Civil Code, a loan contract is perfected only upon the delivery of
the object of the contract.
In this case, although petitioners applied for a ₱3 million loan, only the amount of ₱1 million
was approved by the bank because petitioners became collaterally deficient when they failed to
purchase TCT No. T-227331 which had an appraised value of ₱1,944,000.00.36 Hence, on
March 17, 1997, only the amount of ₱1 million was released by the bank to petitioners.37
Upon receipt of the approved loan on March 17, 1997, petitioners executed a promissory note
for the amount of ₱1 million.38 As security for the ₱1 million loan, petitioners on the same day
executed in favor of the bank a real estate mortgage over the properties covered by TCT Nos. T-
237695, T-237696, T-237698, T-143683, T-143729, T-225131 and T-225132. Clearly, contrary to
the findings of the RTC, the loan contract was perfected on March 17, 1997 when petitioners
received the ₱1 million loan, which was the object of both the promissory note and the real
estate mortgage executed by petitioners in favor of the bank.
Claims of fraud and bad faith are unsubstantiated.
Petitioners claim that there was fraud and bad faith on the part of the bank in the execution
and notarization of the real estate mortgage contract.
We do not agree.
There is nothing on the face of the real estate mortgage contract to arouse any suspicion of
insertion or forgery. Below the list of properties mortgaged are the signatures of petitioners.39
Except for the bare denials of petitioner, no other evidence was presented to show that the
signatures appearing on the dorsal portion of the real estate mortgage contract are forgeries.
Likewise flawed is petitioners’ reasoning that TCT Nos. T-225131 and T-225132 could not have
been included in the list of properties mortgaged as these were still mortgaged with the PNB at
that time. Under our laws, a mortgagor is allowed to take a second or subsequent mortgage on
a property already mortgaged, subject to the prior rights of the previous mortgages.401avvphi1
As to the RTC’s finding that "the x x x bank acted in bad faith when it made it appear that the
mortgage was executed by the [petitioners] on June 16, 1997, when the document was
acknowledged before Atty. German, x x x when in truth and in fact, the [petitioners] executed
said mortgage sometime in March, 1997 x x x," we find the same without basis. A careful
perusal of the real estate mortgage contract would show that the bank did not make it appear
that the real estate mortgage was executed on June 16, 1997, the same day that it was
notarized, as the date of execution of the real estate mortgage contract was left blank.41 And
the mere fact that the date of execution was left blank does not prove bad faith. Besides, any
irregularity in the notarization or even the lack of notarization does not affect the validity of the
document. Absent any clear and convincing proof to the contrary, a notarized document enjoys
the presumption of regularity and is conclusive as to the truthfulness of its contents.42
All told, we find no error on the part of the CA in sustaining the validity of the real estate
mortgage as well as the certificate of sale.
WHEREFORE, the petition is hereby DENIED. The assailed January 11, 2006 Decision of the
Court of Appeals and its April 12, 2006 Resolution in CA-G.R. CV No. 84236 are hereby
AFFIRMED.
SO ORDERED.
MARIANO C. DEL CASTILLO

Associate Justice
WE CONCUR:
RENATO C. CORONA
Chief Justice
Chairperson
TERESITA J. LEONARDO-DE CASTRO

Associate Justice LUCAS P. BERSAMIN
Associate Justice
MARTIN S. VILLARAMA, JR.
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions
in the above Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
RENATO C. CORONA
Chief Justice
Footnotes
* In view of the demise of petitioner Brigada Palada, the title of the instant case should have
been "Wilfredo Palada and Heirs of Brigada Palada" (See Transcript of Stenographic Notes [TSN]
dated September 9, 2003, pp. 2-3).
1 Cathay Pacific Airways, Ltd. v. Sps. Vazquez, 447 Phil. 306, 321 (2003).
2 Rollo, pp. 9-21.
3 Id. at 23-33; penned by Associate Justice Rodrigo V. Cosico and concurred in by Associate
Justices Regalado E. Maambong and Lucenito N. Tagle.
4 CA rollo, pp. 84-85.
5 Rollo, p. 40.
6 Records, p. 7. Although the promissory note is dated June 16, 1997, both parties admit that
the promissory note was executed on March 17, 1997 (Complaint, id. at 2 and Answer, id. at
23).
7 Id. at 8.
8 Rollo, pp. 23-24; TSN dated July 17, 2000, pp. 6-9, Direct Examination of Wilfredo Palada.
9 Id. at 24.
10 Records, pp. 1-6.
11 Id. at 11-14.
12 Rollo, p. 34.
13 Indicated as T-225152 and T-221512 in the Complaint; see records, p. 2.
14 Id. at 3-4.
15 Id. at 23-26.
16 Id. at 24.
17 Id.
18 Id.
19 Rollo, pp. 34-46; penned by Judge Efren M. Cacatian.
20 Id. at 43.
21 Id. at 44-46.
22 Id. at 29-30.
23 Id. at 31.
24 SECTION 1. When a sale is made under a special power inserted in or attached to any real-
estate mortgage hereafter made as security for the payment of money or the fulfillment of any
other obligation, the provisions of the following sections shall govern as to the manner in which
the sale and redemption shall be effected, whether or not provision for the same is made in the
power.
25 SECTION 2. Said sale cannot be made legally outside of the province in which the property
sold is situated; and in case the place within said province in which the sale is to be made is the
subject of stipulation, such sale shall be made in said place or in the municipal building of the
municipality in which the property or part thereof is situated.
26 An Act To Regulate The Sale Of Property Under Special powers Inserted In Or Annexed To
Real-Estate Mortgages.
27 Rollo, pp. 30-32.
28 Id. at 10-11.
29 Id. at 14-15.
30 Id. at 110.
31 Id.
32 Id. at 114.
33 Id. at unpaged-129 and 131-132.
34 Id. at 127.
35 Art. 1934. An accepted promise to deliver something by way of commodatum or simple loan
is binding upon the parties, but the commodatum or simple loan itself shall not be perfected
until the delivery of the object of the contract.
36 TSN dated July 17, 2000, pp. 21-22, Direct Examination of Wilfredo Palada; TSN dated July
31, 2000, pp. 7 and 25-26, Cross-examination and Re-direct examination of Wilfredo Palada;
TSN dated August 25, 2003, p. 22, Direct Examination of Julieta Ayala.
37 TSN dated July 17, 2000, p. 5; Direct Examination of Wilfredo Palada.
38 Id. at 5-7.
39 Rollo, p. 30.
40 Cinco v. Court of Appeals, G.R. No. 151903, October 9, 2009, 603 SCRA 108,118.
41 Records, p. 8.
42 Ocampo v. Land Bank of the Philippines, G.R. No. 164968, July 3, 2009, 591 SCRA 562, 571-
572.
The Lawphil Project - Arellano Law Foundation.
FIRST DIVISION
[ G.R. No. 172227, June 29, 2011 ]
SPOUSES WILFREDO PALADA AND BRIGIDA PALADA,* PETITIONERS, VS.
SOLIDBANK CORPORATION AND SHERIFF MAYO DELA CRUZ, RESPONDENTS.
DECISION
DEL CASTILLO, J.:
Allegations of bad faith and fraud must be proved by clear and convincing evidence. [1]
This Petition for Review on Certiorari [2] under Rule 45 of the Rules of Court assails the
January 11, 2006 Decision [3] of the Court of Appeals (CA) in CA-G.R. CV No. 84236
which dismissed the complaint filed by the petitioners against the respondents and
declared as valid the real estate mortgage and certificate of sale. Also assailed is the
April 12, 2006 Resolution [4] which denied the motion for reconsideration thereto.
Factual Antecedents
In February or March 1997, petitioners, spouses Wilfredo and Brigida Palada, applied
for a P3 million loan broken down as follows: P1 million as additional working capital
under the bills discounting line; P500,000.00 under the bills purchase line; and P1.5
million under the time loan from respondent Solidbank Corporation (bank). [5]
On March 17, 1997, petitioners received from the bank the amount of P1 million as
additional working capital evidenced by a promissory note [6] and secured by a real
estate mortgage [7] in favor of the bank covering several real properties situated in
Santiago City. [8]
Due to the failure of petitioners to pay the obligation, the bank foreclosed the mortgage
and sold the properties at public auction. [9]
On August 19, 1999, petitioners filed a Complaint [10] for nullity of real estate mortgage
and sheriff's certificate of sale [11] with prayer for damages, docketed as Civil Case No.
35-2779, against the bank and respondent Sheriff Mayo dela Cruz (sheriff) before the
Regional Trial Court (RTC) of Santiago City, Branch 35. [12] Petitioners alleged that the
FIRST DIVISION
[ G.R. No. 172227, June 29, 2011 ]
DECISION
DEL CASTILLO, J.:
Factual Antecedents
Santiago City. [8]
bank, without their knowledge and consent, included their properties covered by
Transfer Certificate of Title (TCT) Nos. T-225131 and T-225132, [13] among the list of
properties mortgaged; that it was only when they received the notice of sale from the
sheriff in August 1998 that they found out about the inclusion of the said properties; that
despite their objection, the sheriff proceeded with the auction sale; and that the auction
sale was done in Santiago City in violation of the stipulation on venue in the real estate
mortgage. [14]
The bank, in its Answer, [15] denied the material allegations of the Complaint and
averred that since petitioners were collaterally deficient, they offered TCT Nos. T-
237695, T-237696, T-225131 and T-225132 as additional collateral; [16] that although
the said properties were at that time mortgaged to the Philippine National Bank (PNB),
the bank accepted the offer and caused the annotation of the mortgage in the original
copies with the Register of Deeds with the knowledge and consent of petitioners; [17]
and that when petitioners' obligation to PNB was extinguished, they delivered the titles
of the four properties to the bank. [18]
Ruling of the Regional Trial Court
On October 21, 2004, the RTC rendered a Decision [19] declaring the real estate
mortgage void for lack of sufficient consideration. According to the RTC, the real estate
mortgage lacks consideration because the loan contract was not perfected due to the
failure of the bank to deliver the full P3 million to petitioners. [20] The RTC also found
the bank guilty of fraud and bad faith, thereby ordering it to pay petitioners moral and
exemplary damages, and attorney's fees. The RTC ruled:
Furthermore, it appears that the defendant unilaterally changed the term and condition
of their loan contract by releasing only P1M of the P3M approved loan. The defendant,
in so doing, violated their principal contract of loan in bad faith, and should be held liable
therefor.
Likewise, the defendant bank acted in bad faith when it made it appear that the
mortgage was executed by the plaintiffs on June 16, 1997, when the document was
acknowledged before Atty. German Balot, more so, when it made it appear that the
mortgage was registered with the Register of Deeds allegedly on the same date, when
in truth and in fact, the plaintiffs executed said mortgage sometime [in] March, 1997,
obviously much earlier than June 16, 1997; for, if indeed the mortgage was executed on
said date, June 16, 1997, it should have been written on the mortgage contract itself.
On the contrary, the date and place of execution [were left blank]. Amazingly,
defendant claims that it was the plaintiffs who [had the] mortgage notarized by Atty.
Balot; such claim however is contrary or against its own interest, because, the
defendant should be the most interested party in the genuineness and due execution of
material important papers and documents such as the mortgage executed in its favor to
ensure the protection of its interest embodied in said documents, and the act of leaving
the notarization of such a very important document as a mortgage executed in its favor
is contrary to human nature and experience, more so against its interest; hence, the
claim is untrue.
Moreover, the defendant also appears to have been motivated by bad faith amounting
to fraud when it was able to register the mortgage with the Register of Deeds at the time
when the collateral certificates of titles were still in the custody and possession of
another mortgagee bank (PNB) due also to an existing/subsisting mortgage covering
the same. Definitely, the defendant resorted to some machinations or fraudulent means
in registering the contract of mortgage with the Register of Deeds. This should not be
countenanced.
Thus, on account of defendant's bad faith, plaintiffs suffered mental anguish, serious
anxiety, besmirched reputation, wounded feelings, moral shock and social humiliation,
which entitle them to the award of moral damages, more so, that it was shown that
defendants' bad faith was the proximate cause of these damages plaintiffs suffered.
xxxx
WHEREFORE, with all the foregoing considerations, judgment is hereby rendered in

favor of the plaintiffs and against the defendant as follows:
1. DECLARING as null and void the undated real estate mortgage between the plaintiffs
and the defendant, appearing as Doc. No. 553; Page No. 29; Book No. 28; Series of
1997; (Exhibits "B" for the plaintiffs, Exhibit "1" for the defendant);
2. Likewise DECLARING as null and void the Sheriff's Foreclosure and the Certificate of
Sale, dated October 7, 1998 (Exhibit "F" to "F-3");
3. ORDERING the defendant to pay the plaintiffs the following damages:
a) Php 1,000,000.00, moral damages;

b) Php 500,000.00, exemplary damages; and
c) Php 50,000.00, Attorney's fee; and
4. ORDERING the defendant to pay the cost of litigation, including plaintiffs' counsel's
court appearance at Php1,500.00 each.
SO ORDERED. [21]
Ruling of the Court of Appeals
On appeal, the CA reversed the ruling of the RTC. The CA said that based on the
promissory note and the real estate mortgage contract, the properties covered by TCT
Nos. T-225131 and T-225132 were mortgaged to secure the loan in the amount of P1
million, and not the P3 million loan applied by petitioners. [22] As to the venue of the
auction sale, the CA declared that since the properties subject of the case are in
Santiago City, the holding of the auction sale in Santiago City was proper [23] pursuant
to Sections 1 [24] and 2 [25] of Act No. 3135. [26] The CA likewise found no fraud or
bad faith on the part of the bank to warrant the award of damages by the RTC, thus:
The List of Properties Mortgaged printed at the dorsal side of the real estate mortgage
contract particularly includes the subject parcels of land covered by TCT No. T-225132
and TCT No. T-225131. Below the enumeration, the signatures of [petitioners] clearly
appear. The document was notarized before Notary Public German M. Balot. We
therefore find no cogent reason why the validity of the real estate mortgage covering the
two subject properties should not be sustained.
Settled is the rule in our jurisdiction that a notarized document has in its favor the
presumption of regularity, and to overcome the same, there must be evidence that is
clear, convincing and more than merely preponderant; otherwise the document should
be upheld. Clearly, the positive presumption of the due execution of the subject real
estate mortgage outweighs [petitioners'] bare and unsubstantiated denial that the
parcels of land covered by TCT Nos. T-225132 and T-225131 were among those
intended to secure the loan of One Million Pesos. Their imputation of fraud among the
officials of [the bank] is weak and unpersuasive. x x x
xxxx
We also note why despite the alleged non-approval of [petitioners'] application for
additional loan, the owner's copy of TCT Nos. T-225131 and T-225132 remained in the
possession of [the bank]. [Petitioners'] claim that they were still hoping to obtain an
additional loan in the future appears to this court as a weak explanation. The continued
possession by the bank of the certificates of title merely supports the bank's position
that the parcels of land covered by these titles were actually mortgaged to secure the
payment of the One Million Peso loan.
xxxx
WHEREFORE, in view of the foregoing, the assailed decision of the Regional Trial
Court, Branch 35 of Santiago City in Civil Case No. 35-2779 is hereby ANNULLED and
SET ASIDE and a new one entered:
(1) DISMISSING the complaint filed by the plaintiffs-appellees against the defendants-
appellants; and
(2) Declaring VALID the questioned real estate mortgage and certificate of sale.
SO ORDERED. [27]
On February 1, 2006, petitioners moved for reconsideration but the CA denied the same
in its Resolution dated April 12, 2006. [28]
Issues
Hence, the present recourse, where petitioners allege that:
(A)
THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN

ANNULLING OR REVERSING THE FINDINGS OF BRANCH 35, REGIONAL TRIAL
COURT OF SANTIAGO CITY THEREBY IN EFFECT DISMISSING THE COMPLAINT
FILED BY THE PETITIONERS AGAINST RESPONDENTS SOLIDBANK
CORPORATION AND SHERIFF MAYO DELA CRUZ.
(B)
THE COURT OF APPEALS ERRED IN DECLARING VALID THE REAL ESTATE

MORTGAGE EXECUTED BETWEEN THE PETITIONERS AND RESPONDENT
SOLIDBANK CORPORATION AND IN SUSTAINING THE VALIDITY OF THE
CERTIFICATE OF SALE ISSUED BY RESPONDENT SHERIFF MAYO DELA CRUZ.
(C)
THE COURT OF APPEALS ERRED IN MISAPPRECIATING THE FINDINGS OF

FACTS OF BRANCH 35, REGIONAL TRIAL COURT OF SANTIAGO CITY. [29]
Simply put, the core issue in this case is the validity of the real estate mortgage and the
auction sale.
Petitioners' Arguments
Petitioners echo the ruling of the RTC that the real estate mortgage and certificate of
sale are void because the bank failed to deliver the full amount of the loan. They
likewise impute bad faith and fraud on the part of the bank in including TCT Nos. T-
225131 and T-225132 in the list of properties mortgaged. They insist that they did not
sign the dorsal portion of the real estate mortgage contract, which contains the list of
properties mortgaged, because at that time the dorsal portion was still blank; [30] and
that TCT Nos. T-225131 and T-225132 were not intended to be included in the list of
mortgaged properties because these titles were still mortgaged with the PNB at the time
the real estate mortgage subject of this case was executed. [31] Moreover, they claim
that they delivered the titles of these properties to the bank as additional collateral for
their additional loans, and not for the P1 million loan. [32]
Respondent bank's Arguments
The bank denies petitioners' allegations of fraud and bad faith and argues that the real
estate mortgage which was properly notarized enjoys the presumption of regularity. [33]
It maintains that TCT Nos. T-225131 and T-225132 were mortgaged as additional
collateral for the P1 million loan. [34]
Our Ruling
The petition is bereft of merit.
The loan contract was perfected.
Under Article 1934 [35] of the Civil Code, a loan contract is perfected only upon the
delivery of the object of the contract.
In this case, although petitioners applied for a P3 million loan, only the amount of P1
million was approved by the bank because petitioners became collaterally deficient
when they failed to purchase TCT No. T-227331 which had an appraised value of
P1,944,000.00. [36] Hence, on March 17, 1997, only the amount of P1 million was
released by the bank to petitioners. [37]
Upon receipt of the approved loan on March 17, 1997, petitioners executed a
promissory note for the amount of P1 million. [38] As security for the P1 million loan,
petitioners on the same day executed in favor of the bank a real estate mortgage over
the properties covered by TCT Nos. T-237695, T-237696, T-237698, T-143683, T-
143729, T-225131 and T-225132. Clearly, contrary to the findings of the RTC, the loan
contract was perfected on March 17, 1997 when petitioners received the P1 million
loan, which was the object of both the promissory note and the real estate mortgage
executed by petitioners in favor of the bank.
Claims of fraud and bad faith are

unsubstantiated.
Petitioners claim that there was fraud and bad faith on the part of the bank in the
execution and notarization of the real estate mortgage contract.
We do not agree.
There is nothing on the face of the real estate mortgage contract to arouse any
suspicion of insertion or forgery. Below the list of properties mortgaged are the
signatures of petitioners. [39] Except for the bare denials of petitioner, no other
evidence was presented to show that the signatures appearing on the dorsal portion of
the real estate mortgage contract are forgeries.
Likewise flawed is petitioners' reasoning that TCT Nos. T-225131 and T-225132 could
not have been included in the list of properties mortgaged as these were still mortgaged
with the PNB at that time. Under our laws, a mortgagor is allowed to take a second or
subsequent mortgage on a property already mortgaged, subject to the prior rights of the
previous mortgages. [40]
As to the RTC's finding that "the x x x bank acted in bad faith when it made it appear
that the mortgage was executed by the [petitioners] on June 16, 1997, when the
document was acknowledged before Atty. German, x x x when in truth and in fact, the
[petitioners] executed said mortgage sometime in March, 1997 x x x," we find the same
without basis. A careful perusal of the real estate mortgage contract would show that
the bank did not make it appear that the real estate mortgage was executed on June 16,
1997, the same day that it was notarized, as the date of execution of the real estate
mortgage contract was left blank. [41] And the mere fact that the date of execution was
left blank does not prove bad faith. Besides, any irregularity in the notarization or even
the lack of notarization does not affect the validity of the document. Absent any clear
and convincing proof to the contrary, a notarized document enjoys the presumption of
regularity and is conclusive as to the truthfulness of its contents. [42]
All told, we find no error on the part of the CA in sustaining the validity of the real estate
mortgage as well as the certificate of sale.
WHEREFORE, the petition is hereby DENIED. The assailed January 11, 2006 Decision
of the Court of Appeals and its April 12, 2006 Resolution in CA-G.R. CV No. 84236 are
hereby AFFIRMED.
SO ORDERED.
Corona, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Villarama, Jr., JJ.,
concur.
* In view of the demise of petitioner Brigada Palada, the title of the instant case should
have been "Wilfredo Palada and Heirs of Brigada Palada" (See Transcript of
Stenographic Notes [TSN] dated September 9, 2003, pp. 2-3).
[1] Cathay Pacific Airways, Ltd. v. Sps. Vazquez, 447 Phil. 306, 321 (2003).
[2] Rollo, pp. 9-21.
[3] Id. at 23-33; penned by Associate Justice Rodrigo V. Cosico and concurred in by
Associate Justices Regalado E. Maambong and Lucenito N. Tagle.
[4] CA rollo, pp. 84-85.
[5] Rollo, p. 40.
[6] Records, p. 7. Although the promissory note is dated June 16, 1997, both parties
admit that the promissory note was executed on March 17, 1997 (Complaint, id. at 2
and Answer, id. at 23).
[7] Id. at 8.
[8] Rollo, pp. 23-24; TSN dated July 17, 2000, pp. 6-9, Direct Examination of Wilfredo
Palada.
[9] Id. at 24.
[10] Records, pp. 1-6.
[11] Id. at 11-14.
[12] Rollo, p. 34.

[13] Indicated as T-225152 and T-221512 in the Complaint; see records, p. 2.
[14] Id. at 3-4.
[15] Id. at 23-26.
[16] Id. at 24.
[17] Id.
[18] Id.
[19] Rollo, pp. 34-46; penned by Judge Efren M. Cacatian.
[20] Id. at 43.
[21] Id. at 44-46.
[22] Id. at 29-30.
[23] Id. at 31.
[24] SECTION 1. When a sale is made under a special power inserted in or attached
to any real-estate mortgage hereafter made as security for the payment of money or the
fulfillment of any other obligation, the provisions of the following sections shall govern as
to the manner in which the sale and redemption shall be effected, whether or not
provision for the same is made in the power.
[25] SECTION 2. Said sale cannot be made legally outside of the province in which the
property sold is situated; and in case the place within said province in which the sale is
to be made is the subject of stipulation, such sale shall be made in said place or in the
municipal building of the municipality in which the property or part thereof is situated.
[26] An Act To Regulate The Sale Of Property Under Special powers Inserted In Or
Annexed To Real-Estate Mortgages.
[27] Rollo, pp. 30-32.
[28] Id. at 10-11.
[29] Id. at 14-15.
[30] Id. at 110.
[31] Id.
[32] Id. at 114.
[33] Id. at unpaged-129 and 131-132.
[34] Id. at 127.
[35] Art. 1934. An accepted promise to deliver something by way of commodatum or

simple loan is binding upon the parties, but the commodatum or simple loan itself shall
not be perfected until the delivery of the object of the contract.
[36] TSN dated July 17, 2000, pp. 21-22, Direct Examination of Wilfredo Palada; TSN
dated July 31, 2000, pp. 7 and 25-26, Cross-examination and Re-direct examination of
Wilfredo Palada; TSN dated August 25, 2003, p. 22, Direct Examination of Julieta
Ayala.
[37] TSN dated July 17, 2000, p. 5; Direct Examination of Wilfredo Palada.
[38] Id. at 5-7.

[39] Rollo, p. 30.
[40] Cinco v. Court of Appeals, G.R. No. 151903, October 9, 2009, 603 SCRA 108,118.
[41] Records, p. 8.
[42] Ocampo v. Land Bank of the Philippines, G.R. No. 164968, July 3, 2009, 591
SCRA 562, 571-572.
FIRST DIVISION
[ G.R. No. 172227, June 29, 2011 ]
DECISION
DEL CASTILLO, J.:
Factual Antecedents
Santiago City. [8]
THIRD DIVISION
G.R. No. 107132 October 8, 1999
MAXIMA HEMEDES, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, DOMINIUM REALTY AND
CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES and R & B INSURANCE
CORPORATION, respondents.
G.R. No. 108472 October 8, 1999
R & B INSURANCE CORPORATION, petitioner,

vs.
CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES and MAXIMA
HEMEDES, respondents.
GONZAGA-REYES, J.:
Assailed in these petitions for review on certiorari is the decision 1 of the eleventh
division of the Court of Appeals in CA-G.R. CV No. 22010 promulgated on September
11, 1992 affirming in toto the decision of Branch 24 of the Regional Trial Court of
Laguna in Civil Case No. B-1766 dated February 22, 1989, 2 and the resolution dated
December 29, 1992 denying petitioner R & B Insurance Corporation's (R & B Insurance)
motion for reconsideration. As the factual antecedents and issues are the same, we
shall decide the petitions jointly.
The instant controversy involves a question of ownership over an unregistered parcel of

land, identified as Lot No. 6, plan Psu-111331, with an area of 21,773 square meters,
situated in Sala, Cabuyao, Laguna. It was originally owned by the late Jose Hemedes,
father of Maxima Hemedes and Enrique D. Hemedes. On March 22, 1947 Jose
THIRD DIVISION
G.R. No. 107132 October 8, 1999
MAXIMA HEMEDES, petitioner,

vs.
CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES and R & B INSURANCE
CORPORATION, respondents.
G.R. No. 108472 October 8, 1999
R & B INSURANCE CORPORATION, petitioner,

vs.
CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES and MAXIMA
HEMEDES, respondents.
GONZAGA-REYES, J.:
Assailed in these petitions for review on certiorari is the decision 1 of the eleventh
division of the Court of Appeals in CA-G.R. CV No. 22010 promulgated on September
11, 1992 affirming in toto the decision of Branch 24 of the Regional Trial Court of
Laguna in Civil Case No. B-1766 dated February 22, 1989, 2 and the resolution dated
December 29, 1992 denying petitioner R & B Insurance Corporation's (R & B Insurance)
motion for reconsideration. As the factual antecedents and issues are the same, we
shall decide the petitions jointly.
The instant controversy involves a question of ownership over an unregistered parcel of

land, identified as Lot No. 6, plan Psu-111331, with an area of 21,773 square meters,
situated in Sala, Cabuyao, Laguna. It was originally owned by the late Jose Hemedes,
father of Maxima Hemedes and Enrique D. Hemedes. On March 22, 1947 Jose
Hemedes executed a document entitled "Donation Inter Vivos With Resolutory
Conditions" 3 whereby he conveyed ownership over the subject land, together with all
its improvements, in favor of his third wife, Justa Kauapin, subject to the following
resolutory conditions:
(a) Upon the death or remarriage of the DONEE, the title to the property donated shall
revert to any of the children, or their heirs, of the DONOR expressly designated by the
DONEE in a public document conveying the property to the latter; or
(b) In absence of such an express designation made by the DONEE before her death or
remarriage contained in a public instrument as above provided, the title to the property
shall automatically revert to the legal heirs of the DONOR in common.
Pursuant to the first condition above mentioned, Justa Kausapin executed on

September 27, 1960 a "Deed of Conveyance of Unregistered Real Property by
Reversion" 4 conveying to Maxima Hemedes the subject property under the following
terms —
That the said parcel of land was donated unto me by the said Jose Hemedes, my
deceased husband, in a deed of "DONATION INTER VIVOS WITH RESOLUTORY
CONDITIONS" executed by the donor in my favor, and duly accepted by me on March
22, 1947, before Notary Public Luis Bella in Cabuyao, Laguna;
That the donation is subject to the resolutory conditions appearing in the said deed of
"DONATION INTER VIVOS WITH RESOLUTORY CONDITIONS," as follows:
(a) Upon the death or remarriage of the DONEE, the title to the property donated shall
revert to any of the children, or their heirs, of the DONOR expressly designated by the
DONEE in a public document conveying the property to the latter; or
remarriage contained in a public instrument as above provided, the title to the property
shall automatically revert to the legal heirs of the DONOR in common.
That, wherefore, in virtue of the deed of donation above mentioned and in the exercise
of my right and privilege under the terms of the first resolutory condition therein
contained and hereinabove reproduced, and for and in consideration of my love and
affection, I do hereby by these presents convey, transfer, and deed unto my designee,
MAXIMA HEMEDES, of legal age, married to RAUL RODRIGUEZ, Filipino and resident
of No. 15 Acacia Road, Quezon City, who is one of the children and heirs of my donor,
JOSE HEMEDES, the ownership of, and title to the property hereinabove described,
and all rights and interests therein by reversion under the first resolutory condition in the
above deed of donation; Except the possession and enjoyment of the said property
which shall remain vested in me during my lifetime, or widowhood and which upon my
death or remarriage shall also automatically revert to, and be transferred to my
designee, Maxima Hemedes.
Maxima Hemedes, through her counsel, filed an application for registration and
confirmation of title over the subject unregistered land. Subsequently, Original
Certificate of Title (OCT) No. (0-941) 0-198 5 was issued in the name of Maxima
Hemedes married to Raul Rodriguez by the Registry of Deeds of Laguna on June 8,
1962, with the annotation that "Justa Kausapin shall have the usufructuary rights over
the parcel of land herein described during her lifetime or widowhood."
It is claimed by R & B Insurance that on June 2, 1964, Maxima Hemedes and her
husband Raul Rodriguez constituted a real estate mortgage over the subject property in
its favor to serve as security for a loan which they obtained in the amount of P6,000.00.
On February 22, 1968, R & B Insurance extrajudicially foreclosed the mortgage since
Maxima Hemedes failed to pay the loan even after it became due on August 2, 1964.
The land was sold at a public auction on May 3, 1968 with R & B Insurance as the
highest bidder and a certificate of sale was issued by the sheriff in its favor. Since
Maxima Hemedes failed to redeem the property within the redemption period, R & B
Insurance executed an Affidavit of Consolidation dated March 29, 1974 and on May 21,
1975 the Register of Deeds of Laguna cancelled OCT No. (0-941) 0-198 and issued
Transfer Certificate of Title (TCT) No. 41985 in the name of R & B Insurance. The
annotation of usufruct in favor of Justa Kausapin was maintained in the new title. 6
Despite the earlier conveyance of the subject land in favor of Maxima Hemedes, Justa
Kausapin executed a "Kasunduan" on May 27, 1971 whereby she transferred the same
land to her stepson Enrique D. Hemedes, pursuant to the resolutory condition in the
deed of donation executed in her favor by her late husband Jose Hemedes. Enrique D.
Hemedes obtained two declarations of real property — in 1972, and again, in 1974,
when the assessed value of the property was raised. Also, he has been paying the
realty taxes on the property from the time Justa Kausapin conveyed the property to him
in 1971 until 1979. In the cadastral survey of Cabuyao, Laguna conducted from
September 8, 1974 to October 10, 1974, the property was assigned Cadastral No.
2990, Cad. 455-D, Cabuyao Cadastre, in the name of Enrique Hemedes. Enrique
Hemedes is also the named owner of the property in the records of the Ministry of
Agrarian Reform office at Calamba, Laguna.
On February 28, 1979, Enriques D. Hemedes sold the property to Dominium Realty and
Construction Corporation (Dominium). On April 10, 1981, Justa Kausapin executed an
affidavit affirming the conveyance of the subject property in favor of Enrique D.
Hemedes as embodied in the "Kasunduan" dated May 27, 1971, and at the same time
denying the conveyance made to Maxima Hemedes.
On May 14, 1981, Dominium leased the property to its sister corporation Asia Brewery,
Inc. (Asia Brewery) who, even before the signing of the contract of lease, constructed
two warehouses made of steel and asbestos costing about P10,000,000.00 each. Upon
learning of Asia Brewery's constructions upon the subject property, R & B Insurance
sent it a letter on March 16, 1981 informing the former of its ownership of the property
as evidenced by TCT No. 41985 issued in its favor and of its right to appropriate the
constructions since Asia Brewery is a builder in bad faith. On March 27, 1981, a
conference was held between R & B Insurance and Asia Brewery but they failed to
arrive at an amicable settlement.1âwphi1.nêt
On May 8, 1981, Maxima Hemedes also wrote a letter addressed to Asia Brewery
wherein she asserted that she is the rightful owner of the subject property by virtue of
OCT No. (0-941) 0-198 and that, as such, she has the right to appropriate Asia
Brewery's constructions, to demand its demolition, or to compel Asia Brewery to
purchase the land. In another letter of the same date addressed to R & B Insurance,
Maxima Hemedes denied the execution of any real estate mortgage in favor of the
latter.
On August 27, 1981, Dominium and Enrique D. Hemedes filed a

complaint 7 with the Court of First Instance of Binan, Laguna for the annulment of TCT
No. 41985 issued in favor of R & B Insurance and/or the reconveyance to Dominium of
the subject property. Specifically, the complaint alleged that Dominium was the absolute
owner of the subject property by virtue of the February 28, 1979 deed of sale executed
by Enrique D. Hemedes, who in turn obtained ownership of the land from Justa
Kausapin, as evidenced by the "Kasunduan" dated May 27, 1971. The plaintiffs
asserted that Justa Kausapin never transferred the land to Maxima Hemedes and that
Enrique D. Hemedes had no knowledge of the registration proceedings initiated by
Maxima Hemedes.
After considering the merits of the case, the trial court rendered judgment on February
22, 1989 in favor of plaintiffs Dominium and Enrique D. Hemedes, the dispositive
portion of which states —
WHEREFORE, judgment is hereby rendered:
(a) Declaring Transfer Certificate of Title No. 41985 of the Register of Deeds of Laguna
null and void and ineffective;
(b) Declaring Dominium Realty and Construction Corporation the absolute owner and
possessor of the parcel of land described in paragraph 3 of the complaint;
(c) Ordering the defendants and all persons acting for and/or under them to respect
such ownership and possession of Dominium Realty and Construction Corporation and
to forever desist from asserting adverse claims thereon nor disturbing such ownership
and possession; and
(d) Directing the Register of Deeds of Laguna to cancel said Transfer Certificate of Title
No. 41985 in the name of R & B Insurance Corporation, and in lieu thereof, issue a new
transfer certificate of title in the name of Dominium Realty and Construction
Corporation. No pronouncement as to costs and attorney's fees. 8
Both R & B Insurance and Maxima Hemedes appealed from the trial court's decision.
On September 11, 1992 the Court of Appeals affirmed the assailed decision in toto and
on December 29, 1992, it denied R & B Insurance's motion for reconsideration. Thus,
Maxima Hemedes and R & B Insurance filed their respective petitions for review with
this Court on November 3, 1992 and February 22, 1993, respectively.
In G.R. No. 107132 9, petitioner Maxima Hemedes makes the following assignment of
errors as regards public respondent's ruling —
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN APPLYING ARTICLE

1332 OF THE NEW CIVIL CODE IN DECLARING AS SPURIOUS THE DEED OF
CONVEYANCE OF UNREGISTERED REAL PROPERTY BY REVERSION
EXECUTED BY JUSTA KAUSAPIN IN FAVOR OF PETITIONER MAXIMA HEMEDES.
II
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AS VOID

AND OF NO LEGAL EFFECT THE "KASUNDUAN" DATED 27 MAY 1971 EXECUTED
BY JUSTA KAUSAPIN IN FAVOR OF RESPONDENT ENRIQUE HEMEDES AND THE
SALE OF THE SUBJECT PROPERTY BY RESPONDENT ENRIQUE HEMEDES IN
FAVOR OF RESPONDENT DOMINIUM REALTY AND CONSTRUCTION
CORPORATION.
III
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING

RESPONDENTS ENRIQUE AND DOMINIUM IN BAD FAITH.
IV
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT

ORIGINAL CERTIFICATE OF TITLE NO. (0-941) 0-198 ISSUED IN THE NAME OF
PETITIONER MAXIMA HEMEDES NULL AND VOID.
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO LOAN

WAS OBTAINED BY PETITIONER MAXIMA HEMEDES FROM RESPONDENT R & B
INSURANCE CORPORATION.
VI
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO REAL

ESTATE MORTGAGE OVER THE SUBJECT PROPERTY WAS EXECUTED BY
PETITIONER MAXIMA HEMEDES IN FAVOR OF RESPONDENT R & B INSURANCE
CORPORATION.
VII
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT THE VALID

TITLE COVERING THE SUBJECT PROPERTY IS THE ORIGINAL CERTIFICATE OF
TITLE NO. (0-941) 0-198 IN THE NAME OF PETITIONER MAXIMA HEMEDES AND
NOT THE TRANSFER CERTIFICATE OF TITLE (TCT) NO. 41985 IN THE NAME OF R
& B INSURANCE CORPORATION. 10
Meanwhile, in G.R. No. 108472 11, petitioner R & B Insurance assigns almost the same
errors, except with regards to the real estate mortgage allegedly executed by Maxima
Hemedes in its favor. Specifically, R & B Insurance alleges that:
RESPONDENT COURT ERRONEOUSLY ERRED IN APPLYING ARTICLE 1332 OF

THE CIVIL CODE.
II
RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic) THE

KASUNDUAN BY AND BETWEEN JUSTA KAUSAPIN AND ENRIQUE
NOTWITHSTANDING THE FACT THAT JUSTA KAUSAPIN BY WAY OF A DEED OF
CONVEYANCE OF UNREGISTERED REAL PROPERTY BY REVERSION CEDED
THE SUBJECT PROPERTY TO MAXIMA SOME ELEVEN (11) YEARS EARLIER.
III
RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic) THE

AFFIDAVIT OF REPUDIATION OF JUSTA KAUSAPIN NOTWITHSTANDING THE
FACT THAT SHE IS A BIAS (sic) WITNESS AND EXECUTED THE SAME SOME
TWENTY-ONE (21) YEARS AFTER THE EXECUTION OF THE DEED OF
CONVEYANCE IN FAVOR OF MAXIMA.
IV
RESPONDENT COURT SERIOUSLY ERRED IN NOT FINDING THAT THE

COMPLAINT OF ENRIQUE AND DOMINIUM HAS PRESCRIBED AND/OR THAT
ENRIQUE AND DOMINIUM WERE GUILTY OF LACHES.
RESPONDENT COURT SERIOUSLY ERRED IN FINDING

R & B AS A MORTGAGEE NOT IN GOOD FAITH.
VI
RESPONDENT COURT SERIOUSLY ERRED IN NOT GRANTING THE DAMAGES

PRAYED FOR BY R & B IN ITS COUNTERCLAIM AND CROSSCLAIM. 12
The primary issue to be resolved in these consolidated petitions is which of the two
conveyances by Justa Kausapin, the first in favor of Maxima Hemedes and the second
in favor of Enrique D. Hemedes, effectively transferred ownership over the subject land.
The Register of Deeds of Laguna issued OCT No. (0-941) 0-198 in favor of Maxima
Hemedes on the strength of the "Deed of Conveyance of Unregistered Real Property by
Reversion" executed by Justa Kausapin. Public respondent upheld the trial court's
finding that such deed is sham and spurious and has "no evidentiary value under the
law upon which claimant Maxima Hemedes may anchor a valid claim of ownership over
the property." In ruling thus, it gave credence to the April 10, 1981 affidavit executed by
Justa Kausapin repudiating such deed of conveyance in favor of Maxima Hemedes and
affirming the authenticity of the "Kasunduan" in favor of Enrique D. Hemedes. Also, it
considered as pivotal the fact that the deed of conveyance in favor of Maxima Hemedes
was in English and that it was not explained to Justa Kausapin, although she could not
read nor understand English; thus, Maxima Hemedes failed to discharge her burden,
pursuant to Article 1332 of the Civil Code, to show that the terms thereof were fully
explained to Justa Kausapin. Public respondent concluded by holding that the
registration of the property on the strength of the spurious deed of conveyance is null
and void and does not confer any right of ownership upon Maxima Hemedes. 13
Maxima Hemedes argues that Justa Kausapin's affidavit should not be given any
credence since she is obviously a biased witness as it has been shown that she is
dependent upon Enrique D. Hemedes for her daily subsistence, and she was most
probably influenced by Enrique D. Hemedes to execute the "Kasunduan" in his favor.
She also refutes the applicability of article 1332. It is her contention that for such a
provision to be applicable, there must be a party seeking to enforce a contract;
however, she is not enforcing the "Deed of Conveyance of Unregistered Real Property
by Reversion" as her basis in claiming ownership, but rather her claim is anchored upon
OCT No. (0-941) 0-198 issued in her name, which document can stand independently
from the deed of conveyance. Also, there exist various circumstances which show that
Justa Kausapin did in fact execute and understand the deed of conveyance in favor of
Maxima Hemedes. First, the "Donation Intervivos With Resolutory Conditions" executed
by Jose Hemedes in favor of Justa Kausapin was also in English, but she never alleged
that she did not understand such document. Secondly, Justa Kausapin failed to prove
that it was not her thumbmark on the deed of conveyance in favor of Maxima Hemedes
and in fact, both Enrique D. Hemedes and Dominium objected to the request of Maxima
Hemedes' counsel to obtain a specimen thumbmark of Justa Kausapin. 14
Public respondent's finding that the "Deed of Conveyance of Unregistered Real

Property By Reversion" executed by Justa Kausapin in favor of Maxima Hemedes is
spurious is not supported by the factual findings in this case. It is grounded upon the
mere denial of the same by Justa Kausapin. A party to a contract cannot just evade
compliance with his contractual obligations by the simple expedient of denying the
execution of such contract. If, after a perfect and binding contract has been executed
between the parties, it occurs to one of them to allege some defect therein as a reason
for annulling it, the alleged defect must be conclusively proven, since the validity and
fulfillment of contracts cannot be left to the will of one of the contracting parties. 15
Although a comparison of Justa Kausapin's thumbmark with the thumbmark affixed

upon the deed of conveyance would have easily cleared any doubts as to whether or
not the deed was forged, the records do not show that such evidence was introduced by
private respondents and the lower court decisions do not make mention of any
comparison having been made. 16 It is a legal presumption that evidence willfully
suppressed would be adverse if produced. 17 The failure of private respondents to
refute the due execution of the deed of conveyance by making a comparison with Justa
Kausapin's thumbmark necessarily leads one to conclude that she did in fact affix her
thumbmark upon the deed of donation in favor of her stepdaughter.
Moreover, public respondent's reliance upon Justa Kausapin's repudiation of the deed
of conveyance is misplaced for there are strong indications that she is a biased witness.
The trial court found that Justa Kausapin was dependent upon Enrique D. Hemedes for
financial assistance. 18 Justa Kausapin's own testimony attests to this fact —
Atty. Conchu:
Q: Aling Justa, can you tell the Honorable Court why you donated this particular
property to Enrique Hemedes?
A: Because I was in serious condition and he was the one supporting me financially.
Q: As of today, Aling Justa are you continuing to receive any assistance from Enrique
Hemedes?
A: Yes Sir.
(TSN pp. 19 and 23, November 17, 1981) 19
Even Enrique Hemedes admitted that Justa Kausapin was dependent upon him for
financial support. The transcripts state as follows:
Atty. Mora:
Now you said that Justa Kausapin has been receiving from you advances for food,
medicine & other personal or family needs?
E. Hemedes:
A: Yes.
Q: Was this already the practice at the time this "Kasunduan" was executed?
A: No that was increased, no, no, after this document.
xxx xxx xxx
Q: And because of these accommodations that you have given to Justa Kausapin; Justa
Kausapin has in turn treated you very well because she's very grateful for that, is it not?
A: I think that's human nature.
Q: Answer me categorically, Mr. Hemedes she's very grateful?
A: Yes she might be grateful but not very grateful.

(TSN, p. 34, June 15, 1984) 20
A witness is said to be biased when his relation to the cause or to the parties is such
that he has an incentive to exaggerate or give false color to his statements, or to
suppress or to pervert the truth, or to state what is false. 21 At the time the present case
was filed in the trial court in 1981, Justa Kausapin was already 80 years old, suffering
from worsening physical infirmities and completely dependent upon her stepson Enrique
D. Hemedes for support. It is apparent that Enrique D. Hemedes could easily have
influenced his aging stepmother to donate the subject property to him. Public
respondent should not have given credence to a witness that was obviously biased and
partial to the cause of private respondents. Although it is a well-established rule that the
matter of credibility lies within the province of the trial court, such rule does not apply
when the witness' credibility has been put in serious doubt, such as when there appears
on the record some fact or circumstance of weight and influence, which has been
overlooked or the significance of which has been
misinterpreted. 22
Finally, public respondent was in error when it sustained the trial court's decision to
nullify the "Deed of Conveyance of Unregistered Real Property by Reversion" for failure
of Maxima Hemedes to comply with article 1332 of the Civil Code, which states:
When one of the parties is unable to read, or if the contract is in a language not
understood by him, and mistake or fraud is alleged, the person enforcing the contract
must show that the terms thereof have been fully explained to the former.
Art. 1332 was intended for the protection of a party to a contract who is at a
disadvantage due to his illiteracy, ignorance, mental weakness or other handicap. 23
This article contemplates a situation wherein a contract has been entered into, but the
consent of one of the parties is vitiated by mistake or fraud committed by the other
contracting party. 24 This is apparent from the ordering of the provisions under Book IV,
Title II, Chapter 2, section 1 of the Civil Code, from which article 1332 is taken. Article
1330 states that —
A contract where consent is given through mistake, violence, intimidation, undue

influence, or fraud is voidable.
This is immediately followed by provisions explaining what constitutes mistake,
violence, intimidation, undue influence, or fraud sufficient to vitiate consent. 25 In order
that mistake may invalidate consent, it should refer to the substance of the thing which
is the object of the contract, or to those conditions which have principally moved one or
both parties to enter into the contract. 26 Fraud, on the other hand, is present when,
through insidious words or machinations of one of the contracting parties, the other is
induced to enter into a contract which, without them, he would not have agreed to. 27
Clearly, article 1332 assumes that the consent of the contracting party imputing the
mistake or fraud was given, although vitiated, and does not cover a situation where
there is a complete absence of consent.1âwphi1.nêt
In this case, Justa Kausapin disclaims any knowledge of the "Deed of Conveyance of
Unregistered Real Property by Reversion" in favor of Maxima Hemedes. In fact, she
asserts that it was only during the hearing conducted on December 7, 1981 before the
trial court that she first caught a glimpse of the deed of conveyance and thus, she could
not have possibly affixed her thumbmark thereto. 28 It is private respondents' own
allegations which render article 1332 inapplicable for it is useless to determine whether
or not Justa Kausapin was induced to execute said deed of conveyance by means of
fraud employed by Maxima Hemedes, who allegedly took advantage of the fact that the
former could not understand English, when Justa Kausapin denies even having seen
the document before the present case was initiated in 1981.
It has been held by this Court that ". . . mere preponderance of evidence is not sufficient
to overthrow a certificate of a notary public to the effect that the grantor executed a
certain document and acknowledged the fact of its execution before him. To accomplish
this result, the evidence must be so clear, strong and convincing as to exclude all
reasonable controversy as to the falsity of the certificate, and when the evidence is
conflicting, the certificate will be
upheld." 29 In the present case, we hold that private respondents have failed to produce
clear, strong, and convincing evidence to overcome the positive value of the "Deed
Conveyance of Unregistered Real Property by Reversion" — a notarized document. The
mere denial of its execution by the donor will not suffice for the purpose.
In upholding the deed of conveyance in favor of Maxima Hemedes, we must

concomitantly rule that Enrique D. Hemedes and his transferee, Dominium, did not
acquire any rights over the subject property. Justa Kausapin sought to transfer to her
stepson exactly what she had earlier transferred to Maxima Hemedes — the ownership
of the subject property pursuant to the first condition stipulated in the deed of donation
executed by her husband. Thus, the donation in favor of Enrique D. Hemedes is null
and void for the purported object thereof did not exist at the time of the transfer, having
already been transferred to his sister. 30 Similarly, the sale of the subject property by
Enrique D. Hemedes to Dominium is also a nullity for the latter cannot acquire more
rights than its predecessor-in-interest and is definitely not an innocent purchaser for
value since Enrique D. Hemedes did not present any certificate of title upon which it
relied.
The declarations of real property by Enrique D. Hemedes, his payment of realty taxes,
and his being designated as owner of the subject property in the cadastral survey of
Cabuyao, Laguna and in the records of the Ministry of Agrarian Reform office in
Calamba, Laguna cannot defeat a certificate of title, which is an absolute and
indefeasible evidence of ownership of the property in favor of the person whose name
appears therein. 31 Particularly, with regard to tax declarations and tax receipts, this
Court has held on several occasions that the same do not by themselves conclusively
prove title to land. 32
We come now to the question of whether or not R & B Insurance should be considered
an innocent purchaser of the land in question. At the outset, we note that both the trial
court and appellate court found that Maxima Hemedes did in fact execute a mortgage
over the subject property in favor of R & B Insurance. This finding shall not be disturbed
because, as we stated earlier, it is a rule that the factual findings of the trial court,
especially when affirmed by the Court of Appeals, are entitled to respect, and should not
be disturbed on
appeal. 33
In holding that R & B Insurance is not a mortgagee in good faith, public respondent
stated that the fact that the certificate of title of the subject property indicates upon its
face that the same is subject to an encumbrance, i.e. usufructuary rights in favor of
Justa Kausapin during her lifetime or widowhood, should have prompted R & B
Insurance to ". . . investigate further the circumstances behind this encumbrance on the
land in dispute," but which it failed to do. Also, public respondent considered against R
& B Insurance the fact that it made it appear in the mortgage contract that the land was
free from all liens, charges, taxes and encumbrances. 34
R & B Insurance alleges that, contrary to public respondent's ruling, the presence of an
encumbrance on the certificate of title is not reason for the purchaser or a prospective
mortgagee to look beyond the face of the certificate of title. The owner of a parcel of
land may still sell the same even though such land is subject to a usufruct; the buyer's
title over the property will simply be restricted by the rights of the usufructuary. Thus, R
& B Insurance accepted the mortgage subject to the usufructuary rights of Justa
Kausapin. Furthermore, even assuming that R & B Insurance was legally obliged to go
beyond the title and search for any hidden defect or inchoate right which could defeat its
right thereto, it would not have discovered anything since the mortgage was entered into
in 1964, while the "Kasunduan" conveying the land to Enrique D. Hemedes was only
entered into in 1971 and the affidavit repudiating the deed of conveyance in favor of
Maxima Hemedes was executed by Justa Kausapin in 1981. 35
We sustain petitioner R & B Insurance's claim that it is entitled to the protection of a

mortgagee in good faith.
It is a well-established principle that every person dealing with registered land may
safely rely on the correctness of the certificate of title issued and the law will in no way
oblige him to go behind the certificate to determine the condition of the property. 36 An
innocent purchaser for value 37 is one who buys the property of another without notice
that some other person has a right to or interest in such property and pays a full and fair
price for the same at the time of such purchase or before he has notice of the claim of
another person. 38
The annotation of usufructuary rights in favor of Justa Kausapin upon Maxima

Hemedes' OCT dose not impose upon R & B Insurance the obligation to investigate the
validity of its mortgagor's title. Usufruct gives a right to enjoy the property of another with
the obligation of preserving its form and
substance. 39 The usufructuary is entitled to all the natural, industrial and civil fruits of
the property 40 and may personally enjoy the thing in usufruct, lease it to another, or
alienate his right of usufruct, even by a gratuitous title, but all the contracts he may enter
into as such usufructuary shall terminate upon the expiration of the usufruct. 41
Clearly, only the jus utendi and jus fruendi over the property is transferred to the
usufructuary. 42 The owner of the property maintains the jus disponendi or the power to
alienate, encumber, transform, and even destroy the same. 43 This right is embodied in
the Civil Code, which provides that the owner of property the usufruct of which is held
by another, may alienate it, although he cannot alter the property's form or substance,
or do anything which may be prejudicial to the usufructuary. 44
There is no doubt that the owner may validly mortgage the property in favor of a third
person and the law provides that, in such a case, the usufructuary shall not be obliged
to pay the debt of the mortgagor, and should the immovable be attached or sold
judicially for the payment of the debt, the owner shall be liable to the usufructuary for
whatever the latter may lose by reason thereof. 45
Based on the foregoing, the annotation of usufructuary rights in favor of Justa Kausapin
is not sufficient cause to require R & B Insurance to investigate Maxima Hemedes' title,
contrary to public respondent's ruling, for the reason that Maxima Hemedes' ownership
over the property remained unimpaired despite such encumbrance. R & B Insurance
had a right to rely on the certificate of title and was not in bad faith in accepting the
property as a security for the loan it extended to Maxima Hemedes.
Even assuming in gratia argumenti that R & B Insurance was obligated to look beyond
the certificate of title and investigate the title of its mortgagor, still, it would not have
discovered any better rights in favor of private respondents. Enrique D. Hemedes and
Dominium base their claims to the property upon the "Kasunduan" allegedly executed
by Justa Kausapin in favor of Enrique Hemedes. As we have already stated earlier,
such contract is a nullity as its subject matter was inexistent. Also, the land was
mortgaged to R & B Insurance as early as 1964, while the "Kasunduan" was executed
only in 1971 and the affidavit of Justa Kausapin affirming the conveyance in favor of
Enrique D. Hemedes was executed in 1981. Thus, even if R & B Insurance investigated
the title of Maxima Hemedes, it would not have discovered any adverse claim to the
land in derogation of its mortgagor's title. We reiterate that at no point in time could
private respondents establish any rights or maintain any claim over the land.
It is a well-settled principle that where innocent third persons rely upon the correctness
of a certificate of title and acquire rights over the property, the court cannot just
disregard such rights. Otherwise, public confidence in the certificate of title, and
ultimately, the Torrens system, would be impaired for everyone dealing with registered
property would still have to inquire at every instance whether the title has been regularly
or irregularly issued. 46 Being an innocent mortgagee for value, R & B Insurance validly
acquired ownership over the property, subject only to the usufructuary rights of Justa
Kausapin thereto, as this encumbrance was properly annotated upon its certificate of
title.
The factual findings of the trial court, particularly when affirmed by the appellate court,
carry great weight and are entitled to respect on appeal, except under certain
circumstances. 47 One such circumstance that would compel the Court to review the
factual findings of the lower courts is where the lower courts manifestly overlooked
certain relevant facts not disputed by the parties and which, if properly considered,
would justify a different conclusion. 48 Also, it is axiomatic that the drawing of the proper
legal conclusions from such factual findings are within the peculiar province of this
Court. 49
As regards R & B Insurance's prayer that Dominium be ordered to demolish the

warehouses or that it be declared the owner thereof since the same were built in bad
faith, we note that such warehouses were constructed by Asia Brewery, not by
Dominium. However, despite its being a necessary party in the present case, the lower
courts never acquired jurisdiction over Asia Brewery, whether as a plaintiff or defendant,
and their respective decisions did not pass upon the constructions made upon the
subject property. Courts acquire jurisdiction over a party plaintiff upon the filing of the
complaint, while jurisdiction over the person of a party defendant is acquired upon the
service of summons in the manner required by law or by his voluntary appearance. As a
rule, if a defendant has not been summoned, the court acquires no jurisdiction over his
person, and any personal judgment rendered against such defendant is null and void.
50 In the present case, since Asia Brewery is a necessary party that was not joined in
the action, any judgment rendered in this case shall be without prejudice to its rights. 51
As to its claim for moral damages, we hold that R & B Insurance is not entitled to the
same for it has not alleged nor proven the factual basis for the same. Neither is it
entitled to exemplary damages, which may only be awarded if the claimant is entitled to
moral, temperate, liquidated or compensatory damages. 52 R & B Insurance's claim for
attorney's fees must also fail. The award of attorney's fees is the exception rather than
the rule and counsel's fees are not to be awarded every time a party wins a suit. Its
award pursuant to article 2208 of the Civil Code demands factual, legal and equitable
justification and cannot be left to speculation and conjecture. 53 Under the
circumstances prevailing in the instant case, there is no factual or legal basis for an
award of attorney's fees.
WHEREFORE, the assailed decision of public respondent and its resolution dated
February 22, 1989 are REVERSED. We uphold petitioner R & B Insurance's assertion
of ownership over the property in dispute, as evidenced by TCT No. 41985, subject to
the usufructuary rights of Justa Kausapin, which encumbrance has been properly
annotated upon the said certificate of title. No pronouncement as to costs.
SO ORDERED.
Panganiban and Purisima, JJ., concur.
Melo, J., please see dissenting opinion.
Vitug, J., please see separate (concurring) opinion.
Separate Opinions
VITUG, J., separate opinion;
I share the opinion expressed by my esteemed colleague, Mme. Justice Minerva P.
Gonzaga-Reyes, in her ponencia.
I just would like to add that a donation would not be legally feasible if the donor has
neither ownership nor real right that he can transmit to the donee. Unlike an ordinary
contract, a donation, under Article 712, in relation to Article 725, of the Civil Code is also
a mode of acquiring and transmitting ownership and other real rights by an act of
liberality whereby a person disposes gratuitously that ownership or real right in favor of
another who accepts it. It would be an inefficacious process if the donor would have
nothing to convey at the time it is made.
Art. 744 of the Civil Code states that the "donation of the same thing to two or more
different donees shall be governed by the provisions concerning the sale of the same
thing to two or more persons," i.e., by Article 1544 of the same Code, as if so saying
that there can be a case of "double donations" to different donees with opposing
interest. Article 744 is a new provision, having no counterpart in the old Civil Code, that
must have been added unguardedly. Being a mode of acquiring and transmitting
ownership or other real rights, a donation once perfected would deny the valid execution
of a subsequent inconsistent donation (unless perhaps if the prior donation has
provided a suspensive condition which still pends when the later donation is made).
In sales, Article 1544, providing for the rules to resolve the conflicting rights of two or
more buyers, is appropriate since the law does not prohibit but, in fact, sanctions the
perfection of a sale by a non-owner, such as the sale of future things or a short sale, for
it is only at the consummation stage of the sale, i.e., delivery of the thing sold, that
ownership would be deemed transmitted to the buyer. In the meanwhile, a subsequent
sale to another of the same thing by the same seller can still be a legal possibility. This
rule on double sales finds no relevance in an ordinary donation where the law requires
the donor to have ownership of the thing or the real right he donates at the time of its
perfection (see Article 750, Civil Code) since a donation constitutes a mode, not just a
title, in an acquisition and transmission of ownership.
MELO, J., dissenting opinion;
I find myself unable to join the majority. The opinion written by my esteemed colleague,
Madame Justice Minerva Gonzaga-Reyes, will have far-reaching ramifications on
settled doctrines concerning the finality and conclusiveness of the factual findings of the
trial court in view of its unique advantage of being able to observe at first-hand the
demeanor and deportment of witnesses, and especially when such findings of facts are
affirmed by the Court of Appeals, which is the final arbiter of questions of fact (People
vs. Edaño, 64 SCRA 675 [1975]; People vs. Tala, 141 SCRA 240; People vs. Canada
and Dondoy, 144 SCRA 121 [1986]; People vs. Clore, 184 SCRA 638 [1990]; Binalay
vs. Manalo, 195 SCRA 374 [1991]; People vs. Miscala, 202 SCRA 26 [1991]; People vs.
Lagrosa, 230 SCRA. 298 [1994]). All these conditions are present in the case at bar,
and I have grave reservations about the propriety of setting aside time-tested principles
in favor of a finding that hinges principally on the credibility of a single witness, whom
we are asked to disbelieve on the basis merely of her recorded testimony without the
benefit of the advantage that the trial court had, disregarding in the process another
long-established rule — that mere relationship of a witness to a party does not discredit
his testimony in court (U.S. vs. Mante, 27 Phil 124; People vs. Pagaduan, 37 Phil 90;
People vs. Reyes, 69 SCRA 474 [1976]; People vs. Padiernos, 69 SCRA 484 [1976];
Borromeo vs. Court of Appeals, 70 SCRA 329 [1976]; People vs. Estocada, 75 SCRA
295 [1977]; People vs. Ciria, 106 SCRA 381 [1981]; People vs. Ramo, 132 SCRA 174
[1984]; People vs. Atencio, 156 SCRA 242 [1987]; People vs. Gutierrez. Jr., 158 SCRA
614 [1988]; People vs. Bandoquillo, 167 SCRA 549 [1988]; People vs. Suitos, 220
SCRA 419 [1993]).
The primordial issue is whether or not the "Deed of Conveyance of Unregistered Real
Property by Reversion" dated September 27, 1960 conveying the subject property to
Maxima Hemedes is valid. If the transfer is not valid, no title passed to her successor-in-
interest, R & B Insurance Corporation.
The Court of Appeals, confirming and summarizing the findings of fact and law made by
the trial court, declared:
We sustain the findings of the trial court.
To begin with, the "Deed of Conveyance of Unregistered Real Property by Reversion"

was nullified by the trial court on two (2) grounds:
First, MAXIMA failed to comply with the requirements laid down by Article 1332 of the
Civil Code. Said provision reads:
Art. 1332. When one of the parties is unable to read, or if the contract is in a language
not understood by him, and mistake or fraud is alleged, the person enforcing the
contract must show that the terms thereof have been fully explained to the former.
In her testimony, MAXIMA admitted the entire document was written in English, a
language not known to Justa Kausapin (TSN, 17 November 1981, pp. 7-8; Deposition of
Justa Kausapin). Yet, MAXIMA failed to introduce sufficient evidence that would
purportedly show that the deed of conveyance was explained to Justa Kausapin before
the latter allegedly affixed her thumbmark. On the contrary, she admitted having failed
to translate the deed of conveyance to Justa Kausapin because according to her, the
latter has "no voice" anyway insofar as the property is concerned. Her testimony reads:
Q — In connection with this deed of conveyance which has been marked as Exh. "2-
Maxima," we note that this is written in English, do you know, Mrs. Hernandez
(MAXIMA), whether this document was ever translated to Justa Kausapin?
A — Justa Kausapin has no voice because that's the order of my father, so anyway. . .
Court — Answer the question, you were only asked whether that was translated.
A — No. (TSN 26 November, 1984, pp. 36-37, Maxima Hemedes).
Second, MAXIMA failed to repudiate the allegation of Justa Kausapin disclaiming

knowledge of her having executed such a deed. As a matter of fact, Justa Kausapin
claimed that it was only during the hearing conducted on 07 December 1981 that she
first caught glimpse of the deed of conveyance (TSN, 07 December 1981, pp. 22-23,
ibid.) She therefore could not have possibly affixed her thumbmark therein. In the light
of such a denial, the burden of proving that the deed of conveyance was indeed
genuine laid on MAXIMA. After all, any party who asserts the affirmative of the issue
has the burden of presenting evidence required to obtain a favorable judgment
(Republic v. Court of Appeals, 182 SCRA 290).1âwphi1.nêt
Instead, what was clearly established from the deposition of Justa Kausapin is the fact
that she never executed any document donating the property to anybody else except
ENRIQUE. This can be readily gleaned from her testimony, reading:
Q — From the time, Aling Justa, that your husband Jose Hemedes donated the property
to you up to the time you in turn donated the same to Enrique Hemedes in 1971, do you
recall having executed any document donating this particular property to anybody else?
A — None, Sir. (TSN, 17 November 1981, p. 21)

(pp. 63-64, Rollo.)
There is no dispute that Justa Kausapin twice repudiated the conveyance in favor of
Maxima Hemedes. As found by the trial court:
In an Affidavit dated April 10, 1981 executed by Justa Kausapin before three witnesses
(Exh. D-Dominium), said affiant disowned the alleged "Deed of Conveyance of
Unregistered Real Property by Reversion" invoked by defendant Maxima Hemedes, and
expressly stated that she never granted any right over the property to Maxima
Hemedes, whether as owner or mortgagor, that she never allowed her to use the land
as security or collateral for a loan. In the same affidavit, Justa Kausapin affirmed the
authenticity of the "Kasunduan" whereby she transferred ownership of the disputed land
to Enrique Hemedes, her stepson and reliable source of assistance throughout the
years that she was in need of help. The testimony of Justa Kausapin was also taken by
deposition on November 17, December 7 and 14, 1981 and on January 14, 1982,
wherein all the contending parties were represented and had the opportunity to cross-
examine her. In her testimony (the entire transcript of which has been submitted as Exh.
K-Enrique), Justa Kausapin reiterated her repudiation of the Deed of Conveyance in
favor of Maxima Hemedes and re-affirmed the validity of the "Kasunduan" in favor of
Enrique Hemedes, as well as the subsequent sale of the land by Enrique Hemedes to
Dominium.
(pp. 83-84, Rollo.)
The majority would hold that the twin repudiations cannot be given credence because
the witness is biased in favor of Enrique Hemedes, who, by providing support and
financial assistance to the witness before, during and after the execution of the
"Kasunduan," is said to have influenced her into signing the same. This issue refers to
the credibility of witnesses which, as stated earlier, is best left for determination by the
trial court (People vs. Oliano, 287 SCRA 158 [1998], citing People vs. Pontillar, Jr., 275
SCRA 338 [1997]; People vs. Rubio, 257 SCRA 528 [1996]; People vs. Del Prado, 253
SCRA 731 [1996]). I am not prepared to substitute my judgment for that of the trial court
on the credibility of Justa Kausapin on the basis alone of the relationship between her
and Enrique Hemedes. To reiterate, the rule is: "Mere relationship of a witness to a
party does not discredit his testimony in court." (U.S. vs. Mante, supra; Aznar vs. Court
of Appeals, 70 SCRA 329 [1976]; People vs. Letigio, 268 SCRA 227, 243 [1997]).
I cannot infer from the mere circumstance that Justa Kausapin was receiving support
and sustenance from Enrique Hemedes that she had any improper motives to testify in
favor of Enrique and against Maxima. It must be remembered that Justa Kausapin had
a legal right to such financial assistance, not only from respondent Enrique Hemedes,
but also from Maxima Hemedes, who are both her stepchildren. If one must impute
improper motives in favor of Enrique, one could just as easily ascribe these to Maxima.
Furthermore, it must be noted that Justa Kausapin's entitlement to support flowed from
her usufructuary rights contained in the "Donation Inter Vivos with Resolutory
Conditions" executed by her late husband, Jose Hemedes, the common father of
petitioner Maxima and respondent Enrique Hemedes. In supporting his stepmother,
Enrique was, therefore, merely performing a legal or contractual duty in favor of Justa
Kausapin. There was nothing improper in Justa Kausapin's repudiation of the
conveyance in favor of Maxima, especially so if one considers the fact that the latter did
not adduce any other evidence to defeat the presumption that Justa Kausapin was
stating the truth when she said that she never conveyed the property to Justa Maxima.
As the trial court found:
. . . The actuation of Enrique Hemedes towards Justa Kausapin is legally and morally
justified. It must be remembered that Justa Kausapin is the stepmother of Enrique
Hemedes; she was also the usufructuary of the property in dispute. It is only natural and
in keeping with law and custom, or Filipino tradition, for a son to support his mother
(even if she happens to be a stepmother); and form a legal standpoint, the naked owner
Enrique Hemedes was bound to support Justa Kausapin by way of giving her what she
was entitled to as usufructuary.
(p. 104, Rollo.)
The trial court's ruling on the invalidity of the title of Maxima is not based solely on Justa
Kausapin's repudiation of the deed of conveyance, but likewise on the very acts of
Maxima and her transferee R & B Surety and Insurance. The factual findings of the trial
court are to the effect that despite the alleged transfer of ownership from Justa
Kausapin to Maxima Hemedes on September 27, 1960 and the subsequent transfer to
R & B Insurance on May 3, 1968 by way of foreclosure and public auction sale, neither
do these petitioners exercised their rights of ownership over the disputed property,
never even asserting their supposed ownership rights until it was too late. The following
findings of the trial court stand unassailed:
There are other indications which led this Court to believe that neither defendant
Maxima Hemedes nor defendant R & B INSURANCE consider themselves the owner of
the property in question. Both of these claimants never declared themselves as owners
of the property for tax purposes; much less did they pay a single centavo in real estate
taxes. The argument that since Justa Kausapin was in possession of the property as
usufructuary she should pay the taxes contravenes the clear provision of the Civil Code
that the taxes which may be imposed directly on the capital during the usufruct, in this
case the realty taxes, shall be at the expense of the owner (Article 597, Civil Code). If
Maxima Hemedes and R & B INSURANCE were convinced that they were the owners
of the property, why did they not pay taxes for the same? This attitude is not consistent
with that of an owner in good faith. The Court has noted that the very owner of R & B
INSURANCE has admitted in her testimony that they declared the property as one of
the assets of R & B INSURANCE only in 1976, which is eight years after they
supposedly bought it at public auction in 1968 (TSN, July 6, 1987, pp. 22-23) (Decision,
pp. 32-33).
(pp. 101-102, Rollo.)
Faced with the categorical and straightforward repudiations of the conveyance

supposedly made in her favor, Maxima Hemedes could only gratuitously assert
otherwise, as no other testimonial or documentary evidence was adduced in support
thereof. Maxima's self-serving assertions, however, are legally infirm in view of her
admission that the deed of conveyance in her favor was written in a language unknown
to the person who supposedly executed the same and the terms thereof were not fully
explained to the person who executed the same. These are the facts as found by the
trial court:
Questioned about the execution of the "Deed of Conveyance of Unregistered Real

Property by Reversion" which is the basis of her claim, defendant Maxima Hemedes
admitted that the document which is in English was not translated or explained to Justa
Kausapin before the latter supposedly affixed her thumbmark to the document (TSN,
November 26, 1984, p. 34; TSN, December 10, 1984, p. 9). The Court has noted from
the records that the Notary Public before whom the said document was notarized was
not presented as a wittiness by defendant Maxima Hemedes, if only to attest to the
execution of said document by Justa Kausapin, considering that the latter is an illiterate
when it comes to documents written in English. Maxima explained the non-translation of
the Deed of Conveyance into a language understood by Justa Kausapin with the
statement that the latter (Justa Kausapin) "has no voice" anyway in so far as the
property is concerned (TSN, November 26, 1984, p. 36) . . . the Notary Public before
whom the said document was supposed to have been axknowledged was also not
presented as a witness, and there was no explanation as to why he was not also
presented. In the face of such an admission and failure on the part of defendant Maxima
Hemedes, coupled with the straightforward repudiation by Justa Kausapin herself of the
document relied upon by said defendant the Court finds and so concludes that the
"Deed of Conveyance of Unregistered Real Property by Reversion" is not a credible and
convincing evidence and is of no evidentiary value under the law upon which claimant
Maxima Hemedes may anchor a valid claim of ownership over the property subject of
this action.
(pp. 91-93, Rollo.)

It is argued that private respondents failed to have the thumbmarks of Justa Kausapin
appearing on the deeds executed in favor of Maxima and Enrique compared and this
failure may be taken as wilful suppression of evidence that is presumed to be adverse if
produced (Rules of Court, Rule 131, Sec. 3(e). The applicability of this rule presupposes
that the suppressed evidence is not available to the other party for production in court
(People vs. Padiernos, 69 SCRA 484 [1976]; People vs. Silvestre, 279 SCRA 474, 495
[1997]). This is not the case here for the same documents were available to petitioners.
In fact, the records show that counsel for Maxima Hemedes pledged to submit the
document which will be compared with the specimen thumbmark to be obtained from
Justa Kausapin (TSN, December 7, 1981, p. 28). The records, however, do not show
that said counsel persisted in his request for comparison of Kausapin's thumbmarks. If
petitioners were convinced that the specimen thumbprint of Justa Kausapin was of
crucial importance to their cause, they should have insisted on presenting her as a
witness and, thereupon, obtaining her thumbprint. Their own failure to pursue the
production of the specimen thumbprint of Justa Kausapin negated any belated claim
that the said specimen was suppressed (People vs. Tulop, citing People vs. Pagal, 272
SCRA 443 [1998]; Commissioner of Internal Revenue vs. Tokyo Shipping Company,
Ltd., 244 SCRA 332 [1995]; citing Nicolas vs. Nicolas, 52 Phil 265 [1928] and Ang Seng
Quiem vs. Te Chico, 7 Phil 541 [1907]).1âwphi1.nêt
The two courts below were, to my mind, most perceptive when they held that proof of
authenticity of the thumbprint of Justa Kausapin would not render valid an otherwise
void document in light of the admission of Maxima Hemedes that she did not explain the
English contents thereof to Justa Kausapin in a language understood by her.
On the other hand, the validity of the conveyance to Enrique Hemedes is amply proven
by the evidence on record. Thus, largely uncontested are the following findings of fact of
the trial court:
Enough has already been said hereinabove concerning the claim of ownership of
plaintiff Enrique. From an overall evaluation of the facts found by the Court to be
substantiated by the evidence on record, the Court is convinced and so holds that the
three conflicting claimants, it is party plaintiffs, Enrique Hemedes and now DOMINIUM,
who have both law and equity on their side. Plaintiff Enrique Hemedes' title to the
property in question by virtue of the "Kasunduan" dated May 27, 1971 was confirmed
twice by his grantor, Justa Kausapin; he complied with his obligations as naked owner
by giving Justa Kausapin her usufructuary rights in the form of financial and other
assistance; he declared his ownership of the property openly and adversely to other
claimants by recording the same in the appropriate government agencies, namely, the
Municipal and Provincial Assessor's Office, the Ministry of Agrarian Reform and the
Bureau of Lands; he was openly known in the community where the property is located
as the owner thereof; he paid the taxes on the property conscientiously from the time he
acquired the same to the time he sold the same to co-plaintiff DOMINIUM; he was in
continuous possession of the property during the said period; he paid the tenant,
Nemesio Marquez, the disturbance fee required under the Land Reform Law.
(pp., 102-103, Rollo.)
The Court of Appeals, therefore, did not err in holding that since the deed of
conveyance to Maxima was found to be spurious, it necessarily follows that OCT No. (0-
941) 0-198 issued in her name is null and void. This is because the registration will not
invalidate a forged or invalid document.
I, therefore, vote to dismiss the petition and to affirm the decision appealed from.
Footnotes
1 Penned by Pacita Canizares-Nye; Manuel C. Herrera and Justo P. Torres, Jr.,
concurring.
2 Entitled "Dominium Realty and Construction Corporation and Enrique D. Hemedes vs.
R & B Insurance Corporation and Maxima Hemedes."
3 Annex "D" of Maxima Hemedes' Petition; Rollo, pp. 113-114.
4 Annex "E" of Maxima Hemedes' Petition; Rollo, pp. 115-117.
5 Annex "H" of Maxima Hemedes' Petition; Rollo, pp. 122-124.
6 Rollo of G.R. No. 108472, p. 17.
7 Docketed as Civil Case No. B-1766.
8 Rollo of G.R. No. 107132, pp. 107-108.

9 Entitled "Maxima Hemedes vs. The Honorable Court of Appeals, Eleventh Division,
Dominium Realty and Construction Corporation, Enrique D. Hemedes, and R & B
Insurance Corporation."
10 Rollo of G.R. No. 107132, p. 28.
11 Entitled "R & B Insurance Corporation vs. The Honorable Court of Appeals, Eleventh
Division, Dominium Realty and Construction Corporation, Enrique D. Hemedes, and
Maxima Hemedes."
12 Rollo of G.R. No. 108472, p. 34.
13 Ibid., pp. 63-64, 91-96.
14 Rollo of G.R. No. 107132, pp. 29-41.
15 Chavez vs. IAC, 191 SCRA 211 (1990).
16 Rollo, pp. 61, 90-96.
17 Rules of Court, Rule 131, sec. 3(e); Sulit vs. Court of Appeals, 268 SCRA 441
(1997).
18 Rollo of G.R. No. 107132, p. 94.
19 Ibid., p. 37.
20 Ibid., pp. 39-40.
21 People vs. Dones, 254 SCRA 696 (1996).

22 People vs. Subido, 253 SCRA 196 (1996), citing People vs. Aguilar, 222 SCRA 394
(1993).
23 Bunyi vs. Reyes, 39 SCRA 504 (1971), citing the Report of the Code Commission, p.
136.
24 Yanas vs. Acaylar, 136 SCRA 52 (1985); Heirs of Enrique Zambales vs. CA, 120
SCRA 897 (1983); Bunyi vs. Reyes, supra.
25 Civil Code, arts. 1331-1344.
26 Id., art. 1331.
27 Id., art. 1338.
28 Rollo of G.R. No. 108472, p. 64.
29 Bunyi vs. Reyes, supra., citing Robinson vs. Villafuerte, 18 Phil. 171; Jocson vs.
Estacion, 60 Phil. 1055.
30 Civil Code, art. 1409.
31 Heirs of Leopoldo Vencilao, Sr. vs. CA, 288 SCRA 574 (1998).
32 Ibid; Titong vs. CA, 287 SCRA 102 (1998).
33 People vs. Cahindo, 266 SCRA 554 (1997).
34 Rollo of G.R. No. 108472, pp. 65-66.
35 Ibid., pp. 47-55.

36 Legarda vs. CA, 280 SCRA 642 (1997).
37 The phrase "innocent purchaser for value" or any equivalent phrase shall be deemed
to include an innocent lessee, mortgagee, or other encumbrancer for value. Presidential
Decree No. 1529, sec. 32.
38 Mathay vs. CA, 295 SCRA 556 (1998).
40 Id., art. 566.
41 Id., art. 572.
42 Tolentino, II Civil Code of the Philippines, 318 (1992), citing Eleizegui vs. Manila
Lawn Tennis Club, 2 Phil 309.
43 Ibid., 46.
45 Id., art. 600.
46 Cruz vs. CA, 281 SCRA 491 (1997).
47 Exceptional circumstances that would compel the Supreme Court to review the
findings of fact of the lower courts are: (1) when the conclusion is a finding grounded
entirely on speculations, surmises or conjectures; (2) when the inference made is
manifestly absurd, mistaken or impossible; (3) when there is grave abuse of discretion
in the appreciation of facts; (4) when the judgment is premised on a misapprehension of
facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals in
making its findings, went beyond the issues of the case and the same is contrary to the
admissions of both appellant and appellee; (7) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the parties and which, if properly
considered, would justify a different conclusion; and (8) when the findings of fact of the
Court of Appeals are contrary to those of the trial court, or are mere conclusions without
citation of specific evidence, or where the facts set forth by the petitioner are not
disputed by the respondent, or where the findings of fact of the Court of Appeals are
premised on absence of evidence but are contradicted by the evidence of record.
Limketkai Sons Milling, Inc. vs. CA, 255 SCRA 626 (1996); Carolina Industries, Inc. vs.
CMS Stock Brokerage, Inc., G.R. No. L-46908, May 17, 1980; Manlapaz vs. CA, 147
SCRA 236 (1987).
48 Carolina Industries, Inc. vs. CMS Stock Brokerage, Inc., supra.
49 Binalay vs. Manalo, 195 SCRA 374 (1991).
50 Arcelona vs. Court of Appeals, 280 SCRA 20 (1997).
51 Rules of Court, Rule 3, sec. 9.
53 Morales vs. CA, 274 SCRA 282 (1997).

Civil Law. Property. Usufruct. Donation.
Hemedes v. CA
MAXIMA HEMEDES v. THE HONORABLE COURT OF APPEALS, DOMINIUM REALTY AND
CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES, and R & B INSURANCE CORPORATION
G.R. No. 107132. October 8, 1999
Gonzaga-Reyes, J.
FACTS:
The instant controversy involves a question of ownership over an unregistered parcel of land,
situated in Sala, Cabuyao, Laguna. It was originally owned by the late Jose Hemedes, father of
Maxima Hemedes and Enrique D. Hemedes. Jose Hemedes executed a document entitled
Donation Inter Vivos With Resolutory Condition whereby he conveyed ownership over the
subject land, together with all its improvements, in favor of his third wife, Justa Kauapin,
subject to the following resolutory conditions:
(a) Upon the death or remarriage of the DONEE, the title to the property donated shall revert to
any of the children, or their heirs, of the DONOR expressly designated by the DONEE in a public
document conveying the property to the latter; or
remarriage contained in a public instrument as above provided, the title to the property shall
automatically revert to the legal heirs of the DONOR in common.
Pursuant to the first condition abovementioned, Justa Kausapin executed a Deed of

Conveyance of Unregistered Real Property by Reversion conveying to Maxima Hemedes the
subject property except the possession and enjoyment of the said property which shall remain
vested in Justa Kausapin during her lifetime, or widowhood and which upon her death or
remarriage shall also automatically revert to, and be transferred to Maxima Hemedes.
Maxima Hemedes and her husband Raul Rodriguez constituted a real estate mortgage over the
subject property in its favor to serve as security for a loan which they obtained in the amount of
P6,000.00., R & B Insurance extrajudicially foreclosed the mortgage since Maxima Hemedes
failed to pay the loan even after it became due. The land was sold at a public auction with R & B
Insurance as the highest bidder and a certificate of sale was issued by the sheriff in its favor.
Since Maxima Hemedes failed to redeem the property within the redemption period, R & B
Insurance executed an Affidavit of Consolidation. The annotation of usufruct in favor of Justa
Kausapin was maintained in the new title.
Despite the earlier conveyance of the subject land in favor of Maxima Hemedes, Justa Kausapin
executed whereby she transferred the same land to her stepson Enrique D. Hemedes, pursuant
to the resolutory condition in the deed of donation executed in her favor by her late husband
Jose Hemedes. Enriques D. Hemedes sold the property to Dominium Realty and Construction
Corporation (Dominium). Dominium leased the property to its sister corporation Asia Brewery,
Inc. (Asia Brewery) who, even before the signing of the contract of lease, constructed two
warehouses made of steel and asbestos costing about P10,000,000.00 each. Upon learning of
Asia Brewery’s constructions upon the subject property, R & B Insurance sent it a letter
informing the former of its ownership of the property as evidenced by TCT No. 41985 issued in
its favor and of its right to appropriate the constructions since Asia Brewery is a builder in bad
faith.
Dominium and Enrique D. Hemedes filed a complaint with the Court of First Instance of Binan,
Laguna for the annulment of TCT No. 41985 issued in favor of R & B Insurance and/or the
reconveyance to Dominium of the subject property. Specifically, the complaint alleged that
Dominium was the absolute owner of the subject property by virtue of the deed of sale
executed by Enrique D. Hemedes, who in turn obtained ownership of the land from Justa
Kausapin, as evidenced by the Kasunduan. The plaintiffs asserted that Justa Kausapin never
transferred the land to Maxima Hemedes and that Enrique D. Hemedes had no knowledge of
the registration proceedings initiated by Maxima Hemedes.
The trial court rendered judgment in favor of plaintiffs Dominium and Enrique D. Hemedes, The
Court of Appeals affirmed the assailed decision in toto.
ISSUE:
Which of the two conveyances by Justa Kausapin, the first in favor of Maxima Hemedes and the
second in favor of Enrique D. Hemedes, effectively transferred ownership over the subject
land?
HELD:
Public respondents finding that the Deed of Conveyance of Unregistered Real Property By
Reversion executed by Justa Kausapin in favor of Maxima Hemedes is spurious is not supported
by the factual findings in this case. In upholding the deed of conveyance in favor of Maxima
Hemedes, we must concomitantly rule that Enrique D. Hemedes and his transferee, Dominium,
did not acquire any rights over the subject property. Justa Kausapin sought to transfer to her
stepson exactly what she had earlier transferred to Maxima Hemedes the ownership of the
subject property pursuant to the first condition stipulated in the deed of donation executed by
her husband. Thus, the donation in favor of Enrique D. Hemedes is null and void for the
purported object thereof did not exist at the time of the transfer, having already been
transferred to his sister. Similarly, the sale of the subject property by Enrique D. Hemedes to
Dominium is also a nullity for the latter cannot acquire more rights than its predecessor-in-
interest and is definitely not an innocent purchaser for value since Enrique D. Hemedes did not
present any certificate of title upon which it relied.
Whether or not R&B Insurance is a purchaser in good faith

R & B Insurance alleges that, contrary to public respondents ruling, the presence of an
encumbrance on the certificate of title is no reason for the purchaser or a prospective
mortgagee to look beyond the face of the certificate of title. We sustain petitioner R & B
Insurances claim that it is entitled to the protection of a mortgagee in good faith.
The annotation of usufructuary rights in favor of Justa Kausapin upon Maxima Hemedes OCT
does not impose upon R & B Insurance the obligation to investigate the validity of its
mortgagor’s title. Usufruct gives a right to enjoy the property of another with the obligation of
preserving its form and substance. The usufructuary is entitled to all the natural, industrial and
civil fruits of the property and may personally enjoy the thing in usufruct, lease it to another, or
alienate his right of usufruct, even by a gratuitous title, but all the contracts he may enter into
as such usufructuary shall terminate upon the expiration of the usufruct.
Clearly, only the jus utendi and jus fruendi over the property is transferred to the usufructuary.
The owner of the property maintains the jus disponendi or the power to alienate, encumber,
transform, and even destroy the same. This right is embodied in the Civil Code, which provides
that the owner of the property, the usufruct of which is held by another, may alienate it,
although he cannot alter the propertys form or substance, or do anything which may be
prejudicial to the usufructuary.
There is no doubt that the owner may validly mortgage the property in favor of a third person
and the law provides that, in such a case, the usufructuary shall not be obliged to pay the debt
of the mortgagor, and should the immovable be attached or sold judicially for the payment of
the debt, the owner shall be liable to the usufructuary for whatever the latter may lose by
reason thereof.
NAVAL vs. ENRIQUEZ - G.R. No. 1318
PRISCA NAVAL, ET AL. vs. FRANCISCO ENRIQUEZ, ET AL.

G.R. No. 1318
April 12, 1904
Don Jorge Enriquez, as heir of his deceased parents, Antonio Enriquez and Doña Ciriaca
Villanueva, whose estates were at that time still undistributed, by public instrument sold to Don
Victoriano Reyes his interest in both estates, equivalent to a tenth part thereof. By another
instrument executed, Don Enrique Barrera, Don Victoriano Reyes sold to Doña Carmen de la
Cavada his interest in the estate of Don Antonio Enriquez and Doña Ciriaca Villanueva, which he
had acquired from Don Jorge Enriquez. The purchaser, Doña Carmen, was the wife of Don
Francisco Enriquez, who was the executor and administrator of the testamentary estate of Don
Antonio Enriquez at the dates of the execution of the two mentioned. The plaintiffs demand
that these deeds be declared null and void, as well as the contracts evidenced thereby,
apparently solely so far as they refer to the estate of Don Antonio Enriquez, no mention being
made of the estate of Doña Ciriaca Villanueva in the complaint. This relief is prayed for upon
the grounds that the deeds in question were consummated and were executed for the purpose
of deceiving and defrauding Don Jorge Enriquez and his family, and such executor Don
Francisco Enriquez was unable to acquire by his own act or that of any intermediary the said
hereditary portion of Don Jorge Enriquez under the provisions of paragraph 3 of article 1459 of
the Civil Code.
ISSUE:
Whether or not the deeds executed are null and void.
HELD:
No. The date of those contracts down to the death of Jorge Enriquez, which occurred July
6, 1891, more than five year had passed and more than fifteen before the filing of the
complaint on January 9, 1902, nothing having been done in the meantime on the part of the
plaintiffs or the person under whom they claim to interrupt the running of the statute. The
action of nullity only lasts four years, counted from the date of the consummation of the
contract, when the action is based, as in this case, upon the absence of consideration. (Art.
1301 of the Civil Code.) The contract of sale is consummated by the delivery of the purchase
money and of the thing sold.(Art. 1462, par. 2, Civil Code.)
Article 1464 provides that "With respect to incorporeal property, the provisions of par. 2 of Art.
1462 shall govern." In the deeds of sale executed by Victoriano Reyes in favor of Doña Carmen
de la Cavada, in consequence he (the vendor) by virtue of this title cedes and conveys all rights
which he has or may have to the part of the inheritance which is the object of this sale may
exercise all the acts of ownership corresponding to her right, to which end by means of the
delivery of this instrument and of his other title deeds he makes the transfer necessary to
consummate the contract, which upon his part he declares to be perfect and consummated
from this date.
EN BANC
G.R. No. 1318 April 12, 1904

PRISCA NAVAL, ET AL., plaintiffs-appellees,
vs.
FRANCISCO ENRIQUEZ, ET AL., defendants-appellants.
Alfredo Chicote and Allison D. Gibbs for appellants.
Montagne and Dominguez for appellees.
MAPA, J.:
November 14, 1885, Don Jorge Enriquez, as heir of his deceased parents, Antonio Enriquez and Doña
Ciriaca Villanueva, whose estates were at that time still undistributed, by public instrument sold to Don
Victoriano Reyes his interest in both estates, equivalent to a tenth part thereof, for the sum of 7,000
pesos. The deed was executed in this city before Don Enrique Barrera, a notary public, who certified in
the document that the vendor received the said consideration at the time of the execution of the
instrument.
By another instrument executed April 15, 1886, before the same notary, Don Enrique Barrera y Caldes,
Don Victoriano Reyes sold to Doña Carmen de la Cavada this interest in the estate of Don Antonio
Enriquez and Doña Ciriaca Villanueva, which by the deed above referred to, he had acquired from Don
Jorge Enriquez for the same consideration of 7,000 pesos, which money he received from the purchaser
in the presence of the notary, who so certifies in the deed itself.
The purchaser, Doña Carmen, was the wife of Don Francisco Enriquez, who was the executor and
administrator of the testamentary estate of Don Antonio Enriquez at the dates of the execution of the
two above mentioned.
The plaintiffs demand that these deeds be declared null and void, as well as the contracts evidenced
thereby, apparently solely so far as they refer to the estate of Don Antonio Enriquez, no mention being
made of the estate of Doña Ciriaca Villanueva in the complaint. This relief is prayed for upon the
following grounds:
(1) Because the said contracts were executed without consideration, it being alleged with respect to this
matter that Don Jorge Enriquez did not receive any consideration for the sale made by him in favor of
Don Victoriano Reyes, and that the latter did not receive any sum whatever as a consideration for the
sale in turn executed by him in favor of Doña Carmen de la Cavada. Upon this ground the plaintiffs
contend that the deeds in question were consummated and were executed for the purpose of deceiving
and defrauding Don Jorge Enriquez and his family.
(2) Because Don Victoriano Reyes, the purchaser under the first deed, merely acted as an intermediary
at the request and instance of Don Francisco Enriquez for the purpose of subsequently facilitating the
acquisition by Doña Carmen de la Cavada, his wife, of the hereditary share of Don Jorge Enriquez, the
real acquirer being Don Francisco Enriquez, the executor and administrator of the estate of Don Antonio
Enriquez. The conclusion of the plaintiffs is that as such executor Don Francisco Enriquez was unable to
acquire by his own act or that of any intermediary the said hereditary portion of Don Jorge Enriquez
under the provisions of paragraph 3 of article 1459 of the Civil Code.
(a) The evidence introduced by the plaintiffs is not sufficient to authorize the conclusion that there was
no consideration for the sales referred to in the complaint. It is true that Victoriano Reyes testified that
he paid nothing to Don Jorge Enriquez, and received nothing from Carmen de la Cavada as consideration
for either of the sales. But against this statement is the testimony of the notary, Don Enrique Barrera y
Caldes, before whom both contracts were executed, and that of the defendants Francisco Enriquez and
Doña Carmen de la Cavada, who expressly affirm the contrary; and more especially the statement is
contrary to the recitals of the deeds themselves, which confirm the statements of the witnesses last
referred to. The deeds clearly and expressly recite the fact of the receipt by the respective purchasers of
the stipulated price or consideration of 7,000 pesos at the time and place of the execution of the deeds.
These instruments having been executed with all the formalities prescribed by the law, they are
admissible as evidence against the contracting parties and their successors with respect to recitals made
therein by the former (Art. 1218, Civil Code.) Their evidentiary force can not be overcome except by
other evidence of greater weight, sufficient to overcome the legal presumption of the regularity of acts
and contracts celebrated with all the legal requisites under the safeguard of a notarial certificate. This
presumption has not been rebutted in the present case, in which the evidence against it, consisting of
the sole testimony of Don Victoriano Reyes, which, moreover, is expressly controverted by that of the
other witnesses at the trial, involves the improbable conclusion that the witness, as well as Jorge
Enriquez, from whom the plaintiffs derived title, the notary public, and the attesting witnesses to both
instruments consented to the commission of the grave crime of falsification of public documents — for
this would be the result were the statements of the said Victoriano Reyes true — without having any
interest in so doing or expecting to derive any benefit from the commission of the crime, the plaintiffs
not having alleged or proven the existence of such an interest on their part. It appears, on the contrary,
from the testimony of Victoriano Reyes himself that he received no compensation for his participation in
the matter.
With respect to Jorge Enriquez, the conclusion, still more improbable if possible, would be that he had
voluntarily and spontaneously taken part in the commission of a grave crime, which not only was not of
the slightest benefit to himself, but the commission of which is supposed to have had for its object the
causing of harm to him. The allegation is that the purpose of the crime was to deprive him, without the
slightest compensation, of his paternal and maternal inheritance, which according to the complaint was
the only possession of himself and his numerous family. This is the most inexplicable and improbable
aspect of the facts alleged in the complaint. It is beyond comprehension, and we can not believe that
Jorge Enriquez, who according to the plaintiffs was absolutely without means of support for himself and
his family, would convey to another his large interest in the estate without receiving any consideration
therefor, and that to do this he would commit the grave crime of falsification. To justify this conclusion it
would be necessary to suppose that Jorge Enriquez was absolutely devoid of intelligence or that he was
the victim or error, violence, intimidation, or fraud. But these are circumstances which counsel for the
plaintiffs have not demonstrated or even sought to demonstrate.
An examination of the evidence leads us to the conclusion that the payment of the consideration of
7,000 pesos expressed in the two deeds in question was actually and really made, and that the
allegation of the plaintiffs that the contracts of sale evidenced by these deeds were made without
consideration is unfounded.
At all events the action of which the plaintiffs might have availed themselves for the purpose of having
those contracts declared void upon the ground, even admitting hypothetically that there was no
consideration, is barred by the statute of limitations, inasmuch as from the date of those contracts down
to the death of Jorge Enriquez, which occurred July 6, 1891, more than five year had passed and more
than fifteen before the filing of the complaint on January 9, 1902, nothing having been done in the
meantime on the part of the plaintiffs or the person under whom they claim to interrupt the running of
the statute. The action of nullity only lasts four years, counted from the date of the consummation of
the contract, when the action is based, as in this case, upon the absence of consideration. (Art. 1301 of
the Civil Code.)
The contract of sale is consummated by the delivery of the purchase money and of the thing sold.
"When the sale is made by public instrument the execution of the instrument is equivalent to the
delivery of the thing which is the object of the contract, unless from the instrument itself the contrary
intention clearly appears." (Art. 1462, par. 2, Civil Code.) And article 1464 provides that "With respect to
incorporeal property [to which class the hereditary right which was the object of the contracts in
question pertains], the provisions of paragraph 2 of article 1462 shall govern." In the deeds of sale
executed by Victoriano Reyes in favor of Doña Carmen de la Cavada we find the following: "In
consequence he (the vendor) by virtue of this title cedes and conveys all rights which he has or may
have to the part of the inheritance which is the object of this sale, to the end that the purchaser, in the
place and stead of the vendor, may exercise all the acts of ownership corresponding to her right, to
which end by means of the delivery of this instrument and of his other title deeds he makes the transfer
necessary to consummate the contract, which upon his part he declares to be perfect and consummated
from this date."
In view of this clause and for the legal provisions above cited, it is evident that the delivery of the things
sold was effected by the mere execution of the deed of sale; and it appearing from the deed itself that
the consideration was delivered to the vendor at the time, and the contrary not having been sufficiently
proven, the conclusion follows that the sale was consummated them and there, and that from that time
the period of four years fixed by law for the prescription of the action of nullity must be counted in this
case.
(b) The thing sold in the two contracts of sale mentioned in the complained was the hereditary right of
Don Jorge Enriquez, which evidently was not in charge of the executor, Don Francisco Enriquez.
Executors, even in those cases in which they administer the property pertaining to the estate, do not
administer the hereditary rights of any heir. This right is vested entirely in the heirs, who retain it or
transmit it in whole or in part, as they may deem convenient, to some other person absolutely
independent of the executor, whose authority, whatever powers the testator may have desired to
confer upon him, do not and can not under any circumstances in the slightest degree limit the power of
the heirs to dispose of the said right at will. That right does not form part of the property delivered to
the executor for administration.
This conclusion having been reached, we are of the opinion that article 1459 of the Civil Code, cited by
the plaintiffs to show the alleged incapacity of Don Francisco Enriquez as executor of the will of Don
Antonio Enriquez, to acquire by purchase the hereditary right of Jorge Enriquez, has no application to
the present case. The prohibition which paragraph 3 of that article imposes upon executors refers to the
property confided to their care, and does not extend, therefore, to property not falling within this class.
Legal provisions of a prohibitive character must be strictly construed, and should not be extended to
cases not expressly comprised within their text.
Consequently, even upon the supposition that the executor, Don Francisco Enriquez, was the person
who really acquired the hereditary rights of Jorge Enriquez, the sale in question would not for that
reason be invalid, the executor, Don Francisco Enriquez, not being legally incapable of acquiring the
hereditary right in question as the plaintiffs erroneously suppose.
This being so, the question as to whether the money paid by Doña Carmen de la Cavada for the
purchase of the said right was her sole and exclusive property, or whether it was the property of her
husband Don Francisco Enriquez, or whether it was the property of the community of goods existing
between them, is absolutely unimportant, for, be the fact as it may, the conclusion must always be that
the incapacity to purchase, alleged as one of the legal grounds upon which the complaint rests, does not
exist.
Enough has been said to show that the action brought by the plaintiffs is devoid of foundation. It is not,
therefore, necessary to decide the other questions raised by the parties at the trial.
The judgment of the court below is reversed and the complaint dismissed, without costs in either
instance. So ordered.
Arellano, C. J., Torres, Cooper, McDonough and Johnson, JJ., concur.
THIRD DIVISION
G.R. No. 179786 July 24, 2013
JOSIELENE LARA CHAN, Petitioner,

vs.
JOHNNY T. CHAN, Respondent.
DECISION
ABAD, J.:
This case is about the propriety of issuing a subpoena duces tecum for the production and
submission in court of the respondent husband's hospital record in a case for declaration of nullity of
marriage where one of the issues is his mental fitness as a husband.
The Facts and the Case
On February 6, 2006 petitioner Josielene Lara Chan (Josielene) filed before the Regional Trial Court
(RTC) of Makati City, Branch 144 a petition for the declaration of nullity of her marriage to
respondent Johnny Chan (Johnny), the dissolution of their conjugal partnership of gains, and the
award of custody of their children to her. Josielene claimed that Johnny failed to care for and support
his family and that a psychiatrist diagnosed him as mentally deficient due to incessant drinking and
excessive use of prohibited drugs. Indeed, she had convinced him to undergo hospital confinement
for detoxification and rehabilitation.
Johnny resisted the action, claiming that it was Josielene who failed in her wifely duties. To save
their marriage, he agreed to marriage counseling but when he and Josielene got to the hospital, two
men forcibly held him by both arms while another gave him an injection. The marriage relations got
worse when the police temporarily detained Josielene for an unrelated crime and released her only
after the case against her ended. By then, their marriage relationship could no longer be repaired.
During the pre-trial conference, Josielene pre-marked the Philhealth Claim Form1 that Johnny
attached to his answer as proof that he was forcibly confined at the rehabilitation unit of a hospital.
The form carried a physician’s handwritten note that Johnny suffered from "methamphetamine and
alcohol abuse." Following up on this point, on August 22, 2006 Josielene filed with the RTC a
request for the issuance of a subpoena duces tecum addressed to Medical City, covering Johnny’s
medical records when he was there confined. The request was accompanied by a motion to "be
allowed to submit in evidence" the records sought by subpoena duces tecum.2
Johnny opposed the motion, arguing that the medical records were covered by physician-patient
privilege. On September 13, 2006 the RTC sustained the opposition and denied Josielene’s motion.
It also denied her motion for reconsideration, prompting her to file a special civil action of certiorari
before the Court of Appeals (CA) in CA-G.R. SP 97913, imputing grave abuse of discretion to the
RTC.
On September 17, 2007 the CA3 denied Josielene’s petition. It ruled that, if courts were to allow the
production of medical records, then patients would be left with no assurance that whatever relevant
disclosures they may have made to their physicians would be kept confidential. The prohibition
covers not only testimonies, but also affidavits, certificates, and pertinent hospital records. The CA
added that, although Johnny can waive the privilege, he did not do so in this case. He attached the
Philhealth form to his answer for the limited purpose of showing his alleged forcible confinement.
Question Presented
The central question presented in this case is:
Whether or not the CA erred in ruling that the trial court correctly denied the issuance of a subpoena
duces tecum covering Johnny’s hospital records on the ground that these are covered by the
privileged character of the physician-patient communication.
The Ruling of the Court
Josielene requested the issuance of a subpoena duces tecum covering the hospital records of
Johnny’s confinement, which records she wanted to present in court as evidence in support of her
action to have their marriage declared a nullity. Respondent Johnny resisted her request for
subpoena, however, invoking the privileged character of those records. He cites Section 24(c), Rule
130 of the Rules of Evidence which reads:
SEC. 24. Disqualification by reason of privileged communication.— The following persons cannot
testify as to matters learned in confidence in the following cases:
xxxx
(c) A person authorized to practice medicine, surgery or obstetrics cannot in a civil case, without the
consent of the patient, be examined as to any advice or treatment given by him or any information
which he may have acquired in attending such patient in a professional capacity, which information
was necessary to enable him to act in that capacity, and which would blacken the reputation of the
patient.
The physician-patient privileged communication rule essentially means that a physician who gets
information while professionally attending a patient cannot in a civil case be examined without the
patient’s consent as to any facts which would blacken the latter’s reputation. This rule is intended to
encourage the patient to open up to the physician, relate to him the history of his ailment, and give
him access to his body, enabling the physician to make a correct diagnosis of that ailment and
provide the appropriate cure. Any fear that a physician could be compelled in the future to come to
court and narrate all that had transpired between him and the patient might prompt the latter to clam
up, thus putting his own health at great risk.4
1. The case presents a procedural issue, given that the time to object to the admission of evidence,
such as the hospital records, would be at the time they are offered. The offer could be made part of
the physician’s testimony or as independent evidence that he had made entries in those records that
concern the patient’s health problems.
Section 36, Rule 132, states that objections to evidence must be made after the offer of such
evidence for admission in court. Thus:
SEC. 36. Objection.— Objection to evidence offered orally must be made immediately after the offer
is made.
Objection to a question propounded in the course of the oral examination of a witness shall be made
as soon as the grounds therefor shall become reasonably apparent.
An offer of evidence in writing shall be objected to within three (3) days after notice of the offer
unless a different period is allowed by the court.
In any case, the grounds for the objections must be specified.
Since the offer of evidence is made at the trial, Josielene’s request for subpoena duces tecum is
premature. She will have to wait for trial to begin before making a request for the issuance of a
subpoena duces tecum covering Johnny’s hospital records. It is when those records are produced
for examination at the trial, that Johnny may opt to object, not just to their admission in evidence, but
more so to their disclosure. Section 24(c), Rule 130 of the Rules of Evidence quoted above is about
non-disclosure of privileged matters.
2. It is of course possible to treat Josielene’s motion for the issuance of a subpoena duces tecum
covering the hospital records as a motion for production of documents, a discovery procedure
available to a litigant prior to trial. Section 1, Rule 27 of the Rules of Civil Procedure provides:
SEC. 1. Motion for production or inspection; order.— Upon motion of any party showing good cause
therefor, the court in which an action is pending may (a) order any party to produce and permit the
inspection and copying or photographing, by or on behalf of the moving party, of any designated
documents, papers, books, accounts, letters, photographs, objects or tangible things, not privileged,
which constitute or contain evidence material to any matter involved in the action and which are in
his possession, custody or control; or (b) order any party to permit entry upon designated land or
other property in his possession or control for the purpose of inspecting, measuring, surveying, or
photographing the property or any designated relevant object or operation thereon. The order shall
specify the time, place and manner of making the inspection and taking copies and photographs,
and may prescribe such terms and conditions as are just. (Emphasis supplied)
But the above right to compel the production of documents has a limitation: the documents to be
disclosed are "not privileged."
Josielene of course claims that the hospital records subject of this case are not privileged since it is
the "testimonial" evidence of the physician that may be regarded as privileged. Section 24(c) of Rule
130 states that the physician "cannot in a civil case, without the consent of the patient, be examined"
regarding their professional conversation. The privilege, says Josielene, does not cover the hospital
records, but only the examination of the physician at the trial.
To allow, however, the disclosure during discovery procedure of the hospital records—the results of
tests that the physician ordered, the diagnosis of the patient’s illness, and the advice or treatment he
gave him—would be to allow access to evidence that is inadmissible without the
patient’s consent. Physician memorializes all these information in the patient’s records. Disclosing
them would be the equivalent of compelling the physician to testify on privileged matters he gained
while dealing with the patient, without the latter’s prior consent.
3. Josielene argues that since Johnny admitted in his answer to the petition before the RTC that he
had been confined in a hospital against his will and in fact attached to his answer a Philhealth claim
form covering that confinement, he should be deemed to have waived the privileged character of its
records. Josielene invokes Section 17, Rule 132 of the Rules of Evidence that provides:
SEC. 17. When part of transaction, writing or record given in evidence, the remainder admissible.—
When part of an act, declaration, conversation, writing or record is given in evidence by one party,
the whole of the same subject may be inquired into by the other, and when a detached act,
declaration, conversation, writing or record is given in evidence, any other act, declaration,
conversation, writing or record necessary to its understanding may also be given in evidence. 1âw phi 1
But, trial in the case had not yet begun. Consequently, it cannot be said that Johnny had already
presented the Philhealth claim form in evidence, the act contemplated above which would justify
Josielene into requesting an inquiry into the details of his hospital confinement. Johnny was not yet
bound to adduce evidence in the case when he filed his answer. Any request for disclosure of his
hospital records would again be premature.
For all of the above reasons, the CA and the RTC were justified in denying Josielene her request for
the production in court of Johnny’s hospital records.
ACCORDINGLY, the Court DENIES the petition and AFFIRMS the Decision of the Court of Appeals
in CA-G.R. SP 97913 dated September 17, 2007.
SO ORDERED.
ROBERTO A. ABAD
Associate Justice
WE CONCUR:
PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson
DIOSDADO M. PERALTA JOSE CATRAL MENDOZA

Associate Justice Associate Justice
See separate concurring opinion

MARVIC MARIO VICTOR F. LEONEN
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court’s Division.
PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I
certify that the conclusions in the above. Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.
MARIA LOURDES P. A. SERENO

Chief Justice
Footnotes
1 Annex "B."
2 Rollo, pp. 69-72.
3Penned by Associate Justice Jose L. Sabio, Jr. and concurred in by Associate Justices
Jose C. Reyes, Jr. and Myrna Dimaranan Vidal.
4Francisco, The Revised Rules of Court of the Philippines, Volume VII, Part I, 1997 ed., p.
282, citing Will of Bruendi, 102 Wis. 47, 78 N.W. 169. and McRae v. Erickson, 1 Cal. App.
326.
Chan vs. Chan Case Digest
Facts:
Petitioner wife filed against respondent husband a petition for the declaration of nullity of marriage,
with the dissolution of their conjugal partnership of gains, and the award of custody of their children to
her, claiming that respondent husband failed to care for and support his family and that a psychiatrist
diagnosed him as mentally deficient due to incessant drinking and excessive use of prohibited drugs.
Respondent husband claims that it was the wife who failed in her duties. And that he initially agreed to
marriage counseling to save their marriage, but upon arriving at the hospital, two men forcibly held him
by both arms while another gave him an injection. He attached a Philhealth Claim Form to his answer as
proof that he was forcibly confined at the rehabilitation unit of a hospital. However, that same form
carried a physician's handwritten note that the husband suffered from methamphetamine and alcohol
abuse.
Based on the physician's handwritten statement, petitioner wife requested for the issuance of a
subpoena duces tecum addressed to Medical City, for the production of the Husband's medical records.
The husband opposed, arguing that the medical records were covered by physician-patient privilege.
The request of the wife was denied by the trial court. CA affirmed.
Issue:
Did the CA erred in ruling that the trial court correctly denied the issuance of a subpoena duces tecum
covering the husband's hospital records on the ground that these are covered by the privileged character
of the physician-patient communication?
Held:
No. The issuance of a subpoena duces tecum is premature. Petitioner wife made the request before trial
started. She will have to wait for trial to begin before making a request for the issuance of a subpoena
duces tecum covering her husband's hospital records. It is when those records are produced for
examination at the trial, that the husband may opt to object, not just to their admission in evidence, but
more so to their disclosure.
It is of course possible to treat Josielene’s motion for the issuance of a subpoena duces tecum covering
the hospital records as a motion for production of documents, a discovery procedure available to a
litigant prior to trial. Section 1, Rule 27 of the Rules of Civil Procedure provides: x x x
But the above right to compel the production of documents has a limitation: the documents to be
disclosed are “not privileged.”
Petitioner wife, of course, claims that the hospital records subject of this case are not privileged since
it is the “testimonial” evidence of the physician that may be regarded as privileged. Section 24(c) of
Rule 130 states that the physician “cannot in a civil case, without the consent of the patient, be
examined” regarding their professional conversation. The privilege, according to her, does not cover
the hospital records, but only the examination of the physician at the trial.
To allow, however, the disclosure during discovery procedure of the hospital records—the results of
tests that the physician ordered, the diagnosis of the patient’s illness, and the advice or treatment he
gave him— would be to allow access to evidence that is inadmissible without the patient’s consent.
Physician memorializes all these information in the patient’s records. Disclosing them would be the
equivalent of compelling the physician to testify on privileged matters he gained while dealing with
the patient, without the latter’s prior consent. (Chan vs. Chan, G.R. No. 179786, July 24, 2013)

SUPREME COURT
Manila
EN BANC
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.
KAPUNAN, J.:
These case touch the very cornerstone of every State's judicial system, upon which the
workings of the contentious and adversarial system in the Philippine legal process are
based — the sanctity of fiduciary duty in the client-lawyer relationship. The fiduciary
duty of a counsel and advocate is also what makes the law profession a unique position
of trust and confidence, which distinguishes it from any other calling. In this instance, we
have no recourse but to uphold and strengthen the mantle of protection accorded to the
confidentiality that proceeds from the performance of the lawyer's duty to his client.
The facts of the case are undisputed.
The matters raised herein are an offshoot of the institution of the Complaint on July 31,
1987 before the Sandiganbayan by the Republic of the Philippines, through the
Presidential Commission on Good Government against Eduardo M. Cojuangco, Jr., as
one of the principal defendants, for the recovery of alleged ill-gotten wealth, which
includes shares of stocks in the named corporations in PCGG Case No. 33 (Civil Case
No. 0033), entitled "Republic of the Philippines versus Eduardo Cojuangco, et al."1
Among the dependants named in the case are herein petitioners Teodoro Regala,
Edgardo J. Angara, Avelino V. Cruz, Jose C. Concepcion, Rogelio A. Vinluan, Victor P.
Lazatin, Eduardo U. Escueta and Paraja G. Hayudini, and herein private respondent
Raul S. Roco, who all were then partners of the law firm Angara, Abello, Concepcion,
Regala and Cruz Law Offices (hereinafter referred to as the ACCRA Law Firm). ACCRA
Law Firm performed legal services for its clients, which included, among others, the
organization and acquisition of business associations and/or organizations, with the
correlative and incidental services where its members acted as incorporators, or simply,
as stockholders. More specifically, in the performance of these services, the members
of the law firm delivered to its client documents which substantiate the client's equity
holdings, i.e., stock certificates endorsed in blank representing the shares registered in
the client's name, and a blank deed of trust or assignment covering said shares. In the
course of their dealings with their clients, the members of the law firm acquire
information relative to the assets of clients as well as their personal and business
circumstances. As members of the ACCRA Law Firm, petitioners and private
respondent Raul Roco admit that they assisted in the organization and acquisition of the
companies included in Civil Case No. 0033, and in keeping with the office practice,
ACCRA lawyers acted as nominees-stockholders of the said corporations involved in
sequestration proceedings.2
On August 20, 1991, respondent Presidential Commission on Good Government

(hereinafter referred to as respondent PCGG) filed a "Motion to Admit Third Amended
Complaint" and "Third Amended Complaint" which excluded private respondent Raul S.
Roco from the complaint in PCGG Case No. 33 as party-defendant.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 codefendants
are charged, was in furtherance of legitimate lawyering.
4.4.1 In the course of rendering professional and legal services to clients, defendants-
ACCRA lawyers, Jose C. Concepcion, Teodoro D. Regala, Rogelio A. Vinluan and
Eduardo U. Escueta, became holders of shares of stock in the corporations listed under
their respective names in Annex "A" of the expanded Amended Complaint as
incorporating or acquiring stockholders only and, as such, they do not claim any
proprietary interest in the said shares of stock.
4.5 Defendant ACCRA-lawyer Avelino V. Cruz was one of the incorporators in 1976 of
Mermaid Marketing Corporation, which was organized for legitimate business purposes
not related to the allegations of the expanded Amended Complaint. However, he has
long ago transferred any material interest therein and therefore denies that the "shares"
appearing in his name in Annex "A" of the expanded Amended Complaint are his
assets.6
Petitioner Paraja Hayudini, who had separated from ACCRA law firm, filed a separate
answer denying the allegations in the complaint implicating him in the alleged ill-gotten
wealth.7
Petitioners ACCRA lawyers subsequently filed their "COMMENT AND/OR
OPPOSITION" dated October 8, 1991 with Counter-Motion that respondent PCGG
similarly grant the same treatment to them (exclusion as parties-defendants) as
accorded private respondent Roco.8 The Counter-Motion for dropping petitioners from
the complaint was duly set for hearing on October 18, 1991 in accordance with the
requirements of Rule 15 of the Rules of Court.
In its "Comment," respondent PCGG set the following conditions precedent for the
exclusion of petitioners, namely: (a) the disclosure of the identity of its clients; (b)
submission of documents substantiating the lawyer-client relationship; and (c) the
submission of the deeds of assignments petitioners executed in favor of its client
covering their respective
shareholdings.9
Consequently, respondent PCGG presented supposed proof to substantiate compliance

by private respondent Roco of the conditions precedent to warrant the latter's exclusion
as party-defendant in PCGG Case No. 33, to wit: (a) Letter to respondent PCGG of the
counsel of respondent Roco dated May 24, 1989 reiterating a previous request for
reinvestigation by the PCGG in PCGG Case No. 33; (b) Affidavit dated March 8, 1989
executed by private respondent Roco as Attachment to the letter aforestated in (a); and
(c) Letter of the Roco, Bunag, and Kapunan Law Offices dated September 21, 1988 to
the respondent PCGG in behalf of private respondent Roco originally requesting the
reinvestigation and/or re-examination of the evidence of the PCGG against Roco in its
Complaint in PCGG Case No. 33. 10
It is noteworthy that during said proceedings, private respondent Roco did not refute
petitioners' contention that he did actually not reveal the identity of the client involved in
PCGG Case No. 33, nor had he undertaken to reveal the identity of the client for whom
he acted as nominee-stockholder. 11
On March 18, 1992, respondent Sandiganbayan promulgated the Resolution, herein

questioned, denying the exclusion of petitioners in PCGG Case No. 33, for their refusal
to comply with the conditions required by respondent PCGG. It held:
xxx xxx xxx

ACCRA lawyers may take the heroic stance of not revealing the identity of the client for
whom they have acted, i.e. their principal, and that will be their choice. But until they do
identify their clients, considerations of whether or not the privilege claimed by the
ACCRA lawyers exists cannot even begin to be debated. The ACCRA lawyers cannot
excuse themselves from the consequences of their acts until they have begun to
establish the basis for recognizing the privilege; the existence and identity of the client.
This is what appears to be the cause for which they have been impleaded by the PCGG
as defendants herein.
5. The PCGG is satisfied that defendant Roco has demonstrated his agency and that
Roco has apparently identified his principal, which revelation could show the lack of
cause against him. This in turn has allowed the PCGG to exercise its power both under
the rules of Agency and under Section 5 of E.O. No. 14-A in relation to the Supreme
Court's ruling in Republic v. Sandiganbayan (173 SCRA 72).
The PCGG has apparently offered to the ACCRA lawyers the same conditions availed
of by Roco; full disclosure in exchange for exclusion from these proceedings (par. 7,
PCGG's COMMENT dated November 4, 1991). The ACCRA lawyers have preferred not
to make the disclosures required by the PCGG.
The ACCRA lawyers cannot, therefore, begrudge the PCGG for keeping them as party
defendants. In the same vein, they cannot compel the PCGG to be accorded the same
treatment accorded to Roco.
Neither can this Court.
WHEREFORE, the Counter Motion dated October 8, 1991 filed by the ACCRA lawyers
and joined in by Atty. Paraja G. Hayudini for the same treatment by the PCGG as
accorded to Raul S. Roco is DENIED for lack of merit. 12
ACCRA lawyers moved for a reconsideration of the above resolution but the same was
denied by the respondent Sandiganbayan. Hence, the ACCRA lawyers filed the petition
for certiorari, docketed as G.R. No. 105938, invoking the following grounds:
I
The Honorable Sandiganbayan gravely abused its discretion in subjecting petitioners

ACCRA lawyers who undisputably acted as lawyers in serving as nominee-
stockholders, to the strict application of the law of agency.
II
The Honorable Sandiganbayan committed grave abuse of discretion in not considering

petitioners ACCRA lawyers and Mr. Roco as similarly situated and, therefore, deserving
of equal treatment.
1. There is absolutely no evidence that Mr. Roco had revealed, or had undertaken to
reveal, the identities of the client(s) for whom he acted as nominee-stockholder.
2. Even assuming that Mr. Roco had revealed, or had undertaken to reveal, the
identities of the client(s), the disclosure does not constitute a substantial distinction as
would make the classification reasonable under the equal protection clause.
3. Respondent Sandiganbayan sanctioned favoritism and undue preference in favor of

Mr. Roco in violation of the equal protection clause.
III
The Honorable Sandiganbayan committed grave abuse of discretion in not holding that,
under the facts of this case, the attorney-client privilege prohibits petitioners ACCRA
lawyers from revealing the identity of their client(s) and the other information requested
by the PCGG.
1. Under the peculiar facts of this case, the attorney-client privilege includes the identity
of the client(s).
2. The factual disclosures required by the PCGG are not limited to the identity of
petitioners ACCRA lawyers' alleged client(s) but extend to other privileged matters.
IV
The Honorable Sandiganbayan committed grave abuse of discretion in not requiring

that the dropping of party-defendants by the PCGG must be based on reasonable and
just grounds and with due consideration to the constitutional right of petitioners ACCRA
lawyers to the equal protection of the law.
Petitioner Paraja G. Hayudini, likewise, filed his own motion for reconsideration of the
March 18, 1991 resolution which was denied by respondent Sandiganbayan. Thus, he
filed a separate petition for certiorari, docketed as G.R. No. 108113, assailing
respondent Sandiganbayan's resolution on essentially the same grounds averred by
petitioners in G.R. No. 105938.
Petitioners contend that the exclusion of respondent Roco as party-defendant in PCGG

Case No. 33 grants him a favorable treatment, on the pretext of his alleged undertaking
to divulge the identity of his client, giving him an advantage over them who are in the
same footing as partners in the ACCRA law firm. Petitioners further argue that even
granting that such an undertaking has been assumed by private respondent Roco, they
are prohibited from revealing the identity of their principal under their sworn mandate
and fiduciary duty as lawyers to uphold at all times the confidentiality of information
obtained during such lawyer-client relationship.
Respondent PCGG, through its counsel, refutes petitioners' contention, alleging that the
revelation of the identity of the client is not within the ambit of the lawyer-client
confidentiality privilege, nor are the documents it required (deeds of assignment)
protected, because they are evidence of nominee status. 13
In his comment, respondent Roco asseverates that respondent PCGG acted correctly in
excluding him as party-defendant because he "(Roco) has not filed an Answer. PCGG
had therefore the right to dismiss Civil Case No. 0033 as to Roco 'without an order of
court by filing a notice of dismissal'," 14 and he has undertaken to identify his principal.
15
Petitioners' contentions are impressed with merit.
It is quite apparent that petitioners were impleaded by the PCGG as co-defendants to

force them to disclose the identity of their clients. Clearly, respondent PCGG is not after
petitioners but the "bigger fish" as they say in street parlance. This ploy is quite clear
from the PCGG's willingness to cut a deal with petitioners — the names of their clients
in exchange for exclusion from the complaint. The statement of the Sandiganbayan in
its questioned resolution dated March 18, 1992 is explicit:
whom they have acted, i.e, their principal, and that will be their choice. But until they do
ACCRA lawyers exists cannot even begin to be debated. The ACCRA lawyers cannot
as defendants herein. (Emphasis ours)
In a closely related case, Civil Case No. 0110 of the Sandiganbayan, Third Division,
entitled "Primavera Farms, Inc., et al. vs. Presidential Commission on Good
Government" respondent PCGG, through counsel Mario Ongkiko, manifested at the
hearing on December 5, 1991 that the PCGG wanted to establish through the ACCRA
that their "so called client is Mr. Eduardo Cojuangco;" that "it was Mr. Eduardo
Cojuangco who furnished all the monies to those subscription payments in corporations
included in Annex "A" of the Third Amended Complaint; that the ACCRA lawyers
executed deeds of trust and deeds of assignment, some in the name of particular
persons; some in blank.
We quote Atty. Ongkiko:
ATTY. ONGKIKO:
With the permission of this Hon. Court. I propose to establish through these ACCRA
lawyers that, one, their so-called client is Mr. Eduardo Cojuangco. Second, it was Mr.
Eduardo Cojuangco who furnished all the monies to these subscription payments of
these corporations who are now the petitioners in this case. Third, that these lawyers
executed deeds of trust, some in the name of a particular person, some in blank. Now,
these blank deeds are important to our claim that some of the shares are actually being
held by the nominees for the late President Marcos. Fourth, they also executed deeds
of assignment and some of these assignments have also blank assignees. Again, this is
important to our claim that some of the shares are for Mr. Conjuangco and some are for
Mr. Marcos. Fifth, that most of thes e corporations are really just paper corporations.
Why do we say that? One: There are no really fixed sets of officers, no fixed sets of
directors at the time of incorporation and even up to 1986, which is the crucial year. And
not only that, they have no permits from the municipal authorities in Makati. Next,
actually all their addresses now are care of Villareal Law Office. They really have no
address on records. These are some of the principal things that we would ask of these
nominees stockholders, as they called themselves. 16
It would seem that petitioners are merely standing in for their clients as defendants in
the complaint. Petitioners are being prosecuted solely on the basis of activities and
services performed in the course of their duties as lawyers. Quite obviously, petitioners'
inclusion as co-defendants in the complaint is merely being used as leverage to compel
them to name their clients and consequently to enable the PCGG to nail these clients.
Such being the case, respondent PCGG has no valid cause of action as against
petitioners and should exclude them from the Third Amended Complaint.
II
The nature of lawyer-client relationship is premised on the Roman Law concepts of

locatio conductio operarum (contract of lease of services) where one person lets his
services and another hires them without reference to the object of which the services
are to be performed, wherein lawyers' services may be compensated by honorarium or
for hire, 17 and mandato (contract of agency) wherein a friend on whom reliance could
be placed makes a contract in his name, but gives up all that he gained by the contract
to the person who requested him. 18 But the lawyer-client relationship is more than that
of the principal-agent and lessor-lessee.
In modern day perception of the lawyer-client relationship, an attorney is more than a
mere agent or servant, because he possesses special powers of trust and confidence
reposed on him by his client. 19 A lawyer is also as independent as the judge of the
court, thus his powers are entirely different from and superior to those of an ordinary
agent.20 Moreover, an attorney also occupies what may be considered as a "quasi-
judicial office" since he is in fact an officer of the Court 21 and exercises his judgment in
the choice of courses of action to be taken favorable to his client.
Thus, in the creation of lawyer-client relationship, there are rules, ethical conduct and
duties that breathe life into it, among those, the fiduciary duty to his client which is of a
very delicate, exacting and confidential character, requiring a very high degree of fidelity
and good faith, 22 that is required by reason of necessity and public interest 23 based
on the hypothesis that abstinence from seeking legal advice in a good cause is an evil
which is fatal to the administration of justice. 24
It is also the strict sense of fidelity of a lawyer to his client that distinguishes him from
any other professional in society. This conception is entrenched and embodies
centuries of established and stable tradition. 25 In Stockton v. Ford,26 the U. S.
Supreme Court held:
There are few of the business relations of life involving a higher trust and confidence
than that of attorney and client, or generally speaking, one more honorably and faithfully
discharged; few more anxiously guarded 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 xxx xxx
An attorney cannot, without the consent of his client, be examined as to any

communication made by the client to him, or his advice given thereon in the course of,
or with a view to, professional employment, can an attorney's secretary, stenographer,
or clerk be examined, without the consent of the client and his employer, concerning
any fact the knowledge of which has been acquired in such capacity. 29
Further, Rule 138 of the Rules of Court states:
Sec. 20. It is the duty of an attorney: (e) to maintain inviolate the confidence, and at
every peril to himself, to preserve the secrets of his client, and to accept no
compensation in connection with his client's business except from him or with his
knowledge and approval.
This duty is explicitly mandated in Canon 17 of the Code of Professional Responsibility

which provides that:
Canon 17. A lawyer owes fidelity to the cause of his client and he shall be mindful of the
trust and confidence reposed in him.
Canon 15 of the Canons of Professional Ethics also demands a lawyer's fidelity to

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

several constitutional and policy concerns. In the constitutional sphere, the privilege
gives flesh to one of the most sacrosanct rights available to the accused, the right to
counsel. If a client were made to choose between legal representation without effective
communication and disclosure and legal representation with all his secrets revealed
then he might be compelled, in some instances, to either opt to stay away from the
judicial system or to lose the right to counsel. If the price of disclosure is too high, or if it
amounts to self incrimination, then the flow of information would be curtailed thereby
rendering the right practically nugatory. The threat this represents against another
sacrosanct individual right, the right to be presumed innocent is at once self-evident.
Encouraging full disclosure to a lawyer by one seeking legal services opens the door to
a whole spectrum of legal options which would otherwise be circumscribed by limited
information engendered by a fear of disclosure. An effective lawyer-client relationship is
largely dependent upon the degree of confidence which exists between lawyer and
client which in turn requires a situation which encourages a dynamic and fruitful
exchange and flow of information. It necessarily follows that in order to attain effective
representation, the lawyer must invoke the privilege not as a matter of option but as a
matter of duty and professional responsibility.
The question now arises whether or not this duty may be asserted in refusing to
disclose the name of petitioners' client(s) in the case at bar. Under the facts and
circumstances obtaining in the instant case, the answer must be in the affirmative.
As a matter of public policy, a client's identity should not be shrouded in mystery 30

Under this premise, the general rule in our jurisdiction as well as in the United States is
that a lawyer may not invoke the privilege and refuse to divulge the name or identity of
this client. 31
The reasons advanced for the general rule are well established.
First, the court has a right to know that the client whose privileged information is sought
to be protected is flesh and blood.
Second, the privilege begins to exist only after the attorney-client relationship has been
established. The attorney-client privilege does not attach until there is a client.
Third, the privilege generally pertains to the subject matter of the relationship.
Finally, due process considerations require that the opposing party should, as a general
rule, know his adversary. "A party suing or sued is entitled to know who his opponent
is." 32 He cannot be obliged to grope in the dark against unknown forces. 33
Notwithstanding these considerations, the general rule is however qualified by some

important exceptions.
1) Client identity is privileged where a strong probability exists that revealing the client's
name would implicate that client in the very activity for which he sought the lawyer's
advice.
In Ex-Parte Enzor, 34 a state supreme court reversed a lower court order requiring a
lawyer to divulge the name of her client on the ground that the subject matter of the
relationship was so closely related to the issue of the client's identity that the privilege
actually attached to both. In Enzor, the unidentified client, an election official, informed
his attorney in confidence that he had been offered a bribe to violate election laws or
that he had accepted a bribe to that end. In her testimony, the attorney revealed that
she had advised her client to count the votes correctly, but averred that she could not
remember whether her client had been, in fact, bribed. The lawyer was cited for
contempt for her refusal to reveal his client's identity before a grand jury. Reversing the
lower court's contempt orders, the state supreme court held that under the
circumstances of the case, and under the exceptions described above, even the name
of the client was privileged.
U .S. v. Hodge and Zweig,35 involved the same exception, i.e. that client identity is
privileged in those instances where a strong probability exists that the disclosure of the
client's identity would implicate the client in the very criminal activity for which the
lawyer's legal advice was obtained.
The Hodge case involved federal grand jury proceedings inquiring into the activities of
the "Sandino Gang," a gang involved in the illegal importation of drugs in the United
States. The respondents, law partners, represented key witnesses and suspects
including the leader of the gang, Joe Sandino.
In connection with a tax investigation in November of 1973, the IRS issued summons to
Hodge and Zweig, requiring them to produce documents and information regarding
payment received by Sandino on behalf of any other person, and vice versa. The
lawyers refused to divulge the names. The Ninth Circuit of the United States Court of
Appeals, upholding non-disclosure under the facts and circumstances of the case, held:
A client's identity and the nature of that client's fee arrangements may be privileged
where the person invoking the privilege can show that a strong probability exists that
disclosure of such information would implicate that client in the very criminal activity for
which legal advice was sought Baird v. Koerner, 279 F. 2d at 680. While in Baird Owe
enunciated this rule as a matter of California law, the rule also reflects federal law.
Appellants contend that the Baird exception applies to this case.
The Baird exception is entirely consonant with the principal policy behind the attorney-
client privilege. "In order to promote freedom of consultation of legal advisors by clients,
the apprehension of compelled disclosure from the legal advisors must be removed;
hence, the law must prohibit such disclosure except on the client's consent." 8 J.
Wigmore, supra sec. 2291, at 545. In furtherance of this policy, the client's identity and
the nature of his fee arrangements are, in exceptional cases, protected as confidential
communications. 36
2) Where disclosure would open the client to civil liability; his identity is privileged. For
instance, the peculiar facts and circumstances of Neugass v. Terminal Cab
Corporation,37 prompted the New York Supreme Court to allow a lawyer's claim to the
effect that he could not reveal the name of his client because this would expose the
latter to civil litigation.
In the said case, Neugass, the plaintiff, suffered injury when the taxicab she was riding,
owned by respondent corporation, collided with a second taxicab, whose owner was
unknown. Plaintiff brought action both against defendant corporation and the owner of
the second cab, identified in the information only as John Doe. It turned out that when
the attorney of defendant corporation appeared on preliminary examination, the fact
was somehow revealed that the lawyer came to know the name of the owner of the
second cab when a man, a client of the insurance company, prior to the institution of
legal action, came to him and reported that he was involved in a car accident. It was
apparent under the circumstances that the man was the owner of the second cab. The
state supreme court held that the reports were clearly made to the lawyer in his
professional capacity. The court said:
That his employment came about through the fact that the insurance company had
hired him to defend its policyholders seems immaterial. The attorney is such cases is
clearly the attorney for the policyholder when the policyholder goes to him to report an
occurrence contemplating that it would be used in an action or claim against him. 38
xxx xxx xxx
All communications made by a client to his counsel, for the purpose of professional
advice or assistance, are privileged, whether they relate to a suit pending or
contemplated, or to any other matter proper for such advice or aid; . . . And whenever
the communication made, relates to a matter so connected with the employment as
attorney or counsel as to afford presumption that it was the ground of the address by
the client, then it is privileged from disclosure. . .
It appears . . . that the name and address of the owner of the second cab came to the
attorney in this case as a confidential communication. His client is not seeking to use
the courts, and his address cannot be disclosed on that theory, nor is the present action
pending against him as service of the summons on him has not been effected. The
objections on which the court reserved decision are sustained. 39
In the case of Matter of Shawmut Mining Company,40 the lawyer involved was required
by a lower court to disclose whether he represented certain clients in a certain
transaction. The purpose of the court's request was to determine whether the unnamed
persons as interested parties were connected with the purchase of properties involved
in the action. The lawyer refused and brought the question to the State Supreme Court.
Upholding the lawyer's refusal to divulge the names of his clients the court held:
If it can compel the witness to state, as directed by the order appealed from, that he
represented certain persons in the purchase or sale of these mines, it has made
progress in establishing by such evidence their version of the litigation. As already
suggested, such testimony by the witness would compel him to disclose not only that he
was attorney for certain people, but that, as the result of communications made to him
in the course of such employment as such attorney, he knew that they were interested
in certain transactions. We feel sure that under such conditions no case has ever gone
to the length of compelling an attorney, at the instance of a hostile litigant, to disclose
not only his retainer, but the nature of the transactions to which it related, when such
information could be made the basis of a suit against his client. 41
3) Where the government's lawyers have no case against an attorney's client unless, by
revealing the client's name, the said name would furnish the only link that would form
the chain of testimony necessary to convict an individual of a crime, the client's name is
privileged.
In Baird vs. Korner,42 a lawyer was consulted by the accountants and the lawyer of
certain undisclosed taxpayers regarding steps to be taken to place the undisclosed
taxpayers in a favorable position in case criminal charges were brought against them by
the U.S. Internal Revenue Service (IRS).
It appeared that the taxpayers' returns of previous years were probably incorrect and
the taxes understated. The clients themselves were unsure about whether or not they
violated tax laws and sought advice from Baird on the hypothetical possibility that they
had. No investigation was then being undertaken by the IRS of the taxpayers.
Subsequently, the attorney of the taxpayers delivered to Baird the sum of $12, 706.85,
which had been previously assessed as the tax due, and another amount of money
representing his fee for the advice given. Baird then sent a check for $12,706.85 to the
IRS in Baltimore, Maryland, with a note explaining the payment, but without naming his
clients. The IRS demanded that Baird identify the lawyers, accountants, and other
clients involved. Baird refused on the ground that he did not know their names, and
declined to name the attorney and accountants because this constituted privileged
communication. A petition was filed for the enforcement of the IRS summons. For
Baird's repeated refusal to name his clients he was found guilty of civil contempt. The
Ninth Circuit Court of Appeals held that, a lawyer could not be forced to reveal the
names of clients who employed him to pay sums of money to the government
voluntarily in settlement of undetermined income taxes, unsued on, and with no
government audit or investigation into that client's income tax liability pending. The court
emphasized the exception that a client's name is privileged when so much has been
revealed concerning the legal services rendered that the disclosure of the client's
identity exposes him to possible investigation and sanction by government agencies.
The Court held:
The facts of the instant case bring it squarely within that exception to the general rule.
Here money was received by the government, paid by persons who thereby admitted
they had not paid a sufficient amount in income taxes some one or more years in the
past. The names of the clients are useful to the government for but one purpose — to
ascertain which taxpayers think they were delinquent, so that it may check the records
for that one year or several years. The voluntary nature of the payment indicates a
belief by the taxpayers that more taxes or interest or penalties are due than the sum
previously paid, if any. It indicates a feeling of guilt for nonpayment of taxes, though
whether it is criminal guilt is undisclosed. But it may well be the link that could form the
chain of testimony necessary to convict an individual of a federal crime. Certainly the
payment and the feeling of guilt are the reasons the attorney here involved was
employed — to advise his clients what, under the circumstances, should be done. 43
Apart from these principal exceptions, there exist other situations which could qualify as
exceptions to the general rule.
For example, the content of any client communication to a lawyer lies within the
privilege if it is relevant to the subject matter of the legal problem on which the client
seeks legal assistance. 44 Moreover, where the nature of the attorney-client relationship
has been previously disclosed and it is the identity which is intended to be confidential,
the identity of the client has been held to be privileged, since such revelation would
otherwise result in disclosure of the entire transaction. 45
Summarizing these exceptions, information relating to the identity of a client may fall
within the ambit of the privilege when the client's name itself has an independent
significance, such that disclosure would then reveal client confidences. 46
The circumstances involving the engagement of lawyers in the case at bench, therefore,
clearly reveal that the instant case falls under at least two exceptions to the general
rule. First, disclosure of the alleged client's name would lead to establish said client's
connection with the very fact in issue of the case, which is privileged information,
because the privilege, as stated earlier, protects the subject matter or the substance
(without which there would be not attorney-client relationship).
The link between the alleged criminal offense and the legal advice or legal service
sought was duly establishes in the case at bar, by no less than the PCGG itself. The
key lies in the three specific conditions laid down by the PCGG which constitutes
petitioners' ticket to non-prosecution should they accede thereto:
(a) the disclosure of the identity of its clients;
(b) submission of documents substantiating the lawyer-client relationship; and
(c) the submission of the deeds of assignment petitioners executed in favor of their
clients covering their respective shareholdings.
From these conditions, particularly the third, we can readily deduce that the clients
indeed consulted the petitioners, in their capacity as lawyers, regarding the financial and
corporate structure, framework and set-up of the corporations in question. In turn,
petitioners gave their professional advice in the form of, among others, the
aforementioned deeds of assignment covering their client's shareholdings.
There is no question that the preparation of the aforestated documents was part and
parcel of petitioners' legal service to their clients. More important, it constituted an
integral part of their duties as lawyers. Petitioners, therefore, have a legitimate fear that
identifying their clients would implicate them in the very activity for which legal advice
had been sought, i.e., the alleged accumulation of ill-gotten wealth in the
aforementioned corporations.
Furthermore, under the third main exception, revelation of the client's name would
obviously provide the necessary link for the prosecution to build its case, where none
otherwise exists. It is the link, in the words of Baird, "that would inevitably form the chain
of testimony necessary to convict the (client) of a . . . crime." 47
An important distinction must be made between a case where a client takes on the
services of an attorney for illicit purposes, seeking advice about how to go around the
law for the purpose of committing illegal activities and a case where a client thinks he
might have previously committed something illegal and consults his attorney about it.
The first case clearly does not fall within the privilege because the same cannot be
invoked for purposes illegal. The second case falls within the exception because
whether or not the act for which the client sought advice turns out to be illegal, his name
cannot be used or disclosed if the disclosure leads to evidence, not yet in the hands of
the prosecution, which might lead to possible action against him.
These cases may be readily distinguished, because the privilege cannot be invoked or
used as a shield for an illegal act, as in the first example; while the prosecution may not
have a case against the client in the second example and cannot use the attorney client
relationship to build up a case against the latter. The reason for the first rule is that it is
not within the professional character of a lawyer to give advice on the commission of a
crime. 48 The reason for the second has been stated in the cases above discussed and
are founded on the same policy grounds for which the attorney-client privilege, in
general, exists.
In Matter of Shawmut Mining Co., supra, the appellate court therein stated that "under
such conditions no case has ever yet gone to the length of compelling an attorney, at
the instance of a hostile litigant, to disclose not only his retainer, but the nature of the
transactions to which it related, when such information could be made the basis of a suit
against his client." 49 "Communications made to an attorney in the course of any
personal employment, relating to the subject thereof, and which may be supposed to be
drawn out in consequence of the relation in which the parties stand to each other, are
under the seal of confidence and entitled to protection as privileged communications."50
Where the communicated information, which clearly falls within the privilege, would
suggest possible criminal activity but there would be not much in the information known
to the prosecution which would sustain a charge except that revealing the name of the
client would open up other privileged information which would substantiate the
prosecution's suspicions, then the client's identity is so inextricably linked to the subject
matter itself that it falls within the protection. The Baird exception, applicable to the
instant case, is consonant with the principal policy behind the privilege, i.e., that for the
purpose of promoting freedom of consultation of legal advisors by clients, apprehension
of compelled disclosure from attorneys must be eliminated. This exception has likewise
been sustained in In re Grand Jury Proceedings51 and Tillotson v. Boughner.52 What
these cases unanimously seek to avoid is the exploitation of the general rule in what
may amount to a fishing expedition by the prosecution.
There are, after all, alternative source of information available to the prosecutor which
do not depend on utilizing a defendant's counsel as a convenient and readily available
source of information in the building of a case against the latter. Compelling disclosure
of the client's name in circumstances such as the one which exists in the case at bench
amounts to sanctioning fishing expeditions by lazy prosecutors and litigants which we
cannot and will not countenance. When the nature of the transaction would be revealed
by disclosure of an attorney's retainer, such retainer is obviously protected by the
privilege. 53 It follows that petitioner attorneys in the instant case owe their client(s) a
duty and an obligation not to disclose the latter's identity which in turn requires them to
invoke the privilege.
In fine, the crux of petitioners' objections ultimately hinges on their expectation that if the
prosecution has a case against their clients, the latter's case should be built upon
evidence painstakingly gathered by them from their own sources and not from
compelled testimony requiring them to reveal the name of their clients, information
which unavoidably reveals much about the nature of the transaction which may or may
not be illegal. The logical nexus between name and nature of transaction is so intimate
in this case the it would be difficult to simply dissociate one from the other. In this sense,
the name is as much "communication" as information revealed directly about the
transaction in question itself, a communication which is clearly and distinctly privileged.
A lawyer cannot reveal such communication without exposing himself to charges of
violating a principle which forms the bulwark of the entire attorney-client relationship.
The uberrimei fidei relationship between a lawyer and his client therefore imposes a
strict liability for negligence on the former. The ethical duties owing to the client,
including confidentiality, loyalty, competence, diligence as well as the responsibility to
keep clients informed and protect their rights to make decisions have been zealously
sustained. In Milbank, Tweed, Hadley and McCloy v. Boon,54 the US Second District
Court rejected the plea of the petitioner law firm that it breached its fiduciary duty to its
client by helping the latter's former agent in closing a deal for the agent's benefit only
after its client hesitated in proceeding with the transaction, thus causing no harm to its
client. The Court instead ruled that breaches of a fiduciary relationship in any context
comprise a special breed of cases that often loosen normally stringent requirements of
causation and damages, and found in favor of the client.
To the same effect is the ruling in Searcy, Denney, Scarola, Barnhart, and Shipley P.A.
v. Scheller55 requiring strict obligation of lawyers vis-a-vis clients. In this case, a
contingent fee lawyer was fired shortly before the end of completion of his work, and
sought payment quantum meruit of work done. The court, however, found that the
lawyer was fired for cause after he sought to pressure his client into signing a new fee
agreement while settlement negotiations were at a critical stage. While the client found
a new lawyer during the interregnum, events forced the client to settle for less than what
was originally offered. Reiterating the principle of fiduciary duty of lawyers to clients in
Meinhard v. Salmon56 famously attributed to Justice Benjamin Cardozo that "Not
honesty alone, but the 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 by lawyers vis-a-vis their clients because the
law, which the lawyers are sworn to uphold, in the words of Oliver Wendell Holmes, 58
". . . is an exacting goddess, demanding of her votaries in intellectual and moral
discipline." The Court, no less, is not prepared to accept respondents' position without
denigrating the noble profession that is lawyering, so extolled by Justice Holmes in this
wise:
Every calling is great when greatly pursued. But what other gives such scope to realize
the spontaneous energy of one's soul? In what other does one plunge so deep in the
stream of life — so share its passions its battles, its despair, its triumphs, both as
witness and actor? . . . But that is not all. What a subject is this in which we are united
— this abstraction called the Law, wherein as in a magic mirror, we see reflected, not
only in our lives, but the lives of all men that have been. When I think on this majestic
theme my eyes dazzle. If we are to speak of the law as our mistress, we who are here
know that she is a mistress only to be won with sustained and lonely passion — only to
be won by straining all the faculties by which man is likened to God.
We have no choice but to uphold petitioners' right not to reveal the identity of their
clients under pain of the breach of fiduciary duty owing to their clients, because the facts
of the instant case clearly fall within recognized exceptions to the rule that the client's
name is not privileged information.
If we were to sustain respondent PCGG that the lawyer-client confidential privilege

under the circumstances obtaining here does not cover the identity of the client, then it
would expose the lawyers themselves to possible litigation by their clients in view of the
strict fiduciary responsibility imposed on them in the exercise of their duties.
The complaint in Civil Case No. 0033 alleged that the defendants therein, including
herein petitioners and Eduardo Cojuangco, Jr. conspired with each other in setting up
through the use of coconut levy funds the financial and corporate framework and
structures that led to the establishment of UCPB, UNICOM and others and that through
insidious means and machinations, ACCRA, using its wholly-owned investment arm,
ACCRA Investment Corporation, became the holder of approximately fifteen million
shares representing roughly 3.3% of the total capital stock of UCPB as of 31 March
1987. The PCGG wanted to establish through the ACCRA lawyers that Mr. Cojuangco
is their client and it was Cojuangco who furnished all the monies to the subscription
payment; hence, petitioners acted as dummies, nominees and/or agents by allowing
themselves, among others, to be used as instrument in accumulating ill-gotten wealth
through government concessions, etc., which acts constitute gross abuse of official
position and authority, flagrant breach of public trust, unjust enrichment, violation of the
Constitution and laws of the Republic of the Philippines.
By compelling petitioners, not only to reveal the identity of their clients, but worse, to
submit to the PCGG documents substantiating the client-lawyer relationship, as well as
deeds of assignment petitioners executed in favor of its clients covering their respective
shareholdings, the PCGG would exact from petitioners a link "that would inevitably form
the chain of testimony necessary to convict the (client) of a crime."
III
In response to petitioners' last assignment of error, respondents alleged that the private
respondent was dropped as party defendant not only because of his admission that he
acted merely as a nominee but also because of his undertaking to testify to such facts
and circumstances "as the interest of truth may require, which includes . . . the identity
of the principal."59
First, as to the bare statement that private respondent merely acted as a lawyer and
nominee, a statement made in his out-of-court settlement with the PCGG, it is sufficient
to state that petitioners have likewise made the same claim not merely out-of-court but
also in the Answer to plaintiff's Expanded Amended Complaint, signed by counsel,
claiming that their acts were made in furtherance of "legitimate lawyering."60 Being
"similarly situated" in this regard, public respondents must show that there exist other
conditions and circumstances which would warrant their treating the private respondent
differently from petitioners in the case at bench in order to evade a violation of the equal
protection clause of the Constitution.
To this end, public respondents contend that the primary consideration behind their
decision to sustain the PCGG's dropping of private respondent as a defendant was his
promise to disclose the identities of the clients in question. However, respondents failed
to show — and absolute nothing exists in the records of the case at bar — that private
respondent actually revealed the identity of his client(s) to the PCGG. Since the
undertaking happens to be the leitmotif of the entire arrangement between Mr. Roco
and the PCGG, an undertaking which is so material as to have justified PCGG's special
treatment exempting the private respondent from prosecution, respondent
Sandiganbayan should have required proof of the undertaking more substantial than a
"bare assertion" that private respondent did indeed comply with the undertaking.
Instead, as manifested by the PCGG, only three documents were submitted for the
purpose, two of which were mere requests for re-investigation and one simply disclosed
certain clients which petitioners (ACCRA lawyers) were themselves willing to reveal.
These were clients to whom both petitioners and private respondent rendered legal
services while all of them were partners at ACCRA, and were not the clients which the
PCGG wanted disclosed for the alleged questioned transactions.61
To justify the dropping of the private respondent from the case or the filing of the suit in
the respondent court without him, therefore, the PCGG should conclusively show that
Mr. Roco was treated as species apart from the rest of the ACCRA lawyers on the basis
of a classification which made substantial distinctions based on real differences. No
such substantial distinctions exist from the records of the case at bench, in violation of
the equal protection clause.
The equal protection clause is a guarantee which provides a wall of protection against
uneven application of status and regulations. In the broader sense, the guarantee
operates against uneven application of legal norms so
that all persons under similar circumstances would be accorded the same treatment. 62
Those who fall within a particular class ought to be treated alike not only as to privileges
granted but also as to the liabilities imposed.
. . . What is required under this constitutional guarantee is the uniform operation of legal
norms so that all persons under similar circumstances would be accorded the same
treatment both in the privileges conferred and the liabilities imposed. As was noted in a
recent decision: "Favoritism and undue preference cannot be allowed. For the principle
is that equal protection and security shall be given to every person under
circumstances, which if not identical are analogous. If law be looked upon in terms of
burden or charges, those that fall within a class should be treated in the same fashion,
whatever restrictions cast on some in the group equally binding the rest.63
We find that the condition precedent required by the respondent PCGG of the
petitioners for their exclusion as parties-defendants in PCGG Case No. 33 violates the
lawyer-client confidentiality privilege. The condition also constitutes a transgression by
respondents Sandiganbayan and PCGG of the equal protection clause of the
Constitution.64 It is grossly unfair to exempt one similarly situated litigant from
prosecution without allowing the same exemption to the others. Moreover, the PCGG's
demand not only touches upon the question of the identity of their clients but also on
documents related to the suspected transactions, not only in violation of the attorney-
client privilege but also of the constitutional right against self-incrimination. Whichever
way one looks at it, this is a fishing expedition, a free ride at the expense of such rights.
An argument is advanced that the invocation by petitioners of the privilege of attorney-

client confidentiality at this stage of the proceedings is premature and that they should
wait until they are called to testify and examine as witnesses as to matters learned in
confidence before they can raise their objections. But petitioners are not mere
witnesses. They are co-principals in the case for recovery of alleged ill-gotten wealth.
They have made their position clear from the very beginning that they are not willing to
testify and they cannot be compelled to testify in view of their constitutional right against
self-incrimination and of their fundamental legal right to maintain inviolate the privilege
of attorney-client confidentiality.
It is clear then that the case against petitioners should never be allowed to take its full
course in the Sandiganbayan. Petitioners should not be made to suffer the effects of
further litigation when it is obvious that their inclusion in the complaint arose from a
privileged attorney-client relationship and as a means of coercing them to disclose the
identities of their clients. To allow the case to continue with respect to them when this
Court could nip the problem in the bud at this early opportunity would be to sanction an
unjust situation which we should not here countenance. The case hangs as a real and
palpable threat, a proverbial Sword of Damocles over petitioners' heads. It should not
be allowed to continue a day longer.
While we are aware of respondent PCGG's legal mandate to recover ill-gotten wealth,
we will not sanction acts which violate the equal protection guarantee and the right
against self-incrimination and subvert the lawyer-client confidentiality privilege.
WHEREFORE, IN VIEW OF THE FOREGOING, the Resolutions of respondent

Sandiganbayan (First Division) promulgated on March 18, 1992 and May 21, 1992 are
hereby ANNULLED and SET ASIDE. Respondent Sandiganbayan is further ordered to
exclude petitioners Teodoro D. Regala, Edgardo J. Angara, Avelino V. Cruz, Jose C.
Concepcion, Victor P. Lazatin, Eduardo U. Escueta and Paraja G. Hayuduni as parties-
defendants in SB Civil Case No. 0033 entitled "Republic of the Philippines v. Eduardo
Cojuangco, Jr., et al."
SO ORDERED.
Bellosillo, Melo and Francisco, JJ., concur.
Padilla, Panganiban and Torres, Jr., JJ., concur in the result.
Romero and Hermosisima, Jr., JJ., took no part.
Mendoza, J., is on leave.
Separate Opinions
VITUG, J., concurring:
The legal profession, despite all the unrestrained calumny hurled against it, is still the
noblest of professions. It exists upon the thesis that, in an orderly society that is
opposed to all forms of anarchy, it so occupies, as it should, an exalted position in the
proper dispensation of justice. In time, principles have evolved that would help ensure
its effective ministration. The protection of confidentiality of the lawyer-client relationship
is one, and it has since been an accepted firmament in the profession. It allows the
lawyer and the client to institutionalize a unique relationship based on full trust and
confidence essential in a justice system that works on the basis of substantive and
procedural due process. To be sure, the rule is not without its pitfalls, and demands
against it may be strong, but these problems are, in the ultimate analysis, no more than
mere tests of vigor that have made and will make that rule endure.
I see in the case before us, given the attendant circumstances already detailed in the
ponencia, a situation of the Republic attempting to establish a case not on what it
perceives to be the strength of its own evidence but on what it could elicit from a
counsel against his client. I find it unreasonable for the Sandiganbayan to compel
petitioners to breach the trust reposed on them and succumb to a thinly disguised threat
of incrimination.
Accordingly, I join my other colleague who vote for the GRANT of the petition.
DAVIDE, JR., J.: dissenting
The impressive presentation of the case in the ponencia of Mr. Justice Kapunan makes
difficult the espousal of a dissenting view. Nevertheless, I do not hesitate to express that
view because I strongly feel that this Court must confine itself to the key issue in this
special civil action for certiorari, viz., whether or not the Sandiganbayan acted with
grave abuse of discretion in not excluding the defendants, the petitioners herein, from
the Third Amended Complaint in Civil Case No. 0033. That issue, unfortunately, has
been simply buried under the avalanche of authorities upholding the sanctity of lawyer-
client relationship which appears to me to be prematurely invoked.
From the undisputed facts disclosed by the pleadings and summarized in the ponencia,
I cannot find my way clear to a conclusion that the Sandiganbayan committed grave
abuse of discretion in not acting favorably on the petitioners' prayer in their Comment to
the PCGG's Motion to Admit Third Amended Complaint.
The prerogative to determine who shall be made defendants in a civil case is initially
vested in the plaintiff, or the PCGG in this case. The control of the Court comes in only
when the issue of "interest" (§ 2, Rule 3, Rules of Court) as, e.g., whether an
indispensable party has not been joined, or whether there is a misjoinder of parties (§ 7,
8, and 9, Id.), is raised.
In the case below, the PCGG decided to drop or exclude from the complaint original co-
defendant Raul Roco because he had allegedly complied with the condition prescribed
by the PCGG, viz., undertake that he will reveal the identity of the principals for whom
he acted as nominee/stockholder in the companies involved in PCGG Case No. 0033.
In short, there was an agreement or compromise settlement between the PCGG and
Roco. Accordingly, the PCGG submitted a Third Amended Complaint without Roco as a
defendant. No obstacle to such an agreement has been insinuated. If Roco's revelation
violated the confidentiality of a lawyer-client relationship, he would be solely answerable
therefor to his principals/clients and, probably, to this Court in an appropriate
disciplinary action if warranted. There is at all no showing that Civil Case No. 0033
cannot further be proceeded upon or that any judgment therein cannot be binding
without Roco remaining as a defendant. Accordingly, the admission of the Third
Amended Complaint cannot be validly withheld by the Sandiganbayan.
Are the petitioners, who did not file a formal motion to be excluded but only made the
request to that effect as a rider to their Comment to the Motion to Admit Third Amended
Complaint, entitled to be excluded from the Third Amended Complaint such that denial
thereof would constitute grave abuse of discretion on the Sandiganbayan's part? To me,
the answer is clearly in the negative.
The petitioners seek to be accorded the same benefit granted to or to be similarly

treated as Roco. Reason and logic dictate that they cannot, unless they too would make
themselves like Roco. Otherwise stated, they must first voluntarily adopt for themselves
the factual milieu created by Roco and must bind themselves to perform certain
obligations as Roco. It is precisely for this that in response to the petitioners' comment
on the aforementioned Motion to Admit Third Amended Complaint the PCGG
manifested that it is willing to accord the petitioners the treatment it gave Roco provided
they would do what Roco had done, that is, disclose the identity of their
principals/clients and submit documents substantiating their claimed lawyer-client
relationship with the said principals/clients, as well as copies of deeds of assignments
the petitioners executed in favor of their principals/clients. The petitioners did not do so
because they believed that compliance thereof would breach the sanctity of their
fiduciary duty in a lawyer-client relationship.
It, indeed, appears that Roco has complied with his obligation as a consideration for his
exclusion from the Third Amended Complaint. The Sandiganbayan found that
action 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. 14-1 in relation to the Supreme
As a matter of fact, the PCGG presented evidence to substantiate Roco's compliance.

The ponencia itself so stated, thus:
. . . respondent PCGG presented evidence 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
(c) Letter of Roco, Bunag, and Kapunan Law Offices dated September 21, 1988 to the
respondent in behalf of private respondent Roco originally requesting the reinvestigation
and/or re-examination of evidence by the PCGG it Complaint in PCGG Case No. 33.
(Id., 5-6).
These are the pieces of evidence upon which the Sandiganbayan founded its
conclusion that the PCGG was satisfied with Roco's compliance. The petitioners have
not assailed such finding as arbitrary.
The ponencia's observation then that Roco did not refute the petitioners' contention that
he did not comply with his obligation to disclose the identity of his principals is entirely
irrelevant.
In view of their adamantine position, the petitioners did not, therefore, allow themselves
to be like Roco. They cannot claim the same treatment, much less compel the PCGG to
drop them as defendants, for nothing whatsoever. They have no right to make such a
demand for until they shall have complied with the conditions imposed for their
exclusion, they cannot be excluded except by way of a motion to dismiss based on the
grounds allowed by law (e.g., those enumerated in § 1, Rule 16, Rules of Court). The
rule of confidentiality under the lawyer-client relationship is not a cause to exclude a
party. It is merely aground for disqualification of a witness (§ 24, Rule 130, Rules of
Court) and may only be invoked at the appropriate time, i.e., when a lawyer is under
compulsion to answer as witness, as when, having taken the witness stand, he is
questioned as to such confidential communicator or advice, or is being otherwise
judicially coerced to produce, through subpoena duces tecum or otherwise, letters or
other documents containing the same privileged matter. But none of the lawyers in this
case is being required to testify about or otherwise reveal "any [confidential]
or with a view to, professional employment." What they are being asked to do, in line
with their claim that they had done the acts ascribed to them in pursuance of their
professional relation to their clients, is to identify the latter to the PCGG and the Court;
but this, only if they so choose in order to be dropped from the complaint, such
identification being the condition under which the PCGG has expressed willingness to
exclude them from the action. The revelation is entirely optional, discretionary, on their
part. The attorney-client privilege is not therefor applicable.
Thus, the Sandiganbayan did not commit any abuse of discretion when it denied the
petitioners' prayer for their exclusion as party-defendants because they did not want to
abide with any of the conditions set by the PCGG. There would have been abuse if the
Sandiganbayan granted the prayer because then it would have capriciously,
whimsically, arbitrarily, and oppressively imposed its will on the PCGG.
Again, what the petitioners want is their exclusion from the Third Amended Complaint or
the dismissal of the case insofar as they are concerned because either they are
invested with immunity under the principle of confidentiality in a lawyer-client
relationship, or the claims against them in Civil Case No. 0033 are barred by such
principle.
Even if we have to accommodate this issue, I still submit that the lawyer-client privilege
provides the petitioners no refuge. They are sued as principal defendants in Civil Case
No. 0033, a case of the recovery of alleged ill-gotten wealth. Conspiracy is imputed to
the petitioners therein. In short, they are, allegedly, conspirators in the commission of
the acts complained of for being nominees of certain parties.
Their inclusion as defendants in justified under § 15, Article XI of the Constitution —

which provides that the right of the State to recover properties unlawfully acquired by
public officials or employees, from them or from their nominees or transferees, shall not
be barred by prescription, laches or estoppel — and E.O. No. 1 of 28 February 1986,
E.O. No. 2 of 12 March 1986, E.O. No. 14 of 7 May 1986, and the Rules and
Regulations of the PCGG. Furthermore, § 2, Rule 110 of the Rules of Court requires
that the complaint or information should be "against all persons who appear to be
responsible for the offense involved."
Hypothetically admitting the allegations in the complaint in Civil Case No. 0033, I find
myself unable to agree with the majority opinion that the petitioners are immune from
suit or that they have to be excluded as defendants, or that they cannot be compelled to
reveal or disclose the identity of their principals, all because of the sacred lawyer-client
privilege.
This privilege is well put in Rule 130 of the Rules of Court, to wit:
§ 24. Disqualification by reason of privileged communication. — The following persons

cannot testify as to matters learned in confidence in the following cases:
xxx xxx xxx
(b) An attorney cannot, without the consent of his client, be examined as to any
or with a view to, professional employment, nor 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.
The majority seeks to expand the scope of the Philippine rule on the lawyer-client
privilege by copious citations of American jurisprudence which includes in the privilege
the identity of the client under the exceptional situations narrated therein. From the
plethora of cases cited, two facts stand out in bold relief. Firstly, the issue of privilege
contested therein arose in grand jury proceedings on different States, which are
preliminary proceedings before the filing of the case in court, and we are not even told
what evidentiary rules apply in the said hearings. In the present case, the privilege is
invoked in the court where it was already filed and presently pends, and we have the
foregoing specific rules above-quoted. Secondly, and more important, in the cases cited
by the majority, the lawyers concerned were merely advocating the cause of their clients
but were not indicted for the charges against their said clients. Here, the counsel
themselves are co-defendants duly charged in court as co-conspirators in the offenses
charged. The cases cited by the majority evidently do not apply to them.
Hence, I wish to repeat and underscore the fact that the lawyer-client privilege is not a
shield for the commission of a crime or against the prosecution of the lawyer therefor. I
quote, with emphases supplied, from 81 AM JUR 2d, Witnesses, § 393 to 395, pages
356-357:
§ 393. Effect of unlawful purpose.
The existence of an unlawful purpose prevents the attorney-client privilege from

attaching. The attorney-client privilege does not generally exist where the
representation is sought to further criminal or fraudulent conduct either past, present, or
future. Thus, a confidence received by an attorney in order to advance a criminal or
fraudulent purpose is beyond the scope of the privilege.
Observation: The common-law rule that the privilege protecting confidential

communications between attorney and client is lost if the relation is abused by a client
who seeks legal assistance to perpetrate a crime or fraud has been codified.
§ 394. Attorney participation.
The attorney-client privilege cannot be used to protect a client in the perpetration of a

crime in concert with the attorney, even where the attorney is not aware of his client's
purpose. The reason for the rule is that it is not within the professional character of a
lawyer to give advised on the commission of crime. Professional responsibility does not
countenance the use of the attorney-client privilege as a subterfuge, and all
conspiracies, either active or passive, which are calculated to hinder the administration
of justice will vitiate the privilege. In some jurisdictions, however, this exception to the
rule of privilege in confined to such intended acts in violation of the law as are mala in
se, as distinguished from those which are merely mala prohibita.
§ 395. Communication in contemplation of crime.
Communications between attorney and client having to do with the client's contemplated
criminal acts, or in aid or furtherance thereof, are not covered by the cloak of privilege
ordinarily existing in reference to communications between attorney and client. But, the
mere charge of illegality, not supported by evidence, will not defeat the privilege; there
must be at least prima facie evidence that the illegality has some foundation in fact.
Underhill also states:
There are many other cases to the same effect, for the rule is prostitution 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. In accordance with this rule, where a forged will or other false
instrument has come into possession of an attorney through the instrumentality of the
accused, with the hope and expectation that the attorney would take some action in
reference thereto, and the attorney does act, in ignorance of the true character of the
instrument, there is no privilege, inasmuch as full confidence has been withheld. The
attorney is then compelled to produce a forged writing against the client. The fact that
the attorney is not cognizant of the criminal or wrongful purpose, or, knowing it, attempts
to dissuade his client, is immaterial. The attorney's ignorance of his client's intentions
deprives the information of a professional character as full confidence has been
withheld. (H.C. Underhill, A Treatise on the Law of Criminal Case Evidence, vol. 2, Fifth
ed. (1956), Sec. 332, pp. 836-837; emphasis mine).
125 AMERICAN LAW REPORTS ANNOTATED, 516-519, summarizes the rationale of

the rule excepting communications with respect to contemplated criminal or fraudulent
acts, thus:
c. Rationale of rule excepting communications with respect to contemplated criminal or

fraudulent act.
Various reasons have been announced as being the foundation for the holdings that
communications with respect to contemplated criminal or fraudulent acts are not
privileged.
The reason perhaps most frequently advanced is that in such cases there is no
professional employment, properly speaking. Standard F. Ins. Co v. Smithhart (1919)
183 Ky 679, 211 SW. 441, 5 ALR 972; Cummings v. Com. (1927) 221 Ky 301, 298 SW
943; Strong v. Abner (1937) 268 Ky 502, 105 SW(2d) 599; People v. Van Alstine (1885)
57 Mich 69, 23 NW 594; Hamil & Co. v. England (1892) 50 Mo App 338; Carney v.
United R. Co. (1920) 205 Mo App 495, 226 SW 308; Matthews v. Hoagland (1891) 48
NJ Eq 455, 21 A 1054; Covency v. Tannahill (1841) 1 Hill (NY) 33, 37 AM Dec 287;
People ex rel. Vogelstein v. Warden (1934) 150 Misc 714, 270 NYS 362 (affirmed
without opinion in (1934) 242 App Div 611, 271 NYS 1059); Russell v. Jackson (1851) 9
Hare 387, 68 Eng Reprint 558; Charlton v. Coombes (1863) 4 Giff 372, 66 Eng Reprint
751; Reg. v. Cox (1884) LR 14 QB Div (Eng) 153 — CCR; Re Postlethwaite (1887) LR
35 Ch Div (Eng) 722.
In Reg. v. Cox (1884) LR 14 QB Div (Eng) 153 — CCR, the court said: "In order that the
rule may apply, there must be both professional confidence and professional
employment, but if the client has a criminal object in view in his communications with his
solicitor one of these elements must necessarily be absent. The client must either
conspire with his solicitor or deceive him. If his criminal object is avowed, the client does
not consult his adviser professionally, because it cannot be the solicitor's business to
further any criminal object. If the client does not avow his object, he reposes no
confidence, for the state of facts which is the foundation of the supposed confidence
does not exist. The solicitor's advice is obtained by a fraud."
So, in Standard F. Ins. Co. v. Smithhart (1919) 183 Ky 679, 211 SW 441, 5 ALR 972,
the court said: "The reason of the principle which holds such communications not to be
privileged is that it is not within the professional character of a lawyer to give advice
upon such subjects, and that it is no part of the profession of an attorney or counselor at
law to be advising persons as to how they may commit crimes or frauds, or how they
may escape the consequences of contemplated crimes and frauds. If the crime or fraud
has already been committed and finished, a client may advise with an attorney in regard
to it, and communicate with him freely, and the communications cannot be divulged as
evidence without the consent of the client, because it is a part of the business and duty
of those engaged in the practice of the profession of law, when employed and relied
upon for that purpose, to give advice to those who have made infractions of the laws;
and, to enable the attorney to properly advise and to properly represent the client in
court or when prosecutions are threatened, it is conducive to the administration of
justice that the client shall be free to communicate to his attorney all the facts within his
knowledge, and that he may be assured that a communication made by him shall not be
used to his prejudice."
The protection which the law affords to communications between attorney and client
has reference to those which are legitimately and properly within the scope of a lawful
employment, and does not extend to communications made in contemplation of a crime,
or perpetration of a fraud. Strong v. Abner (1937) 368 Ky 502, 105 SW (2d) 599.
The court in People v. Van Alstine (1885) 57 Mich 69, 23 NW 594, in holding not
privileged communications to an attorney having for their object the communication of a
crime, said: "They then partake of the nature of a conspiracy, or attempted conspiracy,
and it is not only lawful to divulge such communications, but under certain
circumstances it might become the duty of the attorney to do so. The interests of public
justice require that no such shield from merited exposure shall be interposed to protect
a person who takes counsel how he can safely commit a crime. The relation of attorney
and client cannot exist for the purpose of counsel in concocting crimes."
And in Coveney v. Tannahill (1841) 1 Hill (NY) 33, 37 Am Dec 287, the court was of the
opinion that there could be no such relation as that of attorney and client, either in the
commission of a crime, or in the doing of a wrong by force or fraud to an individual, the
privileged relation of attorney and client existing only for lawful and honest purposes.
If the client consults the attorney at law with reference to the perpetration of a crime,
and they co-operate in effecting it, there is no privilege, inasmuch as it is no part of the
lawyer's duty to aid in crime — he ceases to be counsel and becomes a criminal.
Matthews v. Hoagland (1891) 48 NJ Eq 455, 21 A 1054.
The court cannot permit it to be said that the contriving of a fraud forms part of the
professional business of an attorney or solicitor. Charlton v. Coombes (1863) 4 Giff 372,
66 Eng Reprint 751.
If the client does not frankly and freely reveal his object and intention as well as facts,
there is not professional confidence, and therefore no privilege. Matthews v. Hoagland
(NJ) supra. See to the same effect Carney v. United R. Co. (1920) 205 Mo App 495,
226 SW 308.
There is no valid claim of privilege in regard to the production of documents passing

between solicitor and client, when the transaction impeached is charged to be based
upon fraud, that is the matter to be investigated, and it is thought better that the alleged
privilege should suffer than that honestly and fair dealing should appear to be violated
with impunity. Smith v. Hunt (1901) 1 Ont L Rep 334.
In Tichborne v. Lushington, shorthand Notes (Eng) p. 5211 (cited in Reg. v. Cox (1884)
LR 14 QB Div (Eng) 172 — CCR), the chief justice said "I believe the law is, and
properly is, that if a party consults an attorney, and obtains advice for what afterwards
turns out to be the commission of a crime or a fraud, that party so consulting the
attorney has no privilege whatever to close the lips of the attorney from stating the truth.
Indeed, if any such privilege should be contended for, or existing, it would work most
grievous hardship on an attorney, who, after he had been consulted upon what
subsequently appeared to be a manifest crime and fraud, would have his lips closed,
and might place him in a very serious position of being suspected to be a party to the
fraud, and without his having an opportunity of exculpating himself . . . There is no
privilege in the case which I have suggested of a party consulting another, a
professional man, as to what may afterwards turn out to be a crime or fraud, and the
best mode of accomplishing it."
In Garside v. Outram (1856) 3 Jur NS (Eng) 39, although the question of privilege as to
communications between attorney and client was not involved, the question directly
involved being the competency of a clerk in a business establishment to testify as to
certain information which he acquired while working in the establishment, the court
strongly approved of a view as stated arguendo for plaintiff, in Annesley v. Anglesea
(1743) 17 How St Tr (Eng) 1229, as follows: "I shall claim leave to consider whether an
attorney may be examined as to any matter which came to his knowledge as an
attorney. If he is employed as an attorney in any unlawful or wicked act, his duty to the
public obliges him to disclose it; no private obligations can dispense with that universal
one which lies on every member of society to discover every design which may be
formed, contrary to the laws of society, to destroy the public welfare. For this reason, I
apprehend that if a secret which is contrary to the public good, such as a design to
commit treason, murder, or perjury, comes to the knowledge of an attorney, even in a
cause where he is concerned, the obligation to the public must dispense with the private
obligation to the client."
The court in McMannus v. State (1858) 2 Head (Tenn) 213, said; "It would be
monstrous to hold that if counsel was asked and obtained in reference to a
contemplated crime that the lips of the attorney would be sealed, when the facts might
become important to the ends of justice in the prosecution of crime. In such a case the
relation cannot be taken to exist. Public policy would forbid it."
And the court in Lanum v. Patterson (1909) 151 Ill App 36, observed that this rule was
not in contravention of sound public policy, but on the contrary, tended to the
maintenance of a higher standard of professional ethics by preventing the relation of
attorney and client from operating as a cloak for fraud.
Communications of a client to an attorney are not privileged if they were a request for
advice as to how to commit a fraud, it being in such a case not only the attorney's
privilege, but his duty, to disclose the facts to the court. Will v. Tornabells & Co. (1907) 3
Porto Rico Fed Rep 125. The court said: "We say this notwithstanding the comments of
opposing counsel as to the indelicacy of his position because of his being now on the
opposite side of the issue that arose as a consequence of the communication he
testifies about, and is interested in the cause to the extent of a large contingent fee, as
he confesses."
The object of prohibiting the disclosure of confidential communications is to protect the

client, and not to make the attorney an accomplice or permit him to aid in the
commission of a crime. People vs. Petersen (1901) 60 App Div 118, NYS 941.
The seal of personal confidence can never be used to cover a transaction which is in
itself a crime. People v. Farmer (1909) 194 NY 251, 87 NE 457.
As to disclosing the identity of a client, 81 AM JUR 2d, Witnesses, § 410 and 411,
pages 366-368, states:
§ 410. Name or identity of client.
Disclosure of a client's identity is necessary proof of the existence of the attorney-client

relationship and is not privileged information. Thus, the attorney-client privilege is
inapplicable even though the information was communicated confidentially to the
attorney in his professional capacity and, in some cases, in spite of the fact that the
attorney may have been sworn to secrecy, where an inquiry is directed to an attorney as
to the name or identity of his client. This general rule applies in criminal cases, as well
as in civil actions. Where an undisclosed client is a party to an action, the opposing
party has a right to know with whom he is contending or who the real party in interest is,
if not the nominal adversary.
§ 411. Disclosure of identity of client as breach of confidentiality.

The revelation of the identification of a client is not usually considered privileged, except
where so much has been divulged with regard to to legal services rendered or the
advice sought, that to reveal the client's name would be to disclose the whole
relationship and confidential communications. However, even where the subject matter
of the attorney-client relationship has already been revealed, the client's name has been
deemed privileged.
Where disclosure of the identity of a client might harm the client by being used against
him under circumstances where there are no countervailing factors, then the identity is
protected by the attorney-client privilege.
In criminal proceedings, a client's name may be privileged if information already

obtained by the tribunal, combined with the client's identity, might expose him to criminal
prosecution for acts subsequent to, and because of, which he had sought the advice of
his attorney.
Although as a general rule, the identity of a defendant in a criminal prosecution is a

matter of public record and, thus, not covered by the attorney-client privilege, where the
attorney has surrendered to the authorities physical evidence in his possession by way
of the attorney-client relationship, the state must prove the connection between the
piece of physical evidence and the defendant without in any way relying on the
testimony of the client's attorney who initially received the evidence and, thus, the
attorney may not be called to the stand and asked to disclose the identity of the client.
However, an attorney cannot refuse to reveal the identity of a person who asked him to
deliver stolen property to the police department, whether a bona fide attorney-client
relationship exists between them, inasmuch as the transaction was not a legal service
or done in the attorney's professional capacity.
Distinction: Where an attorney was informed by a male client that his female
acquaintance was possibly involved in [a] his-and-run accident, the identity of the
female did not come within scope of attorney-client privilege although the identity of the
male client was protected. (emphases supplied)
WIGMORE explains why the identity of a client is not within the lawyer-client privilege in
this manner:
§ 2313. Identity of client or purpose of suit. — The identity of the attorney's client or the
name of the real party in interest will seldom be a matter communicated in confidence
because the procedure of litigation ordinarily presupposes a disclosure of these facts.
Furthermore, so far as a client may in fact desire secrecy and may be able to secure
action without appearing as a party to the proceedings, it would be improper to sanction
such a wish. Every litigant is in justice entitled to know the identity of his opponents. He
cannot be obliged to struggle in the dark against unknown forces. He has by anticipation
the right, in later proceedings, if desired, to enforce the legal responsibility of those who
may have maliciously sued or prosecuted him or fraudulently evaded his claim. He has
as much right to ask the attorney "Who fees your fee?" as to ask the witness (966
supra). "Who maintains you during this trial?" upon the analogy of the principle already
examined (2298 supra), the privilege cannot be used to evade a client's responsibility
for the use of legal process. And if it is necessary for the purpose to make a plain
exception to the rule of confidence, then it must be made. (Wigmore on Evidence, vol.
8, (1961), p. 609; emphases supplied).
In 114 ALR, 1322, we also find the following statement:
1. Name or identity.
As is indicated in 28 R.C.L. p. 563, it appears that the rule making communications

between attorney and client privileged from disclosure ordinarily does not apply where
the inquiry is confined to the fact of the attorney's employment and the name of the
person employing him, since the privilege presupposes the relationship of client and
attorney, and therefore does not attach to its creation.
At the present stage of the proceedings below, the petitioners have not shown that they
are so situated with respect to their principals as to bring them within any of the
exceptions established by American jurisprudence. There will be full opportunity for
them to establish that fact at the trial where the broader perspectives of the case shall
have been presented and can be better appreciated by the court. The insistence for
their exclusion from the case is understandable, but the reasons for the hasty resolution
desired is naturally suspect.
We do not even have to go beyond our shores for an authority that the lawyer-client
privilege cannot be invoked to prevent the disclosure of a client's identity where the
lawyer and the client are conspirators in the commission of a crime or a fraud. Under
our jurisdiction, lawyers are mandated not to counsel or abet activities aimed at
defiance of the law or at lessening confidence in the legal system (Rule 1.02, Canon 1,
Code of Professional Responsibility) and to employ only fair and honest means to attain
the lawful objectives of his client (Rule 19.01, Canon 19, Id.). And under the Canons of
Professional Ethics, a lawyer must steadfastly bear in mind that his great trust is to be
performed within and not without the bounds of the law (Canon 15, Id.), that he
advances the honor of his profession and the best interest of his client when he renders
service or gives advice tending to impress upon the client and his undertaking exact
compliance with the strictest principles of moral law (Canon 32, Id.). These canons strip
a lawyer of the lawyer-client privilege whenever he conspires with the client in the
commission of a crime or a fraud.
I then vote to DENY, for want of merit, the instant petition.
Narvasa, C.J. and Regalado, J., concur.
PUNO, J., dissenting:
This is an important petition for certiorari to annul the resolutions of the respondent
Sandiganbayan denying petitioners' motion to be excluded from the Complaint for
recovery of alleged ill-gotten wealth on the principal ground that as lawyers they cannot
be ordered to reveal the identity of their client.
First, we fast forward the facts. The Presidential Commission on Good Government
(PCGG) filed Civil Case No. 33 before the Sandiganbayan against Eduardo M.
Cojuangco, Jr., for the recovery of alleged ill-gotten wealth. Sued as co-defendants are
the petitioners in the cases at bar — lawyers Teodoro Regala, Edgardo J. Angara,
Avelino V. Cruz, Jose Concepcion, Rogelio A. Vinluan, Victor P. Lazatin, Eduardo
Escueta and Paraja Hayudini. Also included as a co-defendant is lawyer Raul Roco,
now a duly elected senator of the Republic. All co-defendants were then partners of the
law firm, Angara, Abello, Concepcion, Regala and Cruz Law Offices, better known as
the ACCRA Law Firm. The Complaint against Cojuangco, Jr., and the petitioners
alleged, inter alia, viz:
xxx xxx xxx

The wrongs committed by defendants acting singly or collectively and in unlawful
concert with one another, include the misappropriation and theft of public funds, plunder
of the nation's wealth, extortion, blackmail, bribery, embezzlement and other acts of
corruption, betrayal of public trust and brazen abuse of power as more fully described
(in the subsequent paragraphs of the complaint), all at the expense and to the grave
and irreparable damage of Plaintiff and the Filipino people.
Defendants Eduardo Cojuangco, Jr., Edgardo J. Angara, Jose C. Concepcion, Teodoro

D. Regala, Avelino V. Cruz, Regalio A. Vinluan, Eduardo U. Escueta, Paraja G.
Hayudini and Raul S. Roco of 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 the San Miguel Corporation shares and the
institutionalization through presidential directives of the coconut monopoly. through
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 7 June 1984.
In their Answer, petitioners alleged that the legal services offered and made available by
their firm to its clients include: (a) organizing and acquiring business organizations, (b)
acting as incorporators or stockholders thereof, and (c) delivering to clients the
corresponding documents of their equity holdings (i.e., certificates of stock endorsed in
blank or blank deeds of trust or assignment). They claimed that their activities were "in
furtherance of legitimate lawyering."
In the course of the proceedings in the Sandiganbayan, the PCGG filed a Motion to
Admit Third Amended Complaint and the Third Amended Complaint excluding lawyer
Roco as party defendant. Lawyer Roco was excluded on the basis of his promise to
reveal the identity of the principals for whom he acted as nominee/stockholder in the
companies involved in the case.
The Sandiganbayan ordered petitioners to comment on the motion. In their Comment,

petitioners demanded that they be extended the same privilege as their co-defendant
Roco. They prayed for their exclusion from the complaint. PCGG agreed but set the
following conditions: (1) disclosure of the identity of their client; (2) submission of
documents substantiating their lawyer-client relationship; and (3) submission of the
deeds of assignment petitioners executed in favor of their client covering their
respective shareholdings. The same conditions were imposed on lawyer Roco.
Petitioners refused to comply with the PCGG conditions contending that the attorney-
client privilege gives them the right not to reveal the identity of their client. They also
alleged that lawyer Roco was excluded though he did not in fact reveal the identity of
his clients. On March 18, 1992, the Sandiganbayan denied the exclusion of petitioners
in Case No. 33. It held:
xxx xxx xxx
whom they have acted, i.e., their principal, and that will be their choice. But until they do
ACCRA lawyers exists cannot even begin to the debated. The ACCRA lawyers cannot
course against him. This in turn has allowed the PCGG to exercise its power both under
The ACCRA lawyers cannot, therefore, begrudge the PCGG for keeping them as a
party defendants. In the same vein, they cannot compel the PCGG to be accorded the
same treatment accorded to Roco.
accorded to Raul S. Roco is DENIED for lack of merit.
Sandiganbayan later denied petitioners' motions for reconsideration in its resolutions

dated May 21, 1988 and September 3, 1992.
In this petition for certiorari, petitioners contend:

ACCRA lawyers who indisputably acted as lawyers in serving as nominee-stockholders,
to the strict application of the law agency.
II

of equal treatment.

Mr. Roco and violation of the equal protection clause.
III
by the PCGG.
of the client(s).
IV

The petition at bar is atypical of the usual case where the hinge issue involves the
applicability of attorney-client privilege. It ought to be noted that petitioners were
included as defendants in Civil Case No. 33 as conspirators. Together with Mr.
Cojuangco, Jr., they are charged with having ". . . conspired and confederated with each
COCOLIFE, COCOMARK, CICI and more than twenty other coconut levy funded
corporations, including the acquisition of San Miguel Corporation shares and the
institutionalization through presidential directives of the coconut monopoly." To stress,
petitioners are charged with having conspired in the commission of crimes. The issue of
attorney-client privilege arose when PCGG agreed to exclude petitioners from the
complaint on condition they reveal the identity of their client. Petitioners refused to
comply and assailed the condition on the ground that to reveal the identity of their client
will violate the attorney-client privilege.
It is thus necessary to resolve whether the Sandiganbayan committed grave abuse of

discretion when it rejected petitioners' thesis that to reveal the identity of their client
would violate the attorney-client privilege. The attorney-client privilege is the oldest of
the privileges for confidential communications known to the common law.1 For the first
time in this jurisdiction, we are asked to rule whether the attorney-client privilege
includes the right not to disclose the identity of client. The issue poses a trilemma for its
resolution requires the delicate balancing of three opposing policy considerations. One
overriding policy consideration is the need for courts to discover the truth for truth alone
is the true touchstone of justice.2 Equally compelling is the need to protect the
adversary system of justice where truth is best extracted by giving a client broad
privilege to confide facts to his counsel.3 Similarly deserving of sedulous concern is the
need to keep inviolate the constitutional right against self-incrimination and the right to
effective counsel in criminal litigations. To bridle at center the centrifugal forces of these
policy considerations, courts have followed to prudential principle that the attorney-client
privilege must not be expansively construed as it is in derogation of the search for
truth.4 Accordingly, a narrow construction has been given to the privilege and it has
been consistently held that "these competing societal interests demand that application
of the privilege not exceed that which is necessary to effect the policy considerations
underlying the privilege, i.e., the privilege must be upheld only in those circumstances
for which it was created.'"5
Prescinding from these premises, our initial task is to define in clear strokes the
substantive content of the attorney-client privilege within the context of the distinct
issues posed by the petition at bar. With due respect, I like to start by stressing the
irreducible principle that the attorney-client privilege can never be used as a shield to
commit a crime or a fraud. Communications to an attorney having for their object the
commission of a crime ". . . partake the nature of a conspiracy, and it is not only lawful
to divulge such communications, but under certain circumstances it might become the
duty of the attorney to do so. The interests of public justice require that no such shield
from merited exposure shall be interposed to protect a person who takes counsel how
he can safely commit a crime. The relation of attorney and client cannot exist for the
purpose of counsel in concocting crimes."6 In the well chosen words of retired Justice
Quiason, a lawyer is not a gun for hire.7 I hasten to add, however, that a mere
allegation that a lawyer conspired with his client to commit a crime or a fraud will not
defeat the privilege.8 As early as 1933, no less than the Mr. Justice Cardozo held in
Clark v. United States9 that: "there are early cases apparently to the effect that a mere
charge of illegality, not supported by any evidence, will set the confidences free . . . But
this conception of the privilege is without support . . . To drive the privilege away, there
must be 'something to give colour to the charge;' there must be prima facie evidence
that it has foundation in fact." In the petition at bar, however, the PCGG appears to have
relented on its original stance as spelled out in its Complaint that petitioners are co-
conspirators in crimes and cannot invoke the attorney-client privilege. The PCGG has
agreed to exclude petitioners from the Complaint provided they reveal the identity of
their client. In fine, PCGG has conceded that petitioner are entitled to invoke the
attorney-client privilege if they reveal their client's identity.
Assuming then that petitioners can invoke the attorney-client privilege since the PCGG
is no longer proceeding against them as co-conspirators in crimes, we should focus on
the more specific issue of whether the attorney-client privilege includes the right not to
divulge the identity of a client as contended by the petitioners. As a general rule, the
attorney-client privilege does not include the right of non-disclosure of client identity.
The general rule, however, admits of well-etched exceptions which the Sandiganbayan
failed to recognize. The general rule and its exceptions are accurately summarized in In
re Grand Jury Investigation,10 viz:
The federal forum is unanimously in accord with the general rule that the identity of a
client is, with limited exceptions, not within the protective ambit of the attorney-client
privilege. See: In re Grand Jury Proceedings (Pavlick), 680 F.2d 1026, 1027 (5th Cir.
1982) (en banc); In re Grand Jury Proceedings (Jones), 517 F. 2d 666, 670-71 (5th Cir.
1975); In re Grand Jury Proceedings (Fine), 651 F. 2d 199, 204 (5th Cir. 1981); Frank v.
Tomlinson, 351 F.2d 384 (5th Cir. 1965), cert. denied, 382 U.S. 1082, 86 S.Ct. 648, 15
L.Ed.2d 540 (1966); In re Grand Jury Witness (Salas), 695 F.2d 359, 361 (9th Cir.
1982); In re Grand Jury Subpoenas Duces Tecum (Marger/Merenbach), 695 F.2d 363,
365 (9th Cir. 1982); In re Grand Jury Proceedings (Lawson), 600 F.2d 215, 218 (9th Cir.
1979).
The Circuits have embraced various "exceptions" to the general rule that the identity of
a client is not within the protective ambit of the attorney-client privilege. All such
exceptions appear to be firmly grounded in the Ninth Circuit's seminal decision in Baird
v. Koerner, 279 F.2d 633 (9th Cir. 1960). In Baird the IRS received a letter from an
attorney stating that an enclosed check in the amount of $12,706 was being tendered
for additional amounts due from undisclosed taxpayers. When the IRS summoned the
attorney to ascertain the identity of the delinquent taxpayers the attorney refused
identification assertion the attorney-client privilege. The Ninth Circuit, applying California
law, adjudged that the "exception" to the general rule as pronounced in Ex parte
McDonough, 170 Cal. 230, 149 P. 566 (1915) controlled:
The name of the client will be considered privileged matter where the circumstances of
the case are such that the name of the client is material only for the purpose of showing
an acknowledgment of guilt on the part of such client of the very offenses on account of
which the attorney was employed.
Baird, supra, 279 F.2d at 633. The identity of the Baird taxpayer was adjudged within
this exception to the general rule. The Ninth Circuit has continued to acknowledge this
exception.
A significant exception to this principle of non-confidentiality holds that such information

may be privileged when the person invoking the privilege is able to show that a strong
possibility exists that disclosure of the information would implicate the client in the very
matter for which legal advice was sought in the first case.
In re Grand Jury Subpoenas Duces Tecum (Marger/Merenbach), 695 F.2d 363, 365
(9th Cir. 1982). Accord: United States v. Hodge and Zweig, 548 F.2d 1347, 1353 (9th
Cir. 1977); In re Grand Jury Proceedings (Lawson), 600 F.2d 215, 218 (9th Cir. 1979);
United States v. Sherman, 627 F.2d 189, 190-91 (9th Cir. 1980); In re Grand Jury
Witness (Salas), 695 F.2d 359, 361 (9th Cir. 1982). This exception, which can perhaps
be most succinctly characterized as the "legal advice" exception, has also been
recognized by other circuits. See: In re Walsh, 623 F.2d 489, 495 (7th Cir.), cert.
denied, 449 U.S. 994, 101 S. Ct. 531, 66 L.Ed.2d 291 (1980); In re Grand Jury
Investigation (Tinari), 631 F.2d 17, 19 (3d Cir 1980), cert. denied, 449 U.S.1083, 101
S.Ct. 869-70, 66 L.Ed.2d 808 (1981). Since the legal advice exception is firmly
grounded in the policy of protecting confidential communications, this Court adopts and
applies its principles herein. See: In re Grand Jury Subpoenas Duces Tecum
(Marger/Merenbach), supra.
It should be observed, however that the legal advice exception may be defeated
through a prima facie showing that the legal representation was secured in furtherance
of present or intended continuing illegality, as where the legal representation itself is
part of a larger conspiracy. See: In re Grand Jury Subpoenas Decus Tecum
(Marger/Merenbach), supra, 695 F.2d at 365 n. 1; In re Walsh, 623 F.2d 489, 495 (7th
Cir.), cert. denied, 449, U.S. 994, 101 S.Ct. 531, 66 L.Ed. 2d 291 (1980); In re Grand
Jury Investigation (Tinari), 631 F.2d 17, 19 (3d Cir 1980); cert. denied, 449 U.S. 1083,
101 S.Ct. 869, 66 L.Ed. 2d 808 (1981); In re Grand Jury Proceedings (Lawson), 600
F.2d 215, 218 (9th Cir. 1979); United States v. Friedman, 445 F.2d 1076, 1086 (9th Cir.
1971). See also: Clark v. United States, 289 U.S. 1, 15, 53, S.Ct. 465, 469, 77, L.Ed.
993 (1933); In re Grand Jury Proceedings (Pavlick), 680 F.2d 1026, 1028-29 (5th Cir.
1982 (en banc).
Another exception to the general rule that the identity of a client is not privileged arises
where disclosure of the identity would be tantamount to disclosing an otherwise
protected confidential communication. In Baird, supra, the Ninth Circuit observed:
If the identification of the client conveys information which ordinarily would be conceded
to be part of the usual privileged communication between attorney and client, then the
privilege should extend to such identification in the absence of another factors.
Id., 279 F.2d at 632. Citing Baird, the Fourth Circuit promulgated the following
exception:
To the general rule is an exception, firmly embedded as the rule itself. The privilege
may be recognized where so much of the actual communication has already been
disclosed that identification of the client amounts to disclosure of a confidential
communication.
NLRB v. Harvey, 349 F.2d 900, 905 (4th Cir. 1965). Accord: United States v. Tratner,
511 F.2d 248, 252 (7th Cir. 1975); Colton v. United States, 306 F.2d 633, 637 (2d Cir.
1962), cert. denied, 371 U.S. 951, 83 S.Ct. 505, 9 L.Ed.2d 499 1963); Tillotson v.
Boughner, 350 F.2d 663, 666 (7th Cir. 1965); United States v. Pape, 144 F.2d 778, 783
(2d Cir. 1944). See also: Chirac v. Reinecker, 24 U.S. (11 Wheat) 280, 6 L.Ed. 474
(1826). The Seventh Circuit has added to the Harvey exception the following
emphasized caveat:
The privilege may be recognized where so much of the actual communication has
already been disclosed [not necessarily by the attorney, but by independent sources as
well] that identification of the client [or of fees paid] amounts to disclosure of a
confidential communication.
United States vs. Jeffers, 532 F.2d 1101, 1115 (7th Cir. 1976 (emphasis added). The
Third Circuit, applying this exception, has emphasized that it is the link between the
client and the communication, rather than the link between the client and the possibility
of potential criminal prosecution, which serves to bring the client's identity within the
protective ambit of the attorney-client privilege. See: In re Grand Jury Empanelled
February 14, 1978 (Markowitz), 603 F.2d 469, 473 n. 4 (3d Cir. 1979). Like the "legal
advice" exception, this exception is also firmly rooted in principles of confidentiality.
Another exception, articulated in the Fifth Circuit's en banc decision of In re Grand Jury
Proceedings (Pavlick), 680 F.2d 1026 (5th Cir. 1982 (en banc), is recognized when
disclosure of the identity of the client would provide the "last link" of evidence:
We have long recognized the general rule that matters involving the payment of fees
and the identity of clients are not generally privileged. In re Grand Jury Proceedings,
(United States v. Jones), 517 F.2d 666 (5th Cir. 1975); see cases collected id. at 670 n.
2. There we also recognized, however, a limited and narrow exception to the general
rule, one that obtains when the disclosure of the client's identity by his attorney would
have supplied the last link in an existing chain of incriminating evidence likely to lead to
the client's indictment.
I join the majority in holding that the Sandiganbayan committed grave abuse of
discretion when it misdelineated the metes and bounds of the attorney-client privilege
by failing to recognize the exceptions discussed above.
Be that as it may, I part ways with the majority when it ruled that petitioners need not
prove they fall within the exceptions to the general rule. I respectfully submit that the
attorney-client privilege is not a magic mantra whose invocation will ipso facto and ipso
jure drape he who invokes it with its protection. Plainly put, it is not enough to assert the
privilege.11 The person claiming the privilege or its exceptions has the obligation to
present the underlying facts demonstrating the existence of the privilege.12 When these
facts can be presented only by revealing the very information sought to be protected by
the privilege, the procedure is for the lawyer to move for an inspection of the evidence in
an in camera hearing.13 The hearing can even be in camera and ex-parte. Thus, it has
been held that "a well-recognized means for an attorney to demonstrate the existence of
an exception to the general rule, while simultaneously preserving confidentiality of the
identity of his client, is to move the court for an in camera ex-parte hearing.14 Without
the proofs adduced in these in camera hearings, the Court has no factual basis to
determine whether petitioners fall within any of the exceptions to the general rule.
In the case at bar, it cannot be gainsaid that petitioners have not adduced evidence that
they fall within any of the above mentioned exceptions for as aforestated, the
Sandiganbayan did not recognize the exceptions, hence, the order compelling them to
reveal the identity of their client. In ruling that petitioners need not further establish the
factual basis of their claim that they fall within the exceptions to the general rule, the
majority held:
The circumstances involving the engagement of lawyers in the case at bench therefore
(without which there would be no attorney-client relationship). 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 word of Baird, "that would inevitably form the chain of testimony
necessary to convict the (client) of a . . . crime.
I respectfully submit that the first and third exceptions relied upon by the majority are not
self-executory but need factual basis for their successful invocation. The first exception
as cited by the majority is ". . . where a strong probability exists that revealing the
clients' name would implicate that client in the very activity for which he sought the
lawyer's advice." It seems to me evident that "the very activity for which he sought the
lawyer's advice" is a question of fact which must first be established before there can be
any ruling that the exception can be invoked. The majority cites Ex Parte Enzor, 15 and
U S v. Hodge and Zweig,16 but these cases leave no doubt that the "very activity" for
which the client sought the advice of counsel was properly proved. In both cases, the
"very activity" of the clients reveal they sought advice on their criminal activities. Thus,
in Enzor, the majority opinion states that 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."17 In Hodge, the "very activity" of the
clients deals with illegal importation of drugs. In the case at bar, there is no inkling
whatsoever about the "very activity" for which the clients of petitioners sought their
professional advice as lawyers. There is nothing in the records that petitioners were
consulted on the "criminal activities" of their client. The complaint did allege that
petitioners and their client conspired to commit crimes but allegations are not evidence.
So it is with the third exception which as related by the majority is "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."18 Again, the rhetorical
questions that answer themselves are: (1) how can we determine that PCGG has "no
case" against petitioners without presentation of evidence? and (2) how can we
determine that the name of the client is the only link without presentation of evidence as
to the other links? The case of Baird vs. Koerner19 does not support the "no need for
evidence" ruling of the majority. In Baird, as related by the majority itself, "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 US Internal Revenue Service (IRS).
the taxes understated.20 Once more, it is clear that the Baird court was informed of the
activity of the client for which the lawyer was consulted and the activity involved
probable violation of the tax laws. Thus, the Court held:
belief by the taxpayers that more tax or interest or penalties are due than the sum
employed — to advise his clients what, under the circumstances, should be done.
In fine, the factual basis for the ruling in Baird was properly established by the parties. In
the case at bar, there is no evidence about the subject matter of the consultation made
by petitioners' client. Again, the records do not show that the subject matter is criminal
in character except for the raw allegations in the Complaint. Yet, this is the unstated
predicate of the majority ruling that revealing the identity of the client ". . . would furnish
the only link that would form the chain of testimony necessary to convict an individual of
a crime." The silent implication is unflattering and unfair to petitioners who are marquee
names in the legal profession and unjust to their undisclosed client.
Finally, it ought to be obvious that petitioners' right to claim the attorney-client privilege
is resolutory of the Complaint against them, and hence should be decided ahead and
independently of their claim to equal protection of the law. Pursuant to the rule in legal
hermeneutics that courts should not decide constitutional issues unless unavoidable, I
also respectfully submit that there is no immediate necessity to resolve petitioners' claim
to equal protection of the law at this stage of the proceedings.
IN VIEW WHEREOF, I respectfully register a qualified dissent from the majority opinion.
Separate Opinions
VITUG, J., concurring:
The legal profession, despite all the unrestrained calumny hurled against it, is still the
noblest of professions. It exists upon the thesis that, in an orderly society that is
opposed to all forms of anarchy, it so occupies, as it should, an exalted position in the
proper dispensation of justice. In time, principles have evolved that would help ensure
its effective ministration. The protection of confidentiality of the lawyer-client relationship
is one, and it has since been an accepted firmament in the profession. It allows the
lawyer and the client to institutionalize a unique relationship based on full trust and
confidence essential in a justice system that works on the basis of substantive and
procedural due process. To be sure, the rule is not without its pitfalls, and demands
against it may be strong, but these problems are, in the ultimate analysis, no more than
mere tests of vigor that have made and will make that rule endure.
I see in the case before us, given the attendant circumstances already detailed in the
ponencia, a situation of the Republic attempting to establish a case not on what it
perceives to be the strength of its own evidence but on what it could elicit from a
counsel against his client. I find it unreasonable for the Sandiganbayan to compel
petitioners to breach the trust reposed on them and succumb to a thinly disguised threat
of incrimination.
Accordingly, I join my other colleague who vote for the GRANT of the petition.
DAVIDE, JR., J.: dissenting
The impressive presentation of the case in the ponencia of Mr. Justice Kapunan makes
difficult the espousal of a dissenting view. Nevertheless, I do not hesitate to express that
view because I strongly feel that this Court must confine itself to the key issue in this
special civil action for certiorari, viz., whether or not the Sandiganbayan acted with
grave abuse of discretion in not excluding the defendants, the petitioners herein, from
the Third Amended Complaint in Civil Case No. 0033. That issue, unfortunately, has
been simply buried under the avalanche of authorities upholding the sanctity of lawyer-
client relationship which appears to me to be prematurely invoked.
From the undisputed facts disclosed by the pleadings and summarized in the ponencia,
I cannot find my way clear to a conclusion that the Sandiganbayan committed grave
abuse of discretion in not acting favorably on the petitioners' prayer in their Comment to
the PCGG's Motion to Admit Third Amended Complaint.
The prerogative to determine who shall be made defendants in a civil case is initially
vested in the plaintiff, or the PCGG in this case. The control of the Court comes in only
when the issue of "interest" (§ 2, Rule 3, Rules of Court) as, e.g., whether an
indispensable party has not been joined, or whether there is a misjoinder of parties (§ 7,
8, and 9, Id.), is raised.
In the case below, the PCGG decided to drop or exclude from the complaint original co-
defendant Raul Roco because he had allegedly complied with the condition prescribed
by the PCGG, viz., undertake that he will reveal the identity of the principals for whom
he acted as nominee/stockholder in the companies involved in PCGG Case No. 0033.
In short, there was an agreement or compromise settlement between the PCGG and
Roco. Accordingly, the PCGG submitted a Third Amended Complaint without Roco as a
defendant. No obstacle to such an agreement has been insinuated. If Roco's revelation
violated the confidentiality of a lawyer-client relationship, he would be solely answerable
therefor to his principals/clients and, probably, to this Court in an appropriate
disciplinary action if warranted. There is at all no showing that Civil Case No. 0033
cannot further be proceeded upon or that any judgment therein cannot be binding
without Roco remaining as a defendant. Accordingly, the admission of the Third
Amended Complaint cannot be validly withheld by the Sandiganbayan.
Are the petitioners, who did not file a formal motion to be excluded but only made the
request to that effect as a rider to their Comment to the Motion to Admit Third Amended
Complaint, entitled to be excluded from the Third Amended Complaint such that denial
thereof would constitute grave abuse of discretion on the Sandiganbayan's part? To me,
the answer is clearly in the negative.
The petitioners seek to be accorded the same benefit granted to or to be similarly

treated as Roco. Reason and logic dictate that they cannot, unless they too would make
themselves like Roco. Otherwise stated, they must first voluntarily adopt for themselves
the factual milieu created by Roco and must bind themselves to perform certain
obligations as Roco. It is precisely for this that in response to the petitioners' comment
on the aforementioned Motion to Admit Third Amended Complaint the PCGG
manifested that it is willing to accord the petitioners the treatment it gave Roco provided
they would do what Roco had done, that is, disclose the identity of their
principals/clients and submit documents substantiating their claimed lawyer-client
relationship with the said principals/clients, as well as copies of deeds of assignments
the petitioners executed in favor of their principals/clients. The petitioners did not do so
because they believed that compliance thereof would breach the sanctity of their
fiduciary duty in a lawyer-client relationship.
It, indeed, appears that Roco has complied with his obligation as a consideration for his
exclusion from the Third Amended Complaint. The Sandiganbayan found that
action 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. 14-1 in relation to the Supreme
As a matter of fact, the PCGG presented evidence to substantiate Roco's compliance.

The ponencia itself so stated, thus:
. . . respondent PCGG presented evidence 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
(c) Letter of Roco, Bunag, and Kapunan Law Offices dated September 21, 1988 to the
respondent in behalf of private respondent Roco originally requesting the reinvestigation
and/or re-examination of evidence by the PCGG it Complaint in PCGG Case No. 33.
(Id., 5-6).
These are the pieces of evidence upon which the Sandiganbayan founded its
conclusion that the PCGG was satisfied with Roco's compliance. The petitioners have
not assailed such finding as arbitrary.
The ponencia's observation then that Roco did not refute the petitioners' contention that
he did not comply with his obligation to disclose the identity of his principals is entirely
irrelevant.
In view of their adamantine position, the petitioners did not, therefore, allow themselves
to be like Roco. They cannot claim the same treatment, much less compel the PCGG to
drop them as defendants, for nothing whatsoever. They have no right to make such a
demand for until they shall have complied with the conditions imposed for their
exclusion, they cannot be excluded except by way of a motion to dismiss based on the
grounds allowed by law (e.g., those enumerated in § 1, Rule 16, Rules of Court). The
rule of confidentiality under the lawyer-client relationship is not a cause to exclude a
party. It is merely aground for disqualification of a witness (§ 24, Rule 130, Rules of
Court) and may only be invoked at the appropriate time, i.e., when a lawyer is under
compulsion to answer as witness, as when, having taken the witness stand, he is
questioned as to such confidential communicator or advice, or is being otherwise
judicially coerced to produce, through subpoena duces tecum or otherwise, letters or
other documents containing the same privileged matter. But none of the lawyers in this
case is being required to testify about or otherwise reveal "any [confidential]
or with a view to, professional employment." What they are being asked to do, in line
with their claim that they had done the acts ascribed to them in pursuance of their
professional relation to their clients, is to identify the latter to the PCGG and the Court;
but this, only if they so choose in order to be dropped from the complaint, such
identification being the condition under which the PCGG has expressed willingness to
exclude them from the action. The revelation is entirely optional, discretionary, on their
part. The attorney-client privilege is not therefor applicable.
Thus, the Sandiganbayan did not commit any abuse of discretion when it denied the
petitioners' prayer for their exclusion as party-defendants because they did not want to
abide with any of the conditions set by the PCGG. There would have been abuse if the
Sandiganbayan granted the prayer because then it would have capriciously,
whimsically, arbitrarily, and oppressively imposed its will on the PCGG.
Again, what the petitioners want is their exclusion from the Third Amended Complaint or
the dismissal of the case insofar as they are concerned because either they are
invested with immunity under the principle of confidentiality in a lawyer-client
relationship, or the claims against them in Civil Case No. 0033 are barred by such
principle.
Even if we have to accommodate this issue, I still submit that the lawyer-client privilege
provides the petitioners no refuge. They are sued as principal defendants in Civil Case
No. 0033, a case of the recovery of alleged ill-gotten wealth. Conspiracy is imputed to
the petitioners therein. In short, they are, allegedly, conspirators in the commission of
the acts complained of for being nominees of certain parties.
Their inclusion as defendants in justified under § 15, Article XI of the Constitution —

which provides that the right of the State to recover properties unlawfully acquired by
public officials or employees, from them or from their nominees or transferees, shall not
be barred by prescription, laches or estoppel — and E.O. No. 1 of 28 February 1986,
E.O. No. 2 of 12 March 1986, E.O. No. 14 of 7 May 1986, and the Rules and
Regulations of the PCGG. Furthermore, § 2, Rule 110 of the Rules of Court requires
that the complaint or information should be "against all persons who appear to be
responsible for the offense involved."
Hypothetically admitting the allegations in the complaint in Civil Case No. 0033, I find
myself unable to agree with the majority opinion that the petitioners are immune from
suit or that they have to be excluded as defendants, or that they cannot be compelled to
reveal or disclose the identity of their principals, all because of the sacred lawyer-client
privilege.
This privilege is well put in Rule 130 of the Rules of Court, to wit:
§ 24. Disqualification by reason of privileged communication. — The following persons
cannot testify as to matters learned in confidence in the following cases:
xxx xxx xxx
(b) An attorney cannot, without the consent of his client, be examined as to any
or with a view to, professional employment, nor 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.
The majority seeks to expand the scope of the Philippine rule on the lawyer-client
privilege by copious citations of American jurisprudence which includes in the privilege
the identity of the client under the exceptional situations narrated therein. From the
plethora of cases cited, two facts stand out in bold relief. Firstly, the issue of privilege
contested therein arose in grand jury proceedings on different States, which are
preliminary proceedings before the filing of the case in court, and we are not even told
what evidentiary rules apply in the said hearings. In the present case, the privilege is
invoked in the court where it was already filed and presently pends, and we have the
foregoing specific rules above-quoted. Secondly, and more important, in the cases cited
by the majority, the lawyers concerned were merely advocating the cause of their clients
but were not indicted for the charges against their said clients. Here, the counsel
themselves are co-defendants duly charged in court as co-conspirators in the offenses
charged. The cases cited by the majority evidently do not apply to them.
Hence, I wish to repeat and underscore the fact that the lawyer-client privilege is not a
shield for the commission of a crime or against the prosecution of the lawyer therefor. I
quote, with emphases supplied, from 81 AM JUR 2d, Witnesses, § 393 to 395, pages
356-357:
§ 393. Effect of unlawful purpose.
The existence of an unlawful purpose prevents the attorney-client privilege from

attaching. The attorney-client privilege does not generally exist where the
representation is sought to further criminal or fraudulent conduct either past, present, or
future. Thus, a confidence received by an attorney in order to advance a criminal or
fraudulent purpose is beyond the scope of the privilege.
Observation: The common-law rule that the privilege protecting confidential
communications between attorney and client is lost if the relation is abused by a client
who seeks legal assistance to perpetrate a crime or fraud has been codified.
§ 394. Attorney participation.
The attorney-client privilege cannot be used to protect a client in the perpetration of a

crime in concert with the attorney, even where the attorney is not aware of his client's
purpose. The reason for the rule is that it is not within the professional character of a
lawyer to give advised on the commission of crime. Professional responsibility does not
countenance the use of the attorney-client privilege as a subterfuge, and all
conspiracies, either active or passive, which are calculated to hinder the administration
of justice will vitiate the privilege. In some jurisdictions, however, this exception to the
rule of privilege in confined to such intended acts in violation of the law as are mala in
se, as distinguished from those which are merely mala prohibita.
§ 395. Communication in contemplation of crime.
Communications between attorney and client having to do with the client's contemplated
criminal acts, or in aid or furtherance thereof, are not covered by the cloak of privilege
ordinarily existing in reference to communications between attorney and client. But, the
mere charge of illegality, not supported by evidence, will not defeat the privilege; there
must be at least prima facie evidence that the illegality has some foundation in fact.
Underhill also states:
There are many other cases to the same effect, for the rule is prostitution 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. In accordance with this rule, where a forged will or other false
instrument has come into possession of an attorney through the instrumentality of the
accused, with the hope and expectation that the attorney would take some action in
reference thereto, and the attorney does act, in ignorance of the true character of the
instrument, there is no privilege, inasmuch as full confidence has been withheld. The
attorney is then compelled to produce a forged writing against the client. The fact that
the attorney is not cognizant of the criminal or wrongful purpose, or, knowing it, attempts
to dissuade his client, is immaterial. The attorney's ignorance of his client's intentions
deprives the information of a professional character as full confidence has been
withheld. (H.C. Underhill, A Treatise on the Law of Criminal Case Evidence, vol. 2, Fifth
ed. (1956), Sec. 332, pp. 836-837; emphasis mine).
125 AMERICAN LAW REPORTS ANNOTATED, 516-519, summarizes the rationale of

the rule excepting communications with respect to contemplated criminal or fraudulent
acts, thus:
c. Rationale of rule excepting communications with respect to contemplated criminal or

fraudulent act.
Various reasons have been announced as being the foundation for the holdings that
communications with respect to contemplated criminal or fraudulent acts are not
privileged.
The reason perhaps most frequently advanced is that in such cases there is no
professional employment, properly speaking. Standard F. Ins. Co v. Smithhart (1919)
183 Ky 679, 211 SW. 441, 5 ALR 972; Cummings v. Com. (1927) 221 Ky 301, 298 SW
943; Strong v. Abner (1937) 268 Ky 502, 105 SW(2d) 599; People v. Van Alstine (1885)
57 Mich 69, 23 NW 594; Hamil & Co. v. England (1892) 50 Mo App 338; Carney v.
United R. Co. (1920) 205 Mo App 495, 226 SW 308; Matthews v. Hoagland (1891) 48
NJ Eq 455, 21 A 1054; Covency v. Tannahill (1841) 1 Hill (NY) 33, 37 AM Dec 287;
People ex rel. Vogelstein v. Warden (1934) 150 Misc 714, 270 NYS 362 (affirmed
without opinion in (1934) 242 App Div 611, 271 NYS 1059); Russell v. Jackson (1851) 9
Hare 387, 68 Eng Reprint 558; Charlton v. Coombes (1863) 4 Giff 372, 66 Eng Reprint
751; Reg. v. Cox (1884) LR 14 QB Div (Eng) 153 — CCR; Re Postlethwaite (1887) LR
35 Ch Div (Eng) 722.
In Reg. v. Cox (1884) LR 14 QB Div (Eng) 153 — CCR, the court said: "In order that the
rule may apply, there must be both professional confidence and professional
employment, but if the client has a criminal object in view in his communications with his
solicitor one of these elements must necessarily be absent. The client must either
conspire with his solicitor or deceive him. If his criminal object is avowed, the client does
not consult his adviser professionally, because it cannot be the solicitor's business to
further any criminal object. If the client does not avow his object, he reposes no
confidence, for the state of facts which is the foundation of the supposed confidence
does not exist. The solicitor's advice is obtained by a fraud."
So, in Standard F. Ins. Co. v. Smithhart (1919) 183 Ky 679, 211 SW 441, 5 ALR 972,
the court said: "The reason of the principle which holds such communications not to be
privileged is that it is not within the professional character of a lawyer to give advice
upon such subjects, and that it is no part of the profession of an attorney or counselor at
law to be advising persons as to how they may commit crimes or frauds, or how they
may escape the consequences of contemplated crimes and frauds. If the crime or fraud
has already been committed and finished, a client may advise with an attorney in regard
to it, and communicate with him freely, and the communications cannot be divulged as
evidence without the consent of the client, because it is a part of the business and duty
of those engaged in the practice of the profession of law, when employed and relied
upon for that purpose, to give advice to those who have made infractions of the laws;
and, to enable the attorney to properly advise and to properly represent the client in
court or when prosecutions are threatened, it is conducive to the administration of
justice that the client shall be free to communicate to his attorney all the facts within his
knowledge, and that he may be assured that a communication made by him shall not be
used to his prejudice."
The protection which the law affords to communications between attorney and client
has reference to those which are legitimately and properly within the scope of a lawful
employment, and does not extend to communications made in contemplation of a crime,
or perpetration of a fraud. Strong v. Abner (1937) 368 Ky 502, 105 SW (2d) 599.
The court in People v. Van Alstine (1885) 57 Mich 69, 23 NW 594, in holding not
privileged communications to an attorney having for their object the communication of a
crime, said: "They then partake of the nature of a conspiracy, or attempted conspiracy,
and it is not only lawful to divulge such communications, but under certain
circumstances it might become the duty of the attorney to do so. The interests of public
justice require that no such shield from merited exposure shall be interposed to protect
a person who takes counsel how he can safely commit a crime. The relation of attorney
and client cannot exist for the purpose of counsel in concocting crimes."
And in Coveney v. Tannahill (1841) 1 Hill (NY) 33, 37 Am Dec 287, the court was of the
opinion that there could be no such relation as that of attorney and client, either in the
commission of a crime, or in the doing of a wrong by force or fraud to an individual, the
privileged relation of attorney and client existing only for lawful and honest purposes.
If the client consults the attorney at law with reference to the perpetration of a crime,
and they co-operate in effecting it, there is no privilege, inasmuch as it is no part of the
lawyer's duty to aid in crime — he ceases to be counsel and becomes a criminal.
Matthews v. Hoagland (1891) 48 NJ Eq 455, 21 A 1054.
The court cannot permit it to be said that the contriving of a fraud forms part of the
professional business of an attorney or solicitor. Charlton v. Coombes (1863) 4 Giff 372,
66 Eng Reprint 751.
If the client does not frankly and freely reveal his object and intention as well as facts,
there is not professional confidence, and therefore no privilege. Matthews v. Hoagland
(NJ) supra. See to the same effect Carney v. United R. Co. (1920) 205 Mo App 495,
226 SW 308.
There is no valid claim of privilege in regard to the production of documents passing

between solicitor and client, when the transaction impeached is charged to be based
upon fraud, that is the matter to be investigated, and it is thought better that the alleged
privilege should suffer than that honestly and fair dealing should appear to be violated
with impunity. Smith v. Hunt (1901) 1 Ont L Rep 334.
In Tichborne v. Lushington, shorthand Notes (Eng) p. 5211 (cited in Reg. v. Cox (1884)
LR 14 QB Div (Eng) 172 — CCR), the chief justice said "I believe the law is, and
properly is, that if a party consults an attorney, and obtains advice for what afterwards
turns out to be the commission of a crime or a fraud, that party so consulting the
attorney has no privilege whatever to close the lips of the attorney from stating the truth.
Indeed, if any such privilege should be contended for, or existing, it would work most
grievous hardship on an attorney, who, after he had been consulted upon what
subsequently appeared to be a manifest crime and fraud, would have his lips closed,
and might place him in a very serious position of being suspected to be a party to the
fraud, and without his having an opportunity of exculpating himself . . . There is no
privilege in the case which I have suggested of a party consulting another, a
professional man, as to what may afterwards turn out to be a crime or fraud, and the
best mode of accomplishing it."
In Garside v. Outram (1856) 3 Jur NS (Eng) 39, although the question of privilege as to
communications between attorney and client was not involved, the question directly
involved being the competency of a clerk in a business establishment to testify as to
certain information which he acquired while working in the establishment, the court
strongly approved of a view as stated arguendo for plaintiff, in Annesley v. Anglesea
(1743) 17 How St Tr (Eng) 1229, as follows: "I shall claim leave to consider whether an
attorney may be examined as to any matter which came to his knowledge as an
attorney. If he is employed as an attorney in any unlawful or wicked act, his duty to the
public obliges him to disclose it; no private obligations can dispense with that universal
one which lies on every member of society to discover every design which may be
formed, contrary to the laws of society, to destroy the public welfare. For this reason, I
apprehend that if a secret which is contrary to the public good, such as a design to
commit treason, murder, or perjury, comes to the knowledge of an attorney, even in a
cause where he is concerned, the obligation to the public must dispense with the private
obligation to the client."
The court in McMannus v. State (1858) 2 Head (Tenn) 213, said; "It would be
monstrous to hold that if counsel was asked and obtained in reference to a
contemplated crime that the lips of the attorney would be sealed, when the facts might
become important to the ends of justice in the prosecution of crime. In such a case the
relation cannot be taken to exist. Public policy would forbid it."
And the court in Lanum v. Patterson (1909) 151 Ill App 36, observed that this rule was
not in contravention of sound public policy, but on the contrary, tended to the
maintenance of a higher standard of professional ethics by preventing the relation of
attorney and client from operating as a cloak for fraud.
Communications of a client to an attorney are not privileged if they were a request for
advice as to how to commit a fraud, it being in such a case not only the attorney's
privilege, but his duty, to disclose the facts to the court. Will v. Tornabells & Co. (1907) 3
Porto Rico Fed Rep 125. The court said: "We say this notwithstanding the comments of
opposing counsel as to the indelicacy of his position because of his being now on the
opposite side of the issue that arose as a consequence of the communication he
testifies about, and is interested in the cause to the extent of a large contingent fee, as
he confesses."
The object of prohibiting the disclosure of confidential communications is to protect the

client, and not to make the attorney an accomplice or permit him to aid in the
commission of a crime. People vs. Petersen (1901) 60 App Div 118, NYS 941.
The seal of personal confidence can never be used to cover a transaction which is in
itself a crime. People v. Farmer (1909) 194 NY 251, 87 NE 457.
As to disclosing the identity of a client, 81 AM JUR 2d, Witnesses, § 410 and 411,
pages 366-368, states:
§ 410. Name or identity of client.
Disclosure of a client's identity is necessary proof of the existence of the attorney-client

relationship and is not privileged information. Thus, the attorney-client privilege is
inapplicable even though the information was communicated confidentially to the
attorney in his professional capacity and, in some cases, in spite of the fact that the
attorney may have been sworn to secrecy, where an inquiry is directed to an attorney as
to the name or identity of his client. This general rule applies in criminal cases, as well
as in civil actions. Where an undisclosed client is a party to an action, the opposing
party has a right to know with whom he is contending or who the real party in interest is,
if not the nominal adversary.
§ 411. Disclosure of identity of client as breach of confidentiality.
The revelation of the identification of a client is not usually considered privileged, except
where so much has been divulged with regard to to legal services rendered or the
advice sought, that to reveal the client's name would be to disclose the whole
relationship and confidential communications. However, even where the subject matter
of the attorney-client relationship has already been revealed, the client's name has been
deemed privileged.
Where disclosure of the identity of a client might harm the client by being used against
him under circumstances where there are no countervailing factors, then the identity is
protected by the attorney-client privilege.
In criminal proceedings, a client's name may be privileged if information already

obtained by the tribunal, combined with the client's identity, might expose him to criminal
prosecution for acts subsequent to, and because of, which he had sought the advice of
his attorney.
Although as a general rule, the identity of a defendant in a criminal prosecution is a
matter of public record and, thus, not covered by the attorney-client privilege, where the
attorney has surrendered to the authorities physical evidence in his possession by way
of the attorney-client relationship, the state must prove the connection between the
piece of physical evidence and the defendant without in any way relying on the
testimony of the client's attorney who initially received the evidence and, thus, the
attorney may not be called to the stand and asked to disclose the identity of the client.
However, an attorney cannot refuse to reveal the identity of a person who asked him to
deliver stolen property to the police department, whether a bona fide attorney-client
relationship exists between them, inasmuch as the transaction was not a legal service
or done in the attorney's professional capacity.
Distinction: Where an attorney was informed by a male client that his female
acquaintance was possibly involved in [a] his-and-run accident, the identity of the
female did not come within scope of attorney-client privilege although the identity of the
male client was protected. (emphases supplied)
WIGMORE explains why the identity of a client is not within the lawyer-client privilege in
this manner:
§ 2313. Identity of client or purpose of suit. — The identity of the attorney's client or the
name of the real party in interest will seldom be a matter communicated in confidence
because the procedure of litigation ordinarily presupposes a disclosure of these facts.
Furthermore, so far as a client may in fact desire secrecy and may be able to secure
action without appearing as a party to the proceedings, it would be improper to sanction
such a wish. Every litigant is in justice entitled to know the identity of his opponents. He
cannot be obliged to struggle in the dark against unknown forces. He has by anticipation
the right, in later proceedings, if desired, to enforce the legal responsibility of those who
may have maliciously sued or prosecuted him or fraudulently evaded his claim. He has
as much right to ask the attorney "Who fees your fee?" as to ask the witness (966
supra). "Who maintains you during this trial?" upon the analogy of the principle already
examined (2298 supra), the privilege cannot be used to evade a client's responsibility
for the use of legal process. And if it is necessary for the purpose to make a plain
exception to the rule of confidence, then it must be made. (Wigmore on Evidence, vol.
8, (1961), p. 609; emphases supplied).
In 114 ALR, 1322, we also find the following statement:

1. Name or identity.
As is indicated in 28 R.C.L. p. 563, it appears that the rule making communications

between attorney and client privileged from disclosure ordinarily does not apply where
the inquiry is confined to the fact of the attorney's employment and the name of the
person employing him, since the privilege presupposes the relationship of client and
attorney, and therefore does not attach to its creation.
At the present stage of the proceedings below, the petitioners have not shown that they
are so situated with respect to their principals as to bring them within any of the
exceptions established by American jurisprudence. There will be full opportunity for
them to establish that fact at the trial where the broader perspectives of the case shall
have been presented and can be better appreciated by the court. The insistence for
their exclusion from the case is understandable, but the reasons for the hasty resolution
desired is naturally suspect.
We do not even have to go beyond our shores for an authority that the lawyer-client
privilege cannot be invoked to prevent the disclosure of a client's identity where the
lawyer and the client are conspirators in the commission of a crime or a fraud. Under
our jurisdiction, lawyers are mandated not to counsel or abet activities aimed at
defiance of the law or at lessening confidence in the legal system (Rule 1.02, Canon 1,
Code of Professional Responsibility) and to employ only fair and honest means to attain
the lawful objectives of his client (Rule 19.01, Canon 19, Id.). And under the Canons of
Professional Ethics, a lawyer must steadfastly bear in mind that his great trust is to be
performed within and not without the bounds of the law (Canon 15, Id.), that he
advances the honor of his profession and the best interest of his client when he renders
service or gives advice tending to impress upon the client and his undertaking exact
compliance with the strictest principles of moral law (Canon 32, Id.). These canons strip
a lawyer of the lawyer-client privilege whenever he conspires with the client in the
commission of a crime or a fraud.
I then vote to DENY, for want of merit, the instant petition.
Narvasa, C.J. and Regalado, J., concur.

This is an important petition for certiorari to annul the resolutions of the respondent
Sandiganbayan denying petitioners' motion to be excluded from the Complaint for
recovery of alleged ill-gotten wealth on the principal ground that as lawyers they cannot
be ordered to reveal the identity of their client.
First, we fast forward the facts. The Presidential Commission on Good Government
(PCGG) filed Civil Case No. 33 before the Sandiganbayan against Eduardo M.
Cojuangco, Jr., for the recovery of alleged ill-gotten wealth. Sued as co-defendants are
the petitioners in the cases at bar — lawyers Teodoro Regala, Edgardo J. Angara,
Avelino V. Cruz, Jose Concepcion, Rogelio A. Vinluan, Victor P. Lazatin, Eduardo
Escueta and Paraja Hayudini. Also included as a co-defendant is lawyer Raul Roco,
now a duly elected senator of the Republic. All co-defendants were then partners of the
law firm, Angara, Abello, Concepcion, Regala and Cruz Law Offices, better known as
the ACCRA Law Firm. The Complaint against Cojuangco, Jr., and the petitioners
alleged, inter alia, viz:
xxx xxx xxx
The wrongs committed by defendants acting singly or collectively and in unlawful

concert with one another, include the misappropriation and theft of public funds, plunder
of the nation's wealth, extortion, blackmail, bribery, embezzlement and other acts of
corruption, betrayal of public trust and brazen abuse of power as more fully described
(in the subsequent paragraphs of the complaint), all at the expense and to the grave
and irreparable damage of Plaintiff and the Filipino people.
Defendants Eduardo Cojuangco, Jr., Edgardo J. Angara, Jose C. Concepcion, Teodoro

D. Regala, Avelino V. Cruz, Regalio A. Vinluan, Eduardo U. Escueta, Paraja G.
Hayudini and Raul S. Roco of Angara, Concepcion, Cruz, Regala, and Abello law
offices (ACCRA) plotted, devised, schemed, conspired and confederated with each
COCOLIFE, COCOMARK, CIC and more than twenty other coconut levy funded
corporations, including the acquisition of the San Miguel Corporation shares and the
institutionalization through presidential directives of the coconut monopoly. through
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 7 June 1984.
In their Answer, petitioners alleged that the legal services offered and made available by
their firm to its clients include: (a) organizing and acquiring business organizations, (b)
acting as incorporators or stockholders thereof, and (c) delivering to clients the
corresponding documents of their equity holdings (i.e., certificates of stock endorsed in
blank or blank deeds of trust or assignment). They claimed that their activities were "in
furtherance of legitimate lawyering."
In the course of the proceedings in the Sandiganbayan, the PCGG filed a Motion to
Admit Third Amended Complaint and the Third Amended Complaint excluding lawyer
Roco as party defendant. Lawyer Roco was excluded on the basis of his promise to
reveal the identity of the principals for whom he acted as nominee/stockholder in the
companies involved in the case.
The Sandiganbayan ordered petitioners to comment on the motion. In their Comment,

petitioners demanded that they be extended the same privilege as their co-defendant
Roco. They prayed for their exclusion from the complaint. PCGG agreed but set the
following conditions: (1) disclosure of the identity of their client; (2) submission of
documents substantiating their lawyer-client relationship; and (3) submission of the
deeds of assignment petitioners executed in favor of their client covering their
respective shareholdings. The same conditions were imposed on lawyer Roco.
Petitioners refused to comply with the PCGG conditions contending that the attorney-
client privilege gives them the right not to reveal the identity of their client. They also
alleged that lawyer Roco was excluded though he did not in fact reveal the identity of
his clients. On March 18, 1992, the Sandiganbayan denied the exclusion of petitioners
in Case No. 33. It held:
xxx xxx xxx
whom they have acted, i.e., their principal, and that will be their choice. But until they do
ACCRA lawyers exists cannot even begin to the debated. The ACCRA lawyers cannot
course against him. This in turn has allowed the PCGG to exercise its power both under
The ACCRA lawyers cannot, therefore, begrudge the PCGG for keeping them as a
party defendants. In the same vein, they cannot compel the PCGG to be accorded the
same treatment accorded to Roco.
accorded to Raul S. Roco is DENIED for lack of merit.
Sandiganbayan later denied petitioners' motions for reconsideration in its resolutions

dated May 21, 1988 and September 3, 1992.
In this petition for certiorari, petitioners contend:

I

ACCRA lawyers who indisputably acted as lawyers in serving as nominee-stockholders,
to the strict application of the law agency.
II

of equal treatment.

Mr. Roco and violation of the equal protection clause.
III
by the PCGG.
of the client(s).
IV

The petition at bar is atypical of the usual case where the hinge issue involves the
applicability of attorney-client privilege. It ought to be noted that petitioners were
included as defendants in Civil Case No. 33 as conspirators. Together with Mr.
Cojuangco, Jr., they are charged with having ". . . conspired and confederated with each
COCOLIFE, COCOMARK, CICI and more than twenty other coconut levy funded
corporations, including the acquisition of San Miguel Corporation shares and the
institutionalization through presidential directives of the coconut monopoly." To stress,
petitioners are charged with having conspired in the commission of crimes. The issue of
attorney-client privilege arose when PCGG agreed to exclude petitioners from the
complaint on condition they reveal the identity of their client. Petitioners refused to
comply and assailed the condition on the ground that to reveal the identity of their client
will violate the attorney-client privilege.
It is thus necessary to resolve whether the Sandiganbayan committed grave abuse of

discretion when it rejected petitioners' thesis that to reveal the identity of their client
would violate the attorney-client privilege. The attorney-client privilege is the oldest of
the privileges for confidential communications known to the common law.1 For the first
time in this jurisdiction, we are asked to rule whether the attorney-client privilege
includes the right not to disclose the identity of client. The issue poses a trilemma for its
resolution requires the delicate balancing of three opposing policy considerations. One
overriding policy consideration is the need for courts to discover the truth for truth alone
is the true touchstone of justice.2 Equally compelling is the need to protect the
adversary system of justice where truth is best extracted by giving a client broad
privilege to confide facts to his counsel.3 Similarly deserving of sedulous concern is the
need to keep inviolate the constitutional right against self-incrimination and the right to
effective counsel in criminal litigations. To bridle at center the centrifugal forces of these
policy considerations, courts have followed to prudential principle that the attorney-client
privilege must not be expansively construed as it is in derogation of the search for
truth.4 Accordingly, a narrow construction has been given to the privilege and it has
been consistently held that "these competing societal interests demand that application
of the privilege not exceed that which is necessary to effect the policy considerations
underlying the privilege, i.e., the privilege must be upheld only in those circumstances
for which it was created.'"5
Prescinding from these premises, our initial task is to define in clear strokes the
substantive content of the attorney-client privilege within the context of the distinct
issues posed by the petition at bar. With due respect, I like to start by stressing the
irreducible principle that the attorney-client privilege can never be used as a shield to
commit a crime or a fraud. Communications to an attorney having for their object the
commission of a crime ". . . partake the nature of a conspiracy, and it is not only lawful
to divulge such communications, but under certain circumstances it might become the
duty of the attorney to do so. The interests of public justice require that no such shield
from merited exposure shall be interposed to protect a person who takes counsel how
he can safely commit a crime. The relation of attorney and client cannot exist for the
purpose of counsel in concocting crimes."6 In the well chosen words of retired Justice
Quiason, a lawyer is not a gun for hire.7 I hasten to add, however, that a mere
allegation that a lawyer conspired with his client to commit a crime or a fraud will not
defeat the privilege.8 As early as 1933, no less than the Mr. Justice Cardozo held in
Clark v. United States9 that: "there are early cases apparently to the effect that a mere
charge of illegality, not supported by any evidence, will set the confidences free . . . But
this conception of the privilege is without support . . . To drive the privilege away, there
must be 'something to give colour to the charge;' there must be prima facie evidence
that it has foundation in fact." In the petition at bar, however, the PCGG appears to have
relented on its original stance as spelled out in its Complaint that petitioners are co-
conspirators in crimes and cannot invoke the attorney-client privilege. The PCGG has
agreed to exclude petitioners from the Complaint provided they reveal the identity of
their client. In fine, PCGG has conceded that petitioner are entitled to invoke the
attorney-client privilege if they reveal their client's identity.
Assuming then that petitioners can invoke the attorney-client privilege since the PCGG
is no longer proceeding against them as co-conspirators in crimes, we should focus on
the more specific issue of whether the attorney-client privilege includes the right not to
divulge the identity of a client as contended by the petitioners. As a general rule, the
attorney-client privilege does not include the right of non-disclosure of client identity.
The general rule, however, admits of well-etched exceptions which the Sandiganbayan
failed to recognize. The general rule and its exceptions are accurately summarized in In
re Grand Jury Investigation,10 viz:
The federal forum is unanimously in accord with the general rule that the identity of a
client is, with limited exceptions, not within the protective ambit of the attorney-client
privilege. See: In re Grand Jury Proceedings (Pavlick), 680 F.2d 1026, 1027 (5th Cir.
1982) (en banc); In re Grand Jury Proceedings (Jones), 517 F. 2d 666, 670-71 (5th Cir.
1975); In re Grand Jury Proceedings (Fine), 651 F. 2d 199, 204 (5th Cir. 1981); Frank v.
Tomlinson, 351 F.2d 384 (5th Cir. 1965), cert. denied, 382 U.S. 1082, 86 S.Ct. 648, 15
L.Ed.2d 540 (1966); In re Grand Jury Witness (Salas), 695 F.2d 359, 361 (9th Cir.
1982); In re Grand Jury Subpoenas Duces Tecum (Marger/Merenbach), 695 F.2d 363,
365 (9th Cir. 1982); In re Grand Jury Proceedings (Lawson), 600 F.2d 215, 218 (9th Cir.
1979).
The Circuits have embraced various "exceptions" to the general rule that the identity of
a client is not within the protective ambit of the attorney-client privilege. All such
exceptions appear to be firmly grounded in the Ninth Circuit's seminal decision in Baird
v. Koerner, 279 F.2d 633 (9th Cir. 1960). In Baird the IRS received a letter from an
attorney stating that an enclosed check in the amount of $12,706 was being tendered
for additional amounts due from undisclosed taxpayers. When the IRS summoned the
attorney to ascertain the identity of the delinquent taxpayers the attorney refused
identification assertion the attorney-client privilege. The Ninth Circuit, applying California
law, adjudged that the "exception" to the general rule as pronounced in Ex parte
McDonough, 170 Cal. 230, 149 P. 566 (1915) controlled:
The name of the client will be considered privileged matter where the circumstances of
the case are such that the name of the client is material only for the purpose of showing
an acknowledgment of guilt on the part of such client of the very offenses on account of
which the attorney was employed.
Baird, supra, 279 F.2d at 633. The identity of the Baird taxpayer was adjudged within
this exception to the general rule. The Ninth Circuit has continued to acknowledge this
exception.
A significant exception to this principle of non-confidentiality holds that such information

may be privileged when the person invoking the privilege is able to show that a strong
possibility exists that disclosure of the information would implicate the client in the very
matter for which legal advice was sought in the first case.
In re Grand Jury Subpoenas Duces Tecum (Marger/Merenbach), 695 F.2d 363, 365
(9th Cir. 1982). Accord: United States v. Hodge and Zweig, 548 F.2d 1347, 1353 (9th
Cir. 1977); In re Grand Jury Proceedings (Lawson), 600 F.2d 215, 218 (9th Cir. 1979);
United States v. Sherman, 627 F.2d 189, 190-91 (9th Cir. 1980); In re Grand Jury
Witness (Salas), 695 F.2d 359, 361 (9th Cir. 1982). This exception, which can perhaps
be most succinctly characterized as the "legal advice" exception, has also been
recognized by other circuits. See: In re Walsh, 623 F.2d 489, 495 (7th Cir.), cert.
denied, 449 U.S. 994, 101 S. Ct. 531, 66 L.Ed.2d 291 (1980); In re Grand Jury
Investigation (Tinari), 631 F.2d 17, 19 (3d Cir 1980), cert. denied, 449 U.S.1083, 101
S.Ct. 869-70, 66 L.Ed.2d 808 (1981). Since the legal advice exception is firmly
grounded in the policy of protecting confidential communications, this Court adopts and
applies its principles herein. See: In re Grand Jury Subpoenas Duces Tecum
(Marger/Merenbach), supra.
It should be observed, however that the legal advice exception may be defeated
through a prima facie showing that the legal representation was secured in furtherance
of present or intended continuing illegality, as where the legal representation itself is
part of a larger conspiracy. See: In re Grand Jury Subpoenas Decus Tecum
(Marger/Merenbach), supra, 695 F.2d at 365 n. 1; In re Walsh, 623 F.2d 489, 495 (7th
Cir.), cert. denied, 449, U.S. 994, 101 S.Ct. 531, 66 L.Ed. 2d 291 (1980); In re Grand
Jury Investigation (Tinari), 631 F.2d 17, 19 (3d Cir 1980); cert. denied, 449 U.S. 1083,
101 S.Ct. 869, 66 L.Ed. 2d 808 (1981); In re Grand Jury Proceedings (Lawson), 600
F.2d 215, 218 (9th Cir. 1979); United States v. Friedman, 445 F.2d 1076, 1086 (9th Cir.
1971). See also: Clark v. United States, 289 U.S. 1, 15, 53, S.Ct. 465, 469, 77, L.Ed.
993 (1933); In re Grand Jury Proceedings (Pavlick), 680 F.2d 1026, 1028-29 (5th Cir.
1982 (en banc).
Another exception to the general rule that the identity of a client is not privileged arises
where disclosure of the identity would be tantamount to disclosing an otherwise
protected confidential communication. In Baird, supra, the Ninth Circuit observed:
If the identification of the client conveys information which ordinarily would be conceded
to be part of the usual privileged communication between attorney and client, then the
privilege should extend to such identification in the absence of another factors.
Id., 279 F.2d at 632. Citing Baird, the Fourth Circuit promulgated the following
exception:
To the general rule is an exception, firmly embedded as the rule itself. The privilege
may be recognized where so much of the actual communication has already been
disclosed that identification of the client amounts to disclosure of a confidential
communication.
NLRB v. Harvey, 349 F.2d 900, 905 (4th Cir. 1965). Accord: United States v. Tratner,
511 F.2d 248, 252 (7th Cir. 1975); Colton v. United States, 306 F.2d 633, 637 (2d Cir.
1962), cert. denied, 371 U.S. 951, 83 S.Ct. 505, 9 L.Ed.2d 499 1963); Tillotson v.
Boughner, 350 F.2d 663, 666 (7th Cir. 1965); United States v. Pape, 144 F.2d 778, 783
(2d Cir. 1944). See also: Chirac v. Reinecker, 24 U.S. (11 Wheat) 280, 6 L.Ed. 474
(1826). The Seventh Circuit has added to the Harvey exception the following
emphasized caveat:
The privilege may be recognized where so much of the actual communication has
already been disclosed [not necessarily by the attorney, but by independent sources as
well] that identification of the client [or of fees paid] amounts to disclosure of a
confidential communication.
United States vs. Jeffers, 532 F.2d 1101, 1115 (7th Cir. 1976 (emphasis added). The
Third Circuit, applying this exception, has emphasized that it is the link between the
client and the communication, rather than the link between the client and the possibility
of potential criminal prosecution, which serves to bring the client's identity within the
protective ambit of the attorney-client privilege. See: In re Grand Jury Empanelled
February 14, 1978 (Markowitz), 603 F.2d 469, 473 n. 4 (3d Cir. 1979). Like the "legal
advice" exception, this exception is also firmly rooted in principles of confidentiality.
Another exception, articulated in the Fifth Circuit's en banc decision of In re Grand Jury
Proceedings (Pavlick), 680 F.2d 1026 (5th Cir. 1982 (en banc), is recognized when
disclosure of the identity of the client would provide the "last link" of evidence:
We have long recognized the general rule that matters involving the payment of fees
and the identity of clients are not generally privileged. In re Grand Jury Proceedings,
(United States v. Jones), 517 F.2d 666 (5th Cir. 1975); see cases collected id. at 670 n.
2. There we also recognized, however, a limited and narrow exception to the general
rule, one that obtains when the disclosure of the client's identity by his attorney would
have supplied the last link in an existing chain of incriminating evidence likely to lead to
the client's indictment.
I join the majority in holding that the Sandiganbayan committed grave abuse of
discretion when it misdelineated the metes and bounds of the attorney-client privilege
by failing to recognize the exceptions discussed above.
Be that as it may, I part ways with the majority when it ruled that petitioners need not
prove they fall within the exceptions to the general rule. I respectfully submit that the
attorney-client privilege is not a magic mantra whose invocation will ipso facto and ipso
jure drape he who invokes it with its protection. Plainly put, it is not enough to assert the
privilege.11 The person claiming the privilege or its exceptions has the obligation to
present the underlying facts demonstrating the existence of the privilege.12 When these
facts can be presented only by revealing the very information sought to be protected by
the privilege, the procedure is for the lawyer to move for an inspection of the evidence in
an in camera hearing.13 The hearing can even be in camera and ex-parte. Thus, it has
been held that "a well-recognized means for an attorney to demonstrate the existence of
an exception to the general rule, while simultaneously preserving confidentiality of the
identity of his client, is to move the court for an in camera ex-parte hearing.14 Without
the proofs adduced in these in camera hearings, the Court has no factual basis to
determine whether petitioners fall within any of the exceptions to the general rule.
In the case at bar, it cannot be gainsaid that petitioners have not adduced evidence that
they fall within any of the above mentioned exceptions for as aforestated, the
Sandiganbayan did not recognize the exceptions, hence, the order compelling them to
reveal the identity of their client. In ruling that petitioners need not further establish the
factual basis of their claim that they fall within the exceptions to the general rule, the
majority held:
The circumstances involving the engagement of lawyers in the case at bench therefore
(without which there would be no attorney-client relationship). 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 word of Baird, "that would inevitably form the chain of testimony
necessary to convict the (client) of a . . . crime.
I respectfully submit that the first and third exceptions relied upon by the majority are not
self-executory but need factual basis for their successful invocation. The first exception
as cited by the majority is ". . . where a strong probability exists that revealing the
clients' name would implicate that client in the very activity for which he sought the
lawyer's advice." It seems to me evident that "the very activity for which he sought the
lawyer's advice" is a question of fact which must first be established before there can be
any ruling that the exception can be invoked. The majority cites Ex Parte Enzor, 15 and
U S v. Hodge and Zweig,16 but these cases leave no doubt that the "very activity" for
which the client sought the advice of counsel was properly proved. In both cases, the
"very activity" of the clients reveal they sought advice on their criminal activities. Thus,
in Enzor, the majority opinion states that 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."17 In Hodge, the "very activity" of the
clients deals with illegal importation of drugs. In the case at bar, there is no inkling
whatsoever about the "very activity" for which the clients of petitioners sought their
professional advice as lawyers. There is nothing in the records that petitioners were
consulted on the "criminal activities" of their client. The complaint did allege that
petitioners and their client conspired to commit crimes but allegations are not evidence.
So it is with the third exception which as related by the majority is "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."18 Again, the rhetorical
questions that answer themselves are: (1) how can we determine that PCGG has "no
case" against petitioners without presentation of evidence? and (2) how can we
determine that the name of the client is the only link without presentation of evidence as
to the other links? The case of Baird vs. Koerner19 does not support the "no need for
evidence" ruling of the majority. In Baird, as related by the majority itself, "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 US Internal Revenue Service (IRS).
the taxes understated.20 Once more, it is clear that the Baird court was informed of the
activity of the client for which the lawyer was consulted and the activity involved
probable violation of the tax laws. Thus, the Court held:
belief by the taxpayers that more tax or interest or penalties are due than the sum
employed — to advise his clients what, under the circumstances, should be done.
In fine, the factual basis for the ruling in Baird was properly established by the parties. In
the case at bar, there is no evidence about the subject matter of the consultation made
by petitioners' client. Again, the records do not show that the subject matter is criminal
in character except for the raw allegations in the Complaint. Yet, this is the unstated
predicate of the majority ruling that revealing the identity of the client ". . . would furnish
the only link that would form the chain of testimony necessary to convict an individual of
a crime." The silent implication is unflattering and unfair to petitioners who are marquee
names in the legal profession and unjust to their undisclosed client.
Finally, it ought to be obvious that petitioners' right to claim the attorney-client privilege
is resolutory of the Complaint against them, and hence should be decided ahead and
independently of their claim to equal protection of the law. Pursuant to the rule in legal
hermeneutics that courts should not decide constitutional issues unless unavoidable, I
also respectfully submit that there is no immediate necessity to resolve petitioners' claim
to equal protection of the law at this stage of the proceedings.
IN VIEW WHEREOF, I respectfully register a qualified dissent from the majority opinion.
Footnotes
1 Agricultural Consultancy Services, Inc.; Agricultural Investors, Inc.; Anglo Ventures,

Inc.; Archipelago Realty Corporation; AP Holdings, Inc.; ARC Investment, Inc. ASC
Investment, Inc.; Autonomous Development Corporation; Balete Ranch, Inc.; Black
Stallion Ranch, Inc.; Cagayan de Oro Oil Company, Inc.; Christenses Plantation
Company; Cocoa Investors, Inc.; Coconut Investment Company (CIC); Cocofed
Marketing Corporation (COCOMARK) Coconut Davao Agricultural Aviation, Inc.;
Discovery Realty Corporation; Dream Pastures, Inc.; Echo Ranch, Inc.; ECJ and Sons
Agricultural Management, Inc.; Far East Ranch, Inc.; Filso v Shipping Co. Inc.; First
Meridian Development, Inc.; First United Transport, Inc.; Granexport Manufacturing
Corporation; Habagat Realty Development, Inc.; Hyco Agricultural, Inc.; Iligan Coconut
Industries, Inc.; Kalawakan Resorts, Inc.; Kaunlaran Agricultural Corporation; Labayog
Air Terminals, Inc.; Landair International Marketing Corporation; Legaspi Oil Co., Inc.;
LHL Cattle Corporation; Lucena Oil Factory, Inc.; Meadow Lark Plantation, Inc.;
Metroplex Commodities, Inc.; Misty Mountains Agricultural Corporation; Northern
Carriers Corporation; Northwest Contract Traders, Inc.; Ocean Side Maritime
Enterprises, Inc.; Oro Verde Services; Pastoral Farms, Inc.; PCY Oil Manufacturing
Corporation; Philippine Coconut Producers Federation, Inc.; [(COCOFED) as an entity
and in representation of the "so-called more than one million member-coconut
farmers"]; Philippine Radio Corporation, Inc.; Philippine Technologies, Inc.; Primavera
Farms, Inc.; Punong-Bayan Housing Development Corp.; Pura Electric Co., Inc.; Radio
Audience Developers Integrated Organization, Inc.; Radio Pilipino Corporation; Rancho
Grande, Inc.; Randy Allied Ventures, Inc.; Reddee Developers, Inc.; Rocksteel
Resources, Inc.; Roxas Shares, Inc.; San Esteban Development Corporation; San
Miguel Corporation Officers Incorporation; San Pablo Manufacturing Corporation;
Southern Luzon Oil Mills, Inc.; Silver Leaf Plantation, Inc.; Soriano Shares, Inc.;
Southern Services Traders, Inc.; Southern Star Cattle Corporation; Spade 1 Resorts
Corporation; Tagum Agricultural Development Corporation; Tedeum Resources, Inc.;
Thilagro Edible Oil Mills Inc.; Toda Holdings Inc.; United Coconut Oil Mills, Inc.; United
Coconut Planters Life Assurance Corporation (COCOLIFE); Unexplored Land
Developers, Inc.; Valhalla Properties Inc.; Verdant Plantations, Inc.; Vesta Agricultural
Corporation; and Wings Resort Corporation.
2 Petition in G.R. No. 105938, Rollo, p. 6.
3 Id., Annex "B," Rollo, p. 45.
4 Id., Annex "C," Rollo, p. 143.
5 Id., Annex "A," Rollo, p. 39.
6 Id., Annex "A," Rollo, p. 39.
7 Petitioner in G.R. No. 108113, Annexes "E," Rollo, p. 161.
8 Id., Annex "D," Rollo, p. 145.

9 Petition in G.R. No. 105938, Annex "E," Rollo, p. 161.
10 Id., Annexes, "G," "H" and "I," Rollo, pp. 191-196.
11 Id., Rollo, p. 8.
12 Id., Annex "K," p. 222.
13 Rollo, p. 303.
14 Id., at 285.
15 Id., at 287.
16 Annex "F," Rollo, pp. 181-182.
17 Coquia, Jorge, Principles of Roman Law (Manila: Central Law Book Supply, Inc.,
1979), p. 116.
18 Id., at 122.
19 Kelly v. Judge of Recorders' Court [Kelly v. Boyne], 239 Mich. 204, 214 NW 316, 53
A.L.R. 273; Rhode Island Bar Association v. Automobile Service Association, 179 A.
139, 100 ALR 226.
20 Curtis v. Richards, 95 Am St. Rep. 134; also cited in Martin, Ruperto, Legal and
Judicial Ethics (Manila, Premium Printing Press, 1988) at p. 90.
21 Rhode Island Bar Association v. Automobile Service Association, 100 ALR 226;
Cooper v. Bell, 153 SW 844; Ingersoll v. Coal Creek Co., 98 SW 173; Armstrong v. 163
NW 179; Re Mosness, 20 Am. Rep. 55.
22 Re Paschal (Texas v. White) 19 L. Ed. 992; Stockton v. Ford, 11 How. (US) 232; 13
L. Ed. 676; Berman v. Cookley, 137 N <E> 667; 26v ALR 92; Re Dunn 98 NE 914.
23 Agpalo, Ruben, Legal Ethics (Manila: Rex Book Store, 1992), p. 136.
24 Hilado v. David, 84 Phil. 569; Hernandez v. Villanueva, 40 Phil. 775.
25 C. WOLFRAM, MODERN LEGAL ETHICS, 146 (1986).
26 52 U. S. ( 11 How.) 232, 247, 13 L. Ed. 676 (1850).
27 Ibid.
28 Act No. 190, sec. 383.
29 Rules of Court, Rule 130, sec. 24 (b).
30 People v. Warden of Country Jail, 270 NYS 362 [1934].
31 58 AmJur 2d Witnesses sec. 507, 285.
32 Id.
33 5 Wigmore on Evidence, sec. 23 13, pp. 607-608. See also, U. S. v. Flores, 628 F2d
521; People v. Doe, 371 N.E. 2d. 334.
34 270 ALA 254 (1960).
35 548 F 2d 1347 (9th Cir. 197).
36 Id. (citations omitted).
37 249 NYS 631 (1931).
38 Id., at 632.
39 Id., at 634.
40 87 NYS 1059 (1904).
41 Id.
42 279 F. 2d 623 (1960).
43 Id., at 633.
44 Supra, note 20, at 257.
45 R. ARONSON, PROFESSIONAL RESPONSIBILITY, 203 (1991).
46 Hays v. Wood, 25 Cal. 3d 770, 603 P. 2d 19, 160 Cal. Rptr. 102 (1979); Ex parte
McDonough, 180 Cal. 230, 149 P. 566 (1915); In re Grand Jury Proceedings, 600 F. 2d
215, 218 (9th Cir. 1979); United States v. Hodge & Zweig, 548 F. 2d 1347, 1353 (9th
Cir. 1977); In re Michaelson, 511 F. 2d 882, 888 (9th Cir.), cert. denied, 421 U.S. 978,
95 S. Ct. 1979, 44 L Ed. 2d 469 (1975); Baird v. Koerner, 279 F. 2d 623, 634-35 (9th
Cir. 1960) (applying California law); United States v. Jeffers, 532 F. 2d 1101, 114 15
(7th Cir. 1976), aff'd in part and vacated in part, 432 U.S. 137, 97 S. Ct. 2207, 53 L. Ed.
2d 168 (1977); In re Grand Jury Proceedings, 517 F. 2d 666, 670 71 (5th Cir. 1975);
Tillotson v. Boughner, 350 F. 2d, 663, 665-66 (7th Cir. 1965); NLRB v. Harvey, 349 F.
2d 900, 905 (4th Cir. 1965); Colton v. United States, 306 F. 2d 633, 637 (2d Cir. 1962),
cert. denied, 371 U.S. 951, 83 S Ct. 505, 9 L. Ed.2d 499 (1963).
47 Baird v. Koerner, supra. The general exceptions to the rule of privilege are: "a)
Communications for illegal purposes, generally. b) Communications as to crime; and c)
Communications as to fraud." 58 Am Jur 515-517. 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. This includes contemplated criminal acts or in aid or furtherance thereof.
But, "Statements and communications regarding the commission of a crime already
committed, made by the party who committed it to an attorney, consulted as such are,
of course privileged communications, whether a fee has or has not been paid. "Id. In
such instances even the name of the client thereby becomes privileged.
48 58 Am Jur 515-517.
49 Supra, note 40.
50 Bacon v. Frisbie, 80 NY 394, 399.
51 517 F. 2d 66 6, 671 (5th Cir., 1965).
52 350 F. 2d 663 (7th Cir., 1965).
53 See, In re Shawmut Mining Co., 87 N.Y.S. 1059 (1904).
54 US Case No. 491, 93-7418 (1994).
55 US Case No. 92-2439 (1993).

56 249 NY 458 (1920).
57 Lorenzana Food Corporation v. Daria, 197 SCRA 428.
58 Lerner, Max, The Mind and Faith of Justice Holmes (New York; Halycon House,
Garden City, 1943), p. 28.
59 Rollo, p. 164
60 Id., at 155.
61 As manifested by the PCGG, the following documents constituted the basis for the
PCGG's decision to drop private respondent:
1. A letter to the PCGG dated 24 May 1989 signed by Mr. Augusto Sanchez, as counsel
for Mr. Roco reiterating an earlier request for reinvestigation of the case;
2. An affidavit dated 8 March 1989 signed and executed by Mr. Roco which was an
enclosure to the letter of 24 May 1989;
3. A letter to the PCGG dated 21 September 1988 by the Roco, Bunag and Kapunan
Law offices, which was the original request for reinvestigation and/or reexamination of
the evidence in the possession of the PCGG. Rollo, p. 238.
62 Gumabon v. Director of Prisons, 37 SCRA 420 (1971).
63 Id.
64 Article III, Section 1 of the Constitution provides:

Sec. 1. No person shall be deprived of life, liberty, or property without due process of
law, nor shall any person be denied the equal protection of the laws.
1 8 J. Wigmore, Evidence, S. 2290 (McNaughton rev. 1961).
2 In re Selser 15 N.J. 393, 405-406, 105 A. 2d 395, 401-402 (1954).
3 See Note, Professional Responsibility and In re Ryder: Can Attorney Serve Two
Masters? 54 Va. L. Rev. 145 (1968).
4 United States v. Nixon, 418 US 683, 710, 94 S.Ct. 3090, 41 L.Ed. 2d 1039 (1974).
5 In re Grand Jury Investigation No. 83-2-35, 83-1290, 723 F2d. 447 (1983) citing In re
Walsh, 623 F2d 489, cert. denied 449 US 994, 101 S.Ct. 531, 66 L.Ed.2d 291 (1980);
Fisher v. United States, 425 US 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1975).
6 125 American Law Reports Annotated 516-519 citing People v. Van Alstine, 57 Mich
69, 23 NW 594.
7 Millare v. Montero, 246 SCRA 1.
8 81 AM JUR 2d. Witnesses, Section 395, pp. 356-357.
9 289 US 1 (1933).
10 Op cit.
11 Hoffman v. United States, 341 US 479, 71 S. Ct. 814, 95 L.ed. 118 (1951).
12 US, et al. v. Tratner, 511 F., 2d, 248-255 (1975); US v. Landoff, 591 F 2d 36 (1978);
US v. Bartlett, 449 F 2d 700 (1971); cert. denied, 504 US 932, 92 S-Ct. 990, 30 L.ed. 2d
808 (1972).
13 US v. Tratner, op cit., p. 252 citing US v. Johnson, 465 F2d 793 (1972).
14 In re Grand Jury Investigation No. 83-2-35, 723 F2d 446 (1983).
15 270 ALA 254 (1960).
16 548 F2d 1347 (9th Cir. 197).
17 See page 25 of majority decision.
18 See page 31 of majority decision.
19 279 F2d 623 (1960).
20 See pp. 31-32 of majority decision.

REGALA vs. SANDIGANBAYAN (DIGEST)
September 29, 2019 by CaseDigestsPh
G.R. No. 105938 (1996)

Kapunan, J.
Attorney-Client Privilege
PARTIES:
Petitioners Teodoro R. Regala,
Edgardo J. Angara,
Jose C. Concepcion,
Rogelio A. Vinluan,
Victor P. Lazatin,
Eduardo U. Escueta
Respondents The Honorable Sandiganbayan (First Division),
Republic of the Philippines acting through the PCGG, Raul Roco
SUMMARY:
Petitioners are partners of the ACCRA Law Firm. One of their clients (allegedly Eduardo
Cojuangco) engaged them to organize corporations and serve as nominees of the
client. The PCGG filed a case for recovery of ill-gotten wealth against Cojuangco. The
PCGG allege that the numerous corporations (including the ones organized by the
petitioners for their unnamed client) were organized to serve as conduit for ill-gotten
wealth of Cojuangco and President Marcos. The PCGG impleaded the petitioners as
defendants in the case against Cojuangco. They will only be dropped as defendants if
they (1) disclose the identity of their clients; (2) submit documents substantiating the
lawyer-client relationship; and (3) submit the deeds of assignments that petitioners
executed in favor of their clients covering their respective shareholdings. The petitioners
refused to give in to the conditions invoking attorney-client privilege. The SC agreed
with the petitioners and held that 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. There are three principal exceptions to the general rule:
EN BANC
G.R. No. L-13135 May 31, 1961
ERIBERTO DEL ESPIRITU, plaintiff-appellant,
vs.
DOMINGO Q. DAVID, defendant-appellant.
x---------------------------------------------------------x
G.R. No. L-13136 May 31, 1961
ERIBERTO DEL ESPIRITU, plaintiff-appellant,
vs.
MAXIMINO TORRES, defendant-appellee.
Filemon Cajator for plaintiff-appellant.
Artemio C. Macalino for defendant-appellee.
CONCEPCION, J.:
Appeal from a decision of the Court of First Instance of Pampanga, dismissing the above entitled cases,
with costs against the plaintiff and without prejudice to the filing of the proper action in the Court of
Agrarian Relations. The appeal is before us, the only issue for determination therein being that of
jurisdiction of the lower court over the subject matter of these cases.
The same were begun separately in the Justice of the Peace Court of Bacolor, Pampanga, on January 26,
1954. The plaintiff in both is Eriberto del Espiritu, whereas the defendant in case L-13135 is Domingo Q.
David and the defendant in case L-13136 is Maximino Torres. The complaints in both cases are for the
recovery of sums of money allegedly due from each of the defendants, as follows:
Domingo Q. David —
1) May 12, 1952, for the repair of his house
50.00
2) June 12, 1952, for the purchase of carabao
250.00
3) July 16, 1952, cost of firewood
13.00
4) Aug. 18, 1952, amount paid for his medical care
10.00
5) Sept. 6, 1952, cost of one cavan of rice (wag-wag)
35.00
TOTAL
P358.00
Maximino Torres —
1) June 15, 1952, for the purchase of carabao

P320.00
2) July 15, 1952, cost of one cavan of rice (wag-wag)
35.00
3) Aug. 5, 1962, cost of 4-1/2 cavanes of palay
63.00
4) Sept. 6, 1962, cost of one cavan of rice (wag-wag)
35.00
TOTAL
P453.00
The defendants moved to dismiss said complaint, upon the ground, inter alia, of lack of jurisdiction over
the subject matter, but the justice of the peace court denied the motion. Thereupon, defendants filed
their respective answers, denying their alleged indebtedness and insisting on said lack of jurisdiction.
After the trial, or on March 6, 1954, said court rendered separate decisions for the plaintiff and against
the defendants, who appealed to the Court of First Instance of Pampanga, and filed therein, on March
26, 1954, a joint motion to dismiss the two (2) cases for want of jurisdiction over the subject matter.
Action thereon having been deferred, upon the ground that the reason relied upon by the defendants
was not indubitable, the latter filed on April 21, 1955, their respective answers. Subsequently, the two
cases were jointly heard and plaintiff introduced her evidence on defendants' alleged debts. The
evidence for the defense was, in turn, limited to establishing that plaintiff's relationship with the
defendants was purely that of landlord and tenants, which plaintiff eventually admitted. In due course,
on August 7, 1957, the Court of First Instance rendered the aforementioned decision, upon the ground
that "the loans or advances granted to each of the herein defendants were utilized to meet the
expenses of cultivation of their crops" and that, even if not granted in connection with the cultivation,
planting and harvesting of said crops, plaintiff's actions for the recovery thereof are cognizable by the
Court of Agrarian Relations. Plaintiff appealed directly "to the Supreme Court because the only issue to
be raised therein will be legal."
In her brief, she maintains that the lower court erred in finding itself without jurisdiction to hear these
cases and in holding that the same are within the exclusive jurisdiction of the Court of Agrarian
Relations, because the loans in question, she says, were not utilized by the defendants to meet the
expenses of cultivation of their crops; because the Court of Agrarian Relations did not exist when these
cases were begun in the justice of the peace court of Bacolor; and because said defendants had, by their
acts, voluntarily submitted themselves to the jurisdiction of the Court of First Instance of Pampanga.
As regards plaintiff's claim that the amounts lent by her to defendants herein were not utilized by them
to meet the expenses of cultivation of their respective crops, it should be noted that the loans, allegedly
made in 1952, were subject to the provisions of the Philippine Rice Tenancy Act, as amended, section 14
of which reads:
Once the accounting is made, any amount of money which the landlord may have advanced to the
tenant as expenses of cultivation or for his own private use, as well as any amount of grain or
agricultural products advanced for his support and that of his family shall be paid by the tenant out of
his share except fifteen per centum of same which is hereby exempt from landlord's lien. . . ." (Emphasis
supplied.)
Again, the Agricultural Tenancy Act regulates "all loans or advances obtained by the tenant from the
landholder," not only "in connection with the cultivation, planting, harvesting and other incidental
expenses for the improvement of the crop planted", but, also, all "loans or advances for the subsistence
of the tenant and his family" (Rep. Act No. 1199, section 15), and "all cases involving ... the settlement . .
. of disputes arising from the relationship of landholder and tenant" — such as those occasioned by said
loan or advances — are under the "exclusive jurisdiction" of the court therein mentioned (section 31),
whereas, pursuant to the Act creating the Court of Agrarian Relations, the same "shall have . . . exclusive
jurisdiction over the entire Philippines, to consider, investigate, decide and settle all questions, matters,
controversies or disputes involving all those relationships established by law which determine the
varying rights of persons in the cultivation and use of agricultural land where one of the parties works
the land". (Rep. Act. No. 1267, section 7.) .
In the cases under consideration, it is obvious that the alleged debt of the defendants for the purchase
of their respective carabaos is connected with the "cultivation, planting, harvesting and other incidental
expenses for the improvement of the crop planted." Plaintiff's testimony to the effect that defendant
Torres had resold his carabao, is insufficient to place the loan for its purchase beyond the purview of the
above mentioned provision of our tenancy laws, not only because plaintiff's testimony is hearsay, but,
also, because said alleged sale does not necessarily show that Torres did not intend to use the carabao
in the land cultivated by him, when he bought said animal. One may buy a carabao, use it and then
dispose of it. In fact, in a decision of the Court of Industrial Relations, dated June 11, 1954, in Case No.
4596-R thereof — brought by defendants herein, together with three other persons, against herein
petitioner, for the liquidation of their harvest as tenants of the latter, which decision is already final and
executory — it was held that herein defendants "shouldered the expenses of cultivation and furnished
the labor, work animals and farm implements . . ." (Exhibit 2).
Similarly, the alleged debt of defendant David for the "repair of his house", "cost of firewood", his
"medical care" and the "cost of one cavan of rice", as well as the alleged accounts of defendant Torres,
for two cavanes of rice and 4-1/2 cavanes of palay, are, obviously, for the "subsistence" of said tenants
and their respective families, all of which are covered by said sections 15 and 31 of Republic Act No.
1199, and section 7 of Republic Act No. 1267. Consequently, these litigations are within the exclusive
jurisdiction of the Court of Agrarian Relations.
It is true that when the present actions were instituted in the justice of the peace court on January 26,
1954, the Court of Agrarian Relations did not exist as yet. However, these cases were pending in the
Court of First Instance when Republic Act No. 1199 was approved on August 30, 1954. Pursuant to our
decision in Mendoza vs. Manguiat (51 Off. Gaz., 137), the court thereupon lost its jurisdiction over the
subject matter of these controversies. Said action involved a tenancy case, filed by a landlord against his
tenant, in the Municipal Court of Lipa City on October 31, 1953, before the approval of Republic Act No.
1199. The tenant moved to dismiss the complaint upon the ground that the said court had no
jurisdiction to hear the case and that the same was within the competence of the Court of Industrial
Relations. The motion having been denied, the tenant brought the matter to the Supreme Court to
enjoin the Municipal Judge of Lipa City from taking cognizance of the case. We granted the writ of
prohibition prayed for, upon the ground that:
. . . On August 30, 1954, Republic Act No. 1199 entitled 'An Act to Govern the Relations between
Landholders and Tenants of Agricultural Lands (Leasehold and Share Tenancy)' has been approved. This
law governs the relations between landlord and tenant in all kinds of agricultural lands. It repeals C.A.
No. 454, known as the Rice Share Tenancy Act, and C.A. No. 461. The provisions of the Act are made to
apply to all kinds of agricultural lands, whatever may be their nature or character, whether rice, sugar,
corn or coconut, and as all controversies between landlord and tenant are placed within the jurisdiction
of the Court of industrial Relations, so any controversy between landlord and tenant, or owner and
lessee falls under said counts jurisdiction.
So that at the time of the institution of the tenancy case in the municipal court of Lipa City on October
31, 1953, said court, therefore, still had jurisdiction to try the case, inasmuch as no law on tenancy had
yet been passed governing citrus lands; the case was not yet cognizable by the Court of industrial
Relations, a court of special jurisdiction. But, upon approval of Republic Act No. 1199, the relation
between the landowner and the tenant of the citrus land fell under the regulatory provisions of the Act;
as a consequence, the power of the municipal court to try and decide the case was revoked and
transferred to the Court of Industrial Relations. The jurisdiction that was terminated is one over the
subject-matter (not like the power in a criminal case to try the case by virtue of the fact that the place
where the offense committed was within the territorial limits of the court's jurisdiction). The said case
should, therefore, be as it hereby is dismissed, and the plaintiff therein directed to file his action in the
Court of Industrial Relations. (Emphasis supplied.)
Furthermore, the hearing of these cases, for the reception and evidence, took place on October 2, 1956
and January 31, 1957, after the creation of the Court of Agrarian Relations by Republic Act No. 1267,
approved on June 14, 1955. Pursuant to section 7 of said Republic Act No. 1267, as amended by section
5 of said Republic Act No. 1409, approved on September 9, 1955, "actions pending in the Court of
Industrial Relations upon the approval of this Act which are within the jurisdiction of the Court of
Agrarian Relations, shall be transferred to, and the proceedings therein continued in, the latter court".
Inasmuch as the present cases should have been dismissed by the Court of First Instance, in order that
the parties could litigate their dispute in the Court of Industrial Relations, and should have been pending
in the latter court on September 9, 1955, it follows that the Court of Agrarian Relations had exclusive
jurisdiction to hear and settle said dispute before the rendition of the decision appealed from.
With respect to defendants' alleged voluntary submission to the jurisdiction of the court of first
instance, which is not a fact, suffice it to say, that jurisdiction over the subject matter is determined by
law and cannot be conferred by the will of the parties.
WHEREFORE, the decision appealed from is hereby affirmed, with costs against plaintiff-appellant.
Bengzon, C.J., Bautista Angelo, Labrador, Reyes, J.B.L., Paredes, Dizon, De Leon and Natividad, JJ.,
concur.
Padilla, J., took no part.

SUPREME COURT
THIRD DIVISION
G.R. No. 143439 October 14, 2005

MAXIMO ALVAREZ, Petitioner,
vs.
SUSAN RAMIREZ, Respondent.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari1 assailing the Decision2 of the Court of
Appeals dated May 31, 2000 in CA-G.R. SP No. 56154, entitled "Susan Ramirez,
petitioner, versus, Hon. Benjamin M. Aquino, Jr., as Judge RTC, Malabon, MM, Br. 72,
and Maximo Alvarez, respondents."
Susan Ramirez, herein respondent, is the complaining witness in Criminal Case No.
19933-MN for arson3 pending before the Regional Trial Court, Branch 72, Malabon
City. The accused is Maximo Alvarez, herein petitioner. He is the husband of Esperanza
G. Alvarez, sister of respondent.
On June 21, 1999, the private prosecutor called Esperanza Alvarez to the witness stand
as the first witness against petitioner, her husband. Petitioner and his counsel raised no
objection.
Esperanza testified as follows:
"ATTY. ALCANTARA:
We are calling Mrs. Esperanza Alvarez, the wife of the accused, Your Honor.
COURT:
Swear in the witness.
xxx
ATTY. MESIAH: (sic)
Your Honor, we are offering the testimony of this witness for the purpose of proving that
the accused Maximo Alvarez committed all the elements of the crime being charged
particularly that accused Maximo Alvarez pour on May 29, 1998 gasoline in the house
located at Blk. 5, Lot 9, Phase 1-C, Dagat-dagatan, Navotas, Metro Manila, the house
owned by his sister-in-law Susan Ramirez; that accused Maximo Alvarez after pouring
the gasoline on the door of the house of Susan Ramirez ignited and set it on fire; that
the accused at the time he successfully set the house on fire (sic) of Susan Ramirez
knew that it was occupied by Susan Ramirez, the members of the family as well as
Esperanza Alvarez, the estranged wife of the accused; that as a consequence of the
accused in successfully setting the fire to the house of Susan Ramirez, the door of said
house was burned and together with several articles of the house, including shoes,
chairs and others.
COURT:
You may proceed.
xxx
DIRECT EXAMINATION
ATTY. ALCANTARA:
xxx
Q: When you were able to find the source, incidentally what was the source of that
scent?
A: When I stand by the window, sir, I saw a man pouring the gasoline in the house of
my sister (and witness pointing to the person of the accused inside the court room).
Q: For the record, Mrs. Witness, can you state the name of that person, if you know?
A: He is my husband, sir, Maximo Alvarez.
Q: If that Maximo Alvarez you were able to see, can you identify him?
A: Yes, sir.
Q: If you can see him inside the Court room, can you please point him?
A: Witness pointing to a person and when asked to stand and asked his name, he gave
his name as Maximo Alvarez."4
In the course of Esperanza’s direct testimony against petitioner, the latter showed
"uncontrolled emotions," prompting the trial judge to suspend the proceedings.
On June 30, 1999, petitioner, through counsel, filed a motion5 to disqualify Esperanza
from testifying against him pursuant to Rule 130 of the Revised Rules of Court on
marital disqualification.
Respondent filed an opposition6 to the motion. Pending resolution of the motion, the
trial court directed the prosecution to proceed with the presentation of the other
witnesses.
On September 2, 1999, the trial court issued the questioned Order disqualifying
Esperanza Alvarez from further testifying and deleting her testimony from the records.7
The prosecution filed a motion for reconsideration but was denied in the other assailed
Order dated October 19, 1999.8
This prompted respondent Susan Ramirez, the complaining witness in Criminal Case
No. 19933-MN, to file with the Court of Appeals a petition for certiorari9 with application
for preliminary injunction and temporary restraining order.10
On May 31, 2000, the Appellate Court rendered a Decision nullifying and setting aside
the assailed Orders issued by the trial court.
Hence, this petition for review on certiorari.
The issue for our resolution is whether Esperanza Alvarez can testify against her
husband in Criminal Case No. 19933-MN.
Section 22, Rule 130 of the Revised Rules of Court provides:
"Sec. 22. Disqualification by reason of marriage. – During their marriage, neither the
husband nor the wife may testify for or against the other without the consent of the
affected spouse, except in a civil case by one against the other, or in a criminal case for
a crime committed by one against the other or the latter’s direct descendants or
ascendants."
The reasons given for the rule are:
1. There is identity of interests between husband and wife;
2. If one were to testify for or against the other, there is consequent danger of perjury;
3. The policy of the law is to guard the security and confidences of private life, even at
the risk of an occasional failure of justice, and to prevent domestic disunion and
unhappiness; and
4. Where there is want of domestic tranquility there is danger of punishing one spouse
through the hostile testimony of the other.11
But like all other general rules, the marital disqualification rule has its own exceptions,
both in civil actions between the spouses and in criminal cases for offenses committed
by one against the other. Like the rule itself, the exceptions are backed by sound
reasons which, in the excepted cases, outweigh those in support of the general rule. For
instance, where the marital and domestic relations are so strained that there is no more
harmony to be preserved nor peace and tranquility which may be disturbed, the reason
based upon such harmony and tranquility fails. In such a case, identity of interests
disappears and the consequent danger of perjury based on that identity is non-existent.
Likewise, in such a situation, the security and confidences of private life, which the law
aims at protecting, will be nothing but ideals, which through their absence, merely leave
a void in the unhappy home.12
In Ordoño vs. Daquigan,13 this Court held:
"We think that the correct rule, which may be adopted in this jurisdiction, is that laid
down in Cargil vs. State, 35 ALR 133, 220 Pac. 64, 25 Okl. 314, wherein the court said:
‘The rule that the injury must amount to a physical wrong upon the person is too narrow;
and the rule that any offense remotely or indirectly affecting domestic harmony comes
within the exception is too broad. The better rule is that, when an offense directly
attacks, or directly and vitally impairs, the conjugal relation, it comes within the
exception to the statute that one shall not be a witness against the other except in a
criminal prosecution for a crime committee (by) one against the other.’"
Obviously, the offense of arson attributed to petitioner, directly impairs the conjugal
relation between him and his wife Esperanza. His act, as embodied in the Information
for arson filed against him, eradicates all the major aspects of marital life such as trust,
confidence, respect and love by which virtues the conjugal relationship survives and
flourishes.
As correctly observed by the Court of Appeals:
"The act of private respondent in setting fire to the house of his sister-in-law Susan
Ramirez, knowing fully well that his wife was there, and in fact with the alleged intent of
injuring the latter, is an act totally alien to the harmony and confidences of marital
relation which the disqualification primarily seeks to protect. The criminal act
complained of had the effect of directly and vitally impairing the conjugal relation. It
underscored the fact that the marital and domestic relations between her and the
accused-husband have become so strained that there is no more harmony, peace or
tranquility to be preserved. The Supreme Court has held that in such a case, identity is
non-existent. In such a situation, the security and confidences of private life which the
law aims to protect are nothing but ideals which through their absence, merely leave a
void in the unhappy home. (People v. Castañeda, 271 SCRA 504). Thus, there is no
longer any reason to apply the Marital Disqualification Rule."
It should be stressed that as shown by the records, prior to the commission of the
offense, the relationship between petitioner and his wife was already strained. In fact,
they were separated de facto almost six months before the incident. Indeed, the
evidence and facts presented reveal that the preservation of the marriage between
petitioner and Esperanza is no longer an interest the State aims to protect.
At this point, it bears emphasis that the State, being interested in laying the truth before
the courts so that the guilty may be punished and the innocent exonerated, must have
the right to offer the direct testimony of Esperanza, even against the objection of the
accused, because (as stated by this Court in Francisco14), "it was the latter himself who
gave rise to its necessity."
WHEREFORE, the Decision of the Court of Appeals is AFFIRMED. The trial court,
RTC, Branch 72, Malabon City, is ordered to allow Esperanza Alvarez to testify against
petitioner, her husband, in Criminal Case No. 19933-MN. Costs against petitioner.
SO ORDERED.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
WE CONCUR:
ARTEMIO V. PANGANIBAN
Associate Justice
Chairman
RENATO C. CORONA
Associate Justice
CONCHITA CARPIO MORALES
Associate Justice
CANCIO C. GARCIA
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision were reached in consultation before
the case was assigned to the writer of the opinion of the Court's Division.
ARTEMIO V. PANGANIBAN
Associate Justice
Chairman, Third Division
CERTIFICATION
Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairman's
Attestation, it is hereby certified that the conclusions in the above Decision were
reached in consultation before the case was assigned to the writer of the opinion of the
Court.
HILARIO G. DAVIDE, JR.
Chief Justice
Footnotes
1 Under Rule 45, Section 1 of the 1997 Revised Rules of Civil Procedure, as amended.
2 Penned by Justice Portia Aliño-Hormachuelos and concurred in by Justice Ma. Alicia

Austria-Martinez (now a member of this Court) and Justice Elvi John S. Asuncion.
3 Docketed as Criminal Case No. 19933-MN and captioned "People of the Philippines
vs. Maximo Alvarez".
4 Transcript of Stenographic Notes (TSN), June 21, 1999 at 3-7.
5 Rollo at 44-47.
6 Id. at 48-58.
7 Id. at 85-87.
8 Id. at 88.
9 Under Rule 65, Section 1 of the 1997 Revised Rules on Civil Procedure, as amended.
10 Rollo at 101-134.
11 People of the Philippines vs. Francisco, No. L-568, July 16, 1947, 78 Phil. 694, and
Cargill vs. State, 220, Pac., 64, 65; 25 Okl. Cr., 314; 35 A.L.R., 133.
12 People of the Philippines vs. Francisco, id.
13 No. L-39012, January 31, 1975, 62 SCRA 270.

14 Supra.
MAXIMO ALVAREZ v. SUSAN RAMIREZ, GR NO. 143439, 2005-10-14
Facts:
Issues:
whether Esperanza Alvarez can testify against her husband
Ruling:
The reasons given for the rule are:
There is identity of interests between husband and wife;
If one were to testify for or against the other, there is consequent danger of perjury;
The policy of the law is to guard the security and confidences of private life, even at the
risk of an occasional failure of justice, and to prevent domestic disunion and
unhappiness; and
Where there is want of domestic tranquility there is danger of punishing one spouse
through the hostile testimony of the other.
But like all other general rules, the marital disqualification rule has its own exceptions,
both in civil actions between the spouses and in criminal cases for offenses committed
by one against the other. Like the rule itself, the exceptions are backed by sound
reasons which, in... the excepted cases, outweigh those in support of the general rule.
For instance, where the marital and domestic relations are so strained that there is no
more harmony to be preserved nor peace and tranquility which may be disturbed, the
reason based upon such harmony and... tranquility fails. In such a case, identity of
interests disappears and the consequent danger of perjury based on that identity is non-
existent. Likewise, in such a situation, the security and confidences of private life, which
the law aims at protecting, will be nothing but... ideals, which through their absence,
merely leave a void in the unhappy home.
Ordoño vs. Daquigan
Obviously, the offense of arson attributed to petitioner, directly impairs the conjugal
relation between him and his wife Esperanza. His act, as embodied in the Information
for arson filed against him, eradicates all the major aspects of marital life such as trust,
confidence,... respect and love by which virtues the conjugal relationship survives and
flourishes.
As correctly observed by the Court of Appeals:
"The act of private respondent in setting fire to the house of his sister-in-law Susan
Ramirez, knowing fully well that his wife was there, and in fact with the alleged intent of
injuring the latter, is an act totally alien to the harmony and confidences of marital...
relation which the disqualification primarily seeks to protect. The criminal act
complained of had the effect of directly and vitally impairing the conjugal relation. It
underscored the fact that the marital and domestic relations between her and the
accused-husband have become... so strained that there is no more harmony, peace or
tranquility to be preserved.
It should be stressed that as shown by the records, prior to the commission of the
offense, the relationship between petitioner and his wife was already strained. In fact,
they were separated de facto almost six months before the incident. Indeed, the
evidence and... facts presented reveal that the preservation of the marriage between
petitioner and Esperanza is no longer an interest the State aims to protect.
At this point, it bears emphasis that the State, being interested in laying the truth before
the courts so that the guilty may be punished and the innocent exonerated, must have
the right to offer the direct testimony of Esperanza, even against the objection of the
accused,... because (as stated by this Court in Francisco[14]), "it was the latter himself
who gave rise to its necessity."
WHEREFORE, the Decision of the Court of Appeals is AFFIRMED. The trial court,
RTC, Branch 72, Malabon City, is ordered to allow Esperanza Alvarez to testify against
petitioner, her husband, in Criminal Case No. 19933-MN. Costs against petitioner.
SO ORDERED.
Principles:
THIRD DIVISION
G.R. No. 127745 April 22, 2003
FELICITO G. SANSON, CELEDONIA SANSON-SAQUIN, ANGELES A. MONTINOLA, EDUARDO A.

MONTINOLA, JR., petitioners-appellants,
vs.
HONORABLE COURT OF APPEALS, FOURTH DIVISION and MELECIA T. SY, as Administratrix of the
Intestate Estate of the Late Juan Bon Fing Sy, respondents-appellees.
CARPIO MORALES, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the Court of Appeals Decision of May 31, 1996 and Resolution of December 9, 1996.
On February 7, 1990, herein petitioner-appellant Felicito G. Sanson (Sanson), in his capacity as

creditor, filed before the Regional Trial Court (RTC) of Iloilo City a petition, docketed as Special
Proceedings No. 4497, for the settlement of the estate of Juan Bon Fing Sy (the deceased) who
died on January 10, 1990. Sanson claimed that the deceased was indebted to him in the
amount of P603,000.00 and to his sister Celedonia Sanson-Saquin (Celedonia) in the amount of
P360,000.00.1
Petitioners-appellants Eduardo Montinola, Jr. and his mother Angeles Montinola (Angeles) later
filed separate claims against the estate, alleging that the deceased owed them P50,000.00 and
P150,000.00, respectively.2
By Order of February 12, 1991, Branch 28 of the Iloilo RTC to which the petition was raffled,
appointed Melecia T. Sy, surviving spouse of the deceased, as administratrix of his estate,
following which she was issued letters of administration.3
During the hearing of the claims against the estate, Sanson, Celedonia, and Jade Montinola,
wife of claimant Eduardo Montinola, Jr., testified on the transactions that gave rise thereto,
over the objection of the administratrix who invoked Section 23, Rule 130 of the Revised Rules
of Court otherwise known as the Dead Man’s Statute which reads:
SEC. 23. Disqualification by reason of death or insanity of adverse party.—Parties or assignors

of parties to a case, or persons in whose behalf a case is prosecuted, against an executor or
administrator or other representative of a deceased person, or against a person of unsound
mind, upon a claim or demand against the estate of such deceased person or against such
person of unsound mind, cannot testify as to any matter of fact occurring before the death of
such deceased person or before such person became of unsound mind. (Emphasis supplied)
Sanson, in support of the claim of his sister Celedonia, testified that she had a transaction with
the deceased which is evidenced by six checks4 issued by him before his death; before the
deceased died, Celedonia tried to enforce settlement of the checks from his (the deceased’s)
son Jerry who told her that his father would settle them once he got well but he never did; and
after the death of the deceased, Celedonia presented the checks to the bank for payment but
were dishonored5 due to the closure of his account.6
Celedonia, in support of the claim of her brother Sanson, testified that she knew that the
deceased issued five checks7 to Sanson in settlement of a debt; and after the death of the
deceased, Sanson presented the checks to the bank for payment but were returned due to the
closure of his account.8
Jade, in support of the claims of her husband Eduardo Montinola, Jr. and mother-in-law
Angeles, testified that on separate occasions, the deceased borrowed P50,000 and P150,000
from her husband and mother-in-law, respectively, as shown by three checks issued by the
deceased,9 two to Angeles and the other10 to Eduardo Montinola, Jr.; before the deceased
died or sometime in August 1989, they advised him that they would be depositing the checks,
but he told them not to as he would pay them cash, but he never did; and after the deceased
died on January 10, 1990, they deposited the checks but were dishonored as the account
against which they were drawn was closed,11 hence, their legal counsel sent a demand letter12
dated February 6, 1990 addressed to the deceased’s heirs Melicia, James, Mini and Jerry Sy, and
Symmels I & II but the checks have remained unsettled.13
The administratrix, denying having any knowledge or information sufficient to form a belief as
to the truth of the claims, nevertheless alleged that if they ever existed, they had been paid and
extinguished, are usurious and illegal and are, in any event, barred by prescription.14 And she
objected to the admission of the checks and check return slips-exhibits offered in evidence by
the claimants upon the ground that the witnesses who testified thereon are disqualified under
the Dead Man’s Statute.
Specifically with respect to the checks-exhibits identified by Jade, the administratrix asserted
that they are inadmissible because Jade is the daughter-in-law of claimant Angeles and wife of
claimant Eduardo Montinola, Jr., hence, she is covered by the above-said rule on
disqualification.
At all events, the administratrix denied that the checks-exhibits were issued by the deceased
and that the return slips were issued by the depository/clearing bank.15
After the claimants rested their case, the administratrix filed four separate manifestations
informing the trial court that she was dispensing with the presentation of evidence against their
claims.16
Finding that the Dead Man’s Statute does not apply to the witnesses who testified in support of
the subject claims against the estate, the trial court issued an Order of December 8, 1993,17
the dispositive portion of which reads:
WHEREFORE, Judicial Administratrix Melecia T. Sy, is hereby ordered, to pay, in due course of
administration, creditors-claimants Felicito G. Sanson, in the amount of P603,500.00; Celedonia
S. Saquin, in the amount of P315,000.00;18 Angeles A. Montinola, in the amount of
P150,000.00 and Eduardo Montinola, Jr., in the amount of P50,000.00, from the assets and/or
properties of the above-entitled intestate estate.
On appeal by the administratrix upon the following assignment of errors:

I.
THE LOWER COURT ERRED IN NOT DISMISSING THE CLAIM[S] FOR FAILURE TO PAY THE FILING
FEES THEREON
II.
THE LOWER COURT ERRED IN NOT DISMISSING THE CLAIM[S] BECAUSE [THEY ARE] ALREADY
BARRED BY THE LAW OF LIMITATIONS OR STATUTE OF NON-CLAIMS
III.
THE LOWER COURT ERRED IN NOT HOLDING THAT CLAIMANT[S’] EVIDENCE OF THE CLAIM IS
INCOMPETENT UNDER THE DEAD MAN’S STATUTE, AND INADMISSIBLE
IV.
THE ALLEGED CHECKS ARE INADMISSIBLE AS PRIVATE DOCUMENTS,19
the Court of Appeals set aside the December 8, 1993 Order of the trial court, by Decision of
May 31, 1996, disposing as follows:
WHEREFORE, the order appealed from is hereby set aside and another order is entered
dismissing the claims of:
1. Felicito G. Sanson, in the amount of P603,500.00;
2. Celdonia S. Saquin, in the amount of P315,000.00;20

3. Angeles A. Montinola, in the amount of P150,000.00; and
4. Eduardo Montinola, Jr., in the amount of P50,000.00 against the estate of the deceased JUAN
BON FING SY.
No pronouncement as to costs.
SO ORDERED. (Italics supplied)
The claimants’ Motion for Reconsideration21 of the Court of Appeals decision having been
denied by Resolution of December 9, 1996,22 they filed the present petition anchored on the
following assigned errors:
FIRST ASSIGNED ERROR
RESPONDENT COURT OF APPEALS, 4TH DIVISION, ERRED IN FINDING THAT THE TESTIMONY OF
JADE MONTINOLA IS INSUFFICIENT TO PROVE THE CLAIMS OF CLAIMANTS ANGELES A.
MONTINOLA AND EDUARDO A. MONTINOLA, JR..
SECOND ASSIGNED ERROR
RESPONDENT COURT OF APPEALS, 4TH DIVISION, ERRED IN FINDING THAT CLAIMANT FELICITO
G. SANSON IS DISQUALIFIED TO TESTIFY [ON] THE CLAIM OF CELEDONIA SANSON-SA[Q]UIN
AND VI[C]E VERSA. (Underscoring in the original)23
With respect to the first assigned error, petitioners argue that since the administratrix did not
deny the testimony of Jade nor present any evidence to controvert it, and neither did she deny
the execution and genuineness of the checks issued by the deceased (as well as the check
return slips issued by the clearing bank), it was error for the Court of Appeals to find the
evidence of the Montinolas insufficient to prove their claims.
The administratrix counters that the due execution and authenticity of the checks-exhibits of
the Montinolas were not duly proven since Jade did not categorically state that she saw the
filling up and signing of the checks by the deceased, hence, her testimony is self-serving;
besides, as Jade had identical and unitary interest with her husband and mother-in-law, her
testimony was a circumvention of the Dead Man’s Statute.24
The administratrix’s counter-argument does not lie. Relationship to a party has never been
recognized as an adverse factor in determining either the credibility of the witness or—subject
only to well recognized exceptions none of which is here present—the admissibility of the
testimony. At most, closeness of relationship to a party, or bias, may indicate the need for a
little more caution in the assessment of a witness’ testimony but is not necessarily a negative
element which should be taken as diminishing the credit otherwise accorded to it.25
Jade’s testimony on the genuineness of the deceased’s signature on the checks-exhibits of the
Montinolas is clear:
xxx
Q: Showing to you this check dated July 16, 1989, Far East Bank and Trust Company Check
No. 84262, in the amount of P100,000.00, is this the check you are referring to?
A: Yes, sir.
Q: There appears a signature in the face of the check. Whose signature is this?
A: That is the signature of Mr. Sy.
Q: Why do you know that this is the signature of Mr. Sy?
A: Because he signed this check I was . . . I was present when he signed this check.
xxx
Q: Showing to you this check dated September 8, 1989, is this the check you are referring
to?
A: Yes, sir.
Q: Why do you know that this is his signature?
A: I was there when he signed the same.
xxx
Q: Showing to you this Far East Bank and Trust Company Check No. 84262 dated July 6,
1989, in the amount of P50,000.00, in the name of Eduardo Montinola, are you referring to this
check?
A: Yes, sir.
Q: Whose signature is this appearing on the face of this check?
A: Mr. Sy’s signature.
Q: Why do you know that it is his signature?
A: I was there when he signed the same.
x x x26 (Emphasis supplied)
The genuineness of the deceased’s signature having been shown, he is prima facie presumed to
have become a party to the check for value, following Section 24 of the Negotiable Instruments
Law which reads:
Section 24. Presumption of Consideration. – Every negotiable instrument is deemed prima facie
to have been issued for a valuable consideration; and every person whose signature appears
thereon to have become a party thereto for value. (Underscoring and italics in the original;
emphasis supplied),
Since, with respect to the checks issued to the Montinolas, the prima facie presumption was
not rebutted or contradicted by the administratrix who expressly manifested that she was
dispensing with the presentation of evidence against their claims, it has become conclusive.
As for the administratrix’s invocation of the Dead Man’s Statute, the same does not likewise lie.
The rule renders incompetent: 1) parties to a case; 2) their assignors; or 3) persons in whose
behalf a case is prosecuted.
xxx
The rule is exclusive and cannot be construed to extend its scope by implication so as to
disqualify persons not mentioned therein. Mere witnesses who are not included in the above
enumeration are not prohibited from testifying as to a conversation or transaction between the
deceased and a third person, if he took no active part therein.
x x x27 (Italics supplied)
Jade is not a party to the case. Neither is she an assignor nor a person in whose behalf the case
is being prosecuted. She testified as a witness to the transaction. In transactions similar to
those involved in the case at bar, the witnesses are commonly family members or relatives of
the parties. Should their testimonies be excluded due to their apparent interest as a result of
their relationship to the parties, there would be a dearth of evidence to prove the transactions.
In any event, as will be discussed later, independently of the testimony of Jade, the claims of
the Montinolas would still prosper on the basis of their documentary evidence—the checks.
As to the second assigned error, petitioners argue that the testimonies of Sanson and Celedonia
as witnesses to each other’s claim against the deceased are not covered by the Dead Man’s
Statute;28 besides, the administratrix waived the application of the law when she cross-
examined them.
The administratrix, on the other hand, cites the ruling of the Court of Appeals in its decision on
review, the pertinent portion of which reads:
The more logical interpretation is to prohibit parties to a case, with like interest, from testifying
in each other’s favor as to acts occurring prior to the death of the deceased.
Since the law disqualifies parties to a case or assignors to a case without distinguishing between
testimony in his own behalf and that in behalf of others, he should be disqualified from
testifying for his co-parties. The law speaks of "parties or assignors of parties to a case."
Apparently, the testimonies of Sanson and Saquin on each other’s behalf, as co-parties to the
same case, falls under the prohibition. (Citation omitted; underscoring in the original and
emphasis supplied)
But Sanson’s and Celedonia’s claims against the same estate arose from separate transactions.
Sanson is a third party with respect to Celedonia’s claim. And Celedonia is a third party with
respect to Sanson’s claim. One is not thus disqualified to testify on the other’s transaction.
In any event, what the Dead Man’s Statute proscribes is the admission of testimonial evidence
upon a claim which arose before the death of the deceased. The incompetency is confined to
the giving of testimony.29 Since the separate claims of Sanson and Celedonia are supported by
checks-documentary evidence, their claims can be prosecuted on the bases of said checks.
This brings this Court to the matter of the authenticity of the signature of the deceased
appearing on the checks issued to Sanson and Celedonia. By Celedonia’s account, she "knows"
the signature of the deceased.
xxx
Q: Showing to you these checks already marked as Exhibit "A" to "E", please go over these
checks if you know the signatures of the late Juan Bon Fing Sy? on these checks?
A: Yes, sir.
Q: Insofar as the amount that he borrowed from you, he also issued checks?
A: Yes, sir.
Q: And therefore, you know his signature?
A: Yes, sir.
x x x30
Sanson testified too that he "knows" the signature of the deceased:
xxx
Q: I show you now checks which were already marked as Exhibit "A" to "G-1" – Saquin,
please go over this if these are the checks that you said was issued by the late Juan Bon Fing Sy
in favor of your sister?
A: Yes, these are the same che[c]ks.
Q: Do you know the signature of the late Juan Bon Fing Sy?
A: Yes, sir.
Q: And these signatures are the same signatures that you know?
A: Yes, sir.
x x x31
While the foregoing testimonies of the Sanson siblings have not faithfully discharged the
quantum of proof under Section 22, Rule 132 of the Revised Rules on Evidence which reads:
Section 22. How genuineness of handwriting proved. – The handwriting of a person may be
proved by any witness who believes it to be the handwriting of such person because he has
seen the person write, or has seen writing purporting to be his upon which the witness has
acted or been charged and has thus acquired knowledge of the handwriting of such person. x x
x,
not only did the administratrix fail to controvert the same; from a comparison32 with the naked
eye of the deceased’s signature appearing on each of the checks-exhibits of the Montinolas
with that of the checks-exhibits of the Sanson siblings all of which checks were drawn from the
same account, they appear to have been affixed by one and the same hand.
In fine, as the claimants-herein petitioners have, by their evidence, substantiated their claims
against the estate of the deceased, the burden of evidence had shifted to the administratrix
who, however, expressly opted not to discharge the same when she manifested that she was
dispensing with the presentation of evidence against the claims.
WHEREFORE, the impugned May 31, 1996 Decision of the Court of Appeals is hereby SET ASIDE
and another rendered ordering the intestate estate of the late Juan Bon Fing Sy, through
Administratrix Melecia T. Sy, to pay:
1) Felicito G. Sanson, the amount of P603,500.00;
2) Celedonia S. Saquin, the amount of P315.000.00;33
3) Angeles Montinola, the amount of P150,000.00; and
4) Eduardo Montinola, Jr., the amount of P50,000.00.
representing unsettled checks issued by the deceased.

SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Corona, JJ., concur.
Footnotes
1 Rollo at 7-8.
2 Id. at 8, 33.
3 Id. at 34.
4 Exhibits "A"-"G" – Saquin.
5 Transcript of Stenographic Notes (TSN), September 16, 1992 at 4-5.
6 Exhibits "A-1"-"G-1".
7 Exhibits "A"-"E" – Sanson.
8 TSN, October 1, 1992 at 2-5.
9 Exhibits "A" and "B" – Angeles Montinola.
10 Exhibit "A" – Eduardo Montinola.

11 Exhibits "A-1" and "B-1" – Angeles Montinola; Exhibit "C" – Eduardo Montinola.
12 Exhibit "D" – Angeles Montinola; Exhibit "B" – Eduardo Montinola.
13 TSN, September 18, 1992 at 4-9.
14 Joint Record on Appeal Against the Order Granting the Claims of Angeles A. Montinola and
Eduardo A. Montinola, Jr. at 15 and 21; Joint Record on Appeal Against the Order Granting the
Claims of Felicito Sanson and Celedonia Sanson-Saquin at 15 and 23.
15 Joint Record on Appeal Against the Order Granting the Claims of Angeles A. Montinola and
Eduardo A. Montinola, Jr. at 16-17; Joint Record on Appeal Against the Order Granting the
Claims of Felicito Sanson and Celedonia Sanson-Saquin at 18 and 24.
16 Rollo at 43.
17 Id. at 32-47.
18 It is noted that the total amount of checks-exhibits of Celedonia Sanson-Saquin is

P360,000.00. She did not, however, move to reconsider the amount of P315,000.00 ordered to
be paid to her.
19 Court of Appeals (CA) Rollo at 40-41, 100-101.
20 Vide Footnotes 18.
21 Rollo at 72-96.
22 Id. at 99.
23 Id. at 12.
24 Id. at 127-129.
25 People v. Bandoquillo, 167 SCRA 549 (1988).
26 TSN, September 18, 1992 at 2-7.
27 Jovito R. Salonga, PHILIPPINE LAW ON EVIDENCE, 3rd Edition, 1964 at 194.
28 Rollo at 17.
29 Vide Martin’s Rules of Court in the Philippines, Vol. 5, p. 158 (1996).
30 TSN, October 1, 1992 at 3.
31 TSN, September 16, 1992 at 4.
32 Sec. 22 of Rule 132 provides:
xxx
Evidence respecting the handwriting may also be given by a comparison, made by the witness
or the court, with writings admitted or treated as genuine by the party against whom the
evidence is offered, or proved to be genuine to the satisfaction of the judge.
xxx
33 As prayed in the Petition before this Court.

Felicito Sanson, et al. vs. Court of Appeals - GR No. 127745 Case Digest
Facts:
Felicito Sanson filed a special proceeding for the settlement of the estate of Juan See.
Sanson claimed that the deceased was indebted to him in the amount of Php 603,
000.00 and to his sister Caledonia Sanson-Saquin in the amount of Php 320,000.00.
also petitioner Eduardo Montinola and his mother filed separate claims against the
estate alleging that the deceased owed them Php50,000 and Php 150, 000,
respectively. During the trial, Caledonia and Felicito Sanson testified that they had
transaction with the deceased evidenced by six checks issued by the deceased before
he died and that after his death, Felicito and Caledonia presented the checks to the
bank for payment but were dishonored due to the closure of the account. The same
transaction happened to Eduardo and Angeles Montionola but when they presented the
check to the bank, it was dishonored. Demand letters were sent to the heirs of the
deceased but the checks remained unsettled.
Issue:
Whether or not presumption of consideration may be rebutted even if the heirs did not
present any evidence to controvert it.
Held:
When the fact was established by a witness that it was the deceased who signed the
checks and in fact who entered into the transaction, the genuineness of the deceased
signature having been shown, the latter is prima facie presumed to have been a party to
the check for value, following Section 24 of NIL which provides that “every negotiable
instrument is deemed prima facie to have been issued for a valuable consideration; and
every person whose signature appears thereon to have become a party thereto for
value.”
Since the prima facie presumption was not rebutted or contradicted by the heirs, it has
become conclusive.

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Republic of the Philippines

G.R. No. 172227 June 29, 2011

SPOUSES WILFREDO PALADA and BRIGIDA PALADA,* Petitioners,

DEL CASTILLO, J.:

Ruling of the Regional Trial Court

3. ORDERING the defendant to pay the plaintiffs the following damages:

a) Php 1,000,000.00, moral damages;

b) Php 500,000.00, exemplary damages; and

c) Php 50,000.00, Attorney’s fee; and

Ruling of the Court of Appeals

Hence, the present recourse, where petitioners allege that:

THE COURT OF APPEALS ERRED IN MISAPPRECIATING THE

FINDINGS OF FACTS OF BRANCH 35, REGIONAL TRIAL COURT OF SANTIAGO CITY.29

Respondent bank’s Arguments

The petition is bereft of merit.

The loan contract was perfected.

Claims of fraud and bad faith are unsubstantiated.

MARIANO C. DEL CASTILLO

TERESITA J. LEONARDO-DE CASTRO

2 Rollo, pp. 9-21.

4 CA rollo, pp. 84-85.

10 Records, pp. 1-6.

13 Indicated as T-225152 and T-221512 in the Complaint; see records, p. 2.

19 Rollo, pp. 34-46; penned by Judge Efren M. Cacatian.

27 Rollo, pp. 30-32.

33 Id. at unpaged-129 and 131-132.

37 TSN dated July 17, 2000, p. 5; Direct Examination of Wilfredo Palada.

Ruling of the Regional Trial Court

WHEREFORE, with all the foregoing considerations, judgment is hereby rendered in

3. ORDERING the defendant to pay the plaintiffs the following damages:

a) Php 1,000,000.00, moral damages;

Ruling of the Court of Appeals

Hence, the present recourse, where petitioners allege that:

THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN

THE COURT OF APPEALS ERRED IN DECLARING VALID THE REAL ESTATE

THE COURT OF APPEALS ERRED IN MISAPPRECIATING THE FINDINGS OF

Respondent bank's Arguments

The petition is bereft of merit.

The loan contract was perfected.

Claims of fraud and bad faith are

[2] Rollo, pp. 9-21.

[4] CA rollo, pp. 84-85.

[5] Rollo, p. 40.

[9] Id. at 24.

[10] Records, pp. 1-6.

[11] Id. at 11-14.

[12] Rollo, p. 34.

[14] Id. at 3-4.

[15] Id. at 23-26.

[16] Id. at 24.

[19] Rollo, pp. 34-46; penned by Judge Efren M. Cacatian.

[20] Id. at 43.

[21] Id. at 44-46.

[22] Id. at 29-30.

[23] Id. at 31.

[27] Rollo, pp. 30-32.

[28] Id. at 10-11.

[29] Id. at 14-15.

[30] Id. at 110.

[32] Id. at 114.

[33] Id. at unpaged-129 and 131-132.

[34] Id. at 127.

[35] Art. 1934. An accepted promise to deliver something by way of commodatum or